Q1 2022 Surmodics Inc Earnings Call

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Speaker 1: Good day and welcome to the Cermotix first quarter fiscal 2022 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tim Ahrens, Senior Vice President of Finance and Chief Financial Officer. Please go ahead, sir.

Good day and welcome to the semantics. The first quarter of fiscal 2022 earnings Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Tim Arens Senior Vice President of Finance and Chief Financial Officer. Please go ahead Sir.

Thank you Casey good morning, and welcome to <unk> fiscal 2022 first quarter earnings call before we begin I would like to remind you that during this call. We will make forward looking statements. These forward looking statements are covered under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Speaker 2: Thank you, Casey. Good morning and welcome to cermatics fiscal 2022 1st quarter earnings call. Before we begin, I would like to remind you that during this call, we will make forward looking statements. These forward looking statements are covered under the safe harbor provisions of the private securities litigation reform act of 1995. And include statements regarding future financial and operating results or other statements that are not historical facts.

And include statements regarding <unk> future financial and operating results or other statements that are not historical facts.

Speaker 2: Please be advised that actual results could differ materially from those stated or implied by our forward looking statements, resulting from certain risks and uncertainties, including those described in our filing. Thermodynamics disclaims any duty to update or revise our forward looking statements as a result of new information, future events, developments, or otherwise.

Be advised that actual results could differ materially from those stated or implied by our forward looking statements, resulting from certain risks and uncertainties, including those described in our SEC filings <unk> disclaims any duty to update or revise our forward looking statements as a result of new information future events developments.

Or otherwise we will also refer to non-GAAP measures because we believe they provide useful information for our investors. Today's news release contains reconciliation tables to GAAP results. This conference call is being webcast and is accessible through the Investor Relations section of the <unk> website, where the audio recording of the webcam.

Speaker 2: We'll also refer to non-GAAP measures because we believe they provide useful information for our investors. Today's news release contains reconciliation tables to GAAP results.

Speaker 2: This conference call is being webcast and is accessible through the investor relations section of this robotics website, where the audio recording of the webcast will also be archived for future reference.

<unk> will also be archived for future reference.

Speaker 2: A press release disclosing our results was issued this morning and is available on our website at cermatics.com. I will now turn the call over to Gary Maharaj. Gary.

Yes release disclosing our quarterly results was issued this morning and is available on our website at <unk> com.

I'll now turn the call over to Gary Maharaj, Gary Thank.

Speaker 3: Thank you, Tim. Good morning and thank you for joining us for our first quarter earnings call. We're pleased with our performance this quarter as it relates to both our financial and strategic objectives in an environment of continuing instability.

Thank you Tim Good morning, and thank you for joining us for foods quarter earnings call. We were pleased with our performance this quarter as it relates to both our financial and strategic objectives.

Environment of continuing instability.

Speaker 3: Let's begin with an update on the impact of COVID on our vid-

Let's begin with an update on the impact of Covid on our business.

Speaker 3: During the past two years, the pandemic has taught us how to effectively manage uncertainty and disruption.

During the past two years, the pandemic has taught us how to effectively manage uncertainty and disruption.

Speaker 3: continue to put these learnings to use to mitigate risks of our business.

Continue to put these learnings to use to use to mitigate risks business.

Speaker 3: The pandemic has placed continued pressures on the global healthcare system as various disruptions emerge. The Micron variant has resulted in elective procedure delays, exacerbated staffing shortages among healthcare providers, and encouraged patients to self-deserve some of their procedures. In addition, limited sales rep access to cath labs has also resulted in hospitals postponing value analysis committees.

The pandemic has placed continued pressures in the global healthcare system as well.

Various disruptions emerge dual micron variances resulted in elective procedure delays exacerbated staffing shortages among health care providers and encourage patients to self distribute some of their procedures. In addition limited sales rep access to Cath Labs and has also resulted in hospitals for spawning value analysis Committee.

The meeting in.

Speaker 3: In addition, staffing shortages have impacted our suppliers, regulatory agencies, and even semiotics, as our employee absenteeism has recently spiked above normal levels due to the virus both in the US and in Ireland.

In addition, staffing shortages have impacted our suppliers regulatory agencies and EBIT synbiotics.

Our employee absenteeism has recently spiked above normal levels due to the virus both in the U S and in Ireland.

Despite these recent than what we believe to be transient headwinds, we remain optimistic about our ability to deliver on our fiscal 2022 financial and strategic objectives. As a result, we are reaffirming our fiscal 2022 financial guidance, which I remind you does not include any revenue.

Speaker 3: Despite these recent and what we believe to be transient headwinds, we remain optimistic about our ability to deliver on our fiscal 2022 financial and strategic objectives. As a result, we are affirming our fiscal 2022 financial guidance, which I remind you does not include any revenue associated with the 30 million dollars surveilled key M.A. miles.

<unk> the $30 million so they will appear in the milestone payment.

Speaker 3: Moving on to a summary of our first quarter performance, which was in line with our expectations.

Moving onto a summary of our first quarter performance, which was in line with our expectations total revenue for the quarter increased 3% to $23 million in the first quarter of fiscal 2002 compared to $22 3 million in the prior year quarter with solid performance from both the medical device and in vitro diagnostics businesses.

Speaker 3: Total revenue for the quarter increased 3% to $23 million in the first quarter of fiscal 22 compared to $22.3 million in the prior year quarter on solid performance from both a medical device and in vitro diagnostics.

We reported GAAP diluted loss per share of negative <unk> 20, and non-GAAP diluted loss per share of <unk>.

Speaker 3: We reported GAAP diluted loss per share of negative 20 cents and non-GAAP diluted loss per share of $0.15.

Tim will provide additional detail on our quarterly results later in today's call.

Speaker 3: Tim will provide additional detail on our quarterly results later in today's video.

Speaker 3: During our first quarter, we continue to make progress on our key strategic objectives for the year. As a reminder, these are...

During our first quarter, we continued to make progress on our key strategic objectives for the year and as a reminder, visa.

First to achieve the PMA for surveil and support Abbott's commercialization efforts second to become the first line treatment for patients with our sublime radial platform and pounds arterial and venous thrombectomy platform.

Speaker 3: first to achieve the PMA for Surveill and support Abbott's commercialization efforts.

Speaker 3: Second, to become the first line treatment for patients with our sublime radial platform and pounds arterial and venous thrombectomy blood.

Speaker 3: Third, to drive top line revenue growth and optimize cash flow from our IVD and medical device coatings offices.

Fluid to drive topline revenue growth and optimize cash flow from our IBD and medical device coatings offerings.

Speaker 3: Starting with surveil, as we discussed in last quarter's call, the FDA has asked for additional data technically called a list of deficiencies.

Starting with surveil as we discussed on last quarter's call. The FDA has asked for additional data technically call a list of deficiencies on surveil to support its pre market approval. Many of these specifically relate to preclinical data, including the impact of different sterilization doses of materials.

Speaker 3: on surveil to support its premarket approval. Many of these specifically relate to preclinical data, including the impact of different sterilization doses on materials used in the final product.

And the final product.

Speaker 3: We have been quite busy preparing our responses to the FDA and aim to finish these before the end of our second quarter. For several of our responses, the FDA has suggested securing a pre-submission meeting to achieve alignment on the response.

We have been quite busy preparing our responses to the FDA and aim to finish these before the end of our second quarter for.

So several formal responses. The FTE has suggested securing a pre submission meeting to achieve alignment on the response.

Speaker 3: While we have requested an accelerated turnaround time for scheduling these meetings, we have been informed that it will most probably take the full 10 weeks to secure the meeting.

While we have requested an accelerated turnaround time for scheduling. These meetings, we have been informed that will most probably take the full 10 weeks to secure the meeting.

I believe but do not know for a fact that the agency has capacity constraints as they have marshal resources to address many of the ongoing public health issues with regard to the Covid pandemic.

Speaker 3: I believe, but do not know for a fact that the agency has capacity constraints as they have marshaled resources to address many of the ongoing public health issues with regard to the COVID pandemic.

Speaker 3: On this normalized timeline, the meeting to align with the agency of data requests for the final submission is now expected at the end of April .

On this normalized timeline the meeting to align with the agency of data requests for the final submission is now expected at the end of April .

Regarding our clinical data from the transcend trial, we have recently completed the required two and three year mortality if analysis of surveil, which successfully demonstrated no difference in mortality as compared to the control device. This further demonstrates the long term safety of our device. These critical analysis will be.

Speaker 3: Regarding our clinical data from the Transcend trial, we have recently completed the required two and three year mortality of analysis of Surveyl, which successfully demonstrated no difference in mortality as compared to the control device. This further demonstrates the long-term safety of our device. These critical analyses will be part of our PME.

Part of our PMA submission.

Speaker 3: Our goal remains to secure the PMA in fiscal 22, and we are confident in our data that we will receive the PMA approval.

Our goal remains to secure the PMA in fiscal 'twenty, two and we are confident in our data that we will receive the PMA approval.

Speaker 3: However, given that the agency still has 90 days to respond after we submit the final responses of additional data, we believe that it's more likely that this approval will occur during the second half of calendar year 2022. I remind you that our fiscal 2022 guidance does not include any revenue associated with the $30 million milestone payment for achieving the surveilled FDA PMA approval.

However, given us given that the agency still has 90 days to respond after we submit the final responses of additional data we believe that it's more likely that this approval will occur during the second half of calendar year 2022.

I remind you that our fiscal 2020 guidance does not include any revenue associated with the $30 million milestone payment for achieving the <unk> FDA PMA approval.

Speaker 3: Moving to Sundance, all balloons in each surround was coated balloons.

Moving to Sundance below the knee sirolimus coated balloon.

Speaker 3: During the fourth quarter of fiscal 21, we completed a six month data follow up visit in conjunction with our swing fruits in human clinical trials.

During the fourth quarter of fiscal 'twenty, one we completed the six months data follow up visits in conjunction with our swing first in human clinical trials.

Speaker 3: Although we have previously communicated that we expect to complete and share these data with Abbott during our first quarter, the physician steering committee for the trial has advised us to conduct some additional data analyses that provide a more comprehensive view of the product performance in different categories of lesions in the enrolled subjects.

Although we have previously communicated we expect to complete and shared these data with Atwood during our first quarter.

The physician steering committee for the trial has advisors to conduct some additional data analyses that provide a more comprehensive view of the product performance and different categories of lesions in the enrolled subjects.

Speaker 3: We have agreed to perform these analyses, but have prioritized our clinical resources at this point towards surveilled and its PMA submission. Our plan is to finalize the clinical report with our clinical investigators and share it with Abbott later in our second quarter.

We have agreed to perform this analysis, but prioritize our clinical resources at this point towards <unk> and its PMA submission. Our plan is to finalize the clinical report with our clinical investigators and share it with Abbott later in our second quarter.

Speaker 3: Our second key strategic objective is to demonstrate the commercial viability of our sublime radial platform and our pounce arterial and venous thrombectomy plan.

Our second key strategic objective is to demonstrate the commercial viability of our sublime radial platform pounds arterial and venous thrombosis from platforms.

Speaker 3: We believe that there are several drivers necessary for us to deliver on this commercialization objective, including the distinctive attributes and advantages of these platforms.

We believe that there are several drivers necessary for us to deliver on this commercialization objectives, including the distinctive attributes and advantages of this platform.

Speaker 3: I'll spend some time today just to rate these unique competitive advantages to help our investors share in my excitement about the future of these products.

Spend some time today just to read this unique competitive advantages to help our investors share in my excitement about the future of these products.

Our sublime radial access portfolio consists of the sublime radial axis guy cheat to over $1 four PTA balloon catheter and <unk> PTA balloon catheter I am pleased to share that we have successfully completed our formal clinical evaluations and have moved into an early commercial fees with each of these products.

Speaker 3: Our Sublime Radial Access Portfolio consists of the Sublime Radial Access Guide Sheet, the 014 PTA Balloon Capacitor and the 018 PTA Balloon Capacitor.

Speaker 3: I'm pleased to share that we have successfully completed our formal clinical evaluations and have moved into an early commercial phase with each of these products.

More than 150, <unk> platform devices have been evaluated and approximately 40 accounts through the United States with nearly 20 of those accounts actually having pleased first time orders for at least one of these products.

Speaker 3: More than 150 Sublime Platform devices have been evaluated in approximately 40 accounts through the United States, with nearly 20 of those accounts actually having placed first-time orders for at least one of these products.

Speaker 3: With a ramp up of our sales team, we now have representation in each of these evaluation site areas for both the Sublime Radial Access Platform and the POUNCE Arterial Comeback to me platform.

With the ramp up of our sales team. We now have representation in each of these evaluation site areas for both the sublime radial access platform and pounds arterial thrombectomy platform.

Speaker 3: This has positioned us to support the commercial use following these product evaluations. Additionally, our sales pipeline is growing with more accounts presenting or preparing to present Sublime to the Internal Hospital Value Analysis Committees for Purchasing Proof.

This has positioned us to support the commercial use following these product evaluations. Additionally, our sales pipeline is growing with more accounts presenting are preparing to present, so blind to the internal hospital value analysis committees.

Purchasing approvals.

As our case experiences broadened over this past quarter.

Speaker 3: As our case experience has broadened over this past quarter, we have continued to be encouraged by the positive feedback we're receiving physicians regarding the unique length, excellent deliverability, and overall performance offered by these dedicated to- carry eyes on our new hospitals and Uh,

We've continued to be encouraged by the positive feedback, we're receiving physicians regarding the unique lengths excellent deliverability and overall performance offered by these dedicated retail devices. As you know the absence of appropriately sized and effective tools has been a limiting factor for the growth of radial axis for peripheral interventions.

Speaker 3: As you know, the absence of appropriately sized and effective tools has been a limiting factor for the growth of radial access for peripheral interventions. And our customers are genuinely excited to have these products facilitate the treatment of above and below the knee disease by a transradial approach.

And our customers are generally yearly excited to have these products facility to treatment of above and below the knee disease bio trans radial approach.

Speaker 3: Along with the optic we have seen in clinical usage, we are also encouraged by the increasing activity we have seen for our products on social media, as well as recent podium mentions at conferences such as these and the recent ICESat meeting.

Along with the uptick we have seen in clinical usage.

Also encouraged by the increasing activity, we have seen for products and social media as well as recent podium mentions of conferences such as this and the <unk> recent <unk> meeting.

Speaker 3: In addition to the success we are having with radial access, a growing number of physicians have also started using Sublime devices for crossing challenging below the knee lesions using femoral and pedal access approaches with our device.

In addition to the success, we are having with radial access the growing number of physicians have also started using sublime devices for crossing challenging below the knee lesions using femoral and pedal access approaches with our devices.

Speaker 3: Based on this successful clinical experience, we have broadened our marketing campaign to drive awareness for Sublime as an any access device to capitalise on this larger market opportunity.

Based on this successful clinical experience, we have broadened our marketing campaign to drive awareness for sublime as in any access device to capitalize on this larger market opportunity.

Speaker 3: Next, regarding our Pounds Arterial Thrombectomy platform.

Next regarding our pounds arterial thrombectomy platform.

Pounds devices, an intuitive and easy to use off the shelf standalone device that provide physicians with the ability to treat a wide variety of cases.

Speaker 3: The Pounce device is an intuitive and easy to use, off the shelf, standalone device that provides physicians with the ability to treat a wide variety of cases.

Speaker 3: These cases can range from relatively simple acute clot extraction to the most complex procedures, dealing with mixed morphology that includes both acute and chronic arterial clots, all without the need for aspiration nor additional capital equipment. In fact, TOUNCE has been used to complete cases involving organized clots where other devices were initially used but could not fully restore blood flow to the level.

These cases and range from relatively simple acute clot extraction to the most complex procedures dealing with mixed morphology that includes both acute and chronic arterial clots.

All without the need for aspiration, nor additional capital equipment. In fact, <unk> has been used to complete cases involving organized clots, where other devices will initially use but could not fully restore blood flow to the 11th.

Speaker 3: I'm pleased to report that approximately 40 procedures have been performed in the United States.

I am pleased to reported approximately 40 procedures have been performed the United States.

Speaker 3: Of our six formal evaluation sites, three of these large hospital assistance systems have officially cleared the value analysis committee approval process and have placed their first commercial orders.

Our six formal evaluation sites three of these large hospital systems have officially cleared the value analysis committee approval process and have placed their first commercial orders looking at our overall pipeline. The pumps arterial thrombectomy device is in the value analysis committee process and more than 15.

Speaker 3: Looking at our overall pipeline, the POUNCE bacterial thrombectomy device is in the value analysis committee process in more than 15 hospitals. This is an encouraging sign that physicians believe in the merits of this device and are willing to support the committee process to ultimately get POUNCE into their cath lab.

Hospitals. This is an encouraging sign that physicians believe in the merits of this device and are willing to support the committee process to ultimately get pumped into their cath labs and.

Speaker 3: In contrast to the sublime products, which can be used in either the hospital or office-based cath lab setting, the nature of acute limb ischemia generally requires thrombectomy in the hospital system, which does extend the sales cycle relative to office-based sites of care.

In contrast, the sublime products, which can be used in either the hospital or office space Cath lab setting the nature of acute limb ischemia generally requires thrombectomy in the hospital system, which does extend the sales cycle relative to office space sites of care.

We continue to be extremely pleased with the feedback we are receiving from evaluating physicians, which consistently indicates that the pound's devices effective and extracting a variety of plaque morphology and restoring critical blood flow to patients extremities without the need for aspiration or capital equipment.

Speaker 3: We continue to be extremely pleased with the feedback we are receiving from evaluating physicians, which consistently indicates that the POUNCE device is effective in extracting a variety of clot morphology and restoring critical blood flow to patients' extremities without the need for aspiration or capital equipment. And it's often now being referred to as their first-line treatment.

And it's often now being referred to as the fruits line treatment device.

Our pounds venous thrombotic Jimmy platform provides physicians with the ability to safely separate large mixed morphology clubs from the vein wall and rapidly extracted without removing the device from the patient with.

Speaker 3: Our POUNDS venous thrombectomy platform provides physicians with the ability to safely separate large and mixed morphology clots from the vein wall and rapidly extract it without removing the device from the patient.

Speaker 3: We continue to target the Q2 completion of our POUNDS-Venus process and manufacturing validation efforts, followed in it quickly by initial clinical product evaluation.

We continue to target a Q2 completion of our pumps <unk> process and manufacturing validation efforts followed in a quickly by initial clinical product evaluations.

Speaker 3: To put it simply, we are thrilled with the physician feedback so far on the performance of our Sublime devices and our Pounce arterial devices. We are content that these products possess the critical drivers to ensure commercial success, including differentiation from other devices in the market and an excellent value proposition to hospitals and interventions.

To put it simply we are thrilled with the physician feedback so far on the performance of our sublime devices on our pounds arterial devices. We are confident that these products possess the critical drivers centric and short commercial success, including differentiation from other devices in the market and an excellent.

Ali proposition two hospitals and the debentures.

Under the Hood, we have assembled a seasoned commercial team with a stellar track record measured in multiple decades <unk> periods in medical devices. This covers the gamut from product marketing internal commercial operations to field sales and clinical reputation at all type sites of care.

Speaker 3: Under the hood, we have assembled a seasoned commercial team with a stellar track record measured in multiple decades of average experience in medical devices. This covers the gamut from product marketing, internal commercial operations, to field sales and clinical reputations at all tight sites of care.

Since our November earnings call. We have added eight experienced field sales team members bring our number of total of sales professionals to 16 two.

Speaker 3: Since our November earnings call, we have added eight experienced field sales team members, bringing our number total of sales professionals to six.

Speaker 3: To a large extent, our Fiscal 22 is about building our commercialization pipeline, those activities that lead to customer purchases, and is an essential catalyst to driving our value creating goal of delivering consistent double-digit revenue growth beginning in Fiscal 2023.

To a large extent our fiscal 'twenty two is about building our commercialization pipeline those activities that lead to customer purchases and as an essential catalyst to driving our value creating goal of delivering consistent double digit revenue growth beginning in fiscal 2023.

Securing new accounts is a multi step process that includes property valuations for physician acceptance followed by consideration of approval from a hospital or clinics value analysis Committee.

Speaker 3: Securing new accounts is a multi-step process that includes product valuations for physician acceptance, followed by consideration and approval from a hospital or clinic's value analysis committee. Although we are early in these processes, I am pleased with the initial process to build this pipeline despite the challenges presented by the COVID pandemic I discussed earlier. We have a healthy early pipeline of counts in various steps of the process.

Although we are early in these processes I am pleased with the initial process to build a pipeline. Despite the challenges presented by the Covid pandemic I discussed earlier, we have a healthy the early pipeline of accounts in various steps of the process.

Speaker 3: As I mentioned during November's call, we expect to see modest but meaningful and growing revenue associated with adoption, utilization, and sales of these products, beginning in our third fiscal quarter.

As I mentioned during november's call, we expect to see modest, but meaningful and growing revenue associated with the adoption utilization and sales of these products beginning in our third fiscal quarter.

Speaker 3: We have already received initial orders from a handful of accounts, and while immaterial to our first quarter financial results, it demonstrates the initial steps on this journey to create meaningful value from these plasmids.

We have already received initial orders from a handful of accounts and while immaterial to our first quarter financial results demonstrates the initial steps on this journey to create meaningful value from these platforms.

Speaker 3: Turning to our third strategic objective, driving growth in our IVD and medical device business.

Turning to our third strategic objective driving growth in our IBD and medical device businesses, while our IBD business delivered somewhat flat revenue performance in the first quarters. The numbers don't tell the complete story, our chemical component offering offerings delivered double digit growth over the year ago Pierre.

Speaker 3: While our IVD business delivered somewhat flat revenue performance in the first quarters, the numbers don't tell the complete story. Our chemical component offerings delivered double digit growth over the year-ago period. And I expect our IVD business will return to growth beginning in the second quarter. Our medical device businesses provided solid mid-single digit revenue growth this quarter driven by strong coatings and product sales.

And I expect our IBD business will return to growth beginning in the second quarter. Our medical device business has provided solid mid single digit revenue growth this quarter, driven by strong coatings and product sales.

Speaker 3: We have high expectations for the company this year, and we believe that delivering our long-term goals starts with executing our fiscal 2022 strategic objective.

We have high expectations for the company this year and we believe that delivering our long term goals start with executing our fiscal 2022 strategic objectives.

Speaker 3: This year's focus is to put ourselves in a position to provide this consistent and robust revenue growth. We're pleased with the progress during our first quarter and look forward to sharing progress and our value creating initiatives throughout the year.

<unk> focus is to put ourselves in a position to provide this consistent and robust revenue growth. We're pleased with our progress during our first quarter and look forward to sharing progress on our value creating initiatives throughout the year.

Speaker 3: I'll now turn the call over to Tim to provide more details of our first quarter of fiscal 22 results. Tim?

I'll now turn the call over to Tim to provide more details on our first quarter of fiscal 'twenty two results Tim. Thank.

Speaker 2: Thank you, Gary. During today's call, I will provide an overview of our first quarter operating performance, as well as an update on our fiscal 2022 financial guidance and liquidity position.

Thank you Gary during today's call I will provide an overview of our first quarter operating performance as well as an update on our fiscal 2022 financial guidance and liquidity position.

Speaker 2: I think it is helpful to begin with a summary of the current macro environment and what we are experiencing.

I think it is helpful to begin with a summary of the current macro environment and what we are experiencing.

Speaker 2: beginning with cermatics. While we were able to avoid shutting down any of our manufacturing and production activities, we recently experienced the highest level of employee absenteeism since the beginning of the pandemic. Approximately one in ten of our employees reported a COVID infection during the month of January .

Beginning with the <unk>, while we were able to avoid shutting down any of our manufacturing and production activities. We've recently experienced the highest level of employee absenteeism since the beginning of the pandemic approximately one in 10 of our employees reported a COVID-19 infection during the month of January .

Speaker 2: At the same time, many hospitals have enacted changes as a result of the recent increase in COVID cases, which include limited or restricted access to sales professionals, including our own, as well as a Postponement of Value Analysis Committee meeting.

At the same time, many hospitals have enacted changes as a result of the recent increase in Covid cases, which include limited or restricted access to sales professionals, including our own as well as the postponement of value analysis Committee meetings.

In addition, the surge in Covid hospitalizations and staffing shortages has resulted in many hospitals deferring elective procedures, we estimate that more than half of our royalty revenues associated with devices utilizing elective or moderately urgent endovascular procedures.

Speaker 2: In addition, the surge in COVID hospitalizations and staffing shortages has resulted in many hospitals deferring elective procedures. We estimate that more than half of our royalty revenues associated with devices utilize elective or moderately urgent endovascular procedures. Associate holiday

Procedures that are often deferred.

Speaker 2: Finally, let me provide some perspective on supply chain pressures. Our operations team has done an excellent job of managing our supply chain to date, and like other companies, we are dealing with an elevated risk of raw material supply shortages.

Finally, let me provide some perspective on supply chain pressures our operations team has done an excellent job of managing our supply chain to date and like other companies. We are dealing with an elevated risk of raw material supply shortages.

Speaker 2: Despite these headlines, we continue to manage what we can control, including our operating expenses that support our strategic initiative.

Spite these headwinds we continue to manage what we can control, including our operating expenses that support our strategic initiatives.

Turning to revenue for the first quarter of fiscal 2022 revenue grew 3% to $23 million compared to $22 3 million in the prior year quarter.

Speaker 2: Turning to revenue, for the first quarter of fiscal 2022, revenue grew 3% to $23 million, compared to $22.3 million in the prior year quarter.

Speaker 2: Our medical device business revenue grew 4% year over year to $16.9 million, driven by strong product sales which offset lower than expected royalty revenue.

Our medical device business revenue grew 4% year over year to $16 9 million driven by strong product sales, which offset lower than expected royalty revenue.

Speaker 2: Our in-detro diagnostics business revenue was essentially flat at $6.1 million and faced a difficult microarray slide revenue comparison.

<unk> diagnostics business revenue was essentially flat at $6 1 million and <unk>.

A difficult microarray slide revenue comparison.

Speaker 2: Nevertheless, the IBD business experienced solid growth and stabilization and color metric substrate products offset by an expected decline in the slide product revenue.

Otherwise the IBD business experienced solid growth in stabilization and color metrics substrate products offset by an expected decline in the slide product revenue.

Our first quarter royalty and license fee revenue totaled $8 1 million down $1 2 million from the same prior year period royalty revenue declined 13% to $6 9 million in the first quarter compared to a more difficult comparison of $7 9 million in the prior year quarter.

Speaker 2: Our first quarter royalty and licensee revenue totaled 8.1 million, down 1.2 million from the same prior year period. Royalty revenue declined 13% to 6.9 million in the first quarter, compared to a more difficult comparison of 7.9 million in the prior year quarter.

Speaker 2: There are two main factors impacting our current royalty performance, both of which we believe to be transitory.

There are two main factors impacting our current royalty performance both of which we believe to be transitory.

Speaker 2: First, let me remind you that we are required to estimate our Royalty Revenue for each period. For example, our first quarter fiscal 2022 Royalty Revenue is an estimate of the Royalty we will earn on our customer sales of devices utilizing our coatings during the October to December 2021 period.

First let me remind you that we are required to estimate our royalty revenue for each period. For example, our first quarter fiscal 2022 royalty revenue as an estimate of the royalty we will earn on our customer sales of devices utilizing our coatings during the October to December 2021 period.

Our year ago royalty revenue included a favorable true up of approximately $800.

Speaker 2: Our year ago royalty revenue included a favorable true-up of approximately $800,000 as a result of stronger than anticipated customer reported royalties relative to our estimates.

As a result of stronger than anticipated customer reported royalties relative to our estimate.

Whereas at current period customer reported royalties were consistent with our estimate this is the first factor.

Speaker 2: Whereas the current period customer reported royalties were consistent with our estimate.

The second factor pertains to our royalty revenue estimate for Q1 fiscal 2022.

Speaker 2: The second factor pertains to our royalty revenue estimate for Q1 fiscal 2022. We expect that many of the macroenvironmental forces that I described earlier had an unfavorable impact on procedures and on our royalty revenue during the period ending December 2021.

We expect that many of the macro environment for environmental forces that are described earlier had an unfavorable impact on procedures and on our royalty revenue during the period ending December 2021.

Speaker 2: While the current environment is challenging the forecast, we expect that our royalty revenues should return to growth over the remainder of the year as the current COVID wave subsides.

While the current environment is challenging to forecast, we expect that our royalty revenue should return to growth over the remainder of the year as the current Covid wave subsides.

Speaker 2: licensed fee revenue under the Abbott Agreement, $1.2 million in the first quarter of fiscal 2022, and was down slightly compared to the prior year quarter.

License fee revenue under the Abbott agreement totaled $1 2 million in the first quarter of fiscal 2022 and was down slightly compared to the prior year quarter.

Speaker 2: Product revenue increased 22% to $12.3 million in the first quarter, compared to $10.1 million in the prior year quarter. In our medical device business, product revenue grew 49%, or $2.2 million to $6.8 million, on increased demand for both their coding reagents and medical devices, both of which exceed

Product revenue increased 22% to $12 3 million in the first quarter compared to $10 1 million in the prior year quarter.

In our medical device business product revenue grew 49% or $2 2 million to $6 8 million and increased demand for both their coating reagents and medical devices.

Both of which exceeded our expectations.

We delivered record coding reagent revenue performance during the quarter. Additionally, our medical device product revenue narrowly missed delivering record revenue and benefited from increased sales of our partnered products, including those to Medtronic and cook as well as from our initial parts and supply and commercialization efforts.

Speaker 2: We delivered record coding reagent revenue performance during the quarter. Additionally, a medical device product revenue narrowly missed delivering record revenue and benefited from increased sales of our partner products. Including most in Medtronic and Cook, as well as from our initial Pounce and Sublime commercialization efforts.

We continue to expect to deliver double digit medical device product revenue growth throughout the remainder of the year driven in part by our pumps and supply and commercialization efforts later in the year.

Speaker 2: We continue to expect to deliver double digit medical device product revenue growth throughout the remainder of the year. Driven in part by our pounce and sublime commercialization efforts later in the year.

Our in vitro diagnostics business reported product revenue of $5 6 million and was essentially flat compared to the same prior year period, we delivered another quarter of solid year over year growth in sales of our protein stabilization and color metrics up shape products.

Speaker 2: Our in vitro diagnostics business reported product revenue of 5.6 million and was essentially flat compared to the same prior year period. We delivered another quarter of solid year over year growth in sales of our protein stabilization and colormetric substrate products.

Speaker 2: This was offset by lower revenue from our slide products compared to the prior year period revenue, which was a record.

This was offset by lower revenue from our slide.

Our products compared to the prior year period revenue, which was a record.

Speaker 2: We expect IBD product revenue growth in a low to mid-single digits for the full year.

We expect the IBD product revenue growth in a low to mid single digits for the full year.

R&D services revenue of $2 6 million was down 11% or 300000.

Speaker 2: R&D services revenue of 2.6 million was down 11% or 300,000 compared to the same prior year period driven by lower customer demand for medical device coding services. Due in part to supply chain challenges related to customer supply components.

Compared to the same prior year period, driven by lower customer demand for our medical device coating services due in part to supply chain challenges related to customer supply components.

Speaker 2: R&D Services revenue in our IBD business was down slightly compared to the year ago period.

R&D services revenue and our IBD business was down slightly compared to the year ago period.

Product gross margin in the first quarter of fiscal 2022 was 64% compared to 63% in the prior year quarter.

Speaker 2: Product gross margin in the first quarter of fiscal 2022 was 64% compared to 63% in the prior year quarter. As both our medical device and IVD businesses delivered improved product gross margins from the year ago period.

As both our medical device and <unk> businesses delivered improved product gross margins from the year ago period.

Favorable impacts from leverage on volume were partially offset by unfavorable impacts from product mix.

Speaker 2: Favorable impacts from leverage and volume were partially offset by unfavorable impacts for products.

Speaker 2: R&D expense, including cost of clinical and regulatory activities, was $11.7 million in the first quarter, or 51% of revenue, compared to $10.9 million, or 49% of revenue in the year-ago period.

R&D expense, including cost of clinical and regulatory activities was $11 7 million in the first quarter are 51% of revenue compared to $10 9 million or 49% of revenue in the year ago period.

Driving this increase was the investment to support our parts venous thrombectomy device commercial readiness activities, including a process and manufacturing validation activities.

Speaker 2: Driving this increase was the investment to support our pounce venous thrombectomy device commercial readiness activities, including our process and manufacturing validation activities.

Speaker 2: While our team continues as always to exercise disciplined expense management, we expect that our quarterly R and D spend will increase several million from Q1 levels as we continue to accelerate our Pounce Venus commercial readiness activities. As well, as our Pounce and Sublime Product Development initiatives over the remainder of the year.

While our team continues as always to exercise disciplined expense management, we expect that our quarterly R&D spend will increase several million dollars from Q1 levels as we continue to accelerate our pumps venous commercial readiness activities as well as our pumps and supply and product development initiatives over the remainder of the year.

Speaker 2: SG&A expense in the 1st quarter of fiscal 2022 was 9.2M or 40% of revenue compared to 7M or 32% of revenue in the year ago period. The increase in SG&A expenses related to sales and marketing activities, including new hires, to support the commercialization of our Sublime & Pounce products.

SG&A expense in the first quarter of fiscal 2022 was $9 2 million or 40% of revenue compared to $7 million or 32% of revenue in the year ago period the.

The increase in SG&A expenses related to sales and marketing activities, including new hires to support the commercialization of our sublime and pumps products. As a reminder, for the full year SG&A is expected to range in the mid <unk> as a percentage of revenue.

Speaker 2: As a reminder, for the full year, SG&A is expected to range in the mid 40s as a percentage of revenue.

Our medical device business reported an operating loss of $3 8 million in the first quarter compared to an operating loss of 590000 in the year ago period. The first quarter includes the addition of $1 1 million in expenses from the <unk> acquisition of <unk>.

Speaker 2: Our medical device business reported an operating loss of 3.8 million in the first quarter compared to an operating loss of 590,000 in the year-ago period. The first quarter includes the addition of 1.1 million in expenses from the V-tex acquisition, of which 550,000 is intangible acid amortization.

550000, as intangible asset amortization.

Speaker 2: Our IVD business reported operating income of 3.2M in the 1st quarter of fiscal 2022 and was consistent with the prior year quarter. Our Q1 fiscal 2022 IVD operating income was equal to approximately 52% of revenue.

Our IBD business reported operating income of $3 2 million in the first quarter of fiscal 2022 and was consistent with the prior year quarter.

Our Q1 fiscal 2022, IBD operating income was equal to approximately 52% of revenue.

Speaker 2: Now turning to income taxes. We recorded an income tax benefit of $710,000 in the first quarter of fiscal 2022 compared to income tax expense of $170,000 in the year-ago period. The current quarter's tax benefit is a result of the pre-tax loss for the first quarter.

Now turning to income taxes, we recorded an income tax benefit of $710000 in the first quarter of fiscal 2022 compared to income tax expense of 170000 in the year ago period. The current quarter's tax benefit as a result of the pre tax loss for the first quarter.

On a GAAP basis, we reported a loss per share of <unk> <unk> in the first quarter of fiscal 2022 compared to a loss per share of <unk> <unk> in the prior year quarter on a non-GAAP basis, we reported a loss per share of <unk> 13.

Speaker 2: On a gap basis, we reported a loss per share of 20 cents in the 1st quarter fiscal 2022 compared to a loss per share of 2 cents in the prior year quarter. On a non-gap basis, we reported a loss per share of 13 cents in the 1st quarter versus earnings per share of 2 cents in the prior year quarter.

In the first quarter versus earnings per share of <unk> <unk> in the prior year quarter.

Moving to the balance sheet in the first quarter, we began with $41 million of cash and investments during the first quarter cash used by operations was $7 million and capital expenditures totaled 780000.

Speaker 2: Moving to the balance sheet. In the first quarter, we began with $41 million of cash and investment.

Speaker 2: During the first quarter, cash used by operations was $7 million and capital expenditures totaled $780,000.

Speaker 2: As of December 31st, 2021, we had cash and investments totaling 32 million and the balance in our line of credit remained unchanged at 10 million related to the funding of the July 2021 V-TEX acquisition.

As of December 31, 2021, we had cash and investments totaling $32 million and the balance on our line of credit remained unchanged at $10 million related to the funding of the July 2021 <unk> acquisition.

It is important to note that our first quarter historically requires a higher use of cash to fund our working capital needs such as our annual employee bonus payments and our annual prepaid insurance premiums.

Speaker 2: It is important to note that our first quarter historically requires a higher use of cash to fund our working capital needs, such as our annual employee bonus payments and our annual prepaid insurance premium.

Speaker 2: We anticipate that we will finish the year with approximately $20 million of cash, which does not include the potential receipt of the $30 million surveilled milestone payment.

We anticipate that we will finish at year was worth approximately $20 million of cash which does not include the potential receipt of the $30 million surveil milestone payment.

Speaker 2: Turning now to our outlook for 2022, as Gary mentioned, we are reaffirming our fiscal 2022 guidance. Which assumes that current coded and macro environmental impacts become a tailwind in the coming months. We expect fiscal year 2022 revenue to range from $97 million to $101 million.

Turning now to our outlook for 2022 as Gary mentioned, we are reaffirming our fiscal 2022 guidance, which assumes that current COVID-19 and macro environmental impacts become a tailwind in the coming months.

We expect fiscal year 2022 revenues to range from $97 million to $101 million.

Speaker 2: We expect fiscal 2022 diluted gap in the range of a loss per share of 2 dollars and 5 cents. To a loss of $1.55.

We expect fiscal 2022 diluted GAAP EPS in the range of a loss per share of $2 <unk>.

To a loss of $1 55.

Speaker 2: We expect non-gapped diluted EPS in the range of a loss per share of $1.75 to $1.25.

We expect non-GAAP diluted EPS in the range of a loss per share $1 75 to $1 25.

Speaker 2: Operator, this concludes our prepared remarks. We would now like to open the call to questions.

Operator. This concludes our prepared remarks, we would now like to open the call to questions.

Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

Speaker 1: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that is star 1 for questions. And we will take our first question.

Thank you speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

Once again that is star one for questions.

And we will take our first question.

From Brooks O'neil with Lake Street capital markets.

Good morning, guys and thanks for all the color.

Speaker 4: Good morning, guys. And thanks for all the color. Congratulations on solid quarter. I have a couple questions. I'll start off by

Congratulations on a solid quarter I have a couple of questions ill start up by.

Recognizing that you provide annual guidance not quarterly guidance, but based on your comments Tim in particular.

Speaker 4: recognizing that you provide annual guidance, not quarterly guidance, but based on your comments, Tim, in particular, would it be reasonable to expect 2Q results to be, particularly revenue, I guess, lower than the results you achieved in 1Q given the continued headwinds you see out there in the marketplace?

Would it be reasonable to expect <unk> results to be particularly revenue I guess lower than the results you achieved in <unk> given the continued headwinds you see out there in the marketplace.

Brooks. Thanks for the question I will I will tell you probably a greater influence on.

Speaker 2: Well, Brooke, thanks for the question. I will tell you probably a greater influence on our Q2 fiscal results, so the period of January through March, is going to be that the prior year period we recognize a significant portion of the milestone payment that we received for the written clinical report submitted to Abbott. That's going to be the biggest factor.

Our Q2 fiscal results. So the period of January through March is going to be that the prior year period, we recognized a significant portion of the milestone payment that we received for the written clinical report submitted to Abbott, that's going to be the big factor.

Speaker 2: In fact, I think we had discussed this on the previous earning call. I expect and continue to expect that every quarter we'll see year-on-year revenue growth compared to the prior year, with the exception of Q2 as a result of that milestone payment that was received a year ago. I will say that we are anticipating that there could be some impact from the macro-environmental environment, including COVID, perhaps some continued supply chain pressures.

In fact, I think we had discussed this on the previous earnings call I expect and continue to expect that every quarter, we will see year on year revenue growth compared to the prior year with the exception of Q2 as a result of that milestone payment that was received a year ago.

I will say that we are anticipating that there could be some impact from.

The macro environmental.

Environment, including Covid, perhaps some continued supply chain pressures, but that doesn't make me change our annual guidance and how we're thinking about that over the course of the year.

Speaker 2: But that doesn't make me change our annual guidance and how we're thinking about that over the course of the year.

Speaker 4: Sure. Okay, that's great. Thank you very much. Questions for Gary. Obviously, appreciate all your comments about the pipeline and the success you're having with Sublime and Pounds, et cetera. Has the successor...

Sure. Okay. That's great. Thank you very much.

For Gary obviously appreciate all your comments about the pipeline and the success, you're having with sublime in pounds et cetera.

Has the success, you're having in any way change your long term thinking about whether it will be more appropriate for you to go to market yourself without a partner for some of those products or do you still.

Speaker 4: in any way change your long-term thinking about whether it will be more appropriate for you to go to market yourself.

Speaker 4: without a partner for some of those products, or do you still...

But the longer term vision that a lot of these products will be partnered with.

Speaker 4: sort of have the longer term vision that a lot of these products will be partnered with a strategic that's already got an established sales and commercialization.

T J, it's already got an established sales and commercialization organization.

Speaker 3: Yeah, you know, Brooks, through the years, I love the early results we're getting, but I've learned not to celebrate the fist bump in the real early market. Really, you know, I'm a big believer in the Crossing the Chasm concept where you get early adopters and that's great. The real...

Yes, Brooks through that through the years.

I lost the early results, we're getting but absolute not celebrate our fifth pump in the real early market.

Im a big believer in the crossing the chasm concept, where you get early adopters and Thats great.

The real.

Validation will come into the mainstream market and what I, particularly like about our results is that.

Speaker 3: validation will come into the mainstream market. And what I particularly like about our results is that we're getting some large hospital systems, which I would not have predicted you pick up this early in terms of value analysis. I mean, that is a war out there. So what you think of the rollout of this rollback vaccine?

We're getting some large hospital systems, which I would not have predicted.

Pick up this early in terms of value analysis, I mean that is a war out there.

So physician use of our product and clearly our excellent.

Speaker 3: Physician use of our product and clearly our excellent field sales team that we've hired are really getting these earlier than I predicted. But I will say my caution is too early to tell.

<unk> sales team that we've hired.

Getting these earlier than that.

I predict it but I will say my caution is too early to tell.

<unk>.

Speaker 3: The number of sales people we have hired and who are attracted to what we have from some other companies, it's a very competitive market to get salespeople, really coming to us based on the merit of the product and the strategy. And so while too early to call, I'll just say I feel really good where we are at in the early market. Thank you.

The number of salespeople, we have hired and who attracted to what we have from some other companies. It's a very competitive market to get salespeople are really coming to us based on the merits of the product and the strategy and so while it's too early to call I'll, just say I feel really good where we are at an early.

Market stay tune perfect.

Speaker 4: Yeah, I'll stay tuned for sure. Last question for me. If I was remembering correctly, and I clearly might not be

I'll stay tuned for sure last question for me.

If I.

Remembering correctly clearly might not be.

Speaker 4: I had some sense that you were hopeful that would surveil with additional time to collect additional data that you might have powered the trial sufficiently to demonstrate superiority versus the Admo product.

You had some sense that you're hopeful that would surveil with additional time to collect additional data that you might have powered the trial sufficiently to demonstrate superiority versus the admiral product.

Speaker 4: Would you say the ultimate status right now does not give you enough data to make that claim?

Would you say.

The ultimate.

Status right now does that give you enough data to EMEA a slimmer.

Speaker 3: You know, non-inferiority and superiority testing are quite involved. So the way you have to do it statistically is you have to run non-inferiority assessments.

Non inferiority and superiority testing.

Quite involved.

Involved so the way you have to do to Simplistically do you have to run.

Non inferiority assessment first.

Speaker 5: If you have demonstrated a non-inferiority, then you can do a test for superiority, both on the safety and efficacy. Those tests for superiority were not valid. So

We have demonstrated a non inferiority then you can do it.

First for superior superiority, both on the safety and efficacy.

Those test for superiority.

Were not valid.

No.

Speaker 5: the product we can clearly claim eventually when we have AMA approval, it is clinically non-inferior at both safety and efficacy. A superiority test at this level of trial would require a lot more patients and it just was not economically feasible....

Product, we can clearly clean eventually.

The approval it is clinically non inferior both safety and efficacy of superiority test at this level of trial would require a lot more patients and it just was not economically feasible, but we didn't run it showed up that went to the non inferiority.

Okay, and then I guess I have one follow up on that is do you think as you as you ultimately commercialize this product you might be able to collect additional data that might give you the opportunity to review that claim again.

Speaker 4: Okay, and then I guess I have one follow up on that is, do you think as you as you ultimately commercialize this product, you might be able to collect additional data that might give you the opportunity to review that claim again?

Speaker 5: Yeah, you know, post markets, superior, yeah, in the US and

Yes, you look post market superiority.

Yes in the U S.

Speaker 3: the EU registry, the PMCF, will be able to collect additional data. To really get a superiority claim, you have to really almost do a trial for the clinical inclusion and exclusion criteria. And I'm oversimplifying it there. In the post-market, you're really looking at real-world clinical effectiveness. In a clinical trial, you're looking for efficacy, which is sort of defined under control, the clinical condition.

The EU registry that <unk> will be able to collect additional data.

To really get a superiority claim you have to really almost do a trial for the clinical.

Inclusion and exclusion criteria and I'm oversimplifying it.

In the post market, you're really looking at real world clinical effectiveness and a clinical trial you are looking for efficacy, which is sort of defined under control the clinical condition.

Speaker 5: So, you know, our partner Abbott may choose to engage in more work, but I don't really see

So.

Our partner Abbott may choose to engage in more work, but I don't really see.

<unk>.

Superiority being a trial to be designed one thing I will say is remember EMEA have said this in the past pharmacologically. If you have a product that uses a lower dose.

Speaker 5: superiority being a trial to be designed. One thing I will say is remember, and may have said this in the past, pharmacologically if you have a product that uses a low dose

For non cytotoxic, Egypt like Paclitaxel.

Speaker 5: for known cytotoxic agents like paclitaxel, eiclinicols, non-inferiorities.

Non inferiority.

Speaker 5: To me, that is a superior product because you have now broadened the therapeutic threshold of getting similar effects with a low dose of a drug with no side effects. So that's really important. The final thing I'll say.

Super.

Okay.

Now.

Thanks.

Getting similarly.

Drug with no side effects.

That's really important.

We don't see it.

Speaker 6: We don't see the commercial success being dependent on a superiority trial. There's enough matter here to actually have a follow up on the average to drive commercial success at the ground level.

Yes.

Got it.

Superiority trial.

Yeah.

Two actually.

The average drive.

Okay.

At the ground level.

Great. Thank you very much and congratulations keep up the great work.

Speaker 6: Great. Thank you very much. Congratulations.

Thank you.

And we'll take our next question.

Speaker 6: We'll take our next question from David Saxon with Needham.

Hey, Doug.

Speaker 7: Hi, Gary and Tim. Good morning and thanks for taking questions. My first question is just on Sundance. I guess, you know, why are they asking for additional analysis? I mean, it seems like that could mean the results weren't great or maybe not as good as expected. So, you know, is that a fair assumption or are there other factors at play?

Hi, Gary.

Good morning, and thanks for taking my questions.

My first question.

Sundance.

Yes, I guess why are they asking for additional analysis I mean, it seems like that could mean the results werent, great or maybe not as good as expected. So is that a fair assumption or are there other factors at play.

Well, so the stirring some modest as a sponsor of the <unk> Committee. It many respects they are the trial lists and so when we have these meetings.

Speaker 5: Well, so the staring, you know, Somatix is a sponsor. The staring committee, in many respects, they are the trialists. And so when we have these meetings, they want to see if it looks. I would say that the real issue here is we had patients in Michigan, and that's when most people would see them. When I was seeing these dancing for their patient statement,

I wanted to see if it looks I would say that the real issue here is we had patients enrolled.

It did not fit the enrollment criteria as designed in the trial. So at that point you have two choices you have.

Speaker 5: who did not fit the enrollment criteria as designed in the trial. So at that point you have two choices. You have as treated group, which is what you report in your statistical analysis plan. But I'm making up a hypothetical example here. If you enrolled a patient that had severe diseases way out of bounds in terms of whether that patient would be accepted into the trial, you could have potentially skewed your data. So that's what I'm doing here.

<unk> treated group, which is what you reported new statistical analysis plan.

Got it.

I'm, making up a hypothetical example, here if you enroll a patient that had severe diseases, we out of bounds in terms of whether a patient would be accepted into the trial you could have potentially skewed year data. So.

Simply put the steering committee has asked to see we'd also like to see an analysis of the per protocol results, meaning.

Speaker 5: Simply put, the steering committee has asked to say, we'd also like to see an analysis of the per protocol results. Meaning, if the protocol was adhered to in all of these sites and the patients were enrolled according to the trial design, what does those data look like? That being said, we don't see, first of all, I wanna make sure there's no safety issue here. It's a safety trial, right? The person, humans are really safety trials. So, we don't see a safety issue. It's a question of,

If the protocol was adhered to in all of these sites and the patients who enroll according to the the trial design what did those data look like that being said, we don't see first of all I want to make sure the whole safety issue.

It's a safety trial first in humans are really safety trials. So we don't see a safety issue. It's a question.

On a per protocol basis, what it looks like this is valuable for us. It will also be valuable when we send this I believe I don't know this but the.

Speaker 5: on a pro-protocol basis what it looks like. This is valuable for us.

Speaker 5: It'll also be valuable when we send this, I believe, I don't know this.

Speaker 5: but the potential partner, Abbot, will also be saying, hey, can you give us this look at the data? So since they have a very short window, we thought best we prepared the looks of the data from a clinical science viewpoint. So really that's what it is. The other issue is...

The potential partner Abbott will also be saying, Hey can you can you give us just look at the data.

Since they have a very short window, we saw best from the looks of the data from our clinical science viewpoint. So really that's what it is the other issue is.

Speaker 5: you know, we, our clinical team, we're running.

Our clinical team we're running.

Speaker 5: final analyses for the FDA right now, both the up-to-date data, which I actually saw last night, and also two-year trial data. And so with a limited team, I've given them the guidance as the priorities prevail.

Final analysis for the FDA right now.

The up to date data, which I actually saw last night and also two year trial data and so with the limited team I have.

Given them the guidance is that the priority is for Vale.

Speaker 5: There's nothing breeding down our necks on Sundance at this point, but surveillance, every day is a cost of delay for the company. So that's our...

There is no nothing breathing on a non exon Sundance at this point, but surveillance every day as the cost of delivery for the company and so that's that's our internal decision we need that would have slowed this down a little bit but.

Speaker 5: internal decision we made that would have slowed this down a little bit. But I think it's a healthy thing to look at. I actually met in person with some of the investigators and steering committee members at ISEP meeting and we're all quite aligned.

I think it's a healthy thing to look at I actually met in person with some of the investigators and certain committee members at ICR meeting.

And we're all quite aligned on this.

Speaker 5: Final thing I'll say is, as we look at lining up the state, you always want to know how you perform against other devices below the knee.

I don't think I will say is as we look at lining up. This deal you always want to know how you perform against other devices below the knee.

Speaker 5: And I'll just tell you, everybody does it a different way. So trying to guess, okay, how we compare it to the other devices that have reported this data. Very few, and you'll hear a lot of discussion about some of these nouveau devices, especially alignment-based devices. I don't know if any of them have measured late lumen loss, when you go back into the patient, previous trials have, and you actually measure that vessel angiographically with another invasive procedure. So.

And I'll just tell you everybody does it a different way so trying to get okay. How we compare to the other devices that have reported this data.

Very few and you'll hear a lot of discussion about some of these new mobile devices, especially alignment speed devices.

I don't know if any of them are measured late lumen loss. When you go back into the patient previous trials out.

And you actually measure that vessel and geographically with another invasive procedures. So.

Speaker 5: We went the distance. And as I hear a lot of podium presentations with other devices, I'd ask them for their late-lumen loss data, which is nonexistent. We have that.

Yeah.

We went the distance and as I hear lot of podium presentations with other devices.

Asked them for their late lumen loss data, which is nonexistent we have that.

Speaker 7: Okay, that's all super helpful. Second question is just on survey. I just want to make sure I understand kind of the cadence.

Okay, that's all Super helpful.

Second question just on survey survey you just want to make sure I understand kind of the cadence.

Speaker 7: So you're expecting to meet with the FDA in late April for kind of a pre-submission meeting, and then after that you submit the data, and then the 90-day clock starts. Is that right? And then I'll just sneak a third one in for Tim. I understand the year-on-year growth expectations for the COVID-19 pandemic.

So you're expecting to meet with the FDA in late April for kind of a pre submission meeting and then after that you submit the data and then the 90 day clock starts is that right and then I'll just sneak.

A third one in for Tim I understand that.

Year on year growth expectations for the rest of the year.

Speaker 7: the rest of the year, despite the macro issues, it sounds like you could still grossed sequentially in the fiscal second quarter from fiscal first quarter. Am I kind of piecing the pieces together correctly on that? Thanks so much for taking the question.

Despite the macro issues it sounds like you could still grow sequentially in the fiscal second quarter from fiscal first quarter.

Am I kind of piecing the pieces together correctly on that thanks, so much for taking the questions short.

Speaker 5: Sure, no problem. So here's how the timeline lays out in broad terms. If the FDA is saying 10 weeks, let me just say this first. We could just hit the send button.

He has held the timeline leaves out in broad terms. This SBA seeing 10 weeks, let me just say this first we could just hit the send button. When we are finished with.

Speaker 5: when we are finished with, you know, we'll be finished in the month of February with our responses.

We will be finished in the month of February with our responses.

Speaker 5: And you could just hit the send button and tell where if they... Yeah, we heard you that you want to talk before we send in the final book, GoPoundSend. We're not going to do that, right? They've asked for a line-mit to some of this, and that's... We believe in that as well. The issue is...

And you can just hit the send button until FDA. Yeah. We heard you that you want to talk before we send into final book fuel pumps, and we're not going to do that.

I've asked for alignment on some of this and Thats that.

We believe in that as well the issue is from the time, we have finishes responses you can't that you don't ask for the meeting while they're still developing their responses right you have to have.

Speaker 5: from the time we have finished these responses, and you don't ask for the meeting while you're still developing the responses, right? You have to have...

Speaker 5: these are specific alignment questions, so you can't bluff it and say, hey, in December we want the meeting and count the 10 weeks, and you really don't, you don't have the detail of the.

These are specific alignment quest, so you can't bill.

Love It and say Hey in December we want the meeting on account of the 10 weeks then you really do you do.

Don't have.

The detail of the.

Speaker 5: what the meeting is about. So let's say we finish this in February , ten weeks, you know, is the end of April . So that's how we're modeling that out.

The meeting is about so let's say we finishes in February 10 weeks at the end of April So that's how we're modeling that out.

And.

And clear.

Speaker 5: Clearly we are going to try to get this meeting earlier, but the initial discussions of the agency, have come back and said.

Clearly we are going to try to get this meeting earlier, but.

The initial discussions with agency they've come back and said sorry.

Speaker 5: Sorry, 10 weeks. The second thing is if at that point we get perfect alignment.

Alright 10 weeks.

The second thing is <unk>.

That point.

We get perfect alignment.

Then you have a 90 day clock now.

Now the 90 day clock could stop again, so when we think of let's say April where this thing is submitted and made then you have may June July probably slip into August Thats, a Q4, which we believe is the early opportunity to get this right.

Speaker 5: Now the 90 day clock could stop again. So when we think of let's say April , you know when this thing is submitted in May, then you have May, June , July , probably slip into August . That's a Q4, which we believe is the early opportunity.

Speaker 5: Right? Not the risk adjusted opportunity with early op...

The risk adjusted opportunity with early opportunity.

Speaker 3: If at this in April they say, hmm, we'd like you to do more, some more benched up chemistry testing or maybe some small mammal testing. The issue we're facing and the reason Tim and I are talking about calendar year is

At this in April , let's say, we'd like you to do more some more benched up chemistry testing or maybe some small mammals testing the issue, we're facing and the reason Tim and I are talking about calendar year is.

Speaker 5: To get a test lab to do a chemistry test for you, and we can do some of those internally, but for GLP type stuff, you usually go external, so this data is pristine data. We're hearing of three to four months healing to getting...

To get a test lab to do a chemistry test for you and we can do some of those internally, but for GLC type stuff usually go external so this data is not its pristine data.

Hearing of three to four months keeling to get in queue to conduct the tests. That's that's an issue that's somewhat out of our control in a similar vein. If we have to do a preclinical small mammal model testing to true up any data they want to see after this meeting.

Speaker 3: That's an issue that's somewhat out of our control. In a similar vein, if we have to do a preclinical small mammal model test,

Speaker 3: to true up any data they want to see after this meeting. Getting animals is not as easy. I think we ordered rabbits in November and we got them January the 11th. So because of those time-based delays versus content data, content delays.

Getting animals is not.

What is easy.

We ordered rabbits in November and we got them.

January 11th so because of those time being delayed versus content data content delays.

This could slip until first quarter or the end of the calendar year.

Speaker 5: This could slip into our first quarter or the end of the calendar year, uh, quarter.

Quarter. So thats if that gives you an idea of it I'll turn it over to Tim for the other part alright, David. Thank you for the question. Yes, we do in fact expect notwithstanding any of the macro environmental impacts accelerating to see sequential revenue growth in Q2 versus Q1, and I will go so far as to say.

Speaker 2: So that gives you an idea of it. I'll turn it over to 10 for the other part. All right, David, thank you for the question. Yes, we do, in fact, expect not withstanding any of the macro environmental impacts accelerating to see sequential revenue growth in Q2 versus Q1. And I'll go so far as to say we're confident, assuming that the current wave subsides and is no longer a headwind, that we should see that with each quarter.

We're confident assuming that the current wave subsides and is no longer a headwind that we should see that.

With each quarter.

Great. Thanks, so much guys.

Thanks.

Speaker 1: Our next question comes from Mike Patiski with Barrington Research.

Our next question comes from Mike <unk> with Barrington Research.

Hey, good morning.

Speaker 4: Hey, good morning. A couple questions. So, Gary, with the initial, and I understand your language on early adopters and

Couple of questions. So Gary with the initial and I understand your language on early adopters.

Speaker 8: caution about reading too much into that, but given the fact that you did sort of say, hey, you know, we're talking to some significant hospital systems and all that, I mean, is there any chance that it would make sense to, you know, go a little bit deeper in terms of your investment in your sales and commercial team?

Caution about reading too much into that but given the fact that you did sort of say hey, we're talking to some significant hospital systems and all of that I mean is there any chance that it would make sense too.

Go a little bit deeper in terms of your investment and your sales and commercial team.

Yes, so we have and you know Tim I think I laid out in the first quarter call. The amount of investment in the SG&A base has been putting in as of February 10 $10 million.

Speaker 3: Yeah, so we have, and Tim I think had laid out in the first quarter call, the amount of investment in the SGA basis we're putting in. It's probably ten or so million, Tim. And we believe based on the potential returns and value creation of this, we think it's a great investment to make. So within that construct, we're going to be looking at the amount of investment in the SGA basis.

And we believe based on the potential returns and value creation of this.

We think it's a great investment to me so.

Within that construct yes, we are continuing and we talk a lot sales but.

Speaker 3: Yes, we are continuing. You know, we talk about sales, but you know, the organization has to have an infrastructure of internal capability, shipping, receiving, complaints.

Organization has to have an infrastructure of internal capabilities shipping receiving complaints marketing qualities all of those things processes have already been built so I would say if we were starting this from scratch you'd see a higher number.

Speaker 5: marketing, qualities, all of those things, processes have already been built. So I would say if we were starting this from scratch, you'd feel higher now.

Speaker 5: But as we've been eking this out in terms of the company readiness, I'm pleased to say we have a foundation for the Salesforce to be successful. So it really comes down to the commercial organization. And I'll tell you, we are...

But as we've been eating this out in terms of the company readiness I'm pleased to say, we have a foundation for our sales force to be successful. So it really comes down to the commercial organization and I'll tell you we.

Speaker 5: Here's the decision. I thought it would be much more difficult to compete for salespeople. I could share my bias now. I don't think we can get to 10 or 12 as we have done. So brilliant.

He is he has the decision.

I thought it would be much more difficult to compete for salespeople that was market I could share my bias now.

I don't think we can get to 10 or 12 as we have done so brilliantly.

But as we are able to get them. If we are able to recruit talented players be colon.

Speaker 5: But as we're able to get them, if we are able to recruit talented A players, as we call them, we'll keep going. But we're not, we're going to stay within the confines of the plan of how much internally we've decided we want to get to. But as we're getting them, I don't see a reason to...

We'll keep going but we're not.

We're going to stay within the confines of the plan of how much internally, we've decided we want to get too, but as we are getting them.

I don't see a reason to.

See note talented person on the street.

Speaker 5: say no to a talented person on the street. No, that does not indicate if we get 40 people sending credit base, we're gonna hire them. It's bracketed by our choice of the investment.

It does not indicate that we get 40 people sending base, we're going to hire them.

It's bracketed by our choice of the investment we decided to make.

Does that get that its disciplined but opportunity yes.

Speaker 8: Does that mean you get that as discipline, but opportunity? Yeah. So it sounds like there's some flexibility in terms of sort of how you invest that incremental, I guess, 10 million, and maybe some of that ends up going a little bit more into hiring additional salespeople. Is that essentially what you're communicating? Yeah. Just one fact of the... What do you do?

It sounds like there is some flexibility in terms of sort of how you invest that that incremental $10 million and maybe maybe some of that ends up going a little bit more into hiring additional salespeople I mean is that essentially what you're communicating.

And then just one factor.

Speaker 3: So we have to have the sales, Tim has a sophisticated sales utilization capacity model.

So we have to have the sales team as a.

<unk> sales utilization and capacity models, we're matching them right now to supply them in pumps arterial now as we get the sublime venous product up and running and you all know how I like to see the 50 to 100 cases that can change the capacity curve because.

Speaker 5: We're matching them right now to sublime and pounce arterials.

Speaker 5: Now as we get the sublime Venus product up and running, and you all know how I like to see the 5,700 cases.

Speaker 3: That can change the capacity curve because

Speaker 3: You know, it doesn't sound like a lot of products we have compared to a big company, but these products require dedicated time and effort. So the Pounce Vena system, as that comes online in Q3 and Q4...

It doesn't sound like a lot of products, we have compared to a big company, but these products require dedicated.

Time and effort so the pounds venous system as that comes online in Q3, and Q4 that could shift up capacity curve a little bit if we get wonderful initial results. It may not bring in revenue in fiscal 'twenty, two but we have to set up the company for growth.

Speaker 3: that could shift that capacity curve a little bit. If we get wonderful initial results, it may not bring in revenue.

Speaker 3: fiscal 22, but we have to set up the company for growth and fiscal 23. So you could see some some nuanced

In fiscal 'twenty, three so you could see some some nuanced.

<unk>.

Speaker 3: incremental in the fourth quarter. It may not be material to the fiscal year expenses, but that's where we might have some flexibility.

Incremental in the fourth quarter, it may not be material to the.

Fiscal year expenses, but thats, where we might have some flexibility.

Gotcha.

Just.

Okay.

Understand Tim I, just wanted to confirm so I think you said that we expect to be down to approximately $20 million in cash and investments at the end of the year, which would seem to imply about $4 million.

Speaker 8: understand this, but I just, Tim, I just want to confirm. So I think you said, hey, we expect to be down to approximately 20 million in cash investments at the end of the year, which would seem to imply about $4 million cash per and a quarter on average. Is that what you were essentially saying?

Cash burn a quarter on average.

What you're essentially saying.

That's right it could be less than that we do think that they are at the higher end of the range would probably be closer to the pension was around $24 million.

Speaker 2: That's right, it could be less than that. We do think that the higher end of the range would probably be closer to finishing with around 24 million. So it could be that 3 to 4 million dollar range. Okay, but.

So it could be that $3 million to $4 million range.

Okay.

But that's on average.

Speaker 8: Right. And then that doesn't include, though, the 30 million milestone of which, like, something like, isn't it something like 24, 25 would be like immediately cash in if if if you got the ball.

Right and then that doesn't include though the $30 million milestone of which like something like isn't that something like 24, 25 would be like immediately cash in.

Got the bottleneck.

Yes, all of it will be cash in.

Speaker 8: Yeah, all of it will be cash in. But it will be voting and will be recognized as revenue on the P&L. But the full $30 million will be on the balance sheet. OK. OK, great. All right. That's all I've got. Thanks, guys.

Okay.

<unk> will be recognized as revenue on the P&L, but the full $30 million will be on the balance sheet.

Okay, Okay, great Alright, that's all I've got thanks, guys.

Okay, great. Thanks, Mike.

We will take our next question from Jim Sidoti with Sidoti <unk> Company.

Speaker 1: We'll take our next question from Jim Sidoti with Sidoti & Company.

Hi, good morning, Thanks for taking my questions.

Speaker 9: Good morning thanks for taking the questions. First one, how long do you think it'll take Abbott to launch the product once approval is received?

First one how long do you think it'll take Abbott to launch the product.

<unk> approval.

Please.

Speaker 5: You know, that's a good question. There's several options there. As I may have said in previous calls, the call is starting a diesel engine right in the winter with a drug delivery production or combination product device. So that is a super Derren

That's a good question that there are several options there.

As I may have said on previous calls the call starting a diesel engine in the winter with a drug delivery production combination product device. So.

Speaker 3: you know, from the time we get a binding order, the way it works is they'll give us an indication months in advance so that we can get the supply chain prepared. But from the time we have a binding order to really jumpstart the manufacturing engines, it's about what, four months? Yeah, four months. We'll try to beat that.

From the time.

We get a binding order the way. It works is they will give us an indication.

<unk> events, so that we can get the supply chain prepared but from the time, we have a binding ordered.

Jumpstart the manufacturing engines, it's about what 10 four months four months.

Try to beat that.

Weak.

Speaker 5: We, there could be some risk we take either thermotics potentially, Abbot or the partnership. The issue that constrains thermotics is that there has to be a certain shelf life left on the product by the time of delivery. So the nuances is if you can make a bet of when exactly you'll get the FDA approval and how much shelf life has to be on the product by the time you deliver it. If we build product now,

There could be some risk we take either.

<unk> potentially abbott to the partnership the issue that constrain somatic is that there has to be a certain shelf life left on the product by the time of delivery. So the nuance is if you can make a better when exactly you'll get the FDA approval and how much shelf life has to be on the product side.

The time and deliver it if we build product now.

It may not meet the shelf life requirements, let's say, if we get approval in October . So we don't want to take that rhythm of scrap scrap launch a lot of products. So think of it as it's four months window.

Speaker 3: it may not meet the shelf life requirement, let's say if we get approval in October . So we don't want to take that risk and scrap a lot of products. So think of it as its four month window.

Speaker 3: from the time of approval to when the product could be commercially available. It could be less, but that is up to our partner on our discussions at the time of commercialization.

The time of approval to win the product could be commercially available.

Could be less but that is up to our partner and our discussions at the time of commercialization.

Speaker 9: And then can you just remind us once it is approved, how will you recognize revenue will be product sales and royalties, a combination and are you prepared to give us any sense on what you think that'll be initially

And then can you just remind us once it is approved.

How would you recognize revenue will be product sales and royalties a combination.

Are you prepared to give us any sense on what you think that will be initially.

Yes.

I like the question, Jim Obviously, you can't provide a whole lot of context in detail all of this.

Just kind of remind you of some of the remarks that we've made publicly in the past.

I'll just start by saying that yes, we will be recognizing product revenue.

As you can imagine once the binding PEO is manufactured and shipped will recognize that revenue.

Speaker 2: The other part is not so much a royalty, it's really profit sharing. And the profit sharing will be somewhat, we'll have to kind of estimate it just like we do with our royalty revenue, and then we collect it period after the period ends or the quarter ends. And we'll have more to say on kind of how that will be classified, but it's more likely to be classified from what we're learning as product revenue.

The other part is not so much a royalty it's really the profit sharing.

And the profit sharing will be somewhat we'll have to kind of estimate it just like we do with our royalty revenue and then we collect it.

Period after period ends or the quarter ends.

And we will have more to say on kind of how that will be classified but it's more likely to be classified from what we're learning as product revenue.

Speaker 2: So, we'll be on the product line. That may change, but that's kind of where we're thinking today.

So it will be on the product line that may change, but that's kind of where we're thinking today.

Speaker 2: And in terms of kind of the economics, how this all works, I think we've provided a little bit of detail on this in the past.

In terms of kind of the economics, how this all works I think we've provided a little bit of detail on this in the past.

Speaker 2: you know, it's really going to be dependent upon the geography, right? So the profit sharing component, a higher price or a higher market selling price is going to result in more favorable profit sharing and Thermautics receives not quite half of the profit sharing.

It's really going to be dependent upon the geography right. So the profit sharing component a higher price or higher market selling price is going to result in more favorable profit sharing and <unk>.

<unk> not quite half of the profit sharing.

Speaker 2: As you can imagine, it's pretty close, but it's not quite half. And we feel very comfortable with the product revenue in terms of what that looks like, in terms of what our product costs are as well. But we'll talk more about that once we actually have Abbott commercialized and we start to report numbers. I think we'll be in a position to share more. The final comment is we had seen previously Abbott's initial stocking order forecast, which was non-binding.

As you can imagine that's pretty close, but it's not quite half.

And we feel very comfortable with the product revenue in terms of what that looks like.

In terms of what our product costs are as well, but we'll talk more about that once we actually have Abbott commercialized and we start to report numbers I think we'll be in a position to share more. The final comment is we had seen previously abbott's initial stocking order forecast, which was non binding but.

Speaker 2: But we liked what we saw and so we'll look forward to sharing more with you when we have more to share

But we liked what we saw and so we'll look forward to sharing more with you when we have more to share.

And.

This product has the real potential repeated a number one product in the market.

Speaker 3: this product has the real potential to be the number one product.

Speaker 3: It is the only product that has a head-to-head trial against the market leader. There is no other product that's done a worldwide pivotal. And so in terms of compelling clinical data and in the hands of a partner like Abbott, I don't see any reason what can't eventually be the number one product. That's just how I feel.

It is the only product that has a head to head trial against the market leader. There is no. Other product has done a worldwide pivotal and so in terms of compelling clinical data and in the hands of a partner like avid I don't see any reason why it can't eventually be the number one product.

This is ari.

Speaker 9: All right, then you talked a lot about impacts and COVID. Can you just break it down between US and Europe ? Are you seeing it about the same in both regions or is one region ahead of the other in terms of recovery?

Alright.

You talked a lot about impacts from Covid.

Can you just break it down between U S and Europe are you seeing it about the same in both regions are as one region ahead of the other in terms of recovery.

Speaker 2: You know, Jim, I like the question and it's unfortunately one that we don't have probably as much visibility as our customers have. Our sales force is clearly a US-based centric organization, but you know what I've heard and read from other international companies that have reported there clearly seems to be a bigger impact from the December and January period in the US.

Jim I would like to question and it's unfortunately, one that we don't have probably as much visibility as our customers has our sales force is clearly a U S based centric organization, but what I've heard and read from other international companies that have reported there clearly seems to be a bigger impact.

From the December and January period in the U S.

Speaker 2: than outside of the US, but I don't know what the impact has been. I'm not sure that I've been paying attention as closely with regard to what the financial impact is, breaking it out by geographic region, but it has had...

Then outside of the U S but.

I don't know what the impact has been I'm not sure that had been paying attention as closely with regard to kind of what the financial impact is breaking it out by geographic region, but it has had an impact.

Speaker 3: Yeah, we're being resourceful about it. I've heard of some of our sales team members dropping the product off for the hospital, not being able to get in. Physician then takes it and then the sales person goes back into their car and starts a Zoom call and guides the physician through the product. So, you know, we're doing what we can.

We're being resourceful about it I've heard of some of our sales team members dropping the product off the hospital not being able to get in the physician then takes it and then the salesperson goes back in to the call and start a zoom call of guide the physician through the product so.

Doing what we can and in insurance.

<unk>.

Speaker 9: And then our last one from me. I think you mentioned that the product sales of the coding materials was a record this quarter or up pretty substantially this quarter. You know, what did we read into that?

Alright, and then last one for me.

I think you mentioned that the product sales of the coating materials.

A record this quarter are up pretty substantially this quarter.

What do we read into that.

Yes. Thank.

Speaker 10: Yeah, you know, I thank you for the question. It was a record and I read into it. First of all a few things. If you take a look at kind of historically Q1 tends to be a bit of a, what I would consider the low spot in terms of product revenue for the coding system. and

Thank you for the question it was a record.

I read into it first of all a few things.

If you take a look at kind of historically Q1 tends to be a bit of.

There is a low spot in terms of product revenues for the components business and we saw that last year, so it could be easier comp.

Speaker 10: We saw that last year, so it could be easier comp. But I will say that we have been trending higher with product revenue. And there could be some folks that maybe are carrying a bit more inventory just to be prepared in the event that there might be some supply chain challenges.

But I will say that we have been trending higher with product revenue and there could be some folks that maybe are carrying a bit more inventory just to be prepared in the event that there might be some supply chain challenges.

Speaker 10: But our team actually isn't thinking that that's a significant portion of the increase. It's more modest in nature. And we're seeing it based upon the forecast as well as the PO's that we're receiving from our customers.

But our team actually isn't thinking that thats, a significant portion of the increase it's more modest in nature and we're seeing that based upon the forecast.

As well as the <unk> that we're receiving from our customers. We're seeing what we've seen with the trajectory that we've seen over the last six six months' or excuse me six quarters.

Speaker 10: We're seeing what we've seen just with the trajectory that we've seen over the last six quarters.

Speaker 10: So, you know, it gives us confidence that what we're seeing is going to continue in the near term. But we don't believe at this point there's a significant amount of the revenue coming from customers stockpiling inventory.

So it gives us confidence that what we're seeing is going to continue in the near term, but we don't believe at this point there is a significant amount of the revenue coming from customers stockpiling inventory.

Alright, thank you.

Youre welcome.

And then as a reminder, if you would like to ask a question. Please press star one.

Speaker 1: And as a reminder, if you would like to ask a question, please press star 1.

It appears we have no further questions at this time I would like to turn the conference back to Gary Maharaj for any additional or closing remarks.

Speaker 1: We have no further questions at this time. I would like to turn the conference back to Gary Maharaj for any additional or closing remarks.

Well. Thank you everyone and thank you for joining our first quarter earnings call and wish everyone. A good day.

Speaker 3: Thank you everyone and thank you for joining our first quarter earnings call. I wish everyone a good day.

And that concludes today's presentation. Thank you for your participation you may now disconnect.

Speaker 1: That concludes today's presentation. Thank you for your participation. You may now disconnect.

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