Earnings Labs

Senseonics Holdings, Inc. (SENS)

Q3 2019 Earnings Call· Tue, Nov 12, 2019

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Transcript

Operator

Operator

Good day and welcome to the Senseonics Third Quarter 2019 Earnings Call. Today's conference is being recorded. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over the Philip Taylor. Please go ahead.

Philip Taylor

Analyst

Thank you very much and welcome to Senseonics third quarter 2019 earnings call. This is Philip Taylor from the Gilmartin Group. Before we begin today, let me remind you that the company's remarks include forward-looking statements. These statements reflect management's expectations about future events, operating plans, regulatory matters, product enhancements, company performance and other matters and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is detailed under risk factors and elsewhere in all Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, and our other reports filed with the SEC. These documents are available in the Investor Relations section of our website at www.senseonics.com. We undertake no obligation to update publicly or revise these forward-looking statements for any reason except as required by law. Also, on this call, we will be discussing our full year 2019 revenue guidance on a gross and net basis, which was also included in the press release. In light of Regulation FD, we advise you that it is Senseonics policy not to comment on our financial guidance other than in public communications. On this call, we will be providing investors with gross revenue in U.S. gross revenue measures to provide meaningful supplemental information regarding our performance and provide better transparency on the impact of reimbursement in the Eversense Bridge program. In accordance with U.S. GAAP Senseonics reports revenue in its financial statements on a net basis, which includes gross to net reductions, primarily related to the Eversense Bridge program. Gross revenue measures do not reflect the gross to net reductions and accordingly may be considered to be non-GAAP financial measures. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with U.S. GAAP and Senseonics non-GAAP measures may be different from non-GAAP measures used by other companies. For information on these non-GAAP financial measures, please see the reconciliation of these non-GAAP financial measures to their nearest comparable GAAP measures in this afternoon's earnings release, which is available on our corporate website at senseonics.com. Joining me from Senseonics are Tim Goodnow, President and Chief Executive Officer; and Jon Isaacson, Chief Financial Officer. With that, I would like to turn the call over to Tim Goodnow, President and CEO. Tim?

Tim Goodnow

Analyst

Thank you, Trip, and thank you all for joining us. On the call this afternoon, I'll provide updates on our recent commercial and operational accomplishments will spend some time reviewing our strategic direction and John will provide more details on our financial results and outlook. To start out, I'd like to highlight several important recent milestones and achievements. First, on reimbursement, I'm very happy to announce that after ongoing engagements with the center for Medicare and Medicaid services over the past several months, CMS has finalized the payment rates for our CPT codes as part of the calendar year 2020 rulemaking process. It's an exciting step forward for Eversense, as it provides Medicare beneficiaries access to the latest innovation in continuation glucose monitoring. In publishing calendar year 2020 physician fee schedules, CMS elected to set are the new values for the existing Category III code used to report the insertion and removal of long-term, implantable CGM devices. We understand the step was taken proactively to ensure a clear understanding of how this new class of CGM devices will be paid for. Through this step CMS is determined that implantable CGMs are categorized as part of the Part B Medical Service and not processed through the durable medical equipment benefit as with all other CGM's. Importantly, the CPT codes we will include the cost of the Eversense CGM system and HCPs may build Medicaid directly to receive a single payment that wraps the cost of the device with their physician service time needed to insert or remove the Eversense sensor. The alternative durable medical equipment benefit has been a challenge, given the regulations around this channel of sale. We're excited to have the opportunity to not only brining an advanced technology to this 61 million Medicare beneficiaries, but also enable a…

Jon Isaacson

Analyst

Thank you, Tim. For the three months ended September 30, 2019, we generated $4.3 million of global net revenue compared to $5.2 million in the prior year period. The decrease was attributable to timing of sales at the Eversense system in Europe based on the contractual timing of purchases throughout the year. To provide increased access to the Eversense CGM system in the U.S. for patients with limited or no insurance coverage during Q1 2019, the company introduced the Eversense Bridge program. Cost associated with the program are treated with a gross-to-net reductions to revenue under U.S. GAAP accounting. For the three months ended September 30, 2019, we recognized net revenue of approximately $500,000 and gross revenue of $2.1 million. We expect that on a go-forward basis there will be fluctuations and quarterly bridge cost that may affect quarterly revenue recognition. To reiterate Tim's comments, we are confident that our investment in the Bridge program is helping patients gain access to our product and demonstrating the utilization of Eversense in the marketplace. We are pleased with the experience of the products with patients and physicians. Gross profit in Q3 2019, decreased by $800,000 year-over-year to negative $3.3 million, compared to negative $2.6 million in the prior year period. The decrease in gross profit was primarily due to lower net revenue in our OUS region, compared to the same period in the prior year. Third quarter 2019 sales and marketing expense, increased by $3.7 million year-over-year to $11.6 million, compared to $7.9 million in the prior year period. The increase was due primarily to the build-out of the sales force and commercialization efforts in the U.S. Research and development expense in Q3 2019, increased by $3.7 million year-over-year to $11.1 million, compared to $7.4 million in the prior year period. The…

Tim Goodnow

Analyst

Thank you. So, in conclusion we remain immensely confident in Eversense and our ability to prominently place it in this market over time. Patient awareness of Eversense is growing every day through our commercial activities including online marketing, our social media presence, and we also note that the social segment of the uses of Eversense is very strong. Payers have been receptive of our clinical data and differentiated product and this has supported our recent wins. We are excited to see a win with a large payer like Medicare and look forward to progress with the remaining payers. The cross providers, the willingness to perform the insertion, and removal procedure is growing as clarity around procedure payments from the payers is obtained. This, in combination with our CES program, will further expand reach. As we expand our installed base, we have taken actions to streamline organization and focus on cash utilization and gross margin. And as covered lives increase, we can thereby reduce our need for Bridge program. We have taken a series of steps to drive progress in each of these areas with a focus on the product, the organization, and our users. Based on what we have learned in the first year of U.S. commercialization and our ability to adapt, to support our paradigm shift in product, we are as confident as ever that as more patients have access to Eversense, we will be able to bring the benefit of our leading solution to an expanding and satisfied user base. With that, we now conclude our prepared remarks. Joining us for questions are Mukul Jain, Chief Operating Officer; Mirasol Panlilio, Vice President and General Manager of Global Commercial Operations; Nick Tressler and Chip Moebus, our Senior Director of Reimbursement and Market Access. Operator, let's open up the call for questions.

Operator

Operator

Thank you. [Operator Instructions] And we'll go first with Jayson Bedford with Raymond James.

Jayson Bedford

Analyst

Hi, good afternoon and thanks for taking the question and congrats on Medicare. So, few questions. I guess just from gross to net reductions, remind me were there any adjustments in the first quarter?

Tim Goodnow

Analyst

Yes, there have been adjustments in relatively modest in the first quarter as we didn't implement the gross to net until March; it was 22% net and then the second quarter--

Jon Isaacson

Analyst

In the second quarter, it was 54.8%. In the first quarter, 22.9% reduction.

Jayson Bedford

Analyst

The reduction in what, sorry?

Jon Isaacson

Analyst

It's a reduction in gross revenue to get to net revenue which is GAAP reported revenue.

Jayson Bedford

Analyst

Okay. So, I guess I haven't done that math, but did U.S. gross revenue -- can you just compared U.S. gross revenue in 3Q versus 2Q? Did it a decline quarter-over-quarter?

Jon Isaacson

Analyst

Yes, it did. It went from $2.4 million in Q2 for U.S. gross to $2.1 million in Q3.

Jayson Bedford

Analyst

Okay. Okay. Thanks. And I guess previously you've talked about the U.S. business -- or sorry the U.S. business generating roughly 30% of total revenue for the year. What's the updated expectation for the U.S. contribution based on that $20 million to $22 million in guide?

Tim Goodnow

Analyst

I think based on where you actually see now Jayson it's about 20%.

Jayson Bedford

Analyst

Okay, perfect. And then I don't know if you have the data there, but what's the national value of the CPT code in which physicians will be paid under Medicare absolutely?

Tim Goodnow

Analyst

The RVUs vary by the procedure. I don't have the dollar values Jayson, but it's -- the RV values that are little bit over 50 for an insertion and an insertion and removal, somewhat less for a removal.

Jayson Bedford

Analyst

Okay. And then finally just I think I heard you Tim, the expectation for 180-day that's still approval obviously pending the FDA at the end of 2020, is that correct?

Tim Goodnow

Analyst

Correct, correct. No change at all for that timeline.

Jayson Bedford

Analyst

Okay. Perfect. So I'll drop. Thank you.

Tim Goodnow

Analyst

Thank you.

Operator

Operator

We'll go next to Danielle Antalffy with SVB Leerink.

Danielle Antalffy

Analyst

Hey, good afternoon and thanks so much for taking the question. And a lot of transitioning, so congrats to everyone that is moving onwards and upwards. Tim, I was hoping you could elaborate a bit more on what drove the sequential decline in U.S. gross revenue, first of all. And the second of all, I appreciate that you're not a position to give 2020 guidance yet, but it feels like the momentum is building, you feel like you're at or approaching critical mass from reimbursement coverage perspective. So help us sort of balance that with what you're seeing out there in the marketplace today and the different friction points you guys talked about to sort of help level set us as we look towards 2020.

Tim Goodnow

Analyst

Sure. So from a revenue perspective, remember our revenue, the way it works for us in the United States is we have regional or area or contracted distributors that partner actually with the different payers. So our shipment to them can be somewhat variable as they build and hold different levels of inventory and we did have some shipments that were very early in Q4 that potentially could have been back in Q3. So it had to do with the dynamic of filling that channel with the distributor. You're right, it's a little bit too early for us to get into 2020. We'll give an update certainly on the next call. But as we've made pretty significant changes in the covered lives, obviously, that's in the right direction and will certainly help us with the growth and the access. So, we as well, feel very good, obviously, about those improvements and what that can bring us for the future.

Danielle Antalffy

Analyst

And if I could follow up on that. I mean, one of the questions I often get is, do you need 180-day sensor to really drive the inflection in the U.S. and I'd be curious as to how you'd answer that. I mean, you're obviously progressing, well, towards that, but, I mean, may be based on your experience in Europe, do you think that's the real point of inflection here, is getting that 180-day sensor? Or do you think you can get there with a 90 day? Thanks so much.

Tim Goodnow

Analyst

Yes. We've certainly -- we feel very confident and very good about what we're doing with a 90-day product. The people that are accepting it are those folks that are most interested in that long-term duration. Remember, their frame of reference today is typically 10 or 14 days. So to go from 90 days or up to 180, both are pretty significant change. That said, we do recognize that the 180-day has different economics on both ends and we also recognize that for the greatest penetration it makes sense for us to continue to move to Gen2 and we continue ultimately to be focus to move to our 365 in the future. So we do see it as an improvement. From an inflection point, certainly we feel very good, we have 1,000 physicians right now in the U.S. that are prescribing Eversense. Right? There are about 2,100 endocrinologist in the U.S. that are practicing and we expect they were going to continue to make good progress. We've essentially doubled in the last quarter from about 500 to 1,000 prescribers. We'll continue to push that with a 90-day product. All of this reimbursement work that we've done is with the 90-day product, so that continues to be very favorable for us and the right level of investment for us to make. When 180 comes, we'll continue to leverage that. We do expect it will drive more penetration, but I don't think that it necessarily by itself is going to be a key point of inflection. I think it will be part of continual of growth that you'll see in the 90-day product and even further growth with 180. Hope that helps.

Danielle Antalffy

Analyst

Thank you. Yes. That’s very helpful. Thanks so much.

Operator

Operator

[Operator Instructions] We'll go next to Alex Nowak with Craig-Hallum Capital Group.

Alex Nowak

Analyst

Great. Good afternoon, everyone. I just want to touch on the restructuring here with the sales force and Mike Gill leaving. What sort of impact are you assuming here to U.S. sales and physician insertions in the near terms, specifically Q4 first half of 2020? And what is the annual OpEx reduction as part of the restructuring?

Tim Goodnow

Analyst

So from a strategic implementation, I'll answer the question. We do want to make sure that we have the right level of investment for the opportunity. So it's a fine line we walk between the payor coverage that we have and the regional coverages that are in place. We have a strong commercial team. Mike certainly contributed to the organization, but the team that is in place right now is very, very strong and capable as well. So there certainly will some transition in Q4 and can have a slight effect, but we don't anticipate that it will be a long term or permanent impact on the efficacy of the sales force. We will ramp up investment as we grow in covered lives, as we bring some of the bigger payers online. Just for clarity, the remaining commercial -- largest commercial peers that we don't yet have are United, Anthem and Cigna and we continue to work on all of those. As those covered lives come on, I would anticipate that we would have further incremental resources and do more broad-based coverage.

Alex Nowak

Analyst

Okay. And just the dollar amount for the annual reduction to OpEx?

Nick Tressler

Analyst

Yeah. Sure, so this is Nick. I think, obviously, we’re now commenting as we think through what are 2020 finalization looks like. Clearly we’ll see savings in three areas, specifically headcounts, obviously, approximately 30% of both open or current and then planned physicians, as well as reductions in external expenses for OpEx, as well as improvements in our cost of goods sold. But at this stage we'll finalize our 2020 numbers and look to have further conversations with our next update.

Alex Nowak

Analyst

Okay, Understood. And then Jon, could you just walk me through the accounting real quick on the net U.S. revenue from the Bridge program. I know there has some been, obviously, some discussion here in the Q&A. But net revenue this quarter was 25% of the gross. Since the 50% of patients who got Eversense to the Bridge program, so just trying to understand the delta between these two numbers.

Jon Isaacson

Analyst

Sure. Yeah. So the gross revenue, the reduction there is three components, the major piece being the Bridge access program. There is also than program discounts as well as co-pay [ph]. The difference then is the utilization of patients, which is approximately 50%, 54% for the quarter and then the payments, which include not only the sensors but also then additional cost for procedure. So, the dollars that are greater than the actual percentage of patient usage.

Tim Goodnow

Analyst

Hi, again. Depending on the patient together, they have a co-pay that's assisted or whether they have a full -- need the full assistance, they pay $99 as a minimum and then with the E&I coverage, the Bridge program would support the balance. If it's to support a deductable, it would be a partial payment.

Alex Nowak

Analyst

Okay, got it. Last question real quick. As we all know you had the contractual obligation out there with Roche in Q4 to have a comeback and buy a bulk order across for 2020. As you're doing the forecasting for 2020, are you seeing that Roche is actually using all of their inventory that they have on hand and thus needs to come back to the market, or come back to you guys to buy some versus having to the contractually obligating to buy something in Q4?

Tim Goodnow

Analyst

The contract we set up was the anticipation of their need, but also as I've suggested before, they do buy in bulk quality. So that they are -- sure they have continuity to supply and they also plan for different market utilization. So their planning is purposeful by the contract to built some inventory and then they lead it off throughout the year. For our manufacturing capability, we don't let them purchase everything in one quarter, which they like but they do build inventories specifically by design as to what they're looking to do in the fourth quarter.

Alex Nowak

Analyst

Okay, understood. Got it. Thanks.

Operator

Operator

We'll go next to Mathew Blackman with Stifel.

Mathew Blackman

Analyst

Good afternoon and thanks for taking the question. Tim, you mentioned things moving slower than you planned in year one, and I think we have a feel for where the headwinds are, but I think from the things you've outlined like the recent reimbursement wins, the procedure initiative, and with targeted commercial strategy, do these address the biggest headwinds that you see out there? Or are there still larger items to tackle?

Tim Goodnow

Analyst

Yeah. When you take a look at what the top three issues are, obviously, reimbursement is at the top of the list. We've made good progress on that. You may recall that we are targeted to do 100 million out of essentially 250 million in the first year, and we've been able to move beyond that. So we're excited by the results that we've been able to get there. Secondarily, of course, with any natural release of a new technology, obviously, awareness is another area that we focus on and our efforts are parallel, a lot of this is done for the more active users as web-based through our digital marketing campaigns, but also you do need to reach out to the prescribers and educators as well and that we do through the sales force. So that's a continued growth area for us. We continue to make investments in that area. And then the third area is just getting many of the folks available to do the insertions and procedures as we can for patients. Right now, we have more patients than prescribers that are doing the procedure. Some of that is due to the fact that they're going through the training program. It is a requirement that before you can get certified, you need to do three insertions and three removals, and we have a team's working on that with the new prescriber and bringing them up to speed. In other cases when you have a multi professional clinic, you may have only one that’s doing insertions and you've got two or three or more that are doing scripts. In cases like hospital systems, we have run into some issues with hospital systems, because the complexity of getting a new procedure introduced that has taken us some time. So the CEF network has worked extremely well in those cases in the internal, while the hospital system is coming up to speed, we can do insertions perhaps in dermatology or surgery and build to our existing core. So all of that has worked as part of the growth I think in differentiation that we do need to work through as an implantable product, but we feel pretty good about it. I would say, it's certainly number one reimbursement we are beginning to get some good traction there and then number two is the use of new technology variants.

Mathew Blackman

Analyst

I appreciate that. Thank you. And then just shifting to the more targeted commercial strategy, could you give us some idea of the number of reasons or number of physicians that you're now going to focus on. And I guess really what I'm getting at is there, any way to sort of think about how much more productive some of these more targeted accounts might be then sort of broader to office physicians you are trying to service up until now?

Tim Goodnow

Analyst

Yes. I wouldn't say that, we’re not going to abandon any particular physician that may be doing the insertion today. I think what we will focus on is to make sure that we get more efficiency out of those particular offices, so it may be that instead of seeing a record leap they may see a record leap every other week if they are not any region with large, large coverage. So we won't be walking away from many, but we will be more focused in two areas. First, as we said deeper penetration into those that are prescribing today where we have coverage. The other area that’s frankly has been pretty attractive for us is in area of digital marketing. We are seeing and encouraging increase in the level of leads that are coming out of those campaigns. The most active users tend to be very, very efficient, very influenced by digital and social input. So we've got a pretty good investment that's going on in that space that's frankly independent of sales team on the streets. So those two efforts is how we intend to tackle it. As we get more coverage and bring some of the bigger wins in and then we'll reserve the right to come back and add to them through that as it makes sense.

Mathew Blackman

Analyst

All right. Really appreciate. Thanks so much.

Operator

Operator

We go next to Kyle Bauser with Dougherty & Company.

Kyle Bauser

Analyst

Hi, thank you for taking the questions and probably updates today. So Tim, regarding the Bridge program so we’re clearly seeing some nice adoption of Eversense and generated some nice prescription numbers and as you talked about the key feature of this has been being able to build up a track record of insurance manipulator and the strength in there argument for positive coverage begins and there well has to be a goal of 109 million covered lives by year-end. Can you just kind of talk about any anecdotes or situations where the increased utilization generated from this Bridge program has helped you in your discussions with the payers?

Tim Goodnow

Analyst

Yes. We certainly know that that's adjacent to couple. One is Humana, right? We had a pretty active effort to fund Humana patients to the Bridge program. We supported that with our single case negotiations. So as patients come in, we would work for them through their E&I journey and ultimately, we feel pretty good that we got to the point with Humana where they recognize that they were denying more claims than they should be and frankly reverse the decision. I would say another is HCSC which is another big focus for us, right? They are top 10 provider; Texas, Illinois and couple other large -- it's a Blue conglomerate. We have a lot of utilization out the Texas and a lot of that -- again the same single case negotiation that we think really won the day with them returning what was and the E&I designation on by of October 15, I think to fully support it. So add investment but it certainly has already paid off and we expect that to continue to be the case.

Kyle Bauser

Analyst

Okay. And the effective program, the Bridge programs in particular, typically have some good traction Q1 since adoptable was reset, do you anticipate keeping the Bridge program through Q1? Any kind of update as to how long you think this will be kept on?

Tim Goodnow

Analyst

Good question. But Kyle, with this one, we are going to get back to you with specifics on 2020, on the next call. But I do recognize and you're absolutely right this is a pretty typical program that's used in the pan healthcare space whether it be medical devices or pharmaceuticals as you correctly state, deductibles are reset on January 1, hence a bigger push by all in Q4 and you see a pretty notable drop off in Q1 which I'm sure we will experience as well and companies will try to moderate that with programs such as this. So we are not ready to comment on it, but your premise is absolutely right and one that we will certainly will be thinking about as we going to implementation. But we also need do to manage the reality that we have these new wins. Medicare is a very big deal with a big opportunity. This different payment methodology we don't want to underestimate. It significantly simpler to get a CGM as a medical service than it is through durable medical equipment. And you need to fully understand that as we build our plans for 2020.

Kyle Bauser

Analyst

Understood. Thanks. And just lastly on the clinical trial, can you remind me what the status is of the IDCL Trial? Thank you.

Tim Goodnow

Analyst

The IDCL Trial is right now on hold due to discussions with Roche and access to their control algorithm. So I don't have an update. The product is ready to be tested but I do think their business discussions that are going on with Roche.

Kyle Bauser

Analyst

Okay. Thank you. I’ll jump back in queue.

Operator

Operator

[Operator Instructions] We will go next to Kyle Rose with Canaccord.

Kyle Rose

Analyst

Great. Thank you for taking the question. Just I haven't asked but I want to follow-up on can you talk about the 30% reduction in either existing or planned headcount. Can you just may be fragment that a bit for us and how much of that is customer facing on the commercial perspective and how much of that is on the back end of the support of the organization?

Tim Goodnow

Analyst

I would say it's about half maybe 40% but it was across the entire organization. But we did do some modifications in the sales organization as well. It's a very, very specific on, focus on obviously, the coverage areas. We didn't do anything that we did in fact areas where we do have good strong coverage today.

Kyle Rose

Analyst

Okay. Great. And next…

Tim Goodnow

Analyst

And to serve those doctors -- sorry Kyle. We'll continue to serve those doctors but we'll just -- we've got little bit bigger territories than we previously had.

Kyle Rose

Analyst

Okay. That's helpful. And then you also talked about OUS and Roche thinking about entering some additional concretes in 2020 maybe just give us an understanding of how big of an opportunity some of those may present?

Mirasol Panlilio

Analyst

Hi, Kyle it's Mirasol. I'll give you certainly an update beyond what Tim has already included in the script. We've been working with the Roche commercial team to really set the foundation for next year. And the markets that we're looking at are really the CGM-friendly markets in Asia Pac, in Latin America. And so we are just prioritizing those markets. Some are fairly large but the product registration and the end market regulatory approval is probably what's holding us up. I can tell you that there shows a lot of excitement in those markets with the product like Eversense into the fold. So we'll continue working with Roche and their local markets our next meeting with them is going to be February, so we'll just keep that in the books in terms of additional markets probably more in the second half of 2020 rather than on the first half.

Kyle Rose

Analyst

Okay. That's very helpful. And then just last question for me. It is just -- have a PPD code that goes live in January. At that point, can you bill for all of Medicare? Or do you have to engage the max on a max by max basis to get individual contract? I'm just trying to understand if it were in Jan 1 impact or if it's something that we should see a cadence over the course of 2020?

Tim Goodnow

Analyst

Yes. It's very interesting Kyle, the CMS Group, specifically the medical services group was very, very supportive and very, very interested. So, by then setting the national RV you values they are actually instructing the regional max to user as a national decision. And they did that to try to facilitate the use of the product. We feel it's very appropriate for their population and they are very interested in expanding the implantable sensors. So, we will not have to negotiate with the max. We will -- they will be using the RVUs as directed from the Baltimore Group. And although we aren't completely ready the CMS was so interested that frankly they retroactively dated it to last Friday. So, officially it's available today. We're not ready to SKUs yet, it will take us a couple of weeks to send those out. But they were very aggressive in bringing this new technology out and we very much appreciate their support.

Kyle Bauser

Analyst

Okay. Thank you.

Operator

Operator

And this concludes a question-and-answer session. I would now turn the conference back over to Mr. Tim Goodnow for any closing remarks.

Tim Goodnow

Analyst

Thank you. I do appreciate everyone's time. Also recognized there are a number of questions on gross to net. We have been using gross to rent ever since we introduced the Bridge program. The gross revenue suggest just that the indicated revenue it would correspond to the total amount of product whether it is paid for by the insurance company or is subsidized by us. But through accounting practices, since we can't recognize any revenue that we support through the gross to net, that result in a revenue reduction our net revenues. So, we've reported in the past the net revenue which is deduction of everything we've supported through the Bridge. What we're sharing today for clarity is both the net and the gross. So, the difference between the two is the contributions essentially that we've been making in bringing this product out. I hope that helps, it's a pretty straightforward. But again GAAP does not allow us to recognize revenue if we financially support it which is why we need this program. So, I hope that clears up happy to chat live there anymore further questions on that. But I appreciate everyone's time and interest and look forward to communications. Take care.

Operator

Operator

The conference is now concluded. Thank you for attending today's presentation.