Boston Scientific Corporation (BSX) Q1 2021 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, and welcome to the Apollo Endosurgery First Quarter 2021 Results. At this time, all participants are placed on listen-only mode. And the floor will be opened for your questions and comments following the presentation. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Matt Kreps of Darrow Associates. Sir, the floor is yours.

Thank you, Catherine and thanks everyone for participating in today's call to discuss Apollo's first quarter 2021 financial and operating results. Joining me on the call are Charles McKhann, our Chief Executive Officer; and Stefanie Cavanaugh, Chief Financial Officer. Before we begin, I'd like to caution listeners that comments made by management during this conference call will include forward-looking statements within the meaning of federal securities laws, including Apollo's financial outlook and Apollo's plans and timing for product development and sales. In addition, there is uncertainty around the spread of the COVID-19 virus and the ultimate impact it may have on our operations, the demand for our products, global supply chains, and economic activity in general. These forward-looking statements involve material risks and uncertainties and could cause actual results may differ materially. For a discussion of risk factors, I encourage you to review the company's annual report on Form 10-K for the year ending December 31, 2020, filed previously with the Securities and Exchange Commission and our most recent form 10-Q. The content of this conference call contains time-sensitive information that is accurate only as of the day of this live broadcast, May 4th, 2021. Except as required by law, Apollo undertakes no obligation to revise or update any statement to reflect events or circumstances after the date of this call. Now, I'd like to turn the call over to Charles.

Thanks Matt. Good afternoon everyone. Thank you for joining today's call. I'm pleased to speak with you today on my first quarterly conference call as Apollo CEO. We're off to a great start to the year. On the call, we will discuss Apollo's third straight quarter posting robust sales growth. But first, I'd like to take the time to share our strategy to transform the company into a market leader in the field of therapeutic endoscopy. In recent weeks, many of you are asked me why I decided to join Apollo. I follow the company for many years. I know the founding CEO and some of the company's original venture capital investors. For years I've been impressed with Apollo's long held vision to build an entirely new field of therapeutic endoscopy as well as the company's remarkable technical innovation, most notably the OverStitch devices. I'm also familiar with the ups and downs that the company has faced since its formation 15 years ago. And so with that understanding of the history that I'm thrilled to be joining Apollo at such a pivotal time as we transform into a market leading growth company. I believe that we have a distinctive, differentiated product portfolio that advances minimally invasive endoscopic surgery, and helps GI and bariatric professionals, enhance the standard-of-care, potentially for millions of patients around the world. At times, the words pivotal and transformational can be so overused in the business community that they lose their meaning. When I was approached about the CEO role, I did my homework on the company's products, procedures, and prospects with three different product lines, all of which have very attractive growth opportunities. I believe that we can fundamentally change the trajectory of this business to delivering consistent, sustainable growth over the years ahead. And that is what I mean, when I use the word pivotal, though now we're at a pivotal point. To me, transformational reflects the impact that we can have on patient care, with continued advances in technology development, such as our recent clearance of X-Tack and more comprehensive market development efforts for ESG, and the use Orbera for patients with NASH, we have the opportunity to address very large market opportunities. More than 100 million people in the United States, 100 million adults in the United States are obese. More than 20 million colonoscopies are performed each year. More than 10 million patients suffer from NASH and have a BMI between 30 and 40. And these are only the US figures. We are a global company. By targeting these populations, we have the potential to increase the scale of patients who may benefit from our technologies from thousands per year to potentially hundreds of thousands per year or more. That is transformational. To achieve our goals, I envision three phases for Apollo to execute our strategy and deliver transformational growth. I call these three phases, energize, accelerate and lead from the front. We've included a new slide in our investor deck, describing these three phases. As you will see from our Q1 results that we announced today, the energize phase is well underway. The energize phase is all about building momentum, by driving near term growth over the next several quarters and achieving strategic milestones that, I believe, will lay the foundation for years of sustainable growth. Near term growth opportunities include continued development of our overseas franchise, scaling our X-Tack launch in the US, steady execution of our IGB franchise, and recovery in some of our OUS markets that continue to see impacts from COVID-19. Yesterday, we announced the appointment of two new commercial leaders, who will join Apollo next week. Kirk Ellis and Steve Bosrock rock are both experienced customer focused leaders, who will increase our capabilities and enhance our execution during this energize phase. In addition, we plan to make targeted additions to our sales team to support our growth aspirations. We anticipate several company milestones during the energize phase, starting with the release of the MERIT study results. MERIT is a randomized control trial of the ESG procedure and a cornerstone of our plans to pursue a new indication for ESG and develop it into a potentially market-leading weight-loss procedure. More on that in a minute. Another key milestone will be defining the clinical pathway required to take advantage of or Orbera’s breakthrough designation to treat patients with NASH. The current standard of care, offers NASH patients very limited prospects for recovery. And that's a key reason why we received the breakthrough designation. A well designed clinical study, focused on achieving a new indication for Orbera for patients with NASH, offers great promise to these patients and our balloon franchise. Phase two is accelerate and it builds on the growth engines that, through continued expansion of X-TACK tech and increased OverStitch utilization, and then layers in the potential for more widespread adoption of the ESG procedure. In particular, following the release of the MERIT study results, and assuming that these results are in line with prior clinical studies of ESG, we will leverage them to pursue new indications -- the new ESG indication, as well as reimbursement in the US and in key markets around the world. And then, finally in phase three, lead from the front, I see Apollo as a market leader by: one, positioning X-Tack as the standard of care for a range of large closer needs across the GI tract; two, continue to develop ESG into a market leading weight-loss procedure; three, expanding the approval of Orbera to include the treatment of NASH; and four, continuing to innovate through a strong R&D pipeline that advances the field of therapeutic endoscopy. And I believe that delivering on these three phases will position Apollo for exciting sustainable growth over many years. The near-term opportunities will contribute in 2021 and 2022. The key priorities in Phase 2 and 3 that I've described will take some time to unfold. And we are putting the plans in place now to ensure we maximize the sizable market opportunities. And so allow me to elaborate more on the first phase of our transformation, the energized phase. And I want to share some of the things that I've learned in my first 60 days that have me so excited about the path ahead, starting with OverStitch and the growth in Endoscopic Suturing. In my travels, talking to customers, I've consistently heard that OverStitch is a one of a kind product that gets excellent reviews from our customers. A number of physicians have told me that OverStitch is the tool that they use to differentiate their clinical practice. And OverStitch sales have been growing at 25% to 30% per year, primarily based on two factors. Existing users continue to increase their use of the product, and new users who have gone through our medical education programs, and subsequently incorporate OverStitch into their clinical practice. OverStitch has a wide range of potential applications in therapeutic endoscopy, including stent fixation and repairs of dissections, resections and perforations. But the ESG procedure stands out as an application that can have the -- that can help and impact the greatest number of patients. ESG has the potential to offer a unique value proposition of efficacy, safety and convenience for patients. Clinical results to date have demonstrated clinically meaningful weight loss, via incisionless, reversible anatomy sparing procedure. Furthermore, ESG procedures require shorter hospital stays and have faster recovery times compared to typical bariatric surgeries. Importantly, only 1% of indicated patients currently undergo bariatric surgeries. Physicians tell us that ESGs are often performed on patients who are not good surgical candidates, or who already decided they don't want surgery. And as a result, ESG has the potential to address a major unmet clinical need for patients who are not well-served by existing approaches. The MERIT study is a key milestone in the path forward for ESG. Independent investigators have completed the 12-month follow-up, and they are working on the initial publication and presentation of the outcomes. We anticipate a publication of the study in the second half of 2021. Once MERIT is published and assuming these results are in line with previous studies of ESG, we intend to pursue a label expansion to cover real primary ESG procedures and bariatric revision procedures. If successful, a new indication would enable Apollo to promote the ESG procedure, provide physician education and training programs to a broader group of practitioners, and initiate programs to increase patient awareness of the benefits of ESG. The MERIT study will also be central in our efforts to secure reimbursement coding, coverage and payment, both in the U.S. and in markets around the world. The investment will likely be a multi-year process that will unfold the following the publication of MERIT results, which was essential for some pair benefit in 2022, and then continued progress in subsequent years. Building on the success of OverStitch, our ESS franchise now has a second growth driver an X-Tack, adding an adjacent new market opportunity that is a strong complement to our existing OverStitch business. X-Tack is unique with a wide range of applications in both the upper and the lower GI. Physicians are already applying it in a wide range of GI tract closures, ranging from relatively simple closures, such as polyp removal to highly complex irregular geometries or standard TTS clips, simply don't get the job done. Results from early cases using X-Tack, have been compelling and that is driving a lot of enthusiasm for the product. Our initial X-Tack customers are primarily current users of OverStitch. Given X-Tack shorter learning curve, ease of use and wide variety of both upper GI app – and lower GI applications, we anticipate that the user base for X-Tack will expand. At the end of Q1, we have introduced X-Tack, in almost 50 accounts, a nice increase from the nine accounts who participated in our initial limited launch. These accounts are providing important insights into how best to scale our launch and increase utilization. In March, we sponsor our first X-Tack educational webcast, hosted by Dr. Andrew Storm from the Mayo Clinic. More than 150 physicians joined the webcast and participated for a full two hours in discussions about the applications for X-Tack. The level of engagement from the participants was a great indication that this product is capturing the interest of our target audience. A recording of the webinar is now available on X-Tack.com. We continue to advance our launch in the second quarter. We will continue to advance the launch in the second quarter, and the rest of 2021 with a keen eye for creating effective education tools, introducing X-Tack in a new centers, driving adoption in buildings sustainable use patterns. Our sales team has been focused on expanding access to X-Tack and we are managing a new account pipeline and potential orders that are working their way to hospital procurement processes and is worth a total of more than $1 million in potential sales. Turning to IGB, the Orbera Balloon has been a very solid franchise for Apollo, and it's potentially an underappreciated asset. IGB is still a very important customer need for weight loss solutions that are less invasive than current bariatric surgical options, but more effective than diet and exercise alone. The 41% year-on-year worldwide growth that we have seen with the IGB franchise is an excellent testament to the strength of this product line. That said, in a few years, I believe that, we will look back on Q1, 2021 and say that, the strategic positioning of Orbera was fundamentally changed based off events of this quarter. My very first day on the job, we announced FDA breakthrough designation for the treatment of patients with NASH and this is a validation of the strategies developed over the past several years to position IGB therapy as an effective clinical treatment options for medical conditions. We are working on the next steps to maximize the benefits of this designation, including designing a clinical trial that will be required to pursue label expansion. We are in discussions with FDA and CMS about the trial design and we hope to have an approved trial by the end of the year. We also receive notification that the American Medical Association assigned new Category I CPT Codes for IGB procedures. It was interesting to learn that 6 separate physician organizations supported the efforts, demonstrating widespread support in the community. In addition – we're pleased to see that the American Gastroenterological Association, the AGA has for the first time, issued practice guidelines, recommending the use of IGB for appropriate patients. Taking together, these three developments enhance the value of the IGB franchise. And then turning to Q1 performance, I'm very pleased with here – with the team here at Apollo, and their work that has resulted in a very positive start to 2021. Even with some lingering effects of COVID and a smaller team in place versus the prior year, we've achieved 29% revenue growth over Q1 2020, driven by 26% growth ESS and 41% growth in IGB. And we believe that our first quarter results provide a solid foundation for the year ahead. It's an exciting time at Apollo. I look forward to leveraging all three of our product lines to energize the business that accelerate growth over time, and ultimately lead the field of therapeutic endoscopy. And with that, I'll turn the call over to Stefanie to cover the first quarter financial results in greater detail. Stef?

Thank you, Todd, and good afternoon, everyone. As Todd mentioned, the first quarter of 2021 overall, demonstrated strong growth against a relatively stable fourth quarter and a prior your first quarter that saw the first impacts of the COVID 19 shutdowns. Total revenue was $13.9 million, a 29% increase from the $10.7 million a year ago, as a result of 26% growth in our ESS franchise and 41% growth of IGB product sales. Geographically, revenue performance was driven by 43% growth in US sales and 18% growth OUS. In US, ESS sales increased 44% and IGB sales increased 64%. X-Tack sales are included in our ESS results, which we don't intend to disclose separately, but sales of our ESS products excluding X-Tack, increased greater than 30% over the prior year, which is evidencing a return of our OverStitch product sales growth to our pre-COVID historical experience. OUS markets also performed well in the quarter as distributor activity increased following the recovery of many of their markets from the effects of the pandemic, which helped to offset the impact of evolving COVID restrictions in certain direct European markets throughout the quarter. Overall, we generated a 5% increase in ESS sales and 33% increase in IGB sales for the quarter on a year-over-year basis. The low ESS growth primarily reflects the impact of those recent COVID waves in certain direct markets in Europe, which we believe will continue to pose some challenges in the near term, until the global recovery expands. Gross margin also continued to improve, increasing 2% over the prior year to 54% due to higher sales, and the benefit of our continuing gross margin improvement projects. The most important gross margin improvement project coming online this year is the X-Tack launch. X-Tack has been designed from the beginning to be accretive to our current consolidated gross margin. Operating expenses also compared favorably year-over-year, down $1.1 million, as a result of the long-term restructuring benefits of our 2020 cost reduction and operating efficiency program. As a result of all of these factors, higher revenue, improved gross margin and lower operating costs, operating loss declined by 44% to just $3.8 million for the quarter. Turning to the balance sheet, our cash balance remains strong at $32.6 million, reflecting the use of approximately $4.3 million dollars for the quarter, of which approximately 1.3 million was due to working capital changes associated with our increased revenue. We also further extended our balance sheet runway by achieving our financial targets necessary to qualify for an additional six month extension of the interest only period and are renegotiated and more favorable debt terms announced in December last year, meaning, we will have no principal payments due as of September 2022. Turning to the topic of 2021 outlook, we are pleased to have a solid start to the year in our first quarter results. Today, we are establishing a full year revenue target of $55 million to $57 million in 2021 or 30% to 35% growth over 2020. In arriving at this range, we have taken a cautious approach for several reasons. First, we continue to experience ongoing uncertainty around the impact of COVID-19, especially in our OUS markets. And this includes uncertainty around how the various lockdowns may influence traditional Q3 European holiday schedules this year. We are also still in the early days of our X-Tack product launch. And while the launch is going well and we are excited about continued growth in this line, we are still early in the process of learning how quickly we will grow new accounts and extract utilization. And finally, we are actively updating our execution plans for our existing business lines as part of our recent change in the future. We plan to revisit this outlook later in the year as we gain greater clarity and advance our plans on the items I just mentioned. So, this will conclude our prepared remarks and with that Catherine, please open the line for questions.

Certainly. Your first question is coming from Matt Hewitt. Your line is live.

Good afternoon. Congratulations on the strong quarter and welcome, Chas.

Matt, you just cut out on us.

Can you hear me?

Back now. You are back.

Okay, great. Well, congratulations on the strong start to the year and welcome Chas. Maybe the first question regarding X-Tack, obviously that was a pretty significant jump in just a couple months from nine sites to -- roughly 50. What kind of ramp should we be anticipating in the number of sites and doctors over the course of the year, or was this kind of, you want to get to this stage, kind of see how it plays out and then maybe add further later in the year?

Yes. No great, great question Matt. And honestly we're still learning as we go, but as you know, the hospital group procurement processes are called value analysis committees typically. And there's a variable process right now. What I can say is that the value proposition for X-Tack is very favorable, and so when we go through those reviews, they've been very well-received. But some hospitals are quite slow right now in coming out of a COVID environment of how quickly they just even will put things through the process. I mentioned that we've got a very robust pipeline, valued at more than a $1 million. This potential -- is referencing. And -- but they'll take a number of months to unfold, we would anticipate, but the sales team has done a nice job of casting a wide net, but still focused primarily within an original group that was referred to in the prior calls of our existing overseas user. So, in a targeted way, but making sure we get the quotes out and into the processes and all those accounts.

Understood. And, I guess, maybe digging in a little bit deeper within the existing user group. What kind of feedback and kind of reorder patterns are you seeing from some of the initial users?

Yes. No -- also great question. First, I mentioned it in the prepared remarks, but really to emphasize one of the things that we've seen is the range of uses of X-Tack. I know in the prior communication, there was a lot of focus on the lower GI because that is new for Apollo, right OverStitch primarily use the upper GI. But what we've seen is and there's a new slide in our investor deck that shows even from the limited launch, a whole wide range of uses across upper and lower GI. So we're really encouraged by that. It's still quite early in terms of hospitals that have a number of months of runway, but we are pleased to see that a number of those have already started to reorder monthly, and we have a little bit more history under our belts, we'll be able to provide more granularity about reorder patterns.

Okay. Okay. And then, shifting gears to Orbera. Obviously, it was a pretty remarkable quarter, and I think, as I look at the performance, given even some of the continued issues with COVID, it was a pretty strong quarter. As you look out, I would expect, as the vaccines are rolled out and maybe COVID subsides a little more, you should expect some more growth, both domestically and internationally, but as you start to think about next year, particularly with, I think, you mentioned the need for a trial. Help us think about that piece of it a little bit. So you've gotten feedback that you're going to be required to do a trial. How should we think about the size of that trial, the duration, cost? And I guess, the another piece is, can you use existing data? How much -- obviously, you've developed a long history of data, can you use that as part of any trial that the FDA requires?

All really good questions and frankly, ones that we're still working through with not one, but two agencies, that's part of the benefit of having a breakthrough designation. You negotiate and ultimately agree on a trial with both FDA and CMS. I can tell you we are in active discussions with both agencies. And as we work through those, we’ll get better direction from them about the size of the trial, but we do expect it's going to take a new trial to prospectively evaluate, specifically, in this patient population. But you're asking me great questions about the size of the trial, and number of patients, those sorts of things. And we just don't have that agreement yet with the agency. I did very intentionally, as I described my three phases. Think of the NASH opportunity in a third phase. I think it is going to take a few years to really work through. In the meantime, we are incredibly encouraged by what we're seeing with the balloons. And I think some of it, there's some factors that are more near term in nature, contributing that, the gene 15 associated with COVID is real. There have been articles published in the New York Times and a recent publication in JAMA, about how much weight gain we've seen, typically at a 1.5 pounds per month. So we think that is actually impacting end user demand. We are seeing some differences in site of service and bariatric practices embracing the balloon. And then I mentioned the age lines, which are very positive development and for the first time embracing the balloon. So I think we do have some opportunities in the near term with our existing balloon business, while we work on the strategic repositioning associated with that.

Got it. Yes. Actually that’s perfect, you've kind of answered the next question, which was are you seeing a pickup in demand just because of the news earlier this year with breakthrough designation in CPT code, is that alone starting to drive some adoption, so it's good to hear that that is. Maybe one last one and then I'll hop back in the queue, regarding OverStitch, obviously, that has continued to be a strong performer for you, but it still is somewhat of early days. As the country and quite frankly, the world starts to reopen, how should we anticipate that the growth profile for that device, particularly as we think about it from an ESG perspective, but just in general, are you anticipating, maybe that growth accelerates as the country and world reopens? Thank you.

Yeah. Matt, great questions, Let's take the outside of the U.S. part of that question first, because as Stef mentioned, the one area where we've some downsized from a COVID standpoint, mostly has been with Endoscopic Suturing, especially in our direct markets in Europe. And it's not surprising, right? Those cases typically are more impatient procedures. And if you go back to Q1, the U.K. was basically shutdown then other markets were shutdown. And we're still seeing some lingering effects of that. So, just in the month of April, again, not telling you anything you don't know about markets like France being closed down over the month of April. So, these are -- so we certainly see a recovery there overtime. And it's hard to predict exactly the pace. We need to remind ourselves even a lot of -- as a people in the U.S. are getting vaccinated. I think it's accurate to say that more people are currently suffering from the virus than any point during the pandemic when we look globally. So, we're watching it all very carefully. Having said all that, as we come out of it, I do think that the benefits of the medical education programs that the company has had in place for years will continue to pay dividends, meeting with new users who are embracing the technology. And then, as we start having additional information about ESG and then the MERIT results. And then an education will be a big deal for us, right? Because we do not -- we are very careful about how we promote and not promote this procedure. And having a new indication, which we're anticipating in the first half of next year, will allow us to do a lot of different things from a training standpoint, from education standpoint to physicians, from an education standpoint to patients. And we think that can be big accelerator as we move forward.

That's great. Thank you.

Thanks Matt.

Our next question is coming from Adam Maeder. Your line is live.

Hi guys, this is actually Duran [ph] for Adam. Thanks for taking the question and congrats on the really nice quarter. And Charles congrats on the new role, I'm looking forward to seeing what changes you have in place for Apollo. I was wondering, if you could just speak to a little bit on how you intend to deliver on some of those pieces, especially those lined-up on the Energize portion of the slide. What are the biggest factors or milestones that we need to see to be successful with some of those items in the initial phase? And then, as we start thinking about some of the recent commercial changes that you guys have announced over the last couple of weeks, maybe you could speak to how you see the new commercial team reshaping, how the organization operates today?

Sure, Thanks, Duran. Yeah, so on the Energize phase. The way we're thinking about it, really is a combination of near-term growth. And then important milestones then lay the foundation for the next wave. And on the near-term growth, the good news, part of it is we're already seeing it, right? And so it's a matter of being able to extend it and continue so with OverStitch, for example, as I mentioned, we are starting to return, OverStitch have been growing a little bit under the radar, 25% or more per year. And putting aside a bit last year for COVID, we're getting back to that. And it's with new users, it's with existing users, finding additional uses for the devices. And it is starting to see the growth of some Endo-Bariatric practices, and there are a number of them as I've made my travels. And as I mentioned, we're not actively promoting that, but there are a number of physicians that have now embraced ESG and are starting to really feature that in their practices. So that'll be I think a big element here in – in that part of it. The second will X-Tack, X-Tack does not require – well, let me put in the positive. X-Tack has a relatively short learning curve. It can be used rather than one or two specialists in institution. We think it could be four or five or more physicians in some of our larger institutions. So for that, it's going to be continued account growth, and then a real focus on driving utilization – depth in it for me – in the product launches, depth of utilization is so important and we're going to really focus on that. And I'll come back to it in a minute. And then third, for Orbera, as I just mentioned, we've had really, really good results. And so, we are working in – which ones of those may be transient and related to COVID and which ones can be more sustainable to put Orbera on a – on a growth pathway. And we think there's possibility there. So more work to do, but we're excited about that. Excuse me, to answer your question about the commercial team. The change really started with my desire to separate out the marketing and sales functions and have – dedicated expertise at a leadership level with both of them. Excuse me – I'll give you an example. So for X-Tack, the team has done a nice job and it's focused primarily on our OverStitch customers, which is a great place to start. They're natural users of X-Tack. And we've gotten some good traction. But already, I've been working with some folks that I know on expanding, how we think about the launch. They see purchasing additional procedural data really being a little more sophisticated about exactly where the procedures are, and then we'll be targeting our launch based of that information, and it'll help us really get a deeper understanding of what our launch priorities will be overtime, and how we're going to expand it. And Steve Bosrock, who's coming in to lead marketing is well aware of that approach. He's done it before and I think we'll add another level of leadership there. And then on the sales side, very happy to have Kirk Ellis coming on board, a very strong leader with experience in GI, he's been in two different startups, with a lot of GI experience both of them are now part of established leaders in the field. So you've got an existing customer relationships and I think we'll be well placed. We'll work together then to decide what else we're going to do from a – building out the team element to that. We have a healthy tension within Apollo between driving growth, but also still keeping a very tight lid on costs. I can tell you, I've already approved less than a handful of some additional sales rep positions in key markets and we're going to fill those. And then we're going to be very smart in terms of how we continue to think about adding. But we've got great growth opportunities. We got to be smart about it and keep investing in the future.

Okay. Yes, that's obviously great to hear. And then as far as the guidance goes, I understand there's still a lot of uncertainty out there. But obviously, the guidance does look a little bit conservative from the normalized growth basis, just with a really strong Q1 here. So maybe you could kind of just help us understand what you're assuming as far as contribution from X-Tack and that number maybe what you're assuming for COVID US versus OUS? And then any other inputs we should really be thinking about there?

So, it's a good question and it's fair and accurate to say that we are being careful in our guidance, for sure. X-Tack is in its early stages, and for competitive reasons, we're not going to break out X-Tack separately. And what we can share Chas has already spoken to from the previous questions. So today, we are remaining careful about what we are estimating for our organization, and as more information becomes available to us about X-Tack and utilization and account additions. We'll let that – as well as the other things we've talked about COVID recovery related items impact on OverStitch growth OUS in the areas where we're experiencing some disruptions. As well as, what might be transit with respect to our IGB revenue, once we pull all of that together, and as the recovery continues then we will look to improve upon what we are estimating today. But for today, we think that the prudent, wise position to be in is a more careful number.

Okay. Understand. And then last one for me just as far as MERIT goes, just wondering if you could speak to – assuming the data is positive, how quickly you expect the payer behavior to change? How compelling do you expect it to be to payers and then where would you expect pushback to be if at all?

Sure. No, good question. First of all, we don't know the data is still being run independently by the investigators. We are optimistic, as it's been described on prior calls. Given the history of how much data has been already developed on X-Tack – I'm sorry on ESG. And so for those who you're new on the call to Apollo and we've got multiple studies encompassing thousands of patients, demonstrating the procedure. So, we're optimistic. So, in the data, once we get that -- reimbursement is a journey. I've lived that journey in other environments. We are working on specific strategies and it involves coding, coverage, and payment around both government CMS reimbursement, as well as with commercial payers. We are aware of already some examples of some of our customers who have coverage relationships with individual payers. And that's really good news. It's really exciting. So, some of the field is starting to be laid there. But to answer your question, I would expect some impact beginning of next year, but then I see that taking then a number of years after that to continue to build exactly what that pace will be. We're working through those plans and at some point, we will get to the point of doing things like reporting on number of covered lives and how fast that ramp is, but we're not there yet.

Thank you.

Thanks Drew.

I would now like to turn the floor back to Charles for closing remarks.

Great. Thank you very much. It's been a busy and energizing first couple of months. And I do anticipate maintaining our positive momentum throughout 2021 and as we work across the many opportunities in front of us. I'm excited to see OverStitch emerging as a standard-of-care in multiple GI applications that call for full fitness suturing and in addition, we believe that physicians see the enormous potential of ESG as a primary weight loss procedure. X-Tack is off to a solid start and is receiving very positive feedback from physician users. And we are very enthusiastic about this new product, and the opportunity to expand our market with another truly innovative and flexible tool for various GI needs. And with Orbera breakthrough designation, the new CPT codes, and a recent AGA practice guidelines, the franchise is once again emerging as a strategic growth opportunity for Apollo. And so as we look forward, I said it before, I'll say it again. We look forward to leveraging all three of these exciting products to energize the business, then accelerate growth over time, and ultimately, lead the field of therapeutic endoscopy. If you have any questions or would like to arrange a call with us, please contact Matt Kreps from Darrow Associates. Matt’s contact information is on our website and in today's press release. And thank you and have a great evening.

Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.