Raj Denhoy: Yes. thank you, Anthony. And what I’ll tell you is that the slower demand developed over the quarter in our direct markets and eventually was reflected as well in the order that we received from our distributors, in the first half of the year, around 60% of our orders came from distributors. So, we normally do see a slowdown in procedures in late summer and then they tend to recover once the seasonality disappears and in September, we see it pick up again. Well, that did not happen this year. What we hear from doctors is that many patients are basically delaying the procedures is not because of lack of interest. I think there is a lot of uncertainty, both macroeconomic and geopolitical, and it is having an impact in all of aesthetics.
However, in the past, we have seen this many times, in which periods like this in the international markets for whether one type of crisis or another, they do come back. And in our case, I think what makes us even more confident is that for that growth, we don’t depend on the current market. We have new markets opening up. We’ve recently had the approval of Flora here in the United States with $180 million market opening to us. And we’re going to see in the next few months, the approval in China and further after that, the approval in the United States. So, all of that is potential growth for us. And that’s what makes us confident. because not all companies have these type of milestones ahead of them.
Anthony Petrone: Fair enough. And then just — one on cash preservation and just how we should be thinking about a Motiva launch under a scenario, where we get FDA clearance. So first on cash, Raj, you mentioned that the burn rate would be limited to $15 million in 4Q. Just want to clarify that, that the cash burn is limited to $15 million. So, is that kind of level we should be thinking about for the first half of ’24? And then when you think about putting funding toward a potential U.S. Motiva launch year, should we get FDA clearance? Is it more of a gradual launch now where you’re not really going to go full tilt or is that unchanged where it would be a full market clearance next year? Thanks.
Raj Denhoy: Yes. your question, Anthony, I think that $15 million level in the 4Q, again, you’ve seen the guidance reduction that we’ve given, right. It’s going to be a very slow top-line growth quarter and we’re guiding to about $15 million of cash. So, as we move into next year and some of these opportunities, China, flora in the United States, the continued growth of Mia, we’re looking at keeping our cash use at that level, if not lower going forward. And so, we did talk about getting to be EBITDA-positive by the end of next year and then ultimately, getting to cash flow-positive on the cash we currently have access to. And so, the preservation of cash is going to continue to be a big focus of ours. But I would look at it more as sort of the use of it in areas that provide us with the best growth.
And so, we talk about the United States, the biggest opportunity in front of us. And we will not underfund that opportunity, but we’ll look to find areas in the other parts of the business that we can lever and devote the capital to again, to the United States.
Anthony Petrone: Thanks. I’ll get back in queue.
Operator: Your next question comes from the line of Josh Jennings from TD Cowen. please go ahead.
Josh Jennings: Hi. good afternoon. thanks for taking the questions. I was hoping to just ask about China approval timeline. It sounds like the team’s still optimistic that the approval could be at hand by the end of this year. Any signals from China regulators or process updates that you can share that driving that, that’s optimism or is it just the process has moved forward, you’ve done your job on your side and the approval will come. It’s just a matter of time.
Raj Denhoy: Yes. thank you, Josh. I think that we have enough signals in front of us to understand that the work on the final labeling is done and usually, by that time, that you’re going to get the letter from the NMPA and I think this is going to happen before the end of the year, at least that is our expectation. However, we now expect to begin recognizing revenue from that market in 2024. and as such, we are preparing for it. We have been on calls with our team there on a weekly basis and we are preparing for a launch that should happen early next year if everything goes according to plan.
Josh Jennings: Thanks for that. And just to follow up on the — I wanted to ask you a question about the process of the over Flora 510(k) approval now have SmoothSilk cleared in the United States. Was the 510(k)-process independent of the PMA review process by the FDA and did the FDA have to visit the manufacturing facilities prior to that Flora 510(k) approval? Thanks for taking all the questions.
Juan Jose Chacon Quiros: Yes. on that, Josh, it is not the same process. One is a 510(k) that leads to a clearance and the other one is a PMA that leads to an approval. However, it is the same division that is looking at both. And as such, as part of the conversations for the clearance of the Flora Tissue Expander, they had to include people that have to do with the approval, potential approval of the Motiva Implants. So definitely, we have cleared an important hurdle when it comes to one of the most important things in the approval process for the Motiva Implants, which is surface biocompatibility. The surface is an important driver of safety. And as such, by having the clearance of flora, we have a lot of confidence that we will finish the process as we expect with the Motiva Implants.
And no, they did not inspect our manufacturing facilities for the flora Tissue Expander, but it is the same manufacturing facilities, equivalent processes that are used for the manufacturer of Motiva Implants.
Operator: Your next question comes from the line of Neil Chatterji from B Riley. Please go ahead.
Neil Chatterji: Hey, guys. good afternoon. Thanks for taking our questions. just on the demand slowdown, I mean, as far as I guess, are you seeing any nuances, I guess, between just the general aesthetic slowdown versus specifically the breast augmentation market and any indications that could come back faster for implants?
Juan Jose Chacon Quiros: So, like we said, you tend to see it first in, surgical aesthetic procedures, because they tend to be more expensive and they usually require more of a commitment. So that’s why I think we’re seeing it first there. When you look at the size of the impact, I think it is very important to understand that in direct markets, we are seeing an impact that is not more than 10%, for instance, in Europe. but in distributor markets, we are seeing a lot bigger of an impact. But that is related to the fact that distributors are very careful with their cash management. So, if they think that they can get through a softer market by ordering less, they will do so. So, the impact, as a percentage in our total revenue, is a lot stronger.
