TELA Bio, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Telebio Fourth Quarter Earnings Conference Call. At this time, our participant lines are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Greg Fedacek from Gil Martin Group. Please go ahead, sir.

Thank you, Victor, and good afternoon, everyone. Earlier today, Telebio released financial results for the fourth quarter and year ended December 31, 2020. A copy of the press release is available on the company's website. Joining me on today's call are Tony Koblich, President and CEO, and Nora Brennan, CFO. Tony will begin the call by providing an overview of our operational highlights, and then Nora will provide a detailed analysis of our fourth quarter and full-year financial performance. Before we begin, I'd like to remind you that during this conference call, the company will 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 forms 10-K and 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, product potential, and the regulatory environment, sales and marketing strategies, capital resources, or operating performance. With that, I will now turn the call over to Tony.

Thanks, Greg, and good afternoon, everyone. We appreciate you taking the time to join us today. Before reviewing our operational highlights, I would like to recognize our team's hard work and dedication at Telebio. Despite the challenges and uncertainties of COVID-19, our company has made meaningful progress in all areas of our business over the past 12 months. In 2021, we plan to build on this momentum and continue to be a leader and innovator in developing tissue reinforcement materials for soft tissue reconstruction. Now turning to our results. Total revenue for the fourth quarter was 5.7 million, representing growth of approximately 17% compared to the fourth quarter of 2019. Like many med tech companies with product used in surgical procedures, we experienced both highs and lows in the fourth quarter. Throughout October and into November, sales for our Ovitex products were picking up, and we were cautiously optimistic about recording strong year-over-year growth However, as the holidays approached in the second half of the quarter, we experienced increase of volatility in demand for our products as COVID cases and hospitalizations increased. This trend continued into January with some areas of the country being worse than others. Starting in early February and continuing through today, surgical procedure trends have improved. While we are hopeful these trends will continue throughout the year, forecasting COVID-19 cases and hospitalizations is a challenge. and is best left to the experts. Before turning the call over to Nora, I would like to talk about some of our accomplishments from 2020. Starting with our BRAVO study, as a reminder, the BRAVO study is a multi-center prospective study designed to evaluate the clinical performance of OVETEX for the treatment of ventral hernias, and 85% of the patients met the criteria for ventral hernia working group grade 2 or grade 3. Last week, we submitted our latest data set for publication, and the data continues to be very good. Seventy-six of the 84 participants, or 90%, have completed their 12-month follow-up with only two having hernia recurrences, both of which occurred adjacent to the repair. In addition, 51 patients completed their 24-month follow-up, and none experienced a new hernia recurrence. Of these 51 patients, only one experienced the surgical site occurrence between 12 and 24 months, and this SSO did not require surgical intervention or implant removal. As we have noted in previous calls, the 24-month post-procedure data are considered to be the gold standard and is vital in persuading surgeons to adopt Ovatex. Based on the current BRAVO clinical trial data, the hernia recurrence rates for Ovatex at 12 months is 2.6%. and 0% for the 51 patients that are out at 24 months. These rates compare very favorably to results published for synthetics, resorbable synthetics, or biologics. Based on our latest estimates, which account for delays we are experiencing scheduling follow-up and site visits for data verification, we expect to have validated data on our 24-month patients by the end of the year. In 2020, another area of success for us has been robotic hernia repair. Today, most robotic hernia repairs use plastic mesh due to its strength and the ability to roll it tightly to fit down a troll car. However, due to the unique properties of Ovitex, we are gaining market share with minimally invasive and robotic hernia procedures. For the fourth quarter, we estimate that approximately 50% of our usage came from MIS and robotic procedures, and we saw a 32% sequential increase, in our LPR unit sales. This data point coincides nicely with our recently completed survey. Based on the data we compiled, synthetic mesh products have been the subject of an increasing number of lawsuits with over 13,000 cases filed in the state of Rhode Island alone. As this number continues to grow and make headlines, surgeons tell us that approximately 20% of their patients are concerned about the use of plastic mesh and would prefer something more natural could be used. Also, nearly 60% of the surgeons we surveyed believe that synthetic mesh probably causes long-term risk of complications. We believe the migration from plastic mesh will continue and we are hopeful that sales of Ovitex will benefit as a result. Regarding the plastic and reconstructive market, we are very pleased with the continued expansion of the PRS launch as we experience record unit volume and dollar growth in the quarter. This is very encouraging, giving the variability and access to supply chain administration for new products and technology. It is emerging that there is a real opportunity for a portfolio of PRS products that are tuned to different patient needs and surgeon technique preferences. This is a vastly different paradigm than what exists today with one material cadaver skin for all situations. As we mentioned last year, in response to the pandemic, we developed TeleLive, our virtual marketing sales solution designed to educate surgeons about our product portfolio and clinical data. Since the start of these programs, approximately 200 surgeons have participated, and roughly a third have been plastic surgeons. Engagement with plastic surgeons remains high, and many have told us they are seeking advancements in plastic reconstruction. especially as it relates to acellular dermal matrices or ADMs. This data point is consistent with the uptick in the number of IDN and GPO requests we are receiving for cross-referencing our PRS portfolio. We continue to grow our commercial team. And at the end of 2020, we had 45 territories filled by 40 sales reps. Our goal is to have 48 reps in place by the middle of 2021. and we expect to continue to increase our number of reps through the remainder of the year. These sales reps will be filling our health trust accounts, making sure that we have coverage in all of our major IDNs and GPOs. In the fourth quarter, we increased the number of hospital customers from 270 to 325, with the number of health trust accounts also increasing. And finally, we believe physical access to hospitals is beginning to ease. As our sales reps are seeing more requests to cover surgeries, we expect this trend to continue as more vaccines are rolled out. I would now like to turn the call over now to Nora to review our fourth quarter and full year financial summary.

Thanks, Tony. And hello, everyone. Please refer to our press release issued earlier today for a summary of our financial results for the fourth quarter and full year 2020. After commenting on our financial results, I will also provide our financial guidance for 2021. Revenue for the fourth quarter of 2020 increased 17% year-to-year to $5.7 million. For the full year 2020, revenue increased 18% to $18.2 million compared to 2019. The increase in both periods was due primarily to the expansion of our commercial organization and increased penetration within existing customer accounts. Gross profit as a percentage of revenue improved in both the fourth quarter and full year periods compared to the respective prior year periods due to longer shelf life on our products and inventory management for our overtaxed products. Fourth quarter gross margins increased to 65% from 61% in the prior year period, while full year 2020 gross margins increased to 62% from 60%. Sales and marketing expenses were $6.4 million in the fourth quarter of 2020 compared to $5.4 million in the same period in 2019. For the full year 2020, sales and marketing expenses were $22.1 million compared to $18.1 million for the full year 2019. The increase in both periods was due to the expansion of the commercial organization and related activities partially offset by lower travel and consulting expenses. G&A expenses were $2.9 million in the fourth quarter of 2020 compared to $2.5 million in the same period in 2019. For the full year 2020, G&A expenses were $10.1 million compared to $6.2 million in 2019. The increase in both periods was due primarily to an increase in insurance premiums, personnel costs, and professional fees. R&D expenses were $1.2 million in the fourth quarter of 2020 and $4.3 million for the full year 2020. Fourth quarter 2020 R&D costs were slightly higher than the same period in 2019 based on personnel costs and additional testing fees. However, full year 2020 R&D costs remain relatively flat compared to 2019. Loss from operations was 6.7 million in the fourth quarter of 2020 compared to 5.8 million in the prior year period. For the full year 2020, loss from operations was 25.3 million compared to 19.2 million for 2019. Net loss was 7.8 million in the fourth quarter of 2020 compared to 6.5 million in the same period in 2019. For the full year 2020, net loss was 28.8 million compared to 22.4 million for 2019. We ended 2020 with 74.4 million in cash and cash equivalents compared to cash, cash equivalents in short-term investments at 54.6 million at year end 2019. This increase includes net proceeds of approximately 44.7 million from the company's public offering completed in June 2020. Now turning to the outlook for 2021, we expect total revenues to be in the range of 27 million to 30 million, representing growth of 48 to 65 percent over 2020. We are providing guidance today, but recognize that the course of the pandemic remains uncertain, and as a result, the rate of recovery in surgical procedures remains variable. In our full-year guidance, we assume a gradual improvement in procedures in the first half with no further setbacks from new surges or new COVID variants. We will continue to assess the current environment and provide updates on our quarterly calls as continued uncertainty relating to the dynamic environment with the COVID-19 pandemic could materially impact this projection. I'll now turn the call back over to Tony.

Thank you, Nora. I'm happy to announce we will be hosting a virtual KOL day on April 12th from 3 p.m. to 4.30 p.m. Eastern Time. This 90-minute webinar will feature presentations from key opinion leaders discussing the benefits of natural repair and soft tissue reconstruction and how OVTECs have shown superior outcomes for patients. These presentations will be followed by a question and answer session. A formal invitation will be sent out later this week. We hope you can join us. With that, Victor, please open the call up for questions.

As a reminder, ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone. And to withdraw your question, just press the pound key. Please stand by while we compile the Q&A roster. Our first question will come from the line of Matthew O'Brien from Piper Sandler. Your line is open.

Matthew O' Afternoon. Thanks for taking the questions, and I just wanted to pass along my heartfelt condolences on the news that Martin had passed away. I'm so sorry to hear that.

Yeah.

Thank you, Matt. We appreciate it. Thanks, Matt. Yeah. So, turning to guidance, you know, Nora, I appreciate you providing some of that guidance today. you know, it's about 20% lower than we had kind of been thinking, you know, heading into the year, understanding there's some COVID impacts. So can you just kind of deconstruct where, you know, where we're expecting, you know, some softness here on the hernia side, on the plastic side, you know, and where things could potentially, you know, even provide a little bit of upside as we start to exit this year?

Sure. So thanks for the question, Matt. So I think as Tony mentioned when he was speaking before, we saw some softness coming out of December into January, and it held up a little bit through February. So we're starting to see a rebound, certainly in the back half of February and into March. So, you know, just to be a little bit more cautious around the guidance, that's why we're guiding a little bit lower than where you had us. I think for us, it's really making sure that you know, we get the count up. I mean, as Tony mentioned, you know, we ended the year with about 40 reps, but 45 territories, it's really making sure that we've got reps in the locations and who have access to hospitals and IDN. So I think with that, that's part of the conservative nature of the guidance that we're providing today. um the other thing is you know we're when we think about prs i mean we're still doing the launch i mean we had some great growth in q4 around our prs and we expect that to continue but you know it's still a new it's a new product we're still you know working with plastic surgeons um to use it working with the clinic our clinical development team so i think for us it's just trying to be really conservative not really sure you know when and how quickly we're going to be able to get into the hospital Certainly around with a lot of vaccines.

Yeah, I'll add a little bit, Matt, as well. That's color to what Nora just said. You know, for us, we're thinking about the transition zones between quarters, right? So we go back to 2020 and we look at that transition zone between Q2 and Q3. The transition zone there was, you know, tough, tough quarter in Q2. a little bit of backlog in Q3, and then I'd say Q3 was really stabilization, probably at a bit of a depressed level due to COVID, but certainly stabilization that lasted until around Thanksgiving, and then it got pretty volatile up and down. And that volatility seemed to have a more national impact, I'd say, for the month of January. But then by February, we snapped back pretty good, right back on plan, and then March is looking really strong, I think we have a very good shot at exceeding plans. So I like where we are very much. You know, Q4 sort of, you know, ended choppily, whereas, you know, we're jumping off from Q1 into that transition into Q2, super, super strong, right? We invested, we hired, we trained, we got great data. We just have everything firing on all cylinders. So that transition zone, if it happens and we stabilize and get stronger in Q2, I think that represents some upside. As we said in our notes and as Nora indicated, you know, we really forecasted around more of a Q2 to Q3 transition, really with more chop in Q2. So I think there's some upside there. And then certainly, you know, we think there's just a lot of upside around our PRS business and how that's starting to move forward. But again, it's new. We're not the incumbent and we've got to overcome, you know, being the new guy on the block and getting the hospital administration moving. You know, the other thing that we're really cautiously optimistic about is the number of accounts that we put on, right? So the supply chain, there's two real problems that COVID causes, right? Problem one is surgeon and rep access, getting together, servicing, doing the cases. But problem two is really dealing with supply chain admin. And they come and go. They came back, and I think we had a backlog of new accounts come online in Q4 that really haven't started producing yet. And so those will start producing as COVID clears out. So, yeah, I think there's upside baked into what we're doing here. You know, we just have to be realistic and We had to pick our spot of when we think things are going to clean out, and we chose a quarter later, you know, more like a second half clean up.

Okay. Okay. It makes total sense. It just sounds like you're being conservative and hoping that things kind of free up as we get to the back half. Yeah.

I mean, I can tell you our commercial team is bullish, you know, coming out of Q1. We just need to have things straighten out at least the way they were in Q3. If things straighten out like they were in Q3, you know, we have a lot of pent-up stuff that's getting ready to break loose, and we're feeling good about it. So that's the key.

Okay, helpful. And then just two more questions. I'll ask them both together to be mindful of everybody's time. But just, you know, Tony, I think you have to 200 surgeons on Tell Alive. How many, I think there's 140 coming out of last quarter. How many have converted over to using or starting or getting close to being able to use your product? Is it 50%, 80%, 90%. And then, Nora, what does cash burn look like this year if you're doing somewhere in that $27 to $30 million of revenue? Thank you.

Yeah, Tell Alive has just been excellent for us. It's been a lifeblood. You know, our mix is starting to get a little more heavy on the plastic surgeon side, and I think about a third of those surgeons have been on the plastic surgery side of the house, which is really, really good. You know, we estimate that there has been about, you know, I'd say 115% increase on average for the surgeons that go through the TeleLife program. Now, keep in mind that we're targeting two types of surgeons, right? We have those that are fresh, brand new, have never used the product. There's less of those, but we really have, you know, the bigger group are the surgeons that have done a little bit. They're intrigued. They like what they see. And this is a way to drive increased usage, but also perhaps to get their partners and get other surgeons engaged. So we're looking at that uptick as the key measure. And by, you know, by any measure, that 116% uptick, you know, in the next few months after Telalive execution, you know, is a very good signal. And I do think that the Tell Alive metric is also tied very closely to those 47 new accounts that we put on in Q4, and frankly, all of the new accounts, right? Because it's the main mechanism that we have for getting surge in buy-in. So I think it could be half of the Tell Alive programs have not yet started contributing yet to this revenue base because of whatever's going on on the ground. there's a tremendous pent-up demand. And maybe another way of looking at this is if you look at our territories, we're estimating that about 40% of our accounts right now are operating below pre-COVID levels, right? So that means that we have you know, pretty close to 60% of our accounts that are operating above pre-COVID levels. And that is all, you know, tell alive and all that, all the stuff that we're doing, you know, to adapt to the environment. Got it.

And Nora, just on the cash burn?

Yeah. So, I mean, we burned about $7 million in Q4. And I think on a run rate basis, Matt, we'll burn through maybe $28 to $30 million. based on our revenue guidance. So we've done a lot of good things, certainly with expenses in 2020, and some of that stuff is going to stick with us.

Got it. Thank you.

Thanks, Matt.

Thank you. Our next question comes from the line of Anthony Patron from Jeffries. Your line is open.

Thank you very much, and I'll second, again, condolences on passing of Martin and Best wishes to his family and everyone in the team at TILA. So, again, our condolences from myself and from the broader team at Jefferies as well. Appreciate it, Matt. Yeah, absolutely. Tony, maybe to just follow up on the 60-40 statistics you just gave, maybe a little bit more color there. Forty percent are still pre-pandemic levels. Sixty percent are at or above pre-pandemic levels. Is there a way to just sort of splice that out a bit in the sense that are the 40% that are behind, were those higher volume accounts, or is it just a mix of?

Yeah, yeah. So there's a couple things going on there, right? So one factor is just the construction stage of where our sales force was when COVID hit, right? So we had just built out to six sales regions when COVID hit, So we had essentially one non-functional region in our grouping because it was just getting built. When COVID hit, we had literally just hired the regional manager, and he didn't really have any reps, and we locked down hiring. So, you know, he was at a deficit. He's now building his territory up, and we expect great things from that territory in the next, you know, next coming quarters, then one of our strong territories pre-COVID was the Northeast. We were really strong in New York. And that really took a beating, you know, in the early stages of COVID. Everybody clearly remembers that. And that territory has not come back to full speed. So in that grouping, there's a lot of the accounts that rest in those two regions. You know, right now, we really have four of six regions that are fully built out, fully staffed, and are executing well. But we're not far away from having all six regions come back. Now, that said, everything is not perfect in those four regions, right? So when things got, you know, choppy and gritty at the end of last year and in January, We saw, you know, localized territory shifting in terms of COVID impact. We saw Florida, Texas, California, and then we saw a rotation back where the Midwest, you know, started to take some hits in January. And a lot of those states are where we had some of our best territories and highest producing account managers. So it's almost a little bit of whack-a-mole that has been going around the country. as these COVID swings unroll. But really for us, the core of it is that architecture of the two regions that got the most impacted by COVID. So we have not yet seen the benefit of all six regions firing, and I think we're going to start to see it Q2, Q3. It's coming. The optimism and bullishness within our commercial team is really, really excellent and good to see right now.

That's very helpful as a backdrop, and two follow-ups for me real quick, and I'll hop back in. One would be an update on hernia mesh lawsuits, and I know last year BARD and ETHCON were supposed to have, I guess, the commencement of MDL suits on synthetic mesh, and I believe that's been pushed out. So any update there would be helpful. And as you look now at, you know, FASICS and SHRATUS being sort of embedded in You have more Bravo data out there. We're presumably going to get some ruling on litigation that I believe would be a negative headline for the competitors. And so how do you think the conversation this year is going to feel with your sales force in talking to physicians about finally making that switch? Yeah, it already feels better, right?

So you are correct. You know, the litigation, the lawsuits were probably slated to kick off around summer of last year. Right now, our latest information is that the main bolus of suits in Rhode Island may be starting in the next month or so. So we're getting closer. And, you know, I think that that is already having an impact in terms of swinging the conversation more to natural repair, right? We did a little survey work. that we talked about in the past where, you know, even before the litigation becomes very public, 20% of patients are acutely aware and would love to have something different, you know, than plastic mesh. And a good percentage, 60% of the surgeons, you know, are now starting to think deeply about, well, you know, are there potential long-term complications and, you know, I have to think about and listen. to what my patients are asking those questions. I think the environment has never been better. You mentioned two competitors there. I think one competitor, the Stratus product, is a very expensive product. It's not really designed, tuned to be used robotically. The price is not right. The handling is not right, you know, for a lot of these simple procedures such as inguinal hiatal and simple ventrals and robotics. You know, Phasix, on the other hand, is. It is tuned for a wide array of procedures. And it's priced just a little bit more than our product. So we're in the ballpark with them. So I think a likely and a hopeful outcome would be that Obatex and Phasix can sort of become the duo that replaces Phasix and Strat as what they were, right, as this shift slowly starts to come online. And we would take that all day. That would be spectacular for us. So I think the dialogue is happening. The market research data seems to be showing the right trends. And we're very well positioned. And, you know, what's interesting is if you look at the IQ via data and you look at, you know, sort of barred as their own control, we definitely see growth and shift towards phasics at the expense of their wide, wide array of polypropylene permanent mesh products. So, you know, I think, you know, that to me is pretty good evidence that there's a lot of interest in natural repair products.

Very helpful. Thank you so much.

Our next question comes from the line of Kyle Rose from Canaccord. You may begin.

Great. Thank you for taking the questions, and I echo the condolences on our end as well. I wanted to just get a little more insight around maybe some of the underlying productivity that you're seeing Um, I appreciate the, the account gains, obviously impressive given the backup of the pandemic. Um, but maybe help us understand how much of those account gains are utilizing both products or both families of products versus maybe just over text or just PRS alone. And then, um, you know, maybe just help frame out a little bit more. You talked about the, I didn't know more than 40 accounts in the Q4. Those really haven't contributed yet. How should we think about what that utilization looks like? So the run rate you're, you're entering. 21, you know, assuming, you know, COVID is behind us.

Yeah, so I'm going to add, again, another variable to stack up on, you know, the proof source that we have, you know, that we're exceptionally well positioned. We did all the right things in 2020, right? We brought on 21 new reps, right, you know, in the pandemic. And those reps have already contributed about 20% to the revenue of So, you know, we've proven that we can, you know, attract the right talent that has the right relationships so they can function in the pandemic, first of all. And then we've invested mightily in the training and education. It's just constant, right? We're going to use this downtime to make them better and better. And then, you know, the virtual, the last piece of the pipe to the sale is definitely that surgeon, that hospital process, and our tele-live stuff, you know, has worked exceptionally well. So I think, you know, that's yet another variable that's on top of, but definitely contributes, I think, to that 60% figure of accounts being better than pre-COVID, right? And it all comes down to all of that stuff. you know, that was going on in the middle of in, you know, in the middle of that. So I don't know if that answers the question, or if you need a little bit more.

I can just I can just jump in a little bit too, as well as you know, how I think what we saw in q4, about 25% of the new accounts were just PRS. And then, you know, the remainder of hernia, but overall, we have the overlap of about 15%, we're signing up for both PRS and hernia. So, you know, as we get into 2021, the expectation is, you know, we'll see more accounts coming on board with both Ovitex, signing up for both Ovitex and PRS products. And we certainly see that within our health trust accounts.

Yeah, thank you for covering that, Nora.

Thank you. Okay, that's great. That's very helpful. And then when we think about, you know, the core hernia business, maybe obviously the trends within, you know, LPR robotics are very encouraging. But maybe just help us understand, like, what type of hernia cases are you seeing be prioritized versus maybe some that are that are, you know, building up from a backlog perspective, just trying to understand the mix of the type of cases we're going to see in 2021, and then kind of how that's impacting, you know, pricing, because I know, you know, some of the smaller meshes on the LPR side do come at a different ASP.

Yeah, that's very true. Our units are up more than our dollars right now in hernia, which, you know, I think is ultimately a good thing. in the sense that it demonstrates the utility of the product across all hernia types of procedures, right, and particularly MIS and robotic. So there may be a higher baseline volume that's driven by the LPR. The LPR is contributing more and more to the portfolio. But at the end of the day, the mix has been fairly consistent. As I'm looking at the data here, you know, across the quarters here, You know, roughly 50% open, roughly 50% robotic and lap, you know, seems to be fairly consistent. And, you know, our ventral business is still the bread and butter business, right? That business is the mainstay, you know, compared to inguinal and hiatals and even the simple ventrals, which are more robotic in nature. You know, I think about 50% is in that MIS category, which is probably simple ventrals on down. So, you know, I think we're going to continue to see that. And then I think the large sizes, I think we expect the large sizes, which really is a proxy for the complex ventrals and ab walls, those are going to tick up as the year goes forward because those are emergent. And as those get delayed, you know, we see backlogs of those coming out And I expect that there'll be a bolus of those coming at wherever the transition point is, right, that I spoke of earlier, whether it's Q1 to Q2 or Q2 to Q3. You know, there's going to be these emergent complex cases that just pick up steam. So I think we're going to see those start to come at us as well.

Great. And then I've just got, you know, two last questions that I'll sneak in together. The first one is just the overall competitive response you've seen in the market. You now have 12-month data with more than 50 patients that came out last week. So, you know, what kind of counter-selling are you seeing from other players? And then maybe just overall talk about, you know, the penetration into health trust from an account base. You talk about higher accounts, but maybe just help us understand where are you at from a health trust penetration.

Sure. So, yeah, so competition, right? So, you know, the competitive response is, you know, evolves, right, as we gain success. When we first came out, the competitive response was fairly simple. They're not on contract, kick them out, and they have no clinical data. Sure, their primate data is interesting, but clinical data, right? So we've largely solved those two counter details, counter punches, right? We've got excellent clinical data emerging, of course. You know, we need more, and we are collecting more. in terms of retrospective series, et cetera. And we need to finish off Bravo 1 to have the full complement of data at two years. But you can see that the Bravo data looks just spectacular relative to competitive products. And Bravo 2, which will be robot-specific studies, needs to get going as well. That's been delayed due to COVID. But we have some interesting ideas on how to jumpstart robotic data sets there. So, you know, we've shifted now to a point where clinical data and contracting are in place. So, interestingly enough, you know, we're just seeing usual med tech, you know, hand-to-hand combat kind of tactics, right? I mean, there's been a rash lately of what I'll call little ticky-tack studies, you know, like, you know, put a piece of plastic in a pouch and infect it with bacteria and compare it to Ovatex and, You know, if the bacteria eats the biologic material, it must be bad, right? Well, that means nothing clinically, right? It's sort of like a rigged test. And we've seen, you know, little titty-tack trials like that, you know, using enzymes and things like that. So, you know, it's good. It's healthy. We have the answers to every one of those, you know, little preclinical studies that they're throwing at us. Because we feel super confident in the product set, the clinical data is awesome. It's very consistent, not just with Bravo, but with the rest of our clinical data. We have about 500 patients aggregated in various studies from everything from robotics to inguinal to complex ventrals. And we even have some surgeons that have done 100% conversions. You know, one of the guys that's going to be speaking at the KOL event, I think he might have 500 procedures under his belt. just on his own. So, you know, there's just a drumbeat, methodical, steady, disciplined, you know, and that's just the way we're going to do it, right? So, sure, the flack will come at us. Right now, I wouldn't consider the flack to be, you know, anything out of the normal that I've experienced in my career, hand-to-hand combat in the field in the OR with surgeons.

And I think the other the other question was around the health trust account. So I'll just say I can go. I was just gonna say Kyle, so at Q4, about a third of our accounts were health trust accounts generated about a third of our revenue. So yeah, we saw about 12% increase in our Q4 numbers for our health trust account. So we're going to continue to penetrate in the areas where you know, there's, there's real opportunity is just kind of getting, getting some more of those health trust accounts signed up. And I think that's a real opportunity for us. Certainly coming into 2021.

Absolutely. Yeah, I'll throw a couple numbers at you to Kyle, you know, we had about 60 some odd health trust accounts at the start of 2020. And I think we ended the year in the 90s. And that's, you know, with a big chunk of the year, you know, being shut down, you know, to new products. So you know, health trusts Like I said, methodical, slow, steady. As they open up, we're there. We're ready. We have the reps. We made the investments. So we feel like we're in good shape there.

Great. Thank you for taking the questions.

Thanks, Kyle.

Thank you. Our last question will be from the line of Dave Takali from GMP Securities. You may begin.

I reiterate the condolences. What a great guy. Tony, I know you talked about hernia volumes, and thank you for the color on the monthly progression of 4Q and 1Q, but being down something like 30%, something to that magnitude maybe at the end of last year, and obviously we can look at some of the comments you made about how the first quarter progressed, but where does that stand today and sort of what is underlying your guidance in terms of how those procedures grow Is it back to sort of a normal cadence? I would imagine it might even get a little bit of an uptick from some of the reschedulings.

Yeah, I think that's right. Like I said, you know, in my other comments, if we could just get, you know, the volatility stabilized, you know, similar to the way it was in Q4, if we could get, I'm sorry, Q3 of last year, if we could get that back in place starting in Q2, that's where I think it gives us that clean air to get all six regions cranking. get those 47 new accounts moving, all of those metrics that I've been talking about that can spring-load this thing. We're just trying to pick our spot, Dave. It made no sense for us to build the forecast for the guidance around a Q2 start. I'm hopeful. I think it can happen, but we built it really around the Q3 start. So that's where it all is. It's in that time zone. It's the three-month delta, basically, was sort of our planning strategy. But like I said, I've never seen our commercial team as optimistic and as bullish. And that includes PRS, right? PRS, even though it's a newer product and it's very highly dependent on supply chain, it's a really attractive set of products from a pricing perspective and from a technology perspective. And it's running, you know, higher as a percent of revenue for sure. It's coming in, you know, closer to 20, 20-plus percent compared to 10 to 15 percent. And I think that's going to grow as well. So, you know, as a newer product, we don't have sort of an exact calibration on that pace But, you know, that's an overlay onto, you know, onto all of the great, you know, territory metrics, new rep metrics, new account metrics. You know, we're feeding that great new product set, you know, into all of that as well. So it's not just a hernia story for 2021. I think it has been up until now for the most part. But I think the story is going to, you know, it's going to shift and we're going to, you know, we're going to have two meaningful products here in the next couple of quarters to start talking about here, Dave. So...

I appreciate that. And, you know, we've talked about, you know, you guys having the potential to be sort of a hundred percent plus growth company. And if I look at your midpoint guidance over 2019, you know, you're sitting right around 84, 85. So I don't feel like you're far off, but I guess as we look at that, you know, in 2021, obviously understanding PRS is new and thanks for the color on the mix right there. But, uh, I imagine it grows faster, but any color you might want to give in terms of hernia versus PRS and how you get up to that.

I think thematically, let's assume we can crack the supply chain access through COVID. Let's assume that cleans up in Q2. That's going to help PRS tremendously. If you just look at the two procedures, the hernia stuff and the PRS procedures, hernia is definitely more impacted. It's more delayable, and a lot of the volume of those procedures are more, quote, unquote, elective and delayable than the PRS procedures, right? So, you know, our feeling right now, having been through these ups and downs and COVID cycles, is that hernia gets hit harder, right? So the fact that we're able to grow our volume into the simpler cases in that period I think is a great sign. We already talked about the complex big procedures. Those are going to come roaring back, and we're well situated for those. So then it's really PRS, which I think is going to be governed more on our ability to get access into the supply chain admin to get the new product started. You know, I think the plastic surgeons, They have a bit more power in the system to get what they want. The cost savings around our PRS offering are substantial and very attractive to hospitals in this environment. And all of that is going to play into our ability to get that product moving. And the fact that the procedure volumes are probably more stable through the ups and downs of COVID. You know, I would not be surprised if we saw a little bit more of a weight on the growth, at least as we are in the early stages of transitioning out of COVID, onto the PRS a bit as we figure out and crack the code on supply chain admin. And then, you know, we'll start to see the hernia, I think, be very much hardwired to the recovery, the COVID recovery, and that will come back nicely as well, too. Thank you.

Thank you. And I'm not showing any further questions in the queue. I'd like to turn the call back over to the speakers for any closing remarks.

All right. Thanks, Victor. So I want to thank everyone again for your time this afternoon and for your interest in Telebio. You know, before concluding the call, I'd like to spend a moment remembering TELA's co-founder and chief medical officer, Martin Personero, who passed away unexpectedly on March 7th. I had the privilege to work with Martin for many years and many of you have known him for many years as well at OrthoVita and here at Telebio. I can honestly say that Telebio would not exist without Martin. He was a co-founder. He put his money where his mouth was. He was an investor in the company from the beginning like most of us here were. He cared tremendously about patients. I share an office with him and he's on the phone. every day with surgeons discussing their outcomes and patients. And he also cared about the healthcare system. You know, Martin wanted nothing to do with starting a company that improved patients' lives and decreased the total cost of care to the system. And, you know, he really had tremendous pride in our company and he worked tirelessly to deliver clinical data, which, you know, we're going to benefit from for a long time. The whole Bravo system is, you know, he's the architect of that. So, you know, we're going to miss him tremendously. You know, he's got a wonderful family, kids, wife, all of that. And our thoughts go out to his family and all of us at Telebio will forever be grateful to Martin and we will continue to work to honor and build upon his legacy. The entire company is motivated to deliver and to deliver big results for him, for his family, and for everyone involved. So thanks. That's the end of my discussion.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.