Bausch Health Companies Inc (BHC) 2004 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the fourth quarter and full-year 2004 earnings conference call for Biovail Corporation. At this time all participants are in a listen-only mode. This conference call is being Webcast on the Worldwide Web at www.biovail.com. If anyone should require assistance during the conference call, please press the star key followed by zero.

As a reminder, a replay of this conference call will be available until 7:00 p.m. Eastern Standard Time on Thursday, March 17th. Callers from Toronto and countries other than the United States should dial 416-695-5800. Callers from the rest of Canada and the United States should dial 1-800-408-3053. The access code for the replay is 3140863.

Biovail's Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. To the extent any statements made in this release contain information that is not historical these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended.

We have based these forward-looking statements on our current expectations and projections about future events. Our actual results could differ materially from those discussed in or implied by these forward-looking statements.

Forward-looking statements are identified by words such as believe, anticipate, expect, intend, plan, will, and may, and other similar expressions. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances are forward-looking statements.

Forward-looking statements include but are not necessarily limited to risks and uncertainties including the difficulty of predicting U.S. Food and Drug Administration, FDA, and Canadian Therapeutic Product Directorate, TPD, approvals. Acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, new product development and launch, reliance on key strategic alliances, availability of materials and finished products, third parties, the regulatory environment, fluctuations in operating results, and other risks detailed from time to time in the company's filings with the Securities and Exchange Commission, FDC, and the Ontario Securities Commission, OSC. Biovail Corporation undertakes no obligation to update or revise any forward-looking statement.

At this point I would like to turn the call over to Ken Howling, Vice President of Finance and Corporate Affairs for Biovail Corporation. Mr. Howling will moderate today's call.

Thank you, operator. Good morning, everyone. On behalf of Biovail I would like to thank you for taking time from your busy schedules to join us this morning for our conference call to recap the company's fourth quarter and full-year 2004 financial results.

Joining me today on today's call are Eugene Melnyk, Chairman of the Board of Biovail Corporation, Dr. Douglas Squires, Chief Executive Officer, Charles Rowland, Senior Vice President and Chief Financial Officer, Dr. Greg Szpunar, Senior Vice President Research and Development and Chief Scientific Officer. Also on the call are Ken Cancellara, Senior Vice President, Chief Legal Officer and Corporate Secretary, and Rick Keefer, Senior Vice President Commercial Operations. They will be available, along with myself, to participate during the question-and-answer session.

After management has completed its review we will conduct a question-and-answer session for research analysts on today's call who cover Biovail. As always we will try to get to as many questions as possible while limiting the call to about one hour. After the conference call other participants are encouraged to follow-up with the company by calling 905-286-3000 and asking for Investor Relations. Eugene, would you like to begin.

Thanks, Ken, and good morning, everyone.

Let me begin by saying that 2004 can be described as a year categorized by considerable challenge and opportunity for Biovail, yet one that has been punctuated with great accomplishment. As we dealt with the reality of doing business in an industry that continues to be driven by rapid and unprecedented change, Biovail had significant successes and capitalized on a number of opportunities.

At Biovail we realize that the development of a viable, sustainable business strategy is a dynamic exercise. Companies need to be able to have an underlying strategic foundation upon which to base decisions that will drive their business and provide their people with a common purpose and shared values.

Since coming on board in mid-November, Doug Squires, our Chief Executive Officer, has been driving the development of a strategic plan for Biovail. Changes to industry market dynamics have created significant strategic challenges for many, if not all, pharmaceutical companies.

Even the largest and most successful pharmaceutical companies are exploring ways to alter the methods by which they approach the commercialization of their product in the U.S. marketplace.

It is now been a little more than 100 days since Doug joined us as CEO and as expected a lot has been accomplished. The strategic planning process is nearly complete and with each day we move closer to implementing significant changes. I will ask Doug to bring everyone up to date on his progress with this important initiative a bit later in the call.

In the past, the challenges faced by Biovail Corporation caused some to question the company's approach to corporate governance and its practices to support it. Further, to the commitment that I made last June, Biovail's Board of Directors has initiated a review of the company's governance practices.

In both January and February we announced updates on our progress with regard to this initiative. More specifically, we begun a board renewal process that we've engaged noted governance authorities, Davies Ward Phillips & Vineberg and recruiting specialist Egon Zender to help us, and that effective with the election of directors at the next annual general meeting of shareholders, Biovail shareholders will be able to cast separate votes for and withhold their support from each candidate for election to the Board of Directors.

Among the other important initiatives announced to date include a review of board structure, composition, processes, practices, and recruitment. The adoption of a written charter for the board, a formal continuing education program for board members, and a succession process designed to ensure the ongoing renewal of the board. And as all of you know, the most visible action that we've taken towards better corporate governance was the split of the Chairman and CEO roles.

From an operational perspective, Biovail took significant strides in 2004 towards its commitment of growing its business organically, avoiding complex acquisitions and focusing on cash flow generation and the repayment of debt, and we continue to move forward with regard to financial reporting offering considerable transparency relating to our quarterly and annual results and more complete disclosure of our business activities.

Given that Doug was only with Biovail for six weeks of 2004, I will now take a few minutes to highlight some of Biovail's 2004 accomplishments. In future conference calls Doug will have the pleasure of sharing Biovail's operational accomplishments with you.

Total product sales for fourth quarter were up 58 percent year-over-year to $265.7 million, compared with 168.3 million for the same period in 2003. For the full-year 2004, product sales were 33 percent higher at 841.4 million than the 632.9 million for the corresponding 12-month period in 2003. This impressive performance is largely attributable to the continued strength in Wellbutrin XL which continues to gain share of the antidepressant market.

Total prescriptions for Biovail's entire product portfolio in the fourth quarter of 2004 again showed steady growth posting a 28 percent increase over the corresponding period a year ago. For 2004 total prescriptions grew 31 percent, compared with the 12 months ended December 31, 2003.

Fourth quarter 2004 U.S. GAAP diluted earnings per share were $0.29. By comparison, Biovail posted a loss of $0.60 per diluted share in the fourth quarter of 2003.

EPS for full-year 2004 was $1.01. This compares with a loss of $0.17 per diluted share for the 12 months ended December 31, 2003.

EPS, excluding specific items, was $0.58 for the fourth quarter of 2004, compared with a $0.27 loss in the fourth quarter of 2003. EPS, excluding specific items for the full-year 2004 was $1.35 compared with $1.45 in 2003. A reconciliation of EPS, excluding specific items, with our GAAP EPS figures is provided in the news release announcing our earnings.

In 2004 Biovail made $280 million in payments against the company's revolving term credit facility completely eliminating the debt outstanding under this facility. With respect to long-term obligations, Biovail made payments of 66.3 million in 2004.

The company's debt to equity ratio stood at 0.4 at the end of the fourth quarter of 2004, compared with 0.9 at December 31, 2003. At the end of February, 2005, Biovail's cash balance was just under $100 million.

In mid-November Biovail became aware of two separate abbreviated New Drug Application filings by two pharmaceutical companies in the United States for generic versions of Wellbutrin XL. The first was filed by Antgen Pharmaceuticals of Taiwan for 150 milligram and 300 milligram versions of Wellbutrin XL.

NDA was filed by Abreca Pharmaceuticals of Florida for 150 milligram generic version. On December 22nd Biovail initiated patent infringement litigation against each company.

In January we became aware of a third filing and earlier this week patent infringement litigation was initiated against IMPAX Laboratories of California for its ANDA for 150 milligram and 300 milligram generic versions.

The patent to state protecting Wellbutrin XL consists of two formulation patents, both of which expire in 2018. A third patent is under accelerated review by the U.S. Patent and Trademark Office. We are confident in the integrity of our intellectual property and will vigorously defend these patents.

With regard to Biovail's manufacturing and operations I'm happy to report that in 2004 we produced more than 1.4 billion dosage units at our manufacturing facility in Steinbach, Manitoba. Two weeks ago we announced that we would further invest an additional $27.6 million in Steinbach to further enhance its manufacturing capabilities to meet growing demand in the United States for such products as Wellbutrin XL and Cardizem LA, and anticipated demand for our current and near-term pipeline products especially the manufacture of such drugs as Tramadol ER among others.

Before turning the call back to Ken Howling, I'd like to address one other subject.

On March 3rd the SEC advised the company that it has initiated a formal investigation relating to an informal inquiry initiated in November 2003. The investigation focuses on a number of accounting and disclosure practices. Biovail has been fully cooperating with the SEC and will continue to do so in an effort to bring the investigation to a conclusion in an expeditious manner.

Ken.

Thanks, Eugene. I would now like to introduce Biovail Chief Executive Officer, Dr. Douglas Squires, who will now provide everyone with an update on the significant progress we've made in developing a strategic plan for Biovail. Doug?

Thank you very much, Ken. Good morning, everyone.

Shortly after coming on board in mid-November I began to work with Biovail's senior operations team to develop a strategic plan upon which we would base the next phase of Biovail's ongoing evolution. The strategic planning process addresses all aspects of the company's business including U.S. commercial operations, non-core business lines, and the product development pipeline.

The goal of the strategic planning process is to provide the framework for long-term sustainable growth with the ultimate goal of maximizing shareholder value. Biovail's first priority is to enhance the return on investment of the company's U.S. commercial operations.

Much attention in recent weeks has been focused on Biovail's commercial operations in the United States and what the company plans to do to optimize their effectiveness.

Our immediate assessment was that our sales force was underutilized. In other words, the revenue generated for sales rep was too low, and while market share for Cardizem LA, Teveten and Zovirax over the past six months has grown, it has become clear to us that these products on their own will not enable Biovail to reach the level of consistent profitability that the company and its shareholders have come to expect.

Considering the progress that the sales force has made to increase market share for our promoted products during the last 26 weeks of 2004, we decided it would be prudent to aggressively investigate the market for new product opportunities. However, as expected, the realities of the pipelines of many pharmaceutical companies, and increasing role these assets play in driving corporate valuations quickly confirmed that there are relatively few product licensing opportunities in the marketplace and that the valuation of those that do exist are unreasonably high.

The bottom line is that there are very few assets for sale. It is very much a seller's market.

Simultaneously we focused our attention on partnering opportunities. To this end, we approached and have since been approached by, numerous companies with regard to accessing our sales force to better leverage their products as well as to put additional muscle behind ours.

In the course of these discussions, third parties have also expressed an interest in Biovail's drug delivery technologies and other capabilities. These discussions have further validated the inherent value of Biovail's U.S. commercial organization.

The discussions underway with multiple companies have identified several different opportunities for Biovail to optimize and in turn maximize the return from its U.S. commercial operations. Throughout these and other discussions, we have been able to confirm that it is becoming increasingly difficult for many pharmaceutical companies to enjoy consistent earnings growth in the primary care segment of the U.S. pharmaceutical market.

There are a number of reasons for this. Most notably, the industrywide increase in the number of primary care reps is being met with a corresponding decline in access to primary care physicians.

As a result of these challenges, patient-focused advertising by pharmaceutical companies has dramatically increased in the last few years to the point where it now exceeds $3 billion a year annually in the United States. However, the numerous discussions with many U.S.-based pharmaceutical companies have been very productive.

Biovail is currently assessing multiple opportunities to drive profitability. Some of these options involve third parties which would likely better leverage our capabilities but take somewhat longer to execute.

Although management could effect a short-term cost savings through a downsizing, Biovail's goal is to effect a strategy that provides both long-term sustainable growth and a more profitable business that leads to enhanced shareholder value.

We have made significant progress in our discussions with a number of companies about the U.S. commercial organization. Biovail expects to complete these processes, implement our strategy, and make public announcements regarding our discussions in the next 30 to 60 days.

Biovail sees significant value in maintaining a presence in the United States. We have established valuable relationships with distributors, managed care companies, trade groups, and key opinion leaders.

We view these relationships as strategic assets that can be leveraged in specialty markets where the ratio of sales reps to doctors is still reasonable. Biovail also feels that this revised footprint will enable the company to increase its flexibility and gear its spend according to the needs of this market.

It is also very important to note that Biovail will maintain a primary care focus when it comes to product development. The U.S. primary care market is still the largest, most profitable in the world.

Biovail's advanced drug delivery technologies has demonstrated their ability to enhance existing medications and create value for our shareholders and our partners. As part of a strategic plan we are evaluating and reprioritizing our research and development portfolio and technology partnerships.

Although we may change our commercialization strategy for the primary care market segment it will not affect our strategy with regard to the way we develop our products.

One of the other important decisions that has evolved from the strategic planning process concerns our legacy product business. Legacy products are assets in decline and are not core to Biovail's business going forward. Our focus is on growth opportunities.

The Board of Directors has authorized management to develop a recommendation for the disposal of legacy assets, whether by way of a sale to a third party or a spin-off to shareholders through a new corporate entity. Biovail expects to make further announcement with regard to legacy products during the second quarter of 2005.

In conclusion, let me say again that I am extremely pleased and encouraged by the progress our team has made thus far in creating opportunities for us to consider for our U.S. commercial organization and for our legacy products business. I must stress that the processes related to evaluating and acting on these opportunities are varied and complex and ongoing.

That being said, we expect to be in a position to announce a final decision in the next 30 to 60 days. The selected strategy will have a material, positive impact on Biovail's 2005 financial results.

This concludes my remarks. Ken?

Thank you, Doug. I would now like to introduce Charles Rowland, Biovail's Senior Vice President and Chief Financial Officer. Charlie will now provide you with a detailed synopsis of the company's financial performance for the fourth quarter and fiscal year 2004. Charlie?

Thanks, Ken. Good morning, everyone.

Biovail reports its financial results in U.S. dollars and under U.S. Generally Accepted Accounting Principles, or U.S. GAAP, Canadian GAAP statements are available upon request. All earnings per share information discussed in the conference call today will presented on a diluted basis.

In keeping with Biovail's commitment to enhance financial disclosure, the company expects to file its fully audited financial statements and MD&A for the fourth quarter and full-year 2004 with the U.S. Securities and Exchange Commission shortly.

On a consolidated basis total revenues for the fourth quarter 2004 were 277.9 million, a 39 percent increase relative to the fourth quarter of 2003. Total revenues for 2004 were 886.5 million, up 8 percent from the 823.7 million for the corresponding period in 2003.

Product revenues for Wellbutrin XL, launched in September 2003, were 109.7 million in the fourth quarter of 2004, compared with 48.6 million for the same period a year ago. In December 2004, Wellbutrin XL captured 54.8 percent of the new prescriptions written for the Wellbutrin brand, including generics.

For the year, total revenue for Wellbutrin XL was 317.3 million, compared with 64.9 million in 2003. Sales of Wellbutrin XL crossed into the third and highest tier of Biovail's royalty pricing arrangement with U.S. marketing partner GlaxoSmithKline in the third quarter.

The strong performance of Wellbutrin XL for 2004 reflected the tremendous and rapid market penetration by GSK with Wellbutrin XL as well as an overall increase in safety stock levels. To the extent that any safety stock was held at GSK at year-end, it was invoiced as the lowest tier supply price.

Turning now to Biovail Pharmaceuticals Canada, BPC generated revenues of 29.7 million for the fourth quarter 2004, compared with 23.4 million for the fourth quarter of 2003, which represents an increase of 27 percent. Total revenues from BPC for 2004 were 101.9 million, compared with 85.2 million for 2003. This represents a year-over-year increase of 20 percent.

Again, the key performance drivers for BPC were Tiazac and Wellbutrin SR. Although Biovail did not officially launch Tiazac XC until January, 2005, it is important to note that total revenues for BPC for the fourth quarter included shipments of Tiazac XC to suppliers and wholesalers.

Legacy products, which are non-core products, generated fourth quarter 2004 revenues of 36.9 million, compared with 36.4 million in the fourth quarter of 2003. For the 12 months ended December 31, 2004, legacy product revenues were 125.9 million, compared with 208.9 million for the corresponding period in 2003.

As expected, the year-over-year decline is indicative of the continued decreases in total prescription volume for these mature products and a reduction in wholesaler inventories.

With regard to generic products, total revenue for Biovail's portfolio of generics was 43.1 million in the fourth quarter of 2004, compared with 25.9 million in the fourth quarter of 2003, an increase of 66 percent. For the full year 2004, revenue for Biovail's generic portfolio was 149.7 million, 47 percent higher than the corresponding period in 2003.

The increase in this product line reflects the strong performance of our generic formulations of Adalat CC and Cardizem CD, and also the renegotiation of the agreement with our partner Teva whereby we now enjoy larger share of gross margins as well as the normalization of inventory levels at Teva.

Gross margins were 75 percent for fourth quarter 2004, compared with 70 percent in the prior year period. Gross margins for 2004 were 73 percent, compared with 78 percent for the previous year.

The changes in gross margins during the three months and 12 months ended December 31, 2004, versus the prior year periods, is primarily due to the gross to net adjustments and changes in product sales mix, and in particular the levels of Wellbutrin XL sold in the respective periods.

Biovail's research and development expenses were 19 million in the fourth quarter of 2004, compared with 26.1 million in the fourth quarter of 2003. R&D expenses for 2004 were 70.5 million, compared with 86.6 million for the corresponding 2003 period. The decreases in 2004 reflect the timing of the initiation of late-stage development for products in Biovail's pipeline.

Selling, general, and administrative expenses for the fourth quarter of 2004 were 73 million, compared with 66.3 million in the fourth quarter of 2003. In 2004, Biovail's SG&A expenses were 257.4 million, compared with 242.8 million for the comparable period in 2003. This is an increase of 6 percent which reflects increased headcount in Biovail's U.S. sales force and the initiation of marketing programs in support of our promoted products.

Earnings before interest, tax, depreciation, amortization, acquired research, net write-down of assets, and equity loss, was 127.2 million for the fourth quarter 2004, and 350.3 million for the year ended December 31, 2004, representing interest coverage of nine times at year-end.

U.S. GAAP net income for the fourth quarter of 2004 was 46 million, compared with a 96 million net loss for the corresponding period in 2003. For the full year 2004, net income was 161million, compared with a 27.3 million loss for 2003.

Fully diluted GAAP earnings per share for the fourth quarter of 2004 were $0.29 compared with a $0.60 loss per share for the same period in 2003. Diluted EPS for 2004 was $1.01 versus a $0.17 loss in 2003.

In the fourth quarter of 2004, Biovail recorded a 4.4 million non-cash charge related to the write-down of the remaining carrying value of the Rondec product rights, and a 37.8 million non-cash charge related to an other than temporary decline in the company's equity investment in ESE Pharm. Also in the fourth quarter, Biovail recorded a 4.1 million non-cash equity loss related to the company's investment in Western Life Sciences venture fund.

Financial results for the 12-month period ended December 31, 2004, also included a 1.5 million gain related to the disposal of the CX product rights recorded in third quarter 2004, and an 8.6 million acquired R&D charge related to the acquisition of the remaining interest in BNC PharmaPass in the first quarter 2004.

Finally, Biovail continued to strengthen its balance sheet in 2004. During 2004 Biovail made 280 million in payments against the company's revolving term credit facility completely eliminating the debt outstanding in this vehicle. Biovail also repaid 66.3 million of long-term obligations.

Biovail's debt to equity ratio stood at .4 at the end of 2004, compared with .9 at December 31, 2003.

Cash flow from operations was 111.7 million for the fourth quarter of 2004, and 277.1 million for the 12 months ended December 31, 2004. Capital expenditures were 7.8 million for the fourth quarter of 2004, and 28 million for the entire year.

That concludes my review of Biovail's financial performance for the fourth quarter and full-year 2004. At this time, I would like to take a few minutes to provide you with earnings guidance for Biovail's business in 2005.

Our guidance reflects the company's strength in leveraging its drug delivery technologies to develop and commercialize therapeutics that provide clinically meaningful enhancements to patients. Biovail is providing overall revenue guidance for 2005 of 925 million to 1 billion and diluted earnings per share guidance of 150 to $1.60 exclusive of any charges which at the midpoint represents 15 percent growth relative to 2004.

Biovail's 2005 guidance does not include impact of any potential new product launches, licensing or acquisitions, restructuring or other specific charges, nor does it include expenses related to stock-based compensation. It doesn't include the impact of any strategic actions outlined by Dr. Squires earlier on the call, which will have a material impact on these results.

We have further based our guidance on a number of variables including current prescriptions and business trends. Our guidance also assumes that wholesaler inventory levels in 2005 will be within a range of one to two months.

Wellbutrin XL continues to be a key contributor to Biovail's earnings in 2005. Revenues from Wellbutrin XL are expected to be in the range of 320 million to 340 million in 2005, with the majority occurring in the second half of the year.

This reflect the dynamics of the tiered pricing agreement with GlaxoSmithKline and the expectation that a portion of GSK's safety stock will be reduced in the first half of the year as Biovail dedicates manufacturing capacity to scale up activities related to Tramadol ER and other development compounds.

Biovail's guidance for gross margins on product sales in 2005 is 78 to 79 percent. Gross margins are expected to increase through the second half of 2005, primarily due to product mix and the favorable impact of higher Wellbutrin XL pricing.

Research and development expenses are projected to be within a range of 80 to 95 million in 2005. Selling, general, and administrative expenses are forecasted to be in the range of 300 million to 335 million in 2005.

Biovail's diluted EPS guidance for 2005 is based on a number of variables and assumptions including estimated revenues, expenses, wholesale and distributor buying patterns, inventory levels, gross margins, tax rate, numbers of shares outstanding, and numerous other items. For more specifics pertaining to our guidance for 2005, please refer to our news release that was distributed earlier this morning.

This concludes my comments. Ken?

Thanks, Charlie. I would now like to ask Dr. Greg Szpunar, Biovail's Senior Vice President of Research and Development and Chief Scientific Officer to provide us with an update on the company's product development pipeline. Greg?

Greg Szpunar, Ph.D.: Thanks, Ken.

Let me begin by saying that Biovail's product development pipeline is one of the broadest and deepest in the specialty pharmaceutical sector. In 2004 we continued to build an integrated research and development organization that's capable of conducting development and preclinical trials and Phase IV trials.

Our product development efforts remain focused on compounds that meet well defined medical needs and those we believe can be improved by the application of our proprietary drug delivery technologies. We continue to focus on high-value compounds that target both primary care and specialty market needs.

The depth of Biovail's product development pipeline was quite evident in 2004. Biovail filed four new drug applications, one for Tramadol Extended Release tablets, a once daily formulation of the analgesic Tramadol, another for and Orally Disintegrating Tablet, or ODT formulation of Tramadol, one for Citalopram ODT for the treatment of depression, and one for Glumetza, a once daily formulation of metformin for the treatment of Type II diabetes.

In Canada we submitted a new drug submission for Glumetza and a supplemental NDS for the anigent indication for Tiazac XC.

In August Biovail received marketing approval for Tiazac XC for hypertension and we successfully launched the drug in Canada. Building on the success of Tiazac, Canada's leading once daily diltiazan formulation, Tiazac XC features a new extended released delivery system designed for bedtime administration, resulting in improved blood pressure control during the early morning hours.

Late last October Biovail received an Approvable Letter from the U.S. Food and Drug Administration for our extended release version of Tramadol. Earlier this week we submitted a complete response to that Approvable Letter.

Since our response relied entirely on data contained our original NDA, we expect that the FDA will be considered a Class I resubmission. If so it will carry with it a 60-day review clock. Therefore we anticipate hearing back from the FDA in May.

Biovail is particularly excited about the market opportunity for this product. Before it was generic [side] branded Tramadol generated annual sales of about 700 million despite significant limitations including daily dosing of up to four to six times per day and a onerous titration schedule of 16 days or longer.

Biovail's Tramadol formulation is improved on both of these issues. We're in very late stage negotiations with multiple partners and anticipate the consummation of a partnership agreement in the coming months.

The momentum we built in 2004 has been sustained thus far in 2005. On February 28th, Biovail and partner Depomed Incorporated of Menlo Park, California announced the receipt of an Approvable Letter from the FDA for Biovail's NDA for Glumetza, an extended release formulation of metformin for man for treatment of Type II diabetes.

The letter indicated Glumetza is approvable pending the completion of discussions with regard to finalizing one manufacturing specification. Biovail is currently in outlicensing discussion with a number of parties for the U.S. rights to this product. We intend to market Glumetza directly in Canada.

Biovail believes that Glumetza, upon approval, may enhance the quality of life of individuals who suffer from Type II diabetes. The large majority of people who currently take metformin use the 500 milligram dosage strength. Our once daily 1000 milligram dosage will especially benefit the roughly 35 percent of diabetes patients who require additional glycemic control.

On February 14th Biovail received an Approvable Letter for the FDA for its. NDA for an Orally Disintegrating Tablet form of Citalopram for the treatment of depressive illness. The Approvable Letter involves the clarification of a number of chemistry and manufacturing issues including issues related to a drug master file from one of our active pharmaceutical ingredient suppliers.

Biovail anticipates a quick turn around on this response. To this end we expect to work with the FDA over the coming weeks and months to resolve these issues.

In addition, the letter provides revised package insert language to reflect recent changes in the FDA's mandated labeling for the class of selected serotonin reuptake inhibitors, or SSRIs, and other antidepressants. Subject to final FDA approval, Biovail believes that its novel formulation of Citalopram may offer physicians a new dosing option with potential advantages and prescribing flexibility that may be advantageous when addressing the needs of certain patients.

On February 5th Biovail submitted for regulatory approval with the Therapeutics Products Director in Canada, Wellbutrin XL for the treatment of depression in adults 18 years of age and older. This application contains the results of two adequate and well-controlled trials in major depressive disorder as well as other supporting clinical data.

On January 8th, Biovail received an Approvable Letter from the FDA for its Orally Disintegrating Tablet formulation of Tramadol that involves only minor issues. And a complete response to this letter was submitted yesterday, March 9th. We anticipate final approval for this product in May.

Last week French chemical technology developer Flamel Technologies announced that it had ended its licensing agreement with Biovail to develop and market its controlled release form of acyclovir, known as Genvir, for genital herpes and herpes zoster, which is also known as shingles.

In April 2003, Biovail acquired exclusive North American rights to this formulation. Since that time, we've had numerous interactions with the FDA concerning the clinical program that the FDA would require as a basis for its approval of a genital herpes indication. This process culminated in a formal special protocol assessment which was received from the FDA in September, 2004.

The hurdles that the FDA have established for this program are significant. Patient numbers have quadrupled and resulting costs for the clinical program have more than doubled relative to our estimates at the time the product was licensed.

The program was considered high risk to begin with. In addition to the gentle herpes indications, it required other indications currently in the acyclovir label to be secured for it to make financial sense for the company.

When the significant increases in cost for just a single indication were overlaid with our most current market research, the return on investment became too small for Biovail and its shareholders. Additionally, when we tested this formulation we found that Genvir performed poorly with lower biovailability relative to the immediate release form and seen in the early [FORMEL] trials and that it exhibited a significant food effect.

These latter issues also added significantly to the risk profile of this program and its probability of success. For these and other reasons, the parties were in the process of discussing a separation when Flamel decided to terminate the agreement.

Let me reiterate that Biovail's product development efforts remain focused on compounds that meet well-defined medical needs and those we believe can be improved by the application of our proprietary drug delivery technologies. In light of the strategic planning process we will continue to target high value compounds and products that target both primary care and specialty market needs.

Our research and development organization continues to work to build a robust pipeline of therapeutics. Beyond the near-term opportunities we continue to move forward with development programs for Venlafaxine, line extensions and enhancements to our Bupropion XL line, line extensions and enhancements to our Tramadol line, Zolpidem, as well as several combination products with application to cardiovascular medicine and metabolic disease.

These combinations will leverage our knowledge related to delivery of [DELTIAZIM], HERVATALOIV, METROPOLOV, metformin and the ACE inhibitors Analatril and Ramopril.

In addition, Biovail's R&D group continues to work toward identifying the products that will become the company's future growth drivers for the years 2008 through 2011, as well as valuating the benefits of initiating the development of novel molecules in mid-stage to late stage development which would bring longer exclusivity periods.

We continue to see significant opportunities for marrying our technology base with new indications to high value commercialized products that have three to five years of exclusivity remaining. Biovail expects that many of these opportunities will be evalued at innovator companies or may be opportunities Biovail could launch itself or partner elsewhere. We'll provide updates on this initiative as more progress is made.

Ken, these conclude my remarks.

Thanks very much, Greg. I would now like to ask Eugene Melnyk to make his closing remarks.

Thanks, Ken.

To summarize today's call I believe that I speak for the senior management team as well as for our entire staff when I say that Biovail has truly achieved some major milestones over the past 12 months, some of which are now clear to you through today's presentation of our financial results for the fourth quarter and the 2004 fiscal year. It has also been a year in which Biovail's actions have proven that it has learned from the past and that it is steadfastly committed to restoring investor confidence.

In my opening remarks I talked about Biovail's ongoing corporate governance enhancement initiative, an initiative we believe is critical to restoring investor confidence and increasing shareholder value. As Chairman I'll continue to lead these efforts and the conjunction with the board and with Doug focus on setting the broad vision and long-term strategy for Biovail.

Although we had made excellent progress in 2004, we recognize that we still after lot of ground to cover. Let me reiterate that the past year, while challenging, was marked by many tremendous accomplishments.

I believe that these achievements will fortify the foundation upon which Biovail will continue to strengthen its position as industry leader in the development of advanced control released product. And I fully expect that these accomplishments will pave the way for additional, sustainable growth and profitability as Biovail continues to increase its visibility in stature in the global pharmaceutical arena.

Let me again stress that we have made significant progress in our discussions with a number of companies about the U.S. commercial organization, but as yet nothing has been finalized. Biovail expects to complete these processes, implement our strategy, and make public announcements regarding our discussions in the next 30 to 60 days.

This concludes my comments. We'll now turn the call over to the conference operator for questions.

Thank you. We will now take questions from the telephone lines. If you have a question, please press star one on your telephone keypad. If you are using a speakerphone, please lift the handset and then press star one. If at any time you wish to cancel your question, please press the pound sign. Please press star one at this time if you have a question. There will be a brief pause while the participants register, and we thank you for your patience. The first question is from Doug Miehm. Please go ahead

Good morning. A few questions with respect to the numbers that were reported and then just some of the discussions with respect to, or the points made with respect to surfacing value with the legacy products. Number one, it looked like the versus what Glaxo did report in Q4 the Wellbutrin numbers were a little bit higher than anticipated. And just curious, would you view that because the Tier 3 royalty was higher than we all thought, or was there a material amount of safety stock that was also put in the quarter? And then maybe you could answer the same question about the generics. Is the type of deal just not much more profitable?

Doug, it's Ken. I think if you look at the performance of Wellbutrin XL, yes, the quarter was obviously very strong, both for Glaxo and therefore for Biovail. We do enjoy a significant supply price in the third quarter. I think some analysts may not necessarily characterize it or understand it to be as strong as it really is.

There was to a degree an element of inventory build as we communicated to Glaxo in the fourth quarter that during the early part and first half of 2005 we would be focusing our manufacturing trains to some degree on Tramadol as well as doing some scale-up activities for other products.

In terms of generics portfolio we had again a strong [inaudible] we did frankly, throughout 2004 a lot of that having to do with the normalization of inventory levels by Teva as they were diminished or depleted over the course of 2003 as we were in negotiations with them. Don't know for sure but we also understand through market intelligence that there may have been supply issues for one of the competitors which also would have favorably impacted in particular possibly two products, I guess the two strongest products in that category were the generic versions of Adalad and Cardizem.

Okay. And then just with respect to you briefly mentioned Tramadol. I am curious, how confident are you that you'll be able to launch that through a partner this year?

Greg, want to take that?

Greg Szpunar, Ph.D.: Well I think we're very confident, or confident in the response that we've put in with the FDA. We think it's a very compelling response to their letter and in terms of manufacturing we have everything in place to be able to produce the product and as I said earlier, we're in very late-stage discussions with several parties. So we're hopeful for approval and confident that we'll have a party signed up and the plant up in Steinbach's ready to roll.

And then finally, just with the legacy products, you talked about a few different ways to surface value, and I was particularly interested in one if it were IPOd as a potential income trust. What type of value do you see being potentially created there?

Doug, it's Eugene. I think there's substantial value there. We know what the sales were last year, we expect the sales this coming year to be relatively flat and in the coming years, they would be, you know, slight decline.

We're currently looking at a number of options, including the potential sale to financial buyers as well as the spin-off into a new public entity and distribution of that asset by way of dividend. There's a number of ways we can do this. We're hoping that we can conclude our analysis over the next 30 to 60 days and we'll report back to you then.

That's great. Thank you very much.

Thanks.

Thank you. The following question is from Dimi Ntantoulis. Please go ahead.

Good morning. A few questions. First on just the distribution agreements and inventory levels you signed a few new ones this last quarter, can you tell us what your target inventory levels are with respect to those agreements? And then Cardizem LA still seemed a little bit light relative to what prescription [records] would suggest. Are inventories still being worked down there, and what is the current inventory levels? And then I have a few other questions.

Dimi, this is Charlie. In terms of inventory levels we finished the year at less than two months aggregate inventory across our product line. Our forecast that we provided assumed that we will be between one to two months supply at the end of next year as well.

In terms of Cardizem, you are correct, in Q4 there was a continued work down of inventory there but we left the year in good shape, and so you'll start to see Cardizem line up with prescription demand similar to what you saw in the fourth quarter with Zovirax, that it came in pretty much right where dollarized prescripts are.

Okay. That's great. That's very helpful. Your gross margin guidance much higher than I would have expected, is this solely driven by Wellbutrin or is it driven by generics and therefore are you're expecting your generic sales to be sort of in the same range in '05 as they were in '04? So what's the driver really of the --

There's a couple of things. As you know, John Sevins was brought in this year to lead our manufacturing operations, and he's put a lot of focus on gaining manufacturing efficiencies. And a lot of that is due to, as we scaled up our Wellbutrin manufacturing capabilities during this year, there were just a lot of inefficiencies with that whole production line. This focus is yielding significant efficiencies in 2005 as well as product mix and the reduction of sample requirements for Wellbutrin by GSK. So those things combined lead to the margin improvement.

And then your R&D guidance, this is for Greg, there's a lot of money being spent, but there's not a lot of color as to where each of your programs are. Greg, could you provide us with a little bit more information? On, say, Effexor or some of your combination drugs? We haven't heard about the pipeline status [inaudible].

Greg Szpunar, Ph.D.: Well, I think as I mentioned earlier we look forward in the future to being able to really paint a much more descriptive picture of what's in development. There's an awful lot going on and Ken, I believe we're going to be planning an investor day in the not too distant future.

Dimi, we are planning on having an investor activity event, certainly one of the highlights would be the R&D pipeline, and as well, once we conclude the strategic planning process we'd obviously want to also use that opportunity to explain our strategy and how we believe it can create value going forward.

Are you going to start any pivotal or Phase III trials during 2005 that you can tell us about?

I don't think we're going to get into the timing of specific programs, and certainly not on this call. I think it's far more appropriate to do so in a setting where we do have investors gathered. We'll go through pipeline product by product and provide greater clarity into the status of the programs, what we believe are the benefits we can bring through the application, the technologies, et cetera.

Okay. For Biovail Canada, what's your outlook for '05 now that we've got a generic Wellbutrin XR sort of looming on the horizon perhaps?

As you see in the guidance that we provided we've given total revenue guidance as well as XL. We broke that out given the significant contribution that it makes.

While there has been an NOC approved for a generic version of Wellbutrin SR, and we do understand that limited quantities, and I stress limited quantities, have been brought into the marketplace, again, it is our understanding that the supply of that product by the generic isn't going to be in the marketplace in any great sense, or at least in terms of availability, so we continue to see a pretty robust picture for the Canadian business. We also look forward to commercializing new products through that entity as well.

Okay. And then just finally, maybe, Eugene, can you provide us an update with the OSC trading inquiry?

The only thing we can really say on that is that we continue to fully cooperate and provide all information that's being requested, but there's no real update from where we were a few months ago other than the fact that we just continue to cooperate with them.

Okay. Great. Thank you.

Thank you. The following question is from Andrew Swanson. Please go ahead.

Good morning. Just a quick couple of follow-ups. Can I just confirm that Tramadol extended release has not been included in your guidance for 2005? And then also, any clarity you could put on where you stand with the, some sort of a follow-on to Wellbutrin XL and the timing there. Thank you.

Maybe we can have Charlie take the first, then Greg.

In terms of Tramadol, you are correct, it is not included in our guidance that we provided today. And so with that I'll turn this over to Greg.

Greg Szpunar, Ph.D.: Well, I think as we've said earlier, I mean, Wellbutrin XL is a very important product for us obviously and in keeping with the way we do business around here, we've got multiple activities underway looking at ways to extend its exclusivity as well as its application. So I don't think today I'm going to go into great detail on terms of what those are. Suffice it to say the first installment, or the next generation of that we expect to file this year in 2005.

Thanks very much.

Thanks Andrew.

Thank you. The following question is from Corey Davis. Please go ahead.

Thanks. Just another Tramadol question. It seems like you're hedging a little bit on the launch saying that you think there's a good chance you get final approval in May, and a very good chance you sign a partner, but would you say if the partner chooses not to launch this year pending say something like a label change?

Greg Szpunar, Ph.D.: I don't think the launch is predicated upon a decision by the partner as much as it's, you know, the hedging is while we're, I guess, cautiously optimistic at the end of the day we're awaiting an FDA approval and trying to second-guess FDA approvals, the only caution is there, until we know, we don't know.

Okay. That's all I had. Thanks.

Greg Szpunar, Ph.D.: Thanks.

Thank you. The following question is from Ken Kulju. Please go ahead.

Ken Kulju, CSFB. I wanted to just drill down a little bit on the strategic redirection on the company. If I'm understanding you correctly, on the U.S. commercial operations, you're not really going to be downsizing the sales force, per se, it sounds to me as if you're going to be pursuing some type of restructured kind of JV or partnering alliance. You're going to be spinning off the legacy products, or there's going to be a collaterallization of those assets, then essentially have your Wellbutrin XL royalty flows and the drug delivery operation. Are you trying really to reposition the company or the base Biovail as a holding company or, I was wondering if could you just elaborate on just some of those broader strategic issues?

Well, Ken this is Doug here. Just a couple of comments. I think the strategic planning process is not going to be making fundamental core repositioning of the company. This company is basically a drug delivery company that adds value to late development and marketed products and then commercializes them through a variety of means using partners or directly.

The real near-term focus is the commercialization within the U.S. and evaluating options that can accelerate near-term profitability within that entity, and that's huge opportunity. We have, as mentioned before, a number of sort of late stage options that we're working diligently towards and expect to make an announcement shortly as to what we will be implementing.

That does not include a reduction in the sales force? You're going to retain the core cost infrastructure for the operation?

At this point I'm in the going to make a specific comment about the size of the organization that's going to remain because, as I say, we have a number of different options in front of us. As I said earlier in the opening comments, however, we will be retaining a significant commercial presence in the U.S. under any of the options that we're in the final stages of resolving.

Very good. Thank you.

Thank you.

Thank you. The following question is from Hari Sambasivam. Please go ahead.

Thank you. Just a couple of quick questions on the focus post the sort of restructuring. Doug, I'm just wondering, if you're going to sort of remove the emphasis on the legacy products, I'm just wondering, in terms of I guess the previous strategy of the company was always to reformulate products and launch them on the basis of the brand value that you have acquired, whether it be Vasotec, whether it be Cardizem CD, et cetera, et cetera. Is that, you know, what happens to that particular initiative? Is that no longer the case? That's the first question.

Second question is, just a little bit more of a clarification on the G&A number. Obviously the G&A number is going to increase by somewhere in the range of maybe 50 million or so for fiscal '05 and I'm wondering where this additional expenditure is going to go to considering that, you know, you're thinking about some kind of repositioning of the company. I'm just wondering what you're going to spend it on or what you've budgeted for, and those are the two questions.

Thank you, Hari. Good morning. I'll take the first question and then I'll ask Charlie to comment on the second one.

The fundamental strategy, as I mentioned before for Biovail, is not changing. We are a technology driven company that adds value to compounds by utilizing sophisticated drug delivery technologies for late stage or marketed products, and that's not going to change.

When we're talking about legacy products, and these are products now on sort a, the late end of their lifecycle. They are declining assets that the declines are reasonably predictable but nonetheless they are declining, and for a company like Biovail whose focus is fundamentally growth they tend to dilute the growth accomplishments of the parent company, and in addition, we feel that there are some interesting options available to us to both enhance Biovail through this type of initiative but also unlock some of the value in these significant assets that, as I say, are at the end stage of their lifecycle. Charlie, maybe you want to comment on Hari's second question.

Actually I had one follow-up on that. I'm just wondering, what do you do with brand names that you've got, like whether it be Vasotec, whether it be Isordil, Ativan, I mean, what are you going to do with these brand names? I mean are you going to hold on to the trademark or are you going to dispose of them as well?

The trade names would remain depending on the strategy. They would go with the new entity or whatever. They would not disappear or stay with us and the products go somewhere else. They would stay with the product.

Thank you. Second question, please.

Hari, this is Charlie. In terms of the SG&A number for '05, if you remember in '04, we increased the size of our field force and reconfigured it, and so during the first half of the year we had a lot of vacancies as we were filling new territory and then also replacing reps because we basically also retooled the [inaudible] capabilities of the field force so a number of people didn't make the transition.

So if you go and look at our fourth quarter of '04, which is around 73 million, multiply that by four you come up with a number around 300 million, and then the rest of the increase year-over-year is really driven by such initiatives where we're working on Sarbanes-Oxley compliance, enhancing our corporate governance, and we have some increased legal costs year-to-year. And that's the real driver behind SG&A year-to-year.

Hari, it's Doug here. I just want to make one clarification on your question to make sure I gave you sort of the full spectrum of the answer. For some of these products, of course, we will continue to develop them. They exist in our pipeline in terms of combinations and other things, so I think that's an important fact to remember as we look at these alternatives.

And one final question. Promotional and ad expenditures associated with Cardizem LA, Zovirax, do you expect to continue them in a fairly significant fashion going forward, or are they going to be sort of a roll back just given the experience you've had to date?

Well, Harry, I think we're, of course, being very prudent on our spend and focusing on short-term return as opposed to large programs, more focused on the long-term, but this, of course, will be impact to some degree by the strategy that we will announce shortly which may or may not involve a partner and, of course, some of that would impact this type of spend, and direction of resources.

That's great. Thank you.

Thank you.

Thank you. The following question is from Amy Stevens. Please go ahead.

Good morning. I just had a few questions. One comment that you made earlier about the fact that you would anticipate that would you continue to have a commercial presence, if you will, in the United States, could that exist in the absence of your having a U.S. sales force, per se, that was your own? That's one question.

Another question, in terms of Wellbutrin XL how would you compare the tiering in the coming year to the past year, i.e. how long would you anticipate it would take to reduce the safety stock and assuming you go into the year at the lowest tiering level during what quarters do you anticipate bumping up to the next tiers?

And then finally, in terms of the generic franchise, how much of the growth that we saw year-over-year this quarter is related to readjustment in inventory levels at Teva and how much is sort of organic growth that we can anticipate going into the coming year? And that's it. Thank you very much.

Thanks, Amy. Maybe I'll jump in, Doug, and we'll do this a little bit out of order. On the Wellbutrin XL timing, I think what we'll see is that the tiering, or the times when we entered into the tiers in '04 I think we'll see it being comparable in '05. Again, safety stock is all invoiced at the lowest tier, it's held by our partner, Glaxo.

However, the adjustment, if you will, or the reconciliation to the tiering occurs as Glaxo sells products to the trade. So if you think about fundamental demand for this product, and as the product is sold to the distributors by GSK that's what triggers when the tiering occurs, and I think the tiering will occur in '05 comparable to when the tiers were met and achieved in 2004.

Just on the generic thing, again, these are generic products, they tend over time to decline, perhaps marginally. I do think we had some growth in Adalad CC, and Cardizem CD in particular, again our market intelligence is that there was certain supply issues that competitors had. We had a bit of a benefit there, I couldn't quantify it. So I think most of, put it that way, the majority of the growth, our revenue growth in '05, came from, excuse me, '04, came from a normalization of inventories maybe we'll turn it over to Doug for the staffing question.

Just a quick response to your question about could we have a commercial presence without a sales force, or that's some strategy we're thinking. When I made the comment about we regarded as strategically important to maintain a commercial presence within the U.S., that included the ability to directly promote certain products through a sales force.

Okay. And then when you say that within 30 to 60 days we are going to hear a little bit more about your new strategic direction, in the absence of a licensing deal taking place during the next 30 to 60 days will you still come out with, you know, this kind of new direction and give us more guidance on the direction you plan to take the company, or is that really going to be a waiting game until you actually sign a deal?

No, we will make an announcement within 30 to 60 days.

Thank you.

Thank you. The following question is from Campbell Parry. Please go ahead.

Thanks very much. Good morning, guys. Firstly, just back to [ROLIVIA] ER, you say you've submitted a response on that product and it's going to be a Class I resubmission, but just wondered whether you could maybe elaborate a little bit more on what was responded? In other words, what was the nature of that response in terms of the questions that they asked? And then I've got two other questions but maybe if you can answer that in the meantime.

Sure. Well, I'm in the going to really be able to read you the letter today but suffice it to say the questions that we got from the FDA were the ones you'd expect for an NDA of this magnitude. So we had questions related to the benefit and risk, or safety and efficacy. Those are two determinations [inaudible] you have to make with any application.

Our response was clarified issues concerning statistical treatment of missing values, dose response relationships, pharmacokinetics, and dynamics. We had a few questions with respect to adverse events and side effects as it related to our proposed labeling. So I think that gives you a prospective of the kinds of things that we responded to which were nothing out of the ordinary.

That's great. Fantastic. And then with respect to your guidance for 2005, 150 to 160, I know it's been in the positive, fairly significant item, but you said it excludes stock-based compensation. What would be the guidance on sort of normalized stock-based compensation year?

You're right, the $1.50 to $1.60 does not include stock-based compensation. We've been running in the order of 3 to $4 million per quarter to give that perspective. Obviously some of the valuation metrics for determining the level of stock-based compensation going forward has to be applied, so it's variable going forward.

Sure.

But historically it's been in that neighborhood.

Okay. That's useful. And then lastly, with respect to the SEC investigation can we expect to you implement some kind of reserve accounting for this? I know it's probably a bit of a leading question, but any guidance would help.

I think, Campbell, at this point it is very, very premature. Wouldn't be able to even, A, determine if one was even appropriate, and if we felt one was, what the value would be. So, you know, perhaps in the future, but at this point it's just too premature.

Thanks very much.

Thank you. The following question is from Ray Garson. Please go ahead.

Thanks. I have a couple of questions. First, with respect to the legacy portfolio can you give us some sense for that product line's EBITDA margins? And just, and then I have a couple others with respect to cash flow in '05.

Okay. Ray, maybe Eugene could touch on the legacy.

Good morning, Ray. The legacy products had '04 revenues of about 125 million, margins of about 75 percent, so free cash flow in the 80 to $90 million range.

Okay. Great. And then with respect to FY '05, excuse me, I think you referenced having about 100 million of cash on the balance sheet in February, and the outlook certainly suggests that you'll remain a strong free cash flow generator. Can you give us some perspective for what you planning to do with that cash now that the revolver's repaid?

This is Charlie. Again, I think it's a little premature, yes, we have very strong cash flow, we've, as we mentioned we have 100 million in the bank today. I think it's without Doug coming out and the team coming out with our strategic direction, I really can't comment on what we're going do with that cash until that point so I think we'll put more clarity around that in the 30 to 60 day time frame.

Maybe to add to that, Ray, I think if you look at the debt that remains on the balance sheet, it is virtually entirely related to senior subordinated notes that are not due until the year 2010. Obviously there's an opportunity to buy those in the open market, but certainly at this point I think we're letting the cash accumulate on the balance sheet and not making any decisions, at least any immediate decisions beyond that.

I really was kind of asking the question about the bonds. So at this point there's no plan with respect to the cash but open market purchases that is potentially on the table?

I think as Charlie said right now as we go through the strategic planning process that's the priority, we're going complete that and obviously make decisions thereafter.

All right. And then just more cleanup, with respect to Cap Ex you mentioned that the manufacturing facility project you're working on, is that all going to be funded in '05? So should we look for, what kind of Cap Ex guidance should we look for for '05?

In terms of '05 the expansion of our Steinbach facility is in '05. It was announced earlier this year, or last year. And the Cap Ex spend should be in the 40 to $50 million range.

Thank you.

Thanks, Ray. Maybe it's getting a bit past 9:30. I don't know if there's one question, final question, maybe we could do that. Perhaps not. Operator?

Thank you. The following question is from Cosme Ordonez. Please go ahead.

I would like to ask with regard to the guidance for 2005 on Wellbutrin XL, I mean it seems that you need 317 million in fiscal '04. The guidance seems a little bit conservative. Could you comment on that?

Well, you have to realize with our agreement with GSK it's a tiered royalty arrangement and the tiers change. So even though there are larger sales for GSK in '05, the tiers have changed. So it's not going to be comparable year-to-year when you do that type of comparison.

Thank you.

Operator, thanks very much. Eugene, closing?

Yes. Just like to thank everyone for listening in to our call and especially all the employees who listen in to these calls, I'd like to thank them for another great quarter and we look forward to speaking to everyone again in the near future. Thank you.

Thank you. The conference has now ended. Please disconnect your lines at this time. We thank you for your participation. Have a great day.