Earnings Call: Q1 2021

May 5, 2021

Greetings, and welcome to the Establishment Labs First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Raj Denhoy, Head of Strategy and Investor Relations. Thank you, sir. Please go ahead. Thank you, operator, and thank you, everyone, for joining us. With me today are Juan Jose Tricone Quiros, our Chief Executive Officer And Renee Gaeta, our Chief Financial Officer. Following the prepared remarks, we'll take your questions. Before we begin, I would like to remind you that Call. At this time, all participants are in a listen only mode. Comments made by management during this call will include forward looking statements within the meaning of federal securities laws. These include statements on Establishment Labs' financial outlook And the company's plans and timing for product development and sales. These forward looking statements involve material risks and uncertainties, and the company's actual results may differ materially. For a discussion of risk factors, I encourage you to review our quarterly report on Form 10 Q that we expect to file with the SEC tomorrow and also be available on our website atestablishantlabs.com. The content of this conference call contains time sensitive information accurate only as of the date of this live broadcast, May 5, 2021. Except as required by law, Establishment Labs undertakes no obligation to revise or otherwise update With that, it is my pleasure to turn the call over to our CEO, Juan Jose. Thank you, Raj, and good morning, everyone. I hope everyone is healthy and continues to remain safe. First of all, we would like to express our sympathy to everyone around the world suffering from the effects of the pandemic. We do business in more than 80 countries, including India, Thailand, Costa Rica and others that are currently experiencing a surge in cases. We continue to support our employees and communities through this difficult time, and we look forward to improving conditions in these hard hit areas over the next coming months. Now turning to our business performance. 2021 Q1 revenue was $30,300,000 a new record for our company. 1st quarter revenue increased 24% Over the Q1 of 2020, it was up 13% sequentially from the Q4 of 2020. Our singular focus on women's health and the superior aesthetic and safety profile of our Motiva platform continues to resonate in the marketplace. With our strong start to the year and the significant momentum in our business, we are raising our full year guidance for 2021 $112,000,000 This updated outlook represents growth of 39% to 44% over 2020. As always, and especially during a pandemic, we are going to be conservative with our guidance. Renee will provide additional detail on our Q1 performance An updated outlook in a moment. Before I turn the call over to her, I'd like to provide an update on recent events as well as key initiatives underway at Establishment Labs. On April 23, 2021, the share committee of the European Commission Published its final opinion on the safety of breast implants in relation to anaplastic large cell lymphoma or ALCL. The report Largely reiterates what has been concluded by other regulatory and scientific agencies around the world, namely that there is a causal relationship Textured implants and the development of ALCL. This has been found most significantly in implants with an intermediate to high surface roughness, which includes macro textured and polyurethane coated implants. We developed our SmoothSilk Surface technology, Which is classified under ISO standards as a smooth surface more than a decade ago to address issues That are now being recognized. With more than 1,600,000 implants after more than 10 years of commercial implant sales, We have still not had a single case of ALCL reported with Motiva. And our post market surveillance data continues to show Less than 1% reoperation rate due to capsular contraction. As a company focused solely on the mission of improving women's health, We do not celebrate the conclusion that products from our competitors can be directly tied to a man made illness. However, while we look forward to a future where the issues with legacy companies and products are no longer discussed, It is important that this industry acknowledge that certain classes of products are not safe and with the evidence available should no longer be used. The rigorous science and clinical data behind Motiva sets us apart from the competition, and our strong sales results show that this message is resonating with surgeons and with women. In February, building on our history of innovation, we provided a first look into MotivaMia, Our minimally invasive breast enhancement procedure made possible by a standardized technique using our proprietary tools and the Ergonomix II Diamond implant. After our first cases in Asia in 2019, I am pleased to report that we recently completed enrollment in our 100 patient Motiva EMEA IRB approved study in Costa Rica. During the latest series, we received feedback from plastic surgeons who traveled in from around the world to participate in this journey of innovation. We hosted surgeons from Europe, Latin America and the United States. We continue to learn a tremendous amount during these early cases and the feedback from surgeons is helping us refine and optimize the procedure. Overall, I can tell you that our initial enthusiasm for MEA and its potential has proven more than justified. The time it takes to perform MotivaMia remains very short, with procedures routinely done in less than 15 minutes. Because Motiva Miea does not require general anesthesia, patients are able to leave the clinic in under an hour, with many leaving in less than half an hour. Patients also report little, if any, discomfort or pain with MIA and are typically able to return to their normal daily activities in less than 2 days. Static outcomes are excellent with as much as a 3 cup size increase and very high satisfaction scores. We look forward to continuing our clinical work with MotivaMia and plan to initiate our multicenter IRB approved study in Thailand later this year. MotivaMia has the potential to make breast enhancement appealing to many women who previously had not considered breast aesthetics. The positive feedback from surgeons who have used the technology supports our view that As a reminder, our initial estimate of the global total addressable market for MEA is 1,900,000 procedures per year. The Ergonomix II Diamond implant used in EMEA received CE Mark in December, and I'm also pleased to report We have filed for regulatory clearance in Europe for the tools that are part of the Motiva Mia system. We expect to begin medical education and premarket activities with Motiva EMEA in Europe before the end of the year. Motiva Flora, our novel tissue expander, received CE Mark in June 2020, and we are preparing for full commercial launch in Europe this summer. With an integrated RFID port, FluorA is a significant improvement over the current standard of care. With a first of its kind non magnetic port, FLUARA allows for MRI imaging during the time an expander is used after mastectomy. Beyond improvements in imaging, FLORA also has the potential to improve women's health by changing the way women are treated for their cancer. The metal in currently available tissue expanders can be a limitation in the way radiation oncologists plan and deliver treatment. Many of the clinicians we are partnering with have noted that FluorA could allow them to deliver safer and potentially more effective treatments to their patients. We have several projects and studies underway to help define how FLORA can improve radiation oncology treatments during this critical stage. The clinical benefits that come from offering substantially better alternatives is an important part of our women's health mission. In many countries around the world, less than 10% of women have breast reconstruction after a mastectomy. FLORA is one part of a long term with the goal to provide similar outcomes for breast reconstruction and aesthetic patients. Fluora could indeed be a game changing solution, And we have a number of additional technologies under development in this area that I look forward to sharing with you in the future. Our clinical and commercial efforts in China are ongoing, and we continue to make progress in this regulatory process. Our plan is to launch Motiva in this important market in 2022. Our regulatory timelines for U. S. Approval Also remain unchanged. More than half of our U. S. ID study patients in the aesthetic cohorts have now reached the 2 year mark, And we continue to enroll patients in the reconstruction cohorts of the trial. I will now turn the call over to Renee. Thank you, Juan Jose. The significant momentum we saw at the end of 2020 continued into this year. We saw strong growth again in sales this quarter to a new record level and our operating expenses and cash are being managed effectively. Total revenue for the quarter was $30,300,000 Direct sales were approximately 42% of this total, while distributor sales, Sales in Europe comprised approximately 42% of global sales. Asia Pacific and Middle East was 31% and Latin America made up the balance. Brazil, which is our single largest market globally, accounted for approximately 11% of total quarterly sales. Our reported gross profit for the Q1 was $20,100,000 or 66.2 percent of revenue compared to $15,500,000 or 63.2 percent of revenue for the same period in 2020. Our gross profit this quarter also improved from the 54.3% reported in the Q4 of 2020. The year over year increase was due to the growth in revenue and better absorption as our production volumes increased. Average selling prices in the Q1 improved slightly from the year ago period. As we saw in this quarter and last, there will be fluctuations in gross margins. We continue to believe The best way to gauge our progress is on an aggregate basis over time, and we remain comfortable with the gross margin in the low 60% range for the near term. SG and A expenses for the Q1 decreased approximately $850,000 to $18,100,000 compared to $19,000,000 for the Q1 of 2020. SG and A in the Q1 was consistent with the level reported in the Q4 of 2020. Our R and D expenses for the Q1 decreased $150,000 from the same quarter a year ago to $4,000,000 R and D expenses were down approximately $400,000 from the 4th quarter due to timing of clinical trial and other expenses. Total operating expenses for the Q1 was $22,200,000 a decrease of approximately $1,000,000 from the year ago period. The decrease this period was due to the timing of expenses of several projects. Net loss from operations for the Q1 was $2,100,000 compared to net loss of $7,700,000 in the year ago period. Our cash position remains strong at $78,000,000 as of March 31, compared to $84,500,000 on December 31. As Juan Jose noted earlier, we are raising our sales guidance for 2021 to a range of $118,000,000 to $122,000,000 from the previous range of $110,000,000 to $112,000,000 This new range represents annual growth of 39% to 44%. As we look down the rest of the P and L, We continue to expect to see spending levels increase as we prioritize investment in a significant number of development and commercialization programs We have underway. Strengthening our product portfolio and preparing for entry into new markets To drive future growth remains our top priority. However, while operating expenses tied to these new programs will increase, We expect a number of cost efficiency programs we have implemented over the past year have become permanent. This increased efficiency as well as our strong revenue growth should result in our cash use continuing to trend down from pre pandemic levels, even as we increase strategic investments. Overall, we believe our company remains in a very strong competitive and financial position. I will now turn the call back over to Juan Jose for concluding remarks. Thanks, Renee. We are off to a very good start this year. The record revenue we generated in the Q1 and recent developments in our industry show again that Estat is on the right path to be the leading company in breast aesthetics However, we are not satisfied with just taking share within the current breast implant market. We are focused on fundamentally changing the patient journey in breast aesthetics and reconstruction through innovation, science and technology. Motiva Mia has a real potential to transform breast aesthetics, and the launch of Motiva Flora this year will mark our entry into the breast reconstruction segment, Where we see an opportunity to improve outcomes for the millions of women diagnosed with breast cancer each year. As perceptions change And as new possibilities become available, the total addressable market for our technologies could grow substantially. I want to close by noting That with operations in over 80 countries around the world, we are mindful in these times that things remain unsettled and challenging for many. I want to thank the entire Establishment Labs team for their dedication to our mission of improving women's health. I will now turn the call over to the operator for your questions. Thank you. Ladies and gentlemen, the floor is now open for questions. Our first question is coming from Josh Jennings of Cowen. Please go ahead. Hi, good morning. Thanks for taking the questions and congratulations on another record quarter. I wanted to, Juan Jose, just follow-up on your comments on the share report and was hoping you could help us Understand the path forward from here with international regulatory decision, the potential for Individual countries to digest this year report and put forward any type of regulatory Decisions or restrictions, are there any processes that are ongoing in any regions? And what should we expect how should we Actually, the most important thing from the Shield report is that it is now public information That there's a causal relationship between textured breast and Ghents and ALCL. So physicians in the European Union, Now that they have that at hand, they need to use that information when informing patients about the potential risks of those devices. It also means that in the future, there may be patients who think that if they have not been properly advised by their physicians, They can take action against them. What goes from here is basically moving Another side of the European Commission that basically provides for legislative action, But at the same time, individual health authorities can take their own decisions ahead of time. So it's not I don't think it's going to happen In the very short term, but to us, the most important thing is that we continue to prove the safety of Motiva Implants is unparalleled. And more and more women worldwide are asking the surgeons not to use textured devices. So I think the trend is Clear away from direct texture devices and into smooth implants. And when someone is choosing a smooth implant, Definitely, the most advanced technology is Nextiva. Other regulatory bodies in other countries outside of the European Union may We want to take decisions also based on that report, but we don't have any indication yet That is to which ones or when they will do so. Great. Thanks for laying that out for us. Then I wanted to follow-up just on the U. S. ID trial for Motiva, to your follow-up data or follow-up Sure. For the entire augment primary augmentation cohort and revision cohort excuse me, revision augmentation cohorts could be enhanced before Yes. Thanks, Josh. So we have now half of our patients that have passed The 2 year mark in our aesthetic cohorts, we're very happy with our follow-up rates and that's been quite a challenge To do so during the pandemic, but the fact that we're able to move to virtual consultation quick enough and get the approval from the FDA for that Has definitely helped to keep those numbers where we want them. So we certainly want to share our data, And we will have this fall all of our patients in the aesthetic cohorts at the 2 year mark. But we have to be mindful to keep the regulatory propriety. And at the same time, we want to be as open as we can. We are the company who's Always sharing data. We recently released our latest post market surveillance report With 1,600,000 implants at now more than 10 years and keeping the same trend as we have had in the past. But we'll keep you updated as we get closer to that 2 year mark. Thank you. Thank you. Our next question is coming from Ross Osborne of Stephens. Please go ahead. Good morning. Thanks for taking my questions. So I wanted to ask a couple on EMEA. Just as the company continues to generate clinical and consumer data Related to MEA, how do you envision positioning the benefits of MEA relative to traditional augmentation surgery In the marketplace without undermining or cannibalizing traditional breast augmentation procedures. And then just Kind of going off of that, what are some of your learnings to date? And do you envision MEA being utilized in reconstruction procedures? Or does the delivery technique and implant Placement limit adoption in cases of highly radiated tissue, post mastectomy? And then are there any inherent limitations that preclude the Euthymia in Thank you. Yes. Thank you. I'll try to answer all of those. We just finished our 100 patient series and it just reiterated what we spoke about In our investor EMEA event, and that is that this procedure has the potential to truly transform breast aesthetics. We size that market at 1,900,000 in patients per year. And one of the interesting things there Is that half of those patients are new patients, patients that would not go for traditional breast augmentation. But definitely, there's the other half, which are patients that have the awareness, are interested in the traditional breast augmentation. But when they see NIA, the appeal to that procedure and the benefits of it, low general anesthesia, The fast recovery, less pain, a procedure that takes less than 15 minutes, going back home within 30 minutes after the procedure is over, All of that is very appealing. So I think it's more of a case of positive cannibalization and because they will be upgrading the procedure. So we will take that all day long. Now when it comes to breast reconstruction, at this point, NEA is designed for aesthetics. Do I see a path for minimally invasive compression? Definitely, yes. PAGMIA is designed and will be an aesthetic procedure. Okay. That makes sense. Thank you. And then if I may, just on the competitive landscape, with the changes in environment, are you seeing any more direct price based competition or is there just simply a lack of less focus by competitors? And then Are you seeing any, I guess, I'd just be curious to hear your view on the use of ultrasound, as a competitive threat to the use of ESSA's RFI eTECH Longer term? Yes. The importance Of our safety profile, I think, is shining every day as awareness levels among patients increase. So to us, that is perhaps the biggest driver to convert new surgeons, especially during this time of the pandemic where it's actually Pretty difficult to go and do face to face visit and medical education is still mostly online. The most important thing for us is being patient centric that there are things that we do with are implants that others cannot. So to give you an example, the fact that our implants are RFID enabled Give the power to women to fully verify after the operation exactly what implant they received. In many geographies, this is a very important thing, and it's called women's empowerment. The fact that they have full control Over that decision, and they can verify it. So I think many companies may look at that As a positive, it may seem to find other ways of achieving that goal. At the FDA panel on breast and skin safety, The FDA expressed its concern over the fact that most women don't know what devices they have in them. That's why the RFID enablement is so important. So we continue to work on our next generation RFID Technologies, what you saw in FLORA already is a great improvement. The fact that we were able to use our RFID technology And get rid of all metals and magnets in a tissue expander. That's going to have an effect in protocols. It's going to improve women's health, And that's what we are about. Thank you and congrats on a great quarter. Thank you. Thank you. Our next question is coming from Anthony Petrone of Jefferies. Please go ahead. Thanks and congratulations on a strong quarter. I have a couple on volumes generally that you're seeing and then a few on Motiva EMEA. Just on volumes, is there a way to sort of quantify how much is actually coming from a relatively higher level of discretionary spending? We're hearing On the refractive side, for instance, that there is a level of discretionary spend from a key demographic where there was lower spend through the pandemic and it's being allocated elsewhere. So is that something that you think is going on in aesthetics? And then the other side of that, of course, would be the issues with textured implants. And so How much of a benefit are you seeing as well from the exit of textured implants from select regions around the world? And then I'll have a quick follow-up on Mia. Sure. Thank you, Anthony. I think it's important to note that unlike most Global medical device companies were not in the United States. And so when you're talking about discretionary spend, I think that's largely probably more U. S. Focused at the moment. So we're not necessarily seeing a direct impact of that, but we're still seeing strong response to our implants and the safety data behind them. So I think our volumes and our sales in both direct markets and distributor markets continue to see their message is resonating with patients and with plastic And then the again, the follow-up on share gains from Exits from competitors, is there a way to sort of think about that for 2021 and how that progresses? And then Real quickly on EMEA, when you think about the EU launch in 2022, just trying to get a sense of the spend ahead of that, how much will be allocated feet on the street versus marketing push and how should that progress in the P and L in 2021 ahead of that 'twenty two launch? Thanks. Yes. I think that the actions that our competitors are taking are some way sort of a logical response to the innovation gap that we have In the marketplace, we've opened up and we will continue to penetrate. With one of our major competitors sort of pulling out of the market, we're more confident as ever We're down the right path and that we've got the best technology. So I think that's where we're focused and We're just continuing the message both with medical education and social media involvement. Thank you much. Our next question is coming from Amit Hazan of Goldman Sachs. Please go ahead. Hey, good morning. This is Phil on for me. Can you guys hear me okay? Yes. Awesome. Thanks so much. First, I was hoping You guys could talk about the inter quarter kind of dynamics. Sorry for the short sighted question, but just interested what you guys saw within the quarter exit rates Obviously, confidence in the forward given the guidance increase above the beat in the quarter. But I'm interested in what you guys saw intra quarter and then maybe if you Layer in with that, what you're seeing from different regions, especially those that are still being notably impacted by COVID? Thanks. Yes, certainly, we do have variability within the quarter as we do sort of any quarter and largely still impacted by Various restrictions that are happening due to the pandemic, but it seems as though most countries are sort of able to work through that And either work through temporary lockdowns and suspensions. I think when we think about guidance, we're obviously balancing the strength and momentum that we saw during the quarter, but also with that still lens of the fact that we're in a lot of countries that are still handling the pandemic on a daily basis. So we're that's what we're focused on and we're very comfortable with the guidance that we've provided. Great. That's great. Maybe I'll stick with you, Renee, since you answered that one. On the OpEx side, my ears perked up for the cost efficiency programs that you were talking about. I'm hoping you could delve a little bit deeper into that and then also sort of talk broadly about Your thoughts on profitability timelines versus prior given some of these permanent cost savings? Yes, certainly, I think from the pandemic, we wanted to institute things like travel and really sort of focused on the core business, where do we want to see the best return on investment. And for us, it was a great learning experience and we are certainly taking some of those learnings and making them permanent as to how we operate more remotely, more online. It was always sort of a foundation of our business, but we've ramped And that ultimately just does mean cost efficiencies. Some of the in person stuff is critical to our organization and will come back as permitted by travel restrictions or in person gatherings. But I think when you think about the core of the business, we really took an internal mindset and thought about How do we run this business more efficiently because we do know that we're going to have to have investments in strategic opportunities and we would much rather focus our dollars on that. And just following on that one, OpEx down year over year with 25% top line growth. Maybe just a little bit of a comment on where you see OpEx trending from here. I'd have to imagine with all these strategic investments that it's going to be up on a dollar basis moving forward, but Some guidance around there would be helpful. Yes, certainly. We are going to expect to see spending levels increase as we prioritize those significant investments. And We think about the commercial launches that we have coming up and the new market entries that we have coming up and that's where we're going to focus that spend. So We're pleasantly surprised with not surprised, but pleasantly happy with the results that we had for the quarter and like to See that comes through and how like I said, the behaviors of the company, where we're spending the dollars, how we're using our money more efficiently. I'm just super proud of the team as a whole. That's great. If I can fit just one more in on the EMEA front. I'm interested what the discussions with the FDA have been like with How positive the progress has been on EMEA front with the IRB in Costa Rica and the progress in the European front from a regulatory standpoint, what have those discussions been like? And what's sort of the current plan for submitting the diamond implant? Is that Potentially going to be in conjunction with the original Motiva approval like we saw with the CE Mark. Thanks so much for taking my questions. Thanks. So our conversations with the FDA are focused on the current trial. And remember, we're continuing to enroll in the reconstructive cohorts of the trial, and that's what we will continue All right. Thanks so much for the question. Our next question is coming from Matt Taylor of UBS. Please go ahead. Hi. Thank you for taking the questions. So the first one I wanted to ask is, I know you reiterated the timelines for U. S. And China. I just wanted to dig in a little bit there. Two questions. One is, in the U. S, do you have any updated thoughts about whether FDA will accept 2 year or 1, 3 year data. And then from the point that you get approval in each of these Countries, maybe just outline how much of a ramp you would expect? How long that would take? Just help us think about Some of the future views and our models for U. S. And China. Yes. Thanks, Matt. I think The most important update is on the bifurcation strategy between aesthetic and recon and how the FDA has expressed comfort with that strategy. So we feel very confident on that. And to us, that is the most important thing because it is the fastest way to enter into the U. S. Market, Having aesthetics ahead of reconstruction. So we're continuing to follow-up with the patients. We will have our 2 year data set this fall. And thereafter, we will continue the conversation with the FDA About using a combination of data or going with traditional guidance of 3 years. On China, we have continued to make progress. We have finalized testing and we feel confident about our 2022 Time line 4 going into China. So I think from the perspective of growth, It gives us so many things going for the next few years because we have not only Our entry into breast reconstruction that is going to happen first in Europe and then moving into other Geographies around the world, we have China coming up, we have EMEA coming up And thereafter, we have the U. S. Market entry. So I think it just gives a multiplicity of growth drivers for the coming years. I think the speed at which we can affect those is probably one of the questions that everyone has. But we're still in a pandemic and we're still dealing with the fluid duty of that. So definitely trying to work all of that out at the same time. Okay. All right. And I was hoping, I know you're in a lot of countries and we know some of the hotspots, but Maybe you could give us some specificity on which of the countries or what percentage of your sales in areas where there's still pressure versus ones That has really opened up. Anything like that to help us think about how things could further improve through the year? Yes. I mean, certainly, our largest market is Brazil, came in at about 11% of our revenue The quarter and that one gets a lot of headlines. But they're still doing surgeries and protocols have been put in place and we're watching it. So That country continues to perform and even saw growth. I think we saw growth across all regions, which was nice to see even if we've got some hot pockets that are going Through temporary lockdowns or restrictions on things. And so we're sort of juggling that. I think Also, our distributors are thinking about that as they think about momentum through the back half of the year and how they're doing their orders and where they're seeing the demand come from. So Overall, we continue to take share gains and march forward, even though we are managing through Different pockets within Europe, Asia Pacific and Latin America that each country is sort of is managing the pandemic individually. Great. Thanks, Renee. And maybe I can sneak one more in. You talked about the competitor exited really validating your strategy and had a lot of investor questions on this in terms of how much Additional share dollars there could be up for grabs with Allergan's exit. Could you give some updated thoughts On that and whether any of that is contemplated in your guidance? Yes. I think I'd just reiterate What we've talked about before, in the international market, Allergan was mainly selling their macro texture devices, And they pulled those off the market a couple of years ago. So most of the market share gains to be done with those Textured breast implants has been taking place over the last couple of years, and we've been definitely Beneficiaries of that, but we take market share from other competitors, from J and J, from other companies in Europe All the time. So we're just focused on market share gains from wherever we can get them. And part of those Are coming from patient awareness and patients telling surgeons that they don't want textured devices. And When it comes to non textured devices, they definitely their first choice or job would be to make it Motiva. I think that the main thing and we've said this before again and again is that they chose to stay in the 4 markets where they don't And that is a testament to our work. And eventually, we'll get to those markets and do the same Great. Thanks a lot for the thought. Thank you. Thank you. Thank you. Our next question is coming from Marie Thibault of BTIG. Please go ahead. Hi. Thank you for taking the questions and congrats on a very nice quarter. I wanted to ask, I guess, there are 2 follow-up questions that have been asked earlier. Some of the commentary on China, obviously, a very exciting growth driver and we know that it's a premium price, Very large market opportunity. I wondered if you could help us start to think about that, and how you might approach that market, whether You'll work with a distributor, whether you'll plan to target patients through kind of digital means. We just Yes. And China is an exciting opportunity for Establishment Labs. Before the pandemic, In other countries of Asia, like South Korea, many of the patients using Motiva came from China. South Korea was 30%, but we also have data coming out of Japan. And now that we are In Taiwan and Thailand, many patients were coming from China to receive Motiva Implants. So we know that our Product does very well with the Chinese consumer. So the opportunity comes from the fact as well that The Chinese consumer is going into aesthetics mostly through digital means and that awareness that we can create Can be very powerful in speeding up our market share gains in that market. I think that already outside of China, we have proven that we have the most engagement by far with patients on social media. So that's a really good precedent for what can happen in China. When it comes to our pathway to market there, as we have said, We continue to make progress with product testing, and we continue to stay with our regulatory target for 2022. We have mentioned before that we see China as a hybrid play for us, and We have a great partner for that market, and we will work with that partner to be making the best, not only of the direct to surgeon, but also Going direct to consumer in many different ways. Okay. Thank you. And then maybe a follow-up on the share report. Obviously, great to see them finalize that report. I'd love to hear kind of the impact to the other parts of the world. I think I recall Big markets like Brazil, that are meaningful to your revenue, still do a lot of macro textured, if I recall correctly. So maybe you can detail for us what kind of impact this year report might be having globally? Thanks for taking the questions. Yes. Thank you. I think the share report, number 1, and this is something that everyone should remember. The share report It's about creating a scientific report on the safety of captured devices as it relates to ALCL. It is not there to make policy. The policy then goes to the individual health authorities and to the legislative European Commission. So for us, it is just again more and more evidence that many patients will be moving to smooth implants The risk associated with certain of their choices. We certainly do think that certain devices should not be in the market. But outside of Europe, it's going to take additional time for certain countries to realize that they have a problem as well. So I don't know how long that's going to take in Brazil. Australia has already done a lot of their work. They've been banning Many macro texture devices over the last 24 months and they continue to do so. So again, it's quite some work, I think for the regulatory bodies because they have to manage a lot of expectations and in the case of Brazil, they also do have local Thank you. At this time, I'd like to turn the floor back over to management for any additional or closing comments. Thank you for joining us on today's call. We look forward to providing our next quarterly update in August, and please stay safe. Ladies and gentlemen, thank you for your interest in Establishment Labs. You may disconnect your lines or log off the webcast at this time and have a wonderful day.