Pulmonx Corporation

and only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Elizabeth Sparisio, Investor Relations at the Gilmartin Group. Please go ahead.

Good afternoon, and thank you all for participating in today's call. Joining me from Pulmonix are Steve Williamson, President and Chief Executive Officer, and Mehul Joshi, Chief Financial Officer. Earlier today, Pulmonix issued a press release announcing its financial results for the quarter ended March 31, 2024. A copy of the press release is available on Pulmonix's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. all forward-looking statements, including, without limitation, those relating to our operating trends, commercial strategies, and future financial performance, the timing and results of clinical trials, the impact of COVID-19 on our business and prospects for recovery, expense management, expectations for hiring, growth in our organization, market opportunity, guidance for revenue, gross margin and operating expenses, commercial expansion, and product pipeline development are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our filings with the Securities and Exchange Commission, including our annual report on Form 10-K filed with the SEC on February 27, 2024. Also during this call, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the press release, which is posted on our investor relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. This conference contains time-sensitive information that is accurate only as of the live broadcast today, May 1st, 2024. Polonix disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I will turn the call over to Steve.

Thanks, Elizabeth. Good afternoon, everyone, and welcome to our first quarter 2024 earnings call. Here with me is Mehul Joshi, our Chief Financial Officer. I am pleased to report that Palmonix delivered $18.9 million in worldwide sales in the first quarter of 2024, representing 30% growth over the same period last year and 29% on a constant currency basis. We're excited to see such strong momentum early in this year, which leaves us increasingly confident in our ability to deliver on our previously communicated revenue guidance of $81 to $84 million for the full year 2024. Our Q1 results reflect our team's continued success in executing a comprehensive strategy to drive long-term, sustainable growth, and I look forward to sharing with you today key updates on our progress. Before detailing our performance and key priorities, I'd like to speak about some of the recent leadership changes at Pulmonix. I'd like to congratulate Glenn French on his retirement and thank him for his innumerable contributions to the company and to interventional pulmonology more broadly through his long tenure in the space and while serving as our CEO. Glenn and I have worked closely over the last few months to ensure an exceptionally smooth transition, and I look forward to our continued collaboration as he maintains his position on our board of directors. Second, I'd like to welcome Mehul Joshi to our team. Appointing an accomplished financial executive as CFO was a high priority for our board and myself, and I'm delighted to have hired an experienced industry veteran for the role. Mehul brings a depth of knowledge, leading global finance teams within high-growth companies such as Gilead and ResMed as they scale revenue and operating leverage. I'm thrilled to be working alongside him and our broader leadership team to drive Pulmonix into its next phase of growth. I'd also like to take the opportunity to thank John McCune for serving as our interim CFO, and I look forward to his continued contributions as our VP and corporate controller. Before we discuss the details of the quarter, I'd like to share a bit of my background and why I'm so excited to be leading Pulmonix through this next growth phase. I've spent nearly three decades leading teams that have helped revolutionize patient care across large markets with transformational technologies. More specifically, I've led large diversified businesses at Hologic, CR Bard, and Beckton Dickinson, as well as cross-functional teams at high-growth companies such as Outset Medical. Across each role, I focused on understanding customer needs, developing a strong cadence of new product development, and driving rapid global market adoption. As I evaluated the pulmonics opportunity, I focused my diligence on three pillars. First, does the company serve a large patient population with significant unmet needs? Second, is its solution a highly impactful transformative technology with a demonstrated clinical and economic value proposition? And third, has the company developed a foundation for long-term success. Through the last month and a half as CEO, I've collectively affirmed what I learned in my diligence, that Pulmonix checks each of these three boxes. First, Pulmonix is focused on a large underserved patient population with limited treatment options. More specifically, we estimate that approximately 1.2 million patients with severe emphysema stand to benefit from the Zephyr valve treatment, resulting in a global addressable market of approximately $12 billion. This represents our opportunity today and does not account for the incremental market opportunity associated with AeroSeal, which we expect has the potential to expand our total addressable market by up to 20% globally. Patients with severe emphysema face a progressive disease that significantly limits their day-to-day activity. Many live with chronic breathlessness that robs them of the ability to do basic life activities and puts them on a downward spiral of deconditioning, which increases their risk of mortality. Current treatment options include medical management and pulmonary rehabilitation, both of which show limited long-term efficacy. as well as highly invasive treatments such as long volume reduction surgery or lung transplantation, which both present significant morbidity and mortality risks. This obvious gap in the treatment spectrum resonates with me given my experience developing and expanding markets while altering the standard of care with transformative new technologies, just as we're doing with Zephyr valves. I am confident that we will be successful because patients undergoing minimally invasive treatment with Zephyr valves show significant durable benefits as validated by four randomized clinical trials and over 100 scientific articles. These data, which have been validated by real-world outcomes and have served as the basis for broad payer coverage and inclusion in key treatment guidelines, demonstrate that patients treated with Zephyr valves experience clinically meaningful and statistically significant improvements in lung function, exercise capacity, and quality of life compared to medical management alone. In summary, I took this opportunity at Pulmonix because it is clear to me just how impactful the Zephyr valve treatment can be for so many patients, and because I view the company as well-positioned operationally and financially to execute a successful long-term growth strategy. As I look ahead, I'm excited to leverage the expertise of our entire team, whose collective experience in interventional pulmonology and dedication to our mission to deliver on our commitments as the global leader in minimally invasive treatments for COPD is unparalleled. With that said, I'd like to pivot back to our first quarter performance, my early perspectives on our strategy, and our team's key priorities for 2024. As I mentioned earlier, Palmonix delivered $18.9 million in worldwide sales in the first quarter of 2024, representing 30% growth over the same period last year and 29% on a constant currency basis. As expected, growth was primarily fueled by our success in the United States, where the team has been laser-focused on executing the commercial strategy. Specifically, our team has been focused in three areas. First, training physicians at hospitals that have the potential to be high-performing Zephyr Valve centers. Second, facilitating the sharing of best practices among existing centers to optimize their Zephyr Valve programs. And third, building local awareness of the benefits of our treatment among COPD physicians and patients. Based on my early experiences in the field and our recent success, I am increasingly confident in our ability to drive sustainable growth with this three-pronged strategy. Over the coming weeks and months, I intend to work closely with the team to design region-specific strategies that will serve to optimize the building blocks we have in place. I look forward to providing more detail on these perspectives in the near future. Regarding new Zephyr Valve Centers, we added nine new centers in the U.S. in the first quarter of 2024, bringing our total number to 346. Of these, 253 were active accounts, having placed a revenue-generating order in the first quarter, which is in line with our expectations. We'll continue to identify potentially high-performing Zephyr Valve Centers and expect to opportunistically establish new accounts with a focus on driving utilization in our active accounts. The team continues to establish our Zephyr Valve treatment as a more routine procedure, particularly through the sharing of best practices of our higher utilization treatment centers. We're seeing an increasing number of Zephyr Valve hospitals investing in dedicated staff to help screen prospective Valve candidates, as well as instituting procedures to routinely identify patients whose test results indicate they may be Zephyr Valve candidates. Additionally, we're piloting programs that will enable customers to optimize patient workflow, resulting in reduced time to treatment, improved patient experience, and greater capacity for centers to evaluate more patients. Collectively, these efforts have led to sustained year-over-year improvement in the average number of cases per active center, and we expect to continue benefiting from year-over-year gains on an annualized basis moving forward. Lastly, Our cost-efficient education efforts aim to inform patients and providers on the benefits and availability of our treatment, particularly in geographies with already well-developed Zephyr Valve programs. We continue to identify and engage high-volume COPD physicians and have launched several field-based education programs which have garnered early traction. We're also focusing on supporting patients who are seeking to learn more about Zephyr Valves and find a treatment center more rapidly, while enhancing our digital geofencing tactics to identify and educate additional prospective patients who may benefit from Zephyr treatment based on search trends. Our confidence in these strategies has been reinforced by early success over recent quarters in driving improved engagement and reduced acquisition costs across ongoing pilot programs in select geographies, thereby demonstrating that we have the right playbook and that there is even more room to grow even within our top cohort of accounts. As we look ahead, we'll continue to deploy resources and tactics strategically on an account by account basis, ensuring that critical success pieces are in place within a given geography before investing more heavily in local awareness campaigns. While our primary commercial focus remains on growing our U.S. business, we continue to see substantial growth opportunity internationally. In Europe, over the course of the last three quarters, we've been making substantial enhancements to our field team and management capabilities. In addition, we've been taking many of the sales tools we've developed for use in the U.S. and adapting them for use in European markets, such as operational best practice sharing, community physician engagement, and peer-to-peer education programs. As a result of these changes, we saw our international business grow as a whole in Q1 by 15% year-over-year and 24% in our top geographies of Germany, France, U.K., and Spain. We anticipate the impact of our international efforts to become increasingly evident in 2025 as we focus on foundation building this year. In addition to our commercial efforts outside the United States, I am excited to announce the treatment of the first patient in our Japanese post-market approval study. We're encouraged by the positive reception of our technology at the recent Japanese Respiratory Society meeting and the growing interest among centers to join in the post-approval study. As a reminder, we anticipate it will take time to grow awareness of this new treatment option and we expect the bulk of enrollment to occur in the back half of the enrollment period as we train additional sites and move the first patients through the treatment funnel. We do not expect a material revenue contribution from Japan until approximately 2026 when we are able to commercialize more broadly. This study marks an essential step towards broader commercialization and a new market where we estimate approximately 100,000 patients stand to benefit from Zephyr Valves. We have also continued to make progress toward our goal of expanding the number of patients that can be treated with Zephyr Valves following receipt of IDE approval for our 200-patient CONVERT II pivotal trial from the FDA. In February, we announced the treatment of the first patient in the trial, a multicenter global study evaluating the safety and effectiveness of the aerosol system in limiting collateral ventilation in severe COPD emphysema patients. We currently expect to enroll through approximately the end of next year. Patients who experience conversion to CV negative status following aerosol treatment will then be implanted with Zephyr valves per current standard of care for lung volume reduction. Conversion success rate, lung volume reduction success rate, and other clinical parameters will be evaluated at six months post-valve placement and will be used to support our PMA application. We also look forward to the presentation of final data from our ConvertOne study following enrollment completion last year. We expect these data to be presented at the European Respiratory Society Congress in early September in Vienna. In conclusion, we are pleased with our Q1 performance, excited for our growth outlook in 2024, and encouraged by the progress we've made with our market development campaigns and the ARISEAL clinical development program. In the time I've been with Pulmonix, my experience has validated my initial confidence in the significant market opportunity for our treatment, the benefits realized by patients receiving Zephyr valves, and the commercial foundation already in place. I look forward to working with our leadership team to continue to execute on our strategy, identify opportunities to accelerate growth, and to achieve profitability. Now, I'll turn the call over to Mehul to provide a more detailed review of our first quarter results.

Thank you, Steve, and good afternoon, everyone. Before I review our first quarter results and guidance for 2024, I want to expand upon Steve's comments and highlight why I'm excited to have joined Pomonix at such a pivotal time. For the past two decades, I have dedicated much of my career to driving sustained profitable growth within innovative healthcare companies. As Steve alluded to, Pulmonix represents a unique opportunity as the leading innovator with a differentiated technology platform in a market that has been significantly underserved. In the last year, the team at Pulmonix has demonstrated its ability to deliver meaningful growth and, in my view, positioned the company well from both an operational and financial perspective for continued success. With a strong balance sheet and increasingly focused execution, I believe Pulmonix is well poised to continue bringing life-changing solutions to patients in need while also achieving continued revenue growth and delivering profitability. And with that, I will move on to our financial results. Total worldwide revenue for the three months ended March 31, 2024, was $18.9 million, a 30% increase from $14.5 million in the same period of the prior year, and an increase of 29% on a constant currency basis. Our strong performance was driven by sustained momentum across the U.S., as well as a rebound in our international markets as we continue to optimize our commercial infrastructure and introduced new tools and capabilities. U.S. revenue in the first quarter was $12.9 million, a 38% increase from $9.3 million during the prior year period. International revenue in the first quarter of 2024 was $6.0 million, a 15% increase from $5.2 million during the same period last year, and an increase of 13% on a constant currency basis. Gross margin for the first quarter of 2024 was 75%, compared to 73 in the prior year period, reflecting favorable geographical mix and higher utilization. Total operating expenses for the first quarter of 2024 were $28.6 million, a 6% increase from $27 million in the first quarter of 2023. Non-cash stock-based compensation expense was $5.3 million in the first quarter of 2024. Excluding stock-based compensation expense, total operating expenses in the first quarter of 2024 increased 3% from the same period of the prior year. R&D expenses for the first quarter of 2024 were $4.2 million, compared to $4.3 million in the same period of the prior year. We expect R&D expenses to increase from the first quarter as enrollment in our clinical trials ramps. Sales, general, and administrative expenses for the first quarter of 2024 were $24.4 million, compared to $22.7 million in the first quarter of 2023. The increase was attributable to continued investment in commercial activities and stock-based compensation. Net loss for the first quarter of 2024 was $13.7 million or a loss of 36 cents per share as compared to a net loss of 15.9 million or a loss of 42 cents per share for the same period of the prior year. An average weighted share count of 38.6 million shares was used to determine loss per share for the first quarter of 2024. Adjusted EBITDA loss for the first quarter of 2024 was $8 million as compared to $11.2 million in the first quarter of 2023. We ended March 31, 2024 with $120.4 million in cash, cash equivalents, and marketable securities, a decrease of $11.1 million from December 31, 2023. Finally, turning to our guidance for 2024, we are reiterating our previously communicated fiscal year 2024 revenue and gross margin guidance and updating OPEX guidance. As a reminder, we expect to deliver full year 2024 revenue in the range of $81 to $84 million, representing approximately 20% growth at the midpoint. We remain confident in our guidance as we continue executing our focused commercial strategy. Our guidance continues to assume a neutral to slightly negative impact on revenue from foreign currency exchange rates. Moving down the P&L, we expect gross margin for the full year 2024 to fall within the range of 74% to 75%. And lastly, we expect operating expenses for the full year 2024 to fall between 127 to 129 million dollars. inclusive of approximately $25 million of non-cash stock-based compensation expense. The reduction in stock-based compensation expense is due to a change in the expected accounting treatment of expenses related to an executive transition. Given our continued revenue growth and prudent cash management, in addition to our commitment to driving further operating leverage, we remain focused on our current operating plan, to maintain a cash runway of at least three years of forward cash burn until we turn cash flow positive with the capital on hand. In all, we are confident in our outlook for 2024 and look forward to providing additional perspectives on the business and our longer-term strategy on our next quarterly call. With that, I'd like to thank you for your attention, and we will now open the call up for questions. Operator?

Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Joanne Wunsch from Citi.

Hey, good afternoon. This is actually Anthony on for Joanne. Thanks for taking our questions. I guess first on the guidance, you beat by about a million, which has been similar to previous quarters, but you kept the range. Just curious if this is more conservatism. Should we be thinking about maybe closer to the higher end of the range? And then a second question, can you just talk about what you're seeing so far this quarter in terms of operating activity, account productivity, and procedure volumes? Thanks. Yeah.

Hi, Anthony. This is Mehul Joshi. I'd say we are very pleased with our Q1 performance. There was underlying strength in the U.S. with continued commercial execution that drove account productivity. The OUS business rebounded as most of our major markets grew, and that's a result of increased sales capability and implementation of process and tools that is in process right now. The Q1 results enabling us to be increasingly confident in the annual revenue guidance. I think it's still a little early in the fiscal year, and we don't want to really get ahead of ourselves and want to see continued momentum and commercial traction.

As far as the account productivity goes, I'll jump in there. We continue to see improvement in productivity from our accounts. I think as you look at that metric, it's a little bit of a skewed metric. There's a number of different puts and takes there. But as we look at the metric itself, we did see about 10% improvement in productivity in our account base. I think as we look moving forward, I think U.S. revenue growth is probably a better metric to focus on to show the progress of the organization.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of John Young from Canaccord.

Hi Steve, can you hear me okay? Yep.

Hi, thanks for taking our questions and congrats on the quarter. Steve, it sounds like as you're reviewing the strategic priorities of the company since getting the seat since March, it kind of sounds like steady as it goes right now. Do you expect to have any large changes to strategy going forward, or do you think you've finished your evaluation phase at this point?

John, thanks for the question. I think it's a good question. As I look at the strategy, that's in place, I think it's the right strategy. I think we've shown growth, or the company's shown growth over prior quarters, and it's been effective. I think over time, we'll probably make some small refinements or add some specificity to different arms of it over time, but I think all in all, our ability to bring on accounts that can be big Zephyr Valve users or big Zephyr Valve treatment centers is important. We'll continue to do that. I think driving efficiency and really the ability for these to facilitate best practices among the accounts that are already up and running is really an area of focus for us. I think that's something that we've seen significant progress. And then third, obviously we'll still look to drive COPD physician awareness and patient awareness over time. To answer the question specifically, I think the strategy is the right strategy. It just might need some fine-tuning here and there.

Great. Thanks. And then as you came in with fresh eyes, too, what are your thoughts on M&A? Do you see potential other products you could add to the bag in the long term at either the COPD physician or the interventional pulmonology call points?

It's a good question. As we look at the IP space and you look at our sales force, we get the question quite a bit. I've got my eyes open to different technologies that are out in this space that could fit in the bag. But right now, if you look at the size of the untapped market that we're going after and really the progress we're starting to make and the physician buy-in that we're seeing, we've got patients that are motivated. I think the opportunity in front of us is really a great one. So I wouldn't say no to M&A, but I will say that we're going to focus on executing the strategy that's out in front of us right now.

Great. Thank you. Yep. Thank you, John.

Thank you. One moment for our next question. Our next question comes from the line of Rick Wise from Stiefel.

Good afternoon, gentlemen. Welcome to you both. Steve, maybe start off with a high-level question, then I'll ask a financial question. You talked about the three-prong approach, and you sort of touched on it a little bit earlier. But I'd be curious, given your unique background and your experience, inevitably, you're looking at things with fresh eyes and also bringing your unique background. Where do you think you walk in and where's the low hanging fruit from through your experience prism, if you will, you know, and you think, wow, I really think we can accelerate. Is it Is it literally the thoughts around strategy about uptake in existing accounts, or just if you see what I'm getting at.

I do, Rick, and thanks for the question. It's a very good one. You know, I've been able to spend some time in the field, and I've spoke to physicians. I've been able to speak to hospital administrators. I spend time with our sales force as well as the sales management team. And it's really interesting because it's different account by account, and that's what we've seen across the country. And I'll give you a couple of examples if I can. I was at an account on the East Coast. We consider them a high-volume Zephyr valve user. Now, at that account, they don't really have the clinical coordination and the navigation and the efficient processes in place to continue to grow that as quickly as they could. You've got physicians that want to do it, but they don't have the infrastructure and support in place to do it. The flip side of that is I go to an account in the Midwest, and they've got two clinical coordinators. They've got a nurse practitioner. They have multiple physicians that are doing Zephyr valves, and really they'll benefit from COPD physician awareness in the market as well as patient awareness. So it's totally a different strategy there. And then even taking it a little bit further, a highly prestigious university hospital here on the West Coast was in the office yesterday, I was speaking with one of the interventional pulmonologists there, and you have a really eager physician that's looking to continue to grow the practice. They have the strong clinical and operational foundations that they need in order to do so. They would benefit from COPD physician awareness in the marketplace to let the market know that they are actually doing procedures at this facility. So each one has different needs. I think That gets to my thoughts on strategy where we need to put a little bit more specificity into a couple areas and really define that path specifically depending on where that account is along the sales process.

Gotcha. And again, one more high level. You highlighted making innovation pipeline a priority. There's obviously the innovation pipeline in place. I mean, it sounds like probably M&A is not gonna be a big near-term priority given everything else going on. But what do you mean by that innovation pipeline? Is there something beyond what we know and you're not ready to talk about it or are there opportunities to invest internally and drive innovation in some way that we're not appreciating?

Not really, there's nothing that's some secret program that we're working on right now. We're really focused on the Aracil clinical trial. I think there's a lot of innovation with that product and I think it's going to open our TAM up significantly over time. So that's part of the innovation I'm talking about. I think our ability to continue to innovate our current product offering, make certain components easier to use, or just refinements from a sustaining perspective are very important over time. Ease of use is obviously a big driver for adoption, and so we want to continue to make the procedure as easy as possible for our physicians. So we'll continue with sustaining work in that area. And then as we go through and develop the strat plan and spend more time on that, there may be other areas that we go after. But right now, the primary innovation that we're looking at from an R&D perspective is AeroSeal and some kind of sustaining improvements. I think more broadly, when you think about innovation, there's ways that we can innovate the way that we interact with physicians, the way that we interact with patients, so marketing innovation. And also, I think you've seen innovation from our sales perspective and the sales process that's in place. So we look to innovate across the organization, coming up with creative ways to get after this really large TAM, this big untapped market. with physicians that want to do more procedures, with motivated patients that'll advocate for themselves. And in most cases, we have administrative buy-in as well. So it seems like all the pieces are in place. We just have to innovate that workflow and the process to get these customers up and get their productivity continuing to grow.

Gotcha. And just, Mehul, if I could ask a third here. gross margins came in 100 basis points better than I was looking for this quarter. And I look back at last year and I appreciate it's not perfect example maybe, but gross margins sort of stepped up first quarter to second quarter and sort of stayed there basically at the 74 or better level in the last three quarters. Why are we still thinking about 74 to 75? What gets you to or at or above the upper end of that range, just your perspectives would be very welcome. Thank you both.

Yeah, thanks, Rick, and nice to meet you. I'd say our Q1 gross margins, you know, were driven primarily by a favorable geographic mix. So, you know, U.S. to OUS revenue, you know, we had about 68% of our revenue coming from the U.S. and the rest of it from OUS. So, That helps quite a bit on the gross margin side. And then we also had some higher manufacturing capacity utilization, which helps. So that's what, you know, raised the number in Q1. And, you know, it's 30, 40 basis points, right? That rounds up to 75. So it's, you know, we did see some benefit mostly from geographic mix. But as we get into the second half of the year, And that's what we've guided to, that we expect higher volumes to, you know, move through the factory. And that is the primary driver in, you know, increasing gross margins. So geomix will also help, but that's, again, volume-based and then better utilization. So that's what we expect in the second half of this fiscal year to drive, you know, gross margins up to 75%. Thank you.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Our next question comes from the line of Larry B. Jelson from Wells Fargo.

Hey, good afternoon. This is Vic Chopra for Larry B. Jelson. Thanks for taking the questions. Welcome Steve and Mehul. So maybe just two questions for me. Steve, one for you. You talked a little bit about your priorities over the next year. Maybe just talk about what would success look like for you in the next 12 months, and then I had a follow-up, please.

Sure. We've got an aggressive program in front of us. I think we've got a new sales process that's in place. We're doing quite a bit from a clinical perspective. both with our convert to trial as well as our Japanese post-approval study and ongoing from a marketing perspective, reaching out and doing more training from a COPD physician and patient perspective, raising awareness there. So I think good for me looks like continued progress in all of those areas. We've got, as I said, I believe in the plan that's in place and execution of that plan and our ability to do so would be a big win for us.

And if I can add in, we'd also want to make sure that we're, you know, meeting or beating our guidance and really focus on, you know, driving operating leverage through our P&L and through our business.

Great. Helpful. A good transition to my next question as well. You know, you lowered your OpEx guidance for the year this afternoon. Maybe just talk about what's driving that. Thank you.

Yeah, sure. So, you know, when we set guidance, you know, in February, we assumed an accounting methodology for SBC, you know, expenses, you know, for an executive transition. And as we you know, continue to evaluate that and close the books for the quarter, you know, we had a methodology change. I mean, SBC is a non-cash expense, so it was a methodology change that was affirmed by our auditors, and, you know, that's what drove the reduction in the SBC guide. Non-OPEX guidance stayed the same, you know. I mean, non-SBC OPEX guidance stayed the same. So we're still, you know, managing to that number, which is around 12%, you know, year-on-year growth. And that's investing in not only our commercial activity, but also in the, you know, clinical trials and the R&D initiatives that we have underway.

Thank you. I would now like to turn the conference back over to Stephen Williamson for closing remarks.

Thank you, Operator. To conclude, we had a great first quarter, and I'd like to take a moment to thank Pulmonix employees worldwide for their continued dedication to helping patients with severe emphysema breathe easier, do more, and to lead fuller lives. I think this is really a great time to be at Pulmonix. And with that, thank you all for your time, and have a great rest of your day.

This concludes today's conference call. Thank you for participating you may now disconnect.