Q3 2023 ReShape Lifesciences Inc Earnings Call
Good afternoon, and thank you for joining to reshape Lifesciences third quarter 2023 conference call.
I'd like to turn the call over to Michael Miller from Rx Communications.
Good afternoon, and thank you for joining the reshaped life Sciences third quarter 2023 earnings call I'm pleased to be joined today by Paul Hickey, President and Chief Executive Officer, and Tom Stankevich, Chief Financial Officer.
Paul will provide an overview and update on the company's activities, which will include a discussion with Doctor Carolina Cobian a member a reshaped.
Advisory Board.
Then Tom will review the financial results for the period.
I'll, then turn the call back over to Paul for some closing remarks, after which we'll open the call to a question answer session.
As a reminder, this conference call as well as reshape life Sciences, SEC filings and web site, including the Investor Information section of the website contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Actual results could differ materially from those discussed due to known and.
Unknown risks uncertainties and other factors these and additional risks and uncertainties are described more fully in the Companys filings with the Securities and Exchange Commission, including those factors identified as risk factors in the company's most recent annual report on Form 10-K.
As an additional reminder, reshaped stock is listed on NASDAQ trading under the symbol or S. L. At.
I'll now turn the call over to Paul Hickey, President and CEO reshape Paul.
Yeah.
Thank you Mike.
And thanks to all of you for joining US this afternoon for our third quarter 2023 earnings call.
After I provide an overview and update on reshaping activities will be joined by a member of our scientific Advisory Board. Dr Carolina Cobian co director at the center for weight management, and wellness and the division of endocrinology diabetes and hypertension.
Brigham and women's hospital in Boston, and a professor of Medicine at Harvard Medical School.
As an expert in key opinion later in her field I've asked Dr program to provide her clinical viewpoint related to GOP ones and their impact on the care continuum for obesity.
The most important takeaway from this call is for all of our investors to understand that we remain dedicated to achieving profitability by executing our growth strategies and maintaining our emphasis on creating shareholder value.
Yesterday I visited by surgeons from one of our centers of excellence in Louisville, Kentucky.
My pain of Louisville.
This site has implemented the high platform and also as part of our co op marketing program.
Despite the pressures from G. L. P. N. One adoption. This center is on pace to have year over year lap and procedural growth in 2023, validating that our marketing initiatives are working.
There is much to look forward to as we move towards 2024, and we are optimistic about the growth potential for the company.
Before I recap, our third quarter and subsequent highlights I'd like to comment on an important events occurring within the abuse in the market today.
As most of you already understand the global obesity market is growing at an alarming rates and carries with it significant medical repercussions and associated economic costs.
<unk> remains a complex lifelong disease that requires personalized treatment to ensure long term weight loss goals are achieved.
I'm sure you are also aware of the growing popularity of <unk> agonists that have brought significant benefits to those suffering from type two diabetes and help those who are obese.
We believe that children, one adoption is expanding the medical weight loss market by vascular reducing the stigma that often occurs around obesity and medical intervention.
<unk> bariatric surgery.
The G. L. P. One related big pharma marketing efforts and resulting adoption has helped increase the numbers of people seeking medical attention for this disease, especially by those who have avoided surgery in the past.
Given the increasing body of evidence pointing to the fact that weight loss to the GOP line usage has limitations related to Comorbidities and accessibility, we believe that the market opportunity for the lap band will increase.
From a continuum of care perspective individuals with obesity on GMP, one therapy are likely potential candidates for Latam bariatric surgery as the next viable anatomy preserving weight loss treatment.
Shortly I will have Dr programs speak to our personal experience, which is representing what we are hearing from physicians across the U S. G.
GOP, one adoption, while potentially delaying surgical consults in the short term is increasing the number of patients who would consider Patrick surgery.
In other words once GL per one agonist patients get a taste of weight loss.
You have issues with the drugs accessibility durability or tolerance, they will contemplate bariatric surgery, especially a minute waste of surgery procedure like all that bad.
Now before I introduce Dr appropriate, let me take a few minutes to update you on our progress related to our three primary growth pillars.
As you recall, our first pillar is to operate our business with a disciplined metrics driven approach to drive predictable revenue expansion.
There are sustainable and scalable business model.
The second is to continue to expand our product portfolio and pipeline across the care continuum.
And our last our third pillar is to continue to validate our evidence based weight loss solutions, leveraging our scientific advisory board for key insights on strategic initiatives.
Our first pillar remains paramount to reshape to deliver shareholder value.
And ultimately profitability.
As we consider the impact of <unk> adoption for weight loss treatment, which has put pressure on several markets, including bariatrics.
It was necessary to take a hard look at our operations make significant cost reductions, while ensuring growth and that our company adheres to key P&L metrics.
Tom will later detail the expense savings, we have identified realized and are planning for.
But in summary, we have identified and implemented effective November one cost reductions totaling approximately $8 million representing more than a 40% reduction in operating expenses for 2024.
We are optimizing our marketing spending while making additional reductions in consulting services totaling approximately $2 4 million.
We have also executed a reduction in force of approximately $1 2 million we.
We have decided to temporarily pause our reshaped care program and.
And achieve an estimated savings of $8 million.
While we.
Continue our efforts to secure a self insured employer to provide reshape character of our employees.
We have also planned for $8 9 million of reductions for incentive compensation and other payroll related about.
All part of streamlining our team significantly but without affecting revenue.
Our board is aligned with our strategy and we'll also take a 50% reduction in their compensation.
Taken together these reductions will allow us to focus and invest in our growth drivers while at the same time, extending our cash runway.
These changes are bolt necessary and indicative to our commitments to our first growth pillar I established late in 2022.
In point of fact, with these 2024 reductions.
The company's core operating expense reductions between 2022, and 2024, our estimated at $22 million or 70%.
In addition to the necessary cost reduction initiatives related to our first growth pillar, we've made significant progress with our newly improved digital lead generation and patient engagement campaign.
As I mentioned earlier with Blackburn up Louisville, we have seen an increase in the quality of patient needs, while successfully reducing costs in targeted markets, where a surgeon advocates operate.
In particular, our exclusive partnership with Hyatt Medical allows us to advance lead optimization software that can enhance patient engagement and increased patient volume.
This software utilizes AI SMS patient self service technology.
Which in combination with our targeted direct to consumer marketing campaign helps individuals', principally effortlessly overcome new patient intake challenges.
As a result patients can easily book appointments with medical professionals at anytime.
Let's now discuss our progress executing our second growth pillar.
We are well positioned with our current FDA approved blackout system, which provides a minimum base of long term treatment for obesity and a safer surgical alternative to more invasive weight loss surgeries.
This past June we filed a PMA supplement with the FDA for the next generation Latam to point out flex.
This product has been designed with physician feedback in order to improve the patient experience.
Like the current lap and the last thing to point out flex can be adjusted postoperatively to increase or decrease the band opening depending on the patient's tolerance to ban therapy.
Additionally, Latam to come out flex has a new feature called Flex technology, which acts as a relief valve, enabling larger pieces of food to pass through the narrow passage more easily specifically.
Specifically the ban momentarily relaxes before returning to its resting diameter, while minimizing discomfort caused by swallowing large pieces of food.
We anticipate approval from the FDA by year end early 2024.
We believe based on surgeon feedback that our Latam to point out flex will be a growth catalyst for the Companys lifespan franchise once approved.
Also of note in September we signed an exclusive royalty bearing license agreement with <unk> to manufacture commercialize and distribute the oberland gastric loan system in India, Pakistan, Bangladesh, Nepal, Bhutan, Sirocco and the Maldives.
The license agreement provides for 200000 in upfront payments from buyer at to reshape and ongoing license payments of 4% on a gross sales of the <unk> system and the territories.
It is important as it represents the first step towards introducing our patented <unk> balloon system, and we believe that bio Rad with decades of experience manufacturing distributing medical devices and the vast south Asia market potentially reaching approximately 20% to 25% of the world's population.
As an ideal partner to expand the reach of our technology.
Expect this agreement will lay the groundwork to catalyze the successful re launch and commercialization of the blend system in markets worldwide.
Given the scope of our second growth pillar to expand our portfolio and global distribution. We have recently engaged the Maxim group on an exclusive basis to identify strategic merger and acquisition opportunities that provide synergistic partnerships engaging maxim and executing on this initiative is very high priority for me.
Appreciate life Sciences.
As far as third growth pillar, we continue to work closely with our scientific Advisory Board are.
Internationally recognized experts and surgeons in the obesity and metabolic disease fields.
<unk> is fully engaged in helping us develop our launch strategy for our lab, Pam Parnell flex and marketing our suites of weight loss solutions.
Now at this time I would like to introduce Carolina, <unk> from Brigham and Women's Hospital and Harvard Medical School as previously mentioned Dr. <unk> is a member of our scientific Advisory Board and has been a key opinion leader and an expert in the field of bariatric surgery for decades.
It is also nationally recognized experts on nutrition.
Metabolism and obesity medicine.
Caroline I would like to ask you given everyone. Your background and then discuss some of you on the recent changes in the field of obesity treatment, including the adoption of <unk> and the overall impact you feel they will have on that surgical procedures available today.
We'd also like to hear about your experience with combination therapies, comprising COPD ones in other gastric surgeries <unk>.
Including lap and to help those who partnered with their weight loss.
Dr appropriately.
Thanks, Paul.
Good afternoon.
As Paul mentioned I am.
<unk> director of the center for weight management alignment.
And this isn't of endocrinology diabetes, and hypertension and Brigham Lindland tasked at all and I'm, a professor of medicine at Harvard Medical School.
My interest in obesity began 35 years ago, when I was a fellow in nutrition the metabolite, Brian at the New England Deaconess Hospital after completing my internal medicine residency there.
I was lucky and honored to have studied under George Blackburn.
Who is considered the father of nutrition and obesity medicine.
And since that time, I have focused completely on obesity and nutrition.
<unk> is a disease and its many serious complication.
Heavy toll in both human and economic terms.
More than a third of adults in the United States have obesity back with 42% of the population.
And they are subject elevated.
The type two diabetes hypertension, dyslipidemia and cardiovascular.
The 42% of Americans suffer from obesity.
With a BMI over 30 will likely go on to develop type two diabetes and heart disease.
The negative effect on quality of life. These are normal.
DLP, one and other.
We call the new ship nutrient.
<unk> hormonal therapy.
Are having a tremendous positive impact on that.
More people than ever are asking about treatment for narrow bodies.
We have learned almost all that we know about ERP ones in other hormones.
With bariatric surgery, which work by altering the secretion of got warmer.
In addition, we've learned from laparoscopic band that they use the DLP one other new ships would be complementary with the Latvian silicate long lasting lately.
We're utilizing many of the TRP agonist as a plan.
They're analog with naturally occurring gut hormone that can be helpful. Andrew.
And reducing body right now up to 20%.
And even more today.
Our approval by the FDA.
Yep.
About.
Unfortunately insurance companies and the government hasn't kept up with the science and don't really embrace obesity as a disease.
These powerful drugs are not ubiquitous recovered and they're certainly not covered by Medicare or Medicaid.
And just the last year at our center for weight management wellness with Brigham we've seen more than 10000 unique patients.
Just on the medical lab so.
Not bariatric surgery and Dr.
It could be but the medical waste management and 10000 patients.
I believe that the utilization of DLP ones at noon.
Ultimately increased the number of patients we would consider very very.
In other words.
First of all.
10000 patients that certainly coming and seeking medical treatment, but I'm able to convince those patients with BMI is over 40 over 35.
More than a useful that surgery really is.
<unk>.
A better option for them and our team that's anecdotal anecdotally over the past six months.
And also what patients are niches yet.
I understand that they can lose weight by altering the DUC hormone and and and.
Feel so much better.
Yes, we have issues with <unk>.
Seth ability durability tolerability, they may contemplate bariatric surgery, more Apis and we are seeing that to be true.
And that includes minimally invasive procedures like the laptop.
And we have been able to convince many patients with BMI is over 40 that surgery net remains the best option.
And we're seeing that.
Again in the last six months or so.
Certainly since the advent of <unk> and <unk>.
<unk>.
Now even though this is true bariatric surgery is still under utilized in the United States only 1% of patients eligible for the surgery get the procedure done annually 250000 procedures done annually.
The same thing happened with cardiac surgery, we would say this was negligible.
But the problem is overlooked with hoping Colby.
Surgery is like getting your gallbladder out with <unk>.
Patients feel they have the.
They have the erroneous idea with this is aggressive surgery.
And that people regain their way.
Which of course is not forever.
Many patients also Joe Eric at the disease.
The new shares are helping patients understand that they have a disease because they take the medication. So for the first time in their lives and they and if they want to continue feeling that way and losing more weight.
I understand now that they are understanding more and more.
Consider bariatric surgery, including the lot form.
In order to effectively treat obesity is imperative.
Combination of intervention, such as diet exercise medications like our new ship.
Endoscopy, and bariatric surgery, including the lab fancy employed at different stages of a patient's weight loss journey.
But nathan therapy.
<unk> uses for those who plateau with their weight loss from bariatric surgery will help individuals get back on track.
That said to ensure patients receive the appropriate treatment.
Crucial for medical and surgical society to collaborate on the development of guidelines that stratify patients based on BMI and.
And determine which medications and procedures can be used alone or in combination.
I certainly hope that these insights that I have.
Now from my 35 years of experience and.
Most importantly over the past few years I hope. These insights have been helpful. I look forward to answering questions later during the call.
Pass the call back to Paul.
Alright, Thank you Carolyn.
That was.
I think you hit the spot and I think that was appreciated by listeners and I'm sure there'll be questions for you, but as a leader in the field that truly appreciate your participation and hearing your opinions firsthand.
So before I turn over the time, just a few more thoughts.
Based on what you heard so far we do remain very confident that with our lap that unexpected future offering in the left hand to point out flex.
That we as a company are uniquely positions with the least invasive safest and most durable weight loss option for those patients.
Historically had an aversion to medically manage weight loss and surgery.
Given the growing body of evidence pointing to the fact that weight loss due to GBP. One usage has limitations related comorbidities and accessibility, we believe that the market out to him for lap band will increase and from a continuum of care perspective. These patients are likely potential candidates for Patrick surgery.
As a next viable weight loss treatment.
I'd like now like to turn the call over to Tom Stankevich to provide a recap of our financial performance Tom.
Thanks, Paul and once again, thank you all for joining our webcast. This afternoon.
As a reminder, a full discussion of our financials is available in our press release and 10-Q.
As Paul mentioned earlier in November and in response to continued pressure on the company's revenue caused by the adoption of <unk>, we are reorganizing the company.
As identified cost reductions of approximately $8 million or more than 40% just for 2024 alone.
Specifically a reduction in force of approximately $1 2 million in November and December of.
300000, more budgeted cost phasing in early 2024, as well as 900000 of reductions in incentive compensation and other payroll related amounts have been implemented across all expense categories.
Okay.
Core operating costs in total had been reduced by approximately $5 4 million.
This reduction in.
<unk> costs of $2 4 million without affecting our continued marketing spend optimization.
Related to the path of re take care.
100000.
Expenses related to G&A totaled $1 $3 million primarily.
Consulting fees and insurance costs.
R&D expenses, excluding 900000, which primarily consulting with reduced fees.
Additionally, third quarter 2023 core operating expenses were 37% lower.
Third quarter of 2022.
Taken altogether with actions, thus far we have made significant progress, reducing our core operating expenses, adding approximately $22 million or 70% between 2022 and 2024.
A full discussion of our actual financials is available in today's press release and 10-Q.
So I will just take a brief moment I would just take a moment to review key financial metrics for the third quarter ended September 32023.
Our revenue totaled $2 2 million for the three months ended September 32023, which represents a reduction of 600000 compared to the same period in 2022.
The growing popularity of <unk> prescription drugs for weight loss treatment is the primary reason for the decrease in sales volume in the U S and internationally.
We have focused our new marketing strategies through targeted and AI supported digital media campaigns, and Youre bariatric surgery centers, while reducing costs and increasing efficiencies.
We expect that these efforts will come to fruition during the fourth quarter of 2023 and beginning of 2024.
Our continued focus on increasing demand for the <unk> system and recently launched three new sizes of calibration tubes will grow revenues.
Additionally, we anticipate receiving FDA approval for the lapping <unk> flex late this year or in 2000 or early in 2024, followed by a U S product launch that should contribute to increased sales going forward.
Gross profit for the three months ended September 32023 was $1 3 million.
Third $2 1 million for the same period in 2022, a decrease of 800000.
Gross profit as a percentage of total revenue for the three months ended September 32023 was 60% compared to 75% for the same period in 2022.
The decrease in gross profit percentage is due to the decrease in sales volume primarily related <unk>, one drugs coming to market.
Nevertheless, it is the highest gross margin percentage in any quarter. This year as some of our cost reductions have had a positive impact on gross margins during the third quarter.
Sales and marketing expenses for the three months ended September 32023 decreased by 800000 to $1 8 million compared to $2 6 million for the same period in 2022.
The decrease of 800000 is primarily due to a decrease in advertising and marketing expenses as we reevaluated our marketing approach and have moved to a targeted digital marketing campaign.
General and administrative expenses for the three months ended September 32023 decreased by $1 7 million to approximately $2 1 million compared to $3 8 million for the same period in 2022.
The decrease is primarily due to a reduction in payroll related expenses and personnel changes and reductions in professional services.
Additionally, other reductions included intangible asset amortization as the company impaired it's finite intangible assets during the fourth quarter of 2022.
And a decrease in rent and insurance costs for the expired lease of our former Carlsbad, California location.
Research and development costs for the three months ended September 32023 remained consistent with the same period in 2022.
And professional services.
non-GAAP adjusted EBITDA loss was $2 9 million for the three months ended September 32023, compared to a loss of $4 2 million for the same period last year.
With a $2 8 million in net proceeds from our recent public offering in October.
And the cost reductions detail during the call, we will preserve cash and extend the company's cash runway.
As we finished 2023 and move into 2024, we anticipate our revenues increasing and a continued reduction in our operating expenses.
With that I will now turn the call back over to Paul.
Okay.
Thank you Tom.
Before we open the call up for Q&A, it's important to reiterate as both Tom and I have detailed.
That we have and will continue to significantly reduce operating expenses across all categories. So we can invest in our growth initiatives.
The bold steps, we have taken to reorganize the company will help to ensure sustainability and scalability.
We continue to prioritize investments, including marketing automation to support scalable lead acquisition segmented consumer centric messaging pn and updated website for improved patient engagement and a frictionless booking system with qualified providers, while further reducing lead generation costs.
Taken together, we expect it to increase lap band procedures and ultimately revenue.
We will continue to develop and offer a portfolio that is differentiated from the competition with transformative technologies that consist of selection of a selection and patient friendly non Amanda Natalie changing lifestyle enhancing products programs and services that provide alternatives to more invasive bariatric surgeries.
To help patients achieve healthy durable weight loss.
At the same time, we will continue to work with our World Class Scientific Advisory Board to continue to execute on our plan for success in a global market that is changing and historic fashion to normalized safe and effective treatments for obesity.
This concludes our prepared remarks, so now we would like to open the call to your questions.
Operator.
Thank you and ask a question. Please press star one on your telephone and wait for name to be announced towards really a question. Please press star one again.
Please standby with part of the Q&A roster.
One moment for our first question.
Our first question will come from the line of Anthony Vendetti from Maxim Group. Your line is open.
Thank you thanks.
Thanks for that overview Paul.
For also.
Dr Caroline accordion.
That was very helpful to hear to hear your view, maybe starting with with.
Dr Kogan.
Obviously, there's a lot of news surrounding the GOP ones today literally it was approved for weight loss or obesity.
And.
There is also.
As you discussed there's comorbidities.
Potential adverse side effects, we don't know at what level at this point right other than what the studies are showing.
I guess, we'll find out over.
Over the next 12 or 24 months as this rolls out.
But what is your expectation.
<unk>.
It's obviously impacting sales.
Four.
Ban for bariatric procedures.
Patience.
And consumers decide to try something new.
Do you think it's a 12 month process before they realize maybe a the cost or decide effects.
For some of them are not worth it is it is it two to three years before some of that sort of data starts to set in for some of the apathy for GOP ones maybe.
Starts to set in or the initial sort of shiny new toy starts to wear off.
Your best guess.
Certainly youre guess is much better than mine, but.
Is your best estimate as to when all of this sort of plays out.
Sure.
And then just trying to get a good understanding of that.
Yeah well.
What I'm seeing.
We have five doctors.
Are these in our.
Medical practice obesity medicine, we saw 10000 new cases.
We're coming.
The decrease in bariatrics surgery.
Came from Covid.
The COVID-19 numbers.
Now as you all know.
No.
Our starting to recover.
But part of it is mark.
I don't see the decrease in borrowings.
I am seeing an increase.
Bariatric surgeon in my practice are telling me there before right.
It takes a while but.
For the 10000 pesos, we saw labs, just in the medical loss.
We'll get through the program, we have 4500 patients are waiting.
Joseph Medical statements trying to get in and they have the weight eight months, one year Tc one of our medical practice provide one.
Yes.
Obesity medicines vessel.
The lifeboat.
Thank you.
You bet.
This demand.
Sure.
The great news.
Pam.
The primary care providers.
They don't have the resources near practical practical.
Rob.
The prior authorization today.
What's required new FTE.
The prior authorization.
And then they don't know how to.
They don't know how to give the drug they don't know how to provide diet and exercise.
They.
So have we.
Relegated to obesity medicines.
They're only 65 7000 obesity medicine vessel.
So what I'm trying to say here is that we all have the backlog.
And what's the pacing yet Tim.
Over the past six months, what I have seen and my colleague.
Is that we're able to get them in as a new polson.
We give the patients with a BMI over 40 or over 35.
Bob.
We're looking at them in the face.
No you want to go on with Goldman I can't give you would go there.
<unk>.
Sure.
When there when the sorted.
Yes, I can give you regardless you realize you're going to have to be on it for the rest of your life and you're going to get a 16% weight loss alright, yet I lost 15 pounds on mogul D and I want to lose more.
<unk> 50.
Way youre going to lose more.
Barry optics.
So on April with with all of the.
Because of the shortage.
The fact that they realize that they need to be on an injection for the rest of their lives because.
They are big that weight loss.
And they got the 16% weight loss with Dolby, yes, but not more and then the patients who need to lose the 100 to 150 pounds, that's not going to work.
So in April.
Now taking densification.
To get a consultation with one of our bariatric surgeon.
And we have 10 of them.
And they have appointment next week, whereas I have an eight month to 12 month waiting.
Okay.
Alright.
What's happening, but it's.
Youre right its going to take some time to get the patients through.
On top of that.
We have the laparoscopic adjustable gastric band.
I have always.
Wanted to combine the lap band with AGL P. One and now in news because now we have.
You know.
<unk> found that we have doubled and tripled coming down the pipe.
Then you get the restriction of the lap band.
The change in guide hormone midyear with the multitude.
Of new ships that are coming down the pike.
So this has been a provide a less let's say less aggressive form of surgery with a medication that can hopefully achieve.
Hey, Rod.
More than 20% of more than 25%.
So Dr.
Sure.
Thats good Thats very helpful.
In the situations where.
They want to.
Patient skoal is to lose more than 16 or 20%.
Do you.
Do you how often do you recommend.
Bariatric surgery verses.
The last band.
With the GOP one.
And are there instances right now where you just recommending the lap band without the GOP.
And then you can do the GOP one later.
Just wondering.
How are you right now.
Guiding or advising your patients.
But it's it.
It runs the gamut, because what you need to understand about our center is we have not.
We have bariatric surgery, but we also have bariatric endoscopy, Chris Thompson the world.
We're leaders in endoscopic.
Rice's and procedure.
So, but within bariatrics endoscopy, we are definitely and with Barrick in February.
Definitely adding DLP, one to both endoscopic and Baird, Sir do Kristine here, what we are.
The last and what I do recommend.
And there still is if youre going for bariatric surgery.
Yes, correct me or the laparoscopic adjustable band.
Certainly not.
Or even the endoscopic procedures.
Ed.
News right away.
We wanted to because you don't want to get excessive weight loss.
Because you're going to lose muscle and fat, we lose muscle and fat anyway.
That's really with the more aggressive bariatric surgery procedures like the <unk>.
Bypass even leave the fleet the Bipap and 1 billion of net conversion youre, losing.
Almost half muscle because youre, losing itself back.
You don't want to do that that caused the stock of <unk> and <unk>.
Lower resting energy expenditure and it's back and those patient cells.
What you wanted to you is that.
Yeah.
A good amount of weight loss with one Christine Sarah if youre going to use the prestige Eric and then when you plateau plateau or you don't lose as much as you wanted which is often the case.
Sure.
Great, but then a year later you regain some late then you add the news.
Okay. So you don't want to do everything at once.
Anthony Let me okay.
Dr.
Anthony This is Paul Dr probably and thank you for that.
Inside both book all of the answers you provided I wanted to add one more point, maybe you can.
Add to it as well.
In terms of the numbers of people that youre seeing.
Just kind of reminding.
And then I know we've talked about this before where there is as mentioned during the call. There is only 1% of the people that in prior years decades, 1% that could have surgery are seeking out surgery.
And our belief is and I think thats what Dr. <unk> was affirming that theres more people now beyond that 1% that are that are seeking care specific with the GOP ones being as popular with a big marketing push from big pharma.
And then it's.
The timing I know that I would love to have that answer too right, but the timing for nationwide on average centers that are unlike brigham and women's and.
In the <unk>.
Center of excellence that Dr. Propylene is formed over the years.
I'm sure has ways of managing their timetable that are completely different across the board.
Look at smaller centers and centers that are less apt to.
Have all the experience that you.
You get out at the Brigham.
And our only.
Alter to to kind of the the.
<unk> <unk> one.
Marketing push is.
Our marketing efforts, which I think I noted briefly that the one center that was one of our three pilots in our Louisville.
Actually coming in with more procedure growth this year than last year with platform based on the fact that they are they are doing the marketing are doing the things that we've put in place.
It's working so that's exciting for us.
But Caroline would you agree that you would have more pent up demand for people that are coming in to see you this year versus previous years because of what's happened the last six months.
There's no doubt.
Theres really no doubt we're seeing patients.
More patients than we used to because of the.
The media attention on obesity, not just the medications, but just the fact that we're.
Patients are finally realizing.
Doctors are paid to the patient.
Need to understand what they have is not safe.
So that's what I said on 60 minutes.
The same that stopped people from going to see the doctor about their obesity.
And this is finally ending because we're finally understanding that if there was a pill.
Action that can help you lower your body weight checkpoint.
Can't be a matter of willpower gives its done.
That's what's changed.
And that's why we can get patients in.
Bariatrics surgery Im not hearing any more like they used to.
I don't want that surgery, I know I can do.
Yes.
I'm not hearing that anymore.
Okay, that's great.
Scott that's a godsend.
Yeah.
Okay, great. Thanks.
Very helpful and obviously it sounds like Youre Center is a center of excellence and do you have.
Align and a huge backlog of patients in.
But shifting gears, Paul maybe just just on two other points here.
The agreement you signed the exclusive royalty bearing agreement with buyer Red Medicine.
The private company for the overlying gastric balloon system.
Where is that in terms of being rolled out is that is that something that's going to be rolled out before the end of the year are they going to start selling that in 2024.
And maybe just any other expectations around that agreement.
Yes, I think <unk> had aggressive.
The goals there the project has kicked off in terms of signing agreements and we've got the two teams from bio Rad in from reshape engaging and as you'd expect sort of the weekly.
It would be appropriate cadence of project meetings.
Yes.
They have aggressive timelines that they've stated I think the knowledge transfer could take longer in terms of getting.
But we know over into their hands. So they can execute that.
The production and then beyond the production, it's about verification validation of their process. So that has the same level of global quality that is needed to pass muster with the regulatory bodies worldwide. So.
I would expect that.
I think we're all pushing to do something this year and to have.
I'm sorry, we're sitting here now in mid November we were.
Pushing to get something done this year I think we're now looking at something that has to be in the first part of next year.
But yes.
Both sides are eager to get.
Initially by Red to get this product produced in and get it done the right way. So we can.
The next phase of this.
Definitely keep you updated.
Yes, and milestones as we define them.
And have some predictability to them I'm going to be I won't be shy about sharing those with you.
Okay excellent and then on the.
The cost cutting.
$8 million.
24.
It is.
Is that going to are there then we could be some onetime charges.
In the fourth quarter that we're in right now.
To account for that and if so do you have do you or Tom.
A handle of what that might be.
Yes.
Thanks, Andrew Yes, sure absolutely.
Yes.
We're not anticipating.
Any big charges in Q4 as a result of all of this.
And.
If there were there would be onetime in nature.
But as of as of as of right now I'm not.
Expecting anything in the millions of dollars. If you if you will.
So the answer to your question directly no not expecting anything anything material will there be some yes, you can imagine that there that there would be some some costs related to <unk>.
When you do a reduction enforce theirs.
Most likely going to be some some severance costs and those types of things. So we will accrue for all of that.
During Q4.
Okay great. Thank.
Thank you.
All of that information I'll hop back in the queue.
Great.
Thank you and this concludes our question and answer session I would now like to turn the conference back over to Paul Hickey for any closing remarks.
Okay.
Great. Thank you.
I hope that you value, our transparency and consistency about we've expressed during this call and.
And Thats Youre able to appreciate.
Enhancing the efficiency and reliability of our companies through the revamping.
The organization to continue our quest to grow shareholder value as a sustainable and scalable company.
We will continue to work diligently to build on our commitment to provide evidence based personalized devices in therapeutics.
We remain optimistic about the long term growth potential for the company.
Special Thanks to Dr. <unk> for participating in today's call.
I want to thank all of our current and past employees.
Our board members customers consultant adviser suppliers existing and new shareholders for Ya.
Continued support of reshape as we progress on our mission to become the Premier physician led weight loss company.
I look forward to continuing to engage with our stakeholders healthcare partners and shareholders.
This conference has now concluded. Thank you for attending today's call. You may now disconnect everyone have a great day.
Okay.
Okay.
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Okay.
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