Establishment Labs Holdings Inc. (NASDAQ:ESTA) Q4 2023 Earnings Call Transcript

Establishment Labs Holdings Inc. (NASDAQ:ESTA) Q4 2023 Earnings Call Transcript February 28, 2024

Establishment Labs Holdings Inc. beats earnings expectations. Reported EPS is $-0.79, expectations were $-0.95. ESTA 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 afternoon. Welcome to Establishment Labs’ Fourth Quarter 2023 Earnings Call. At this time, all participants will be in a listen-only mode. At the end of this call, we will open the line for a question-and-answer session. Instructions will follow at that time. As a reminder, today’s call is being recorded. I will now turn the call over to Raj Denhoy, Chief Financial Officer. Please go ahead.

Raj Denhoy: Thank you, operator, and thank you everyone for joining us. With me today is Juan José Chacón Quirós, our Chief Executive Officer. Following our prepared remarks, we’ll take your questions. Before we begin, I would like to remind you that comments made by management during this call will include forward-looking statements within the meaning of federal securities laws. These include statements on Establishment Labs’ financial outlook and the company’s plans and timing for product development and sales. These forward looking statements are based on management’s current expectations and involve risks and uncertainties. For discussion of the principal risk factors and uncertainties that may affect our performance or cause actual results to differ materially from these statements, I encourage you to review our most recent annual and quarterly reports on Form 10-K and Form10-Q, as well as other SEC filings which are available on our website at establishmentlabs.com.

I’d also like to remind you that our comments may include certain non-GAAP financial measures with respect to our performance, including but not limited to sales results which can be stated on a constant currency basis or the company’s earnings, which can be stated as adjusted EBITDA. Reconciliations to comparable GAAP financial measures for non-GAAP measures, if available, may be found in today’s press release which is available on our website. Please also note that Establishment Labs receive an investigational device exemption from the FDA for Motiva Implants and is undergoing a clinical trial to support regulatory approval in the United States. We continually seek to expand the geographies in which our products are regulatory approved.

Please check with your local authority for specific product availability. The content of this conference call contains time-sensitive information accurate only as of the date of this live broadcast, February 28, 2024. Except as required by law, Establishment Labs undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances after the day of this call. With that, it is my pleasure to turn the call over to our CEO, Juan José.

Juan José Chacón Quirós: Thank you, Raj. And good afternoon, everyone. Revenue in the fourth quarter of 2023 totaled $31.6 million in line with the range we pre-announced in early January. While our second half results reflected lower demand for breast procedures globally, our markets are stabilizing and we are seeing improving demand, including from our distributors. Our global market checks suggest that we will have continued improvement throughout 2024. Given this, we are setting guidance in a range of $174 million to $184 million, representing growth of 5% to 11%. This guidance does not include the launch of Motiva Implants in the United States, which would significantly improve both our revenue and growth. 2024, the 20th anniversary of our founding, is a pivotal year for Establishment Labs.

With the approval of our implants in China and our pending approval in the United States, we are becoming a true global player in our industry. We are well-positioned for multiyear growth and poised to take global market leadership in an industry that has not brought any meaningful innovation to market in more than two decades. 2024 is also the year in which we will achieve the necessary scale to become EBITDA positive, with a clear path to cash flow positive. Since we launched Motiva 14 years ago, we have been in the most price-sensitive markets with low-ASPs and gross margins. Our entries into China and the United States provide the necessary market dynamics for a healthy business model with significant growth. We have taken and continue to take a number of steps to reduce cash burn and expect cash use to be less than $48 million.

It is worth reiterating that we remain focused on achieving positive EBITDA by the end of this year and turning cash flow positive in 2025. As we prepare for our growth ahead, we have taken tangible steps to focus our business on the areas of highest returns. In this process, we have reduced global headcount by approximately 28% and have reprioritized our operating spending. The impact of these initiatives can be seen in the reduction in cash use in the fourth quarter to $12.2 million. This was less than one-third of our cash use in the second and third quarters of 2023. This focus on improved efficiency and cash use is core to our budgeting process and is a significant part of how management will be compensated this year. In early January, we added to our balance sheet with a $50 million private placement, bringing our pro forma cash position to approximately $90 million.

Last week, we announced an amendment to our existing credit facility with Oaktree Capital. The amendment updated the terms under which we can draw an additional $50 million in non-dilutive financing. The first $25 million is available in FDA approval of Motiva in the United States. While we are committed to achieving cash flow breakeven with the cash we have, the availability of this capital, should we need it, helps further de-risk the full execution of our U.S. launch strategy. Raj will provide additional details on our fourth quarter performance and our outlook in a moment, but I would like to provide some additional detail on the most important near-term initiatives, the United States, China, and Mia Femtech. In the United States, the first case with our Motiva Flora tissue expander was performed in late December by a surgical team led by Dr. Mark Clemens at the University of Texas, MD Anderson Cancer Center in Houston, Texas.

Flora is initially being made available to a limited number of Centers of Excellence in the United States. We are working through the back process with a first list of 15 Centers for Excellence across the country. As these premier cancer centers have taught Flora, the benefits of this unique expander are making clear that there is a new standard in breast reconstruction. Flora includes our patented SmoothSilk surface technology, as well as an RFID enabled non-magnetic port and is labeled as MRI conditional by the FDA. By being magnet-free, Flora avoids the interference that magnets cause during MR imaging and can improve the precision of radiation oncology treatments. This is a distinct advantage to Flora, as all other commercially available breast tissue expanders include magnets.

Flora defines a new era for breast reconstruction, and it will help further transform breast cancer into a treatable disease from which women can fully recover. For our Motiva Implants, our PMA remains under review by the FDA. Our interactions with the agency on Motiva remain very positive and we continue to make progress. We do not yet have a date for GMP inspection, but given our regular interactions with agency, we expect to receive notification very soon. Our team is ready for the inspections, and we have over a decade of experience in audits from high vigilance authorities. So far this year, we have had our MDSAP surveillance audit, which includes compliance with medical device regulations from the United States, Canada, Europe, Brazil, Japan, and Australia, for our three manufacturing sites in Costa Rica.

We also had our quality management system surveillance audit for the latest MDR European medical devices regulations. These audits resulted in the renewal of our certifications and the recommendation for inclusion of our latest manufacturing unit at the Sulàyöm. Mia Femtech is creating an entirely new true minimally invasive category within breast aesthetics and the list of countries where Mia is available continues to grow. We have partner sites in Japan, Spain, France, Sweden, Switzerland, Germany, and Costa Rica and we have partnered with distributors in the United Kingdom, Turkey, Poland, and the Middle East to begin opening sites in those regions in 2024. We now have 17 centers certified to offer the Mia experience across 15 cities in Japan, Switzerland, Spain, France, Germany, and Sweden, with 39 certified plastic surgeons performing Mia.

We are in the process of onboarding an additional 15 new centers across Europe and the Middle East with 31 additional plastic surgeons. We have also signed 20 new centers, which will begin the process of onboarding in the first half of this year. On top of that, we have a lot of interest from the best plastic surgery clinics who see the business opportunity with the expansion into minimally invasive breast aesthetics. And we are in advanced negotiations with 16 such clinics. Mia is gaining appeal with a new consumer. Of the women who experience Mia, so far 38% were not considering breast augmentation prior to Mia. The average consideration time among these women was less than 2 months versus 3 to 7 years for traditional breast augmentation and the average price paid for Mia was 70% or more higher than the traditional procedure.

Moreover, the testimonials from women reinforced the value proposition based on convenience, quick recovery and excellent aesthetic outcomes. It is still early in the launch of Mia, but we are seeing proof points that we’re creating and capturing new consumer demand in this new category in breast aesthetics. In China, we held a series of events during the first week of January to formally launch Motiva with our exclusive distribution partner. We held special events in Shanghai, Guangzhou, Shenzhen, and Hainan. Supported by our partner, additional medical education events have been taking place in different cities in China and will continue throughout the year. China is the second largest market for breast augmentation and has among the highest ASPs in the world.

Our research confirms that there is a large segment in a Chinese market willing to pay significantly higher prices for the perceived value of the highest quality products. We expect our share in the Chinese market will mirror the success we have seen in surrounding markets of Asia. In markets like South Korea, Japan, Thailand, Vietnam, Singapore, Hong Kong and Taiwan, we hold the number one market share position, and China should match this success over time. I will now turn the call over to Raj.

Raj Denhoy: Thank you, Juan José. Total revenue for the fourth quarter was $31.6 million, a decline of 28% from the year ago period. Currency had a positive impact of approximately 2% in the fourth quarter. Direct sales in fourth quarter were approximately 49% of implant sales, while distributors made up the balance. From a regional perspective, sales in Europe, Middle East, and Africa were approximately 53% of the global total, Asia Pacific 19%, and Latin America 27%. Brazil, which is our largest market globally, accounted for approximately 10% of total quarterly sales. A gross profit for the fourth quarter was $20.6 million, or 65.2% of revenue, compared to $28.2 million or 64.3% in revenue for this same period in 2022. A gross profit in the fourth quarter was negatively impacted by an obsolescence charge, without which gross margins would have been approximately 66%.

A gross margin was also impacted by higher overhead and labor costs. Costs were higher in part from changes in foreign exchange rates between the U.S. dollar and the Costa Rican colón. As we report in U.S. dollars, the strengthening of the colón over the last year resulted in higher reported costs. Average selling prices in fourth quarter were up from the third quarter of 2023 and year-over-year. SG&A expenses for the fourth quarter increased approximately $2 million to $36.9 million, compared to $34.99 million in the fourth quarter of 2022. The increase in SG&A in fourth quarter resulted in part from our investment in new growth initiatives like Mia and preparations for our launch in U.S. These were offset by the significant cost reduction initiatives we undertook in quarter.

SG&A declined $3.1 million sequentially from the third quarter. R&D expenses for the fourth quarter declined approximately $700,000 from the same quarter year ago to $5.8 million and were down $1.3 million, sequentially. Total operating expenses of the fourth quarter were $42.7 million, an increase of approximately $1.4 million from a year-ago period. Operating expenses declined at approximately $4.4 million in the third quarter due primarily to cost reduction initiatives in the quarter. The net loss from operations for the fourth quarter was $22.1 million compared to a net loss of $13.2 million in the same period in 2022. Our cash position as of December 31 was $40 million dollars, compared with $66.4 million at the end of 2022. Our cash use in the fourth quarter was $12.2 million, which compared to $38 million in the previous quarter.

With the $50 million private placement in January, our pro forma cash position increased to $90 million. Last week, we also amended our credit facility with Oaktree. The milestones under which we can access the two remaining tranches on our debt facility was total $50 million were amended to allow us to access the first $25 million on U.S. FDA approval of Motiva Implants, and the second with the additional milestone of achieving $195 million in trailing 12-month sales. For 2024, our guidance excludes the contribution of Motiva Implant approval in the United States. We’re guiding to a revenue range of $174 million to $$184 million, representing growth of 5% to 11%. We expect currency to have a minimal impact on our sales results this year.

We expect gross margins in 2024 to be approximately 100 basis points higher than 2023 to a range of 65.5% to 66%. We’ve taken a number of steps to lower cash use in 2024. These efforts include the reduction of global personnel by approximately 28%, targeted reductions in operating expenses, and management of inventory levels. As a result, we expect cash used before financing in 2024 to be less than $48 million. With these actions, we expect to achieve positive adjusted EBITDA in 2024 and positive cash flow in 2025. I will now turn the call back to Juan José.

Juan José Chacón Quirós: Thank you, Raj. Establishment Labs was founded on bringing differentiated technology to an industry that has seen little innovation for decades. Unlike our competitors, we have grounded our products in true science and innovation, and the clinical and scientific data clearly demonstrate our technologies have no parallel in this industry. We are now launching our technologies into China and the United States, the two largest highest priced and highest gross margin markets in the world. In our current markets, Flora is constructing a new standard in breast reconstruction, and Mia is creating an entirely new and higher value category in breast aesthetics. We are acutely focused on creating shareholder value, and a significant piece of this is to get to cash flow positive as soon as possible.

We are confident in our ability to do this early next year and have model or cash spent accordingly. With the cash we have on hand and the amendment to our credit facility, we are in an excellent position to fund our growth initiatives while meeting our profitability targets. 2024 will be one of the most important in our 20-year history. We are entering this year with a solid foundation and with the clear path to become the leading global company in breast aesthetics and reconstruction. I will now turn the call over to the operator for your questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question is from Allen Gong with JPMorgan. Please proceed.

Allen Gong: Thanks for the question. I had a quick one to start off on China. The approval came a little bit later than expected, but you were previously expecting a contribution in the low-teens in fourth quarter. Now, some of that’s stalking not all underlying quarterly demand, but how should we think about your assumptions for China contribution this year in light of the fact that you’re not assuming any contribution from the U.S.?

Raj Denhoy: Yeah. Thanks, Allen. I think when we lowered the guidance coming out of the third quarter for 2023, we talked about China being roughly $10 million of the reduction in 2023. As we think about the contribution in 2024, that’s a good place to start, right? We don’t expect that it’s all going to come in the first quarter. It should be spread out over the first 2 or 3 quarters of a year, but I think as a starting point for what China will contribute for us this year, I think that’s a great place to start.

Juan José Chacón Quirós: Yeah, additionally, I think it’s important to recognize that what we are doing now is holding educational events in Tier 1 and Tier 2 cities and our shipments in the first half of this year will [mirror stalking] [ph] taking place in those cities across China. And in the second half the year, you should think more about some of the reordering starting to take place as demand for these procedures increase.

Allen Gong: Got it. And then a question kind of on broader market dynamics. When we think about the assumptions underpinning your guidance, in early January, you talked about how markets haven’t necessarily recovered, but that previous weakness looks to have stabilized. What assumption do you have for the underlying market to get to your range? Should we thing that the bottom half of the range assumes minimal improvement and the top half assumes more improvement, just help us level set your expectations there? Thank you.

Juan José Chacón Quirós: Yeah, I think the way we think about it is, I think you’re right. I mean, we are seeing the market stabilizing. We’re seeing recovery in these markets. Things are not fully back to normal. I think as we look out over the course of the year, and even some of the feedback we’re already getting from the market, is that things are picking up, things are improving. And so do expect to see that stabilization to take hold over the year. In terms of the range, the top to the bottom, I mean, for us this year, I think, as you described it right, if we see a stronger recovery, a quicker recovery, it’ll probably push us towards the upper end. I think take a little bit longer, perhaps with the lower end. So we’re starting this year, I think, from a kind of a conservative starting point and, again, we are seeing things improve out there, but it’s going to take some time.

Operator: Our next question is from Joanne Wuensch with Citi. Please proceed.

Joanne Wuensch: Good evening, and thank you for taking the question. One is that a mechanical, I’m curious what you think your CapEx spend will be this year with the majority of your new facility behind you? And then my second question is a little bit more interesting, I hope, which is, if you’re seeing stabilization in demand, is it pocketed? Is it in certain regions? How do we think about stabilization transitioning towards higher demand and our growth? Thank you.

Juan José Chacón Quirós: Yeah. Thank you for that. I think what takes us to these comments around markets recovering and us seeing some of these civilizations taking place. We see this happening at different speed in different regions. For instance, Brazil, I think it’s still not in the right place, but we see Asia picking up again. We also seen our direct markets in Europe demand picking up as well. So I think it’s not going to happen all at once, but we’re not the only company seeing the recovery in aesthetics, and that includes, of course, breast aesthetics and reconstruction.

Raj Denhoy: Yeah, on your question on CapEx, we did see stronger or heavier CapEx over the last couple of years as we were completing the new facility in Costa Rica, which you’ve been to. As we look out in 2024, there still is some work to be done on that facility. As we’ve noted, we are investing in the United States and so, I think, CapEx for us will still be something in order of about $20 million. That’s captured in guidance we have given of the overall cash used being less than $48 million this year.

Joanne Wuensch: Thank you.

Operator: Our next question is from Anthony Petrone with Mizuho Group. Please proceed. Anthony, your line is live. Please check if you’re muted. Okay, we will move on. Our next question is from Josh Jennings with TD Cowen. Please proceed.

Joshua Jennings: Hi. Good afternoon. Thanks for taking the questions. I was hoping to just get some comments, Juan José, on your views on the state of the U.S. breast implant market, you guys haven’t launched yet, but future competitor announced or filed for bankruptcy and it seems like an opportune time for [Establishment Labs] [ph] to launch Motiva in the coming months, but maybe just the state of affairs there. And does this change your strategy on the U.S. Flora launch? I think Sientra had a relatively strong recon franchise.

Juan José Chacón Quirós: Yeah. Thanks, Josh. So in U.S. market, what you see is about 95% of procedures take place with round smooth implants that have very little difference between them. And with nothing to separate the offerings in the market, the basis of competition is not on the merits of the technology. So it’s not surprising in that situation the smallest of companies was not able to survive. But, I think that probably the slowdown in aesthetics overall probably exacerbated the demise of that company. But, overall, I think that just like any other slowdown that we have seen in the past, eventually it goes back. In 2008-2009, it was about around 10% of procedures affected for 2 years, but eventually, it came back, and it came back higher.

I think the U.S. market is starting to pick up again from what we hear from different indicators. And yeah, of course, as we look into the expansion of Flora, this provides for an opportunity for us to be able to bring our fully differentiated tissue expander to U.S. Centers of Excellence.

Joshua Jennings: Great. Thanks. And then just I know you haven’t detailed in this little bit premature to detail of the U.S. commercial launch strategy, but just in terms of the initial spend, the investments that have already been made versus the investment that are required as you move closer to launch and then execute the launch, and just considering the updated status of your balance sheet, anything you can share just on terms of investments made versus investments to be made in the coming months in front of the launch? Thanks a lot.

Raj Denhoy: Yeah, sure. We have been investing in the U.S., I think, as we’ve been building the infrastructure here to be a commercial organization, if you think about finance, logistics, the things you need to be commercial, so that spending has been taking place, and we’re actually leveraging that now as they’ve launched Flora in the United States and are starting to see traction with that product. When we get closer to the approval of the implants in the United States, we will start to see a pick-up in spending relative to commercial activity. But given the higher ASPs in the U.S., the higher margin here, the ability we have to leverage the spending we’ve already done as well as the infrastructure we had outside the United States, a period of time which we’re loss-making in the U.S. should be relatively short.

And, I think, as we noted in the prepared remarks, he amendment to the Oaktree facility also gives us additional capital should we need it to fully fund the U.S. launch strategy. So we are feeling pretty good about where we are in terms of getting ready for being commercial with their entire portfolio in the U.S.

Joshua Jennings: Right. Thanks, Raj.

Operator: Our next question is from George Sellers with Stephens Incorporated. Please proceed.

George Sellers: Good afternoon, and thanks for taking the question. Two-parter here on Flora. Just curious, first of all, what your guidance assumes, if any, for Flora contribution in 2024? And then, could you also just speak to the commercial process for flora and breast reconstruction in the hospital as compared to commercialization in the breast augmentation market?

Juan José Chacón Quirós: Yeah. Thanks, George. When you launch products, especially products that have such differentiation, a lot of your focus at the beginning is on the qualitative parts. Still, you heard our numbers. We have 15 centers that are working through the VAC [ph] process. That process is you know takes time, but you’re already seeing us getting into these hospitals in the first half of this year and we’ll continue adding to that. But it’s early on to be able to give you precision on what we expect for Flora. Now, overall, it is $180 million market and we are selling our tissue expander that our premium. So we do expect this to eventually be an important contributor over the next few years to our growth and definitely it has the highest ASPs in the world and highest gross margins for any market for tissue expanders.

George Sellers: Okay. That’s really helpful. And then maybe shifting to Mia, could you give some additional color on what Mia contributed in the quarter and then also your expectations. I believe you’ve said there’s another 30 or so potential clinics that you may add to the Mia clinics, but just curious your expectation for that progression in 2024 as well.

Juan José Chacón Quirós: Look, just like everyone we are super excited with Mia, particularly, because we see the amazing results and the differentiated experience. The fact that these women are just going back to their daily lives minus the exercise the same day is just an amazing thing to see. And that’s why we’re so confident on the growth of Mia. But just like I said before, when you’re launching these type of products, you focus first on a qualitative. What we did today though is give you a lot of color on number of centers. So just with the list we provided, it seems that we should be in about 70 centers this year, at least. So, the network of Mia certified centers is increasing and what we are seeing is in the first group of clinics that launched in second half of last year we were seeing increasing demand every month.

And, as we get through the capillarity in these cities with more centers getting there, then we’re going to see more demand. So, eventually, I think what we will try to do is, on top of all the information we gave today on the number of centers, is also give you an idea in the future of how that ramps up in terms of the numbers of procedures, but still a little bit early to go ahead in that and do that.

George Sellers: Okay. Thank you all for the time.

Operator: Our next question is from Marie Thibault with BTIG. Please proceed.

Sam Eiber: Hey, good afternoon, everyone. This is Sam Eiber on for Marie. Thanks for taking the questions. Maybe I can start, Raj, on just an operating expense question, and maybe your thoughts for 2024, if any of these cuts that you made in the back half of last year, is there anything left to be recognized in Q1, or is that all behind us at this point?

Raj Denhoy: Yeah, so I think there will be some additional spending in first quarter relative to the fourth quarter in terms of cash used, again, around severance cost and we do have heavier costs usually in the beginning of the year. And I think it’s also important to note that we’re continuing to look for efficiencies across the business, right, so in terms of getting to the stable position we are not there yet and we will continue to looked again at ways to make our business more efficient. We did take a lot of cost out of the base, so if you look at operating expenses last year versus this year they will be down something around $25 million or $30 million from where we were in 2023. So I don’t know if that answers your question, but in terms of cash used we could see a little bit of a tick up in the first quarter again on some of the severance costs and the restructuring costs we’ve undertaken.

But then over the course of year, the overall expense base is going to be significantly lower than where it was last year.

Sam Eiber: Yeah. No, that’s super helpful. Thanks for that. Maybe I can ask just my follow-up here. I know we’re getting close to maybe when we’d expect you guys to have maybe 4-year data from the pivotal trial. I know considering a lot of the back and forth with the FDA right now, I don’t know if that’s something you’re looking to present or is that something maybe we should hold off on maybe saying you guys present until you get approval?

Juan José Chacón Quirós: So it is important to remember that the FDA per guidance document on breast implant requires 3-year data which we have provided. However, as a women’s health company we’re always been super transparent with data. We were the first company ever to provide data pre-approval on the trial, and we will continue to do so. So, yes, the idea is to provide the full year data to the market after the FDA has received that data for our periodic interactions. And, yes, and I think this data will show as – it has shown in the past, that we have an amazing technology with superior safety results.

Sam Eiber: Great. Thanks for taking the questions.

Operator: [Operator Instructions] Our next question is from Anthony Petrone with Mizuho Group. Please proceed.

Anthony Petrone: Thanks. Apologies, just having between calls here. So maybe first just on the geographic sort of split for the aesthetics market. Are there any regions where you’re starting to see green shoots, where perhaps distributors are seeing more activity on the ground and are re-upping on inventory stocking? So that would be question one, just geographically how the market is playing out? And then maybe any thoughts on where the underlying aesthetic market in the United States just ahead of a potential launch on Motiva into the second half? And then, I’ll have one follow-up for Raj, on the middle of the P&L.

Juan José Chacón Quirós: Yeah, so if you want to think about it by regions, I think that probably Latin America and, most importantly, Brazil have not recovered as quickly as other markets. Like in Asia, we’re starting to see – that’s a full distributive region for us, by the way, but we are starting see some of activity coming back. And we are also seeing that across Europe and especially in our direct markets where we see that in real time. So we expect this to continue taking place at different speeds in these regions, but when we think about guidance for this year, I think what you should think of is conditions improving throughout this year. And the U.S. was actually hit quite strongly by this global slowdown in aesthetics, but from different indicators, we know the situation is improving.

By the time we go to market, I think that we’ll be in a good position to take over demand, and the fact that if we might go the market with one less competitor, of course, adds up to the opportunity.

Anthony Petrone: No, absolutely. And, Raj, just on the expense outlook, when you think about the Motiva trial eventually rolling off, I mean, what is the cost burden on trial itself? And then when you think of reinvesting those dollars, is that happening now ahead of a launch or will it happen post-FDA clearance? Thanks.

Raj Denhoy: Yeah, it’s a fair question. We are still incurring costs relative to that trial as we’re moving through the FDA process. We were getting close to the approval, but there’s still costs associated with it. Once the improvement happens, we don’t stop our clinical activity in the United States. We have products coming after that. Mia is an important one that’ll come to the United States, and the Ergonomics 2 platform. So there will still continue to be costs associated our regulatory activity in The United State. But I think in general, as we noted earlier, we’ve taken quite a bit of cost out of our base here in 2024. And so, again, we’re operating on a much more efficient basis and it does give us some flexibility as you move through the year to take advantage of some of these opportunities, if we can. So I wouldn’t expect that that event of the U.S. approval is really going to step down our spending here too dramatically.

Anthony Petrone: Helpful. Thank you.

Operator: That is all the time that we have for questions today. I will now turn the call back over to Juan José for closing remarks.

Juan José Chacón Quirós: Thank you for joining us in today’s call. We look forward to providing our next quarterly update in May, and we wish everyone continued good health and happiness.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time, and thank you for your participation.