Q4 2020 Establishment Labs Holdings Inc Earnings Call
Good afternoon, welcome to establishment Labs fourth quarter 2020 earnings call at this time, all participants will be on listen only mode.
The end of this call we will open the lines for question and answer session on it.
We will follow at that time.
If you require assistance. Please press Star then zero to reach an operator.
As a reminder, this call is being recorded.
I'll now turn the call over to Raj Jain, who is head of strategy and Investor Relations. Please go ahead.
Thank you operator, and thank you everyone for joining US with me today are Juan Jose Chacon, Quiros, Chief Executive Officer, and Renee Gaeta Chief Financial Officer. Following their prepared remarks, we will take your question.
Yes.
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 involve material risks and uncertainties on the company's actual results may differ materially for.
For a discussion of risk factors I encourage you to review the company's annual report on form 10-K, which we plan to file with the SEC tomorrow, and which will be available on our website at establishment labs Dot com. The content of this conference call contains time sensitive information accurate only as of the date of this live broadcast March 10 2021.
Except as required by law establishment labs undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances. After the date of this call.
With that is my pleasure to turn over the call to our CEO Juan Jose.
Thank you Raj and good morning, everyone. I hope everyone is healthy and continues to remain safe.
Our fourth quarter revenue of $27 million represents a new record for our company.
Fourth quarter revenue increased 11% over the fourth quarter of 2019 and was up sequentially, 18% from the third quarter.
Our strong results and recovery we saw over the course of 2020 are the latest evidence that we are moving beyond the pandemic and that the foundations of our growth story are very much intact, our singular focus on women's health and the superior aesthetic and safety profile of our implants continues to resonate in the marketplace.
We continue to grow our total global market share.
October of last year, we shared the 10 year post market surveillance data of our Motiva implants with now over $1 4 million implants worldwide. We continue to report and less than 1% complication rate and the key safety measures of capsular contracture and implant rupture.
These results are at least in order of magnitude better than anything <unk> seen from the legacy competitor products in the international markets.
As impressive as this data is it speaks to something beyond just the competitive advantage. It should change how women perceive the safety of breast augmentation procedures on establishment labs. We believe that this is not just possible, but likely we believe that our data and aesthetic outcomes are quite literally game changing it.
As perceptions change and as new possibilities become available the total addressable market could grow substantially.
Another area, where we are working to change perceptions isn't day breast reconstruction segment with one in eight women afflicted by breast cancer being able to offer a substantially better alternative is an important mission for our company in many countries around the world less than 10% of women have breast reconstruction <unk>.
Our mistake to me.
One reason for this is that the historical focus of breast reconstruction has not been on achieving an aesthetic outcome or.
Our goal is not just to allow for C for breast reconstruction, but to create a new standard of aesthetic breast reconstructions were the patients aesthetic outcome matches traditional breast augmentation within the static breast reconstruction available more women could seek out and have much more comfort with this important surgery.
The planned launch of per flora tissue expander is an important step in offering a better solution to these patients.
2020 was also an important year for establishment labs, because it tested our company and showed that we can manage well during the most difficult times.
We can serve cash and protected our people, while continuing to invest in strategically important initiatives.
We reduced spending at the height of the pandemic, but we did not reduce head count with our customer facing commercial team.
Our balance sheet remains in great shape with $84 $5 million in cash Renee and her finance team manage our operating expenses and working capital well in our cash balance increased in the fourth quarter.
As impressive as this discipline has been over the last year, we are increasingly confident that the worst of the pandemic is behind us and given the significant opportunities still in front of us we intend to invest in our future in.
In manufacturing just last week, we pass our annual audit under DMT SAP standard with no major observations M. D. SAP is a single audit program that covers requirements for U S. FDA as well as regulators in Europe, Canada, Japan, Brazil, Australia, and other jurisdictions 'twenty.
20 has also validated our focus on making digital part of the fabric of our company with our Motiva edge online programs, we train thousands of plastic surgeons in 2020 and attracted many new potential customers through our best in class digital training and educational resources on social media, we have been.
Built a commanding presence with our message of women's health and improved safety and aesthetic outcomes, we have more than 10 times to social media engagement of our closest competitor.
This level of engagement allows us to support a patient's journey as she conducts research and helps us provide answers customized towards specific areas of interest. Our marketing team is also focused on initiatives to leverage our online presence to provide valuable insights into women's decision, making as they seek Brad.
Static procedures. This level of digital based activity is unmatched in our industry is.
As challenging as the last year has been for all of US our strong financial results and the resiliency in our business makes us even more confident that we will have continued strong growth for the foreseeable future given the momentum which has carried over from the fourth quarter. We are providing guidance for the full year 2021 of one <unk>.
<unk> hundred $10 million to $112 million. This represents growth of 30% to 32% over 2020, Renee will provide more detail on our financial results and our outlook in a moment.
Before I turn the call over to her I want to provide an update on several near term initiatives on February 9th we hosted a virtual meeting showcasing the significant development work, we have done on Motiva Mia, our minimally invasive breast enhancement procedure.
Along with strong investor and industry participation, we had over 100 plastic surgeons tune in and the feedback has been outstanding and minimally invasive breast enhancement procedure that can be done in less than 30 minutes without general anesthesia and with no visible scars has been a goal for decades in our industry.
And with me here, we feel we have developed a system that matches that goal and one that is simple to perform reproducible and safe we have learned a tremendous amount in our early series of cases.
The learning curve for me I is very fast with all surgeons able to reducer procedure time by 50% after performing only three to four procedures.
Procedure times fell to as low as just 13 minutes recovery is also very fast with patients discharge in our initial series and as little as 28 minutes and back to work in less than two days with little pain or discomfort.
Motiva Mia opens up breast enhancement too many women, who previously had not consider breast surgery and we view this technology as expansive to the overall market opportunity for breast aesthetics.
Based on our proprietary market research conducted with over 4000 women around the world are an initial estimate of the global market size for <unk> is $1 9 million procedures a year.
This market expansion will increase the total addressable market from $1 $5 billion with traditional breast implants to more than $5 billion with Motiva Mia.
The ergonomics two diamond implant Houston Mia received CE Mark in December and we are now advancing with the regulatory process for the tools that are part of the Motiva Mia system. We continue to define our commercial strategy and we will share more details in the near future.
Our ergonomics two round implant was also CE marked in December.
The ergonomics two platform builds upon our successful ergonomics implant, which has become our best selling and most premium offering in Europe and Asia Pacific.
The features of this innovative new product, including enhanced mechanical properties advanced chemistry, and improved ergonomics. We believe will result in even greater patient satisfaction as it is so feature rich we expect ergonomics two to command the price premium over ergonomics.
Our early experience in Latin America with Ergonomics, two implants has been very positive. We are on track to begin early commercial activity in Europe with ergonomics two over the summer.
Laura are novel tissue Expander received CE Mark in June of 2020, we know in centers for breast reconstruction in Europe have used motiva implants for years.
And are looking forward comparing them with the flora tissue expander and the unique features it offers including our proprietary smooth silk value engineered surface.
With an integrated RFID Port, Florida will be the only MRI compatible tissue expander on the market, which is a significant improvement over the current standard of care Primark.
Pre marketing activities are underway in preparation for a broad commercial launch in Europe over the summer and we are already in contract discussions with several hospital accounts.
Our clinical and commercial progress in China continues and we are moving toward launching in this important market in 2022.
Our regulatory timelines for U S approval also remain unchanged.
More than half on for U S. IDE study patients India steady cohorts have now reached the two year post op anniversary.
I will now turn the call over to Rene.
Thank you Juan Jose establishment labs closed 2020 with significant momentum not only did we see strong sequential growth in sales this quarter to a new record level, we controlled operating expenses and managed our cash position effectively.
Like to thank <unk> team for helping keep establishment labs and in very solid financial position.
You can find additional details about our fourth quarter financials in our earnings press release, and our form 10-K, which we plan to file tomorrow.
Total revenue for the quarter was $27 million <unk>.
Direct sales were approximately 49% of this total while distributor sales, which can fluctuate based on changes in inventory levels and the timing of Reorders made up the balance.
From a regional perspective sales in Europe comprised approximately 45% of global sales Latin America was 29% and Asia Pacific Middle East made up the balance, Brazil, which is our single largest market globally accounted for approximately 13% of total quarterly sales.
Both direct and distributor sales in Latin America has rebounded and were up year over year.
Our reported gross profit for the fourth quarter was $14 $6 million or <unk> 54, 3% net revenue compared to $16 4 million or 67, 5% of revenue for the same period in 2018.
The year over year decrease was due to the timing of certain one time expenses related to inventory obsolescence and scrap.
As a reminder, we only report GAAP results and do not exclude these types of expenses from our results.
Secondly, these items reduced gross margin by approximately 6% in the quarter and 2% for the year.
Importantly, despite these charges gross profit increased on an annual basis in 2020.
To 62% from 61, 3% in 2018.
Average selling prices in the fourth quarter were consistent with the year ago period.
There will be fluctuations as we saw in this quarter. We continue to expect an upward bias in gross margins over time.
Total operating expenses for the fourth quarter were $22 7 million, an increase of $1 $9 million compared to $20 $8 million in the same period a year ago.
SG&A expenses for the fourth quarter increased $1 $1 million to $18 2 million compared to $17 1 million in the fourth quarter of 2018.
The majority of this increase resulted from insurance cost and investment in digital transformation systems.
Our R&D expenses in the fourth quarter increased $900000 from the same quarter, a year ago to $4 $5 million.
This increase was due to the timing of clinical trial expenses and increased investment in several development projects.
Strengthening our product portfolio to drive future growth remains a top priority and we will continue to be disciplined and focused in our research and development investments.
Net loss from operations for the fourth quarter was $8 million compared to net loss of $4 4 million in the year ago period.
During the fourth quarter, we generated $3 $1 million in cash and from a balance sheet standpoint, our cash position remains strong at $84 $5 million as of December 31 <unk>.
Compared to $81 $4 million on September 30th.
The increase this quarter was primarily the result of strong working capital management as.
As Juan Jose noted earlier, we are providing sales guidance for 2021 at $110 million to $112 million, representing an annual growth of 30% to 32% as.
As we look down the rest of the P&L, we expect to see spending increase as we prioritize investment in the development and commercialization of a significant number of programs we have underway.
While operating expenses tied to these new programs will increase we expect a number of cost efficiency programs, we implemented over the past year will become permanent this increased efficiency as well as our strong revenue growth should result in our cash use continuing to trend down from <unk>.
Pre pandemic levels, even as we increased strategic investments.
Overall, we believe our company is in a strong competitive position the business fundamentals are sound and we remain very optimistic about the potential for our new products to contribute to growth in 2021 and beyond I.
I will now turn the call back over to Juan Jose for concluding remarks.
Thank you Rene we are off to a very good start this year.
The record revenue, we generated in the fourth quarter and our progress over 2020 should again that S debt is on the right path and that it is within our grasp to be the leading company in breast aesthetics and reconstruction. There is no other company in our industry innovating like we are or with our commitment to women's health.
The field is wide open for us.
But we are not satisfied with just taking share within the current breast implant market by transforming the patient journey in breast aesthetics and reconstruction, we can expand the markets for our products.
<unk> has a real potential to change the perception and accessibility of breast aesthetics, which could make our addressable markets much larger.
The launch of Florida. This year, we'll begin a concerted push by us into the breast reconstruction market than we see on opportunities to significantly improve outcomes for day millions of women diagnosed with breast cancer around the world day.
Next 18 months will be exciting, but so the next 10 years.
We recently appointed Raj the envoy as head of strategy and Investor Relations.
Many of you know him from his 20 years as a medical device analyst. Most recently as recovering analyst at Jefferies. We are excited to have him join the team.
I also want to thank the entire establishment labs team for their dedication to our mission of improving women's health. The last year has not been an easy one the team continues to perform at a very high level and I could not be more proud.
With that we will turn the call now over to questions.
Ladies and gentlemen, if you'd like to ask a question. Please press Star then one.
If your question has been answered and you'd like to remove yourself from the queue. Please press the pound key.
Our first question comes from Anthony per trial with Jefferies. Your line is open.
Thank you and good morning, everyone. Congratulations to Roger on on your new role and congratulations to the team on a very strong year I hope everyone is doing well on staying healthy.
Maybe to begin Juan Jose couple on you mentioned physician training virtually in 2020, certainly a lot of companies shifted from physical meetings to virtual training, but it sounds like the number of surgeons.
On boarded last year, notably increase so maybe just a little bit of detail on how many surgeons were trained virtually last year and what is the historical conversion rate from.
From training to active Motiva users that you've seen.
Pre pandemic and how that's trended during the pandemic and I'll have a couple of follow ups.
Yes of course, Anthony and thank you.
It was very important for us to prove that we could shift our medical education platform <unk> edge.
From just in person to on.
On line that quickly so that resulted in.
I think the latest number was over 18000 attendees for the year.
In our medical education platform online of which.
<unk> of those were new contacts for us.
Of course, it's difficult during the pandemic to follow up in person with many of them, but we are looking forward to the situation improving so that we can begin doing business with many of them.
As the year evolves, I think youre going to see us doing more in person than now.
But I guess, what we have been able to prove is that.
Online medical education can also be a very powerful tool for training and for attracting surgeons that don't know yet about our story of innovation and improved safety and aesthetic outcomes. So very glad to see the development with I would guess this hybrid.
Medical education, and I think it's going to help very much when we move into new things like me and breast reconstruction.
One follow up for you JJ and quick one for Renee on guidance on would be just a quick update on on U. S. Studies, obviously a lot of studies in in 2020 were were delayed due to COVID-19. So maybe just an update on timing there and how should we think about.
A motiva and knee launch in the U S with those on simultaneously.
Just considering the unveiling at February and the quick Frank quick one for Renee on guidance would be how much is baked in for flora and is there any way to estimate what you've baked in for backlog recapture thanks.
So perhaps we can begin with the FDA. So we were very happy that we finished the enrollment in the aesthetic co.
Cohorts.
Back in August of 2019, so the clock is ticking with that group, which represents 80% of the U S market.
We've been progressing with a follow up.
Most of that happening through virtual consultation debt was pre approved with the FDA. So.
We are looking forward to the two year Mark for us.
For all of those patients.
We believe we are well on track with.
The aesthetic indication as we have mentioned before with breast reconstruction there were a lot of challenges during the pandemic. So that that cohort is delayed but we continue to make progress and we hope to be able to give you some news in the near future.
Yeah. Thanks, Anthony and then also on on <unk>.
2021 guidance now this is our initial view and we are certainly balance on the strength that we've been seeing from the continued uncertainty within the pandemic.
Well, it's sort of timing of those product launches that we've talked about coming this summer, but also some of that deferral recapture because patients not all patients can get in there are still restrictions in certain countries.
We are seeing continued momentum and the outlook outlook on our business remains very good and we're definitely.
Turning to capture global market share.
Thank you congratulations on.
Our next question comes from Josh Jennings with Cowen Your line is open.
Hi, good morning, Thanks for taking the questions.
And Echo Anthonys congratulations on that on a strong end to 2020 and it sounds like momentum has continued in the first quarter here.
Two quick quick ones or two more quick ones two questions sorry.
The share report I think there was a committee meetings in Europe Oh.
Earlier, this month or beginning of the month any takeaways that you've heard from from.
So that that the plenary session.
On Oh.
On the safety of textured implants and are there any other regulatory decisions on textured implants that could hit in 2021 on other geographies outside of Europe.
Yeah. Thanks, Josh.
So just to remind everyone to share committee is basically a committee from the European Commission that focuses on safety.
Across the European Union.
They began looking at the safety of breast implants last year. They issued a report during Q4 that was clearly associated.
Textured breast implants.
With.
Breast implant associated LCL. So definitely this is something that we have been talking for many years at establishment labs, one of the reasons Forex or SaaS is our proprietary smooth silk surface that allows for less inflammation and less capsular contracture.
To date, we have had no cases reported of LCL and when we think about what can happen in the future definitely across the globe regulators are looking at the safety of texture devices and we do expect to see a report from sheer later this year, it's hard to know.
The pandemic exactly when they will be able to finalize that but definitely our expectations is that it will happen. This year that they will give the final recommendations of their report we are seeing.
No other regulatory agencies acting across the world a.
At different speeds, but one thing is clear texture.
Textured breast implants on not the future of this industry and we're happy to be part of the future with our proprietary technologies.
Great great Thanks for that and my.
My follow up is just thinking about the.
The future launch of Motiva, the United States.
What can the establishment to today and in the coming months and quarters per year.
In front of the U S launch in terms of.
Creating motiva awareness within the plastic surgeon community.
I mean, clearly the FCA dataset.
A big deal for the in terms of sentiment towards Motiva.
Are there other channels or other strategies that establishment is considering in terms of creating the buzz and.
And just awareness of Motiva in front of the the approval on the launch thanks for taking the questions.
Yes of course, we have to be very mindful of not doing pre marketing activities. The FDA does frown on on those.
But at the same time, our job is to continue to put out in peer reviewed journals. The evidence on this.
The science behind our technologies, but also.
There has been more and more independent and sponsored peer reviewed studies that have been coming out and I think we will do so we will see more in the future.
I think also there were some awareness globally.
There are new technologies out there by establishment labs, and those happy and can.
Pac positively patient outcomes, so I think the.
Plastic surgery community in the U S is well aware that something is going on as we get our clearance from the FDA, we will be very happy to engage with them.
And get them to use our products quickly.
If I could just follow up any any incremental thoughts on a potential floral launch in front of Motiva approval in the United States.
Again.
Yes, so for our tissue expander flora, which is the only MRI compatible tissue expander with integrated valve.
We expect to submit a revised five 10-K.
In the first half of this year and we will update you on the progress on when we do receive approval.
And of course that gives us the optionality of launching that tissue expander ahead of the breast implant approval.
But it's too early to tell you about what will happen, but we will definitely update you on the different milestones leading to that.
Understood. Thank you.
Our next question comes from Chris Cooley with Stephens. Your line is open.
Thank you good morning, I appreciate everyone, taking the questions and also other everyone else's prior set of materials.
<unk> on our performance on a extremely challenging year.
If I could look to go back on just revisit for my first question.
Inventory around the reconstruction marketplace.
Clearly better clinical outcomes book, but I'm curious as you.
How do you achieve a more augmentation or aesthetic outcome for <unk>.
Those patients.
And I guess I'm just trying to go farther afield here do ultra.
Ultimately envision motiva EMEA being used in these cases or do you also envision some type of a P. D M being brought on board at some point in time as these women more often than not unfortunately have extra.
Extremely radiated tissues there so.
Traditional implant just doesn't really work as well. So just would appreciate any additional color you can provide on the complete suite that you think you'll have to bring to bear here in that segment and how you would achieve a Maurice tulloch outcome and I've got a quick follow up.
Yes.
Yes, Thank you Chris.
The rates of faxes for women in breast reconstruction globally are quite low in some markets they can be single digits and.
Part of it is awareness of good options in good outcomes and non breast reconstruction. Our plan is to transform breast for construction over the next decade by using technology and advanced techniques to bring about what we call an aesthetic breast reconstruction, which is to bring.
Outcomes that are closer to dose of aesthetic patients. There was a publication independent publication last year in Prs Open journal.
Regarding the use of Motiva ergonomics implants.
A hybrid breast reconstruction <unk>.
You go to debt article and you look at the outcomes. It is hard to think that those are not aesthetic looking outcomes and that's exactly what we're looking for we are looking to take some of these initial.
Results with our products and make them into a standard so that they can be used by surgeons worldwide by democratizing. This level of outcomes. We believe more women will be willing to have a reconstruction procedure, but we are not only looking at that we're looking at early.
So we can help these women ahead of time before its too complicated to get a good outcome.
Of course, you know, Florida is our first.
On technology that is uniquely suited for breast with construction as we expand our technologies youll see us, bringing other products to market and as I said.
Our plan is to transform breast reconstruction, just like we've done with breast aesthetics before.
Okay.
Thank you I appreciate all the additional color and then.
Maybe just for my follow up Renault if it's on my when we think about the year on I. Appreciate it's early on in a number of moving parts here, but.
It does seem like there'll be some fairly significant needs for investment this year not only from a working capital perspective, but also just.
In terms of just traditional sales and marketing expense could.
Could you maybe just help us think a little bit about maybe first half versus second half.
Just just any kind of granularity that you can provide there about how we should think about this ramp up in the spend.
Company's perspective in anticipation of these really.
Exciting new launches here.
Come summertime. Thank you so much.
Yes, Chris that's a great question and were obviously factoring in all of the different exciting programs that we have going on here, how does that look with regards to those product launches and rolling out the new advance.
In technology that we're going to bring to the space, but also.
Balancing where we're at with our own our own internal strength in what we're still staying with the pandemic. So.
I wouldn't necessarily say first half on second half.
I'm not going to give quarter.
Quarter by quarter breakdown.
We will see spend increase and would probably expect that as we roll out some of those additional programs over the summer.
The spend would align with that so we're super excited.
How we've come out of the pandemic.
The strength that we're seeing on how our products are resonating with with patients and plastic surgeons and I think as we look forward through the rest of the year, we really wanted to make sure that we're investing strategically to execute on this new milestone.
Thank you.
Our next question comes from Matt Taylor with UBS. Your line is open.
Alright, Thank you for taking the question.
So I wanted to start and ask one about this continued momentum that you called out in Q1, I was hoping you might be able to be.
A little bit more specific you mentioned that there are some countries where people are still having trouble with with access I know you're in 80 countries, China Pollutes, if you'd go through all of them, but could you give us some flavor on where things are going better versus still slow and how you've imputed that into the initial guidance here.
Yeah, certainly you know you're right. We're in over 80 countries that obviously you know the top set of those drive a big chunk of our revenue and we have to be mindful of sort of what's happening in Europe, we've seen some.
Some great response, there and hopefully the vaccine rollout continues and actually increasing momentum I think as we also look towards countries like Brazil, which for US is often times, the leading country and they are seeing an increase in case volume is right now after coming out of their summer on their carnival season.
Some regional governments have recommended deferrals of non essential surgical procedure. So we're winning in all of those factors on sort of watching it daily or weekly just to see what happens I think you know as countries open vaccines roll out.
As always positive for us, but we're still in that interim period right now where we're just trying to.
Provide patients with all.
Our implants and procedures, where we can but in some cases those are still restricted in our in our larger countries that swap.
Okay great.
The recent developments that could be really.
Positive for you as Allergan exit from a number of the O U S markets and I was hoping you could provide some commentary there in terms of how quickly you might be able to to capitalize on some of that or just framing that opportunity for us.
Yeah, Thanks, Matt I think.
This action is in some ways a logical response to the innovation gap that has opened up in the market.
But we have to be mindful that it really began.
Over two years ago, when there was the global recall of allergens textures.
<unk> and <unk>.
The international market at that time was <unk>.
Alrighty textured and off that Allergan had a.
A good portion of it with their textured devices. So the shift away from Allergan really began over two years ago. Many of those users shifted to other extra devices naturally. So that's why we are so adamant are about our medical education.
<unk> evolution from texture devices to smoothed devices.
And if it is going to be smoothed device and advanced by engineers smoothed device like ours.
In saying that.
You have to be mindful that we are taking market share from.
The rest of day competitors, including Allergan.
And also that in many markets, we are moving into a leadership position. So I think in a market where you don't have allergan, our leadership position could be even stronger. So that's probably one of the most important takeaways from us strategically and.
I think we are confident debt.
We can continue taking market share organically and on top of that add to new geographies like China and the U S, where we still have allergan as a competitor.
Okay, Great. That's that's a good way to think about it and that dovetails into my kind of last follow up here I'm talking about your leadership positions you.
Intermittently given some color on market share is in certain geographies relatively high numbers could you update us on a few of those where your shares are today help us think about how your your shares could gravitate higher.
Over time based on your your differentiation.
Yes, I think that we plan to give a.
You know a good update on international markets and the market share position that we have on them but.
But I can tell you you know just to give you some ideas.
How good we've been doing.
In countries, where we launched last like Thailand, and Taiwan, We went literally from zero to being.
On on on par with the market leaders in those markets.
And that shows you how quickly we can grab market share I think we have a good blueprint these days about going into a market and using medical education and patient education to quickly gravitate.
The market towards us.
Do believe though that.
In the international market, you can think of establishment labs is well underway to a market leadership position.
Okay, great. Thanks, J J.
Thank you.
Our next question comes from Amit Hassan with Goldman Sachs. Your line is open.
Hi, all this is Phil on for me, Thanks for taking the questions as always.
I wanted to circle back on the EMEA event that happened earlier this year and ask if you all can can sort of detailed the steps and the timeline that are ahead.
Performing commercial procedures in Europe, obviously, just one of the three elements approved today in the clinical studies that are still ahead.
Yeah of course so.
Just a reminder, our minimally invasive augmentation to concept includes no general anesthesia fast procedure quick discharge of the patient and quick recovery times.
In the series that we performed in Costa Rica.
We're also able to prove a quick learning curve for surgeons and that is fundamental to that timeline.
We were very happy to see the CE Mark for the ergonomics two diamond breast implant that is part of the Motiva Mia system. We are now expecting an approval of the tools that go with them on <unk> system and we're talking about the.
The balloon that is used to create the space through a very small incision and also the motiva injectors. So that we can safely deliver that diamond implant through that very small incision.
For us.
The approval of another group of patients in the Costa Rica series is very important. So we are taking debt group to 100 patients and.
Procedures are happening week to week, and we're progressing towards that end.
Once we get the approval from.
The European notified body in the second half of this year, we will begin pre market activities, which will give us the optionality of launching early in 2022. So of course, we are super excited about these possibilities in our market research a significant amount of the opportunity lies in Europe.
And we do believe debt. It proved that this concept that was born as you know more like.
On a wave two a day.
GAAP, our technology to Asian patients.
Now proven to be a very appealing.
Option for women, who are not thinking about traditional breast augmentation, but who are probably not as happy as it could be with their breast shape or size.
That's great. Thanks, so much on my second one there was a specific comment and the Roger announcements for joining the team.
Helping to create value.
As you expand into new areas of aesthetics, maybe it's for you Juan Jose or maybe for Roger as well to opine on.
Interested in what the implication of that was on how you see rogers' role for the company. Thanks, So much.
Yes of course, you know, we're we're very fortunate to have Raj joined the team.
As we think about the future of the company I think that you have to understand what is it that we bring to aesthetics and I think what we bring that is different is that angle of women's health and we will continue to work towards that end.
We always say debt we are doing this initially in breast aesthetics and reconstruction, but as the as the opportunities come to US we will be very mindful of what fits that angle of women's health. There are many things out there are many interesting technologies, we continue to work through our rich pipeline.
Internally, but but at the end we will do what is best for the company and to shareholders.
Thanks, Juan Jose.
Our next question comes from Murray Tivo with <unk>. Your line is open.
Great. Thank you for taking the questions. This morning, and I'll add my congrats.
Last year, a very strong quarter and congrats to Raj as well.
Wanted to start here with the new ergo to implant on expecting that launched this summer here in Europe could you give us a sense of the pricing premium you're hoping to attach to that product and how we might expect adoption with existing.
Motiva users to sort of roll out is that something that you expect here.
I'm pretty much replace their current ergonomics use what they would be using it in specific cases, how do you see that being on that.
Yes, Thanks Marie.
So.
Back in 2015, when we launched the first generation of the ergonomics device.
That came at a premium of about 50% over a round smoothed sick Smith smooth sales device.
And.
Most people thought debt.
Doctors would not pay per that premium the important thing for US is that we were able to educate patients on the benefits of the ergonomics device ahead of them visiting a plastic surgeon so that made them less price sensitive because they were able to see the value in the ergonomics device the <unk>.
For the softness the tissue like qualities of that implant.
Very appealing to many women so they found themselves in a in.
In a situation, where they were willing to upgrade and pay for debt for that premium I think a similar thing may happen with ergonomics, two but remember this doesn't happen overnight surgeons have to try the device patients will come back with their views on the ergonomics two device I can tell.
From our early experience that patient feedback is extremely positive. So we do expect to see similar process of adoption in which patients pushed surgeons to upgrade or price.
Seizures to the ergonomics two device so hopefully a Europe a few years from now we will be able to tell you that that is our number one.
Offering and we certainly expect that.
Okay great.
I think J D.
On that on the Nielsen Kurt.
Hundred classic surgeons.
And any surprises.
Anything that kind of.
Thank you guys to price.
Yes, probably the amount of surgeons that called <unk>.
Sales rep, saying, how fast can I have it I think that was probably the.
You know the.
The most important takeaway from from from that part is that yes of course plastic surgeons have been thinking about this for decades, it's a logical.
Outcome can we do a minimally invasive augmentation safely quickly.
Can we make it through a reproducible tech.
Technique and I think that's what we've been able to create with Mia.
We have now expanded the IRB series to a 100 patients. We hope that we can continue to prove what we have seen with the initial 30 patients.
We are also looking at the.
Longer term outcomes with the patients from Japan, So all of that together creates a really good.
On atmosphere for a potential product launch in early 2022.
Okay, perfect and last one from me then.
You gave us some nice numbers around the split between direct and distributor sounds like it was almost about half half on this quarter.
Im wondering if theres anything to look here in terms of Lumpiness on the distributors. This year for Kate on for should be thinking about and then any change to your outlook on.
Taking some of your markets direct on on the path that you've taken various countries their acts on whether we should continue to expect that here on 2021.
The results from the year on even the last quarter.
Especially the back half of 2020 was.
Pretty consistent with what we've seen and how we expect it to sort of go going forward.
That 50 50 split on direct versus distributor is where we will likely be fluctuating quarter to quarter, but that's where we're at.
Until we really see day.
Geographical expansion into China and U S.
That's what we're predicting for the future.
Alright very helpful. Thank you again.
Our next question is a follow up from Anthony Petrone with Jefferies. Your line is open.
Thanks, just a quick one on EMEA pathways clinically I'm just wondering when you consider the <unk> secured for.
In the original U S study is that the same sort of protocol, we should be expecting.
On the original U S study of 750 patients. So I'm just wondering if that's sort of the size.
Sort of makeup between revisions on Augmentations, who we assume a similar.
<unk> approach or will it be a P.
P M a supplement to that original data. Thanks.
Yes, Thanks Anthony.
Just a reminder, debt <unk> at this point is for the aesthetic indication only.
Regarding U S potential approval pathway.
Our initial thoughts regarding this are.
A PMA supplement so that's how we plan to approach it it's a little bit early on.
To be having those conversations directly with the FDA, but I think when the time comes.
We would like to.
Confirm with them that that's the appropriate pathway for EMEA, but there are many good reasons, including what we have done in other high vigilant as countries with Mia and.
That could be a good precedent for what we do with the FDA.
Thank you.
That is all the time, we have for questions today I will announce on the call back over to Juan Jose for closing remarks.
Thank you for joining us on today's call. We look forward to providing our next quarterly update in May we wish you a very good day and continued good health. Thank you.
Ladies and gentlemen, this does conclude the program you may now disconnect.
Yes.
Yes.
[music].