NEXGEL, Inc. (NXGL) Earnings Call Transcript

Hello, and welcome, everyone joining today's NEXGEL Investor Update Conference Call. [Operator Instructions] Please note, this call is being recorded. We are standing by, should you need any assistance. It is now my pleasure to turn the meeting over to Steven Glassman, Chairman of the Board of Directors. Please go ahead.

Thank you. Good afternoon, everyone. Welcome to the update call. I just wanted to reiterate, we appreciate everyone's interest as well as their patience over the past 6 weeks, as noted in the press release from the middle of August, just taking a step back and looking at the entire company and the different lines of businesses holistically and determining what is best way to move forward with shareholder value. So with that said, I'm going to go ahead and turn the call over to Brian Kieser, the Interim Chief Executive Officer and have Brian start out walking you through the update.

Thank you, Steve. Good afternoon, everyone. My name is Brian Kieser. I have the pleasure of holding the title of Interim Chief Executive Officer of NEXGEL Inc. I appreciate everybody's patience again, to reiterate what Steve said, over the last 6 weeks as we've done a strategic review of all of the business and our goal to determine the best path forward for NEXGEL its shareholders. What we will discuss today will be really a proposed platform reorganization that our Strategic Review Committee, along with our employees, have worked very, very hard on over the last 6 weeks. And before I begin, I do want to take a second to mention how important the employees have been over these last few months since this transaction with Celularity took place. I can tell you that we have a very hard-working, very dedicated team. And they have gone above and beyond to try and do everything they can to work with us and help us develop what we think could be a very successful plan for NEXGEL going forward. So a public thank you to all of our team members at NEXGEL. So where were we versus where we are now versus where we go tomorrow. Traditionally, NEXGEL was a high-quality hydrogel manufacturer and had a medical device pipeline. However, it looks to me and appears to us that NEXGEL drifted into non-medical, non-health care-related lines and focused more on over-the-counter consumer products. And we believe that those product lines have created a misalignment and a disconnect between the operational needs of the hydrogel business, legacy business and the needs of the -- and requirements of the over-the-counter business. And because of that, we feel like in order for NEXGEL to focus on a growth path, that we need to transform NEXGEL from an over-the-counter products line into a medical device line, a biomedical innovation line and a company that can scale in those areas. The transformation that we're talking about started with the acquisition of a diverse portfolio of licenses from Celularity. And those -- the portfolio of products really centered around regenerative biomaterials and focused on skin grafts, skin substitutes and products that can be used both in wound care and in surgical settings. Many of you may know that I came into the NEXGEL orbit as an initial investor in that transaction through Fountainhead LifeSciences and one of our subsidiaries, Sequence LifeScience. We committed $6.5 million of our investment towards innovation, training, manufacturing and supporting NEXGEL. And our goal was to become a strategic partner with NEXGEL, supporting the manufacturer and the economics of the products that were acquired in the Celularity transaction. We have done a great job. I think NEXGEL has done a great job as well as Sequence in working through a lot of those strategic partnership opportunities, and I'll be talking about that a little bit later. But that's only part of the really of the goal that we're trying to get to. And we see a vision for tomorrow for NEXGEL that creates a market-facing gateway for surgeon engagement that creates a closed-loop experience for surgeons to innovate and create medical devices and biomedical innovation that will help patients. We want to create a single point of care and continuum of care portfolio, and we want to create diversified lines among clinical reimbursement verticals and reimbursement channels. Our goal is to take NEXGEL fully into medical technology, medical device, biomedical innovation and focus on improved patient outcomes and procedural excellence within the clinical setting. Why we are here, I guess, is the next opportunity -- the next thing we need to talk about. Again, the most recent transaction is the acquisition of the Celularity assets by NEXGEL, the licenses of several of the biomaterials, placental skin grafts, et cetera. Our original acquisition thesis did not materialize as we expected it to. The original expectations were for a significant revenue growth, immediate profitability, a successful BioNX commercialization, existing reimbursement and clinical use pathways and expansion through additional products. What actually occurred, though, is that revenue and margin expectations were not achieved, customer products consumed more capital than anticipated -- excuse me, consumer products consumed more capital than anticipated, manufacturing and commercialization challenges disrupted execution, the initial BioNX commercial structure added cost, and the existing organizational structure separated manufacturing profits from commercialization economics. What did work in our transaction -- post transaction with Celularity? Interfyl, one of the core products acquired, remains a stable revenue generator. Arthrex, one of the -- our most stable customers, continues to bear fruit and be a strong and strategic relationship with NEXGEL, and we believe it presents multiple expansion opportunities. Our manufacturing transfer of technology to Sequence, which we believe will lower costs and improve margins, is occurring ahead of schedule. We recently launched an ocular business, and we believe that, that opportunity is positioned for growth. We have reevaluated the hydrogel component of NEXGEL, and we believe that there are additional revenue opportunities that have been unrealized to date. And we also believe there are opportunities to decrease costs and improve margins across the hydrogel line. We've also scaled the BioNX leadership to an appropriate level and have found and secured the leadership talent needed to grow the Celularity products acquired by NEXGEL as we move forward. What didn't work? The consumer products just underperformed. Those products have been losing revenue, have been declining in revenue over the last several years. Margins continued to erode, and most of the consumer products are operating at a loss. Working capital was consumed much faster than expected, partly due to an increased BioNX personnel ledger. As we first made the transition, we again scaled that back and have properly staffed the BioNX commercialization team for these products. The commercialization assumptions, the operating profits and the sales opportunities of these products were misunderstood, and that -- we discovered that early into the transaction. And the initial cost structure and actually, current cost structure of the manufacturing and cost of these products are just not sustainable. And so cost reductions are necessary, have been necessary and have been implemented. But the cost reductions alone will not unlock the value of the assets that we have. In short, the current structure is not sustainable. Our primary constraints as of today are liquidity. Additional capital is required. Debt, the current operating business cannot support the $15 million of debt burden. Profitability, the stand-alone economics of NEXGEL remain insufficient to support the current structure. And fragmentation. Management, manufacturing, regulatory, quality and commercialization capabilities are distributed across separate entities. The strategic review identified a path to consolidate the regenerative medicine platform. The Fountainhead operating team and the Sequence LifeScience and NVISION Biomedical Technology assets, we believe can be integral to a proposed reorganization. The status quo right now is limited liquidity, large debt burden, fragmented operations and constrained access to growth capital. We believe that a reorganization could provide new capital, a recapitalized balance sheet, contributing operating assets from Fountainhead, consolidated management and infrastructure and a platform positioned for future financing. So I'd like now to provide you what our vision is for NEXGEL and what we are trying to build for the future. We believe that we could create, in a reorganization, combining all of the assets, an integrated life sciences ecosystem. We could create a surgeon-centric platform that shapes procedural excellence across clinical indications. It would connect innovation, training, manufacturing and commercialization into 1 coordinated system, 1 entity. It would place the surgeon, the procedure and the patient rather than the product at the center of the platform, engagement and the ability to influence procedural excellence to find the experience. The platform is designed to advance procedural excellence, improve patient outcomes, advance standard of care and enhance quality of life. We believe that we can create a scalable, high-touch experience where we can scale infrastructure while preserving personalized, trust-based surgeon relationships. We believe that we can create surgeon-led product development where healthcare providers across all disciplines use real-world clinical insight to guide product development, validation and education. We believe we can reduce fragmentation and friction. We'll integrate capabilities, accelerate learning and training and reduce execution risk. We believe we can address many of the industry challenges and center an experience around patient outcomes and quality of life. So what would this look like? When simplified, Fountainhead LifeSciences is a platform that provides innovation, manufacturing and engagement through a series of entities. The engagement would come from the current NEXGEL commercialization team, the innovation and manufacturing. The engine, if you would, would come from NVISION Biomedical Technologies, Sequence LifeScience and LockHill Advanced Manufacturing Technologies. All members and subsidiaries of the Fountainhead LifeSciences platform and the experience tying it all together, where innovation, manufacturing and engagement come together to improve patient outcomes, elevate the standard of care and elevate quality of life would be done at the CadaverLab housed here with Fountainhead LifeSciences. And so what is Fountainhead LifeSciences? And what are the subsidiaries of Fountainhead? What assets do they have that will help support this vision? NVISION Biomedical Technologies is an orthopedic medical device company that manufactures -- develops and manufactures spinal implants, lower extremity foot and ankle implants and sports medicine implants. It houses a complete engineering and design team, has its own internal prototyping capabilities in-house, intellectual property patent council, an entire quality and regulatory management team and a robust product commercialization and sales team. NVISION has cleared over 35 products with the FDA and holds over 20 patents for medical devices in the orthopedic space. Sequence LifeScience, which many of you may know led the investment, is also a Fountainhead subsidiary. Sequence has 17 ISO Class 5 cleanrooms, it has ISO Class 7 lyophilization rooms and 3 ISO Class 7 packaging rooms. Sequence also has a full R&D wet lab doing research on human tissue, placental tissue stem cells, many advanced future cellular therapies. It has a staff of PhDs and scientists. It has its own quality and regulatory department. It has its own manufacturing and operational staff. And in addition to producing products that it sells and commercializes, it has a robust contract manufacturing and packaging business. LockHill Advanced Manufacturing Technologies is also another asset that Fountainhead can bring to bear. LockHill currently runs 10 polymer and resin printers, has post-processing, milling and machining capabilities, has FDA regulatory and quality teams and also is able to do contract manufacturing for third parties. LockHill and NVISION are the leaders in lower extremity nonmetal solutions for the foot and ankle and have expanded their products into sports medicine and other extremities. And the CadaverLab is a 2,500 square foot 12-station surgical suite and [ Bioskill ] suite. It has a state-of-the-art classroom lecture hall that could accommodate 75 or more participates. It has another 750 square foot overflow community classroom. The CadaverLab trains -- currently has contracts and trains EMTs. Fire departments were using CadaverLab training for pre-emergency room trauma. It is a training and [ Bioskill ] suite for many of the large orthopedic and other medical device companies around the country that come and train surgeons when they're in the San Antonio and Hill Country area of Texas. And it is a -- the centerpiece of what Fountainhead does and how Fountainhead operates as a fully vertically integrated system. So what are we proposing? We're proposing to reorganize, contribute the core Fountainhead operating assets to NEXGEL as part of this reorganization. We're proposing to raise $5 million in new capital. With that, we will recapitalize and simplify NEXGEL's balance sheet. Our goal is to align the ownership, management, manufacturing and commercialization, and we want to operate through a single public company platform. But what does that look like? Today, multiple entities are trying to share economics in order to operate. We have duplicated infrastructure between the NEXGEL teams and the Fountainhead teams. The economics, again, are divided between the companies. And each company -- each entity has its own capital requirements. Our vision for the future is 1 platform, 1 management team, 1 capital strategy and 1 public ownership vehicle. What Fountainhead would contribute to this is more than $10 million of 2026 revenue. We would contribute our tissue processing and biologic manufacturing operations, existing supplier donor recovery and customer relationships, the capabilities to manufacture the products recently acquired by Celularity, a complete established quality and regulatory infrastructure, a product development and innovation platform that serves both medical device and tissue and biologics and pending clinical trials for Sequence products. The NVISION medical device business would also be contributed, includes 20-plus patents on medical devices and processes. And a complete engineering and design team, a complete specialized quality and regulatory team. It's about $10 million to $12 million of inventory between Sequence and NVISION, a 42,000 square foot production facility and associated real estate, cleanrooms, manufacturing equipment, prototyping equipment and additional equipment valued by management in total, of between $17 million and $20 million. What other things are we hoping to contribute? Strategic assets and economic contribution, an experienced management team, integration with the CadaverLab surgeon-led engagement ecosystem, accounting, finance, human resources, marketing and investor relations support. These are operating assets and capabilities, these are not passive investments. All descriptions and the values we believe should remain preliminary and subject to an independent review and evaluation. Why consolidation changes the economics. The platform economics, we believe, are stronger than the stand-alone economics. Under the current structure, again, the manufacturing economics are realized outside of NEXGEL. The commercialization costs and the risk concentrated are concentrated inside NEXGEL. We have duplicated expenses, separate funding requirements, and there's limited ability to invest in growth. If we combine, the manufacturing and commercialization economics are consolidated. We share an operating infrastructure. We diversify revenue across hydrogel biologics, medical devices and contract manufacturing. We have a greater ability to invest in products and innovation and commercialization and a much improved pathway to profitability. The value is created by consolidating assets, earnings, management and capital. I'd like to speak briefly, but intently on an illustrative combined company financial profile. This is an unaudited estimate, and it would be subject to completion of the audit and preparation of SEC compliant pro forma financial information. The objective we're trying here -- to achieve here with this reorganization is to survive is to emerge with a business model that can actually generate attractive gross margins and operating profits. Standing alone today, NEXGEL's revenue for the next 2 years are forecasted at $11 million in fiscal year 1, with a gross profit of roughly $2.7 million, a gross margin of 24% and an operating profit -- or operating loss, excuse me, of $1.5 million. In fiscal year 2, a modest $2 million growth of $13 million, gross profit of $3.5 million, equating to a 27% gross margin, with a $600,000 operating loss. If we reorganized, in the first 12 months following reorganization, revenue at current levels, assuming no growth and no other additional outside opportunities, would be just shy of $21 million with a gross profit of $15 million and a gross margin of -- excuse me, 73%. The overall 12-month loss would be $1 million, but that loss would be over really the first 5 or 6 months as we're recovering and cash flow positive over the second half of that first 12-month period. In the second 12-month period, forecasted revenues, $31 million; gross profit, $23 million; gross margin, 74.6% and an operating profit of $4.4 million. As I mentioned earlier, part of the reorganization is new capital requirements. We believe we need approximately $5 million of new capital, 40% of this to support operations and liquidity, 22% to restore commercial growth, 28% to integrate the platform and launch growth initiatives and 10% to pay the transaction costs. No proceeds are intended to fund consumer products, noncore assets or the legacy initiatives that do not fit into our proposed platform strategy. The recapitalization objective is to reduce or eliminate the existing debt burden through conversion or restructuring, provide an operating runway, complete the platform integration, restore commercial execution and position the company for future financing. What this means for existing common shareholders? In short, a smaller percentage of a potentially stronger and better capitalized company. Currently, shareholders maintain approximately 21% ownership after a full conversion of the $14.9 million in convertible notes, excluding any warrant exercise. Alongside that, the company's liquidity is constrained, debt burdened. It has separated manufacturing and commercial economics, and it has limited, if any, ability to finance growth. Under our proposed platform, existing comp shareholders retain approximately 5% ownership in the following proposed recapitalization, which is a new capital raise, management equity and Fountainhead contribution. Debt is recapitalized, operating assets and management has contributed, manufacturing and commercialization economics are consolidated, new growth capital is introduced and revenue base is diversified. This proposed transaction will materially dilute existing common shareholders. However, we believe the investment thesis is that a smaller ownership percentage and a better capitalized, more complete operating platform can provide greater long-term value than a larger ownership percentage and the currently liquidity constrained and fragmented structure. What would be our process, our protections and our next steps? We would immediately move for an independent governance process. This proposed transaction is a related party transaction. We would ask for review negotiation and approval by the independent special committee. We would ask for independent legal counsel, an independent financial adviser, an independent valuation, an independent fairness opinion, completion of audits of the contributed businesses defendant agreements, satisfaction of the applicable NASDAQ and SEC requirements, and stockholder approval, if required. In the near-term processes, we need to evaluate stakeholder support, secure interim liquidity, begin audits and independent valuations, negotiate definitive transaction documents and pursue necessary finance and required approvals. I want to make sure everybody understands on this call that no transaction has been completed. This is simply a proposal that we want to make aware to all of the shareholders. Management believes the proposed reorganization offers a more attractive past than preserving the current structure. But the transaction remains subject to an independent review, evaluation, negotiation, financing and required approval. I want to thank you all for taking time to walk through that with me and for your attention as I walked through this deck. It is available online. And we have filed the appropriate 8-K with this, and it is available for you. I want to make myself, I want to make Ian Blackman, our Chief Financial Officer; Kevin Harris, the Chairman of our Strategic Review Committee; and Steve Glassman, our Chairman of our Board, available as we open a question-and-answer portion of our call. And I, again, thank you for your time.

[Operator Instructions] Our first question comes from Naz Rahman with Maxim Group.

I have a few. So the first one I want to start on is on time line. Just sort of a 2-part question. So at the end of 2Q, those [ biases ] assets that was acquired earlier this year, they weren't really fully integrated in terms of like the tech transfer in terms of like setting up and training the sales force and in terms of securing contracts with potential institutions and payers. And now you have this proposed transaction. So my question is, one, how long do you think it's going to take, given it has an area to completely integrate the BioNX asset? And does that affect the time line, the [ rose ] integration? Does that have to occur first? And two, how long do you think it would take to do the proposed integration?

Thank you for the question. So as of today, I can share with you that our Sequence processing, tissue processing team spent 6 weeks at the Celularity facility, learning how to process, specifically Interfyl, which is a specialized product and something that is outside of what our team at Sequence has ever made before. As a matter of fact, Celularity is the only one in the country making it. We completed the tech transfer on September 12. Our team returned here. We actually purchased equipment from Celularity needed to make the product, and our team is going through the installation and the validation of the equipment that is needed to produce Interfyl. We believe that -- and Celularity has been very supportive of this tech transfer, and I do want to take the opportunity to thank them on that. And we believe that we should be ready to produce Interfyl internally in San Antonio within the next 2 to 3 weeks. We're finalizing packaging right now, final packaging. And we believe that we should be able to turn on manufacturing here. That's going to continue regardless of the time line of the transaction as that is part of what we have to do in order to keep NEXGEL moving forward. NEXGEL, under the current arrangement, just won't be able to with the economics that are currently there. Without us helping manufacture, we're not going to be able to hit the numbers we're hoping to hit. As it relates to the other tech transfer pieces, those were completed, and we're starting production down here in San Antonio. So from an integration of the manufacturing of the products acquired in the Celularity transaction, Interfyl would be the last of our products to integrate. Again -- and I would tell you that we're -- again, it's been a lot of work. We -- as I said, 3 of our team members spent 6 weeks up there. But I would also say that from a sales standpoint, from a sales integration, we have been to Arthrex. We've met with Arthrex, had very, very promising meetings. We feel like there's a back order, there's a significant back order currently with Arthrex. We feel like we can -- we're going to be able to dig in that once we start manufacturing down here in the next 2 to 3 weeks. Does that help answer your question?

Yes. The other part of that question was, how long do you think it would take to complete the proposed integration?

Well...

Between the two companies.

I think the near-term stuff is within weeks. The longer-term integration valuation audits, that could take 3 to 5 months.

Got it. That was helpful. So my next question is on those hypothetical combined financials. Does that combined financial, does that include BioNX running at full operations and at steady state? Or are you still assuming in those financials that there's still a ramp-up in BioNX from fiscal -- for fiscal year 1 and 2?

I'm going to let Kevin Harris, member of the Board and Chairman of the Strategic Review, jump in on those questions.

Yes, that's a great question. So the BioNX assets that are assumed in the illustrative combined forecast are essentially -- we wanted to be conservative because we believe that the assumptions that were undertaken at the beginning of the transaction produced underrealized revenue outcomes and also really have some underappreciated framework around the margins that existed with those revenues as well. So the forecast that we put together assumes, first and foremost, the elimination of participating in all of the consumer product lines and businesses that NEXGEL has historically been in. It assumes the hydrogel business continues to operate under the rolling 12 months of historical revenues that they've had, applying no growth on them in the first year and applying no changes or efficiency gains to the cost of goods that would go into generating the hydrogel revenues. With regards to the purchased assets that BioNX is commercializing and that were purchased from Celularity, we split it out to really the piece that is being supplied to Arthrex, which is obviously one of the core assets that was purchased in the transaction. And what we did was we took the existing order since the close of the transaction in April, plus the orders that have not been fulfilled and sit in a backlog or that are backordered but have been placed by Arthrex, and we annualized those moving forward on a 12-month basis so that we can show essentially what is happening real time since the integration in the purchase of those assets. And we're basically in doing so, we're moving away from the forecast that might have been placed or assumed by previous management under the conditions of what they thought they were buying on the Celularity side. So that generates a little over $6 million from an Arthrex perspective. And then the second piece is all of the other biologics assets. If you call them skin substitutes or patches, it's everything else that would include, in particular, things like BioVance that is being sold by the BioNX piece today. And then the combined businesses takes in addition to what we just talked about with the NEXGEL hydrogel assets and the purchased assets from Celularity and stacks on the revenue streams that exist with the medical device business on NVISION and the similar biologics business that exists today at Sequence. Really, the big piece that comes out of that is, yes, the stand-alone company has about $11 million of revenue and the combined company has almost $21 million of revenue. But I think that if you look at the print version of this presentation and have a chance to kind of digest the numbers, what is really much more meaningful is the fact that the stand-alone business today of NEXGEL has operating losses going forward on pretty much a continuous basis and is achieving that off of gross margins that are in the low 20% -- mid-20% range, which really doesn't provide adequate coverage to run the business. And when you combine these, capturing the manufacturing economics alongside the commercialization economics inside of the same company, what we're really capable of being able to do is shift the gross margins into the mid-70s range. And that is really what the achievement of putting these assets together is, yes, we've been working on cost reductions. Today, we've reduced cost already by a little bit over $1.5 million. We are underway with reductions right now that are going to eliminate another $2.5 million. So collectively, we're reducing and rightsizing the cost structure for the historical NEXGEL business by a reduction of over $4 million. But the restructuring of the business itself is what adds a tremendous amount of value.

Got it. That was very helpful. And then one last question, if I may. So I understand you're shutting down the consumer line. But are you also planning on divesting the consumer lines? Or have you potentially initiated the process of divesting the consumer lines? Like what kind of multiples are you sort of seeing or what kind of sales price that you get for the...

Yes, great question. At this eye and condition of the products, knowing that they're kind of operating in a less than attractive gross margin position and they're losing money to operate them. Some of that capital loss is generated because we're a public company. So if you had a private market buyer, they might not have the same loss structure that we would. But in general, they operate or they sell at about a 3x multiple of sales. Plus if you have substantial inventory, you take that cost on. Typically, the 3x sales also comes with 2 to 3 months' worth of inventory as is assumed. That goes into that transaction. We've gone through the process today of looking not only at what we have in inventory, but the historicals, and we've already engaged an outside broker to give us a valuation. And we've started to take the process to build the listing package, if you will, and the term sheet, the offering memorandum to get that out. So I think I said it was 3x sales, 3x profits. So we don't see these assets bringing significant value given that the profitability is really not that meaningful. There is collectively across the board, somewhere in the neighborhood of $400,000 to $500,000 of inventory between all of the consumer lines of businesses. So that may be where, give or take, the final proceeds come in from lifting this. But we have started the process. We're creating the offering memorandums to list it on a -- with a listing broker that sells these types of businesses on a day-to-day basis.

[Operator Instructions] Our next question comes from [ Andrew Dean ], [ Present Value ].

Very clear presentation. Thank you very much. I'm just interested in your OTC [ agta ] business. Are you proposing that for sale?

I'm sorry, could you repeat that question?

Yes. So I'm just saying, very clear presentation. Thinking about your hydrogel business, are you -- I think from the previous question, are you proposing that is in a sales process finance?

For the hydrogel business? So we believe that there is significant value that can still be extracted from the hydrogel business. And again, as I mentioned at the outset of the call, the team, the employees that we have, our team members have done an unbelievable job. They've been coming forward with opportunities to take cost out of the hydrogel manufacturing process. And so we believe that there is value in the hydrogels. We believe that there's a tremendous value in surgical applications and more hospital and office type applications for the hydrogels. And so our goal is to continue to try and -- our goal is to continue to try and grow the hydrogel business while taking cost out of the system, making them more efficiently. The other thing is the hydrogels, when placed into the surgical settings, in these hospital settings, there are many times on the same call patterns as the NVISION products that are being sold and marketed to hospitals and surgeons as well as in many cases, the tissue products that are being marketed to hospitals and surgeons. So being able to put the hydrogels in the sales bag of our distribution partners that are currently carrying the medical device products as well as the tissue products, it allows us to really put more in the bag to sell. And it gets -- our goal is to get more of the pie when we're marketing these products.

Okay. That seems to make sense. So it's not for sale? Basically, your...

The hydrogels? No, at this point, no, we believe the hydrogels can be a significant asset operating asset for the combined entity.

And the hydrogel today are function as a modestly profit line of business in isolation. So -- it's something that is not punishing us in the near term from a liquidity perspective.

Sure, understandable. Have you considered sort of outreach into other international markets for the hydrogels?

Yes, we have. We've had preliminary discussions outside the U.S.

And on the regulatory standpoint, do you think there's a chance of success now?

I think it's too early to tell. I think there's always an opportunity for success. It's just where you're looking to market the products, what the individual countries, healthcare regulatory environment looks like. And so if we're going to do something like that, we would look at the ones with the most favorable and probably easiest paths to allow us into the country market. But we're still evaluating that. We've had people reach out, but there's nothing substantive to report on. And thus, we haven't built any international sales for hydrogels into our existing forecast.

Interesting, but you already to consider?

I'm sorry?

You receive them? You would be...

Yes. We're considering, for sure.

Our next question is from [ Beth Mihalos ], private investor.