Jacob Johnson: Got it, that’s really helpful context. I’ll leave it there. Thanks, Stephen.
Stephen Gunstream: Thanks, Jacob.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Steven Mah, with TD Cohen. Your line is open.
Steven Mah: Great, thanks for taking the questions. A question for you, Matt. On the gross margins, which were impacted by the absorption of the fixed cost of the new GMP facility, how should we think about when a gross margin low point will be hit or maybe this is the low point? And when do you think the gross margins are going to start inflecting and starting to grow?
Stephen Gunstream: Yes, thanks, Steve. Yes, the gross margins have been impacted here recently as we’ve added additional depreciation in particular from the bringing on the remainder of the facility in Q3 for GMP production. I would say that it’s hard to say if we’re actually at a low point. I mean, there’s certainly possible it could be lower, but when we start seeing the revenue growth, we have a very high fixed cost ratio in our cost structure, not just depreciation, but other costs, which will allow that to leverage up pretty quickly and maybe just as a reference point to think about what we saw in Q2. When we had a much higher quarter and more GMP revenue, we had quite significantly higher gross margins, but of course we’ve added additional costs and depreciation since then. But I do think that once we see the revenue growth resuming, we’ll see some pretty good leverage there.
Steven Mah: Okay, got it. Yes, that makes sense. It’s highly dependent on the product mix.
Stephen Gunstream: Yes, mix and total volume.
Steven Mah: Yes, that makes sense. And then, yes, I just wanted to dig in a little bit more on the operating expenses. Down significantly, you guys had a pretty significant reduction in force. Are there going to be any more cost cutting efforts or do you think the company is now right sized? And then, should we think about the OpEx run rate going forward? As this quarter, Q3, or how do you think about that for the balance of the year and then also into 2024? Thank you.
Stephen Gunstream: Yes, as it relates to operating expenses, as you mentioned in the remarks, we’ve worked really hard there during the course of the year to bring that down substantially. Again, over $9 million in annualized savings on a run rate basis. So, we’re always looking to manage, obviously manage, but reduce costs. Where we can, I would say we’ve done the lion’s share of that through the rift that you mentioned earlier this year and other things that we’ve done since then. So, I do expect a slightly downward trend on those as we move forward, but nothing as substantial as you’ve seen from the beginning of the year until now. So, it’s really important for us to make sure that we maintain the investments that we’ve made that we think are going to be key drivers of growth and be able to support that growth, which will come back.
So, we’re being very careful to find the right balance of maintaining the investments while also taking out any excess costs that are needed for the short term. So, that’s kind of where we’re at. And so, I think the outlook is sort of flattish to slightly down looking outward. And obviously, a lot is also going to depend on when the revenue comes back and how we think about costs in the future.
Steven Mah: Okay, great. Yes, thanks for taking the questions. Appreciate it.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Matt Larew with William Blair. Your line is open.
