Medical Innovation Exchange

Elise Reuter

23andMe CEO plans to take company private

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Dive Brief:

23andMe CEO Anne Wojcicki plans to take the DNA testing company private, according to a Wednesday filing with the U.S. Securities and Exchange Commission. 
Wojcicki currently owns more than 20% of the firm’s total outstanding shares, and about 49% of voting rights. She plans to acquire all outstanding shares of the company. 
The CEO wants to maintain control of 23andMe and would not be willing to support any alternative transaction, according to the filing. 

Dive Insight:
23andMe, which makes consumer genetic tests, has been looking at strategic alternatives as its shares have fallen. The firm went public in 2021 through a merger with a special purpose acquisition company valuing 23andMe at $3.5 billion. Its stock has traded below a dollar this year, down from its IPO price of $10 per share.
23andMe has also expanded into drug research by using its database built up through the DNA testing business, with Wojcicki claiming the company was a full-fledged biotech.
In February, Wojcicki discussed splitting up the consumer and therapeutics businesses as a potential option. 23andMe’s board formed a special committee last month, composed of independent directors, to review strategic alternatives.
Now, the CEO is considering taking the company private, a move that TD Cowen analysts said could be the “new most likely outcome” in a Thursday research note. 
Wojcicki is working with advisers and plans to seek out potential partners and financing sources, according to the SEC filing. The special committee would review her proposal once it’s available, alongside other options, including continuing to operate as a publicly traded company. 
The Cowen analysts wrote that the company has been challenged because biotech investors, who would be interested in the therapeutics side of the business, don’t want to be involved in a direct-to consumer platform. Other investors might be interested in a mature platform healthcare business but don’t want to support the cash burn of therapeutics. 
“A potential business split, which has been previously discussed, remains on the table in our view and addresses the central dilemma of 23andMe shares, but beyond that options are seemingly limited, in our view,” they wrote. “We view the company turning private from Ms. Wojcicki’s proposal as the new most likely outcome which should be welcomed by investors.” 
23andMe has faced financial pressure as sales of DNA tests have declined and an exclusive research collaboration with GlaxoSmithKline ended last year. In its fiscal third quarter, ending Dec. 31, revenues fell about 33% year over year to $44.7 million.
After a data breach last year affected 6.9 million people, the company now faces multiple lawsuits from its customers. 

‘An incredible undertaking’: 5 takeaways from Philips consent decree

Philips will have to undergo “an incredible undertaking” to meet requirements set out by the Food and Drug Administration in a consent decree last week, attorneys told MedTech Dive. 
The U.S. Department of Justice filed the document on behalf of the FDA on April 9, barring Philips from selling certain sleep and respiratory products in the U.S. for years until it proves compliance. The action came as Philips continues to work through a recall of more than 15 million sleep apnea machines and ventilators that started in June 2021 due to soundproofing foam breaking down and being inhaled by patients.

The consent decree includes new provisions and actions rarely taken by the agency to help patients affected by the recall, the FDA said in an emailed statement. That includes the agency taking the unusual step of requiring a manufacturer to repair, replace or refund the purchase price of devices.
“When you look back at how many consent decrees FDA enters into, and what the scope of them are, this would be on the more stringent side than I’ve seen in a while,” said Jamie Ravitz, a partner at the McDermott Will & Emery law firm.
Here are five takeaways from the legal documents filed last week:
1. The FDA uses its authority for the first time to require repairs, replacements or refunds
The agency has used its authority in the past to require a recall, but it is “very rare,” said Beth Weinman, an attorney with Ropes & Gray. 
Now, the FDA is using its authority to require a company to submit a plan for the repair, replacement or refund of the recalled devices, which Weinman couldn’t find any instance of the agency doing before, since at least 1995.    
In its statement on the consent decree, the FDA said Philips must come up with a recall remediation plan, agreed to by the agency, that includes the repair, replacement or refund of the purchase price of recalled devices manufactured after November 2015. Philips won’t be able to manufacture or sell certain devices from its Respironics facilities in Pennsylvania or California until it meets this requirement. The agency declined to provide a copy of the remediation plan. 
“My guess about why that is the case here is that you’re dealing with consumer products at the end of the day. A lot of consent decrees in the past have dealt with medical equipment that’s first and foremost being used in hospitals,” said Jennifer Bragg, a partner at Skadden who specializes in healthcare issues. “I think the FDA is trying to create a situation where there will be some opportunity for consumers to, if not be made whole, to be really taken into account when it comes to replacing these devices.”

Philips began recalling millions of Dreamstation sleep apnea machines and ventilators in June 2021. 
Courtesy of Philips

2. Philips must pay a percentage of profits on devices it can sell
Philips will still be able to manufacture and sell certain devices deemed medically necessary, including bilevel positive airway pressure machines for patients between 40 and 66 pounds, and ventilators and associated accessories, FDA spokesperson Kristina Wieghmink wrote in an email. 
However, the company will have to pay a portion of revenue from those sales to the U.S. Treasury. That amount starts at 10% from now through December, and gradually increases to 25% by 2026. 

Bragg said that the FDA has taken this approach when a company is out of compliance but is selling products that are important to the market, such as where a total ban would create a shortage. The payments are designed to keep the company from “getting too comfortable” because it’s selling products. 
“What I see from that is the government trying to give a very strong incentive to Philips to really expeditiously try to move through and get to compliance under the decree,” Bragg said. She added that being able to sell some devices might seem like a boon, but it can also be a challenge because the company is “fixing the plane while it’s flying.”
3. Philips is required to hire several inspectors and demonstrate compliance for at least 5 years
Philips must bring in three different quality systems experts to monitor its facilities. The company must hire a design expert to check if changes made to the replacement or reworked devices would require Philips to submit a new premarket notification to the FDA. 
Philips must also hire an auditor to inspect the covered facilities for five years. If problems are reported, the FDA can require the auditing cycle to be extended or start over for up to two years. 

“It’s an incredible undertaking. I couldn’t tell you how much it costs, but it is a massive investment of resources.”

Beth Weinman
Attorney with Ropes & Gray

Weinman said it’s standard in consent decrees for the covered facility to have to demonstrate five years of continuous compliance. 
“It can take many, many more years,” she said. “That means that every audit, you come out clean for a period of five years.” 
Requiring all of these reports also means that there is a lot of work for Philips and the FDA to do going forward. 
“It’s an incredible undertaking,” Weinman said. “I couldn’t tell you how much it costs, but it is a massive investment of resources.”
4. Philips received two warning letters before the consent decree
Two warning letters were sent to Philips years before the consent decree was filed and the recall began. Both were related to inspections at its Murrysville, Pennsylvania, facility, according to a complaint filed by the DOJ on April 4. A 2011 warning letter was sent to the company regarding an inspection where FDA investigators documented Philips Respironics’ failure to submit medical device reports related to malfunctions with its Trilogy ventilators. In 2014, a separate letter found that Philips failed to monitor and control production to ensure devices conformed to their specifications. 
The complaint said the FDA’s most recent inspections ”documented significant violations, many of which are the same as or similar to violations that have been previously observed at the Defendants’ facilities.” 
Typically, the FDA will issue warning letters and take other actions before it escalates to a consent decree, Ravitz said. 
“They’ll go this route, when they feel like there’s extenuating circumstances, like a pattern of non-compliance,” he said. 
5. Philips was the subject of another consent decree in 2017
In 2017, Philips was the subject of a consent decree related to quality control problems with Philips North America’s automatic external defibrillators. Some of those facilities were part of Philips’ connected care business segment, which its sleep and respiratory care unit falls under, according to the FDA’s complaint. 

“One of the things that I think it’s important to know first is how unusual it is for CDRH to go down the path of seeking a consent decree.”

Jennifer Bragg
Partner at Skadden

“One of the things that I think it’s important to know first is how unusual it is for CDRH to go down the path of seeking a consent decree,” Bragg said. “To me, it’s an indication that this was a very important issue from the government’s point of view.” 
Weinman said the consent decree and invocation of a rarely used authority reflects “a significant lack of trust.” 

“FDA wants companies to do what they need to do and voluntarily come into compliance,” Weinman said. “I don’t think the agency relishes having to do the work to come up with a plan and a consent decree like this.”

Abbott looks to ‘highly productive’ device pipeline for future growth

By the numbers

Q1 revenue: $9.96 billion
2.2% increase year over year

Medical devices revenue: $4.45 billion
14.2% increase year over year

Net income: $1.23 billion
7% decrease year over year

Abbott CEO Robert Ford said Wednesday on an earnings call that a slate of recent approvals and a “highly productive” pipeline will accelerate growth. 
The company recently received FDA authorization for a minimally invasive treatment for tricuspid regurgitation, a blood test to detect traumatic brain injury, and the ability to integrate its Freestyle Libre 2 Plus glucose sensor with Insulet’s Omnipod 5 insulin pump. 
Abbott is looking to enter the competitive pulsed field ablation market with its Volt system. The company also plans to add new devices to its diabetes segment, including a dual-analyte sensor that can detect glucose and ketones, and a consumer version of its glucose sensors that Abbott launched in the U.K. last year. 
“We’ve got a real nice cadence of products and pipeline, beyond the next 12 to 18 months,” Ford told investors. 

Abbott raised its sales and earnings forecasts for 2024, which it typically does not do in the first quarter, Ford added. The company now expects organic sales growth of 8.5% to 10%, excluding COVID-19 tests, and diluted earnings per share of $3.25 to $3.40.
“I just feel that this type of performance that we delivered gives us the confidence for the remainder of the outlook of the year. So we felt comfortable raising the guidance,” he said. 
While some challenges remain from January, including foreign exchange rates and geopolitics, the company sees more opportunities than risks, Ford added. 
PFA competition
Medtronic and Boston Scientific have already brought their pulsed field ablation devices to the U.S. market. The new form of cardiac ablation is intended to treat a type of arrhythmia called atrial fibrillation by selectively scarring heart tissue. 
Abbott is working on its own version of the technology with its Volt system. The company recently finished enrolling in a trial in Europe and expects to file for a CE mark before the end of the year. It also recently began enrolling patients in a U.S. trial that would generate the data needed to file for FDA approval, Ford said. 
“It’s an important therapy. It’s an under penetrated disease,” he said. “So we know there’s plenty of growth in this segment. And as a result of that, it’s highly competitive.”
Tricuspid repair vs. replacement
Ford said Abbott’s new Triclip system could be a “billion-dollar opportunity” as the company builds up more capabilities and clinical data. The device is used in a minimally invasive procedure to repair the tricuspid valve to prevent blood from leaking back through it.

Triclip is competing with a system made by Edwards Lifesciences to replace the valve entirely. Ford expects safety to play a “key role” in helping physicians decide between repairing or replacing the valve. 
“I expect repair or Triclip to be the preferred option unless the valves are too damaged, and then obviously replacement is the only remaining option,” he said.
About 5 million patients globally, including 2 million people in the U.S., could be in the patient pool. 

GE Healthcare imaging CEO to resign

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GE Healthcare imaging CEO Jan Makela will resign on July 8 to join another company. Makela has not disclosed which company he will join, but it is a private firm that is not a competitor, according to a Monday filing.
Makela has worked at GE Healthcare for more than 17 years, recently collaborating with Mayo Clinic on imaging and AI. He also led acquisitions including the purchase of Imactis, which makes CT navigation technology, and MIM Software, which makes AI-enabled image analysis and workflow tools across multiple specialties. 
GE Healthcare spun out as an independent company in January 2023.

Exact Sciences names Aaron Bloomer CFO

Name: Aaron Bloomer
New title: CFO, Exact Sciences
Previous title: Vice president, Baxter International
Bloomer will become the new CFO of Exact Sciences effective May 15, the company announced Monday. Earlier this year, current CFO Jeff Elliott announced plans to step down in 2024 for personal reasons. 
Bloomer has more than 15 years of experience in finance and accounting, previously leading financial planning, reporting and analytics (FP&A) for Baxter. Before that, he worked for 3M for more than a decade, including as senior vice president of FP&A and CFO for 3M China.

He joins Madison, Wisconsin-based Exact Sciences as it looks to grow adoption of its Cologuard screening test for colon cancer and its Oncotype DX test to predict the risk of breast cancer recurrence. The company is also working on a next-generation version of Cologuard and a blood test for colon cancer screening.
William Blair analyst Andrew Brackmann wrote in a research note that Bloomer seems to fit the bill for what the company was looking for in its next CFO. 
“There is no doubt that Bloomer will have big shoes to fill, with Elliott seen as a trusted and highly talented leader, for which investors have gained immense trust in,” Brackmann wrote. “That said, Exact is a much stronger entity today than when Elliott joined in 2016, with a broad infrastructure and global team in place, making this less about one hire and more about the entire team — all of which remains strong, in our view.”

Steris to sell dental segment for $787.5M

Dive Brief:

Steris has agreed to sell its dental business to investment firm Peak Rock Capital for $787.5 million in cash, the companies said on Thursday.
The sale will allow Steris to focus on its core markets of healthcare, pharma and medtech, CEO Dan Carestio said in a statement. The Mentor, Ohio-based company provides sterilizers and washers, surgical tables and other equipment.
Steris decided to divest the dental segment “after a thorough review of strategic alternatives,” Carestio said. The business reported $407 million in revenue and $86 million in operating income during the 12-month period ending Dec. 31, 2023.

Dive Insight:
Steris acquired the dental business in 2021 when it bought Cantel for $4.6 billion. The purchase was expected to complement Steris’ existing business, adding infection control products for endoscopy and providing an entry into the dental market.
Now, the company is looking to sell the segment. Peak Rock Capital agreed to pay an additional $12.5 million to Steris if the dental business achieves certain revenue targets in fiscal year 2025. 
“We are confident this business will do well with the investment and support of Peak Rock Capital,” Carestio said.
The planned sale comes after a few challenging quarters for the dental segment. Dental revenues declined by 6% on a constant currency basis in the quarter ending Dec. 31 because of “reduced orders from a large customer due to a temporary disruption of their operations as a result of a cybersecurity incident,” Carestio said. Without the cybersecurity incident, revenue for the segment would have been flat year over year.
On a November earnings call, the CEO said the economic downturn has affected people’s ability to spend money on elective dental procedures, a trend that is rippling through the entire dental industry. 
Steris expects the sale to close in the first quarter of its 2025 fiscal year, subject to regulatory review and other customer closing conditions. The company expects the sale to reduce its interest expenses by about 35 cents per diluted share on a full-year run rate basis. 
Steris will use most of the proceeds to repay debt.

Philips restricted from selling respiratory machines in DOJ consent decree

Dive Brief:

The Department of Justice filed a consent decree of permanent injunction against Philips on Tuesday in response to the company’s ongoing recall of sleep apnea and respiratory devices.
The settlement would restrict Philips from producing or selling new continuous positive airway pressure (CPAP) and bi-level positive airway pressure (BiPAP) machines and other devices in the U.S. until the company meets certain requirements. Philips also faces restrictions on exporting devices that are being provided to patients impacted by the recall “to help ensure remediation of U.S. patients is prioritized over export for commercial distribution.” 
Philips is required to implement a recall remediation plan that the Food and Drug Administration must agree on, including providing patients with new or reworked devices, or a partial refund. Jeff Shuren, director of the FDA’s Center for Devices and Radiological Health, said in a Tuesday statement that the finalization of the decree is a “significant milestone.” 

Dive Insight:
Philips said in January that it had agreed to stop selling certain devices in the U.S. as part of a consent decree. Now, that agreement has been finalized and filed in the U.S. District Court for the Western District of Pennsylvania. 
The consent decree primarily focuses on Philips Respironics’ U.S. operations, including its manufacturing facilities in Murrysville and New Kensington, service center in Mount Pleasant and the Respironics headquarters in Pittsburgh, all of which are located in Pennsylvania, spokesperson Steve Klink wrote in an email. 
Attorneys told MedTech Dive in January that consent decrees are a significant step. The agreement gives the FDA a lot of power, and sets out clear mandates for companies to fix problems identified by the agency, often requiring years of compliance.
Philips began its recall of respiratory devices in June 2021, after the company found that foam used to soundproof the devices could break down and be inhaled by users, causing health risks. That recall now encompasses more than 15 million devices, according to the FDA’s database. Philips said it has remediated 99% of actionable sleep therapy device registrations, referring to devices where the company has the necessary information. The company’s remediation of ventilators affected by the recall is ongoing, Klink said. 
The complaint alleged that Philips violated the Federal Food, Drug, and Cosmetic Act by selling devices that did not meet current good manufacturing practice requirements. The decree also alleged that Philips failed to provide the FDA with specific corrections made to devices, such as when the company added foam replacement to its preventive maintenance schedule for the devices in 2018, but didn’t disclose it until a 2021 inspection. 
Another inspection of Philips’ Mount Pleasant facility in 2023 found further violations of good manufacturing requirements, according to the complaint. A facility in Carlsbad, California, found in violation of the requirements closed down in December 2022.
The injunction includes, “novel provisions aimed at helping ensure that patients receive the relief they have long deserved,” Shuren said. “This also marks the first time a device company is providing a remediation payment option for a recalled device under a consent decree.”
In addition to ceasing sales of respiratory devices, Philips must also contract with an independent testing expert within 10 days to evaluate the company’s testing of the previous foam and a new, silicone-based foam the company is using to replace or rework some of the affected machines. 
The company must also retain an independent expert to inspect its sleep and respiratory care facilities, other than those in Pennsylvania and California, to evaluate whether they are complying with federal requirements and correct deficiencies. 
The FDA said it is assessing the supply chain for these products and “believes there is adequate supply and that alternative manufacturers are able to handle patient demand for CPAP and BiPAP machines.” 
Philips said that millions of patients in the U.S. use its sleep and respiratory care devices, and it will be allowed to continue servicing those devices and sell accessories and replacement parts. The company also plans to continue to provide new sleep and respiratory care devices, accessories and parts outside of the U.S., subject to the consent decree requirements, Klink said. The Respironics business generated global sales of about 1 billion euros in 2023.

Synchron launches patient registry to prepare for brain implant trial

Dive Brief:

Synchron, a startup making a brain implant rivaling Elon Musk’s Neuralink, is launching a patient registry.
The New York-based company is developing technology that would allow people to use computers and other devices with hands-free point-and-click. The idea has garnered backing from Bill Gates’ and Jeff Bezos’ investment firms. 
Synchron said last year that six U.S. patients were implanted with its Stentrode device in a feasibility study. The company declined to comment on the timing of the results. CEO Thomas Oxley told Reuters on Monday that the company is preparing to recruit patients for a large-scale clinical trial that would be required to seek device approval from the Food and Drug Administration. 

Dive Insight:
Brain-computer interface (BCI) technologies, such as Synchron’s implant, translate brain signals to allow users to operate digital devices. The technology is still largely considered experimental, and developing it can be challenging because each person generates unique brain signals, the U.S. Government Accountability Office said in a 2022 report. 
Synchron’s Stentrode device is intended to help people with limited mobility operate technology using only their thoughts. It stands apart from competitors because the procedure to place the device doesn’t require open brain surgery. Placement is done through a minimally invasive procedure where the device is implanted through the jugular vein and sits atop the blood vessel on the surface of the motor cortex, the part of the brain responsible for movement.
Once in place, Stentrode expands to press electrodes against the vessel wall close to the brain, where it can record neural information and deliver currents to targeted areas, a Synchron spokesperson wrote in an email. The signals are captured and sent to a wireless antenna unit implanted in the chest, which sends them to an external receiver. 
A patient using the technology would also need to learn how to control a computer operating system that interacts with assistive technologies.
Synchron will analyze the preliminary data from the feasibility study while waiting for the FDA’s blessing to proceed with a larger study, CEO Oxley told Reuters. The company plans to include “dozens of participants” in the trial and has received interest from about 120 clinical trial centers, he said in the report. 
Neuralink, which is also working on brain chips, said last year that it had received FDA approval to begin its first-in-human study. However, FDA inspectors found problems with record keeping and quality control for animal experiments less than a month later, Reuters reported. Musk tweeted in January that the first patient received an implant and posted a video last month of the person playing chess on a computer. 
Other BCI companies include Blackrock Neurotech, which received a breakthrough device designation for its system, and Braingate, which is running a feasibility study.
Mass General Brigham launched an industry group last month focused on BCI technology. The group, which will collaborate with the FDA’s Center for Devices and Radiological Health, includes Synchron, Neuralink and Blackrock Neurotech.

FDA grants de novo nod to AI tool for detecting sepsis

Dive Brief:

The Food and Drug Administration granted de novo clearance to an AI tool to help clinicians predict and diagnose sepsis, the first time the agency has authorized such a tool.
The Sepsis Immunoscore software, developed by Chicago-based Prenosis, provides a risk score for clinicians on a patient having or developing sepsis within 24 hours. The score is based on 22 parameters, including respiratory rate, blood pressure and white blood cell count. 
Hospitals already use early sepsis detection tools, despite lacking FDA review. The agency clarified in a final guidance in 2022 that clinical decision support software that provides a risk score or probability of a condition should be regulated as a medical device.

Dive Insight:
Sepsis is a severe response to an infection and is responsible for nearly 270,000 deaths each year. It requires prompt treatment, but symptoms can vary across different people. 
Because it is such a big problem, software companies and hospitals have dedicated resources to building early detection tools that can alert clinicians when a patient may be at risk of developing sepsis. These tools have recently come under scrutiny after researchers published a study in 2021 finding a widely used tool developed by electronic health record company Epic Systems only correctly predicted the risk of sepsis 63% of the time before clinician intervention. 
Prenosis CEO Bobby Reddy Jr. said the company decided to take a different approach, seeking FDA clearance before the agency set out that requirement. The company received de novo authorization on April 2, which will allow its software to serve as a predicate for other sepsis tools. 
Reddy pointed to a culture clash in the space with some companies breaking the rules by marketing their AI products without authorization.
“You have companies that are really used to regulation and rely on trust,” Reddy said in an interview with MedTech Dive, adding that some firms are excited about AI, but don’t have as much of an understanding or culture around regulations. 
“We don’t think it’s right to have this out on the market without third-party validation,” the CEO added. 
The Sepsis Immunoscore has four risk categories: a patient’s rate of sepsis within 24 hours, in-hospital mortality, length of stay in the hospital and ICU admission in 24 hours. The tool is integrated into the electronic health record and displays a number from 0-100 to indicate the risk of sepsis. It also provides a list of all 22 parameters, ranking them in the order of which contributed the most to the increased risk for that patient.
“A lot of clinicians don’t trust AI products for multiple reasons,” Reddy said. “We are trying very hard to counter that skepticism by making a tool that was validated by the FDA first, and then the second piece is we’re not trying to replace the clinician.” 
The tool was cleared based on a 750-person study across three sites. Prenosis ran sub-analyses to assess the tool’s performance across gender, race and health comorbidities. 
Roche Diagnostics started collaborating with the company in 2020 to expand Prenosis’ core dataset and help it work toward FDA clearance.

3M spins out Solventum

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Dive Brief:

3M completed a spinoff of its healthcare business, Solventum, on Monday. The company started trading on the New York Stock Exchange under the ticker SOLV and was quoted at $67.96 a share at midday. 
The new company will sell 3M’s medical devices, including its stethoscopes, IV port protectors and negative pressure wound therapy devices. It also houses 3M’s dental, health IT and filtration products. 
Solventum CEO Bryan Hanson told investors in March the spinoff will be one of the top three in medical device history, citing its global scale and more than $8 billion in revenue last year.

Dive Insight:
Solventum told investors last month that the standalone company expects organic revenue in a range of from minus 2% to 0% in 2024, and a free cash flow of from $700 million to $800 million. The four business units that make up the company — MedSurg, dental solution, health information systems and purification & filtration — generated total sales of $8.2 billion in 2023. 
MedSurg is Solventum’s largest unit, at $4.6 billion in revenue last year. Negative pressure wound therapy is a large product for the business, but a slow-growing one. Hanson sees an opportunity to expand use of the devices, estimating that only 10% who should be using the technology are getting it. 
The company’s advanced wound dressings, which include its Tegaderm product, are a faster-growing segment for the company, but Hanson saw some gaps in its portfolio. 
Hanson told investors that Solventum has several strong brands, but it is not currently performing at market. The reasons for that were because as a subsidiary, it had to compete for resources with other businesses, and it focused more on industrial metrics than the metrics a medtech company would, focusing more on margin than innovation, Hanson said. 
The new company will face challenges at the beginning, including debt from the spinoff and working through sole-supply arrangements with 3M. 
Hanson said going forward, the company will be disciplined with where it is spending time and resources on its sub-markets, and then create growth drivers within those categories. 
“It’s going to take time. This is not months, it’s years,” Hanson said. “But there’s a clear pathway. The risk associated with this is low because we’re in attractive markets.