Burning Rock Biotech Ltd (BNR) 2020 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Burning Rock's 2020 Second Quarter Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminologies such as will, expects, anticipates, future, intends, plans, believes, estimates, target, confident and similar statements. Statements that are not historical facts, including statements about Burning Rock's beliefs and expectations are forward-looking statements. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Burning Rock's control.

Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. Burning Rock does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law.

And now I'd like to hand the conference over to the management team of Burning Rock. Thank you. Please go ahead.

Good morning, and good evening, everybody. This is Leo, Chief Financial Officer of Burning Rock. I have today with me our founder and CEO, Yusheng; I have our Chief Operating Officer, Shannon; and myself. The 3 of us will be presenting and answering your questions today. So I'd like to pass on to our founder and CEO. Yusheng, please.

Good evening, ladies and gentlemen. This is Yusheng Han, Founder and CEO of Burning Rock. Welcome to our first earnings call today. We are delighted to be listed in NASDAQ in June this year and broaden our shareholder base to include many experts in the industry across both Asia and U.S. We actually celebrated our IPO by having an evening of social events, and followed by 3 full days of management discussion and planning sessions. We do have much to do on our 2 business areas, which are therapy selection and early detection.

We started therapy selection when we were founded in 2014. And now we have become the market leader in terms of R&D, market share and registration. And we provide high-quality of products, which I think that Shannon might mention later on for the SEQC2 study initiated by the USFDA. We have -- I mean USFDA has a comparison among Burning Rock and the other top peers in the world, and our performance was quite good. And we are also strong in registration. The first NGS kit for oncology, I mean, we got it approved in 2018, and we know a lot about the registration in China. And also, we have a strong sales channel, covering over 600 hospitals in China.

And in terms of the business model for therapy selection, there are 2 models. The first one is the central lab, which is similar to what Foundation Medicine and Guardant Health are doing in U.S. I mean they collect the samples from the prescription from the doctors and are doing -- and do the lab in our central lab. And the other model is in-hospital model, which does -- we sell the whole NGS platform into the hospital and continuously to sell the reagents and consumables to the hospital. And they do the test in their own site. And this is quite unique if you want to compare it with the U.S. situation because most of the hospitals, top hospitals in China want to have their own platform. And we are quite successful in that model and it grows faster than the central lab model. And also in the in-hospital model, which takes around 80% market share.

But 4 years ago, we realized that the combination of NGS, machine learning and epigenomics is probably far more beyond just therapy selection. We can combine them to lead to early detection for pan-cancers. So we started our R&D efforts on early detection 4 years ago, using the technologies I mentioned above. And in the last 4 years, we have already accumulated 8,000 samples in different types of cancers. The promising results we obtained give us strong confidence. So in May this year, we started the PREDICT trial, is a clinical trial called PREDICT. This is a pan-cancer prospective trial that will test 14,000 patients in the coming 3 years. We're looking forward with that. So this is generally what we are doing.

I'm going to pass it to our COO, Shannon Chuai, to talk about -- more in detail. Shannon?

Yes. Thanks, Yusheng. This is Shannon, the Chief Operating Officer of Burning Rock. It's my pleasure to walk you through some of the key progresses that we have made during the second quarter. So we listed on our recent progresses on Page 5. So in terms of the therapy selection business, the first and foremost is that we have continued to publish a lot of our research collaborations with our key doctor collaborators and pharmaceutical company collaborators in China.

And these publications represent strong validation of our products and also the adoption and endorsement from our collaborators. These include a few studies including the BENEFIT study, the blood-based microsatellite instability validation study and also our liquid-based real-world validation COMPASS study.

All of these were published in the second quarter recently, and all of them are validated on our liquid biopsy products called LungPlasma. And in addition, we have also published quite a few clinical validation or genetic landscape studies on our other products, including tissue-based testing, on multiple cancer types still, so extending from our key business in lung cancer into other cancer types as well, including the breast cancer, lymphoma and colon cancer, et cetera.

And then the second thing we wanted to mention is in terms of the registration efforts. In the second quarter, we formed a formal collaboration deal with Illumina. Next sequencing -- I'm sorry, the NextSeq 550Dx sequencer. So this is -- the aim of this collaboration is to develop Burning Rock's IVD kits on this sequencer. And so this takes the way of registering more panels from Burning Rock in China for the NMPA. And also just to remind you that built on our former collaboration with Illumina on their smaller sequence the MiSeq Dx, which led to the first NMPA approval in Japan and China, which happened in 2018. So we believe this collaboration on this larger sequencer will continue our leadership in the registration situation in China.

And then in terms of our collaboration with the pharmaceutical companies, we are very happy to announce that we have had a companion diagnostic onco-development deal with CStone for their RET inhibitor. And so this will be one of the first few CDx type of collaboration in China, meaning the NGS test goes together for approval with the corresponding job.

And then in terms of our early detection R&D efforts, we have progressed on the training and validation from our 3-cancer-type test into a 6-cancer-type test. So this progress or expansion, did not affect the (technical difficulty) cancer to uncover on early detection accuracy. But also, more importantly, we have embedded the tissue-of-origin analysis or tissue-of-origin analysis efforts -- capabilities within this early detection assay. So we are currently working on validation of the 6-cancer-type assay.

And then we have also, as Yusheng has mentioned, we have also launched a 14,000-patient study called PREDICT. This will ultimately help us to develop and validate our ultimate form of early detection assay, which will cover at least 9 cancer types.

So on Page 6, just to refresh your memory, we listed our roadmap for developing early detection products here again. And so we have actually finished the first 2 boxes here, which are the proof-of-concept studies for both single cancer types, early detection and 3-cancer-type early detections. For the single cancer type, we already have the methodology papers, the manuscript submitted for publication. And it's under review, and we expect it to come out in a few months. And then for the 3-cancer-type proof-of-concept study, we have recently presented that result in the AACR special conference in January early this year. This one covers lung, colorectal and liver cancer.

And then as I mentioned, we are now expanding into this 6-cancer-type test. And we expect the readout of this test, covering both the early cancer accuracy and the tissue-of-origin analysis accuracy. This result will -- we think we will release it -- we will be able to release it in the fourth quarter next year in some conference. And we also listed the 6 cancer types that are being covered in this new assay here. And then eventually, through PREDICT, we will be able to validate our ultimate early cancer -- early detection products, which will cover at least 9 cancer types.

And then on Page 7, we listed, firstly, the near-term catalysts that we are expecting. First, as Yusheng already mentioned, this SEQC2 study initiated by FDA, is a study that we think it's a very rare and precious opportunity for Burning Rock to be able to be compared head-to-head or apple-to-apple with quite a few U.S. assay developers. And this SEQC2 study has 2 different parts, including the tissue-based comparison and liquid-based comparison. Those parts have been summarized and submitted for publication through manuscripts. So they are being submitted as 2 separate manuscripts, each to a very top-notch journal. And we are expecting that those publications will be able to come out and further strengthen the endorsement on Burning Rock's technology capability.

And then in terms of the regulatory, we are still expecting 2 approvals for the kits in 2021. One is on the BRCA kits, the other one is the 3-cancer multi-protein inject kit, and both of them we expect to be approved next year. And in terms of an MRD product development, we wanted to mention briefly that we have a study, called MEDAL study, that we launched 2 years ago, and we expect the readout for the baseline results for MEDAL to be released later -- sometime later this year, in the second half of the year.

And then in terms of the early detection, as I mentioned before, the technology paper or the methodology paper has been submitted for some time and is under review, it should come out soon. And then on the 6-cancer-type test, we expect to release the validation results on both early detection accuracy and tissue of original analysis on the first quarter next year. And then for the PREDICT, we are still under the same timeline that we have already -- originally planned. So we expect to have the Phase I model lock-in for 9 cancer types in 2021 -- by the end of 2021. And then we expect to start to release the readout from Phase I and start Phase II enrollment sometime in 2022. So those are the near-term catalysts that we are expecting.

So Leo -- I'm going to turn to Leo for our operating metrics and financials -- key financials. Leo?

Sure. Thanks, Shannon. First of all, I'd like to cover our top line. And I think under the unprecedented COVID environments, we'd like to be more granular than what we would typically be. So I'll first go through our trends in more detail on a monthly basis. And to recap, China's COVID outbreak started towards the end of January, and that led to a nationwide lockdown during Chinese New Year, extending into February. So the month of February was our low point. We were down 50% on a year-over-year basis.

Going into March, we started to see sequential improvements on a week-over-week basis. And for the month of April, we closed that month at around RMB 35 million revenue, up 30% on a year-over-year basis. And I'm speaking of round numbers here. May, we had an unexpected dip, which we disclosed in the IPO perspective. We did RMB 30 million, and we were flat on a year-over-year basis. June, we saw resumed year-over-year growth. We did RMB 40 million revenue and the growth rate was higher than the month of April. And for the month of July, we had similar run rates in terms of dollar value compared to June. So that's what we're seeing at the moment.

And the run rate we did for July, we're now back to the full run rate that we achieved or we saw in the first 3 weeks of January prior to COVID. So that was still our high point in terms of run rates for the year. By region-wise, Eastern China has been strong. Northern China has been weak, and we had a few top centers in Northern China and more so in the in-hospital channel compared to the central lab channel. So Northern China has had an impact for us.

Then breaking down our revenues into channels, first I'd like to talk about the in-hospital channel. We grew this quarter 69% year-over-year, high double-digit, and we continue to make new progress in terms of converting hospitals into contracted hospitals. And by the way, it is only with the contracted hospitals that we book revenues. So we were able to add 3 more contracted hospitals during the second quarter, extending the progress that we made back in January, which we added 2. So for the first half of the year, we've been able to add 5 more hospitals into the contracted status, and these are contributing towards our high double-digit revenue growth for the in-hospital channel. Because in the base, last year, we did not have those hospitals. And for hospitals that we already contracted prior to 2019, they showed actually divergent trends. Eastern China grew strong during the second quarter. But Northern China has been weak.

Next, I'll talk about our central lab channel. We have had stable ASP for the second quarter. First quarter this year was an outlier in terms of revenue and also cost base, but we did not see these trends in any major way for the second quarter. So second quarter was more normalized for that channel. We grew volume 20% for the second quarter of this year for the central lab channel, and the top line growth rate was at 18%, so very similar to the volume growth that we did.

Next, talking about our GP margins, the margins have been largely stable, and the details are in the earnings announcement in terms of breakdown by channel and also the qualitative description of trends.

Then moving on to OpEx, we actually are largely stable in terms of our OpEx space compared to the first quarter with the difference being that we had an additional share-based compensation related to our R&D team in the second quarter. So that led to the biggest jump in terms of OpEx expenses for the second quarter compared to the first quarter. And the details of our OpEx trends are available in our earnings announcement.

Next, I'd like to move on to our guidance. And to recap again, the trends that we disclosed in our IPO prospectus quantitatively for April and qualitatively for May, did dip. So we actually made 2 observations. One is that we are able to see share gain by Burning Rock, us growing slightly stronger compared to the broader markets according to our own market survey data. The second is that the rebound or the recovery out of COVID, from what we observed, is not a straight line but it has been wobbly, and we saw that in May, so we'd like to call that out. I think both points are still valid in the current environment as we head into August. And translating -- and given where China is on the COVID trajectory, i.e., China had a very tight lockdown during the outbreak periods and a relatively small case number before reopening and quarantine requirements for cross-border traffic movement, our base case is that China will come out of COVID over time, and it is in this context that we are providing our guidance.

We should point out that there are risks of a return of COVID in China. We're not factoring those probabilities into our numbers and the guidance did not factor into account a return of COVID in China. So with all those contexts in mind, our full year top line revenue guidance is RMB 420 million, and this implies RMB 246 million for the second half of the year, which implies a 28% year-over-year growth rate compared to the second half of last year. And if we look at this in terms of the monthly run rate, this would imply RMB 41 million revenue monthly run rate for the second half of the year, which is higher than the second quarter amongst the average run rates, but similar to the run rates that we're doing in July. So that's the context of our guidance.

And I'd like to call out, lastly, the lumpiness of our in-hospital channel revenues. When we think about our second half, so for the in-hospital channel, our revenues are more concentrated in terms of number of customers, it's more lumpy in this channel in terms of the revenue spread across hospitals. So we do have an impact. We have very large centers that are signed on, which happened for the third quarter last year. So we had lumpy revenues in the third quarter last year, but relatively light revenue for the fourth quarter due to timing differences on the revenue and COGS bookings.

We're not expecting any lumpiness on that scale for the second half of this year. So the trend should be smoother and easier to digest for the remainder of this year. But when we're making third quarter year-over-year comparisons, we like to call this out and probably more representative to look at our year-over-year growth trends comparing to the second half average of last year.

So that concludes our prepared remarks, and we are open for questions.

(Operator Instructions) Our first question comes from the line of Doug Schenkel from Cowen.

Congrats to the team on your first earnings call. So I want to talk about 3 things. One is the PREDICT study, just a couple of follow-ups there; two is just on commercial trends in the central lab; and then 3 is just a clarification on guidance. So first on PREDICT, I'll start there. It's good to hear a bit more about the 14,000 patient 9 cancer test prediction -- I'm sorry, PREDICT study. You positioned this as a training validation study in your deck. I'm just wondering, does this mean there would be another follow-up study planned? I asked because I'm wondering if you envision having to do something that resembles what GRAIL is doing in terms of scope and size for their asymptomatic multi-cancer test.

So that's the first part. And I'm just wondering if there's anything about the study design specifically that would believe -- that you believe would limit the utility of this test to China versus other global geographies?

Yes, this is Shannon. I can take that question. So first of all, there is a follow-up factor in the PREDICT design. We actually -- as we mentioned, there are 2 phases for PREDICT in Phase I. It's mostly for training and validation. And then by the end of Phase I, the model, the assay and the cutoff will all be locked.

And then Phase II will be a blinded study, which means that all the team within Burning Rock, the assay team and the analysis team, they will all be blinded from the identity of all the samples. And then the validation will be a blinded and independent validation. And then within that Phase II, we do have a follow-up module, which means that for those turn out to be a healthy control, which are tested positive, we will have up to 12 months of follow-up on them to -- for one, to give them a second test and to see whether the specificity will improve by a second test.

And then for 2, to test on whether there are any 2 positives within them. And then for 3, more importantly, probably, is to test on the utility of the test, which means that among those healthy controls if you are tested positive, down the road, how much effort you would need to take in order to exclude -- either exclude the cancer probability or to diagnose or to make sure that you do -- to go through the full diagnosis process for your cancer, if you do have it. So that sort of mimics the DETECT-A study in some of the design productive. So the short answer is yes, there will be some follow-up modules embedded in PREDICT.

And then in terms of the applicability of the PREDICT results to other geographical regions, we don't really think for an early detection trial the results would be very applicable to different ethnicities or races, per se, because early detection is -- we expect it to be very population-specific because it was linked to people's genetic or epigenetic basis, and also to their particular local living habits and also house check routines, et cetera. So we don't expect that to be applicable to other areas anyway. So if we do want to -- if we do plan to expand to other places or countries, we will have to do a separate trial in that particular region anyway. Does that answer your question?

Yes, that's great, Shannon. And then the only thing I don't think you touched on is just the size of the follow-up studies. Is it just too early to comment on?

Right. Great. Currently, our expected -- our these 3 -- I'm sorry, for the 6-cancer-type tests, we are shooting for 98% specificity. So you can sort of estimate the size of the cohort. But we don't know for sure yet. So you will see -- we all will see more results when we release the 6-cancer-type assay results.

Okay. Super helpful. Just pivoting to a commercial question, specific to the central lab, so if we look at Q1 and then look at the number of ordering physicians and number of hospitals that were active, you had a pretty notable drop in Q1 relative to previous quarters, which I think we all know was largely, if not wholly, a function of what was going on with pandemic. If we then look at what happened in Q2, mathematically you recovered about 90% of the central lab ordering physicians you lost in Q1 and over 70% of the ordering physicians. I'm guessing that's kind of an oversimplification. But really, what I'm getting at is how much of the Q2 central lab recovery was a function of essentially getting those doctors and those hospitals back versus actually moving beyond kind of same-store sales and playing offense and actually adding first-time hospitals and first-time ordering physicians?

Yes. So I think on the last point, it is more to do with same-store, so existing physicians that we work with. And this, you can look at -- actually, you can look at our number of ordering physicians, 1,175, for the second quarter. We're not back to the number we did in fourth quarter last year, which is 1,222. So there is still some restrictions or limits that our sales team -- limiting our sales team's capability to reach the physicians or interact with them as the way they would do prior to COVID. So that is one factor. And also looking at the physicians or the hospitals where they work, there is some capacity caps. So the hospitals are not back to 100% capacity in terms of biopsies or even the number of visits, appointments they're able to have. And this varies by region. So in general, Eastern China has recovered better compared to Northern China, and we have a nationwide business, so the pockets of weakness, which would have an impact on us.

So if you look at the numbers here, the number of patients tested grew better for the second quarter compared to the number of ordering physicians. So for the physicians that our sales team are able to reach and then interact with and resume contact, those have shown recovery, but there are physicians that we're just not able to reach and still not able to resume.

Okay. Understood. Last one, a quick one. I'll direct this at you, Leo. Guidance seems to imply that you're basically assuming not a whole lot of improvement relative to the June and July revenue run rate. Specifically, if you take first-half revenue and add RMB 40 million for month for the second half, you end up within RMB 5 million to RMB 6 million of your full year revenue guidance. Assuming I'm just doing that basic math right, is this just an acknowledgment that you don't want to assume the environment improves or deteriorates relative to trend just given the inherent uncertainty associated with the pandemic?

I don't think we are holding back our numbers, per se. I do think that there are uncertainties. And there have been volatilities on COVID. And if we look at the news on a more granular level and particularly for Northern China, there are outbreaks that we do see in a few cities, not just 1, in Northern China. And when those happen, the hospitals are typically more impacted by -- compared to other service industries. So we are, I would say, more sensitive to that compared to other industries in China, which have -- some of them have resumed rather well. It is with that background, I think when we think about our guidance for the second half of the year, we have to base that on what we've seen, and this is what we're seeing.

Our next question comes from the line of Sean Wu from Morgan Stanley.

Congratulations to you, Yusheng and Shannon, for very good results in face of the COVID-19 problem. So I actually have some questions. Maybe you can help address as well. It's basically your bread and butter is a bit kind of unique. You do both tissue samples and essentially liquid biopsies, unlike kind of Guardant Health in the U.S., purely focusing on nuclear biopsies. So people would wonder whether the advantage or disadvantage with both going on.

And also, Genetron reported pretty good results for the first half, and then they employ another different business model that they have with NGS and also have long adjusted pack of mouse-testing stuff. It appears their non-NGS part is performing pretty well. So what do you compare kind of your business models with theirs? And also, you mentioned earlier about you taking kind of market shares, and your market share is kind of increasing. Can you tell us about the overall market share, both for the central lab and also for the in-house segment for the first half or for the second quarter, if you have numbers that can help the investors?

Well, I think that in terms of the different technology platforms, I would say that Burning Rock now is focused on more about the NGS platform because we think that it is the future. And we didn't pursue the COVID testing opportunity, like 3 months ago, because we think that there was very low entry barriers in terms of the technology. And we have witnessed that any technology without entry barrier, in the long run will go into aggressive competition. So we didn't pursue that opportunity. And I don't think we should be able to comment on our peers' Q2 financial report. And in terms of the technology platform, if you mentioned some TCR platform for brain tumor, yes, they -- I think Genetron does has that part, but we don't know what number that is. So I don't think it's suitable for us to comment on that.

And in terms of the market share, since we don't know too much information about the our -- what the other players are exactly doing. Well, if you look at the oncology market, for solid tumor, I would say that from our perception, our position in the market is still very strong. And that is the thing that I can answer. Any additional comments, Shannon or Leo?

Yes, according to the tissue versus liquid platforms, we do think being able to do both tissue and liquid does give us quite a bit advantage, both -- in terms of both the technology development and also the commercialization channels. So being able to do and to collect those tissue and prepared samples actually gives us opportunity to test on the 2 positives and genetics on the liquid-based technology. So it gives us more data to play with to refine our assay and algorithm for the liquid-based testing. And also, in China, actually, the consensus among the doctors are -- for first-line patients, tissue is still the main central source and the gold standards, in terms of the therapy selection test.

So doctors would prefer to do tissue-based testing at baseline or at the first-line treatment-naive patients. However, more and more doctors are adopting the concept that liquid biopsy does have its advantage at the later lines of treatment. So being able to do both tissue and liquid, we give the doctors the choice to choose whichever sample they feel most comfortable with. And that also help us to cover all their needs, no matter what they live in. So I think they -- being able to do both does give us some advantage.

(Operator Instructions) Our next question comes from Girish Bakhru from Bank of America.

Sorry, guys, I joined the call a bit late. But just on the Magnis BR, have we commented on when the approval is expected from the NMPA?

Shannon?

I'm sorry, I didn't catch the question. I know it's about Magnis BR, but what exactly are you asking? Do you mind?

Yes. Just asking, when is the approval expected from the China regulator?

Thank you. So we already had the type I approval from NMPA, we already got that. And actually, it just happened in July for our Magnis BR. We didn't mention that, in particular, in the slide deck is because that we are now working on type II registration, which we think would be the key. And also will be able to help us differentiate that machine even more, even better. So we're focusing on type II registration now, which we expect to get it sometime next year. We don't have a specific quarter or more a specific date for the prediction of registrations yet.

Right. That's helpful. And on the PREDICT study, just remind us what are the endpoints of the PREDICT Phase I?

The endpoint would be the sensitivity and the specificity as well as the tissue of origin accuracy. So those 3 statistics would be our endpoints.

Shannon, Phase I...

When you -- sorry, go ahead.

Yes. I just wanted to mention -- remind Shannon that you're asking the Phase I endpoint.

Wait. Yes, that is for Phase I.

So when you actually validate the technology using these 2 criteria, you are looking at certain, I mean, benchmark endpoints that it should cross this level of specificity and sensitivity to take it as a positive trial. Is that correct?

Right. So from a classical design for a trial, you should be able to -- you should do that. However, for early detection trial because there isn't anything to compare to, so what you see people nowadays are doing is that they design the trial large enough so that they have a precise enough estimate on the sensitivity and specificity. But they don't have a particular bar they preset to cross, so that they can claim positive or negative results. So that's also what we're doing with PREDICT as well. But I think down the road, once the first facial product is on the market, and then for the next generation of products, people will have something to have to compare with. And then design will follow the more classical design in the future.

Right. And then last one was on the contracted and pipeline hospitals. I mean assuming that your guidance, of course, say that you have not factored COVID return, would they pick up in terms of pipeline and contracted hospitals increase materially? Because if you look at the previous growth rate it was higher, and this year of course that addition of new hospitals has kind of seen an impact. But where do you see this number going by end of the year?

Yes. So in terms of guidance, we have guidance for our overall top line, we don't have specific guidance or breakdowns by channel. But qualitatively speaking, when we look at in-hospital channel, it is driven by both new hospitals getting signed on, getting into the contracted status, and also existing hospitals ramping up their volume. So if you look at the first factor, we've been able to add 5 new contracted hospitals in the first half of the year compared to 7 for the full year of 2019. So that's what we've been able to achieve for the first half of the year. And if you look at the existing hospital ramp-ups, we have seen better ramp-ups for Eastern China, but a weak number for Northern China. So that's the qualitative trend.

Our next question comes from the line of Derek Leung from Nomura.

Congratulations for the good results. So on behalf of [Aster Wong] from Nomura, I have one question about our prospective study, which launched in May this year. So may I know the average R&D expense for each enrolled patient in this study? So maybe we can have a breakdown of patient recruitment expenditure, testing fee and payment to doctors. So could you please tell some detail about this expense?

Sure. Sure. I'd like to take a step back and provide the overall expense for the PREDICT program that we expect to be around USD 30 million. We don't actually provide specific breakdowns by components of that number. So that's what we foresee for PREDICT, and taking a further step back that would imply that given our current burn rates prior to the start of the PREDICT study and with PREDICT, we are able to fund ourselves for the next 3 years or so, given our current cash balance after the IPO.

(Operator Instructions) As there are no further questions, that does conclude our conference for today. Thank you for participating. You may all disconnect.