Vericel Corporation (NASDAQ:VCEL) Q4 2022 Earnings Call Transcript

Vericel Corporation (NASDAQ:VCEL) Q4 2022 Earnings Call Transcript February 23, 2023

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Vericel’s Fourth Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. I would also like to remind you that this call is being recorded for replay. After the speakers’ presentation, there will be a question-and-answer session. I will now turn the conference call over to Eric Burns, Vericel’s Head of Financial Planning and Analysis and Investor Relations.

Eric Burns: Thank you, operator, and good morning everyone. Welcome to Vericel’s fourth quarter 2022 conference call to discuss our financial results and business highlights. Before we begin, I’m going to remind you on today’s call, we will be making forward-looking statements covered under the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations and are described more fully in our filings with the SEC, also available on our website. In addition, all forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Please note that a copy of our financial results press release is available on the Investor Relations section of our website.

We also have a short presentation with highlights from today’s call that can be viewed directly on the webcast or access on our website. I’m joined on this call by Vericel’s President and Chief Executive Officer, Nick Colangelo, and our Chief Financial Officer, Joe Mara. I’ll now turn the call over to Nick.

Nick Colangelo: Thank you, Eric, and good morning everyone. I’ll begin today’s call by discussing financial and business highlights for the fourth quarter and full year 2022, current trends for MACI, which have been very positive to start the year. Our NexoBrid commercial launch activities and our overall outlook for 2023, a year in which we expect total revenue growth to accelerate in continued strong profitability for the company. Joe will then provide a more detailed update on our financial performance in 2022 and financial guidance for 2023 before opening the call to Q&A. The company delivered strong financial and business results to close the year as we generated record quarterly revenue, delivered our 10th straight quarter of profitability and positive operating cash flow and achieved significant development milestones including an accelerated regulatory pathway for the arthroscopic MACI program, an FDA approval of NexoBrid, which we believe will enable the company to build a second high growth commercial franchise.

For the full year, total revenue was more than $164 million, with MACI revenue growing 18% to $132 million, we continued to deliver strong profitability and cash flow as we generated nearly $25 million of adjusted EBITDA and $18 million of operating cash flow ending the year with $140 million in cash in investments and no debt. We also generated record total revenue of nearly $53 million in the fourth quarter, as well as gross margin of 73% and adjusted EBITDA margin of nearly 30%, both of which increased versus the prior year and approximately $6 million in net income for the quarter, which increased more than 30% compared to 2021. Our strong fourth quarter results were driven by record quarterly MACI revenue of over $46 million, which came in at the high end of our guidance range, represented 24% growth over the fourth quarter of 2021 and approximately 50% sequential growth over the third quarter of 2022.

This strong revenue growth was driven by strengthening key growth drivers for MACI. Surgeon adoption continued to grow as we finished the year with approximately 2,000 surgeons taking biopsies in 2022, an increase of approximately 10% from 2021. We also had continued growth in MACI biopsies in the fourth quarter and stabilization in the biopsy conversion rate to close out the year. As I’ll discuss in a moment, the positive trends that we saw in the fourth quarter have continued into the first quarter as the operating environment continues to improve. With respect to Epicel, fourth quarter and full year revenue was lower than anticipated as the incidence of large burns greater than 30% of total body surface area declined to pre-2021 levels. Notwithstanding this dynamic, we continued to see broad burn center engagement as we had a record number of burn centers taking biopsies in the fourth quarter and the full year and a similar number of burn centers grafting patients during the year.

While the breadth of customer engagement generated solid Epicel biopsy activity, the proportion of biopsy patients going on to surgery was lower in 2022 and particularly in the fourth quarter due mainly to lead to patient health related issues. We also had fewer Epicel graphs per patient in 2022, which had grown significantly in 2021, and there were some organizational changes at our largest customer, which impacted patient referral patterns and had a significant impact on patient volume at that center. Despite these dynamics which led to the variability we often see with Epicel, we believe that our strong engagement with leading burn centers and our expanded customer base positions us very well to drive NexoBrid uptake upon launch. In addition to generating strong financial results in the fourth quarter, we also made significant progress advancing our pipeline as we announced last month following our Type C meeting with the FDA in December, we’re planning to initiate a human factors validation study this year to support expanding the MACI label to include arthroscopic delivery of MACI for the treatment of cartilage defects in the knee.

We now anticipate a potential launch of arthroscopic MACI in 2024, which is several years earlier than an additional clinical study was required. We believe that the arthroscopic delivery of MACI will be a very attractive option for patients and surgeons and could provide a substantial upside growth opportunity for MACI. Based on our initial market research, approximately 90% of respondents expressed interest in an arthroscopic delivery option for MACI, which provides an opportunity for additional surgeon adoption, given that a portion of the more than 10,000 surgeons that perform cartilage repair procedures in the U.S. each year either primarily or exclusively perform arthroscopic procedures and could now consider MACI as an option for their patients.

Arthroscopic MACI also offers the potential for increased utilization among current MACI users, as approximately 90% of current users indicated that they would expect to increase MACI procedure volume if an arthroscopic option was available. To that end, the arthroscopic MACI instrument kit is designed to treat the most common defects in the MACI patient addressable market, which are two to four square centimeter defects on the femoral condos, and MACI would be the only arthroscopically administered restorative cartilage repair product to treat these defects, which we believe would allow us to achieve a greater share of those procedures. We’re also in discussions with the FDA regarding our planned MACI clinical development program for the treatment of cartilage injuries in the ankle, which is the next largest market opportunity for MACI.

We believe that a potential ankle indication with an estimated $1 billion addressable market could be a significant growth driver for MACI over the long-term. Turning to our burn care franchise, the FDA approval of NexoBrid was a significant milestone for the company and our commercial launch activities are progressing well. We’ve seen widespread interest in enthusiasm from burn surgeons and other healthcare providers for NexoBrid and we’re on track to meet or exceed our internal goals regarding burn center engagement ahead of commercial product availability, which is expected in the second quarter of this year. The hiring of our NexoBrid sales team is nearly complete, and training for burn surgeons began last month following approval. There are a number of high profile burn conferences in the first part of the year, including the American Burn Association annual meeting, where we’ll have a significant presence to support the launch of NexoBrid and where NexoBrid training conducted by leading burn surgeons will be included in pre-conference peer-to-peer educational sessions regarding the science of wound preparation and the science of wound closure.

Given that NexoBrid will be dispensed through hospital pharmacies gaining P&T committee approval for the use of NexoBrid in our largest or in our target burn centers is a high priority activity during the early launch phase. Based on the widespread interest in NexoBrid, we have surgeon champions at dozens of our target burn centers who will lead the process to gain P&T committee approval at the respective institutions. This process can take up to a few months, which should sync up well with the timing for an NexoBrid commercial product availability in the second quarter. Looking at the overall burn care franchise, the approval of NexoBrid in the U.S. significantly increases the addressable market for our burn care franchise to over $0.5 billion.

While we expect that Epicel will return to growth over the coming years, we believe that NexoBrid will provide a more consistent and predictable revenue stream and help offset much of the Epicel revenue volatility. In addition, the incremental investment required for NexoBrid is relatively limited given our existing burn care commercial infrastructure and the overlap with Epicel, which should also benefit from a larger commercial footprint and higher share of voice in the market. Finally, turning to guidance for 2023. We expect total revenue for the year to increase to approximately $100 million to $188 million and to generate continued strong profitability in operating cash flow. Joe will provide further details in a moment, but I wanted to touch on some of the key elements of our guidance as well as the current operating environment for MACI to start the year.

As we announced this morning, we expect MACI revenue to be in the range of $152 million to $156 million for the year. The underlying framework for our initial MACI guidance is that full year revenue growth will be driven by continued growth in biopsy surgeons and higher net price per implant. At this point, our guidance for the year does not assume any sustained increase in other MACI key growth drivers of biopsies per surgeon or the biopsy conversion rate compared to 2022 levels, which would represent upside growth potential as we start the year. That being said, we’re very encouraged not only by the strong fourth quarter for MACI, but also by a strong start of the year with positive trends that we saw in the fourth quarter continuing into the first quarter and the overall operating environment continuing to improve.

At this point, we expect MACI growth for the first quarter to be approximately 20% versus last year, which would represent the third straight quarter of 20-plus-percent year-over-year growth as MACI resumes its high growth profile. More broadly, we believe that MACI’s very well positioned for another strong year of growth in 2023, and we expect that the launch of arthroscopic MACI in 2024 will drive even broader surgery adoption and further growth acceleration next year. Importantly, based on our 2023 full year guidance, our sales rep productivity will meet or surpass our historical high of $2 million per rep achieved prior to our last sales force expansion in 2020 and we would expect to begin to significantly exceed that level in 2024 and beyond.

With respect to the burn care franchise, we expect total burn care revenue of $28 million to $32 million with growth versus our fourth quarter annualized run rate for Epicel of $24 million, driven primarily by the launch of NexoBrid. We believe that the launch of NexoBrid, which has the potential to become the standard of care in eschar removal and take a very meaningful share of its $300 million addressable market in the U.S., will enable the company to build a second high growth franchise in the burn care market. I’ll now turn the call over to Joe to discuss our fourth quarter and full year financial results as well as our financial guidance for 2023.

Joe Mara: Thanks, Nick, and good morning, everyone. Starting with the income statement. Total net revenue for the full year was $164.4 million, driven by strong MACI results in the fourth quarter. Total company revenue in the fourth quarter was $52.7 million. MACI revenue of $132 million for the full year was at the high end of our guidance range growing 18% versus the prior year. For Q4, MACI revenue was $46.3 million and grew 24% versus the prior year and approximately 50% versus the third quarter. As we continued our momentum in the MACI business with two very strong quarters to close out the year. MACI growth in 2022 was driven by continued strong surgeon and biopsy growth as well as a higher price, and importantly, the conversion rate where MACI stabilized in the second half of the year.

Total burn care revenue for the year was $32.4 million, consisting of $31.7 million of Epicel revenue and $0.7 million of revenue related to the procurement of NexoBrid by BARDA for emergency response preparedness. Epicel revenue in the fourth quarter was $6.3 million. Gross profit for the quarter was $38.2 million or 73% of net revenue, an increase compared to 72% for the fourth quarter 2021. For the full year gross profit was approximately $110 million or 67% of gross revenue, which was in line with the prior year gross margin and higher than our full year guidance in the mid 60% range. Total operating expenses for the quarter were $32.2 million compared to $29.9 million for the same period in 2021. And for the full year our operating expenses were $126.8 million compared to $113.9 million last year.

The increase in operating expenses in 2022 was primarily due to an increase in headcount and higher sales and marketing expenses. Net income for the quarter was $5.9 million or $0.12 per share compared to net income of $4.5 million or $0.09 per share for the fourth quarter of 2021, an increase of more than 30% versus the prior year. Non-GAAP adjusted EBITDA for the quarter was $14.9 million or 28% of net revenue, an increase versus the 27% in 2021. And importantly, this represents our 10th consecutive quarter that we’ve generated positive adjusted EBITDA. For the full year adjusted EBITDA was $24.2 million, similar to the $29.5 million we generated in 2021, despite lower Epicel revenue. The company’s now generated over $50 million of adjusted EBITDA over the last two years and over $90 million over the last four years.

As we’ve continued to grow our top line revenue, expand our pipeline and position the company for multiple product launchers, while maintaining a very strong financial profile. Finally, we generated $7 million of operating cash flow in the quarter and $17.7 million for the full year, and we ended the year with approximately $140 million in cash and investments and no debt. Transitioning to our financial guidance for 2023. We expect total revenue of $180 million to $188 million for the full year. We expect MACI revenue to be in the range of $152 million to $156 million with growth in the mid to high teens percentage range for the full year. As Nick referenced, first quarter trends for MACI have been encouraging, driven by strength in both biopsies and implants and we anticipate another strong quarter with growth of approximately 20% versus the first quarter of 2021.

In terms of MACI’s seasonality or mix of business by quarter, we would generally expect a similar percentage of full year revenue by quarter, as we saw in 2022. Moving to the burn care franchise. We expect full year burn care revenue, which includes both Epicel and NexoBrid revenue to be approximately $28 million to $32 million. This full year revenue range implies growth for the burn care franchise versus our commercial revenue run rate from Q4 of approximately $24 million. In terms of NexoBrid revenue and uptake during the year, assuming commercial product availability in the second quarter, we would anticipate some modest stocking revenue in Q2 with the vast majority of NexoBrid revenue occurring in the second half of the year. As Nick mentioned, we expect NexoBrid to take a significant share of the market over time.

In the near-term, we would also expect NexoBrid to be an important driver of our burn care growth this year with meaningful revenue during the second half of the year, although it is difficult to predict the exact uptake and quarterly cadence of revenue during its launch year. For Epicel, quarterly revenues remain very difficult to predict due the nature of the product and the volatility across quarters. Although for the first quarter based on trends to date, we would anticipate revenue to be roughly in line with the fourth quarter run rate of approximately $6 million. Moving down the P&L, we expect an improvement in gross margin compared to 2022 with gross margin expected to be in the high 60% range, adjusted EBITDA in the mid-teens percentage range and full year operating expenses to be approximately $140 million.

Finally, we would also anticipate an increase in capital investment for the build-out of our new state-of-the-art cell therapy manufacturing facility in corporate headquarters as the project continues to move forward with our share of construction costs in the $30 million to $40 million range for 2023. In total, this guidance points to accelerating company revenue growth in 2023 and continued strong profitability for the full year. In addition, we would also anticipate further acceleration of our total company revenue growth in 2024 with a full year of NexoBrid on the market and the anticipated launch of arthroscopic MACI. This concludes our prepared remarks. We’ll now open the call to your questions.

Operator: Thank you. Our first call comes from Ryan Zimmerman . Ryan, your line is open.

Q&A Session

Ryan Zimmerman: Thanks for taking the questions. Good morning guys, and congrats on all the progress this year. I want to start with Epicel a little bit just because the guidance is a little lower than I think we were expecting. And I understand, it’s volatile, NexoBrid going to help offset that. But when you think about that run rate, that $24 million run rate, do you feel like you’ve sufficiently set a floor here to account for the variability given how unpredictable it is? And just help us understand kind of how you came to that $40 million on NexoBrid. Why is that right? Why is it not less? Why is it not more? Just would appreciate understanding your thought process on coming to that number.

Joe Mara: Yes. Good morning, Ryan. Thanks for the question. This is Joe. I’ll start with that one. So, I think on Epicel, so at first it’s important to realize with Epicel from a run rate perspective to your question, we’re very mindful of kind of where the business is. So, the Q4 revenue was roughly $6 million. When we talked about in the prepared remarks as we move into Q1, as we would expect a similar revenue number around $6 million, although to your point, it’s always difficult to predict exactly what that looks like based on the small patient numbers, et cetera. So it obviously could be a bit different quarter-to-quarter. But we do feel like that run rate, we saw that coming exiting last year, that’s where we started this year.

As we think about the framework for guidance, maybe turning to that for a moment. So, the way we’re thinking about it is, that $24 million is really the appropriate starting point for Epicel. So basically that $6 million run rate per quarter and certainly we will look to grow from there. If you look in prior years kind of pre-2021, we said more significant growth. You typically saw growth in the kind of mid-single-digit or low-double-digit range. So, if you do the math there, you could get up to, call it $25 million, $26 million perhaps a bit more. Again, right now your question we’re on that $24 million run rate. So as we then think about the total guidance, that’s where NexoBrid is important as well. So, we feel like the combination of the two products can get us into that $28 million to $32 million range for the full year.

And again, we want to be mindful of kind of where Epicel trends are right now as part of that. But what that points to your NexoBrid question is, as we talked about in the prepared remarks, we’ve certainly seen some strong indicators so far. We still expect commercial availability in the second quarter. And again, from a cadence perspective, there’ll be no revenue in the first quarter, some modest stocking in the second quarter, and then really an increase as we get into Q3 and Q4. So, if you kind of think about the guidance framework, and again, we’re not giving specific numbers by product, which is why we’re talking about the franchise, but that does put you in kind of that mid-single-digit range, which based on kind of what we’ve seen to date, I think kind of makes sense for NexoBrid.

And again, we think we can take a pretty meaningful share over the long-term. So, again, we’re thinking about it from a franchise perspective, but when we think about where Epicel is and potential of NexoBrid, I think it’s the appropriate range this year.

Ryan Zimmerman: Okay. Let me turn to MACI for a moment. And just one housekeeping question, Joe, did you say 20% growth off of first quarter 2021? I thought I heard you say that not first quarter of 2022, or was that just a mistake?

Joe Mara: Yes, sorry. First quarter of 2022, 20% year-over-year growth in Q1.

Ryan Zimmerman: Okay. Okay. All right. Okay, just want to check. And then, as I think about the MACI business, I think your guidance is very clear about what’s included in that business, what could be upside? Do you €“ and your comments about productivity are also helpful, Nick. But when you think about the arthroscopic delivery edition, do you feel like you need to upsize the sales force to capture that opportunity? Or is the sales force appropriately sized at, I think it was 76 last we checked. And just given a broader customer base, why not upsize it if productivity is going to keep growing implied by kind of your comments.

Nick Colangelo: Yes. Ryan, thanks. This is Nick. So number one, you’re right. We did increase our sales force from by about 50% from 49 to 76 territories back in 2020. And at that point leading into that, our rep productivity was €“ had gotten up to a couple million dollars a year. As you remember, it kind of grew even as we were expanding from a sales force size in the 20s, up through 50. And we’re kind of now back at that range given the current MACI guidance. I think what we’ll end up doing, as we’ve mentioned before around arthroscopic MACI is going back and refreshing sort of the targeting work that we did back in 2019. The Health Advances project, as we talked about at that time, we know there’s a meaningful segment of those 10,000 plus surgeons that we had both arthroscopic and open procedure data on that either exclusively or predominantly do arthroscopic procedure.

So that may mean we add some number of new surgeons, and if that’s large enough that it would justify increasing the sales force, that’s certainly something we think about. So we’ll be doing that work during this year ahead of the potential launch next year.

Ryan Zimmerman: All right. Thank you. I’ll hop back in queue.

Nick Colangelo: Thank you.

Operator: Thank you very much. Our next call comes from Sam Brodovsky of Truist Securities. Sam, your line is open.

Sam Brodovsky: Hi. Thanks for taking the question and congrats on the good quarter. I’ll just start with one on MACI in terms of €“ and appreciate you providing the components of the guidance. But in terms of things looking better to start the year, what would you need to see to start to incorporate either increasing conversion rates or an improving sort of patient census into the MACI guide?

Joe Mara: Yes. This is Joe, I’ll take that one to start. So, I think from a MACI’s perspective, again, just to clarify Ryan’s earlier comment, what we talked about was we’ve had a strong couple quarters to close out last year, kind of both above 20%, which certainly is a good sign. And I think as we look into the first quarter, I think what we’ve really seen is strength in both biopsies, which really started in Q4 and then continued into Q1 as well as implants. So that’s certainly an encouraging sign. And so, our expectation in the first quarter is to be approximately 20%, so I think gets you to around $31 million for the quarter. As we think about the full year, a couple things to keep in mind there. We do think about kind of that seasonality and mix by quarter so that kind of number in Q1 actually lines up again to roughly 20% of our full year €“ if you look at the midpoint, for example, it’s basically 20% of that full year number.

So that’s certainly something we’re mindful of. I’d also say, we’ve probably seen some early signals that perhaps conversion rate is ticking up. But we generally measure that over longer periods of time. And I think what I would say is, from our perspective, we want to see that over a longer period of time. We think the foundation is there and the operating environment is improving, but we would want to see some of those additional growth drivers, which we think can still be growth drivers for the brand, but in terms of 2023, we’d want to see that over a longer period of time before we know whether that’s the case for multiple quarters.

Sam Brodovsky: Thanks. That’s helpful. And then just a quick one on NexoBrid and thanks for providing the guide points there, does guidance for this year contemplate any accounts outside of the existing Epicel base, or does it just assume revenue coming from those accounts? Thanks.

Nick Colangelo: Yes. Hey Sam, this is Nick. No, we obviously have tiered the targets and the sales force is focused on, as we talked about, first thing you do, aside from sort of surgeon training and hiring the sales force training and deploying them, really it’s about the P&T committee approval process. And so that is well underway and that includes accounts that are Epicel users. But also, if you’ll recall, obviously there was the DETECT pivotal study at sites here in the U.S., the pediatric study, the ongoing NexoBrid or the next expanded access protocol. So three different clinical studies where sites may have experience with NexoBrid often those are also Epicel centers, but sometimes they’re not. So I would just say that all 140 target burn centers are in play for the year, and we would expect utilization to come from both current Epicel burn centers, but then NexoBrid burn centers as well.

Sam Brodovsky: Okay. Thanks for any the questions.

Nick Colangelo: Thanks.

Joe Mara: Thanks.

Operator: Thank you very much. Our next call comes from Jeffrey Cohen of Ladenburg. Jeffrey, your line is open.

Jeffrey Cohen: Hi, Nick and Joe, how are you?

Nick Colangelo: Good, Jeff.

Joe Mara: Doing well. Good morning.

Jeffrey Cohen: Just a couple questions from our end. If you could talk a little more about some of the human factors work you’re doing in the arthroscopic setting as far as the device and its design. Is it locked down at this point?

Nick Colangelo: Yes, Jeff, I think and one thing you can do is go to our website where we have a video of the MACI arthroscopic procedure, which I really think helps give people an understanding of exactly what the instrument set looks like and how MACI will be administered arthroscopically. And the context for the human factors study is that when we met with the FDA in December, we proposed that because we were not changing either the drug substance or the drug product, just the way it was administered. And because there’s a fair amount of published data about, the outcomes, good outcomes when MACI has delivered arthroscopically principally outside the U.S. when the product was available outside the U.S., the FDA agreed that a human factor study would be inappropriate path going forward.

So really that means you bring in a number of orthopedic surgeons, you give them instructions on how to administer the product arthroscopically, they do it in a cadaver lab just to make sure that the interface, the surgeon interface faced with the instruments is appropriate. And there’s no issues there. And so it’s a pretty streamlined path for us comparing and obviously an accelerated regulatory pathway versus having had to do an actual clinical study. So that study is planned for this year and we would plan to submit the label expansion to the FDA by the end of the year and would allow us to launch in 2024.

Jeffrey Cohen: Okay, that’s helpful. And then Nick, could you talk about the consumable or reposable instrument kit and what portions may or may not be and how that might look from the payer standpoint as far as the actual procedures being done arthroscopically in the Monday flow there?

Nick Colangelo: Yes, so as you’ll recall for MACI, it’s typically reimbursed under a J code. So it’s a separate code that, the payers €“ under which the payers reimburse the product. There’s obviously a procedure code, a CPT code in terms of how the surgeons get paid and then a facility fee. So that’s kind of the current economics. This is the kit you can see in the video is basically a set of disposable instruments, different size cutters, curettes, things like that. And so exactly how we’ll price those is to be determined but it won’t impact sort of the current reimbursement for the MACI product itself.

Jeffrey Cohen: Got it. Okay. Perfect. That does it for us. Thanks for taking the questions.

Nick Colangelo: Thanks Jeff.

Joe Mara: Thank you.

Operator: Thank you very much. Please stand by for our next question. Our next question comes from Sean Lee of HC Wainwright. Sean, your line is open.

Sean Lee: All right, good morning guys, and congratulations on finishing a great year. I just have two quick questions. One for next outbreak, can we expect any more orders from BARDA this year?

Nick Colangelo: Yes, no orders from BARDA during this year, just commercial.

Sean Lee: Okay. Great. And in terms of the launch strategy for NexoBrid, would you be targeting all the burn centers at the same time similar to what Epicel is doing, or would you start in certain geographies first before rolling out nationwide?

Nick Colangelo: Well, as we’ve talked about previously of the 140 accredited burn centers in the U.S. each year, episodes typically used in probably half of them. So obviously we have relationships in those accounts. We are adding sales reps that will focus on the other accounts with NexoBrid only to start. And so, we’ve tiered them out by patient volumes, claims data, et cetera. And obviously you focus on high volume centers first, so it will be, as I mentioned earlier on the call or in the Q&A session that, we’ll be targeting both current Epicel using centers as well as, high volume centers that have been involved in the various studies for NexoBrid here in the U.S.

Sean Lee: Thanks. That’s helpful. And my final question is just on the new manufacturing facility. Is everything still on track there, still ready to be €“ sorry, still expected to be completed in 2024?

Nick Colangelo: Yes, so everything remains on track. The tenantive improvement part of the project is scheduled to be completed by the end of 2024. Of course, we’ve mentioned that we would expect commercial production in early 2026. So really that 2025 time period is FDA inspection and validation of the new facility.

Sean Lee: Great. Thanks. That’s all the questions I have.

Nick Colangelo: Thank you.

Operator: Thank you very much. I would not like to turn the call back to Nick Colangelo for closing remarks.

Nick Colangelo: Okay. Well, thank you very much and thanks to everyone for your questions and your continued interest in the company. Overall, we delivered strong financial and business results to close the year in 2022, and we expected another year of significant top line revenue growth and strong profitability and operating cash flow driven by both our commercial franchises in 2023. Given our significant market opportunities for the products and our strong financial profile, we really believe that the company’s well positioned for sustained long-term growth in the years ahead. So thanks again and have a great day.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.