The way that it works, we basically sell them the drug product based on the lowest royalty tier at least at present until we pick up and go to the next level, meaning 15% of the lease price, and that’s the revenue basically that we recorded. I want to be even more conservative than this since the agreement which is public state that we’re getting the royalties from the net sales. Obviously, we have a reserve for sRNA and discount in case that they are applied to the price. In terms of projections for the next year, as a small company, we don’t really provide projections, but I think that the trend at least in the next quarter is going to continue as Chiesi are building up and ramping up their inventory. Again in general in the next two to three years until revenues are going to be stable and growing means that the changes in inventory are going to be at least for us totally transparent.
I guess that most of the revenues we’re going to see is going to be changes in inventory and Chiesi’s inventory build. Two to three years from now, I guess that, that will be a different story but the trend is definitely that you’re going to see an increase in revenue towards the end of this year. And obviously, in the beginning or the second quarter and towards the second half of next year as well, they are ramping up their operations.
John Vandermosten: Okay. Great, great. That’s a good answer. And then royalty revenue sometimes take a while to flow through. Perhaps Chiesi would have sales in the third quarter of 2023, but the royalties won’t be recognized until later. Can you give us a sense of the timing of how that might be and also the cash flows, I mean, I’m not sure if the revenue recognition and the cash flows will happen at the same time for this, can you help us understand how that flow will go for Elfabrio?
Eyal Rubin: Sure. So as I described, the revenue is almost fully recognized the minute that we sell the inventory to Chiesi, the drug product to Chiesi. And it’s also — there’s no timing difference between the revenue recognition and the cash flow. According to the agreement, which is public, they have 45 days net to pay us, so there is no timing gap there. As I mentioned, since the sRNA and discount if applicable, at this point, at least unknown, I guess that they — as we move forward, we’ll know better. And we’re going to play with the reserves that we recorded, but most of the revenues are recorded in our books in a timely manner and the same goes for the cash flows.
John Vandermosten: Okay. And then last question for me is on gross margin. And how might the gross margin in Elfabrio compared to LOIs, so will they be in a similar range or should we expect a difference?
Eyal Rubin: That’s — we’re talking about a little different ball game. Obviously, I can share with you the gross margin of the product, but looking at the industry, I guess we can assume that you have biological drugs, you’re talking about like anywhere between 85% to 90% gross margin on the product. And I think I can state that this is give or take the case with Elfabrio, — different story but don’t forget that we sold the royalties to Pfizer back then in return to getting a one-off big check that the Pfizer cut. That’s the reason that we sell them at a very small, if any, margin on the sales. In Brazil, a different story also. In Brazil, we do have margins. We don’t complain. But again, we’re not disclosing those margins at this point.
John Vandermosten: Okay, thank you Eyal.
Dror Bashan: Thank you John, appreciate it.
Operator: [Operator Instructions]. Our next question is from Dar Bashes, Private Investor.
