Apollo Endosurgery, Inc.
Q1 2018 Earnings Call Transcript

Published: 4 May 2018

[Operator:]

Good day everyone, and welcome to the Apollo Endosurgery First Quarter 2018 Results Conference Call. Today’s call is being recorded. And at this time, it’s my pleasure to turn the conference over to Lee Roth of The Ruth Group. Please go ahead, sir.

[Lee Roth:]

Thanks, Laurie, and thanks, everyone, for participating on today’s call. Joining me from the company are Todd Newton, Chief Executive Officer; and Stefanie Cavanaugh, our Chief Financial Officer. Before we begin, I’d like to caution listeners that comments made by management during this call will include forward-looking statements within the meaning of federal securities laws. These include statements on Apollo’s financial outlook and Apollo’s plans and timing for product development and sales. These forward-looking statements involve material risks and uncertainties, and our actual results may differ materially. For a discussion of risk factors, I encourage you to review the company’s quarterly report on Form 10-Q filed today, May 3, 2018, with the Securities and Exchange Commission. The content of this conference call contains time-sensitive information accurate only as of the date of this live broadcast, May 3, 2018. Except as required by law, Apollo undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances after the date of this call. With that said, it’s my pleasure to turn the call over to our Chief Executive Officer, Todd Newton. Todd?

[Todd Newton:]

Thank you, Lee, and good afternoon, everyone. We are very pleased overall with our first quarter results and think 2018 is off to a great start for the company. Our worldwide Endo-bariatric product sales in the first quarter increased by 40% compared to the first quarter of 2017, and these products contributed more than 65% of our total sales in the quarter. Within our Endo-bariatric product portfolio, consolidated OverStitch sales more than doubled compared to the first quarter of last year. For Orbera, the European launch of Orbera365 is going very well, and we’re experiencing both sales volume increases and improved local currency pricing. Additionally, we observed positive signs of a rebound in demand for Orbera within the United States as physician-reported U.S. implant volumes in the first quarter were up sequentially 27% compared to the fourth quarter of 2017, and we look to keep this momentum going. I’ll turn the call over to Stefanie Cavanaugh to give more details on our first quarter financial results. Stefanie?

[Stefanie Cavanaugh:]

Thank you, Todd, and good afternoon, everyone. Starting with first quarter revenue result, total revenues for the first quarter 2018 increased 8% compared to the first quarter of 2017 from $14.5 million to $15.7 million. This was driven by an increase in Endo-bariatric product sales of 40% from $7.3 million to $10.3 million. Product sales from international markets, OUS markets, were particularly strong in the first quarter, increasing in total by 25% compared to the first quarter of last year. A weaker U.S. dollar also aided our reported sales this quarter compared to the first quarter of last year, with the foreign currency contributing just over 1/3 of the total OUS increase. In the first quarter, 80% of OUS product sales were in direct market, where we sell in local currency, versus 81% in the first quarter of last year. The remaining 20% of our OUS product sales are to distributors who purchase our product in U.S. dollars. Outside of the U.S., Endo-bariatric sales increased more than 61% in Q1 2018 from $3.8 million to $6.2 million, mainly from increased sales of OverStitch in our direct and distributor market, and the introduction of Orbera365 in Europe. In the U.S., total Endo-bariatric sales increased approximately 18% to $4.1 million in the first quarter of 2018 compared to $3.5 million in the first quarter of 2017. The increase in U.S. Endo-bariatric product sales was due to higher volumes and pricing for OverStitch, as Orbera reorder sales were essentially flat. Total surgical sales shifted from 48% of total revenues in the first quarter of 2017 to 33% of total revenues in the first quarter of 2018 as a result of lower gastric banding procedure volume, particularly in the United States. In total dollars, worldwide surgical sales decreased 26% to $5.2 million from – no, from $7 million in the first quarter of last year. As we have discussed for some time now, as the majority of our product sales mixes shift from surgical products to Endo-bariatric product, it puts pressure on our gross margin. For the first quarter of 2018, gross margin was 58.4% compared to 64.9% in the prior year period, and that’s due to the shift in our overall product sales mix. Total operating expenses increased just under 4% to $16.8 million for the first quarter 2018 compared to $16.2 million in the first quarter 2017. Sales and marketing expenses increased $1 million as a result of Orbera patient and consumer awareness programs in the U.S. and sales compensation in both the U.S. and OUS. Research and development increased $0.5 million primarily due to our expanding clinical study activities. Both of these increases were partially offset by a reduction of $0.9 million in G&A expenses as costs we incurred in the first quarter of 2017 for new public company activity did not reoccur. Interest expense for the first quarter of 2018 decreased $0.5 million when compared to the first quarter of 2017 due to a $7 million principal payment that was made in March 2017. Our net loss for the first quarter was $8.1 million, and that compares to $8.2 million for the first quarter of last year. Finally, we used $8.2 million of cash in the quarter compared to $10.8 million used in the first quarter of 2017. Our overall use of cash was very consistent for the 2 quarters, except for 3 things. First, we used in total about $1.3 million for capital expenditures primarily due to equipment purchases associated with our gross margin improvement project, and that’s an increase of about $0.9 million as compared to the first quarter of last year. Second, the timing of inventory purchases resulted in higher cash used this quarter, and this is timing only. Our quarter end average carrying value of inventory last year was approximately $12.5 million. And while there is some rebalancing of the inventories due to the mix shift we’re experiencing in revenue and also some finished good and raw material positioning associated with our gross margin projects, we expect that our inventory balance will work back down towards our historical averages during the rest of the year. And third, the first quarter of last year’s cash used included a repayment on our debt facility of $7 million as I previously referred. With that, I’ll turn it back to Todd to provide closing comments regarding the quarter. Todd?

[Todd Newton:]

Thank you, Stefanie. And as I said in my opening remarks, we’re pleased with the start of this year. Training and medical education continues to be very important to the adoption of our Endo-bariatric products, particularly for OverStitch, and demand for training was robust this quarter. In Europe, we trained 104 physicians on OverStitch, which is more than half of the total physicians we trained in Europe in all of 2017. In the U.S., 126 physicians in 17 different cities came to our Mobile Learning Center for OverStitch training. In addition to our Apollo-led training, we also provided educational grants to 26 different requesting third parties through sponsored-physician training events worldwide this quarter. We’re very pleased with the ESG adoption rates we are seeing. At the end of the quarter, there were approximately 70 U.S. physicians performing ESG procedures, up from roughly 20 physicians at the end of Q1 last year. We’re making good progress towards our goal to have 100 U.S. physicians actively performing ESG procedures by the end of this calendar year. If we can achieve that, we think we will be relatively far along towards developing the necessary critical mass of users to eventually support the case for reimbursement. Outside the United States, there were approximately 500 ESG cases performed during the first quarter. For Orbera, in the United States, we believe we are on track to have about 950 physicians trained by the end of the year. Through the end of the first quarter, we have trained 917 U.S. physicians on Orbera. But adding new Orbera users is not our first priority this year. Our greater emphasis will be on building greater patient awareness and seeing good clinical outcomes. As I earlier alluded to, our U.S. customers self-reported 1,035 Orbera implants during the quarter, which is up 27% sequentially from approximately 820 implants in the fourth quarter of 2017. Outside the United States, we also obtained approval for the sale of Orbera in South Korea and Orbera365 in Saudi Arabia, 2 very promising distributor markets, we believe. Our first quarter use of cash was right in line with our internal expectations for the quarter as we pursue our gross margin improvement programs, the completion of the Sx project and the various clinical efforts that we think will be central to the markets’ continuing adoption of our products in the future. During the first quarter, we made good progress on our gross margin improvement projects and expect to complete and begin to bring online 2 of these projects by the end of the third quarter. The first of these 2 projects involves the transfer of the OverStitch Cinch from a contract manufacturer to our internal manufacturing facility. The Cinch is an implant that is deployed once a physician completes his or her suture pattern in order to secure the suture in place. As more suture-intensive applications of OverStitch, such as the ESG procedure, grow in demand, the number of Cinches required to complete a procedure also grows. The second of these projects is to lower this cost of certain components associated with the Orbera delivery system. The balloon or the implant itself will remain unchanged. Once completed and old inventory is sold off, we expect these 2 projects in aggregate to reduce our annual cost of goods sold by more than $2 million based on our current unit volumes. We have several other gross margin improvement projects staged to follow after the completion of these 2 and the launch of OverStitch Sx, which is our new single-channel endoscope-compatible version of the OverStitch product. And to update everybody on the Sx, here in the first quarter, we worked through a couple of issues involving some key components. But we now think that these issues are resolved, and the remaining items for us to complete prior to the product release of Sx should be completed over the next couple of months. And we should be in position to release Sx in the third quarter in both the U.S. and European markets. On the clinical side, this was a very good quarter for a variety of reasons. First, the MERIT trial is proceeding in line with expectations. MERIT, as most of you know, is a multicenter randomized controlled trial to study the ESG procedure. The 8 participating sites are all at very different stages in their participation, ranging from 3 who are well ahead on the enrollment and performing cases. And actually, one of those sites is close to completing their full environment. And then on the other end of the spectrum, 3 sites are in the end stages of finalizing their paperwork and approvals. We think these three sites, though – once all the paperwork is in place, are likely to enroll subjects quite quickly. Good enrollment progress continued throughout the first quarter on our Orbera U.S. postapproval study. At the end of the first quarter, 232 subjects were enrolled out of the 284 required, and we remain on track to completing enrollment by the end of the third quarter. This study is an FDA requirement with a 1-year patient follow-up period. For the AGA’s Suturing Registry, the final protocol was recently approved by IRB. Site selection and local IRB approvals are now proceeding, and the sites should begin enrollment immediately following the completion of these steps. And in addition to these major company-supported clinical efforts, we are aware of 18 other investigator-led studies involving the use of Orbera or OverStitch and, particularly, the ESG procedure in a number of different patient groups. In some of these cases, we’re being asked to support the studies by a grant request. But in many cases, these are self-funded or third-party funded efforts. These types of organic clinical data generation initiatives are very exciting, and they speak highly of the in-the-field-clinician interest in exploring the value our Endo-bariatric products and what they can deliver to their patients. We hope to have more to tell you down the road on these efforts. And lastly, as we announced on March 12, the FDA approved the termination of the LAP-BAND lower BMI postapproval study. When doing so, the FDA concluded that there was sufficient long-term safety and effectiveness data already in existing published literature, such that continuing the postapproval study was simply not needed. Terminating this study, which required patient follow-up for 10 years, is expected to save us more than $5 million prospectively. For the first time, perhaps, ever, LAP-BAND is free of any postapproval study obligation. And with that, we’ll now open the lines for questions. Laurie, we’re ready to proceed, please.

[Operator:]

Thank you, sir. [Operator Instructions] And we’ll go first to Matt Hewitt at Craig-Hallum.

[Matt Hewitt:]

Good afternoon and congratulations on the projects – progress, sorry.

[Todd Newton:]

Thank you, Matt.

[Matt Hewitt:]

A few questions for me. First, obviously, very nice growth in the Endo-bariatric segment. Looking at the OverStitch specifically, can you parse out how much of the growth that you’re seeing there is on the revisions and the repairs versus ESG?

[Todd Newton:]

Not in a real granular fashion, Matt. It’s a great question. I would lead you this way though. I would say that a lot of our growth outside the United States will be largely ESG driven. In the United States, though, I would say that the growth is probably a lot to come.

[Matt Hewitt:]

Okay. All right. That’s helpful. And obviously, that’s something that, I think, everyone’s kind of watching just given the opportunity with ESG. I guess, additionally, and you commented on it briefly, but as you look out over the next year or 2, how do you see some of the reimbursement discussions going out? Obviously, the MERIT study’s going to be a critical component to that, but are you seeing a change in tone or maybe more frequent meetings in Washington and with some of the reimbursement consortiums, where they’re looking and really just striving to find more solutions for obesity? And how do you think your products kind of fit into that?

[Todd Newton:]

Yes. Well, what we need to do first and foremost, Matt, is just simply construct all the piece parts for the reimbursement story. For us, a lot of that is tied to the clinical data generation, and you know what we’re doing there. Another component of that, that’s is very, very important is to be able to establish that the procedure is not just the procedure that a couple of people are doing, but that it’s a procedure that has broad appeal and that there’s a critical mass of users, again, the reason why feel like our goal of 100 ESG users in the United States by the end of this calendar year is really so important. So that’s what we’re really focused on. We’re focused on that, if you will, building together – putting together, I should say, of all those piece parts that go into that reimbursement submission. And then, of course, the thing that we also are spending a lot of time working on, call it behind the scenes, is to ensure that we have the support of the appropriate societies – physician societies because all these reimbursement things do roll through the American College of Surgeons at the end of the day. So that’s what we’re doing. And outside the United States, of course, the reimbursement pathway looks very, very different and can be very different in each of those countries. So in those countries where we are direct, that’s obviously, as well something that we have at the forefront of our efforts.

[Matt Hewitt:]

Okay. Great. Shifting gears a little bit, Orbera. Maybe this is a little bit bigger question. But with 365 now in Europe, how do doctors determine whether or not they want to go with the 6 months or the shorter version versus the full year version of the balloon? And – or is it your expectation over time that 365 will be the primary option for those doctors? Then as you look at the U.S., what your expectations here?

[Stefanie Cavanaugh:]

So we really do believe that the 12-month balloon will replace the six-month balloon over time and that there really is no compelling reason to stay with the shorter-term balloon as the community gets used to that particular product. For the U.S., we’re not really focused on getting through that process. That’s going to require a regulatory pathway that will be – have some significant expense attached to it. So for now, our focus is on continuing to get 365 approved in our other direct markets around the – outside of the United States.

[Matt Hewitt:]

Okay. Make sense. And then, I guess, one last one from me. LAP-BAND, a little bit down versus our expectations here in the quarter. But obviously, you had the positive news that you don’t need to continue with the follow-up study. Where is that, do you think, from a stabilization standpoint? Kind of what are the puts and takes? What are you driving or doing from a sales and marketing effort to maybe help stabilize that? Any color along those lines would be helpful. Thank you.

[Todd Newton:]

Yes. And another good question, Matt. We – our focus on LAP-BAND has been on our most important customers, those that use LAP-BAND frequently in their practices. And as we look at our first quarter results here in the United States, in particular, we definitely see there is some signs of greater stability in those accounts versus those accounts which have traditionally been sporadic users of Over – LAP-BAND, sorry. And so that trend has been one, though, that we have seen now for some time. It continued to be a trend here in the first quarter.

[Matt Hewitt:]

Understood, all right. Thank you very much.

[Stefanie Cavanaugh:]

Thanks Matt.

[Operator:]

We’ll go next to Scott Henry at Roth Capital.

[Scott Henry:]

Thank you, and good afternoon. I guess, first, just to stay on that topic of the surgical segment in LAP-BAND. When we think about the sequential progression we should be thinking about in 2018, do you think that the number you put up in first quarter, should we see some growth going through the year even – forgetting about seasonality, just numerically? Or is that kind of the new normal?

[Todd Newton:]

Yes. It’s again, a good question Scott. I wish I had a good answer for that. I think our expectation is that while we’re making every effort to stabilize LAP-BAND, the historical trend is probably still the best thing that we can point to in terms of creating expectations.

[Scott Henry:]

Okay. Fair enough. And a lot of my questions, they’re just trying to get an idea of how representative Q1 will likely be for the full year in 2018, at least just subjectively at this point. But Endo-bariatric, strong numbers. How should we think about that first quarter growth rate as far as the rest of the year?

[Todd Newton:]

Again, a great question. We don’t see any reason to believe that we’re going to have a different trend continuing from Q1 on. U.S.– OUS, we feel like that was a indicative quarter of the demand that we are feeling and the momentum we’re feeling within that product portfolio. I think as we get out later in the year, the growth rate associated with a product like Orbera, when it gets into the third quarter, the fourth quarter, these are quarters where U.S. Orbera sales were obviously impacted by the news that came out on Orbera in the third quarter. And so those periods will have, if you will, a softer comparative number.

[Scott Henry:]

Okay. Great. And then, I apologize if I missed this earlier. The OverStitch Sx launch, I believe we’re looking for a midyear launch. Is that still the expectation? And what kind of steps are necessary to continue on that path?

[Todd Newton:]

We mentioned that in our prepared remarks, Scott. But, our expectation right now is that Sx will be available in the U.S. and in Europe in the third quarter. Yes, I’d like to think about the third quarter still as being somewhat the middle of the year. But technically, it’ll be the third quarter.

[Scott Henry:]

Okay. And I guess, just finally, as far as the expenses and gross margins in Q1, anything unique there? Or should we just sort of think about that trajectory for the remaining part of the year?

[Stefanie Cavanaugh:]

I would say the latter. It’s been the ongoing trend as our mix shift margin is impacted, and so I would expect similar impacts as we continue.

[Todd Newton:]

That helps some of the way with our margin improvement projects, and it’ll just take us a little bit more time to run through our inventory and get to where we can realize those. But we feel very good about those gross margin improvement programs that we have ongoing.

[Scott Henry:]

Okay. Great. Thank you for taking the questions.

[Stefanie Cavanaugh:]

Thanks, Scott.

[Operator:]

And we’ll go next to Suraj Kalia at Northland Securities.

[Suraj Kalia:]

Good afternoon, Todd, good afternoon, Stefanie. Can you hear me, all right?

[Stefanie Cavanaugh:]

Yes. Hi, Suraj.

[Todd Newton:]

Yes, we can. Good afternoon.

[Suraj Kalia:]

So Todd, bunch of questions and let me see if I can cover all of them. So Orbera, can you give us some color? The numbers I heard was 1,034 implants, up 27% year-over-year, 917 physicians trained in the U.S. If I can ask a slightly different flavor, what were the number of the accounts that actually purchased in the quarter? Can you give us any utilization metrics on Orbera in the U.S., especially pre-Dear Doc and post-Dear Doc?

[Todd Newton:]

Yes. We don’t really have all that information to provide you on this call, Suraj. I would say, though, the number of doctors who are trained does not necessarily indicate the number of accounts. And of course, these - we share – or we ship product to accounts. That’s one thing. So – and of those accounts that have – that we have – and I would say that probably on order of magnitude, it’s roughly a 500 number, 500 accounts here in United States. Even though they have doctors who’ve gone through the training, the reality is, not every one of those accounts turn on and make the balloons a really big part of their practice. So we clearly have high-volume users and then we have low-volume users within that group. But the 1,035 is the number of implants that were self-recorded by our physician customers during Q1. What gets us excited is just that it starts to show – what that just sequential comparison is starting to show that the demand for the balloons is starting to recover.

[Suraj Kalia:]

So obviously, kudos to you guys. I think some, if memory serves me right, Q4, you guys went down or low single digits, I might be a little off there, on Orbera. And the Dear Doc letter did have an impact, and you guys had rebounded. I guess, Todd, was there existing users who had stepped back after the Dear Doc that came forward and said, you know what? That was just sort of a red herring. Send me some more balloons. I’ll put these on my patients. Or were these new accounts that happened? And at the same time, to just add on to that question, did you see any change in the average sales cycle for Orbera pre and post?

[Todd Newton:]

Yes, I’ll tell you what we did observe, Suraj. And for the – for Orbera here in the United States, the marketing effort is very, very important. And upon the initial, if you will, letter being released, we did see a number of accounts pull back on their marketing. They wanted to observe what was going to happen. And so we did – that was probably the one thing that I would say was really clear in our observation that, that marketing dollar that is so essential to creating patient awareness dried up a little bit at the end of the third quarter. Around November time frame, we started to see accounts, though, begin to invest in marketing again. I think they felt like they had observed enough to know that they understood the situation. And they felt like their marketing dollars would be well spent. And so we saw accounts beginning to, again, promote and create the awareness in their given local markets. That’s probably the difference. I would say that, by and large, those are existing accounts that did that, not new accounts. And that’s really affirming to us at this point.

[Suraj Kalia:]

Got it. Todd, I don’t remember you guys talking about ASPs for Orbera365. If you guys can give some color on that front. And the second part to that question is, I mean, look, your competition on the balloon side made a pretty big deal out of Dear Doc. Unfortunately, they have had other issues of their own. Has anything changed on the competitive side for you guys, good, bad, ugly, that you can give us some color on, specifically on the balloon side?

[Todd Newton:]

And I’ll answer the second of your question first. No, there isn’t really anything I can give you on that. We have the same competitors that we had before in all of our markets. But for Orbera365, what we have been able to see in Europe is that the physicians are able to justify a greater value to the therapy that they’re delivering to patients because they’re able to offer with the balloon assistance for a 12-month period for twice as long as what they’re able to offer it before, which elongates the overall therapy from 6 months with a balloon, 6 months without a balloon to 12 months with a balloon and then a follow-up period afterwards without a balloon. That additional value is important. And as a result, we’ve been able to garner as well additional price when we sell to our accounts.

[Suraj Kalia:]

Got it. And I’ll just end with a final one here, Todd. The number I got was 18, other investigator studies from Orbera being – OverStitch being conducted that are not initiated by you guys. Are any of these studies, Todd, focused on Orbera as an acute weight-loss device prior to orthopedic surgery? And forgive me, I haven’t looked at ClinicalTrials.gov or other sites. Maybe you can give us a snapshot. But the reason I ask is I’m just trying to understand, if this can be used as a springboard to assist in your reimbursement efforts.

[Todd Newton:]

Well – and short answer on that is yes. We’re seeing – that of those 18, many of them deal with Orbera. And I do believe there’s one that deals specifically with the orthopedic patient population.

[Suraj Kalia:]

Thank you.

[Stefanie Cavanaugh:]

Thanks, Suraj.

[Operator:]

And we’ll go next to Matthew O’Brien at Piper Jaffray.

[Matthew O’Brien:]

Good afternoon. Thanks for taking the questions. Sticking on Orbera365 in Europe, can you talk a little bit more about the reception that you’re seeing over there to that product? Is it only – are you really only focusing on your existing accounts there? Are you already getting inbounds from new accounts? And what I’m really trying to get at is, is the therapeutic time line of 6 months, is that a gating factor and one that’s not lifted going out to 12 months? Or just any kind of color would be helpful there.

[Todd Newton:]

Yes. And in particular with the market we’re talking about, Matt, as you know, is a pretty crowded market when it comes to intragastric balloons. And it’s a pretty mature market when it comes to intragastric balloon therapy, and it’s predominantly 6-month product that is available in the market, not exclusively, but primarily. And so we have been able to, not only succeed with the product in existing accounts, but we’ve been able to see here at the early stages of launch a conversion of competitive accounts. So we feel really good about where Orbera365 is heading in Europe.

[Matthew O’Brien:]

Got it. And then just back over to OverStitch Sx. Can you talk a little bit more about some of the issues that you identified over the last few months and the confidence you have, if those are fixed, and is the timing of kind of Q3 launch won’t slip?

[Todd Newton:]

Yes. And our confidence in Q3 right now is pretty high. You never really want to say 100% when you still have work to do, but it is pretty high. And the nature of the issues that we work through this quarter had a lot to do with component specifications and making sure that when we go from prototyping, which was low volume, to high-volume production in a manufacturing environment, that those components are going to be still according to the spec even though they’re now being produced in greater quantities. So a lot of that is fairly routine from the standpoint of product validation and qualification procedures. And that’s what we are working through here in Q1. We think like, though, we have solutions to that and have worked through that, and now we’re continuing to move forward.

[Matthew O’Brien:]

Got it. And then, Todd, can you talk a little bit about the activities that’ll come along with the Sx launch? Because, obviously, you’re opening almost 20x as many surgical cases, being able to go through a single channel versus where you’re going today. So just – if you can kind of help us get a sense for what that rollout will look like and how impactful that could be as we head into 2019.

[Todd Newton:]

Yes. I think what we’ll to do is we’ll want to start with some existing user accounts where we can gain clinical experience with Sx. And at this point, even though we feel great about this product, we still need to – it still is a product that has yet to see a real human as a patient. And so you always want to make sure that you start by gaining some experience and ensuring that all those things that are part of your value proposition are, in fact, going to be the things that you observed in the field. So we will start, if you will, somewhat slowly. But we have just a lot of demand. When we think about our training pursuits around OverStitch up to now, a lot of times, we’re training physicians or introducing physicians to our technology who have this scope restriction impacting their ability to get started on OverStitch. That’s just the reality. And so where we start in terms of canvassing for new customers, I think we have a very pretty sense of that.

[Matthew O’Brien:]

Okay. And last one for me, just either Stefanie or Todd, just on the gross margin side with these programs. You laid out what you’re going to do and the savings you’re going to get. But can you give us a sense for when you’re going to see some of those savings?

[Todd Newton:]

We expect to see those savings, probably, in the early part of next year. We have existing inventory that’s going to be at the existing cost structure that we still need to sell off. So that’s our expectation on time.

[Matthew O’Brien:]

Fair enough. Thank you.

[Stefanie Cavanaugh:]

Thanks, Matt.

[Todd Newton:]

So I think that’s all the questions, it sounds like. But let me just wrap up. We, as Apollo, are just about a month out from Digestive Disease Week, or DDW, which is one of our most important events of the year. And we expect this year’s going to be a great conference for all of our Endo-bariatric products. We’re expecting several clinical abstracts will be presented at DDW for a variety of clinical uses for our products and a variety of patient situations. And during this conference, DDW will be hosting several hands-on workshops, including sessions that feature both Orbera and OverStitch technologies. And in addition, we’re going to have our Mobile Learning Center on-site in D.C. to support additional hands-on training for physicians. So in closing, we want to thank you for your interest in Apollo Endosurgery today. Should you have any questions for follow-up, please contact The Ruth Group team listed in our press release today. And Laurie, I think we’re done.

[Operator:]

Great. And once again, that does conclude today’s conference. And again, I’d like to thank everyone for joining us today.