Establishment Labs Holdings (NASDAQ:ESTA) Q3 2020 Earnings Call

0:00 Good afternoon, and welcome to Establishment Labs' third quarter 2020 earnings conference call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session, and to ask a question during the session, we need to press star one of your telephones. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star, then zero. I would now like to hand the conference over to your speaker today, David Erickson, Vice President of Investor Relations. Please go ahead.

0:30 Thank you, Operator, and thank you, everyone, for joining us. With me today are Juan Jose Chacon Quiros, our Chief Executive Officer, and Renee Galleta, our Chief Financial Officer. Following their prepared remarks, we'll take your questions. Before we begin, I would like to remind you that comments made by management during this call will include forward-looking statements within the meaning of federal securities laws. These include statements on Establishment Labs' financial outlook and the company's plans and timing for product development and sales. These forward-looking statements involve material risks and uncertainties, and the company's actual results may differ materially. For discussion of risk factors, I encourage you to review our quarterly report on Form 10-Q that we filed with the SEC today and is available on our website at establishmentlabs.com.

1:22 The content of this conference call contains time-sensitive information Thank you, David, and good afternoon everyone. I hope everyone is healthy and continues to be safe.

1:54 As we guided to in October pre-announcement, total revenue in the third quarter was $22.8 million, which is comparable to the $22.9 million reported in the third quarter of 2019, and more than double the sales reported for the second quarter this year. With a strong recovery from the pandemic well underway, we are comfortable issuing full-year 2020 revenue guidance of 80 to 82 million dollars. While we are now back to our 2019 revenue levels, we believe we are actually recovering faster than our global industry. Our success at returning to pre-pandemic levels is actually indicative of continued market share gains, which can be attributed not only to the superior aesthetic and safety profile of our implants, but also in how our digital efforts have amplified In addition to strong top-line sales this quarter, our focus on lowering expenses and driving efficiencies led to a continued decrease in our operating cash burn.

3:06 During the third quarter, our cash burn was $3 million, giving us a cash position at September 30 of $81.4 million. These Kipsas and a strong financial position and affords us the flexibility to continue managing our business for continued growth and market share gains. Importantly, in the quarter, we continue to advance the technologies in our R&D pipeline that will contribute to our sales growth in 2021. Equally important, our submission timeline to gain regulatory approval and enter the US market remains on track. Like most of the world, Our business and industry have not yet returned to normal, but we are on a clear path towards doing so. Of course, we are seeing country-to-country volatility as COVID-19 clears up in some places, but sales in more than 80 countries has given us some stability to manage our business throughout this period.

4:09 As of today, plastic surgeons are operating even where government restrictions have limited other activities. It certainly helps that the majority of breast enhancement procedures are not performed in hospitals but in private clinics, which are generally owned or controlled by plastic surgeons. While not all countries are performing procedures at pre-pandemic levels, all countries in which we operate are open and performing procedures. Our Q3 sales in Europe and Asia were at or above levels reported in the third quarter last year. Latin America appears to have seen the worst of things and finished October fully reopened with continuing improvement across the region, including Brazil.

4:55 Most importantly, we have seen continued month-over-month improvements since the lows of April, and this has continued into the fourth quarter. Third quarter direct sales, which continue to be the most reliable indicator of real-time trends, were back to the levels of direct sales in the first quarter of 2020, which, except for the final two weeks of March, were mostly unaffected by COVID shutdowns. Distributor sales, which are best viewed as an indicator of future demand, showed stronger sequential gains than direct sales. The most important takeaway from our third quarter results is this. Patient demand is strong. Across our many geographies, we consistently hear from surgeons that they have never been busier as they work through their backlogs and that new patients are interested in using this time to recover at home from aesthetic procedures.

5:54 One of the interesting and unexpected outcomes of the pandemic is that with the increased time at home, patients are eager to invest in themselves. Both plastic surgeons and patients have become much more adept and comfortable with online tools for education and initial consultations. As we noted last quarter, the level of optimism and business outlook among our plastic surgeon customers remains quite positive. Turning to some recent events, I would like to recap some of the data we announced at our 10-year Motiva Symposium a few weeks ago. At that event, we were pleased to report 10-year post-market surveillance data from a variety of sources demonstrating an unmatched device-related complication rate of less than 1% for the key safety endpoints of capsular contracture and implant rupture. These are two of the most important safety metrics when evaluating the success of breast augmentation procedures.

6:57 Of all the data sets that we discussed at our symposium, I would like to highlight one in particular, our warranty data from the past five years. With approximately 12,500 women purchasing extended warranty coverage, only 9 of them, just 0.73%, required coverage for re-operations. This data is incredibly compelling. Patients and doctors are economically incentivized to let us know about every complication. And yet, the reported number remained below 1%. If continued studies support these findings, It will represent a dramatic improvement over the historical published numbers of our industry.

7:43 This data speaks to something beyond a competitive advantage, however. It could change how women perceive the safety of breast augmentation procedures in general. If perception of the industry improves, along with widely reported new safety data, the total addressable market could grow substantially. While we would like to focus on the data that we are generating, Regarding our improved safety profile, even more important is improved patient experiences. Word of mouth and online forums are an important component of our growth. And the superior performance and results of our products is at the heart of our success. As firsthand experiences are the driving force behind our business, the second part of the symposium featured a panel of leading plastic surgeons who discussed the important technological differences between Motiva and other implants, and shared their real-world experiences with our products.

8:41 Their belief in Motiva and the growing body of evidence supporting our matched clinical results are why nearly 1.3 million Motiva implants have been placed worldwide over the last 10 years. If you did not get a chance to catch the symposium, we have archived it on our website, and I hope you find time to do so. Surgeons are taking time to listen to their peers. Our digital platform Motiva Edge offers online training programs and seminars and attracts both new and existing surgeons interested in education and the latest innovations in breast implant technology. So far this year, the total audience for online Motiva Edge scientific events has been more than 19,000 plastic surgeons and other medical professionals.

9:30 Now for an update on our product pipeline, We have a number of exciting and innovative new technologies, several of which represent potential growth drivers in 2021. Beginning with our Motiva Flora Tissue Expander, we are continuing to collect early patient experience in advance of our broad commercial launch in Europe early next year. We believe the market will be receptive to the advancements offered by Flora, including a proprietary integrated RFID port and our smooth silk bioengineered surface. In the eight sites that have used Flora so far, feedback has been very encouraging with surgeons commenting on its ease of use and patients reporting overall satisfaction and comfort.

10:19 Although our Motiva implants are already used in breast reconstruction procedures in Europe, the ability to pair them with one of the most advanced tissue expanders available means that we will be able to fully access This important market segment. As for Flora in the U.S., we now expect to submit our 510K in the first half of 2021. Once cleared by the FDA, we will be able to access the largest portion of the $225 million global tissue expander market. We expect receipt of a CE mark in Europe for Motiva Ergonomics II implant in the fourth quarter. Ergonomics II builds upon our successful ergonomics implant, which has become our best-selling and most premium offering in many markets, including Europe and Asia Pacific.

11:10 The features of this innovative new product, including enhanced mechanical properties, advanced chemistry, and improved ergonomics, should result in even greater patient satisfaction. As it is so feature-rich, we expect Ergonomics II to command a premium price over ergonomics. Plastic surgeons familiar with ergonomics should be able to switch easily to ergonomics too, which will be available in a wide range of sizes throughout Europe. Turning to Motivamia, our minimally invasive breast augmentation program, we are continuing to make good progress as we fine-tune the surgical technique. During the quarter, we received IRB approval to begin a patient series in Thailand.

11:57 To broaden our experience even further, we are also planning to initiate a patient series in Latin America by the end of the year. Motiva Mia is a very promising technology, and we are excited by the opportunity to expand the addressable market for breast aesthetics by creating a new product category. We are confident of the large number of women who would be interested in a less invasive breast procedure with safety and aesthetic outcomes similar to our current Motiva implants. If MIA is successful, it would contribute meaningfully to our growth and further differentiate us in the market. Motiva is already the implant of choice for many surgeons and patients around the world, and we are eager to introduce our innovative product portfolio to the large Chinese and U.S. markets. We are continuing to make progress with our regulatory submission in China, and we expect approval during the first half of 2022, as previously discussed. Customers in this market are active digital users for product information, breast enhancement education, and scheduling of plastic surgeon consultations, and this plays very well to our strong digital capabilities.

13:11 The United States represents the single largest breast implant market in the world, and we are continuing to pursue approval to offer Motiva to women and plastic surgeons in this geography. Study follow-up visits are continuing for all patients of our US IDE clinical trial, and follow-up compliance is high, even during the more challenging pandemic environment. Approximately half of the patients in the aesthetic cohorts have reached their two-year anniversary date, and all study-related activities remain on track per FDA requirements. We are very eager to demonstrate the advantages of Motiva in an FDA clinical trial. You will recall We successfully completed enrollment in the revision reconstruction sub-cohort during the second quarter.

14:00 Enrollment in our remaining reconstruction cohorts, which was delayed by the pandemic, still continues, and we are making steady progress. With that, I'd like to turn the call over to Renee to discuss the financials in detail. Renee?

14:16 Thank you, Juan Jose. Not only did we see strong sequential growth in sales this quarter, we aggressively controlled operating expenses, and I'd like to thank the team for helping to keep Establishment Labs in a very solid financial position. You can find additional details about our third quarter financials in our earnings press release and our Form 10-Q, which we filed today. Total revenue for the quarter was $22.8 million. Direct sales were approximately 40% of this total, while distributor sales, which can fluctuate based on changes in inventory levels and the timing of reorders, made up the balance. Our direct distributor sales mix this quarter has returned to a more typical pattern and was similar to the same period a year ago.

15:01 From a regional perspective, sales in Europe comprised approximately 45% of global sales, Asia Pacific Middle East was approximately 35%, and Latin America made up the balance. Brazil, which is our single largest market globally, accounted for approximately 10% of total quarterly sales, even though the Brazilian REI has depreciated approximately 40% this year. As Juan Jose mentioned, both direct and distributor sales in Latin America were down year over year as the region continued to recover. By comparison, year over year growth was strongest in Asia Pacific and Europe as those regions recovered more quickly. Our reported gross profit for the third quarter was $15.1 million or 66.6% of revenues compared to $14.2 million or 62.3% of revenues for the same period in 2019. The year-over-year increase was due to the benefit of geographic mix, greater operating efficiencies, and enhanced manufacturing planning capabilities.

16:07 Total operating expenses for the third quarter was $17.7 million a decrease of $5.3 million or 23% compared to $23 million in the same period a year ago. SG&A expenses for the third quarter declined $4.2 million or 21.9% to $15 million compared to $19.2 million in the third quarter of 2019. The majority of this decrease resulted from our commitment to preserve cash by controlling expenses, including lowering consulting fees, Lower sales and marketing expenses and the reduction of other discretionary expense categories. Our research and development expenses for the third quarter decreased $1.1 million from the same quarter a year ago to $2.7 million.

16:56 Most of the reduction was due to the timing of clinical trial expenses and the reprioritization of certain projects. Strengthening our product portfolio to drive future growth remains a top priority, and we will continue to invest in research and development with discipline and focus. Net loss from operations for the third quarter was $2.6 million compared to net loss of $8.8 million in the year-ago period. During the third quarter, we used $3 million to fund operations compared to $6.1 million in the second quarter of 2020. and $10.9 million for the third quarter of 2019. This demonstrates our ability to restrict cash burn when circumstances require it and invest when warranted, all while driving growth.

17:45 From a balance sheet perspective, our cash position remains strong at $81.4 million as of September 30th compared to $86.4 million on June 30th. To help you with some modeling, We expect to see fourth quarter expenses similar to what was reported in the third quarter, and we plan to provide more specific 2021 guidance next year. Overall, we believe our company is in a strong competitive position, the business fundamentals are sound, and we remain very optimistic about the potential for our new products to contribute to our growth in 2021. While the COVID pandemic still presents a degree of uncertainty, I am confident we have the flexibility to respond quickly to changes in our business and will continue to remain diligent as we progress towards cash flow breakeven and profitability.

18:44 I will now turn the call back over to Juan Jose for some concluding remarks.

18:49 Thanks, Renee. Before we open it up for questions, I'd like to express my gratitude to our plastic surgeons and business partners for their ongoing commitment to Establishment Labs. I also want to acknowledge and thank the employees of Establishment Labs for their tremendous effort and resilience, which has enabled us to successfully navigate a challenging year while meeting our operating and financial commitment. Establishment Labs has a very bright future. We are excited about our ability to grow and create value for our shareholders. As we look to 2021, we have truly differentiated technologies coming that will expand our comprehensive portfolio. We expect continued market share gains, both from expanding our presence in breast reconstruction and also developing new product categories like minimally invasive augmentation.

19:43 These will help support our growth next year and for many years to come. We continue to plan for our entry into the U.S. and Chinese markets, while staying committed to controlling expenses and increasing our efficiency to maintain a strong financial position. Finally, in honor of Breast Cancer and Breast Reconstruction Awareness Month in October, as part of our global campaign, Establishment Labs was privileged to partner with plastic surgeons and medical personnel in Brazil who volunteered their time to perform more than 60 reconstruction surgeries for breast cancer survivors. Many of these women have been waiting for a long time for their surgeries, and being able to help them in their journey is an important and powerful reminder of our commitment to women's health and well-being. We thank you for your support as we continue to transform this industry while improving women's health.

20:38 With that, I will turn the call over to the operator for Q&A. Thank you. And as a reminder to ask a question, ladies and gentlemen, you need to press star one on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. And our first question comes from the line of Chris Cooley with Stevens. Your line is now open.

21:07 Good afternoon, everyone. Thank you for taking the questions. Can you hear me okay?

21:13 Yes, we can hear you.

21:16 Thank you. Congratulations on the very impressive results in light of an extremely challenging environment. Maybe just two quick ones for me. First, when we think about just what you saw in the third quarter and the exit rates here as we're going into 2021, curious what you anticipate seeing most specifically in the European theater in terms of growth here in the fourth calendar quarter. Do you think that We see additional spikes, and is that kind of what we need to bake in, or is it an environment now that can manage through any flare-ups that you're seeing there? Just curious, you know, again, a little bit more about what's built into the expectations for the fourth quarter from a top-line perspective.

22:07 And then similarly, if I could, maybe just for my follow-on with Renee in terms of your cash flow break-even commentary, Could you just update us again when you expect to achieve those levels? I mean, clearly you're getting much better leverage now. You've done a great job of expense management. Just curious if you plan to spend some of those savings or that initial target on cash flow break-even could be pulled forward somewhat. Thank you.

22:34 Hi, Chris. Thanks for the questions and thanks for joining us today. Certainly, as we went through the third quarter, we saw strong performance in Asia Pacific and Europe as those countries responded well to the pandemic and came back online. Latin America was certainly behind that, but we've seen improvements as well in month-over-month improvements. As we think about the guidance that we gave for the fourth quarter and full year, we're factoring in a variety of Thank you for joining us. continue to operate. But as your question implies, we're watching it closely, and we'll have to see how the rest of the quarter plays out.

23:47 As you, in your second question, asked about cash burn, I'm very happy with the team's response to this year and everything that we've been juggling, and it's great to see that we can restrict cash burn when needed. But we also fully appreciate that we will want to continue to invest in research and development and new product innovation so that we can continue to bring amazing products to this industry. So I'm not going to specifically comment on when I think the cash burn is going to turn profitable or turn positive, but I'm extremely excited with what we've done this year and look forward to getting there. Thank you.

24:35 Thank you. Our next question comes from the line of Matt Taylor with UBS. Your line is now open.

24:43 Hi. Thank you for taking the question. So, Rene, maybe one for you. I was wondering on the Q4 guidance if you could help us understand between Q3 and Q4, how much stocking do you think there was for some of your distributors? Did that help you in Q3, and are you expecting a similar More or less benefit in Q4?

25:07 You know, our Q3 results, most of our distributors are ordering based on sales forecast for future quarters. I would not indicate that there were restocking or replenishments there. I think we're very happy to see the activity that's coming from our distributors, and we're talking with them on a monthly basis. So, you know, when I look back at Q3 and look back at it in comparison to the prior year Q3, gave some commentary where we're really seeing it sort of return to normal, both not only the balance of direct versus distributor, but then also some of the geographic stuff. So I was happy to see business returning that way.

25:50 Okay. And can you speak a little bit to the outlook for surgical schedules? Have you talked to your customers yet? Do you have any beat on how things are looking early into next year relative to the pre-COVID baseline?

26:07 Yeah, Matt, what we are seeing is that the business continues to progress well. And while we continuously have seen as well these flare-ups in different areas of the world, what we have found is that surgeons have gotten really good at adapting to the situation. The way they are conducting online consultations, the way they are providing very safe protocols for patients to come in when they need to, everything they're doing around providing safe protocols for the surgery procedures to take place. All of that is going on. The situation is very different from last spring. What we are seeing now in Europe, we have seen in other places at different times.

26:54 I think By now, the plastic surgery community is well adapted to the situation. So, of course, we're monitoring things literally week to week over those 80 countries. But we feel confident of where we are in terms of patient demand. And the online search activity supports that confidence. Great. Thank you. Thank you. And our next question comes from the line of Raj Denhoy. with the Jefferies. Your line is now open.

27:27 Great. Thank you. Good evening. I wonder if maybe Juan Jose can start with you on Flora, you know, rolling out, I guess, the E-Mark later this year, by the end of this year, and then the U.S. at some point next year. Maybe you can give us some of your thoughts around, you know, how quickly this could start to take share and, you know, that $225 million market opportunity described, you know, what would be a reasonable expectation for you over the next, say, call it 12 to 18 months?

27:52 Yes. Thank you, Raj. Well, look, we are, of course, super happy that we got the C mark for Motiva Flora earlier this year. We are conducting pre-marketing activities, and we're doing that in preparation of a broader commercial launch in 2021. What we have seen so far in the different centers where they are using Motiva Flora is that they are commenting on its ease of use, and patients reporting overall satisfaction and comfort with the device. Now, we need to educate surgeons about the unique features of FLORA, including what this bioengineer surface means, if you pair that surface in the tissue expander ahead of the use of our Motiva implants, and then also there's that integrated RFID port that is MRI compatible. So we're doing a lot of good work to measure the benefits because, of course, what we want to be able is to bring to market once we fully launch this at the right price point.

29:04 So I think that we're not in a hurry to do this. I think when we see the sales in the past that we've had of breast implants in reconstruction, it's been very low for us because we've been focused mostly on aesthetics. But the plan is next year that as we start bringing to market this Motiva Flora, we're also going to be bringing to market the ergonomics implants, for instance, for breast reconstruction. Now remember, most of the countries in Europe for reconstruction, you're talking about government contracts, hospital contracts, and that takes time. So although we may... Do a broad launch in the first half of next year.

29:52 Do remember that we have to go through the process of how contracting takes place.

29:59 That's helpful. Maybe just also on Europe, maybe I have to follow up there. There was a report, which I'm sure I think you guys actually sent around out of a European commission recently, again, on textured implants and their association with ALCL. You know, it's not something that seems to be getting a lot of focus, at least not as much as it used to get. But maybe you could describe a bit about what you're hearing on the ground in terms of, you know, how much, you know, are these issues with textured implants still pushing surgeons to move towards Motiva? You know, is that still a very active process, you think, or sort of through the worst of that in the sense that people have sort of already voted where they want to be in terms of their implant choice and these reports are really just sort of nothing new in maybe physicians' minds?

30:42 As you well know, we were the company that saw this coming a decade ago, and that's why we created that proprietary bioengineered surface. What I would say is that what we have seen last month is more of the same. What we are talking is about regulators placing another set of restrictions. First, we saw earlier last month The TGA in Australia taking out of the market two macro-texture devices and polyurethane implants completely out of the market in Australia. And then this committee report, the Shear Committee, which is basically a committee of the European Commission that looks at safety issues.

31:27 What they are highlighting and what's particularly interesting there is that they are calling out on the association between textured implants and ALTL. As you know, according to ISO 14607, we are a smooth surface. We do think that this purge of unsafe devices is good for the industry, is going to bring us closer to the patients and closer to women who are worried about these devices. Just like we've done over the last few years, we will continue to push the message of safety and trying to gain as much market share that we can because of that superiority.

32:06 It's helpful. Thank you. Thank you. And our next question comes from the line of Josh Jennings with Cowling. Your line is now open.

32:16 Hi. Good evening. Thanks for taking the questions. I want just two questions. First, on the FDA trial, I think with your symposium and the stellar data that was presented there, it's catalyzed some questions from investors around when we could see data from the Thank you, Josh. One of the

33:04 Really good things in terms of the progress is the fact that half of the patients in the aesthetic cohorts have now reached their two-year anniversary of their surgery. So that shows the progress that we are making. Now, we are, of course, we're looking very much forward to showing our data because we believe that data will be consistent with what we have seen outside of the United States. However, all of these things are ongoing. The conversations with the FDA are part of that, and we do plan to show our progress as soon as it is possible. But those conversations keep on going with the FDA.

33:49 We'll let you know as soon as we know some of the, I would say, clear images regarding this.

33:58 Understood. Understood. Thanks for that. And then just thinking about China, I mean, huge market opportunity you're going to unlock. I was hoping you could just share with us what's left in the regulatory process for China FDA approval, if that's the pathway you guys are taking. And should we be expecting approvals in China when they happen for ergonomics to MEA and FLORA, or what will be the initial implants? or devices that will be approved with that initial opening up of the China gate. Thanks a lot for taking the questions.

34:32 Yes, thank you. And of course, for us, the opportunity in China is super exciting. You know, already many patients fly from China to places like South Korea, Japan or Vietnam to get Motiva implants, at least they were doing so before the pandemic. Out of those, in countries like South Korea, 25% of patients used to come from China. We know that our technology is going to fit very well into that market, which is said to be the fastest growing breast aesthetic market in the world, and the one with the highest average selling prices. We just passed our latest round of testing earlier in last quarter, and we continue to make progress.

35:21 We are going to continue working on that product testing that is coming and then complete the remaining regulatory steps. We are expecting approval in the first half of 2022. Those are for ergonomics and round smooth silk implants, but we are planning all of the work that we are doing now with the Chinese regulators to allow us to build on that so that we can bring, of course, Ergonomics II and especially Motiva MIA because we do believe that Motiva MIA is particularly well-suited for the Chinese market. And some of the early experience work that we are doing with Ergonomics II and some of the patient series that we are planning with MIA, they all will be in that same line to eventually use that information for the Chinese market.

36:22 That's great. Thanks for those details. Appreciate it. Thank you. And our next question comes from the line of Marie Theibel with BCIG. Your line is now open.

36:34 Hi. Good evening. Thank you for taking the questions. I wanted to ask one here recalling the symposium you hosted last month and that excellent 10-year data. In light of that, I wanted to hear sort of the feedback you've been hearing from industry and on a related note, Any details you can tell us about establishment labs' ability to pick up new surgeons during COVID?

37:01 Yes, of course. So I think, you know, we've talked about this before, is that for many years our competitors spoke about Motiva implants not having been on the market for long enough to really measure the safety profile of our devices. And because the FDA establishes the studies as a 10 year study, then surgeons tend to look at that 10 year mark very carefully. So of course we have received very good feedback from the plastic surgery community, but also from patients that have had these devices now for 10 years. So we are very happy to show in that symposium, for instance, the results of patients who've had the devices for that long. So that's definitely very helpful for us.

37:55 And it also allows us to really go into our medical education platform and to Motiva Edge with that message of 10 years in the market with that amazing safety data. And just to remind everyone, so far this year, we've had over 19,000 plastic surgeons trained using Motiva Edge. And out of those, thousands of new accounts. So I think that, of course, we want to get those new accounts to start using Motiva as quickly as possible. We are working towards that. But it does show that there is a strong connection between the safety data, our ability to conduct online education, and eventually turning that into new accounts.

38:41 That's great. Thank you for that. wanted to ask a follow-up on MotivaMia. Good to hear that you'll be expanding into patient series in Latin America. But I wondered, where is this taking us in terms of sort of the timeline for MotivaMia? When might we see kind of data from that patient series, and then what is the plan for, I guess, formal trials in the regulatory process? Thank you.

39:08 Yeah, thank you. And what we want to be able to do with these patient series is to not only expand the number of patients who have received Motivamia, but also look at different geographies. So we started the series in Asia with some patients getting Motivamia in Japan, and the plan now is to turn those series also to Latin America so that we can learn how fast Can plastic surgeons begin doing this procedure? Because in a way, it's a simpler procedure, but it's different. So we want to learn about that. How can we make this procedure replicable?

39:55 Because we're setting a new standard for minimally invasive breast augmentation. And of course, we do plan to expand our series in Asia to Thailand so that we can also see in another market in Asia, how does that relationship Thank you for joining us. How can we get women who are currently using padded bras but not thinking about a breast augmentation because that's not what they want to eventually see this as an option?

40:50 And I think that's one of the key things in this whole equation and one that we are working on very hard. So I would say, Marie, is we will show data as soon as we can, but most importantly, We already have the safety data of the surface. We are talking about implants manufactured under the same conditions as the rest of our products, so we are fairly confident on that side. It is mostly about getting to the final details of the surgical procedure and then how do we teach this to surgeons all over the world.

41:30 Makes sense. Thank you, Juan Jose. Thank you. Our last question comes from the line of Amit Hazan with Goldman Sachs. Your line is now open. Hi, everyone. This is Phil on for Amit. Thanks so much for taking the question. I thought I'd start maybe for Rene. It's a question around cost controls and the great job you guys have done with OPEX so far this year. I'm wondering how durable some of those cost savings might be as we look out to 2021 and Maybe how those are going to be related to a resumption and procedures and a ramping back up of sales next year.

42:07 Yeah, thanks, Phil. Yeah, I mean, we've been very pleased with this year and how the team has worked diligently across all departments of the organization, thinking about different ways to do things differently. I think not unlike many other companies, sort of reevaluating how we do business in the most efficient manner and yet while still delivering on our growth targets and our innovation product pipeline. So, you know, we will obviously, you know, costs will come back in as growth continues to ramp, but I think we've learned a big lesson this year and I'm hopeful that some of those are going to stick. You know, some of the cost controls that came in You have to keep in perspective that they are volume-based so that they will just automatically come back when revenue continues to grow.

42:59 But again, I think things like travel or events or, again, just different ways of working with our vendors or consultants, I'm really pleased to see the sort of new culture that we've adopted. That's great, Kyla. I appreciate it. I think the second one Looking to 4Q, certainly appreciate the conservatism you guys are taking, given all the question marks ahead. I'm wondering if a 30% growth number on 21 right now from the street is an appropriate place to start as you guys think about the recovery and the visibility that you have maybe in light of some of the developments today. Thanks a lot.

43:38 Yeah, it's a good question, and I totally appreciate it. I think we're still finalizing our 2021 annual operating plan, which includes real-time assessment of business conditions in all of the countries that we operate and how the pandemic is happening and flowing through. So at this stage, I'm not going to be able to give too much more color to that, but we're trying to be really thoughtful in this process, and we're just excited with the results that we've seen today. All right. Thanks a lot. Thank you. and this does conclude today's question and answer session. I would now like to turn the call back to management for any further remarks.

44:23 Thank you for joining us on today's call. We look forward to providing our next quarterly update early next year. Have a very good rest of the day and please stay healthy. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.