Sientra, Inc. (NASDAQ:SIEN) Q2 2023 Earnings Call Transcript

Sientra, Inc. (NASDAQ:SIEN) Q2 2023 Earnings Call Transcript August 10, 2023

Sientra, Inc. beats earnings expectations. Reported EPS is $-0.85, expectations were $-0.88.

Operator: Good afternoon and welcome to the Sientra Second Quarter 2023 Financial Results Conference Call. My name is Keith. At this time, all participants are in listen only mode. After Sientra executive provide their business update, there will be a question-and-answer session. As a reminder, today’s conference call is being recorded. I’d now like to turn the conference over to your host, Oliver Bennett, Sientra’s Chief Legal Compliance and Corporate Development Officer. Mr. Bennett, you may begin.

Oliver Bennett: Welcome and thank you for joining us on today’s call to discuss Sientra’s second quarter 2023 financial results. On our call today we have Ron Menezes, Sientra’s President and Chief Executive Officer; Dr. Denise Dajles, Sientra’s Chief Technical Officer; and Andy Schmidt, Sientra’s Chief Financial Officer. We are pleased to have reported earlier today another quarter of record results for revenue, EBITDA, and free cash flow performance. We achieved our 12th successive quarter of year-over-year revenue growth with revenues of $23.1 million, representing 7.5% growth over the prior period. Significantly, we achieved these results while also obtaining a 63% year-over-year improvement in non-GAAP EBITDA and a 95% improvement in free cash usage of under $700,000 this quarter.

As Ron and Andy will describe, these results give us confidence of meeting our goal of positive free cash flow performance by Q4 of this year. Before I turn the call over to Ron, I must remind everyone that we will include forward-looking statements in our prepared remarks and in response to any questions you may ask. These forward-looking statements are based on management’s current assumptions and expectations of future events and trends. Our actual results may differ materially from those expressed in or implied by the forward-looking statements. The company undertakes no obligation to update or review any estimate, projection, or forward-looking statement. For a more detailed discussion of the company’s risks and uncertainties, I would refer you to our SEC filings including our Form 10-K and Form 10-Q to be filed later this month available on the company’s website.

With that, I’ll ask our President and Chief Executive Officer, Ron to comment on our second quarter results.

Ron Menezes: Thank you, Oliver. Sientra has reached a critical inflection point that supports our strategic direction of becoming a profitable and diversified surgical aesthetics company. As we reported earlier today, we recorded the lowest ever free cash flow usage in the history of the company. With this near breakeven performance, combined with a continued market growth and disciplined financial management, we’re confident that we’ll achieve positive free cash flow in the fourth quarter of 2023. Entering the second half of 2023 with a fully built-out leadership team and a new product suite of high-value products, Sientra is in the best fundamental position in our company’s history. Importantly, for investors, we’re committed to rewarding their patients.

Here at the midpoint of the year, I’m confident that Sientra is a tipping point with market-leading topline revenue at a scale where it can be leveraged to generate highly attractive sustainable operating profit growth. It was just last year when Sientra is reporting an average of $10 million free cash flow usage each quarter. As explained at that time, some of this was tied to necessary investments in Sientra’s infrastructure and operations to support our path to profitability. Today’s results are the product of those investments combined with the disciplined financial management that we have instilled as we have consistently reduced the free cash flow usage over the past several quarters. And in the most recent quarter, we reduced it again, coming to under $700,000, representing a 95% year-over-year improvement.

Our strong financial performance has not come at the expense of growth and we have reported another record quarterly revenue result, representing a 12th consecutive quarter of year-over-year growth. What is exciting about these results is that the growth was fueled by our core business, implants and expanders and does not yet reflect the acceleration of growth we expect to see in the coming quarters from the new products we’re introducing to the market. We’re single-minded in our drive for long-term profitable growth. Our success is driven by three areas that differentiate Sientra in the market: our comprehensive product platform to serve the needs of board-certified plastic surgeons; our transformative products backed by robust clinical data, and a clear strategy for growth and disciplined financial management steering us to profitability.

Let me elaborate. Sientra is a surgical aesthetics company with a platform of high-value products focused on board-certified plastic surgeons. We’re positioning ourselves as a preferred partner for plastic surgeons with a platform of products and services to meet their needs in both augmentation and reconstruction. We know that plastic surgeons value partners who can meet their needs and Sientra has demonstrated its agility and capacity to evolve alongside them. This has shown Sientra’s evolution of the past several years from a single product company to one that has expanded rapidly into reconstruction with the interesting leading expanders, fat grafting and other technologies to assist plastic surgeons in this complex area of care. Our focus on reconstruction shows that we are not driving growth at any cost but we are driving profitable growth, creating a clear line of sight to positive free cash flow performance by next quarter.

I’m extremely proud of our accomplishments this quarter in obtaining FDA clearance of our AlloX2 Pro tissue expander, the first and only FDA-cleared tissue expander that is MRI compatible. We expect that this product will be a game changer in the standard of care for reconstruction patients as Denise will explain a little bit later in the call. This clearance, which is the first new tissue expander cleared by the FDA many years, demonstrates Sientra’s commitment to innovation and bringing transformative products to the market. While other companies may talk about getting products to the FDA Sientra is one of the select companies a proven track record of doing so. Having had three new products cleared or approved by the FDA in the past 15 months.

We have also introduced two new products to the market Viality and SimpliDerm and have additional new product launches planned for 2024. This level of innovation set us apart from the competition will fuel our growth and profitability going forward. One example of that growth will be our fact grafting product Viality. We’ll begin the early commercial launch of this product in the past quarter. While we continue to work through the contracting process of getting this product into hospitals, we’re encouraged but we’re seeing in the early stages of the launch. Hospitals that have placed their first orders for Viality at the beginning of the quarter have already reorder products. We expect to see an acceleration of orders in the coming quarters as more hospitals began ordering and reordering.

In addition to this innovation, we have also expanded to three new international markets in the last 12 months. We’re seeing solid growth in these new markets as they take share already from the existing companies in those countries. Physician interest in our products continue to grow internationally as demonstrated by the recent scientific presentation on Sientra implants held at the ICOPLAST conference in Dubai. The event earned two Guinness world records one for the most attended plastic surge less than ever and another for the most nationalities present at the Plastic Surgery Conference. Looking forward to the balance of 2023, it is important to remember that augmentation and reconstruction of two different segments in plastic surgery with very unique market dynamics.

Documentation segment is cyclical and more sensitive to changes in consumer buying behavior. As a result, we’re seeing softness in our augmentation segment this year. But is this typical cyclical market, we expect to see an upswing in augmentation in the future as the market research continues to indicate that interest in breast augmentation remains strong. The reconstruction market on the other hand is less sensitive to market fluctuations. Reconstruction cases also represent a higher revenue opportunity per procedure given the price points and use of multiple products. As a reminder, the recent launch of Viality SimpliDerm Sientra has more than doubled its total addressable market for more than $600 million to close to $3 billion. Our focus on both the reconstruction and augmentation has been the foundation of our growth.

We continue to add new accounts in just this quarter at close to 240 new accounts. During the past three years, we have doubled our market share in our core business of implants and expanders. Moving forward, we aim to enhance our penetration with existing accounts, as they are more productive and drive most of our growth. As we look forward to the balance of the year, we’re revising our full year revenue guidance to $98 million to $102 million from the previously announced of $104 million to $109 million. The new guidance is an increase of 8% to 13% over 2022 full year revenue. This revision reflects our expectation that we’ll see continued softness in our augmentation segment. While we expect the softness to be offset by our continued double-digit reconstruction growth, we’re also seeing the cadence of adoption of our Viality SimpliDerm products follow the normal hospital contracting process.

Achieving steady adoption in a hospital can take up to six months from getting the product by contract, before we start to see meaningful revenue contributions. Given the number of accounts that are adding both products and contracts, we believe that this will set us up for strong acceleration as we head into 2024 and beyond. As we continue to leverage our infrastructure and generate operating efficiencies, we’re revising our non-GAAP operating expense guidance to $75 million to $78 million, a decrease of 16.5% at the midpoint versus 2022. On a GAAP basis, our guidance is $84 million to $87 million, a decrease of 23% versus last year at the midpoint. This reflects our confidence that Sientra can be cash flow positive by the end of this year.

I’ll now turn the call over to Denise Dajles, our Chief Technology Officer to share more about our product and clinical data.

Denise Dajles : Thank you Ron. Ron has already spoken to you about how our platform is designed to serve the needs of augmentation and reconstruction patients and plastic surgeons. As we continue to expand our portfolio, transformative innovation continues to be top of mind. We continue to add products and solutions to support total body transformation and we are excited about the groundbreaking products in clinical research we have. One example of that innovation is our AlloX2 Pro Tissue Expander, the first and only FDA-cleared MRI-compatible tissue expander. This is a significant advancement in the standard of care for reconstruction patients, because it helps remove the limitation for women undergoing tissue expander -based reconstruction, who cannot presently have MRIs. And MRI may be needed for these patients to test for recurrence of the cancer, that led to the reconstruction in the first week, or to screen for other underlying conditions and injuries because the magnetic infusion force of tissue expander, were considered unsafe for MRI.

Before Allox2 Pro, women were left with a choice of foregoing MRI screening for having an additional surgery, to remove the tissue expander. Once on the market next year, Sientra’s Allox2 Pro will provide a new option that not only does not interfere with MRI, but also has negligible interference with radiotherapy, and allow for faster feeling which we believe will be groundbreaking for women and plastic surgeons. We are committed to transparency and accountability in our product development, which is evident in the clinical research data we shared. We have significant depth in our research, and we believe that we provide more relevant and transparent data in our presentations and publications than anyone in the market. I will remind you, that our breast implants were evaluated over a 10-year clinical trial, with unparalleled safety and clinical results.

Our implants have been clinically shown to have one of the lowest rates of capsular contracture, and the lowest rupture and reoperation rate in the industry. Our ongoing post-approval study nearing its tenth year, continues to provide data that reinforces our safety profile with real-world evidence. As we shared at the Aesthetic Society Annual Meeting in Miami in April of this year, our post-approval study six year data continues to show impressive results. The study which has over 5,000 patients and over 10,000 implants across more than 130 sites, demonstrates our implant efficacy in a wide range of patients and surgical sites, rather than handpicked patients and procedures for the best outcome. This is part of our commitment to accountability, and it is also why Sientra provides an industry-leading warranty thus far surpasses similar products in the market.

Importantly, we are not selective in the data that we present, but provide the data for all complications across all cohorts. We believe that these openness and transparency in the presentation of clinical data, is critical and provide more meaningful information for physicians and patients, than highly curated and selective self-reported post-market surveillance data, or incomplete presentation of clinical data that excludes cohort and amid presentation of relevant complications. Our new products are also supported by deep and transparent research. We continue our ongoing 13-site long-term volume retention clinical study with vials. As we have previously stated, preliminary results from this study shows that Viality yielded over 80%, volume retention at both the three-month and six-month time points, post-breast augmentation and reconstruction.

This preliminary data makes Viality, the first and only system to have clinically demonstrated such high retention results. We expect to provide more data from this study in the early fourth quarter. Again, it is our goal to seamlessly bridge the gap between innovation and safety. We know these procedures are life changing for patients, and they trust our products to help them with self-confidence and self-respect, as they transform and rebuild their bodies, completing their journey and helping them feel feminine and good about them. That is a responsibility we take very dutifully, as we bring products to market that we believe will transform the aesthetics industry. And now I will turn the call over to Andy Schmidt, our Chief Financial Officer to discuss the financials.

Andy Schmidt: Thanks, Denise. As Ron mentioned earlier, our Q2 2023 financial results showcased our continued trend of strong revenue performance, disciplined expense management and exemplary EBITDA and free cash flow results. All of these elements support our path to cash flow positive performance, which we expect to achieve by Q4 of this year. Our key Q2 2023 financial highlights include record Q2 revenue of $23.1 million as compared with $21.5 million for the prior year period, an increase of 7.5%. Non-GAAP operating expense of $17.5 million as compared to $22.3 million for the prior year period at 22% reduction. Non-GAAP EBITDA of a $3.4 million loss as compared to a $9.2 million loss for the prior year period, a 63% improvement.

Free cash flow usage was $693,000 as compared to free cash flow usage of $13.2 million for the prior year period, a $12.5 million or 95% improvement. Our core product revenues continue to build with market share gains across both augmentation and reconstruction with a key focus on new hospital wins. Our current period revenue does not reflect the launch and expected revenue contributions from SimpliDerm and only includes a small contribution from Viality, as we began our early launch programs in Q2. Our free cash flow performance is a spotlight, is our operating expense discipline combined with efficient working capital management combined for a near free cash flow breakeven performance this quarter. This is the fourth consecutive quarter of improved cash flow performance.

During the past four quarters, we saw free cash flow usage decrease from $50.5 million to $14.8 million from a year-over-year perspective, a 71% improvement. This trend is the result of the hard work we had been communicating to the Street over the past year and we expect this trend to continue over the next several quarters. Completing the P&L view, our pro forma gross margin of Q2 2023 was 61%, which compares to 61% for the same period last year. The current year’s performance includes Viality launch costs, which will decrease over the second half of the year. GAAP gross margin of 55% was negatively affected by a non-cash depreciation and amortization charge of $1.5 million. This charge is primarily due to the inclusion of amortization of Viality manufacturing know-how and develop technology and cost of sales.

Prior to product launch this non-cash expense was charged to G&A expense. This cost is fixed in nature, hence will not impact GAAP margins significantly in future periods as Viality sales continue to increase. Total GAAP operating expense for Q2 2023 was $19.7 million compared to $28.7 million in Q2 2022, a $9 million or 31% decrease. Total GAAP loss from continuing operations for Q2 2023 was $9.5 million, as compared to an $18.2 million loss for the prior year period, a 48% year-over-year improvement. Switching to key balance sheet items, cash at June 30, 2023 was $18.6 million, a decrease of only $0.8 million from the previous quarter. Given our improving free cash flow performance and growing revenues, we feel that we have sufficient cash to drive the business to free cash flow-positive performance, exiting fiscal year 2023.

We continue to focus on working capital efficiencies. We see a consistent strong performance in our inventory management with ending inventories at June 30, 2023 of $39.4 million down from year-end December 31, 2022 of $42.7 million. This performance includes building Viality inventories. Accounts receivable also is performing well. At June 30, 2023 our AR balance was $31.8 million, down from $36.9 million at year-end 2022. In all, we’ve seen a strong first half of 2023 and all facets of our financial model and look forward to continuing our trend of improving financial performance. At this time, I’ll turn the call back to Ron.

Ron Menezes: Thank you, Andy. Our progress will not have been possible without a clear strategy for long-term sustainable profitable growth. As I said in my earlier remarks, we have reached an inflection point in our business model. We have remained singly focused, on providing the safest and most innovative solutions for the best aesthetic outcomes. At Sientra, we seek to empower patients during every step in their journey, innovate for their needs and reduce the potential for risk and guide them in making informed decisions about their health. We have invested in the areas with the most potential for future growth and profitability and have helped us transform Sientra, into a company that offers a diverse portfolio of transformative products and services. And with that, I’ll turn the call over to the operator for Q&A. Operator?

Q&A Session

Operator: Yes. Thank you. At this time we will begin the question-and-answer session. [Operator Instructions] And the first question comes from Anthony Vendetti with Maxim Group.

Jeremy Pearlman: Hi. Good evening. Thank you for taking my questions. This is actually Jeremy on for Anthony. So I just first wanted to start with the macro environment. You said that softness you’ve seen softness in the augmentation market. Do you think that’s due to higher interest rates or maybe just customers have a fear of a pending recession. So they’re just hesitant to invest now in some type — in that type of surgery?

Ron Menezes: This is Ron. I don’t know if I would speculate what the reasons were. But one of the great things about where we’re at now as a company the augmentation obviously is important. It was 47% of our business in that — this past quarter. But soon sometime, well late next year in 2025 would be a smaller part, because at the end of the day, as we will become a diversified company and we have started entering new TAMs close to $3 billion TAM from $650 million. That will change. Now, what we’ve seen in the augmentation market even though there is a softness there there’s still a much higher interest by prospective patients. We did a market research in March of this year. And the same market research we did last in 2022, we had about 13% of patients thinking about getting breast aug within seven to 18 months and now it’s 53%.

And so there is a high interest while it’s still getting breast augmentation much higher than last year. But I think between the second quarter and all the different travels, whatever everyone’s thinking, it’s hard to measure, there’s softness in augmentation. But there’s still a very high interest for getting that surgery done in the next seven to 18 months.

Jeremy Pearlman: Understood. So, it seems like it’s a cyclical — more cyclical and then it should rebound a healthy rebound when the market rebounds the macro environment. Okay. And then just actually switching to the Viality and SimpliDerm, I know you said the you’re in middle of — there’s a six-month long hospital contract process. What percentage of the hospitals and what does that represent of the accounts that you currently have are you in the middle of this process?

Ron Menezes: We’re just introducing. We actually just introduced Viality at the beginning of the quarter and SimpliDerm in the process of reaching out to some accounts starting through contracting. We’re very encouraged what’s happened in the beginning. As I stated earlier, we actually have seen the hospitals that came on board in the first — in March, April, they already reordered at the same rate they ordering tissue expanders and implants. Now, we’re going through that process of getting more accounts. It’s happening weekly. For SimpliDerm we’re introducing the product to hospitals and products to GPOs. So, we’re seeing some good very good feedback on that discussion as well. We’re very excited about some of the networks that are experiencing and trying Viality and we’ve seen as well an example is a well-known hospital that has a very high interest in SimpliDerm.

So, we’re in that introduction part for very early stages for SimpliDerm and the same thing for Viality excited about what’s happening in Viality of the hospitals that came onboard.

Jeremy Pearlman: Okay, great. It sounds really great. I think there’s going to — it’s going to really be a nice contributor to revenue. And then just the last question from us. You — sorry excuse me, yes, the — what — sorry yes, I don’t know if you could — sorry, I just lost the question here. So, yes, I’ll hop back in the queue. If I pull up the question again, I’ll jump back in. Sorry.

Ron Menezes: Okay. Thank you.

Operator: Thank you. And the next question comes from Jon Block with Stifel.

Jordan Bernstein: Hey, it’s Jordan Bernstein on for Jon. I guess my first question is on new account growth. You reported $240 million in the quarter. Where would you expect further new account growth to come from? Is that Viality and some of the newer products opening new doors for the business? And then if you could just break that down to $240 million between aug and reconstruction for us? Thanks.

Ron Menezes: Yes. Still about 75% to almost 80% of our revenue comes from existing accounts. Those accounts really drive our business. Obviously, the new accounts of future revenue coming in. And right now over the $240 million, $125 million augmentation and $115 million came from reconstruction. So, still much higher for augmentation, which we find to be exciting for the future as we’re discussing before. The market is cyclical. The great thing is we’ll continue to gain share. I don’t have the data for second quarter, but data that we already shared in the first quarter continue to grow share in both augmentation and reconstruction.

Jordan Bernstein: Great. Thank you. And then I guess my follow-up would just be on the demand environment in general. I am hearing from some of your aesthetic peers a bit more hesitancy on the purchasing side. That said now that we are into August, would you say there’s some seasonal summer demand that you’re experiencing in the augmentation side? And how would you anticipate the second half of the year progressing cadence-wise 3Q versus 4Q with the fourth quarter being the strongest of the year, if I have that correct? Thanks.

Ron Menezes: Remember keep in mind it was really becoming a surgical aesthetic company focused on the hospital environment as well. There is no cyclical impact there. We continue to grow extremely well on the reconstruction side. And as we roll new products in the hospital environment, we’ll be entering new markets that we have not been discussing right now. So we’re really excited about the future of the company. The timing of the launch of our two products that I just said that we’re introducing and it was acceleration of new accounts and hospitals adopting both Viality and SimpliDerm and then at the beginning of next year we have AlloX2 Pro that will be introduced to the market. We did a complete game changer and we already have requests by hospitals to want the product and we try to tell them we’re setting up manufacturing everything in the next five months.

So that’s going to be our big focus as well. Now on the augmentation side you’ll see more of cyclical usually in the summer is a little softer in augmentation and then it picks up again in late fall and definitely in fourth quarter in augmentation. The good thing is the interest by the patient is still very, very high and has not changed independent of what’s happening in a macroeconomic area.

Jordan Bernstein: Great. And then last question for me. Just on Viality the fat-grafting system. It seems like the contracting processes are ongoing with the hospitals. But would you still think that the revenue stream would account for 5% to 10% of revenues exiting 2023, or how would you characterize that moving forward? That’s the last thing.

Ron Menezes: Yes. I think, yes, we still think it’ll be in that range exit Q4 this year. Yes.

Jordan Bernstein: Great. Thanks for the color.

Operator: Thank you. And next question comes from Alex Nowak with the Craig-Hallum Group.

Alex Nowak: Hey, great. Good afternoon, everyone. Ron or Andy do you expect to remain cash flow positive after Q4 so in Q1 2024, or do you think through referent for the cash flow positivity might jump around a little bit as you’re rolling out the new products?

Andy Schmidt: Sure. This is Andy. Yes, we’re modeling it it’s going to be variable depending on the launches. However, it’s not unusual for us to see a seasonal Q1 where cash flow usage is higher than the other quarters. That has a lot to do with paying our key vendors have to do with manufacturing, coming off of a very, very strong Q4. Again our seasonally best quarter has to do with this basic corporate structure of paying commissions, paying year bonuses and so on. So that’s the one piece of it. Again, we’re not concerned at all about our cash balance going into the Q1 and that’s the only quarter where we see seasonality on cash. The other quarters are pretty predictable.

Alex Nowak: That’s helpful. And when you think about how the bundling strategy is working so far this early in the biology launch, is it basically a hospital or a physician is placing and using Viality fat grafting one-to-one with the Sientra implant or maybe is it being used in one to two like how to think about how often the Viality is being used with another Sientra product?

Ron Menezes : Yes. It’s too early on that and we do have a strategy that we’re not going to get into details for obvious reasons. But we do have a strategy we have a plan and we have discussions with hospitals about betting all products, there is obviously an advantage for the hospital. As I stated before, most hospitals prefer to deal with one vendor. And now we have the ability to walk into the hospital and offer almost everything that surgeon needs in the reconstruction from honestly implants tissue expanders, an ADM and also a fact grafting. But we are seeing some wins already in some of those hospitals based on this multiple product strategy.

Andy Schmidt : And let me kind of add to the modeling side of that. As Ron said, you’ve got the complete suite now the ADM the expander implant and the fact rating. When you look at that and if you look at how procedures are done, a single procedure utilizing a full suite can be as high as $19,000 of revenue for Sientra for one patient. That compares to an augmentation patient that basically might be $50 or $60, again getting back at that suite, that hospital suite. The gross margin dollars are 20 times greater for one patient then basically one augmentation patients. So it’s a tremendous multiplier on this model.

Alex Nowak : Certainly, makes sense. And then Obviously the FDA came in and gave you the approval on AlloX2 Pro. There’s obviously the talk about them stepping and putting that as a PMA potentially product line. So I guess what is — what’s the background? What did FDA step away from doing the PMA round?

Denise Dajles : Hi, Alex. This is Denise. Actually, we’re very excited with the recent clearance for AlloX2 Pro, because it’s a lot of confidence to the strength in our products the strong data that we have around it and that we’ve got a really, really good regulatory strategies to work with them and have with turnaround. Right now we’re getting ready on focus on launching. We know that. Overall, there’s recent data that shows that NPA is taking over 160 days for 510(k) or clearance and over 2.5 years for PMA approval. So we are very excited that now we have the opportunity with this clearance to move on launch the product and introduce, because there’s a huge need in the market and a lot of excitement around it. The other interesting thing is if they ever decided to go PMA route, which at the moment there are no active conversations all products that are already available on the market we’ll have an expedited path for PMA approval.

That’s what they have publicly said before.

Alex Nowak: Got it. Okay. Very helpful. And then just lastly just the status in competition in the market those who are already in the market those who want to come to the market for implants just what’s the latest take on the market out there.

Ron Menezes : I’ll start and move over to — actually I’ll let Oli address as well. In the current market environment in U.S. you have two competitors that still own the majority of the market. So we’re very, very excited about the future as well in both aug and recon. We have growth opportunities in reconstruction and I announced in the first quarter that we are about 23% share in recon. So we’ve got a long ways to go to be a leading company there. And then we’re in the mid-teens on the other side augmentation. They are great competitors. They are still very much focusing on their key products. And then from a new entry right now I don’t expect anyone anytime soon but I’ll let Oli make any comments on that.

Oliver Bennett: Yes. Just to follow, Ron, can obviously be [ph] the existing competitors we’re seeing aggressive responses in the market. So it’s credit to our products and our sales force that we continue to gain market share. And then, as for the FDA, we’re obviously not privy those conversations but as Denise alluded to this recent data from BTIG that showed it on average two and a half year actually almost close to three years for the NDA approval PMA. So that suggests that any new entrant has a significant path to getting approval in the marketplace.

Alex Nowak: All right. Appreciate the update. Thank you.

Operator: Thank you. As I show no further questions at this time and we have no closing remarks. That concludes our session. Thank you for participating in today’s meeting.

Ron Menezes: Thank you.