Vericel Corp Q3 FY2021 Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to Vericel’s Third Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. I would like to remind you that this call is being recorded for replay. I will turn the conference call over to Eric Burns, Vericel’s Head of Financial Planning and Analysis, and Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Vericel’s third quarter 2021 conference call to discuss our financial results and business highlights. Before we begin, let me remind you that on today's call, we will be making forward-looking statements covered under the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations and are described more fully in our filings with the SEC, which are available on our website. In addition, all forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Please note that a copy of our third quarter financial results press release is available in the Investor Relations section of our website. We also have a short presentation with highlights from today's call that can be viewed directly on the webcast or accessed on our website. I am joined on this call by Vericel's President and Chief Executive Officer, Nick Colangelo; and our Chief Financial Officer, Joe Mara. I will now turn the call over to Nick.

Thank you, Eric, and good morning, everyone. Despite additional COVID-19 headwinds in the third quarter, the company delivered solid commercial and operational results and continued to generate top-line revenue growth, positive adjusted EBITDA, and operating cash flow for the quarter. The spread of the Delta variant and the resulting disruptions to healthcare networks and patient behavior dynamics clearly impacted MACI revenue in the quarter. However, the key underlying growth drivers for MACI remained very strong, and Epicel had another outstanding quarter with revenue growth of nearly 50% compared to the third quarter of 2020. Importantly, from a profitability perspective, the company generated positive adjusted EBITDA and operating cash flow for the fifth consecutive quarter as we continue to drive top-line growth while delivering sustained profitability and cash flow. With respect to MACI revenue, based on historical seasonality patterns, for the second half of 2021 we expected the typical sequential decline in third quarter revenue and strong sequential step up in the fourth quarter. During the third quarter, we saw a significantly greater decline in July than in recent years due to patients deferring procedures as the economy reopened and travel and vacations resumed. While we assumed that we'd start to recapture some of those deferred cases later in the quarter, the expected improvement in the second half of the quarter did not materialize due to the Delta variant resurgence in various regions of the country. The impact on MACI activity was most pronounced in the areas of the country that had the highest COVID-19 case rates and some of our best performing territories are in those regions. Importantly, MACI biopsy growth, as was the case in prior periods of COVID-19 disruption, continued to outperform implant growth. We estimate that as a result of the reopening dynamics and the Delta variant surge, we exited the quarter with a backlog of approximately 150 cases that would have converted to implants under normal conversion patterns, which equates to about $7 million in revenue. We had similar levels of backlog during the initial COVID-19 lockdown in the spring of 2020; and again, last winter. In each instance, we recaptured more than 80% of the backlog cases within one to two quarters. We expect to recapture a similar percentage of the current backlog, although due to continued uncertainty regarding COVID-19 disruptions for the remainder of the year, we believe that this recapture likely will be more gradual and that the majority of these cases will move into 2022. Even so, as Joe will discuss in more detail, we've seen an acceleration of MACI orders in the fourth quarter, and we expect the highest sequential growth in MACI revenue from Q3 to Q4 since launch, and record quarterly revenue to close the year. From an operational standpoint, we're very pleased with the results that we've generated to date with respect to the key underlying growth drivers for MACI, which we believe support its long-term high growth profile. We remain on track to grow the number of surgeons taking biopsies by more than 20% this year to approximately 1,800 surgeons, which is a key growth target for the year. Biopsies per surgeon, another key growth driver, are projected to grow approximately 10% compared to 2020, and overall biopsy growth is expected to exceed 30% for the full year. Looking forward to 2022, we expect continued double-digit growth in biopsy surgeons, an increase in biopsies per surgeon based on continued MACI uptick and the return of more normal patient flow, a normalization of biopsy conversion rates and the timing thereof. With all of our key growth drivers expected to continue to progress in 2022, and with potential for backlog carryover, we expect an acceleration of MACI growth in 2022, assuming that COVID-19 trends do not change materially. We've also achieved important reimbursement enhancements for MACI this year that have further bolstered an already strong reimbursement profile. As a result of the expansion of UnitedHealthcare's medical policy to include patients with patella defects, the number of UnitedHealthcare facilities has more than doubled through the third quarter of this year, compared to 2020. In addition, and as the ASC Payment System Final Rule was issued last week, CMS determined that MACI is one of a small number of procedures that were added to the ASC covered procedure list last year that will remain on the list for 2022. This determination was based on meeting the reinstated general standards and exclusion criteria for the list, as well as the fact that the routine procedures are largely performed in an outpatient setting, and that advancements in clinical practice and less invasive techniques have contributed to allowing these procedures to be safely performed in an ASC setting. While we have limited Medicare business, this determination is important, and certain commercial plans refer to these CMS rules in determining allowable sites of care, so that having MACI on the ASC covered procedure list provides greater flexibility for our customers in selecting the preferred site of care for MACI procedures. Finally, we are also making significant progress on a key lifecycle management program for MACI, the development of a custom arthroscopic delivery system, which we believe is another important step in our strategy of continuing to make MACI even simpler and less invasive for surgeons and patients. We believe that arthroscopic MACI could be a significant mid-term growth driver to further penetrate the $2 billion MACI addressable market by increasing our physician targets beyond those that perform only open procedures and by increasing the number of procedures performed by current MACI surgeons. We're in the process of finalizing the design of these instruments, and we've received very positive feedback from key opinion leaders in the field. We look forward to providing additional details on this important program in the near future. Turning to our burn care franchise. We had another outstanding quarter for Epicel, achieving 48% growth in revenue compared to the third quarter of 2020 and the fourth straight quarter with over $9 million in revenue, which has led to 77% revenue growth year-to-date for Epicel. We continue to see strength across the key growth drivers for Epicel with significant increases in the number of burn centers taking biopsies, the number of patients treated with Epicel and the number of grafts per patient. Given the strong commercial performance, we believe that we're well-positioned to deliver sustained penetration into our expanded addressable market, as we continue to build the second high-growth franchise into a more meaningful part of our overall business. Turning to the NexoBrid BLA. We recently participated in a productive Type A meeting with the FDA and there is agreement on the path forward to address the questions, issues and information requests from the FDA. The Vericel team is leading this next phase of work in partnership with MediWound, and we currently are targeting a BLA resubmission in mid-2022. We remain very enthusiastic about adding NexoBrid to our burn care franchise and look forward to potentially bringing this innovative product to the market as expeditiously as possible. I'll now turn the call over to Joe to discuss our third quarter financial results and updated financial guidance.

Thanks, Nick. Starting with the income statement. Total net revenue for the third quarter increased 7% to $34.5 million, compared to $32.3 million in the third quarter of 2020, and included $23.9 million of MACI revenue and $9.8 million of Epicel revenue compared to $24.4 million and $6.7 million of MACI and Epicel revenue respectively in the third quarter of 2020. Total revenue for the quarter also included approximately $0.8 million of revenue related to the procurement of NexoBrid by BARDA for emergency response preparedness. For the third quarter of 2021, total net revenue increased 38% to $108.6 million compared to the same period in 2020 with MACI revenue increasing 24% to $74.2 million, Epicel revenue increasing 77% to $31.8 million and $2.6 million of revenue related to the BARDA procurement of NexoBrid. As Nick discussed earlier, MACI’s third quarter results were impacted by COVID-19 headwinds. Additionally, when comparing third quarter MACI revenue to Q3 2020, it is important to keep in mind that the third quarter of 2020 was positively impacted by a significant catch-up after the initial COVID-19 related lockdowns, which impacts the year-over-year comparison. We estimate that approximately $5 million of MACI revenue in the third quarter of 2020 was related to the cases that shifted from the prior quarter due to the initial COVID-related restrictions on elective surgeries. So while MACI revenue was down 2% for the quarter on a reported basis, the underlying growth was over 20% excluding this estimated $5 million catch-up in Q3 of 2020, which is more consistent with the year-to-date MACI growth. Gross profit for the quarter was $22.1 million or 64% of net revenue compared to $22.5 million or 70% of net revenue for the third quarter of 2020. The reduction is primarily due to higher non-cash stock compensation expense related to a higher share price, an increase in manufacturing headcount, and our product mix. Total operating expenses for the quarter were $27.1 million compared to $19 million for the same period in 2020. The increase in operating expenses was primarily driven by higher non-cash stock compensation expense, as well as a normalization of spend across all areas of the business as compared to the constrained spend in 2020 due to COVID-19 related factors. Net loss for the quarter was $4.9 million or $0.11 per share compared to net income of $3.6 million or $0.08 per share for the third quarter of 2020. Non-GAAP adjusted EBITDA for the quarter was $4.3 million or 12% of net revenue compared to $6.8 million or 21% of net revenue in the third quarter of 2020. Finally, we generated approximately $4 million of operating cash flow in the quarter. And as of the end of the third quarter, the company had approximately $119 million in cash and investments compared to $100 million as of December 31, 2020, and no debt. Transitioning to our updated financial guidance for 2021. Our previous guidance for MACI assumed that biopsy conversion rates and the timing of conversions would generally be in line with historical patterns or at least normalize by year end and that COVID-19 dynamics would not materially change those patterns versus prior years. With the recent COVID impacts that Nick mentioned earlier, we exited the quarter with a backlog of approximately $7 million worth of cases that in normal conditions would have converted from biopsy to implant this year. Given this disruption in the second half of the year, we now anticipate that conversion rates will not fully normalize until next year and that the majority of our incremental backlog will convert to new cases in 2022. Based on these COVID-related dynamics, we are updating our MACI guidance for 2021 to be in the low 20% growth range for the full year. This change to our full year guidance mainly reflects our updated expectations on the timing or calendarization of when cases will convert to implants, not a decrease in underlying demand as demonstrated by our surgeon and biopsy growth. Although COVID headwinds remain, we have seen an acceleration in MACI ordering patterns to start Q4, and our updated guidance for the fourth quarter implies what would be a sequential increase of over 64% from Q3 to Q4, which represents the highest sequential increase since the launch of MACI and also would represent the highest MACI quarterly revenue to date. With the majority of the incremental biopsy backlog now expected to convert to implants next year, as well as the increases in the other key MACI growth drivers that Nick discussed earlier, we believe that this should allow for a further acceleration of MACI growth in 2022, with MACI full year growth next year expected to exceed this year's overall growth rate. Moving to Epicel. Our updated guidance now anticipates growth for the full year to be in the low 50% range with over $40 million in full year revenue. This revised Epicel guidance represents a full year growth rate of approximately three times our initial growth rate expectations to start the year, and a further increase versus our most recent guidance, as our year-to-date results for Epicel of approximately $32 million have already exceeded our full year results in any prior year. Finally, we expect approximately $3.3 million of NexoBrid BARDA related revenue for the full year. In total, this brings our full year 2021 revenue guidance roughly back to where we started the year, which at that time did not assume significant headwinds from COVID-19. We now expect total revenue in the $158 million to $161 million range representing full year growth in the range of 27% to 30%. Apart from 2020, which was more severely impacted by COVID-19, this would continue Vericel’s strong track record of generating over 25% growth for the company each year since the launch of MACI. With our updated revenue outlook, we now expect full year gross margin to be approximately 70% and full year adjusted EBITDA margin to be approximately 22%. We expect our operating expenses to be approximately $114 million, slightly below our previous guidance of $115 million. Importantly, our adjusted EBITDA guidance for the full year would essentially double our adjusted EBITDA of approximately $19 million in 2020, demonstrating the continued strengthening of the overall financial profile of the company. Looking forward, we expect that both our gross margin and adjusted EBITDA margin will further increase next year as the company's profitability profile continues to progress. This concludes our prepared remarks. We will now open the call to your questions.

Please state your question. Your first question comes from Ryan Zimmerman with BTIG.

Hey, good morning. Thanks for taking the questions. So I want to ask first on MACI biopsies a little bit. I appreciate the conversion dynamics pushing into the next year. But you guys were on track, I think for greater than 50% growth in the past and the first half of 2021. Now you're talking about maybe 30% growth for the year. So can you just discuss what you saw this quarter and then what your expectation really is on biopsies in the fourth quarter based on your run rate for the year?

Yes. Thanks, Ryan. I'll start and Nick can chime in. So, on the last call, what we talked about was through the first half of the year we'd seen roughly 50% or more when you look at that year-to-date biopsy growth. I would also say, on the last call we talked about MACI kind of in that 30% plus range on revenue. So there was a bit of a disconnect as we were seeing biopsies come through in the first half of the year, and that was compared to 2020, which obviously had some COVID impact in the first half of the year. When you look more broadly, what we're saying is on a full year basis now we expect biopsies to be over 30% for the full year. In the third quarter, we did see some disruption in the healthcare systems, but biopsies were close to what we saw in the prior quarter. If you look at the first three quarters of the year and compare those to 2019, which is a cleaner comparison, you see growth rates of over 30% across all those quarters. So that gives you a sense of where we are year-to-date and supports the 30% expectation for the full year.

Okay. And then Epicel is becoming a more material portion of the business. I think back a few years and that necessarily wasn't the case. But now the growth rates have become pretty material. Nick, as you think about Epicel next year in a normalized environment, how do you think about the growth rate that can sustain for an Epicel-like product that you're now seeing such growth from?

Thanks, Ryan. This has been an outstanding year for Epicel. As we continue to focus on the growth drivers of increasing the number of biopsying and grafting burn centers, treating more patients, and maintaining higher utilization of grafts per patient, that will form the basis for growth going forward. It would be premature to commit to a specific long-term percentage like 50% year-over-year, but we certainly expect Epicel to continue to grow as we broaden the user base and deepen penetration into those centers. We're not prepared at this point to give guidance for next year; we'll do that early next year. But we do expect continued growth for Epicel in the years ahead.

Your next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann.

So, a few familiar ones. Firstly, could you talk about United and patella defects and give us a sense of what percent of your revenues that may be or how large the patient pool is?

Yes. As we mentioned earlier this year, UnitedHealthcare did expand its medical policy to include patella cases. UnitedHealthcare is the largest commercial payer in the U.S., representing about 15% of commercial lives. The approval rates now for United cases for patella are basically on par with other plans and non-patella cases. At a high level, you can think about the percentage of our business represented by United as roughly in line with their share of commercial lives, about 15%.

And could you talk a little bit about the arthroscopic delivery tool? Would that be a Class II filing? And what would you expect as far as uptake from the surgeons out there? Would you expect that to turn into a majority of cases or maintain a minority?

It's premature to forecast what percentage of cases would be done arthroscopically versus through the mini-arthrotomy. Taking a step back, this is another step on the path we've been taking with this franchise—moving from Carticel to MACI made a highly invasive procedure less invasive. Over the past couple of years, we've had sizing tools available for more uniform defect debridement and implant, which has become very popular. Arthroscopic delivery, being less invasive and potentially simpler, continues that journey. You often see in the industry that highly invasive surgeries become minimally invasive over time and that fuels growth. Last year, we focused on demonstrating that cell viability is not impacted through arthroscopic delivery. We've been able to do that through feasibility studies and demonstrated that you can meet minimal cell number and other release criteria for MACI when it's delivered arthroscopically. The next part of the project is designing instruments; we've been working closely with a group of our key opinion leaders on instrument design this year. We expect to finalize the design of the instruments by the end of the year. Whether it's a Class I or Class II device will depend on whether the disposables are reusable; that's a question we're still considering. We're very pleased with the prospect of an arthroscopic delivery method. There are two dimensions to its impact: First, there are surgeons who only do open procedures but perform high volumes of cartilage repair; arthroscopic capability could open up part of the addressable market to them. Second, current MACI users may identify additional patients with an arthroscopic alternative. We're excited about it and will provide more details early next year as the project proceeds.

And then lastly, could you talk about any activities or any ongoing activities outside the U.S. for the two products as far as any channels or agreements in place?

We're principally focused on the U.S. market. When we acquired this business, MACI was approved in the EU, but that would have required manufacturing changes to our U.S. plant which would have impacted U.S. production. As we expand capacity in the future, we can design facilities and clean rooms to meet European requirements and potentially re-enter Europe. The U.S. market by far dominates the opportunity for MACI. For Epicel, because of its shelf life, if we were to go outside the U.S. we'd essentially have to build a manufacturing facility in the relevant geography. So for these two products, we will remain focused on the U.S. market, which provides the greatest opportunity.

Your next question comes from Danielle Antalffy with SVB Leerink.

Just a question, I appreciate you're not going to give 2022 guidance. But talking about MACI biopsy growth rate of 30% plus this year, why is that not the right way to think about MACI growth for next year? Are there other dynamics at play here? I appreciate the conversion rate, but as long as the conversion rate doesn't get materially worse, and you've got the backlog, arguably the conversion rate could be better. Is that the right way to be thinking about the growth outlook in 2022? And then I have one follow up.

I'll start, Danielle. We're not ready to give guidance on 2022 yet. Broadly speaking, as noted in the prepared remarks, we expect continued double-digit growth in the number of surgeons, which is a key driver. We expect biopsies per surgeon to also increase, a normalization of biopsy conversion rates, and we have that backlog moving into next year. Broadly speaking, these pieces point toward a higher growth rate, but the absolute number is hard to say at this point. Certainly biopsies will be part of the growth story for 2022.

Okay. That's helpful. And then just a quick question on where we are— I know this is probably unfair given COVID-related headwinds—but MACI has been on the market now for several years, and I'm curious, Nick, if you could describe what inning you think you are in the MACI launch? I ask because the discussion about seasonality in Q3—when a product is still early in the adoption phase, you're usually not dealing with seasonality as much. So curious about where we are in the MACI launch.

We believe we remain in the early innings—maybe the third inning rather than the second. The primary growth driver is increasing biopsying surgeons; this is the first full year we've had our expanded salesforce in place. We expect to increase biopsying surgeons by 20% to about 1,800. In 2019, our third year of launch relative to our initial 3,000 target, we grew biopsying surgeons by 25% and reached about 50% penetration on a cumulative basis. We think there are still years of growth ahead for biopsying surgeons. Other dynamics will become dominant growth drivers: increasing biopsies per surgeon, which occurs when surgeons identify more patients they believe are good MACI candidates, and then conversion rates—once normalized—tend to be higher among more experienced, higher-volume surgeons. Putting all of that together, and knowing there is no major competitive threat on the near horizon, we expect years of growth for MACI going forward.

Your next question comes from Sam Bordovsky with Truist.

Hi. Thanks for taking the questions. I'll start with the MACI side of the business. I'm curious to hear how you think about the newer reps there in terms of where they are relative to peak productivity? And more broadly, how you think about peak productivity for that side of the salesforce and some of the productivity gains that were made last year with the new tools introduced?

I'll take that, Sam, and Joe can add commentary. We had our largest salesforce expansion in 2020, going from 49 to 76 reps. Even during this disruptive period, that cohort of sales reps has been leading the country in terms of growth in new biopsying and implant surgeons, which is what you'd expect when bringing experienced reps on board. We're pleased with that expansion. By the end of next year we'll evaluate whether additional expansion is justified. Regarding productivity per rep, we had about $2 million per rep in 2019. As we expanded, we expected productivity to fall back toward the lower end of the historical range—around $1.7 million per rep, which is where we were in 2017—but absent COVID we expected to exit 2020 around a $2 million run rate. That got pushed out because of COVID-19. We expect to be back to that level by the end of 2021. If you look at consensus estimates with 76 territories and roughly $150 million in MACI revenue, that aligns with a productivity level around a couple of million dollars per rep. If we do not expand further, productivity per rep should increase as we grow.

Great. And then on the Epicel side of the business—any updates on where you are in expanding the salesforce, and how we should think about that moving into 2022?

At the end of last year, on Investor Day, we outlined expansion plans ahead of a potential NexoBrid launch. At that time we planned for a larger footprint in support of NexoBrid with more clinical support specialists. Given the strong ramp with Epicel, we've added positions this year and are up to about 7 territories, 6 clinical support specialists, and a couple of management leaders. As the timing of a potential NexoBrid launch becomes clearer next year, we'll complete the expansion ahead of that, and it will be roughly in the range we contemplated earlier.

Your next question comes from Swayampakula Ramakanth with H.C. Wainwright.

A couple of quick ones. First, thank you for explaining some of the issues you faced because of COVID-19, especially for MACI. You said some of your best performing areas were impacted in the third quarter. Can you comment on those specific areas and how they are experiencing things in the fourth quarter now?

There were two main types of COVID disruptions in Q3. One was the reopening dynamic as the economy reopened and people began traveling and resuming activities, which led some patients to defer procedures. We expected to recapture some of those cases, but that’s when the Delta surge occurred—particularly in the Southeast, Southwest, parts of the Midwest and West—leading to further disruption. From a patient perspective, that dynamic has probably mostly passed, though individual patients continue to make choices about timing. The other aspect was institution-level restrictions: some healthcare systems or institutions paused elective surgeries or limited the number of elective surgeries surgeons could do in those facilities. That happened sporadically around the country. For the most part, those restrictions have been resolved, and we don't expect to see much of that in the fourth quarter, although we cannot predict future developments.

If I heard correctly, you said there is a backlog of approximately $7 million now, which you think could be spread into the first quarter of 2022. If that is the case, generally the first quarter is one of the weaker quarters historically. Do you think the first quarter of 2022 will look better than historical first quarters?

R.K., it's difficult to predict exactly how those cases will flow through. We are thinking about the first half of 2022 for recapture, with cases likely spread into Q1 and Q2. As we get into guidance conversations next year, we'll have a better sense of seasonality. It really depends on how things normalize from a healthcare and COVID perspective.

You said during the third quarter of 2020 there was a $5 million catch-up impacting year-over-year metrics. Can you comment on what the catch-up was during the fourth quarter of 2020, if there was any?

We were referring specifically to the third quarter of 2020 when discussing the V-shaped recovery that affects year-over-year comparisons. That catch-up related to cases that shifted from the prior quarter due to initial COVID restrictions. It was primarily a Q3 2020 phenomenon when comparing to Q3 2021.

I understand. I was just trying to see if you identified any anomaly in Q4 2020.

We have a slide in our accompanying presentation on Slide 6 that shows the recovery periods for the initial surge in spring 2020 and what we saw over the winter. The tricky part is that these impacts did not line up cleanly with quarter boundaries. The last two weeks of December in 2020 didn't have the case schedules they might have had historically, and that effect drifted into January and early February. So it crosses quarters and years, which makes it harder to pinpoint to a single quarter. But as Joe mentioned, we expect recapture to happen in the first half of 2022, and it's difficult to predict exactly when individual patients will decide to move forward.

Your next question comes from Chris Cooley with Stephens.

If I may, I want to touch briefly on the MACI shortfall in the quarter. I fully appreciate the COVID headwinds. But curious if you see anything underlying this beyond COVID, specifically changes in physician practice protocols. We've seen some clinician shifts, more bias in favor of single versus multiple use on hyaluronic acid. Just curious if you're seeing any subtleties in how physicians are thinking about addressing these patients, either from a staging perspective or pulling them through the process that might have made this more pronounced? Also, I have a quick follow up.

There are two dimensions to the COVID-19 impacts. One is physician- or institution-based. From a physician perspective, we have not seen any impact on physician enthusiasm for MACI. That's reflected in biopsying surgeon growth, which is a strong indicator of physician interest. There were institutional issues where some systems paused or limited elective surgeries during regional surges, which is outside physicians' control. The other piece is patient behavior: our KOLs reported difficulty throughout the third quarter and as early as May getting patients to schedule surgery, as patients preferred to delay procedures while travel and other activities resumed. In the third quarter, patient behavior was more dominant than surgeon behavior in driving the decline. The underlying enthusiasm among surgeons remains strong, and with 5,000 surgeons that are good targets, we expect continued growth from the surgeon side.

Adding to Nick's point, with the underlying growth drivers in place, we believe growth can continue into 2022 and beyond. On seasonality and mix, historically MACI has shown consistent fourth-quarter strength, often representing 35% plus of annual MACI revenue. Given physician and patient behaviors and year-end reimbursement dynamics, we still see that seasonality continuing for the foreseeable future.

Just a quick follow-up. The NexoBrid resubmission is targeted for mid-2022. Can you provide any additional color around your confidence in that resubmission and anything else that needs to be done between now and then?

As discussed on our last call, there are four main things to address prior to potential NexoBrid approval. First, the FDA requested additional CMC information. We're working with MediWound to provide that information and integrate it into a revised CMC module for the resubmission. That involves generating the data and assembling the documentation. Second, the inspection issue related to CMC—FDA inspections outside the U.S.—are now occurring in Israel and Taiwan, and we'll discuss that with the FDA upon resubmission. Third, the FDA referenced observations from GCP inspections; we are reviewing additional details at study sites to respond to their questions. Fourth, a routine safety update will be included in the resubmission. We had a productive Type A meeting with the FDA and agreed on the path forward. That work is ongoing and will be assembled into the resubmission package; our current target is mid-2022.

We have no other questions in queue at this time. I would like to turn it over to management for closing remarks.

Thanks to everybody for your questions and your continued interest in the company. Despite the COVID challenges, the company continues to execute well throughout the year. We expect another year of significant top-line revenue growth, margin expansion, and operating cash flow, driven by both of these high-growth franchises. Given our strong financial profile and portfolio of innovative products in large addressable markets, we believe the company is well positioned for sustained long-term growth. Thanks again for your questions, and have a great day.

This does conclude today's conference. You may now disconnect your lines.