Joe Mara: Yes. And I would just Joe, I would just add and then just kind of as we’re thinking about the year kind of more in the near term and just a couple of comments just to add to that. I think obviously, Epicel can vary, but we have seen certainly some strength now over several quarters. We came into the year kind of expecting to grow over last year’s run rate. We’d like to think of Epicel kind of the sort of the baseline from a quarterly run rate perspective. We came in with an exit rate of in the low to mid-8s. Obviously, we were well ahead of that in the first quarter. It’s — you can’t really plan on that. I will say that, I think we certainly have an expectation that it can stay at these higher rates. We came in the year and kind of said 9 plus or mid-9.
So whether you’re thinking about the second quarter, we said around $10 million, I think we would certainly expect kind of Epicel to be in that $9 million plus range within that $10. Certainly could be some variability there, but I think that’s a reasonable expectation. And similarly, I think for the rest of the year, which is kind of how we’re thinking about Epicel as well. So there could certainly be variability. And I would agree with Nick kind of over time, we would expect NexoBrid to continue to build and sequentially grow. That’s sort of the expectation as we close out the year and into next year.
Swayampakula Ramakanth: Thank you. Thank you very much both. I appreciate it.
Joe Mara: Thanks, RK.
Operator: Thank you. One moment while we bring up our next question. Our next question is from Mike Kratky with Leerink Partners. Go ahead, Mike. Your line is open.
Unidentified Analyst: Hey, guys. This is Brett on for Mike. Thanks for taking the question and congrats on another great quarter. You guys saw a strong pull through in 1Q, 2020 through obviously. How should we think about the durability of this operating leverage into the second half of ’24 and ’25, while you drive penetration in both existing market and the new arthroscopic market once approved. And then obviously, you have the ankle improvements or investments in 2025. So how is that going to impact the durability of the operating leverage?
Nick Colangelo: Yes. And I think you’re referring to 1Q ’24, I think, to 1Q ’23, but…
Unidentified Analyst: Correct.
Nick Colangelo: Yes. So I think, so as we talked about earlier, obviously, a great first quarter from a kind of P&L perspective, across the board, margin expansion, and the pull through is very high, et cetera. I do think on the gross margin side, our sort of our expectation for quite a while, our kind of call it, midterm expectation was to get to that 70% plus on a gross margin level. And obviously, our guidance this year is at 70%. And I would say, certainly, as I talked about earlier, it could ebb and flow kind of within a year, we look at margins or pull through, but on a full-year basis, that is kind of tracking in a very good place to kind of get to those targets. And I would say from a gross margin perspective as well, I mean, there’s definitely a lot of efforts right now kind of thinking about in the right ways, where can we find efficiencies within our processes, across our spend, vendors, et cetera.
And that’s going to be pretty important as we move into a new facility in the next couple of years as well. So I think a lot of work on the gross margin side and sort of a lot of focus to kind of make sure we’re driving kind of the right savings there. On the kind of operating expense side, as part of your question, I mean, there are some investments that we will need to make. I mean, we’ve referenced arthromacy, there’s some development costs there, but obviously that’s an important initiative. Similarly on ankle, over the next few years that will kind of make its way in the P&L, but that doesn’t change from a bottom line perspective. Our expectation to be trending towards that 30% adjusted EBITDA target that we’ve talked about for quite a while as well.
So I think it really starts with the top-line growth, but there’s a lot of focus on kind of making sure kind of managing the rest of the P&L, but it also just shows just the operating leverage kind of within the business, particularly as we start to scale. So I think Q1 obviously was a great quarter, but I think a good start to the year. But as we think over 2024 and ’25 and beyond, I mean that’s going to remain a focus and we think we’ll continue to see that leverage across the P&L.
Unidentified Analyst: Got it. That’s helpful. And then one more. I guess I want to go back to Arthro. You mentioned six to 12 new reps likely. How should we be thinking about that the difference in outreach for those reps versus existing MACI when they target those new surgeons? And then obviously, the shape of that penetration curve may be different versus what we’ve seen with legacy MACI. How should we be thinking about the steepness of that curve and if there’s any differences to call out for the next couple of years?
Nick Colangelo: Yes. So as I mentioned, we will be adding, I guess, a couple of different profiles. So number one is kind of territory development managers who can kind of be, at biopsy, at surgeries, et cetera. And then there’s arthroscopic specialists who are really kind of training and kind of spreading best practices for the Arthro delivery of MACI. So they’re really in support functions. As I alluded to on the call when you think about an extra couple of 1,000 targets over 76 territories you’re talking a dozen or two new targets per territory. Those could easily be targeted by existing sales reps. In terms of the — so it doesn’t again require a realignment or a wholesale increase in the sales force. When you talk about uptake, I think you can think about a couple different surgeon segments.
