Q3 2023 Nevro Corp Earnings Call

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Hello, My name is Chris and I'll be your conference operator today.

At this time I'd like to welcome everyone to the <unk> third quarter 2023 financial results Conference call.

All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there'll be a question and answer session.

If you'd like to ask a question. During this time simply press Star then one on your telephone keypad.

Thank you Ian Tau you may begin.

Good afternoon, and welcome to <unk> third quarter 2023 earnings Conference call with me today are Kevin Donald CEO, and President and Rob Mcleod Chief Financial Officer.

On today's call, Kevin will discuss third quarter business results and Rod will conclude with detailed financials and guidance before we open up the call for questions. Please note. There are also slides available related to our best third quarter performance on our Investor Relations website in the events and presentations section.

Earlier today never released its financial results for the third quarter ended September 32023, a copy of the earnings release is available on the Investor Relations section of the never website. It never Dot Com. This call is being broadcast live over the Internet to all interested parties on November one 2023, and an archived copy of this webcast will be available on Netherlands investor.

Before we begin I'd like to remind everyone that comments made on today's call may include forward looking statements within the meaning of federal securities laws results could differ materially from those expressed or implied as a result of certain risks and uncertainties. Please refer to <unk> SEC filings, including its annual report on Form 10-K filed on February 21, 2023 for a detailed presence.

Patients have risks.

Forward looking statements in this call speak only as of today and the company undertakes no obligation to update or revise any of these statements. In addition management will refer to adjusted EBITDA and non-GAAP measure used to help investors understand Nevertheless, ongoing business performance non.

non-GAAP adjusted EBITDA excludes interest taxes noncash items, such as stock based compensation depreciation and amortization litigation related expenses certain litigation charges and credits and other adjustments such as restructuring charges. Please refer to the GAAP to non-GAAP reconciliation tables within the earnings release and now it's my pleasure.

To turn the call over to Kevin.

Thanks, Dan and good afternoon, everyone. We appreciate you joining us on today's call I'd like to discuss our progress on our three pillars of growth our third quarter results. The overall SCS market and our updated 2023 revenue guidance I will then turn the call over to rod to discuss the details of.

Our Q3 financials.

As we discussed during our second quarter earnings call, we believe focusing on commercial execution market penetration and profit progress is essential to moving our business forward to the next level staff.

Starting with our first pillar growth commercial execution in mid June Greg filler was appointed senior Vice President and Chief Commercial officer and was given the mandate of increasing sales productivity, improving physician education and maximizing the growth opportunity of net brown, while changes don't happen overnight Greg has hit the.

The ground running and has quickly made his mark guided by the philosophy and approach of talent strategy and culture.

During the third quarter, Greg implemented several key changes, including realigning our sales force to improve performance filling in right sizing our sales territories and enhancing the compensation plan to align the sales force at the customer level.

In the third quarter, Greg and his team turned their focus to our marketing department, while the ongoing commercial changes will be dynamic for both sales and marketing, we're driving focus and execution on areas of the business that will move the needle from both a growth and leverage perspective for instance, new product introductions and expanded indications of the current portfolio.

Another area of focus is to increase our position education and training specifically fellowship programs, all chronic pain patients deserve our best in class high frequency paresthesia free therapy, and we must continually educate implanting physician on why its superior and differentiated.

Best practice dictate that multiple physician touch points and training are essential despite having the best in class technology.

Over the past 90 days, we trained over 100 fellows on the implementation implantation and use of the unique capabilities of our <unk> IQ system.

These three cadaver skill labs held in three different areas of the country allow physicians in their fellowship program to learn more about the benefits of our <unk> IQ system in Hawaii.

<unk> logically Sip superior to other SCS offerings. In addition to these training sessions, we held many targeted local events to provide additional knowledge and training to physicians nationwide.

Moving to our second pillar of growth market penetration.

<unk> can expand the market in several ways for example through our <unk> indication.

<unk>, we announced the publication of 24 months data from the center painful diabetic neuropathy TVN randomized controlled trial RCT in diabetes research and clinical practice. These data which were also presented during the American Diabetes Association 80, <unk> scientific sessions.

<unk> high frequency 10, kilohertz SCS long term efficacy in treating refractory PD and the.

The data showed that patients who received a high frequency 10, kilohertz SCS implant and conventional medical management.

Compared to <unk> alone experienced durable pain relief with a 91% responder rate and significant improvements in both human related quality of life and sleep at 24 months post implementation.

These robust data are critical and set nevertheless, apart from its competition as our technology demonstrates durable pain relief and significant improvements without paresthesia.

Is so important because a large portion of PD and patients suffer from numbness, which is how products from our competitors masked PD in pain using paresthesia is the mechanism of action may increase the overall number the numbness Ah patient already experiences.

These robust data combined with health plan coverage of over 205 million lives for PD and gives us an excellent opportunity to expand the market for our best in class technology.

Regarding our new PD and sensory study the enrollment now stands at almost 50 patients. We're very excited about this study as it is the first prospective RCT specifically designed to evaluate changes in pain and neurological function using high frequency 10 kilohertz.

Therapy in patients with chronic attractive bolt intractable lower limb pain associated with PD and we will keep you updated on the enrollment progression of this important clinical trial.

Last quarter, we mentioned the potential of augmenting our product portfolio through strategic opportunities.

We've received many questions on this topic, so I'd like to briefly expand how we think about a potential acquisition.

We have a large global field force that interacts with treating physicians and we believe we can leverage those call points to one strengthen our position relationships to increase our growth and three accelerate our path to profitability. There are many potential adds to ourselves bag that we are currently evaluating to take advantage of the synergies with our <unk>.

Best in class SCS therapy that will be accretive to our margin and growth, but we will be thoughtful as we explore opportunities and will only expand our capital if a potential target meets all of our criteria, we will be a disciplined buyer.

And finally profit progress we continue to invest in our Costa Rica manufacturing plant and have other initiatives ongoing as we drive towards profitability the manufacturing ramp at our Costa Rica plant is proceeding as 40% 46% of our IQ volumes were manufactured in our Costa Rica plant in Q.

Three and we continue to evaluate our internal processes looking for additional ways to improve our operational efficiencies.

Okay.

Turning now to our third quarter results for the three months ending September 32023, net ROE reported revenue of $103 9 million, an increase of 3% on both a reported and constant currency basis compared to prior year results are permanent procedure growth was 7% year over year.

<unk> had another strong quarter, increasing revenue by 56% compared to last year.

In the third quarter Hff's IQ accounted for roughly 43% of our permanent implant procedures up 300 basis points over the previous quarter and we expect this trend to continue.

The feedback for <unk> IQ and its ability to deliver personalized pain relief continues to be very positive and we are confident that the combination of our superior high frequency paresthesia free SCS technology, and our <unk> algorithm will enable us to outpace our competitors.

While we believe we held share in new implants. This quarter, we are obviously not content and it is our moral obligation to win for patients to receive the superior pain relief from the only high frequency SCS provider in the world.

Additionally, with three of the leading players having now reported growth for the quarter. We remain confident that the SCS market continues on the road to recovery and showing consistent growth.

Turning now to our PDL business PD in trials represented approximately 24% of our total U S drive trial volume an increase of 41% from Q3 of last year, among our permanent implant procedures PD and represented 20% of total worldwide procedures, resulting in approximately $21 million in <unk>.

Again indications sales.

In Q3, approximately 21% of our USP DN trial procedures came from leads generated from our direct to consumer marketing program. We believe that patient and physician education is imperative to drive awareness of the proven clinical benefits for patients that suffer from debilitating painful diabetic neuropathy.

I would now like to say a few words about our updated guidance first while we exceeded our Q3 expectations. We know we can accelerate our topline growth. We have made many changes to our marketing and commercial teams over the past several months and it will take time for these changes to translate into meaningful financial results.

Positive enhancements, we have driven in our culture over the last seven months have been significant and we believe these changes will lead to a stronger net ROE. We are confident in the direction of our company and look forward to executing our current strategies driving growth and taking advantage of the meaningful leverage opportunities, we have to drive towards profitability and deliver shareholder value.

Before turning the call over to Rod I would like to briefly discuss our thoughts on DLP ones and proactively explain why these therapies will not adversely impact our PDL business. There's been a lot of noise regarding how GOP ones will affect the market for medical devices. We.

We acknowledge that these therapies can help many people with obesity lose weight in patients with diabetes lowered their <unk>.

This is not our target patient population, however, and <unk> ones were never intended to nor do they address PD in many PD and patients have been using <unk> for years to control their glucose level and importantly, these drugs have never been shown to reduce the incidence of <unk> or the severity of the symptoms and fab.

<unk> a large number of patients that were included in our sins of PDL study were already taken DLP ones are similar types of drugs for years, and unfortunately still suffered from painful diabetic neuropathy. These patients responded very well to our high frequency SCS therapy.

<unk> is not simply a result of the patients' <unk> or their weight and even patients with normal BMI and controlled <unk> levels experienced PD and.

We continue to believe that there remains a large addressable refractory PD end market around two to 3 million patients and penetration rates are very low in that market today.

And with that I'll pass the call over to Rod to provide further details on our third quarter results and guidance.

Thanks, Kevin and good afternoon.

I'll begin with our worldwide revenue for the third quarter of 2023, which increased 3% as reported and on a constant current currency basis compared to the third quarter of 2022.

PDL represented 20% of permanent implant procedures worldwide, resulting in approximately $21 million in PD and indication sales in the third quarter of 2023.

This quarter included one less selling day than Q3 of 2022.

U S revenue in the third quarter of 2023 was $89 8 million, an increase of 4% compared to the third quarter of 2022.

International revenue in the third quarter of 23 was $14 1 million down, 2% as reported and down 6% on a constant currency basis.

Now moving on to some detail below the top line.

Gross margin was 66, 9% in the third quarter of 2023 compared to 69% in the third quarter of 'twenty two.

The full market release of the H FX IQ system continues to progress well and we are capturing a pricing uplift on our <unk> Iq product.

Our legacy products, which still represent over 50% of our mix continue to experience pricing erosion. This pricing pressure along with regulatory delays are selling IQ into Europe and the reduction in second half guidance on volumes continue to cause us to sell off our higher cost IQ product sourced from <unk>.

Tracked manufacturers were still optimistic on our long run margin expansion opportunities with our Costa Rica source products, assuming pricing remains stable.

Looking at operating expenses the total for the third quarter of 2023 was $95 1 million compared to $92 2 million in the third quarter of 2022.

Excluding the $105 million of certain litigation credits in the third quarter of 2022.

The increase in Opex is primarily due to litigation and personnel related costs, partially offset by a decrease in stock based compensation litigation related legal expenses were $4 3 million for the third quarter of 2023 compared to $1 9 million in the third quarter of 2022.

non-GAAP adjusted EBITDA for the third quarter of 2023 was a loss of $5 8 million compared to a loss of $3 8 million in the third quarter of 2022.

Cash cash equivalents and short term investments totaled $323 million as of September 32023. This represents a decrease during the third quarter of 2023 of $9 7 million uses of cash were in line with normal business operations as well as our projections.

We continue to manage our working capital and are very comfortable with our balance sheet to fund operations.

Turning now to guidance, it's important to note that we will be using non-GAAP financial measures to describe our outlook for the business.

Please see the financial tables in our press release issued today for GAAP to non-GAAP reconciliations.

We expect fourth quarter worldwide revenue of approximately $108 million to $110 million, which represents a decrease of 4% to 6% on a constant currency basis.

We expect fourth quarter of 2023, non-GAAP adjusted EBITDA to be a gain of approximately 1 million to $2 million.

We expect worldwide revenue for full year 2023 of approximately $417 million to $419 million, an increase of 3% over prior year.

On both an as reported and constant currency basis.

We expect full year 2023, non-GAAP adjusted EBITDA to be in the range of negative 24 million to negative $25 million, which compares to a non-GAAP adjusted EBITDA loss of $23 8 million in 2022.

In closing, we continue to make good progress and remain on track to drive growth and scale profitably in our core business in years ahead.

W. A b S. C S market recovery competition uptake of Btn. If you can just help us frame 2024 that would be really helpful. Thank you for taking the question.

Yeah. Thank you for the good questions, there and I'll take a crack in the first one is in it over to Rod for the second part so for guidance you know obviously, there's a lot of things going on in the world from a macro level right now.

We're also still underway with our transition of Greg coming in and the changes in our commercial organization and so we want to make sure that we continued down and make the right decisions, we need to for the business to set us up for the future and so those things play play into our guidance for Q4.

Also just thinking through from a competitive standpoint, we do now have three of US have have now reported on on Ses in all three reported growth, albeit a little bit lower.

From a couple of us in the low single digits, and we'll see what our fourth competitor or the fourth player in the market here in a few weeks will report and so yeah, we still feel confident on the recovery feel good that now there's multiple quarters, where all four players have shown some growth or one quarter that one one player didn't but pretty consistent growth <unk>.

Now, but definitely not to the level, where we were prior to COVID-19 and so uhm that plays into to that as well and I'll turn it over to ride to talk about exit rates and.

Any other guy yeah.

Hi, Sharon Thanks for the question and then just add a little bit on on queue for we've we've got our typical Q for seasonality built in there which is showing the sequential ramp up from from Q3 <unk> in the queue for as well.

We don't normally full.

We're not providing guidance on 2024 at this point and we generally don't get so granular is to provide it to provide exit right. Kevin spoke generally about where the market has been performing over the last over the last three quarters and we remain.

Optimistic that that sort of sort of growth is training in the right direction, but beyond that there's not a whole lot more color in terms of.

What our exit rate will be going going into next year.

Thank you.

The next question is from Anthony Fatone with Securities. Your line is open.

Great. Thanks, you know just one follow up here you know kind of on the four Q Guide. This is Brad on the by the way on for Anthony.

Just looking at I guess, what you're kind of applying from the core business you know it seems.

The the turn to looking at in the fourth quarter at least her guidance is actually one of the worst I guess core.

Quarters since the back half of 2021, I guess when we first saw you know never revenue kind of falling and the core business I just kind of wanted to hear but the thought process was on that trend you know what you're seeing I guess within.

The core business at those practices.

Yeah. Thanks bread, you know again to start off with the macro environment right. I mean, we've got two wars going on right now and I'm I'm watching all of my colleagues at other medical device companies I don't know, what they're saying right now and so you know obviously you want to make sure in this environment that we're we're thinking through anything that could happen from a macro trend level.

As far as the core market itself again, you know we posted a three per cent growth one of our competitors was probably in two to three.

Per cent growth in the core market and then one had an outlier replacement of batteries and that's not new <unk> new patients as we talk through so we are a little bit cautiously optimistic about the market returning back.

To where it was before but obviously with this macro environment overhang, it's a little bit affecting capital market is probably more than it would for implants, but we also want it to be a little bit cautious with what's going on in the world.

Right anything to add yeah, just one thing to to reiterate is that you know we are still early in this and the changes on the commercial side of the business. So we do have to give them a little bit of time to to implement and give them a little bit of a little bit of time in and room to maneuver to the way. They think is the right to set us up for 2024 and beyond.

Yeah, I'll add just add into that <unk>, we got two of our largest training classes ever come through here in Redwood city over the last quarter. So those reps are are getting out in the field coming back in for additional training and then getting back out in the field to being able to get out there and do.

Some people do best.

Okay, Great and then just one quick follow up here you know you know have I guess all of the competitors in the P. G. N market you know with one get the final one getting their approval recently so.

I just want to give you the opportunity you know now we don't have to worry about you know what's gonna happen. Once those competitors are in the market. So you know how the conversations are going you know with the P. D N sales force and and you know how it never I was continuing to win win this conversation and thanks. Thanks again for taking the questions.

Yeah, No no problem. Thanks bread, Yeah, we are still the only paresthesia free Ses player on the market the only high frequency on the market and as we've said all along and it resonates with the endocrinologist that refer a patient in to our implanting physicians and it makes sense, sorry, implanting physicians that you would desire.

Paresthesia free option for patients that are already experiencing numbness in their in their feet and their legs why would you want to add even more to that right. So the the whole goal is to get up is to get people pain free and up in ambulate in so they can walk around and when they walk around obviously, then they're gonna have better results in lower in there a one C and their body weight, which.

We have now data showing that the implanted.

Patients with S. He has 10 kilohertz high frequency do reduce weight and a one C and that's because obviously, we don't know for sure that <unk> method of action, but we do know those patients get up and walk around and we do have clinical resolved soon they do better uhm no one else has that kind of clinical.

Data and no one else can do paresthesia free high frequency. So we still feel very optimistic that we're going to continue to win there now I'll also say that in any type of medical devices that I've been in for well over 20 years.

All companies do well when rising tides happened for all right. So I do think that having more players in the market to help educate and have increase the awareness is good for patients and good for implanting physicians as well.

The next question is from William <unk> with Canaccord Genuity. Your line is open.

Okay. This is Caitlin <unk>, congrats I can't quite just wondering more <unk> to an extent you're seeing increased competition and you know share gains and losses from the private competitors in the market. Thank you.

Yeah, we're really not seen that much we do look at a couple of the models that are out there. We we do see some of the expected results are there. We obviously still are the only high frequency player in the market I do believe that they're probably going after some of the other low frequency competitors is better.

That are out there and we continue on our path of explaining and using the clinical studies that we have to show the superiority of of the pair seizure free high frequency S. Yeah. So we're not thinking that we're losing chair to any of those smaller players and you know obviously doesn't mean, we're not losing a few cases here or there.

But we believe we held share in the in the quarter.

[noise]. The next question is from Adam Major with Piper Sandler Your line is open.

Hi, Kevin Hi, Rod This system ran on for Adam. Thank you guys for taking the question.

I just wanted to start off on a comment that you guys made on the H F X I Q lines. I think you said I Q represented 43 per cent of implant in Q3, we're now over six months into the IQ launch an I think previously.

<unk> said it would take six to nine months for the launch to represent 70.

Five to 80 per cent of the neck.

So just any further color on how that one has.

Relative to your expectations.

Any learning that you can share from wrapped in the field.

Yeah, Hi, Cimarron this rod.

Yeah. So we're we're a touch or touch behind the curve, where where we would've thought that we would be at this point and and there've been a couple of things that that have impacted the launch although we still continue to see a trajectory that that is going up into the right.

But you know as we've mentioned before we did we.

Kevin just mentioned, we had with a large training class we had some open territories and we're we're making the changes within the sales force to bring them up to speak at the new folks trained.

That probably had a little bit of an impact there some of them some of the larger contracts it took us a little bit longer to to get on contract with those but we had some pretty good successes in in Q3 that we should start to see some of the results of that and then we also thought that we would be selling.

I Q, India internationally with a b S I approval and <unk> I I think we're not the only ones in saying that we've had experienced some delays out of BSI on that but that's that's certainly delayed that entering into the mix as well in terms of the eye to launch but those are those are some.

The the the bigger areas that have you know maybe slowed it down a little bit from where we thought we would be <unk> as I said, we are still continuing to.

To go up that ramp.

Okay very helpful. Just a quick follow up on on the initiative.

Implemented regarding the sales for I guess I just wanted to fully understand aren't those initiatives completely implemented and digested or do you still have some hope in territory here and there and you kind of need a right size and then how should we think about the sales force over the <unk>.

Remainder of the year and in 2024 in terms of size and productivity.

Yeah pretty much thanks for those questions pretty much open territory or onesie Twosies at this point.

<unk> most of those you know the last couple of quarters and as I said, they've been in and out of their training courses that have been here. So that's good the inflammation in an enhancement of the top plan is is all done the reps have the numbers that they're marching towards to finish up the year as we head into the end of the year.

And you know obviously will continue to tweak everything as we head into 2024, but in large everything that was the big initiatives are behind us and absorbed and the team is running hard.

In the field.

Great. Thank you.

The next question is from robbing Marcus with J P. Morgan to your line is open.

A this is actually <unk>.

Question on gross margin it came out of his saucer in the corner and I was hoping you could just talk more about your expectations for fourth quarter in light of the ancient texts ramp and what a reasonable assumption is for margin expansion next year and longer term given all the puts and takes.

From the legacy pricing H attacks in Costa Rica.

Yeah, and and your hidden this is Ryan and thanks for the question you're hitting the two big things. We we have we have a confluence of.

And I to launch and and the transfer of manufacturing too to Costa Rica and <unk>.

As you know as we've talked about in the past as I Q ramps. We also have pricing pressure on our legacy products and in Q3 legacy products still represented over over 50 per cent of our mix and and you know as we've reported on over the last couple of quarters and getting into this.

Quarter continue to have some pricing pressure there.

Similarly, as we are a little bit behind that curve as we we entered in one of the previous questions and don't have that BSI approval to sell in Europe. Our volume is a little bit are a little bit lower which also means we have to continue to sell through contract manufactured <unk>.

<unk> at a higher rate than than we would have anticipated. So we kind of have the confluence of those two things happening in Q3, which which obviously put some pressures on the margins as as as you noted that should can.

And now that will certainly help help margins.

I would I would anticipate that.

We <unk> for 20th well, we're not providing guidance for 2024, but we do expect that over time, we have a pathway still to kind of that mid seventies that we've talked about it's just gonna take a little bit of time is in terms of us getting they're both from a cost and and the price.

Perspective.

Great that was super helpful. Thank you I just had a quick follow up on P. D N.

And apologies if someone may have already touched on this but are you seeing any competitive pressures here, specifically and do you have.

Any thoughts.

Qualitative on 2024, and your expectations for the market as well as competition next year.

Yeah. So we didn't answer the P. D M. One, but I'll I'll just wrap it up again, yes, we do know that all of our competitors have indications. However, that's obviously F. D. A approval you still need to have clinical studies to show the doctors to convince them to try that and that's continually where we are the only <unk>.

Many that has a large R. C. T. That's out there that shows the benefits of high frequency paresthesia free and like I said just earlier before why would you want to put a patient into paresthesia, who was already experiencing experiencing numbness and tingling in their legs. So we feel very confident about our leadership, they're impeding in in in.

Talked about it every day and I used the world the word moral obligation to the words moral obligation because we know when we when that means patients to get the best therapy. That's been clinically proven in the P. D. In space. So we feel good that will continue to maintain our leadership. There. We are you know it is a benefit to have other competitors in this space cause all all those <unk>.

<unk> with the rising tide of course, so that will help from an education standpoint in all of 2024. We're just we're a month into the queue for so we need to get a few more months on radar belt and and the transition with our commercial teams before we provide anything for 2024, so we're not going to provide any guidance.

At this time.

Great. Thank you.

The next question is from Richard <unk> with the Truest Securities. Your line is open.

Hey, Thanks for taking the question. This is Sam on for rich.

What can one just to follow up on gross margin there and I know, we're not gonna provide guidance for 24 Yep with just Directionally is there any way you can speak to you know with all those moving parts going forward and hopefully getting resolved should.

24 on a corner and a quarter basis team that are gross margin.

Then four Q can can for to basically be taking off point for gross margin next year.

Yeah I appreciate the question, but like I said, we're not we're not providing guidance into into 24 for the full year, let alone for quarters at this point.

Uhm.

What what I, what I will say, though is that we.

We continue to be excited about the the costs that are coming out of our Costa Rica plan and we believe that we've got a good pathway to continue to drive drive those costs down and that should help with with margins and as we do move forward. We we in.

<unk> that will receive.

Uhm pricing benefit from our IQ product as as that makes increases so I'm not going to get a whole lot more granite granular than that at this point, but yeah. That's that's that's the sort of color that we can provide at this time.

Great. That's that's helpful and then just.

More qualitative one just as we think about maybe some of the regions where the commercial structure was more just real line as opposed to having turnover and the sales.

<unk> can you give us any color as to what what the performance and the three Q look like for those reasons versus some of the ones where there was more disruption.

Yeah, I don't think we'll get into territory by territory, but I'll I'll just say in general we feel really great about the bringing.

Bringing dragon and ensuring that we have a plus talent in every single position whether that someone who's been here for 10 years or 10 days uhm the expectations for our sales organization is extremely high the bar to get in is extremely high and once here uhm the expectations continued to be extremely high and so.

<unk> you know a typical turnover and men devices highly competitive would be you know, 10% to 20% and we definitely we're in that range previously with our enhanced top plan with the alignment of the teams that we have closer to the customer working together with the management responsibilities occurring closer.

The customer and giving power to those that are closest to the customers were seen not only pockets, but uhm, obviously, our expectations for this quarter and we'd better than what we would've thought so while we're not declaring victory I do like where we're going we have another quarter here that you know <unk>.

<unk> some of these changes, but I feel good about bringing his team and what they've done to be able to set us up for success not only for this this quarter, but also really as we head into 2024.

There are no further questions at this time will turn it back to the presenters.

My apologies.

One more question.

From Dave strictly with JMP Securities. Your line is open.

Great. Thank you, Kevin I might just want to personally put on the M&A side.

Did you stay focused on.

<unk> markets or are you open to other areas, let's say in the neuro monitored by electronic Medicine Arena.

Yeah. Thanks to a great question, you know as I alluded to in the prepared remarks.

The biggest asset we have in this organization outside of our technology. Our basic biggest expenses are as ourselves for us and what we want to do is ensure that we keep them focused on the same call points, where they're headed today. The last thing. We wanted to do is add more places they have to go to new doctors they don't already know.

So the focus has been on dropping something into the bag that they can leverage those relationships. They already have and you know spend more time in each of those locations before getting in the car and spinning windshield time between the next position I, just say is a little bit more clearly what would it be great is each of our sales reps when they show up at a physician's office and.

In the morning can look at the staff and say boy. This is going to be a great morning, I'll be with you all morning doing X Y Z procedures with you and then we'll have lunch and then head on to the next place versus bouncing from one S. D. F case to another doctor to Doctor right I mean.

Our sales force whenever there in front of a windshield or not in front of a customer in front of a patient and so uhm leveraging the sales force and dropping something to the call point. They already have is the number one priority and the targets that were looking at.

Got it thank you for that and one quick set up in the G O P. But it sounds like you already said that you expect zero impact.

And I think I heard that [laughter] and that many of your.

Since in the trial were already on it.

Is that like half or could you. Please provide like a per cent there and did I hear that correctly.

Yeah. So yeah, I I I will provide it's about a third of a little less than a third of the patients in the P. D. M study, we're already on G. L P ones or the class of drugs and so.

They obviously had been on those for for years I mean, it's not a new drugs that had been on those for years and they still were met the inclusion criteria that man they had painful diabetic neuropathy. Despite taking those drugs. So that's what gives us the confidence and then I'll reiterate in the prepared remarks as well I mean, we're very in a very.

Very early innings were probably still in batting practice and the full you know a launch of P. D. In two to 3 million patients and obviously you can do the math I mean, we're we're very very little penetration so see even if.

A big portion of that market happened to go away, we still well within our ability to grow for a really long period of time, but the confidence is is not only the patients who are already in our P. D and studying to still hasn't benefit and at great results, but also we obviously talked with with some of the top bleeding Andrew Chronologist in the world.

That are part of our K O L key opinion leader group and so we take the guidance from from them as well just during the experts to see the patients every day.

Thank you.

The next question is from rich neuter with tourists to your line is open.

Rich neuter with Truest your line is open.

Okay. It appears there are no further questions I'll turn it back to the presenters for any closing remarks.

Alright. Thank you operate appreciate it and thanks, everyone for joining us today and I look forward to reporting on our progress on our North next call talk to everyone. Soon thank you.

Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may notice correct.

Good.

Please wait the conference will begin shortly.

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