Elutia Inc (ELUT) 2024 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Elutia of first quarter 2024. (Operator Instructions) Please be advised that today's call is being recorded. I would now like to hand the conference call over to Matt Steinberg, Finn Partner. Please go ahead.

Thank you, operator, and thank you all for participating in today's call. Earlier today, Elutia released financial results for the quarter ended March 31, 2024. A copy of the press release is available on the company's website before we begin, I would like to remind you that management will make statements during this call include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

And these statements contained in this call that do not relate to matters of historical facts or relate to expectations or predictions of future events, results or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance are based upon our current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. And accordingly, you should not place undue reliance on these statements.

For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the SEC, including Elutia's annual report on Form 10-K for the year ended December 31, 2023. That's accessible on the SEC's website at www.sec.gov. such factors may be updated from time to time in Elutia's other filings with the SEC.

The conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 9, 2024. Elutia disclaims any intention or obligation except as required by applicable law to update or revise any financial projections or forward-looking statements was it because of new information, future events or otherwise.

Also during this presentation, we refer to gross margin, excluding intangible asset amortization, which is a non-GAAP financial measure, a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure is available in the company's financial results release for the first quarter ended March 31, 2024, which is accessible on the SEC's website and posted on the Investor page of the Illumina website at www.solutia.com.

And with that, I will turn over the call to Elutia's CEO, Randy Mills.

All right. Thank you, Matt and it's hard to imagine that any part of the presentation could get better than our forward-looking statements slide. But I'm going to give it a shot here on. We have some new people on our call with us today. So we're going to go over a little bit of background and history of the company, but we've got a whole lot of exciting stuff to talk about.

I hope you got a chance to see the earnings release that was just put out, but we'll be going through that. Matt will be taking us through some of the financial components and then at the end, obviously, we'll be happy to take your questions.

So Elutia, our mission in humanizing medicine so that patients can thrive without compromise. We are a commercial stage company now with a $27 million revenue run rate and growing on the backs of two proprietary product platforms, our CanGaroo product platform, which is used to protect implantable pacemakers and electronic devices, and our simpler derm product line, which is used in breast reconstruction.

But very excitingly, we are pioneering the drug eluting BioMatrix, and we use that to solve very serious problems with implantable devices that currently are not addressed by the state-of-the-art technology. Importantly, we expect FDA clearance of our first drug eluting biologic CanGarooRM. June in June coming up right now, and I'll go over this, but that gives us the ability to jump into a $600 million device protection market within pacemakers that really is ripe for disruption. So let's let's jump into it.

Okay. So from a business highlight for the first quarter, we had another exceptional first quarter, but this win was really quite a standout. $6.7 million in revenue for the quarter puts us at a run rate of about $27 million. SimpleDerm from a revenue standpoint was the real star with sales surging 55% in the quarter and then obviously all eyes are on our CanGarooRM product line, and we expect clearance for that now in June of this quarter, coming up.

A little bit of background, so what we do at this company is we are pioneering the drug eluding biologic, and we do that by taking natural biological matrices and adding a pharmaceutical payload to that. By combining those two things we are able to create products that have a regenerative component as well as a pharmaceutical component.

So it's really the idea is the best of both worlds being able to have an implant that incorporates and regenerates in your own healthy tissue, but also deliver active pharmaceutical agents that are able to impact things such as postoperative infections and we're really excited about with that technology brings us.

So with that said, let's jump into our first application of this, which is on our CanGaroo product line and Kangaroo RMs the next one coming up. So this is, CanGaroo is a product in the CanGaroo line is a product that's used in the CIED or the basically pacemaker and internal distributor later space each year, there are about 500,000 pacemakers that are placed.

There's really only four significant players in the pacemaker field. Medtronic has 40% market share in that space with the other 60% divided between Boston Scientific and Abbott at about 25% each and then Biotronic a bit of a distant fourth, it at 10%.

And so this is the market place in which we are able to not compete with. But instead actually facilitate and make these implantable pacemakers performed better in the patients that they're intended to help why we need CanGaroo or cangrelor. I'm well, this is this is what it can look like for somebody receiving a pacemaker. And so some of the co-morbidities and problems that that these patients and their physician space, things like thin skin on.

You can see in the picture on the left there, you have no problem identifying the pacemaker and the lead wire, even coming off of that. If you look closely, you might be able to see the serial number on the pacemaker. But this idea of a patient with thinner skin and having this pacemaker place directly underneath that skin really sets off a cascade of events. And so one of them is migration to the next big picture.

Over to the right, you could see an arrow where the actual incision less than the pacemaker was placed. And you can see that this pacemaker is rotating laterally towards towards the ARM pit and that starts in motion a series of events that can lead to problems. One is you can have tension and pulling on the leads and those leads can dislodge.

But another thing that you can see happen here is the pacemaker can move and have micro motion against the skin and that can lead to pacemaker erosion, which is the next picture over and so you're not sure how big of a problem pacemaker erosion can be will the third picture over you can see pacemakers literally dangling from this patient outside of his body. That's obviously not a sustainable picture that somebody is going to have to go back into the operating room and have that and have that fixed.

In the meantime, it's pulling on those leads, which are supposed to be placed firmly in the right ventricle and that can lead to obviously failure to pace. And then lastly, is this idea of infection? So anytime you're putting you're putting a long-term implantable device into a patient, particularly those that have co-morbidities such as things like smoking or obesity or are type two diabetes, you're at a significant risk for postoperative infection.

And that can be a really catastrophic event in patients who need peso-dollar pacemakers. So the problem that we're trying to address, it's the most common type of failure that you see with pacemakers. Pacemakers themselves generally don't fail very often. They don't spontaneously break most failures with pacemakers occur at the device host interface, just like I've shown here and that's actually what we're trying to address with CanGaroo and CanGarooRM.

The first real entrant into this into this space that we're now playing in is a product called Direct. It was introduced originally by a company called TRX on that shortly after their product was approved and the product was acquired by Medtronic and Direct is a fully synthetic polymer that you place the pacemaker inside of it dissolves and as it dissolves it alludes off a different rev and mid-cycle, neither thing here that the direction and ultimately Medtronic got right.

Was this idea of having antibiotic protection around a pacemaker implantation procedure was something that resonated with the electrophysiologists that are putting these in in this direct was acquired by Medtronic back in 2014 for about $200 million. They have really taken this market and they have created a market where there was none. We estimate they do about $250 million or $300 million a year in this space with this product.

That's a market we think we can do better and it's a market that we think we can disrupt by having powerful antibiotics like benefit administration. But instead of the synthetic pouch moving over to one, that's a more natural regenerative biologic matrix. So you're getting all the benefits of having antibiotic solution, but in one that's able to address some of the complications of thin skin and migration and fibrosis and inflammation and all of these other things.

In fact, we did a market survey when we go out and talk to electrophysiologists that were using tire access part of their cases, 88% of them, an overwhelming majority said they would move a summer all of their business and to a biologic envelope by CanGaroo. when it came out and so we view this not as a competitive product in this $600 million market with only one player, but we actually view it as a superior product and we're super excited about getting it approved and launching.

So with that said, let's give you an update on where we are in our in our path towards FDA clearance. So we submitted our combination product of a filing in December of this year. It's gone through a pretty significant review with FDA. All of our interactions to date have been very positive.

We are now working through, I would say, the very final details, and we expect to close out all of those details within the month, and that would then put us on track for FDA decision in June and where we stand right now, we fully expect that to be favorable decision after that, we've got to take this product to market.

And so just a little bit of an overview on our commercialization strategy following approval, we see two groups of customers as our first really our first and second tier, that first tier or those customers and those centers that are currently using CanGaroo our base product, we have 356 centers right now that currently have CanGaroo on formulary and we think whipping those centers into CanGarooRM and going after existing sales, there would provide us about $25 million of revenue opportunity that we see as fairly low hanging fruit.

Right behind that, though, are those US those electrophysiologists that are currently it using Abbott and Boston pacemakers but they're putting a tire exit Medtronic product around that. There's about $75 million of direct business. We estimate there. So you put those two together and we think fairly low hanging fruit is about $100 million of revenue opportunity for us to go after first.

And that's really our first tier approach. Beyond that, we do think we have a superior product. And so we are going to go after those Medtronic direct customers and also those currently right now that are on the sidelines that aren't using an envelope in their procedures.

We think there's significant benefit for them to switch over and use CanGarooRM. As such, we are we have started scaling our production at our manufacturing site in Atlanta, Georgia in preparation of launch in the second half of the year. So that's where we are with our CanGaroo and a kilogram product line.

Next, it would be almost impossible for us to go through this call, as John mentioned, the standout performance of our simpler derm product. So a little bit of background, the role of the BioMatrix in breast reconstruction, there are about 13% of women. Unfortunately, that will develop some form of invasive breast cancer in their lifetime.

In the United States, that leads to about 151,000 mastectomies each year, somewhere between a 50% to 60% of those will actually be bilateral mastectomies. You put all that together, the breast reconstruction market in the United States alone is about a $1.6 million addressable our market, not as a market that really hasn't seen a whole lot of improvement for innovation.

And that's really what we're looking to do again, just like just like we're executing in the pacemaker protection space where we've had some good technology, but it's frankly, it's gotten a little stale and we think we can go in there and disrupt it. We see the same opportunity here in the breast reconstruction space to come along with second generation and next-generation products and really provide the patients with superior outcomes.

Can you say a little bit what we need here with Cymbalta are asking some questions about why like why it is that simple derm is performing so well in the marketplace sort of take you through a bit of a story here, but it starts out first with the first thing, the surgeon sees, they're look, they're looking for a conforming and flexible product, you see similar adds rate over a curved con towards surface and how well it's able to comply with that surface.

Imagine that going around the complex surfaces, a breast implant for an expander implant. It's the right look fit and feel it's pretty hydrated. So that means the surgeon is able to open it up directly onto the operating field. It's already it comes terminally sterilized to that sterility assurance level of 10 to the minus 6. And so right away, that service surgeon is able to open up this product directly onto the surgical field and use it like any other surgical, if any, other surgical tool used in the procedure.

So this one is a fully compatible biologic product and so as we were making this product. We were developing this product. One of the most important things we were doing was we were we were trying to develop a proprietary process processing methodology that would minimize the inflammatory response and therefore minimize the potential foreign body and fibrotic response that could sometimes happen.

We think we did a pretty good job with this. I will show you some pretty impressive data. This is data that was post it on from a nonhuman primate model. So these are primates having a simple derm implanted into them and we use actually it's truly are the market leaders is AlloDerm.

So the first thing you're looking at the graph at the left is that you are you're looking at TNF alpha response in the nonhuman primate model at two weeks, four weeks in six weeks, and you can see statistically significant reduction in TNF alpha.

So what is TNF-alpha? So I came at a time marker of inflammation that's seen in all different kinds of inflammatory responses. So you look at it and say, okay, so that's kind of interesting. What does that mean when you look at the histology from this on the right, you could see where the hours are. The arrows are stained for CD 68.

CD 68 is a marker that we use to depict different types of inflammatory cells. This one happens to be looking at macrophages that would be attacking foreign body substances. And so you put these two things together. And what this is showing is that there is significantly less foreign body response and inflammation in the animals that are receiving simpler derm versus those that are receiving ALLODERM and that comes from that proprietary processing methodology that we developed.

So you might look at all of that and say, Okay, Randy, I got it. Why do I care when you go to the next slide, it sort of pays this all up because at the patient level, this is where this matters. This is a publication done looking at what's called Red breast syndrome with a cellular dermal matrix. And so sometimes when you're doing these changes and it can be up to 10% of the time when you're doing a breast reconstruction procedure.

The patient can have a significant postoperative inflammatory response and have so much inflammation. It becomes very painful and an unacceptable, frankly, of the patient that could go back in and they have to change out. So this was the case study that was done where another is a cellular dermal matrix was used in the reconstruction procedure.

It led to this red dress syndrome within tolerable for the patient because you need to go back into the operating room, they changed it out for simple derm. And the red best syndrome was able to go away. This is a direct result of that of that less immunogenic product that causes less inflammatory response, less a reduced cellular inflammatory response and ultimately a better outcome for the patient.

So that's what's sort of the science behind why everyone is so excited about simply derm in these breast reconstruction procedures and then you could see a payoff commercially for us. So absolutely stellar quarter again for a simple derm, growing 55% in the quarter.

We distribute similar in two ways. One is through our highly trained proprietary internal distributors we also last year signed a non-exclusive partnership with Siempre on. They went through some disruption in the first quarter and I would say this 55% growth is despite of that disruption with center centric, they were recently acquired by Tiger.

That could be beneficial sort of I would say it still remains to be seen. And but we have our own network of distributors that are just crushing. And so we are super excited about what's going on with both our CanGaroo product and our simpler derm product in the breast reconstruction space.

That's really starting to show and in everything about how this company is evolving into a real serious commercial company so that I will stop for a minute or two and allow our CFO, Matt Ferguson. So walk us through some of the financials.

Okay. Thanks, Randy. I'm just going to hit a few of the highlights from our financial performance for the quarter. As Randy mentioned, net sales of $6.7 million for the quarter. That compares to $6.4 million from the first quarter of 2023. So that was led, as Randy mentioned, by simply derm with 55% growth. But we're also really pleased with our performance with CanGaroo or other main proprietary product line where we were able to maintain roughly consistent revenue with last year, but with a much smaller commercial organization.

So it's really showing the leverage we're getting in our in our operating model and we are extremely pleased with that and really excited about what that that area of the company can do once we get CanGarooRM clearance.

Moving down the P&L, our gross margin on an adjusted basis. So this is the non-GAAP version, which excludes non-cash amortization of non-cash amortization expense was 55% in Q1 versus 66% a year ago and again, we are very pleased with this both our product proprietary product lines in the range that we have been expecting and looking for the real driver of the decline was our cardiovascular business, which has been partnered exclusively in the US with LeMaitre Vascular.

We're very pleased with how that's going, but the result of that from a financial point of view is selling the product there at a transfer price versus the end user price. So it kind of distorts the overall gross margin. That was the main driver there.

Overall, we're very pleased with how we're performing operationally and we do expect as we continue to scale up, we'll see good positive gains in our gross margin. Both of our proprietary product lines ultimately should get into the 70% range or so.

From an operating expense perspective, we were at $11.3 million for the quarter, down slightly from $11.7 million a year ago. However, again, there are some non-cash expenses going on a little bit behind the scenes that masked what is really a very positive progress there in terms of how we're operating and namely about $2 million of that expense was non-cash stock-based compensation expense. So when you exclude that, we're really looking at a pretty significant decline year over year.

Jumping down all the way to adjusted EBITDA, which is a non GAAP, but probably more instructive metric than then net loss or operating loss. We saw an improvement there as well to $3.6 million for the quarter versus $4.8 million last quarter. And that's where you're really starting to see some of the gain associated with lower cash operating expense, particularly in the sales and marketing line, and then the reduced expense in our R&D area as we're getting to the end of the development process for CanGaroo are and as we've discussed.

So those are the main points from our P&L or our statement of operations to finally, from a cash point of view, we ended the quarter at $12.6 million and $12.6 million in cash. And that does not include about $15 million in warrants, which are now nearly 100% in the money and those warrants expire 30 trading days after the clearance of CanGaroo RM.

So we're looking forward to that cash coming in the not-too-distant future and that end of the quarter number also does not include about $4 million in reduction in our debt and revenue into interest obligations. So we are on improving our balance sheet and our operating performance and feel really good about where we are from an overall financial perspective. With that, I will and back to Randy, before we take questions.

I do want to mention we are going to be at the Heart Rhythm Society May 16 to 19 next week, both one four, four three. It would be awesome if you are interested in seeing what working I mean some of the team I know I'll be there, and Matt will be there and our CSO Dr. Michelle Williams as well as part of our sales team. So we'd love to see if you start by on that will be, as I said, next week at the Heart Rhythm Society meeting in Boston.

So just to finish up and get any questions. I think this is a recap of what I hope. You know, a fully integrated company from R&D all the way through commercial with $27 million and counting revenue run rate. We are pioneering the field of drug eluding BioMatrix.

We have two products that we are building on our CanGaroo or product line, and our simple derm product line but we think there's a tremendous future in this entire field of drug eluting biologics. We think we are we're the only ones in it right now, and we think that's the position for us to own going forward.

As I said, we are now expect a not just an approval decision in June, but we expect approval of CanGaroo RM. in June that will put us squarely in a $600 million market with really favorable dynamics and only one competitor. And we think a unashamedly, we think with a superior product and we are really excited about putting that on the market and giving the physicians and the patients that opportunity right behind that.

We have simpler derm at a $14.3 million run rate growing at 55% and an exceptional team that I would be remiss if I did not profusely, thanks today for another exceptional quarter. They are the most talented group I have ever worked with and have the resources and abilities to execute this plan ahead.

So with that, I will end my comments and turn it back to the operator and take any questions you might have.

(Operator Instructions) Frank Takkinen, Lake Street Capital.

Yes, great. Thanks taking the question. Congrats on the progress was hoping to start with one on Kangaroo RM. and I figure you can guess and any update on some of the conversations with the FDA and looking for you to discuss what you're talking about specifically with the FDA in the public domain, but just positive negative in line different from your expectations and then I'll close it up with how we expect the clearance to come in June and the confidence behind that?

Yes, Frank. So thanks for that. I won't get into this specific. We'll get into the specific details. Obviously, some of that actually deals with some proprietary things that we're going through, but you're asking for where are we in the process, as I said in the call, and I think we put in the release to we expect to close out and any last details of that we need to get in with the FDA this month in the next really week or two.

And with regards to positive, I would say, yes, very positive with regards to in line with expectations? Yes, again, in line with expectations because we expected it to be positive. We've done we've really taken what we would say is a belt and suspenders kind of approach to this. We didn't want to leave a lot to question. It's an enormous file, a combination drug.

Our device is really, really sophisticated, saying it involves review at two centers and so I know there's some how come how come the review might be taking on. It's a it's a really serious review. It's going on at the Center for drugs in the Center for Biologics, but it's proceeding very positively. And I'm kind of proud to say as expected, it's perceived as well.

So those two things are going together from a timing standpoint. From a timing standpoint, we are still anticipating on a to be fully submitted with FDA in the next, as I said, a week or two and that would that would put us on track for our June clearance decision.

We think that clearance decision is going to be positive and I said Center for Biologics, I didn't mean that center for drugs in the Center for Devices or CDRH. I've spent a lot of time with the Center for Biologics as well. So they're always not too far out of my mind.

Perfect. Thank you for that. Maybe switching over to the commercial preparation you're doing for CanGaroo RM or what are some of the things you're doing to prepare for that? And I heard your comments around 656 centers and the Tier 1 $100 million opportunity you're going after. But what are you thinking about today to set yourself up for success in the second half of this year?

Right. So there's a couple of things that we need to do. One is we've after we clear it, we need to be able to make it and so you're hearing us talk about operationally gearing up and preparing from a production standpoint for the launch of the product just after we make it doesn't mean we can go ahead and sell it before that we actually need to introduce it to the different the different hospitals and centers and get on formulary there.

That and evolve going through what is a center to center of that process, you know, the value added committees and to get the get the product on formulary. We cannot submit those to the Vax until we get the clearance decision. But what we can do is prepare the back packages. And so that's a big part of what's going behind going on right now behind the scenes, the clinical data, the preclinical data, the all of the different value proposition data that the back needs in order to make favorable decisions.

Ultimately, we think the initial our sales trajectory of the product won't be constrained by supply and it won't be constrained by demand.

We actually think the rate limiting step for adoption is going to be with these different backs in the hospital getting on formulary and that's why the idea of starting with these 356 mix makes so much sense. We're already on formulary with the base CanGaroo product at these 356 centers on cangrelor and for sure is a different product and so I don't want to create a misleading expectation there, but it's 356 centers that have familiarity with the base biologic CanGaroo product.

And should we think there's already a tremendous amount of excitement and enthusiasm at these centers for the drug-alluding, the drug-alluding version of the product. And then lastly, it's a new day for our sales team. Right?

So they've got to learn and be prepared to articulate the benefits of not just a fully biologic envelope, but one that also alludes right dampening the cycle and all the intricacies that go on and with a with a drug-alluding product. So behind the scenes, that's what we have going on right now.

Production being prepared to introduce it and get it on formulary through the vaccine, getting the back packages up and ready to go and then lastly, making sure our sales force is fully geared up and trained and ready to talk about the product effectively.

Got it. That's helpful. And maybe just one last one on Simplura. Derm obviously continues to grow very robustly. Maybe talk through some of the investments you're contemplating making in that organization. Maybe it's nothing given how well it's executing. But is there thoughts around additional sales reps there, different commercial support personnel or anything of that nature to keep up that growth rate may be accelerated?

Yes, we continue to make investments in growing the commercial side of that infrastructure. We have been exceptionally pleased and proud of how well our proprietary distributors. There are doing our own network of distributors. They are knocking the cover off the ball and we are investing in expanding there that is turning out to be an investment that is there's no paying tremendous dividends.

There's also some back office work we're doing. We're also investing in improving our coverage with that, we recently got another favorable coverage decision and continue to work through. We have another, I don't know, $79 million lives right now that we are currently submitted for coverage decisions.

And so there's a fair amount going on to the commercial side, as Matt talked about, though, too, we're also we're also making investments and on all sides of our business improving as we scale up the gross margins of our product. That's we think both of these products can and will be in the 70 plus percent gross margin rate.

I'll stop there extra questions.

Thanks, Frank.

Ross Osborne, Cantor Fitzgerald.

Hi, guys. This is Matt on for Ross. Congrats on all the progress and thanks for taking the question. Just want to start off with CanGaroo RM. And following up on a previous question, are you able to provide some more insight into what the back process will look like upon RM approval and how long you anticipate the sales process to be with getting into those hospitals?

Yes. So again, here, it's the vac process. It's going to is going to be a very variable event, depending on whether or not it's one of our 356 centers or whether or as we go into these as we go into these new centers from a cycle standpoint, where we have existing CanGaroo on formulary and where we have surgeon champions there, we can be looking at bad times as low as a month.

We are modeling conservatively though, when you look at sort of the average of all of them, we're modeling a six month of that process across all of them. That might be a little conservative, but we've got a lot of centers to go after and some in others, there's plenty of fertile ground to go after. That's what we have going on there.

Okay, sounds great. And then maybe turning to simply derm, I just wanted to get some more color on any initial conversations you've had with Tiger following the Centra acquisition from how you view simple derm growth for the remainder of '24?

So we don't give guidance, I know Ross based and but with regards to Tiger, so a tiger could be some upside for the simpler derm product line. We had been very early in the relationship with C Entra.

Obviously, when they ran into their issues. We are fortunately the vast majority of our product sales is through our own distributor network, which which is which has been crushing. And I happen to when when your old like me and you've been around for a while. I happened to get have gotten to know and work with a whole lot of people, and one of them is the CYO at Tiger and we have a great working relationship.

And so we are in the early discussions there. But Tiger, you know, really could be beneficial certainly to you know, to the team at Sientra by bringing in a fresh balance sheet and the ability to invest more in their sales team.

And if ultimately, that's something that is it makes good sense for both Tiger and dilution. I would be happy to do that from a personal standpoint. And these are some quality people that I've known for a long time and certainly would have a lot of with that, I have a lot of trust in working with them.

Got it. Helpful. And then maybe one more for me. Turning to OpEx. Assuming Kangaroo arm gets approved how should we think about the size of yourself sales force ahead of launch? And if you guys can shutter any incremental spend throughout the balance of the year? And if you guys see any tailwinds there you'd like to shut out?

Yes. So we're certainly evaluating the investments that we make in the commercial organization and operations. And I think fortunately, we have a a really well established and highly effective organization in place already. So we can very much hit the ground running with the people and the processes and the systems that we already have in place and have been using for quite some time now.

We do think that as we as we ramp up and we get manufacturing going and get through some of these that processes like you were talking about before, it probably will make sense to add to the commercial organization on that both could be through additional direct reps. It could also be through some independent distributors in the case of failure RM.

So we think we will have more feet on the street in the medium term or so, probably won't rush to do that right away. But probably by the end of this year, we will be adding to that organization. And that would be my expectation.

Yes, we're just it's not a it's not a lack of willingness to make the investment in the rep. Just to be super clear about it as we get more clarity on the back process and we will start to aggressively add more reps.

What we don't want to do is obviously add reps and disrupt their lives and take on the expense of reps before they have something to do in the hospital for the products on formulary. So once we get a handle on how long the vaccine are taking at the different locations, we will be increasing that sales team right now.

Sounds great. Thanks for the update, and thanks again for taking our questions and congrats again on the progress.

Thank you.

We have reached the end of our question and answer session. And with that, this concludes today's teleconference. You may disconnect your lines at this time. Thank you.