Operator: Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Jeffrey Cohen: Hi, Pat, Lance, how are you?
Pat Mackin: Good. How are you?
Jeffrey Cohen: I’m good. Thanks, Suraj for segue right into my first question, which is 59% on tissue forms. That’s an all-time high for the company. Is that sustainable? Or how should we think about that opening up in the tissue business for 2024?
Pat Mackin: Well, as I just mentioned, Jeff, and I think so Lance commented on the pricing, we obviously had some significant increases on SynerGraft in 2023, which will still get some benefit in the first quarter. During that year, by working with some of our top surgeons, we’ve also seen significant yield improvements in our processing area. So we think that that growth will continue, because, we — like I said, we’ve almost doubled the availability of our pulmonary valves, and because of this rapid growth of the Ross procedure, we’re literally selling everyone that kind of comes out off the line. So the answer to your question is yes, it’s going to continue.
Jeffrey Cohen: Wonderful. And I guess, secondly for us, could you comment a little bit on some of the geographies out there? I know you call out Asia and LATAM at that 19% rate, but any specific geographies? And how does that tie into specific product lines by geography or geographies?
Lance Berry: Yes. Every region grew double digits. Obviously, Asia-Pacific and Latin America are smaller, just in size. They’re growing 20%. So, again, we’re seeing double-digits across all four of our regions.
Jeffrey Cohen: Okay. Got it. And then lastly for us, can you talk about gain a little bit as far as the prevention of a tear in the structure? And are clinicians and hospitals looking at that as a cost associated or it’s just death period?
Pat Mackin: I’m not sure if I caught that, Jeff.
Jeffrey Cohen: As far as DANE and its measurement and how it’s being viewed by —
Pat Mackin: Viewed by teams.
Jeffrey Cohen: Yes.
Pat Mackin: Yes. Actually, it’s a again, it’s probably not a topic many people understand. I mean, I certainly didn’t know what DANE was until we got into this specific area. So think about it this way. In the current standard hemiarch, where they actually — I tried to make a plumbing analogy, right? You have tear in the pipe. You got to fix that little piece of pipe. So you take the bad piece out, you put a new piece in, and you connect it to the old kind of connector, the old piece of the pipe, so now you’ve got a fully functioning pipe. That’s what they do with a hemiarch. Up to 70% of the times, the connection you make ends up having a leak, which requires a reoperation and can lead to higher mortality. It’s a real problem, and it can happen.
Like, again, it depends on where you’re doing it. But 35% to 70% of the time, they get a leak in the connection, which is a gain. We don’t see it at all with AMDS. Three years in the 50 patient DARTS trial and 93 patients in the PERSEVERE trial, zero. So we’re running the health economics on that. But re-ops and mortality for these patients, I mean, this is obviously a significant thing. And the FDA has been extremely interested in DANE and actually had us added as a primary efficacy endpoint.
Jeffrey Cohen: Got it. Okay. That’s super helpful. Again, thanks for the questions and fantastic readout on the year.
Pat Mackin: Thanks, Jeff.
Operator: Thank you. Our next question comes from the line of Frank Takkinen with Lake Street Capital. Please proceed with your question.
Nelson Cox: Hey, this is Nelson Cox on for Frank. I’ll just start maybe internationally as well. Can you refresh us on the current size of the sales force there and maybe thinking about the team size there throughout the year? Obviously, you’ve seen some nice growth there, but maybe just walk through your thinking there.
Pat Mackin: Yes. We’ve talked about Asia and Latin America. When I started as a company, we had one person in Asia, nobody in Latin America. We’re now probably about 30 people in Asia, probably 15 in Latin America. We feel like Latin America is kind of where it needs to be. We may have a kind of onesie twosies here and there. Asia obviously is a significant opportunity and we’ll continue to add to those regions, but we treat it somewhat like a venture capitalist, right? I mean, as we get product approved — products approved, for example, we’ve had some big approvals in Australia. Then we’ll add feet on the street. We’ve got approvals in Hong Kong, we’re direct there. We’ve had approvals in Thailand, we’re direct there. We’ve had approvals in Taiwan, we’re adding people there.
So as we get the product approved, which is really just the incremental cost of the regulatory approval. If we see the size of that market make sense and we just run an NPV and then we’ll add people. So it’s really a gated self-fulfilling — self-funding process that we go through. But Asia is the area that we can pull that back. We can titrate that depending on our EBITDA requirements and commitments and what we see coming from an approval standpoint. Hopefully that helps you.
Nelson Cox: Yes, no, that does. Then obviously I’ll switch over to On-X. Obviously a strong quarter there. Can you maybe just talk a bit more about the competitive landscape? Maybe just what you’re seeing from the other competitors there, you can clearly continue to take share, but just curious what you’re hearing out there from maybe their investments or lack thereof.
Pat Mackin: Yes. So I’ll talk about what customers are saying. We just — as I mentioned in November, or I guess October last year, we presented a 510 patient study, the kind of the FDA post-approval trial on the low INR, which is a typical requirement. They want to see that your valve performs in the community as it performed in the kind of rigorous FDA trial so 60 centers, 510 valves. We saw an 85% reduction in major bleeding. So we went and did some market research, talked to 100 cardiac surgeons, by the way, it’s very unique research, that — and I’ve done a lot of this over my career. We did research in competitive accounts, what we call competitive accounts, which have On-X share like less than 25%. And it shows that we continue to take share over the next three years and basically double our share. So this is a very meaningful new data set. We’re excited about and our customers are excited about it and we’re going to be going after it.
Operator: Thank you. There are no further questions at this time. I’d like to turn the floor back over to management for closing comments.
Pat Mackin: Yes. Obviously, we appreciate everybody’s time here. I mean I’ll be quick in my wrap up. We’re super excited about 2024. We had this great PERSEVERE readout on AMDS with 72% reduction in mortality, 52% reduction in major adverse events. So we’re going to be working with the FDA to get this technology here in the U.S., but we’re also approved around in multiple countries in Europe, Canada and Asia where we’re going to use that data to continue to take care of patients and drive growth. I just got done talking about the On-X post-approval trial of 510 patients showing an 85% reduction in major bleeding, and we’re going after share there. I talked a couple of times about our price increases on SynerGraft as well as our efforts to improve supply, and we’ll continue to see growth there and we talked about Asia-Pacific, Latin America.
We’re also advancing our pipeline. We’re going to be starting the third-generation Frozen Elephant total arch repair system called ARCEVO LSA later the this year. So we continue to build an aortic company and are excited about delivering for you again in 2024. Thank you.
Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
