TELA Bio - Q4 2022

Transcript

Operator (participant)

Good afternoon, ladies and gentlemen, welcome to the TELA Bio fourth quarter and full year 2022 earnings conference call. At this time, all participants on the listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Louisa Smith from the Gilmartin Group. Please go ahead.

Louisa Smith (Principal)

Thank you, Lisa. Good afternoon, everyone. Earlier today, TELA Bio released financial results for the fourth quarter and full year 2022. A copy of the press release is available on the company's website. Joining me on today's call are Antony Koblish, President and Chief Executive Officer, and Roberto Cuca, Chief Operating Officer and Chief Financial Officer. Before we begin, I'd like to remind you that during this conference call, the company may make projections and forward-looking statements regarding future events. We encourage you to review the company's past and future filings with the SEC, including, without limitation, the company's annual report on Form 10-K and quarterly reports on Form 10-Q, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward-looking statements.

These factors may include, without limitation, statements regarding product development and pipeline opportunities, product potential, the impact of various macroeconomic conditions, including the ongoing response to the COVID-19 pandemic, recessionary concerns, banking instability and inflationary pressures, the regulatory environment, sales and marketing strategies, capital resources or operating performance. With that, I'll now turn the call over to Tony.

Antony Koblish (President and CEO)

Thank you, Louisa. Good afternoon, everyone, thanks for joining us today for our fourth quarter and full year 2022 earnings call. I'm pleased to report that in the fourth quarter of 2022, TELA Bio continued to deliver strong revenue growth and sales of $11.6 million, up 39% over the prior year, and full year 2022 revenue of $41.4 million, representing 41% growth from 2021 overall. This was despite continued hospital staffing challenges and slower than expected GPO contract uptake, which Roberto will describe in greater detail shortly. Even with these ongoing headwinds, we are encouraged that TELA Bio's OviTex portfolio continues to gain market share quarter after quarter.

Our ability to drive continued revenue go-growth and share capture is a result of our focus on the five factors contributing to top line achievement: sales force size, individual rep productivity, product portfolio, GPO access, and clinical data. I'll spend some time describing how we advanced each factor since the beginning of 2022 and how they impacted our revenue growth. First, sales force size. Given their productivity to date, including through the time of the greatest COVID-19 impact several years ago, we've sought to continue expanding the number of reps selling our products. We entered 2022 with just under 45 sales reps, and our earnings call a year ago announced the goal of reaching 55 sales reps by the middle of 2022 and 60 by the end of the year.

I'm pleased to report that at the close of 2022, we had 61 reps, and as of today, we have a total of 68 on board. I'll talk more about our goals for hiring in 2023 in a few minutes. Another important factor driving revenues is contract access to hospital members of GPOs or group purchasing organizations. In addition to our pre-existing HealthTrust contract and the Premier contract, which became effective on October 1, 2022, we recently announced entry into an agreement with a third national GPO. This three-year dual source agreement extends through January of 2026 and places TELA in the biosynthetic category. We are very pleased with this new contract as it provides us access to a significant number of new hospitals.

It's also important to understand that this GPO is strictly administered, which means that we are getting incremental access to customers we would not have otherwise been able to reach. Our inclusion in GPO contracts allows physicians to utilize our products without having to first go through a hospital's value analysis committee for access. This clears the way for our sales representatives to introduce surgeons to the use of our OviTex portfolio and grow their usage from there. A third factor is the extent of our product offerings. We continue to expand our portfolio of complementary soft tissue restoration and preservation solutions. Most recently, we announced the launch of two larger OviTex LPR device configurations. These are ellipse-shaped products designed for ventral and incisional hernia repair in robotic and laparoscopic procedures, each with a smooth side for placement within the abdominal cavity adjacent to the viscera.

With 40% of reported OviTex cases performed robotically and 20% laparoscopically in the fourth quarter of 2022, we expect these two new larger pieces will allow for even broader usage of our products going forward. At the beginning of this year, we announced the launch of the NIVIS Fibrillar Collagen Pack. This is an absorbent matrix of Type I and Type III bovine collagen designed to manage moderately to heavily exudating wounds and to control minor bleeding. Type I and Type III collagen closely resemble the native collagen of a patient and have been shown to stimulate cellular activity and contribute to new tissue development. Specifically, Type III collagen helps control wound contraction and the amount of scar deposition during wound healing. TELA's NIVIS product is provided in particulate form, allowing it to be molded and packed into wounds to facilitate contact with host tissue.

We're very excited to launch this high-quality product, which is already generating physician interest and promises to be a new vehicle of growth in the future. We also have a robust internal R&D program developing reinforced resorbable synthetic mesh solutions for soft tissue restoration, as well as additional technologies for soft tissue preservation. We expect our collaboration, business development, and internal R&D efforts to continue to provide our sales team with a complementary portfolio of products that will yield great outcomes for patients and surgeons. The fourth factor, clinical data, is a key focus for us because these trials and studies allow us to highlight the effectiveness and benefits of OviTex. In October of 2022, we announced the publication of very positive two-year recurrence data and patient-reported quality of life outcomes from our BRAVO hernia study.

We recently also highlighted 5 other studies published in 2022 that demonstrate favorable results with OviTex in a variety of hernia and abdominal wall reconstruction applications. We are currently enrolling our BRAVO II study, which will capture data on the effectiveness of OviTex when used in robotic procedures. As the use of surgical robot systems in general surgery continues to grow, we believe OviTex is uniquely positioned to capitalize on this opportunity, and we anticipate using the data from BRAVO II to further build on that foundation. Additionally, we are conducting a retrospective study for our OviTex PRS products, which could potentially be used to support expanded label indications. Finally, a fifth growth factor is sales rep productivity. In our most recent analysis, we have continued to see that our newest representatives reach break even within six months of arrival.

This results from a combination of high-quality talent joining TELA in recent years and our Playbook90 training and performance assessment program. As part of this training, reps become proficient in selling both our OviTex and OviTex PRS products to a variety of surgeon subspecialists. We continue to expand the number of accounts that purchase both categories, and when that happens, we experience synergistic productivity gains. Specifically, accounts that purchase both OviTex and OviTex PRS are more productive than the sum of other accounts that purchase only one or the other product categories. That is one plus one equals three or four rather than two. Our reps continually work to leverage this positive dynamic in more and more accounts, and we expect this to contribute to continued growth for TELA.

Before passing it on to Roberto Cuca for more details on the financials and on expectations for 2023, I wanted to provide additional color on the growth of the sales force going forward. A year ago, we were a company with one GPO contract, and we announced plans to expand our sales force from about 45-60 reps over the course of 2022. Today, we have three quality GPO contracts in place, and we are actively pursuing additional targets. To take optimal advantage of these hunting licenses, we have budgeted the hiring of between 15 and 20 additional reps this year, leading to a 2023 year-end total of 75-80 reps. Hiring will be more geographically targeted this year, given our presence in 68 territories already.

We continue to see strong sales rep candidates across the U.S., so we are confident we can grow to this range by the end of the year. Additionally, if we see as many strong applicants as we have to date and their availability lines up with the needs of our new territories, we would be sure to have opportunistic about exceeding the 20 rep target and achieving more aggressive growth goals. We will update you on progress on this front in our quarterly calls over the course of the year. With that, I'll turn the call over to Roberto.

Roberto Cuca (COO and CFO)

Thanks, Tony. As Tony mentioned earlier, revenue for the fourth quarter of 2022 increased 39% year-over-year to $11.6 million, during which OviTex revenue grew 29% year-over-year and OviTex PRS grew 72%. We continued to see a headwind in the form of staffing constraints with procedure volumes still below pre-pandemic levels, but we also experienced a transient contracting challenge which we now believe has been corrected. Specifically, the effectiveness of the new GPO contract on October first had two impacts. First, any hospital member of the new GPO that had already been buying our products now received a discount, which on its own would have just decreased revenue. However, a second effect is to open up many new hospitals to the use of TELA products without the need for prior value analysis committee approval.

We had expected that increased volume would more than make up for the ASP pressure in the fourth quarter. What we found was that hospitals were administratively slow to implement the new contracts, which led to a delay in the volume uptake. This administrative challenge seems to be resolving with the incremental volume manifesting in the beginning of 2023. Gross margin was 70% for the fourth quarter and 65% for the full year. The quarter's gross margin was driven by the cost of goods of product actually sold within the quarter, as well as amounts reserved for expected expiration for inventory received within the quarter, whether or not it was sold within the quarter. Because of the holidays and our manufacturer's seasonal shutdown, we typically receive less inventory in the fourth quarter than in any other quarter.

We expect gross margin in the first quarter of 2023 to step down from the fourth quarter, although the full year should show improvement from 2022. Sales and marketing expense was $11.6 million in the fourth quarter of 2022, compared to $8.3 million in the same period in 2021. This increase was mainly due to higher salary, benefit, and commission costs as a result of the expansion of our commercial organization, higher travel and consulting expenses, and additional employee-related costs due to increased headcount, particularly in our customer-facing roles. General and administrative expense was $3.2 million in the fourth quarter of 2022, compared to $3.3 million in the same period in 2021.

R&D expense was $2.7 million in the fourth quarter of 2022, compared to $1.7 million in the same period last year. The increase is primarily due to an in-process research and development charge, higher salary and benefit costs due to an increase in headcount, as well as increased consulting and study costs. Loss from operations was $9.4 million in the fourth quarter of 2022, compared to $7.7 million in the prior year period. Net loss was $10 million in the fourth quarter of 2022, compared to $8.6 million in the same period in 2021. Turning to the full year, 2022 revenue was $41.4 million, an increase of 41% compared to $29.5 million in 2021, excuse me.

2022 gross profit was $27 million compared to $18.8 million in 2021, an increase of 44%. Sales and marketing expense were $43.4 million for the full year. G&A and R&D were $13.9 million and $8.9 million, respectively. Loss from operations was $39 million in 2022 compared to $29.5 million in the prior year. Net loss was $44.3 million for 2022 compared to $33.3 million for full year 2021. We ended 2022 with $42 million in cash and cash equivalents. Turning to the outlook for 2023. We anticipate revenues to be in the range of $60 million-$65 million, representing growth of 45%-57% over the full year of 2022.

I'll now turn the call back to Tony for closing remarks. Tony?

Antony Koblish (President and CEO)

Thanks, Roberto. As you've just heard, our momentum is strong, we see no signs of it slowing in 2023. In fact, based on our guidance, we are expecting it to accelerate and for good reason. In 2022, we established a second key GPO agreement quickly, followed by another important national GPO win in early 2023. We expect to start to see the impact of those agreements over the course of 2023. We also now have impressive two-year BRAVO data in hand. We were able to open many eyes regarding OviTex with our solid one-year data, so we look forward to educating surgeons about these even longer-term efficacy benefits. In 2023, we have even more products to offer and additional reps in the field to detail them. We are in the very early days of penetrating an estimated $2.2 billion market opportunity.

Even having posted impressive growth, revenue growth for successive years since going public, our sales still comprise a relatively small percentage of the total addressable market. That is extremely exciting to us, as we believe we have the best combination of proven performance, safety, and value of any surgical repair solution on the market. I'd like to thank all my colleagues at TELA for making 2022 a tremendously successful year and helping to get 2023 off to such a great start. With that, I'll now ask Lisa to open the line for your questions.

Operator (participant)

Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. One moment while we compile the Q&A roster. Our first question is coming from Frank Takkinen of Lake Street. Your line is open.

Frank Takkinen (Senior Research Analyst)

Hey, guys. Thanks for taking my questions. Congrats on all the progress. Wanted to start with one on as it relates to the guide. I heard the comment of incremental volume manifesting thus far in 2023. Maybe could you start with giving us a little more color into how the first quarter is shaking out? Two, maybe just give us a feel for a quarterly cadence throughout 2023 as these developments start to hit the model more robustly.

Roberto Cuca (COO and CFO)

Sure. Thanks, Frank. We did not provide specific guidance on the first quarter, although what we're seeing is a reasonable strength, suggesting that the uptake we were expecting volume-wise from the new contract that became effective on October first is beginning to hit in the first quarter. We are positively encouraged by that. As far as cadence, we expect to see a similar type of cadence across the quarters over 2023, with, as usual, the fourth quarter being the strongest. As you'll note, though, the fourth quarter of this past year was not quite as strong comparatively to the rest of the years it had been in years past. That, we believe, was due to some headwinds, affecting surgical volumes.

We expect the basic cadence to remain the same over the course of the year.

Antony Koblish (President and CEO)

Yeah. I'll add a little something, Frank. You know, since the COVID situation started, hernia has been the more impacted by the ups and downs of staffing and OR time. I think we saw that throughout last year. One nice element that we're seeing in Q1 thus far is hernia has been strong. Hopefully, that's a great signal that we can get all of our products, you know, growing in a clean environment like they can and should based on our development and execution against the five factors.

Frank Takkinen (Senior Research Analyst)

Got it. Okay, that's good color. My second one on the sales force hiring. Looks like that you front-end loaded the hiring this year thus far. Can you maybe talk about how you're thinking about the cadence of hiring throughout the remainder of the year?

Roberto Cuca (COO and CFO)

Just to be clear, we finished last year with 61, and we're now currently at 68. We have seen good progress in the hiring. It's not clear that the full-year hiring will be quite as front-loaded as it was last year. If you think about it, we began 2022 with just under 45 reps, and we've always talked about having a mature sales force size of something on the order of 90-100. More than half of our territories were still open. We put in 15 reps over the course of last year and an additional eight at the beginning of this year. It's going to become, you know, we'll need to be a bit more targeted in placing further incremental reps.

The timing could be a bit more stretched out than it was, last year.

Antony Koblish (President and CEO)

Again, I'll add a little bit of color. I'm really bullish on the talent pool that's coming to us. Our regional manager talent is just exceptional right now. The new team that we're putting in place, spliced on to the old team is just really, really good. I think they're helping us even up our game even more in attracting and hiring excellent reps. You know, I think we're in a great position to take our time and make sure that we fill each one of these location territories with the best possible talent and then align that, as Roberto said, with the GPO access, which is now broad.

Frank Takkinen (Senior Research Analyst)

Okay, great. Maybe last one. A little extra color on the third GPO. Sounds like there's some unique characteristics here being dual source and highly compliant. Maybe just talk about how you expect uptake...

Antony Koblish (President and CEO)

Yeah.

Frank Takkinen (Senior Research Analyst)

Within this third GPO as it compares to the other GPOs you've contracted.

Antony Koblish (President and CEO)

Well, let me start by saying, you know, we've never implemented a GPO in a clean environment, right? HealthTrust started as COVID started. I think we're learning. Maybe the Premier, you know, uptake, I think is gonna be a little different than this third GPO. This third GPO does not want us to mention their name, so we will certainly abide by that. But they are a smaller GPO, roughly 150 or so hospitals, but very disciplined, tough, I would say, and compliant. Getting on contract there, I think, shows the value proposition that our product offers. The character of all of our GPO contracts as they, as they become available to us and we win them, are getting better and better. I think this last GPO is a good example.

We're in the biosynthetic category, which means we can compete almost across the whole portfolio of hernias, which is great. It's a dual source contract, which means many competitors are eliminated, including the market leader, which is unbelievable. That shows we're in rarefied air, good company, and that means we have an 80/20 sort of ratio to compete for. Theoretically, over time, you know, we can compete for at least 80% of that business, and again, that's tied to, you know, what we believe is tiered pricing for volume. You know, we're getting contract structures now that are usually reserved for the big incumbent dominant players. I think that means our product set is special, and we're delivering great value.

You know, that said, you know, we're still feeling our way to understand the best implementation process and the length of time that it takes. Right now, my best guess to be, I hope, conservative, is somewhere in that three to six-month period, we'll start to see these contracts get rolling. I think that's probably the rule of thumb that we should use going forward.

Frank Takkinen (Senior Research Analyst)

Okay. That's great color. Thanks for taking the questions, and congrats again on all the progress.

Antony Koblish (President and CEO)

Thanks, Frank.

Roberto Cuca (COO and CFO)

Thanks, Frank.

Operator (participant)

Thank you. One moment while we prepare for the next question. The next question is coming from Matthew O'Brien of Piper. Your line is open.

Speaker 7

Hey, this is Phil on for Matt. Congrats on the quarter, and thanks for taking our questions. I guess just to touch on Q4 performance and specifically as it relates to the less than expected volumes from Premier. Were there any particular reasons for the volume miss in that GPO specific to Premier? Has that ASP discount rolled off at this point?

Antony Koblish (President and CEO)

Well, two parts. When we sign up a new GPO, when we enter into contract, it's often the case that we're already selling to some of the hospitals in that GPO. We may have gone through the that committee already. Those units that previously would have been a price X will now go through at a slightly lower price because of the discount. That discount takes effect as of the first day of the contract. Compared to the day before, you have a little bit of an ASP headwind.

The big bonus of a contract is it opens up a lot of new hospitals to purchasing because physicians can access the products without going through their back, assuming that each hospital has administratively entered the terms of their contract into their purchasing systems. What we found is that over the course of the fourth quarter, that process, hospital by hospital to get our products into their systems under the new contract took a bit longer than we were originally expecting. That seems to have resolved itself by the end of the quarter, such that we're now seeing the sort of volume we expected to hit earlier coming through in the first quarter.

You know, it was a transient challenge, and something that we've now worked through and a learning that we're gonna be applying to our future contracts going forward.

Speaker 7

No, that's helpful. Thanks for that color. Shifting gears here, just wanted to touch on that mostly hernia-related backlog. You know, assuming you haven't seen much, if any of that recapture, can you speak to how large that backlog is? I think you characterized it at about 100,000 procedures in the past. Maybe when we can start to see hospitals operating above 100% call it in order to start to work through that and recapture some of that backlog.

Antony Koblish (President and CEO)

Yeah. Maybe I'll just start with the methodology for, you know, for analyzing that number. There is not clean data on this. We took, you know, third party purchase market research and just did an analysis, sort of an area under the curve analysis, pre-pandemic, post-pandemic, and came up with that estimate. You know, as we saw 22 unfold, it did not look at all like we were catching up. In fact, it seemed like we were behind for the whole year on pre-pandemic levels. I'll drill into a regional local example. You know, we have a general surgeon that we collaborate with who's sort of transitioning to management for a decent sized New England-based regional health system. He explained it to us this way, particularly to the hernia practice or service up there.

He said, "Look, we're running about 85% of pre-pandemic, which means that the backlog just continues to grow and maybe roll forward. We'd have to be running 115% to pre-pandemic levels to catch up. That's just not gonna happen given nursing shortages, challenges, and frankly, reduction in OR block time." Hernia is susceptible to that. I think if you apply that lesson across the 100,000 and a more national view, you're probably not looking at a bolus that's gonna come through this system. I think what you're gonna do is slowly crawl your way up from 85% back to par and then slowly get beyond par, maybe over time, as the labor and OR block time challenges sort of sort themselves out over the long term.

I think what we have is a rolling situation where it's just gonna roll forward. The way we're looking at it is this is a permanent situation. We've proven that we can grow and execute, you know, in a much worse environment earlier in the pandemic. Our job is to figure out how to grow like this is gonna roll forward for the next several years, and that's the way we're treating the situation.

Speaker 7

No, that's very helpful. I guess just one quick follow-up to that. In your guidance, are you assuming that that 85% rate or maybe pushing a little bit higher this year and, you know, anything above 85% might be a little bit of upside? Thanks so much.

Antony Koblish (President and CEO)

Yeah. We're assuming our guidance assumption assumes that the availability of operating room space in 2023 is similar to what it was in 2022.

Speaker 7

Got it. Thanks so much.

Antony Koblish (President and CEO)

Thanks, Phil.

Operator (participant)

Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. One moment for the next question. The next question will be coming from Kyle Rose of Canaccord. Your line is open.

Kyle Rose (Managing Director of Medical Technology)

Great. Excuse me. Great. Thank you for taking the questions. I'm just wondering if you could start from a high level. I mean, obviously you've had some big GPO wins over the course of the last, call it 18 months. Maybe just frame where we are in 2023 relative to where we were entering 2022. I mean, you did a great job of, you know, framing out the sales force structure there, but just How many hospitals do you have access to now versus, you know, previously? I guess of the ones you have access to, you know, where does your count base stand? Just kinda help us understand where your team is from actually, you know, putting pen to paper and getting access.

Antony Koblish (President and CEO)

Yeah. I'm gonna say this. I think we have not yet seen the impact of both Premier and this new third GPO contract at all, right? It's starting to happen as we speak. If you look at the one piece of data that we can be solid and have an actual real-life experience, it's HealthTrust, right? HealthTrust started when the pandemic started, and we were unable to implement there, I'd say, for, you know, half of the three-year term of the contract. Even with that, 36% of our revenue in Q3 came from HealthTrust. 40% of our revenue in Q4 came from HealthTrust, right?

It shows you that in more normalized circumstances, with the five factors getting stronger and stronger, that we can really make headway when we have clean operating environment, and our internal factors are strong into these systems. There's no reason to believe why that can't be the case in the next three to six months with Premier and this new contract. What's really great as well, and I'm gonna announce it, you know, for the first time on this call, it's a big deal that HealthTrust has renewed with us for four years. Not three years like the first contract, but four years. They're pretty pleased with the way we've handled ourselves, the way we've executed, and the performance of our product, I would say. That's, that's very good.

We have three solid national scale contracts in place. I think that's a robust footprint that can handle all the five-factor expansion plans that we've gone over here today and the sales force expansion that Roberto and I have talked about. I think that this footprint is big enough that it should allow us to have durable and consistent growth over the next two to three years. And it should be much less friction in the system than the way we've been doing it up till now. You'll recall at 36% HealthTrust in Q3, the balance of that were in IDNs that did not roll up to a contracted GPO. That is a much higher friction process, finding a surgeon champion, value analysis committees, et cetera. We are equipped to do it.

We will continue to do it, in addition as a sidecar alongside the GPO contracts. We actually have four, you know, contracting and execution plays to help drive growth here. You know, that's gonna continue as we go forward.

Kyle Rose (Managing Director of Medical Technology)

Great. That's very helpful. Congrats on the renewal of HealthTrust there. Maybe just a little bit more on the GPO side. Can you just confirm when you're signing these agreements, do they include both OviTex and PRS? Just maybe the overall uptake or if there is a difference in uptake that you're seeing in the hernia versus the breast recon side.

Antony Koblish (President and CEO)

Yeah. They include both. The category is for, you know, reinforcement meshes basically. It's focused on the category of products that includes both indications and both products. I think it depends, right? It depends on where the hospital is, right? The hospital isn't just gonna adopt our product without surgeons demanding the product. If we have better relationships in a particular hospital on the plastic side, it may start with PRS, and vice versa on the hernia side, right? It's not like these hospitals automatically purchase the product. The first step after you get these contracts remains and always will remain, you know, to develop the surgeon interest.

Once the surgeon realizes it's on contract, then the supply chain says, "Okay, we'll start to put this implementation process in place," which also can take time. It's fairly bureaucratic. It's much easier than it is just on an IDN, you know, without a GPO contract. It depends on where the surgeon relationship is first, whether it's on the hernia abdominal wall side or on the plastic and reconstructive side.

Kyle Rose (Managing Director of Medical Technology)

Okay. Last question for me, then I'll hop back in, is, you know, I know you've outlined your five-point plan. From my view, you know, three of those are bigger than the others as far as being on the street, new products and new GPO opportunities. You already commented previously that, you know, guidance assumes no fundamental improvement in the backdrop, at least from a hospital staffing and throughput perspective. I guess, how do we think about the drivers of, you know, GPO, you know, new products and new headcount? Where, where is the biggest impact from a, from a metric perspective that we should be seeing this year?

Roberto Cuca (COO and CFO)

You know, we always refer to them as five factors because we do believe that they are multiplicative. You know, when we get the limit case example that you wouldn't wanna build a 100% sales force when you didn't have any GPOs in place. I think it's the size of the sales force and the number of GPOs that are available at the same time that's gonna have the biggest impact.

To Tony's point that we now have two additional GPOs that'll be either mostly full effect for the year or full effect for the year, is gonna have a great impact because the new sales reps coming in, both the ones that are annualized from last year and the new ones that we hired this year, will have a lot of, you know, new ground to till as far as getting new sales. You know, we believe that, you know, those two are the ones that'll work the strongest together and the ones that we pushed hardest on advancing.

Kyle Rose (Managing Director of Medical Technology)

Great. Thank you very much.

Operator (participant)

Thank you. One moment while we prepare for the next question. Our next question is coming from David Turkaly of JMP. Your line is open.

David Turkaly (Research Analyst of Medical Devices)

Great. Good afternoon. maybe one for Roberto, given the comments you made on the hiring side and some of the new product, launches you may have. Could you give us any color on sort of, the net loss or the operating loss, even if it's just directionally versus what you did in 22? I imagine it's gonna be slightly larger, but, is there any color you can provide there?

Roberto Cuca (COO and CFO)

We haven't provided bottom-line guidance. I guess what I'd do is I'd walk through each of the components of OpEx. G&A should be the same in 2023 as in 2022, you know, very slightly higher possibly. R&D will grow a little bit as we advance some clinical studies and as we dig in further into our own internal R&D development programs. Sales and marketing is the one that's gonna step up the most. There'll be two effects. One is the annualization of the hiring that we did last year, and the second will be the growth that we experience this year, depending on when exactly that times out. I think, you know, we're not providing guidance on operating loss, but I think directionally you're thinking about it is correct.

David Turkaly (Research Analyst of Medical Devices)

Great. Tony, I think we said last quarter three new products, and you mentioned the two larger OviTex LPR, that's not the second-gen hernia or PRS devices. Are they still on tap for 2023 launches?

Antony Koblish (President and CEO)

Yeah. We have a third product that is getting extremely close. We'll keep you posted on that. We will deliver three new substantial products this year, for sure.

David Turkaly (Research Analyst of Medical Devices)

Great. Maybe I'll sneak one last one in. Who makes the NIVIS or the bovine collagen?

Antony Koblish (President and CEO)

We're partnered with CMI in New Jersey on that product.

David Turkaly (Research Analyst of Medical Devices)

Great. Thank you.

Operator (participant)

Thank you. This concludes today's Q&A session. I would like to turn the call over to Tony Koblish, excuse me, for closing remarks.

Antony Koblish (President and CEO)

Yeah. Thank you, everybody, for tuning in. We look forward to reporting on Q1 next, and we really appreciate your interest and support. See you next time. Thank you. Have a great night.

Operator (participant)

This concludes today's conference call. Thank you all for joining. Everyone, have a pleasant evening, and you may all disconnect.