Accuray Inc (ARAY) 2011 Q1 法說會逐字稿

Good day ladies and gentlemen and welcome to the Q1 2011 Accuray Incorporated Earnings Conference Call. I'll be your operator for today. At this time, all participants are in a listen only mode. Later we will conduct a question-and-answer session.

(Operator Instructions)

As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Tom Rathjen, Vice President of Investor Relations. Please proceed, sir.

Thank you Keith. Hello and thank you for joining us this afternoon for Accuray's conference call for the first quarter of fiscal year 2011. Joining us today are Dr. Euan Thomson, Accuray's President and Chief Executive Officer, And Derek Bertocci Accuray's Senior Vice President and Chief Financial Officer. As we have done in the past quarters, we will again be referring to revenue and backlog data which are found in PDF files on the Investor Relations page of the Accuray website at accuray.com, please log onto the site to view this information.

Before we begin I need to remind that except for the historical information, the information that follows contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, revenue guidance, installations, gross margins, operating expenses, profitability, clinical acceptance, and regulatory approvals. These and other risks are more fully described in the risk factors section of our annual report on Form 10-K as updated from time to time by our quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. And now I would like to turn the call over to our President, Chief Executive Officer, Dr. Euan Thomson. Euan?

Thank you, Tom. And thanks to everyone for joining us on today's conference call to review our First Quarter fiscal 2011. I will start with a recap of the business highlights of the quarter then I'll comment on the current sales environment for the CyberKnife, provide brief clinical and reimbursement updates and review our experience from the recent ASTRO Convention in San Diego.

During the First Quarter we added seven orders to backlog, increasing total backlog by approximately 2% from the fourth quarter. Nine CyberKnife systems were installed and six were shipped during the quarter, maintaining a positive book-to-bill ratio, which, we believe, is a continued indicator of future growth. During the past four quarters a net of 53 CyberKnife orders have been added to backlog, 38 units have been shipped and 36 units have been installed for customers around the world. I'll now provide a brief review of the business highlights of the First Quarter of our Fiscal Year 2011, and I'll then turn the call over to Derek for detailed financial review.

During the quarter, Accuray's total revenue was $38.1 million dollars, within the guidance range provided last quarter. Revenue from sources, excluding previous deferred Platinum revenue was $26.1 million during the first quarter. We recorded net loss of $4.6 million or $0.08 per share.

Seven CyberKnife systems were added to backlog during the quarter, contributing a total value of $33.8 million. In addition, service and ancillary orders with a value of $16.8 million were also signed. Of the seven orders added to backlog, two were from the Americas and five orders from the European region. While we had seven orders to backlog in the First Quarter, ending September 30. Four additional orders that were anticipated in Q1, ended up closing during the first two weeks of October. Three of these were from the Americas region and one from the European region. The delays experienced related to obtaining and completing the contract documentation necessary to enter an order into backlog rather than customer negotiations. While these orders cannot be included in our Q1 backlog, they indicate that we are maintaining positive sales momentum. These orders will be included in our Q2 and annual totals.

We had one cancellation of an order in backlog during Q1. This cancellation was a result of the dissolution of the business partnership purchasing the system. Derek will provide a more detailed analysis of backlog in a few minutes.

During the First Quarter, nine CyberKnife systems were installed, of which four were in the Americas region, four in the European region, and one in Japan. The worldwide install base as of September 30, 2010, was 216 systems. As in past years the First Quarter of the fiscal year has typically been our slowest period from an order, shipments and revenue perspective. Nonetheless, worldwide interest in the CyberKnife remains strong and we anticipate significantly stronger quarters as the fiscal year progresses.

The Americas sales team reports a steadily improving hospital spending environment, with budgets becoming increasingly available. The team reports that the sales pipeline continues to expand with growing interest in CyberKnife Radiosurgery among leading hospital customers, as well as academic centers. We have seen little observed impact on the radiosurgery business from recent competitive product releases.

The European region remains particularly strong. And outside of specific impacted areas, reports no sign of slowing down. Of the five orders coming from the region in the First Quarter, three were from academic centers reflecting the expanding amount of CyberKnife technology among the region's key opinion leaders. Italy's Vicenza Hospital became the first European hospital to be equipped with the two CyberKnife systems. In Japan, the 22nd CyberKnife system was installed during the quarter, providing increased opportunity for full body radiosurgery treatment for the nation's expanding cancer population. As recently announced, the eighth CyberKnife system was installed in South Korea. This installation was the second CyberKnife at Korea Cancer Care Hospital, marking it at the first hospital in Asia to have two CyberKnife systems in use.

Also, Accuray has hired a new general manager for the APAC region, which is expected to have a favorable impact in this important territory. Last week Accuray attended the annual convention of the American Society for Radiation Oncology, or ASTRO, in San Diego. ASTRO was successful for us this year, with considerable activity at the Accuray booth and a record number of visitors obtaining information and receiving demonstrations of the latest CyberKnife technology. As a result, the sales leads generated were more than double the number from last year.

We will now spend time analyzing these inquiries to evaluate their sales potential. We announced a number of exciting products at this year's ASTRO meeting including a suite of products to further enhance the CyberKnife efficiencies and to improve its ease-of-use for clinicians and physicists. Recognizing the immense growth in the field of CyberKnife lung radiosurgery and the CyberKnife's unique ability to track and correct for (inaudible), combined with the three-dimensional delivery system, we announced the long optimized treatment product. This product is pending 510-K clearance and is intended to provide clinicians the ability to offer every lung radiosurgery patient the option to have a non-invasive, fiducial free, CyberKnife treatment and the ability to choose the optimal accuracy for a specific lung tumor, regardless of location.

Expanding clinical demand is a key driver in generating sales results, at this year's ASTRO Convention, 40 abstracts were accepted for presentation. Highlighting the use the CyberKnife Robotic Radiosurgery System. Presentations covered an array of growing clinical indications including lung, prostate, intercranial, renal, pancreas, spine and breast. Three of these abstracts were from ongoing Accuray sponsored multi-center lung and prostate clinical studies, continuing to support positive outcomes through each of these clinical applications. Of particular note was the release of five-year clinical data for CyberKnife prostate treatments, by Dr. Chris King's group, documenting excellent local control and minimal long-term toxicity.

Also presented at ASTRO were two abstracts on the use of CyberKnife for the treatment of breast cancer, the most common form of cancer in women. Two new studies from the University of Texas Southwestern Medical Center and Fox Chase Cancer Center both highlighted the significant advantages the CyberKnife treatment may provide by sparing the skin, lung and heart for breast cancer patients, as compared to standard gantry based radiation therapy systems and invasive brachytherapy treatments. CyberKnife offers a unique benefit of providing patients with a non-invasive treatment option, with radiosurgical precision due to its ability to track and automatically correct for motion of the breast, as the patient breaths normally. There's enthusiasm among clinicians regarding the use of CyberKnife for breast cancer and we're excited by the benefits it can bring for breast cancer patients.

Finally, before I turn the call over to Derek, I wanted to provide a brief update on the recent release of Medicare's C schedule for 2011. The G codes, which hospital's use to bill for CyberKnife treatments are, as expected, being maintained. Medicare payments under the outpatient prospective payment system for typical three to five fraction CyberKnife treatments are essentially unchanged from the prior year. Accuray's business is focused on improving the lives of cancer patients worldwide. During the First Quarter we were very pleased to announce that over 100,000 patients have now been treated with the CyberKnife. With that, I'll now turn the call over to Derek for the financial review. Derek.

Thank you, Euan. Revenue of $38.1 million for the First Quarter of fiscal 2011 was in the middle of our guidance range, though it was down from $50.6 million in the first quarter of the prior year. Excluding revenue previously deferred for systems sold with legacy platinum service agreements, revenue was $36.1 million a decline of approximately 14% from the comparable $42.2 million in the First Quarter of the prior year.

In past years, we have observed a pattern of relatively low revenue and new orders in the First Quarter of the fiscal year and this pattern has continued in the current fiscal year. Gross profit margin of 47.9% was up 5.2 percentage points from the 42.7% gross profit margin in the First Quarter of the prior year. This reflects improved profitability on both system and service revenue. We continue to manage operating expenses effectively, holding them to $24.4 million for the quarter, which is approximately 3.5% below the level from the prior year's First Quarter. The overall result was a net loss of $4.6 million or $0.08 per share for the First Quarter compared to a net loss a $3.3 million or $0.06 per share for the First Quarter of the prior year.

Net orders added to backlog totaled $44.6 million in the First Quarter of fiscal 2011, which includes the value of service orders entered into by our customers as well as other ancillary purchases. During the First Quarter seven new orders for CyberKnife systems were added to backlog, two from customers within the Americas region and five from the European region. One of this quarter's orders was shipped and converted to revenue within the quarter. We received one cancellation during the quarter due to dissolution of the purchasing group. Including this quarter cancellation, net orders to backlog totaled six systems in the First Quarter. Comparing net orders for CyberKnife systems to shipments of five systems indicates a 1.2 book to bill ratio.

As Euan mentioned, orders for an additional four systems were added to backlog in the first half of October. Orders, as well as significant customer interest in the CyberKnife expressed at ASTRO, demonstrate ongoing customer demand for the CyberKnife, which will help support our continued growth in the future.

At the end of the First Quarter backlog was $381 million, a 2% increase from last quarter's ending backlog of $374 million. Ending backlog was comprised of $136 million in contracts for CyberKnife systems, $16 million for CyberKnife shared ownership programs, and $229 million associated with long-term service agreements. [To assist in] international financial modeling efforts, we anticipate that order backlog for CyberKnife systems will generally convert to revenue over a 12 month period. Though, this period can range from as little as one quarter to well beyond four quarters, due to customer's schedules.

CyberKnife shared ownership programs entail a five-year usage period. Therefore, backlog for these orders are expected to convert to revenue over a five-year period, unless the systems are bought out early. Service orders cover from one to five years of service, therefore, service backlog is expected to convert to revenue over a period of up to five years. Charts reflecting our backlog have been placed on the Investor Relations page of the Accuray website.

CyberKnife product revenue total $19.3 million, down 36% from $30.3 million dollars in the First Quarter of the prior year. Service and other revenue totaled $18.2 million, down 8% from $19.7 million in the First Quarter of the prior year. Excluding revenue previously deferred for system sold with Platinum service agreements. Product revenue totaled $18.1 million, down 27% from $24.9 million in the First Quarter of the prior year. While services revenue totaled $16.9 million, up 1% from $16.7 million in the First Quarter of the prior year. This decline in product revenue was due to fewer revenue systems. This increase in service revenue was due to a $1 million increase in systems service revenue resulting from an increase in the installed base under service contracts, offset by a $0.8 million decline in revenue earned for training and other services.

We installed nine CyberKnife systems in the First Quarter, four in the Americas region, four in the European region and one in Japan. This brings worldwide CyberKnife install base to 216 units at the end of the First Quarter. With 136 systems in the Americas region, 33 in the European region, 25 in Asia-Pacific region and 22 in Japan.

Prior to fiscal 2006, we sold CyberKnife systems in the US with Platinum service agreements, which entitled customers to specified upgrades over the term of their platinum service agreements. All revenue and cost of sales were deferred when such systems were sold After all the required upgrades were installed and began to recognize revenue and cost of sales evenly over the period of service coverage that remained under the original Platinum service agreement. Final upgrades under Platinum agreements were usually requested by customers and installed several years after the installation of the system. As a result, revenue and cost of sales for systems and services have usually been recognized over the last one to two years on a normal five-year Platinum service term.

All upgrades had been installed by the end of the First Quarter Fiscal 2010 on each of the 30 systems sold with Platinum service agreements. We have fully recognized revenue on 26 of these arrangements and are recognizing revenue over the remaining service term on the final four systems. In Fiscal 2009, we recognized $60 million of revenue from systems sold with Platinum service agreements and in Fiscal 2010, we recognized $29 million of Platinum revenue. We expect to recognize approximately $5 million of revenue for systems still covered by Platinum service agreements in Fiscal 2011. During the First Quarter of Fiscal 2011, we recognized approximately $2.7 million of revenue for systems still covered by Platinum service agreements of which $1.2 million was system revenue. Platinum service revenue recognized during the First Quarter totaled $1.5 million and was comprised of $0.7 million for service work provided during the First Quarter and $0.8 million for service work deferred from prior quarters.

Our gross profit margin improved for both products and service revenues. Product margins improving to 62% and 51.7% in the First Quarter of the prior year, due to the shipments up VSI systems in the First Quarter of Fiscal 2011. There are additional features and capabilities enable VSI systems to garner higher average price than earlier models. Service margins improved to 33.4%, from 29.2% in the First Quarter of the prior year, due to greater efficiency derived from increases in the number of systems covered by service contracts.

During the First Quarter, operating expenses totaled approximately $24.4 million, down $0.7 million from the Fourth Quarter and down $0.8 million from the $25.2 million in the First Quarter of the prior year. The overall reductions in operating expenses reflect our ongoing efforts to prudently manage these costs. Accuray's balance sheet remains strong with cash and investments ending the quarter at $140.9 million which includes $42.6 million of cash and cash equivalents and $98.3 million of short-term securities.

We are reconfirming the guidance announced last quarter and expect total annual revenue to be in the range to $210 million to $225 million. Total revenue excluding amounts related to Platinum contracts, is expected to be in the range of $205 million to $220 million, in Fiscal 2011, up from $193 million in Fiscal 2010. Product revenue is dependent on our customers' construction schedules as they build or renovate facilities to house their new CyberKnife systems. Based upon the number of orders placed into backlog over the last four quarters and ongoing sales activity, we expect quarterly installations and revenue in the Second Half of Fiscal 2011 to be considerably stronger than the first half. We continue to expect our gross profit margin will be in the range of 48% to 51% for Fiscal 2011, up from 46.9% in Fiscal 2010, due to improved margins on product and service revenue.

In addition, we believe that we have opportunities to further enhance the lead role of the CyberKnife in radiosurgery through continued investment in R&D. We also believe that we have opportunities to increase market awareness to the benefits to treating cancer patients with CyberKnife radiosurgery. We believe that progress towards these goals will be critical to maximizing long-term growth in revenue and profitability of Accuray for our shareholders. Accordingly, we plan to increase our efforts in R&D including development of next generation CyberKnife technology. In addition, we plan to pursue sales and marketing activities to increase awareness of the CyberKnife for radiosurgery. To support these programs, we plan increases in spending in Fiscal 2011, principally on R&D and also, on sales and marketing. Through continued careful management and control of expenses, we anticipate a modest reduction in general and administrative expenses in Fiscal 2011.

We anticipate that we will operate at approximately break even for the full year of Fiscal 2011, with the second half of the fiscal year being significantly stronger than the first half. Based on the strong order flow we achieved over the last four quarters and ongoing sales activity, plus the developments in R&D and market awareness that we plan to pursue in fiscal 2011, our longer-term goals are to grow annual revenues while maintaining solid gross profit margins and prudent management of operating expenses. We believe these are the elements essential to generate pre-tax profits of 10% or possibly more. Now, I'd like to turn the call back to Euan.

Thanks, Derek. We'll now be happy to take questions.

(Operator Instructions) Your first question is from the line of Mark Arnold, please proceed.

Good afternoon. Just to start with, can you walk us through the math on the system side? And I think you explained this a little bit in the prepared remarks, but I just would like a little more commentary, if you could? Where you place nine systems for about $19 million in revenue, but you booked seven new systems for $34 million in revenue? I think you mentioned the VSI contribution there in the quarter, in terms of those shipments, but can you just talk a little bit more about that big differential in revenue per system between your placements and your new orders?

Yes, Mark. This is Derek. The installations were nine systems, but, as you know, oftentimes, especially when systems are sold through a distributor, once we have completed our obligations, which is to ship the product to the distributor, if the distributor is responsible for installation, we take revenue at the time we ship, not at installation. We do report installations just because many of our investors want to follow that. So, in this quarter, the number of systems that were revenue systems was five, as opposed to the nine that were installed. The seven units or of new orders compared to the five systems that were revenue systems in the quarter.

Okay, that's helpful. And then, just a follow up to that. The VSI product mix in the quarter, is that a mix that we should expect will be approximately the same, should it increase going forward? How should we think about the contribution there and impact it has on margins going forward for the rest of the year?

Yes. The VSI product, that we had indicated when we introduced it, we anticipated selling it for a higher price, which is in fact, what we saw this quarter. I think that from quarter to quarter there will be some variability, as to what the mix of customers. So, you should expect that the VSI will become an increasingly important part of the mix. But, from quarter to quarter, there will be some variability on it. This quarter there was a relatively small number of units shipped and most all of them were VSI units, so it helped to accentuate the additional -- the improvement in margin this quarter.

Okay, one follow up from me, just one last thing. At ASTRO last week I was particularly impressed with the lung optimization improvements. I think people often overlook how big that opportunity is. Can you just remind me, how big you view the lung opportunity, in terms of number of patients, and then how many you've treated in the past year?

We treated last year about 6000 lung patients.

That's the worldwide number.

Which is a worldwide number.

Primary lung tumors represent about 130,000 patients a year in the US. So, it's a big opportunity. Lung cancer is the most common form of cancer, and there was actually, interestingly, data which may have been relevant from the CHEST Meeting, which was taking place last week as well. There was a study presented there indicating some progress with lung screening studies. A study of about 50,000 patients who were followed and randomized into CT screening or plain radiography screening and it was found those who with CT -- who went through a CT screening program, survival was about 20% improved, so they were less likely to die of lung cancer. And those types of early detected primary lung tumors are exactly the type of tumor that we feel, long-term, the CyberKnife will add most value for. So, we definitely see lung as a continuously improving, expanding market for us.

And metastatic disease is about twice that number, somewhere in that range?

Probably about 500,000, actually, so a little more than twice.

Great. Thank you guys.

Your next question is from the line of Bob Labick, please proceed.

Good afternoon.

Good afternoon.

Hello. You recently announced some enhancements to your service offerings, I was wondering if you could just expand -- tell us a little more about that and expand on it? And tell us what other things, I'm assuming this is one of the things you are doing, and what other things are you doing to maintain customers on the Diamond service plan, please?

So we, yes -- the additional things we included on Diamond were really related to services we can provide as a Company. So, things like marketing support services and consultancy services, treatment planning support as opposed to just simple product offerings and upgrades, which is where Diamond has been positioned in the past. And one of the benefits of that is that those -- the types of service we are talking about here, are services which new customers, often use and often need. So, whereas in the past, Diamond customers, probably realize the most benefit a year or two after they'd installed their system. Because at that point, the point of installation, they'd had the most modern CyberKnife system, a year or so later, there were new upgrades offered and they want to enhance their system. These services are services they used up-front. So, the point-of-sale of the CyberKnife, it's attractive to -- it makes Diamond a more attractive proposition to customers. And generally, it's been well received.

Okay, great. And then, I don't know if you have this or we can wait for the queue, but you have how many of the systems were under service plans during the quarter?

I apologize, Bob, we don't have that right off the top of our head. It is in the queue, so, we will try and get that for you.

Okay. No problem. Thank you very much.

(Operator Instructions) And your next question is from the line of Josh Jennings, please proceed.

Hello, good afternoon, gentlemen, this is actually Matthew Weiss in for Josh. I was wondering if you had talked in the prepared remarks about Dr. King's data he had presented at ASTRO with respect to the prostate cancer out to five years? I was wondering if you could maybe speak to any other prostate data that you may be coming out in calendar '11? And how meaningful it is for the radiation oncology community in general, in terms of accelerating adoption of SRS for prostate cancer and, what that five year data can mean for the market in general?

So, I can answer the second one more easily than the first. It's a little hard for us to predict exactly what data will be published during the year. We do know, generally, that the studies are clearly aging toward the five year mark. And we'd expect, certainly, over the 18 months for -- over the next 18 months or so for the other two studies to approach the five year mark. Now, how soon they will get into print, it's a little bit hard for us to say. But at ASTRO, the Winthrop Study reached about the five year mark, and the Naples was somewhere in the four to five year range. So, certainly, in the next year to 18 months the data should mature to the point where its -- includes a sizable proportion of five year data. Again, how soon it gets into print is a little bit hard for us to judge.

The impact question is relatively simple to assess. I think the first thing we would expect to see, is increased confidence amongst our existing CyberKnife users to start prostate treatments. Certainly, we are a long way from having 100% adoption of prostate treatments throughout the CyberKnife world, and that would be the first impact. And clearly, the next one then, is the strengthening of the pro forma as we put it into the sales process.

Okay. That's helpful. And then, you had talked also in your prepared remarks about how your sales funnel coming out at ASTRO. I was wondering if you could provide just a little more color on the current overall hospital purchasing environment in North America, specifically, for radiation oncology systems and maybe as a benchmark, compare it to where it was at this time last year?

That's a little bit hard to give data on that. But, I can say that we feel like things are improving slowly. We don't see any dramatic changes, certainly no dramatic changes in either direction. We have seen continued strengthening on some international markets, Europe in particular is -- remains very, very strong for us and we're getting very good growth there. The US market, I think, is strong, but not necessarily expanding at the rate of some of the international markets.

Okay. And then as a follow-up, in Europe, is there any noteworthy country by country specific activity where it may be harder in one country or region than the other? Specific dynamics in Europe or just the overall strength?

I think there are changes country by country. In France, we saw, and we've talked about this before on calls, that we saw the results of the initial assessment of CyberKnife that was funded by the National Cancer Institute, that led to reimbursement in France. And France is a -- it has a good and strong and expanding pipeline for us. We've seen things driving along nicely in the UK, and well in Germany as well. So, the big markets in Europe appear to be strong and strengthening for us. Italy remains strong for us, it's always been a good country for us. And other countries such as Turkey, we have pockets where we are extremely successful. Other markets are growing, and in some cases we're establishing a foothold there. One thing that's important to remember worldwide, is that in each country it's very important that we launch a CyberKnife program in a very methodical way. Selling one system doesn't necessarily mean that you've got a whole program, you have to address issues of reimbursement, of clinical acceptance, clinical adoption, awareness of patients and awareness of physicians and start to change referral patterns. So, that remains a continued investment for us, to engage each new site in each new country and built a program independently.

Okay, very good. And then, one last one, moving across the globe to Japan. Can you speak on some of your success there, specifically with the Shonin approval? And you did mention that you have the new general manager into that region, maybe you can talk about what kind of favorable impact you think that will have on returning Japan back to a growth region, in terms of orders? Because obviously, I think there was two installations, but no specific orders out of that region?

That's a good question. So, Japan, we did our launch of our G4 product on October 5, so, not that long ago. The initial response was very good, we had good media coverage and good media presence. We also had immediate customer interest, and it's a little bit early to talk about the impact on sales. But certainly in terms of the sales pipeline and the sales funnel, we definitely saw that it grabbed people's attention and we've had a lot of inquiries, actually, from both from new potential users and people that have some of the last generation CyberKnife are looking to maybe upgrade their systems to the G4. So, I think that's a -- it's a market with considerable potential.

One of the challenges we have there, we're still moving out at the environment of it being an intracranial treatment towards it being a full body treatment. And Japan is a market, similar to those that I mentioned just now, where you really need to build a clinical program, an in-country clinical program. So, whereas there's a lot of interest and a lot of interest in CyberKnife, a lot of interest in G4, we know that in order to build the business long-term we also need to build clinical programs in Japan, to -- around such treatments as lung cancer treatment. So we have a lot of work there to go, but we nevertheless, have a lot of activity and a lot of sales interest and a lot of enthusiastic and supportive customers.

Okay. And then -- that's great. If I can just squeeze in one last more -- one last one? It's still, obviously, pretty early on the Siemens collaboration, but if you could just remind us when you believe that you can see some incremental system sales there, is that more of a F '12 event?

Yes. What we've -- we remain consistent with what we've said up until now. We are not expecting revenue, particularly, in this year. We would expect to make some progress with distribution channels and we'd expect to make some progress, perhaps, with generating some orders into backlog. But those will probably be toward the end of the year, if they happen. It takes a long time to bring on any new distribution channel and Siemens is, clearly, a large country -- a large company with a large infrastructure and it takes awhile to get it moving and to get it engaged.

Okay. Thank you for taking my questions.

Thanks.

Your next question is from the line of Mark Arnold, please proceed.

Just, that was actually my last question regarding Japan. And if you -- if there's any other update there, in terms of how fast you expect to see some of those?

Yes. I'm reticent to give a sales forecast there, but, I can say that we've actually been very encouraged. The in-country team was extremely pleased and I think the launch exceeded their expectations. So we are actually very positive about the Japanese market. But, with the rider, as I mentioned just now, that we do need to build clinical programs outside of the brain, in Japan. And it will not need to be as extensive as we've run already, but certainly some local experience, perhaps some local endorsement of the CyberKnife as a lung treatment machine will certainly go a long way into rapidly expanding the market.

I'd now like to turn the call back over to Mr. Euan Thomson.

Thank you. Accuray remains dedicated to expanding the use of CyberKnife radiosurgery, as we change the way in which cancer is treated around the world. As always, I want to take a moment to knowledge Accuray employees and the tremendous contribution they make every day. Thank you for joining us today, and we look forward to speaking with you on our next call.

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