LivaNova PLC (NASDAQ:LIVN) Q1 2024 Earnings Call Transcript

LivaNova PLC (NASDAQ:LIVN) Q1 2024 Earnings Call Transcript May 1, 2024

LivaNova PLC misses on earnings expectations. Reported EPS is $-0.77593 EPS, expectations were $0.45. LivaNova PLC isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, ladies and gentlemen, and welcome to the LivaNova PLC First Quarter 2024 Earnings Conference Call. As a reminder this conference call is being recorded. I would now like to introduce your host for today’s conference, Mr. Matthew Dodds LivaNova’s Senior Vice President of Corporate Development and IT. Please go ahead, sir.

Matthew Dodds: Thank you, Candace, and welcome to our conference call and webcast discussing LivaNova’s financial results for the first quarter of 2024. Joining me on today’s call are Vladimir Makatsaria, our Chief Executive Officer and member of the Board of Directors; Alex Shvartsburg, our Chief Financial Officer; Stephanie Bolton, President of Global Epilepsy; and Briana Gatlin, Director of Investor Relations. Before we begin, I would like to remind you that the discussions during this call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company’s most recent financial filings and documents furnished to the SEC, including today’s press release that is available on our website.

We do not undertake to update any forward-looking statement. Also the discussions will include certain non-GAAP financial measures with respect to our performance including but not limited to revenue results, which will all be stated on a constant currency basis. Reconciliations to the most directly comparable GAAP financial measures can be found in today’s press release, which is available on our website. We have also posted a presentation to our website that summarizes the points of today’s call. This presentation is complementary to the other call materials and should be used as an enhanced communication tool. You can find the presentation and press release in the Investors section of our website under News Events and Presentations at investor.livanova.com.

I would like to welcome Vlad to his first earnings call as LivaNova’s CEO after starting March 1st. Prior to joining LivaNova, Vlad most recently served as company Group Chairman at Johnson & Johnson Medtech, leading its Global Ethicon Surgery business. He’s a respected leader in the medical technology industry with a 27-year track record of delivering results, driving innovation and leading high-performance teams. With that, I will turn the call over to Vlad.

Vladimir Makatsaria: Thank you, Matt, and thank you everyone for joining us. It’s my pleasure and privilege to welcome you to LivaNova’s conference call for the first quarter of 2024 as LivaNova’s Chief Executive Officer. First and foremost on behalf of the Board and the executive leadership team, I would like to express our gratitude to Bill Kozy, Chair of the Board of LivaNova for a tremendous job leading the company on an interim basis. I would also like to thank the entire Board of Directors for the opportunity to serve as CEO and express my sincere gratitude and excitement for the future of LivaNova. During my first two months, I interacted with customers, met investors and engage with my colleagues around the world. I can confidently say that the patient-first mentality thrives across every function and geography at LivaNova.

It is in order to work with the global organization that focuses on solving significant unmet patient needs into very high-impact medical fields, neurological and cardiac health. I’m humbled to be in this role and grateful to our teams for their exceptional work and dedication to serving our patients and customers. Over the coming months, I will continue to listen learn and complete a comprehensive review of business. In doing so, I’m focused on three key areas; execution, innovation and talent. Let me provide additional color on each. First, execution and performance. My view of success in this area is achieving sustainable above-market growth, while improving profitability and cash flow and most importantly delivering on commitments to our customers.

The first quarter marked our fifth consecutive quarter of double-digit revenue growth. In cardiopulmonary, we maintained above-market growth driven by the strong launch of the Essenz heart-lung machine and our ability to fulfill the high demand for consumables. In epilepsy, we saw continued growth in both new and replacement implants driven by disciplined commercial execution. Second, innovation and portfolio. Over the last year, the company has made progress in refining the business strategy and portfolio, including the wind down of the Advanced Circulatory Support segment and the heart failure program. These portfolio actions position us well for the future and enable us to have appropriate resources focus and investment to drive growth in the business.

This includes reinvigorating our cadence of core innovation to meet our customers’ most prevalent unmet needs. In both difficult-to-treat depression and obstructive sleep apnea, we anticipate results in RECOVER and OSPREY studies later this year. Looking ahead, we will evaluate those opportunities alongside a holistic view of all possibilities for innovation. At LivaNova, our commitment to pioneering innovation remains unwavering. And to this end, I’m very pleased to welcome Ahmet Tezel as LivaNova’s Chief Innovation Officer which we announced yesterday. Ahmet has a remarkable track record leading teams and developing a wide range of market-leading technologies. Ahmet will drop on his extensive experience to guide innovation at LivaNova. And finally, the third area of focus is people and culture.

Any great organization starts with great people. And in my first two months at LivaNova, I have met many of our colleagues from Houston to Arvada from Munich to Mirandola. As previously mentioned, I’m most impressed by the environment of the patient’s first value. I was also struck by the deep expertise in the areas which we operate. It is no wonder we are category leaders in heart-lung machines and epilepsy surgery. We will build on this foundation and continue to attract top talent to LivaNova. Focus on execution innovation and talent will lead to success as an organization. We’re confident that by delivering in each of these areas, we will improve patient outcomes and create shareholder value. For the remainder of the call, I will focus on the first quarter results and then turn to our strategic portfolio initiatives.

After my comments, Alex will provide additional details on our results and update 2024 guidance. I will wrap up in closing remarks, before moving to Q&A. So in the first quarter, we achieved 12% revenue growth versus prior year. Excluding the impact of ACS segment wind down, revenue increased 14% versus 2023. This performance included double-digit revenue growth in both cardiopulmonary and Neuromodulation segments. We’re encouraged by our team’s continued strong execution as demonstrated by our performance in the quarter. Now turning to segment results. For the cardiopulmonary segment revenue was $156 million in the quarter. That’s an increase of 16% versus the first quarter of 2023. Heart-lung machine revenue increased more than 20% driven by Essenz.

We are pleased to see continued the Essenz placements and strong price/mix in the quarter. Oxygenator revenue grew in low-teens, driven by customer demand and price. As previously noted, the oxygenator business continues to see strong demand and our efforts to increase capacity remain on track. We now expect cardiopulmonary revenue to grow 8% to 9% for the full year 2024. Our revised forecast incorporates strong HLM growth and continued strong demand for consumables. Epilepsy revenue increased 11% versus the first quarter of 2023. The US epilepsy revenue increased 13% year-over-year with growth in both new and replacement implants. We achieved 826 new patient implants in the quarter representing 4% growth versus the prior year. We realized 1,941 replacement implants representing 5% growth versus the prior year.

Epilepsy revenue in Europe and the rest of the world grew 7% versus prior year. For the full year 2024, we continue to expect global epilepsy revenue to grow 6% to 7%. Our forecast incorporates a continued mid-single-digit growth rate in the U.S. new patients and more normalized low single-digit growth rate in replacements. We now expect international revenue to grow in high single-digits. Difficult to treat depression revenue in the first quarter was $2 million and for the full year, we continue to anticipate approximately $7 million revenue, primarily coming from the RECOVER study. The RECOVER study continues to advance and the Bipolar cohort continues to enroll as expected. As a reminder enrollment for the Unipolar cohort of the study is now complete.

We anticipate the 12-month follow-up data for the 500 Unipolar patients in the second quarter. At that time, we will conduct an analysis and continue to expect publication of the full study results by late 2024. Now, moving to obstructive sleep apnea. The OSPREY clinical study achieved a positive predictive outcome and concluded enrollment in March that this means that there is a very high probability that there will be a statistically significant result in the primary endpoint, which is seven months AHI response rate. In accordance with the study protocol, once the last implanted patient completes the last follow-up visit, we will conduct a final analysis for the study. We are pleased to have achieved this positive milestone for the OSPREY study and we will continue to work actively with clinical science to manage the study patients.

With that let me turn the call over to Alex.

Alex Shvartsburg: Thanks Vlad. During my portion of the call, I’ll share a brief recap of the first quarter results and provide commentary on 2024 guidance. Turning to results, revenue in the quarter was $295 million, an increase of 12% versus 2023. Excluding the impact of the ATS segment wind down, revenue increased 14% versus 2023. Foreign exchange in the quarter had an unfavorable year-over-year impact of approximately $1 million or less than 1% of revenue. Adjusted gross margin as a percent of net revenue was 71% compared to 69% in the first quarter of 2023. The year-over-year increase was driven by favorable product mix and pricing. Adjusted R&D expense in the first quarter was $43 million compared to $46 million in the first quarter of 2023.

R&D as a percent of net revenue was 15% down from 18% in the first quarter of 2023. The year-over-year decrease was largely driven by the closeout of the ANTHEM trial. Excluding the costs related to ANTHEM, our R&D investments increased 15% versus the prior year. Adjusted SG&A expense for the first quarter was $113 million compared to $108 million in the first quarter of 2023. The year-over-year increase was driven by targeted investments supporting Essenz, legal expenses, and variable costs such as freight and commissions associated with increased revenues, offset by the reduction in ACS. SG&A, as a percent of net revenue, was 38% compared to 41% in the first quarter of 2023. Adjusted operating income was $53 million compared to $27 million in the first quarter of last year.

Adjusted operating income margin was 18% compared to 10% in the first quarter of 2023. This increase was driven by improved gross margin and operating expense leverage, primarily related to the wind down of the heart failure program and the ACS segment. Adjusted effective tax rate in the quarter was 21% compared to 6% in the first quarter of 2023. The year-over-year increase is related to developments in the global tax landscape and is in line with our expectations. Adjusted diluted earnings per share was $0.73 compared to $0.43 in the first quarter of 2023. Our cash balance at March 31st was $309 million, up from $267 million at year-end 2023. Total debt at March 31, was $624 million, up from $587 million at year-end 2023. This increase in total debt was driven by the closing of a $345 million private offering of convertible senior notes maturing in 2029 and repurchase of $230 million of convertible senior notes.

Net debt, including restricted cash at March 31, was $120 million. Adjusted free cash flow for the quarter was $11 million, down from $20 million in the prior year period. The year-over-year decrease was driven by higher working capital needs and ACS restructuring costs. Capital spend in the quarter was $6 million compared to $8 million in the prior year. The year-over-year decrease was driven by timing of key investments. Now, turning to our revised 2024 guidance. As Vlad mentioned, based on our performance in the first quarter, we’re increasing our full year 2024 revenue and adjusted diluted earnings per share guidance while maintaining the range on our adjusted free cash flow. We now expect 2024 revenue growth on a constant currency basis between 6% and 7%, and between 8% and 9% when excluding the portion of the ACS business that we are exiting.

In the first quarter, we observed favorable comparisons, which will continue in the second quarter. While we do not provide quarterly guidance, we expect revenue growth to be lower in the second half of 2024 compared to the first half of this year. Foreign currency is now expected to be a 1% headwind based on current exchange rates. We continue to expect a full year adjusted effective tax rate of approximately 21%. We now project adjusted diluted earnings per share in the range of $3.05 to $3.15, and with adjusted diluted weighted average shares outstanding to be approximately 55 million for the full year. Adjusted free cash flow is still expected to be in the range of $95 million to $115 million, an increase of approximately 9% at midpoint versus the prior year.

This range includes a meaningful step-up in capital spending, which we forecast to be approximately $60 million. As a reminder, our cash flow projections include costs associated with the ACS wind down in the range of approximately $15 million to $20 million, the majority of which occurs in 2024. From a phasing perspective, free cash flow generation in the first half of the year is lower than the second half. And as a reminder, LivaNova pays its prior year short-term incentive bonuses in the second quarter. In summary, I’m encouraged by the company’s execution and financial performance in the first quarter. Looking to the rest of the year, we will continue to invest in critical capabilities to support innovation, growth, and infrastructure.

We remain well positioned to drive above-market growth and more than 300 basis points of operating leverage in 2024. With that, I’ll turn the call back over to Vlad.

Vladimir Makatsaria: Thank you, Alex. And so to conclude, our first quarter results were marked by double-digit revenue and operating income growth in both the cardiopulmonary and Neuromodulation segments. Our performance in the quarter positions us well to build on this competitive momentum. Looking ahead, we will focus on execution, innovation and talent. With this framework in mind, we expected we’re excited for the remainder of the year. Again, we will build on the strength of our core cardiopulmonary and epilepsy businesses making investments to drive sustainable above-market growth. We will also gain clarity on the results from the RECOVER and OSPREY studies, which will allow us to strategically target our most compelling opportunities.

Finally, we will continue to explore areas of high clinical unmet need in markets with high-growth potential to create long-term shareholder value. In closing, I would like to thank my colleagues across the organization for the warm welcome to LivaNova. Their hard work and passion underpin our success as an organization. I’m grateful for their continued dedication to serving customers and patients. And together, we will continue to advance our mission of improving outcomes for patients with neurological and cardiac health conditions around the world. So with that, Candace, I think we’re ready for questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Rick Wise of Stifel. Your line is now open. Please go ahead.

Rick Wise : Good morning everybody. Good morning to you Vlad. I look forward to meeting you in person. Maybe to start off, you talked about the fundamental momentum and it’s clearly visible in the outperformance. Maybe you could help us better understand just first at a high level, the sustainability of the strong epilepsy growth that we saw and some of the drivers there both on the new implant side and replacement. How are you thinking about the year unfolding and the drivers of that? And on the Oxy side, where are you with the capacity expansion? And are you seeing competitors come back? So again, addressing the sustainability and your thoughts about it as you look ahead to the full year?

Vladimir Makatsaria : Yes. Well, Rick, thank you for the question. And likewise, I look forward to meeting you in person soon. Look, I think the first order of business, as I said in earlier in my comments is to build a sustainable above-market growth in the core business. And I think it’s both in cardiopulmonary and neuromodulation segment. On the cardiopulmonary side, the sustainability comes from continuous upgrade to the Essenz heart and lung machine, which still around the world, we have major opportunities. And as a market leader, I think that upgrade is our biggest driver for that growth momentum, as we continue to upgrade the customers, but also to upgrade the technology itself. On the disposable side, we have a significant opportunity to increase our market share still.

And obviously, we will help in this quarter with the — end of previous quarters with some of the competitive disruptions. So we have capitalized on that momentum. And the key drivers there will be short-term will be expansion of our capacity, which we are on track. And we are using our current footprint to really improve the way the work is done. So that’s number one. And then number two is going back to innovation — is making sure that our cadence in innovation in the oxygenator and other disposable business is following. So that’s on the cardiopulmonary side. On the neuromod side is similar drivers. Obviously, we’re coming from the position of strength. We’re currently the leader in the technology, in the space of kind of neuromodulator interventional procedures, surgical procedures, and we will build on that strength.

The key driver there for sustainable growth will be innovation. And so our first step is to invest in digitally connected technologies and that will make procedures easier for the physicians and better outcomes for patients. So that is going to be the major driver of our long-term sustainability. And short-term is really about our commercial execution around the world, which with STEP’s leadership over the last year, we have significantly improved. So that’s that. And I’m really encouraged because it’s now I look back, it’s five quarters of double-digit growth. And obviously, my key role here is to make sure our organization has enabled to continue this momentum.

Rick Wise : Yes. That’s great. And maybe just as a follow-up, you’ve highlighted innovation repeatedly. I think, I’m correct in saying you said our R&D growth ex whatever 15%, if I’m saying it correctly. Anyway, you’ve made an important hire with the Chief Innovation Officer. What are you charging him with? What are you asking him to do? What are his priorities? What are your priorities? What can we expect to see? You’ve touched on a little bit. Maybe you can give us a little deeper perspective. Thank you.

Vladimir Makatsaria: Rick thank you for highlighting this. I think it’s a big deal for us. And that comes with just an incredible track record. And you can obviously, you can look at his background in various companies, various technologies and clinical states and he led not just R&D, but a holistic innovation functions with regulatory and medical affairs clinical, preclinical market access. So that’s a little bit on Amit’s background. And I think just outside of pure innovation capability. He is an extraordinary leader and I think just on a great addition to our leadership team. My — and to go back on the why and what needs to get done, it’s been two months for me and I’ve been kind of deeply engaged with teams around the world and learning and assessing and I’m — like I said, I’m extremely impressed with the people and talent and culture of LivaNova.

Obviously, execution is very strong and you see this in the results. Innovation is one area where we need to build on the strength of our core and really accelerate. And my ask for Amit to come in and continue to develop top talent and bring top capabilities in functions that are surrounding innovation, so bring top talent and develop our current talent at LivaNova, that’s number one. Improve our processes on how we look at innovation from end-to-end state inside generation, product development, market access, links to supply chain, so improve the entire process of innovation end-to-end. And then finally help us assess and make decisions on spaces in which we should work. Short term, there will be some major decisions that we will have to make with our OSA and DTD strategy.

And I think it will be important to have his voice on this.

Rick Wise: Thank you, very much.

Operator: The next question comes from the line of Matt Taylor of Jefferies. Your line is now open. Please go ahead.

Matt Taylor: Thank you for taking the question. I guess I actually wanted to ask one about the medium-term outlook for some of your businesses. It’s a little bit challenging to try and forecast cardiopulmonary with some of the dynamics going on with Oxy this year. Can you help us understand I guess first for oxygenators with your increase in capacity combined with all the share you’ve gained and the potential for competitors to come back. How do you expect that business to grow over the next couple of years? And same kind of question I have on the heart and lung machine launch. Obviously, that’s done really well you’re out of the gate. What happens when you start to comp the launch? What kind of growth would we expect through that period? Thank you.

Alex Shvartsburg: Matt, it’s Alex. I’ll take this one first. So, in terms of the midterm outlook for the cardiopulmonary business, we are really excited about the opportunity that we have in the HLM replacement cycle. We said all along this is going to be a multiyear opportunity for LivaNova and we’re capitalizing on the great technology and the insights that we use to develop the product. So, we think that the HLM growth will continue — will continue to accelerate into the balance of the year. So that — and we project that for — as I said for the next couple of years. As far as the oxygenator business, as we’ve said all along, we reached our sort of peak capacity in oxygenators in the second half of last year. We’ve been really working hard to expand the capacity and the team is doing a really good job at that.

We’re actually seeing some acceleration in those programs where we’re really improving our processes at the Miranda a manufacturing facility and continuing to add some automation to enable that. So we expect some capacity expansion primarily in the second half of this year but we’re probably going to see some benefits in the second quarter as well. So feel good about the opportunity that we have there. Now we’re monitoring the competitive situation never sure what the competition will do in terms of coming back into the market but we feel like we have a great opportunity to continue to enhance our market position and continue to capture market share.

Matt Taylor: Thanks for the color.

Operator: The next question comes from the line of Michael Polark of Wolfe Research. Your line is now open. Please go ahead.

Michael Polark: Hi, good morning. Thank you for taking the question. My first question is on the sleep program. Obviously, a positive update here from the clinical trial prediction work. This is a confirmatory study. You know a lot about this asset already. If I just speculate on timing kind of seem set up or LivaNova set up to get an FDA approval call it middle of 2025 maybe one year away from today. And so I’d imagine you would want to think about doing some commercial prep here hiring a field force that sort of thing. So what is the state – what is the view on that prepping for sleep launch in 2025. And maybe as it relates to 2024 numbers do you have anything built in here from an OpEx perspective on early sleep prep?

Matthew Dodds: Hey, Mike, it’s Matt. I’ll go through those for you. So for the program we are going to have around 105 patients implanted, we took the look at 90 but as we were discussing with the FDA on early stoppage all patients in the queue were implanted. So it’s – we’re going to have the primary endpoint data at a seven-month reduction in AHI around year-end. And to your point, we probably file then assuming the data is there in early 2025 and just so you’re aware, we do have to give the FDA 1-year safety data as well. That would probably be in like April. So it’s still a 2025 approval based on where we are today it didn’t change that much. In terms of the commercial prep, I think the seven-month data will be directionally very important but we’re – again we’re not going to get that until year-end.

The 13-month data which will compare to the competitive data we’ve seen from now two companies that’s the really important data. So I would say commercially, we’re going to take this very slow until we see to a, the seven-months data and then b, the 13 months data. So there’s really not much in 2024 in terms of commercial spend.

Michael Polark: Helpful. And then my follow-up on the Essenz launch I’m just curious in the US and Europe where this product is available kind of what is the Essenz that’s five mix? Any color on units and how it has ramped versus the back half of last year? And what Essenz unit expectations might be for this year? Thanks so much.

Alex Shvartsburg: Hey, Mike, it’s Alex. We’re not sharing the actual unit numbers. What I will tell you is typically first quarter is kind of a lower volume quarter anyway for our heart-lung machine placements. And we continue to anticipate that we’ll have a steady increase in placements throughout the year.

Operator: Thank you. The next question comes from the line of Adam Maeder of Piper Sandler. Your line is now open. Please go ahead.

Adam Maeder: Hi, guys. Good morning. Congrats on the nice start to the year. Thank you for taking my questions. I wanted to follow up on Essenz and I believe are fully launched in the US and Europe but was hoping you could talk about potential time lines for rest of world. And then also wanted to better understand how the existing heart-lung machine installed base kind of is broken down by geography as we think about a potential replacement curve. And then I had a follow-up.

Alex Shvartsburg: Yeah. So Adam again as far as the Essenz rest of world rollout this is already starting to occur in select markets. As we saw in Europe and the US, we kind of start out slowly with the limited commercial releases and then ramp as we get insights and feedback from our customers. So throughout the year we’ll see a continued flow of new markets coming online.

Adam Maeder: And Alex any color on the existing heart-lung machine installed base and how that looks between the US, Europe and rest of world?

Matthew Dodds: Sure Adam, it’s Matt. US say roughly, 30%; Europe about, 20%; Rest of World, 50%.

Adam Maeder: Okay. I got it. That’s good color guys. Thank you for that. And then for the follow-up I wanted to ask Vlad for your thoughts on the Recover program. And I guess two-part question. First, what would you define as a successful Recover trial? Maybe to ask the question differently, what do you want to see to push forward and commercialize the program? And then I did want to ask about data disclosure. It sounds like you’ll see the data in June to next month. Will you top line that information to the investment community? Do you have approval to do that from CMS, or is that still up in the air? Thanks again for the questions.

Vladimir Makatsaria: Yeah. So Adam thank you for the question. It’s obviously the outcome of the Recover trial is a very important milestone for us, because I mean not only it will more importantly make some opportunities potentially available for patients, but also will kind of determine direction of our strategy on this one. So it’s an important milestone. All the decisions will be routed and founded on the outcome of the clinical study. And like you said, we anticipate the results before the end of this quarter. And once we have them, we will analyze and we will make it transparent at the high level to the community. So that’s important. And two, based on these clinical results, we will then determine the path work with CMS with the clinical sites and with the investment community on what is the best path forward.

So to your point there will be transparency to data as we have it at the high level. And then the full data will be available by the end of the year with the scientific publication. And then the way — look it’s a complex trial because it hasn’t — we’re answering a number of questions in various clinical needs within difficult-to-treat depression. So we will have to assess together with CMS on after reimbursement depending on what clinical questions were positively answering.

Adam Maeder: Thank you.

Operator: The next question comes from the line of Anthony Petrone of Mizuho Group. Your line is open. Please go ahead.

Anthony Petrone: Thank you and congrats to the team here on strong 1Q, and Vlad congrats on the new role CEO with the company. Maybe to start with guidance and maybe just a little bit of math on the 1Q beat versus the guidance outlook. And so you look at the prior guidance versus revised guidance top line is up by 200 basis points and the midpoint of the range is up $0.10. You had a sizable 600 basis point beat top line and a $0.24 beat in 1Q. So there’s a little bit of spread there. So hoping to just get a little bit of color on the extent of the 1Q beat and what’s implied for guidance. And then one specific to guidance would be on capacity for oxygenators. What is actually assumed in there in the revised guidance of 4% to 6%, does that reflect a tailwind in the second half for that business specifically? And I’ll have one quick follow-up. Thanks.

Alex Shvartsburg: Hey, Anthony, it’s Alex. So the first quarter is typically a low quarter for us in terms of revenue and profitability. So we had favorable comparisons and we just — we do not expect the same level of growth in the second half of 2024. We’re still continuing to invest in critical capabilities to support innovation and growth and infrastructure. And we expect spending to be higher for the remainder of the year. Additionally, we saw favorable pricing and product mix which contributed meaningfully to our gross margin expansion in the quarter. So look at the end of the day, it’s still early in the year. And the way we think about this is we have some significant opportunities as Vlad talked about the innovation portfolio et cetera. And I think it’s — at this point in time, we’re taking sort of a prudent approach to the revised guidance.

Anthony Petrone: No that’s very helpful. And go ahead. sorry. Sorry, Alex.

Alex Shvartsburg: No go ahead.

Anthony Petrone: That’s helpful. Thank you, Alex. Maybe just a quick follow-up here and I’ll get back in. One would be just to recap on the cost savings from ACS and when we think about depression, how do you think about the bipolar cohort here? So in other words, there’s a go no-go sort of option here for unipolar, how does that influence the bipolar cohort decision-making process? Thank you.