But as we move towards commercialization, a number of those manufacturing costs are going to be appearing in cost of sales, which has the effect of reducing R&D expense. So with that, we expect on an overall net basis, just really a slight increase in overall burn for 2024 compared to 2023.
Vernon Bernardino: And then regarding – Laura, you had alluded to using the same manufacturing and so on. Do you anticipate margins improving over time since you’re using the same equipment regardless of whether or not you’re making, let’s say, mostly large versus small or whatever mix of diameter of what HAVs?
Laura Niklason: Yes. There are two main sources of decreasing COGS over time. And I would say that both apply regardless of whether we’re making a 40-centimeter vessel or, say, a short vessel in the future, for example, down the road. The first is just a more efficient use of our facility. Right now, we have built out only a fraction of our manufacturing floor because we have eight LUNA’s installed, although we have room for 40. So we’re essentially amortizing all of the facility costs across a smaller amount of production as production increases, that inherent overhead obviously will fall linearly. But in addition, we believe that there are additional reductions in COGS that will result from efficiencies of how we use our raw materials, how we prepare and bring in our raw materials, which as we go to greater scale and as we’re able to negotiate improved contracts with some of our suppliers, some of those cost inputs will also come down.
So it’s – we anticipate that regardless of what type of product we’re making COGS should fall at a fairly predictable rate.
Vernon Bernardino: And one further follow-up, if I may. Regarding, let’s say, the launch this year. I know that with vascular trauma, you would expect not to really have insight into a really much longer than, let’s say, a short-term vision of need. But do you have any idea of vision, let’s say, that you might have, at some point, what you could describe as an inventory patients who need something such that you could predict the need for example, much longer than, let’s say, the next week, two weeks, maybe even a month, but longer term, two or three months. Or is that really just going to be for when you have the AV access and PAD and CABG markets where HAV has approval for application? Thank you.
Laura Niklason: So, Vincent, I’m going to try to answer your question. I’m not completely sure I understood the question, but let me take a shot. So certainly, trauma care, there is some variability. There’s some seasonal variability. But overall, it’s not a hugely variable market in the aggregate. There are some centers that will have more trauma some months than others. But in the aggregate, it’s not a hugely variable market. So we have shared in some of our filings that – and on this call that we think the total addressable market in trauma is about 26,000 patients. Of those, we would expect to capture at full saturation at three or five or seven years at full market saturation, we would expect to capture a reasonable fraction of those.
Might be 30%, might be 50% of those patients, could be more. So – and we’ve shared that we expect market penetration in dialysis and peripheral artery disease, ultimately at full penetration to be at around 20% because we – again, we are targeting the HAV toward patients who do not have their needs met by the current standard-of-care. But trauma overall, even though it’s locally episodic is globally a little bit more predictable. So we believe we’ll be able to ramp production, tracking demand, we’ll be able to ramp production and add more LUNA capacity and meet that as it grows. Does that answer your question?
Vernon Bernardino: No, that’s perfect. And by the way, it’s Vernon and Vincent is my evil twin. So thank you for taking my questions.
Laura Niklason: I’m sorry Vernon.
Vernon Bernardino: That’s okay. My evil twin and I, again, in each other way, I’m looking forward to your KOL event and thanks again for taking my question.
Laura Niklason: Thank you.
Operator: Thank you. I’m showing no further questions in the queue at this time. This will conclude the Humacyte 2023 results conference call. Thank you all for participating.
