Cerus Corp (CERS) 2008 Q1 法說會逐字稿

Welcome to the Cerus 2008 first quarter financial results conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a question and answer session. (OPERATOR INSTRUCTIONS). As a reminder, this conference call is being recorded today, May 1, 2008. I would now like to turn the call over to Ms. Carin Canale of Porter Novelli Life Sciences, the investor and public relations firm representing Cerus Corporation. Please go ahead.

Thank you operator, and good afternoon. Cerus issued a press release today announcing Cerus's financial results for the first quarter ended March 31, 2008, and describing the company's recent business highlights. You can access a copy of this announcement on the company's website at www.cerus.com. Before introducing Claes Glassell, President and Chief Executive Officer of Cerus, I would like to remind you that during this call, company management will be making forward-looking statements about research and development activities, regulatory and governmental processes, commercialization progress, finances and business prospects. The Company's actual results may differ materially from those suggested by forward-looking statements that company will be making, and the company assumes no obligation to update guidance or other forward-looking statements. I call your attention to the the disclosure and the company's SEC filings in particular Cerus's quarterly report to be filed on Form 10-Q and Annual Report on Form 10-K including the sections entitled risk factors. This call will be archived temporarily on the company's website and will not be updated during that time. I will now turn the call over to Claes Glassell, President and CEO of Cerus Corporation. Claes?

Thank you, Carin, I'm joined today by Bill Dawson, our Chief Financial Officer. Larry Corash, our Chief Medical Officer is attending the FDA Blood Products Advisory Committee meeting being held today in Rockville, Maryland. I'll touch on the relevance of that meeting later during the call.

It has been an active quarter for Cerus. To begin the call I would like to provide a high level overview of key external developments and Cerus' accomplishments. These achievements point to building momentum for the use of INTERCEPT to improve that safety. First, product sales increased by more than 300% to $4.9 million during the first quarter from $1.2 million in the same period last year. Sales momentum has been particularly gratifying in Eastern Europe and the Middle East, where blood banking institutions are beginning to accept pathogenic activation and adopt the INTERCEPT blood system. Commercial adoption in the Nordic, Belgium and Spain is also contributing to our top line growth. Secondly, I'm pleased to disclose today that our distributer in Spain has informed us they have recently been awarded four new contracts in key regions representing nearly 20% of the Spanish population. Third, several recent studies have further exposed the vulnerability of the world's blood supply to bacterial contamination and finally I'm very pleased that Carol Moore joined Cerus to head Regulatory Affairs on Quality where our contributions are already having an impact. With Carol, we are actively working on protocols for collecting data from commercial use of the INTERCEPT platelet system to support U.S. regulatory approval. We are also preparing to commence a Phase I clinical trial later in 2008 for the INTERCEPT red blood cell system.

I'll now expand on these highlights. The most telling indicator of our positive momentum is our growth in product sales. In the First Quarter, product sales were $4.9 million, up from $1.2 million in last year's first quarter, and $3.4 million in the fourth quarter of 2007. I'm quite pleased with this increase and with the commercial momentum it implies. The strong product sales performance in the first quarter was broad based. We saw significant revenues from customers in Russia, Spain, France, and Kuwait among others. These revenues included sales of illuminators both to distributors and new customers. As these illuminators are placed in service, we expect they will need to increase kit sales.

Additionally, sales growth in the quarter was achieved absent sales growth in either France or Germany where we continue to await ministerial or regulatory actions. We believe this building momentum for activation is due to three primary factors: 1, the ripple effect of the international consensus conference held in Toronto, and the more recent Department of Health and Human Services advisory committee on blood safety and availability. Both issued strongly positive recommendations that validated pathogen inactivation and stressed its importance to overall blood safety. 2, there is increased awareness of the prevalence of bacterial contamination and the very real risks that reliance on current testing methods pose to blood safety worldwide. And 3, the testing paradigm only works for known pathogens for which tests have been developed and deployed as has been demonstrated with HIV and Hepatitis C and more recently with West Nile virus, SARS and chikungunya the blood supply is continually vulnerable to emerging pathogens.

Now, let me give some more comments on specific markets. During the quarter, Russia was our largest market in terms of product sales. Russia and the former Soviet Republic constitute an adjustable market of $71 million. We have selected distributors in this region with broad coverage, their efforts have lead to a number of illuminators being sold this quarter in the region. We have limited disability on when these will be installed at customer sites and generate kit sales. We believe our safety proposition is resonating with Blood Centers in markets such as Russia which have improving healthcare systems. With improved access to medical and financial resources, Blood Centers in these developing Markets have the opportunity to leapfrog the traditional screening and testing paradigm in favor of adopting pathogen inactivation to improve safety of the blood supply. For example, many healthcare practitioners in Russia and Eastern Europe, along with Central Asia and parts of China and India, believe that in fusion of fresh blood can remedy diseases and illnesses such as pneumonia.

As reported in the International Harold Tribune last year, local doctors had prescribed tens of millions of unnecessary transfusions with very limited or no testing. This, of course, puts patients at heightened risk of contracting a disease. This practice did in fact lead to an outbreak of transfusion related HIV infections in Kazakhstan. As regulation of the blood supply improves in response to these outbreaks we see greater opportunity for adoption of INTERCEPT. Shifting to Western Europe, our exclusive distribution agreements to commercialize the INTERCEPT blood system in both Spain and Portugal is beginning to pay off. As a reminder, the addressable market in Spain and Portugal for INTERCEPT platelet and plasma systems is roughly $36 million. I'm announcing today that this award was contracts to supply four new regions in Spain with the INTERCEPT platelet system. These regions collectively represent nearly 20% of the Spanish population. We understand that three of these four contract awards have been finalized with Grifols. Grifols is also now supplying INTERCEPT plasma kits to the biggest Blood Center in Spain. Through Grifols we hope to increase our share of the Spanish market during the remainder of 2008.

In France, we continue to sell to four out of the 18 regions that have converted 100% to INTERCEPT. We're working diligently with the EFS, the country's national blood authority, and the Ministry of Health regarding the adoption of the INTERCEPT blood system. As we've discussed, the EFS has gone on record stating its intentions to implement pathogen activation, and initial supply contract is in place, blood conformance treated with both platelets and plasma systems are now in the national formulary. Resolution of the budget between the Ministry of Health is required for national adoption and we are working with multiple channels to accelerate this budget decision. Unfortunately, as we wait for the budget approval, vulnerabilities of the blood supply to bacterial contamination and emerging viruses are making news in France. In fact, recently there were reports of two patients in France developing sepsis due to transfusion of bacterially contaminated platelets. One of these patients died. Both of these tragic events could have been avoided had INTERCEPT been in place.

And in Germany, the Frankfurt region of the German Red Cross is working with the Polaric Institute or PI, to gain marketing approval for platelets treated with the INTERCEPT system. PI is the agency that regulates blood products in Germany and has already granted marketing authorization to one blood bank in Germany. Here again, we are working through multiple channels to accelerate the process. We're encouraged that blood banks within the Frankfurt region have already received the requisite manufacturing approval from State governments. This means that they could be in position to begin a phased adoption of the INTERCEPT platelet system while the PI approval is given. To provide some color on the dynamics of blood safety practices in Germany, in 2007, the German blood banking community performed a collaborative study to evaluate the usefulness of bacterial testing.

The study reported that the incidence of bacterial contamination was one in every 384 platelet units. Two patients were infected with bacteria despite testing being in place. One of them died. As a result of this study, bacterial testing has not been widely adopted nor mandated in Germany. Consequently, transfusion recipients in Germany are exposed to unacceptably higher risks of transfusion related infections. Once again, these infections could be prevented with the adoption of INTERCEPT. We're also seeing encouraging progress in the Middle East. Our distributor in Kuwait, won a tender to supply the Kuwait National Blood Service for the INTERCEPT platelet system. The Kuwait National Blood Service is a thought leader in the Middle East and their adoption of INTERCEPT may influence blood safety practices throughout the region. In summary, we made good commercial progress during the quarter. France and Germany remain important to our overall core facility but at the same time, we are seeing very encouraging adoption in the rest of Europe, the Eastern and the Middle East.

Now, I'd like to turn your attention to four studies, all of which demonstrate unacceptably high risk of bacterial contamination, coupled with poor methods of detection. In addition to the German study just mentioned, the Passport study in the U.S, the Murphy Irish Blood Transfusion Service Study and the Welsh Blood Service Study in the UK all report on similar findings. Current bacterial testing practices are inadequate. We discussed a 2008 U.S. Passport study on our last call, but the final data showed an even higher rate of contamination at the preliminary report. Platelet units released for transfusion even after testing negative for bacteria still displayed a greater than 1 in 1500 chance of containing bacteria. Given that the average patient is transfused with six platelet units, approximately 1 in every 250 transfusion recipients is at risk of receiving bacterially contaminated blood. This is unacceptably high.

Transfusions for the Irish Blood Transfusion Service Study were published in a paper by Dr. William Murphy in the March 2008 issue of Vox Sanguins, a leading international journal in transfusion medicine. Dr. Murphy noted that platelets for transfusion are particularly prone to problems with bacteria. In large part, because they are stored at room temperature. The paper highlighted inadequate screening for bacterial contamination in platelets and the need for pathogen in activation technology to eradicate bacteria and replace screening processes. Common practices of bacterial testing have serious draw backs. First, culturing for bacteria leads to significant false negatives. Dr. Murphy's paper indicated that using bacterial testing formerly used in Blood Centers more than 60% of contaminated units were not detected. Second, bacterial testing causes an inherent delay in platelet release due to the two day period required for growing bacteria to be detected. This delay reduces the useful shelf life of platelets by 40%. This has a negative impact on Blood Center economics and availability of platelets for transfusion. And third, in addition to bacterial testing being done at Blood Centers, point of care tests are available; however, they still take roughly a half hour to get a read out and time can be critical in many medical procedures. These tests have also been shown to have very poor levels of sensitivity and they are expensive. In his summary, Dr. Murphy concluded the most effective solution to the shortcomings of bacterial testing is adoption of pathogen in activation methods.

We believe this is all evidence that we are at the forefront of a significant change in blood safety practices. Current practices are just not enough. A growing number of thought leaders have been recommending pathogen inactivation and an expanding customer base has reported good results as for adopting the INTERCEPT blood system. All points to work awareness and adoption of INTERCEPT. As a further indicator of momentum, the AABB, the largest global association of blood banks has for the first time accredited a blood bank that has chosen to use the INTERCEPT blood system in lieu of bacterial testing. This accreditation is an important step for Cerus and our customers. Further, it is an acknowledgement by AABB, that pathogen inactivation meets the quality and safety standards to reduce bacterial contamination risks.

As I mentioned at the beginning of our call, Larry Corash, our Chief Medical Officer is attending a regularly scheduled meeting of the Blood Products Advisory Committee, or BPAC, which makes recommendation for the FDA. The BPAC agenda suggests that the issue of bacterial contamination in the blood supply is a priority at the FDA. INTERCEPT was not an explicit topic on the agenda, but a portion of the meeting was devoted to a review of the Health and Human Services recommendation supporting the adoption of pathogen inactivation. The Passport study and ramifications of its findings was also discussed. We have already heard that the FDA stated in today's meeting that U.S. blood banks will have to increase platelet production by 19% to compensate for the loss of two days of shelf life from seven to five days that have been sought through the Passport study. Larry briefly addressed the committee during the public comment section at which time he reminded the practice that INTERCEPT could provide a comprehensive solution to bacterial contamination and the threat of emerging pathogens. However, we do not expect that BPAC will issue any recommendations at this meeting.

In regards to potential U.S. approval of the INTERCEPT platelet system, please recall that the FDA reversed its decision on the regulatory pathway in late January, and is now open to reviewing data from commercial use of the platelet system in Europe. Our existing hemovigilence database now numbers in excess of 30,000 transfusions. These data, together with data from our Phase III study, may be supportive of a product approval in the U.S. We are actively developing clinical protocols to gather and analyze European commercial use data. By the end of the third quarter of this year, we expect to have had discussions with the FDA to define the scope of acceptable data collected from Europe and we hope to communicate a regulatory pathway for INTERCEPT in the U.S. at that time.

In other regulatory developments, we recently announced that we had been granted expanded label claims for INTERCEPT treated platelets and plasma units to prevent transfusion associated graft versus host disease in at risk patients. Prevention of graft versus host disease is critical because it is a condition with greater than 80% mortality and no effective treatment options. These expanded label claims allow blood banks in Europe to use the INTERCEPT blood system in place of gamma radiation. Our customers in France, Sweden, Germany, Belgium, Spain, Norway, are already doing so. Turning to our red blood cell program, we have made considerable progress through extensive in vivo and in vitro studies with our modified system. We believe we have identified an approach that maintains adequate red blood cell function and hydration through a normal storage period. We expect to begin a new Phase I clinical trial before year-end. We also commenced discussions with key potential customers of the INTERCEPT red blood cell system to get their input on commercial system design and on design of Phase III trials.

Finally, it was my pleasure this past quarter to welcome Carol Moore to our Senior Management Team as Vice President, Regulatory Affairs and Quality. Carol joined Cerus from Bayer Corporation where she was Vice President Worldwide Regulatory Affairs. Carol's breadth of experience interacting with regulators and health authorities worldwide as well as strategic planning and product development will be valuable in our commercialization efforts of INTERCEPT. I will now turn the call over to Bill to review our financial highlights.

Thank you. As Claes highlighted, product revenue for the INTERCEPT blood system increased to $4.9 million during the first quarter of 2008, up from $1.2 million during the first quarter of 2007, and $2.4 million in last year's fourth quarter. This increase was largely driven by an increase in unit sales of consumable platelet system kits and illuminators. We recognized $1.2 million of previously deferred net product sales revenue during the first quarter. Government grant revenue in the current quarter was $117,000, down as expected from $1.1 million in the first quarter of 2007. Total revenue for the first quarter of 2008 was $5 million, up from $2.3 million in the first quarter of 2007, driven by increased product sales offset by lower government grant revenue.

Total operating expenses for the first quarter of 2008 were $9.9 million, up from $8.6 million in the same period in 2007. The increase in our operating expenses was due to planned expansion of our sales and marketing efforts to support commercialization of the INTERCEPT blood system. Net loss for the first quarter of 2008 was $5.3 million or $0.16 per share, compared to a net loss of $6.8 million or $0.21 per share for the first quarter of 2007. At March 31, 2008, the Company had cash, cash equivalents and short-term investments of $46.7 million, reflecting a $10.1 million cash burn since the beginning of the year. Cash burn for the first quarter was within budget and included $6.1 million in cash consumed in working capital. We continue to believe our cash balance will be adequate to fund operations well into 2009. I will now turn the call back over to Claes for concluding remarks.

Thank you, Bill. In summary, Cerus is establishing itself as the leader in pathogen inactivation. We're seeing significant commercial progress in Europe and the Middle East with sales growing robustly and we and our distributors are adding customers. Commercial momentum and public and regulatory awareness of the benefits of pathogen inactivation is increasing. We are working diligently to educate and influence the blood banking community, public policy groups, and appropriate regulatory agencies on the advantages of adopting INTERCEPT. The limitations of the current screening and testing practices and evidence that the INTERCEPT blood system can improve blood transfusion safety has never been more apparent. Operator? I'll now like to open the call for questions.

Certainly. (OPERATOR INSTRUCTIONS). Our first question comes from Chris Raymond with Robert W. Baird. Please proceed with your question.

Thanks for taking the question, guys. Just want to understand a little bit, how much of your sales, you mentioned a couple times in your prepared remarks, a good portion of your sales was driven from the illuminator business and I think it was in, I think you mentioned Russia primarily. Can you, I'm not looking for an exact number but can you give maybe sort of a general estimate of how much of that this quarter was illuminator sales?

Well, precisely, I think we sold 16 illuminators, Chris. So how much dollar wise? Probably about $800,000 or so. So, if I do my math right, and you back out the $1.5 million that was deferred from Q4, your run rate with the illuminators was $3.4 million. If you back out that, that's about what? Roughly if my math is right, it's about 2.6 million. Well I think first of all you shouldn't back out the 1.5 of deferred because we still have some deferred revenue going into Q2.

Okay, got you.

And we also sold illuminators in Q4, although we didn't call out those sales numbers for you, so it's not quite as simple as that.

All right, so even if you back it out, you kind of mentioned that you've got all of this momentum with this back out, is your momentum mostly the backlog that you're talking about because quite frankly, and I don't mean to be obtuse here, I really see it in the numbers.

Well, I think you see it in terms of, there's a certain degree of lumpiness when you sell illuminators but you get a big revenue up front when you actually sell them and then you start selling kits and you see the momentum so I think in terms of adding new customers who are buying illuminators and starting to sell kits to those who have bought the illuminators I think we'll see momentum in both of those.

And Chris I think our reason for highlighting illuminators this quarter is in large part to answer a question as to why our gross margin was so high.

Right, okay.

We've sold illuminators in prior quarters as well.

Okay. But it looks like this quarter probably given your gross margin to your point on the gross margin this quarter was probably had a high quarter in terms of Illuminator placements or sales.

It was a high quarter in terms of mix and its effect on gross margin.

Right. And again, not to go through some review here, but I listened to your comments on Germany but I didn't get a date, and maybe that was on purpose, but can you maybe just go back and talk through, I know this is delayed from where we were originally discussing the reimbursement approval, but could you just explicitly say when you, if you feel comfortable doing this when you think you might have the reimbursement approval?

So Germany has not actually a question of the reimbursement, it's a question of the PI, who was the corresponding to the FDA, if you wish, in Germany, issuing a marketing approval for the Frankfort Red Cross and its entire region, and that review process, we have learned, was actually slowed down because PI staff was obligated to review a number of stem cell applications in Germany and they only have so many people, so that caused a delay in the review process and my understanding now is that they are now having people available and reviewing the file application. I don't want to at any moment in time start putting timelines on when other people will finish their work. These are regulators, so I don't want to go there.

Yes, certainly lesson learned I guess.

Yes.

Okay, and then maybe some of this is more under your control as the RBC program. Just looking at the last commentary you had on starting Phase I, it was more of a range of timing that was second half. I think your comment here is, end of year which is still second half but it sounds a little bit like a slippage. Is that what we should read in or is there something else going on?

No. I think that when we said second half, we did so because we wanted to be -- the further out you are in time from something you want to give yourself a broader range and now I think we're saying that it's probably going to be Q4 but not necessarily end of the year, but it's no more precise than that.

Okay.

So you shouldn't read slippage into that.

Okay. Great, and then just to clarify, the U.S. approval, you mentioned Q3 you'll have a regulatory pathway to announce that will be post a meeting with them; correct?

Correct. And I'm not saying we will, we're saying we're hoping because again, if it requires that the FDA will be willing to accept something close to what we intend to propose to them.

Okay, thank you.

Thanks.

Your next question is from Liisa Bayko from JMP Securities. Please proceed with your question.

Hi, guys, wanted to follow-up on something Chris was alluding to. So, you had $3.9 million of sales in the fourth quarter and then the it looks like if you back out the deferred revenue and if you back out the deferred revenue from this quarter, which is you said 1.2, you get to about 3.6. Is that the way to look at it?

Lisa, we had $2.4 million in reported revenue in Q4. 2.4. And then we had $1.5 million of deferred revenue at that point.

Right. But that was so if you add that back in, because that was revenue, those were sales that happened in that quarter although you can't officially report it so it's 3.9 and now we're going to 3.6.

So our balance sheet if you've seen that on our earnings release has another $300,000 of deferred revenue at March 31.

I saw that.

So if you did want to kind of normalize quarterly sales and say we recognized, had we recognized those deferred revenues in Q4 that we ultimately recognized in Q1, our revenue projection would have been 3.6 in Q4 and 3.7 in Q1.

Okay. I guess it's because you had the, where is the $1.5 million that was in the fourth quarter? Like I thought --

We recognized, these dollars are fungible, right, so these aren't the same underlying events, okay? We had $1.5 million in deferred revenue at the year-end. We have 300,000 in deferred revenue at the end of the first quarter.

Okay, and Claes, so but is that 3 additive to the 1.5 or still part?

It's all net. Each number are net. The 300,000 in deferred revenue at the end of the first quarter --

So but then Claes said you recognized $1.2 million this quarter.

We did.

So that's where you get the 3 that's still being carried?

On a net basis, correct.

Okay, so then that's where I'm getting 3.9 to 6.2. We can take this off line.

All right

And then just so for Frankfort just want to make sure I understand, so for Frankfort you get a marketing authorization and then you can begin selling or are there other things that need to happen before you make your first sale?

Once the marketing is in place, the most important thing is they can start from the front right away. I think we've said before, they have to get in some free kits from us so I think that will get them enough to get going and then we will start sales as they consume the free kits.

So you don't need to get into any sort of reimbursement or any contract discussions?

Contract discussions, we certainly did get into.

And have those begun yet?

No, and I promise to announce when we are done with those.

No, have they begun.

Oh, begun. Yes, they've been going on for awhile.

Okay. And then just your cash position, about a year of cash left. Is your stance still the same with respect to how you're going to address that?

Yes, it is, Lisa.

Okay. And then just wanted to talk a little bit about France. Do you have any guidance you can provide or any sort of time frames on when you might expect some movement there?

This, again, a little bit back to the same answer I gave to Chris before. This is the process that we ultimately don't control, so we're doing I think a lot of of useful things to try to accelerate the process in terms of lobbying and other efforts that we have under way, but I can't say when someone tells me something a year ago and then they are slower because of some budget negotiations, I stopped trying to predict what will happen.

Okay. And then just any updates on Belgium? I know they had slotted for country-wide conversion in 2008. Is there any update there?

Well, everything is basically in place as far as we understand. We're doing that, but one thing I don't think I have a administrative signature yet and I don't know exactly where we stand now with getting a government in Belgium but it's a permanent, not a caretaker government.

Okay.

But that's again something Unfortunately we don't control.

Thank you very much.

Thank you.

(OPERATOR INSTRUCTIONS). Our next question is from Daniel Owczarski with Avondale Partners. Please proceed with your question.

Yes, thanks, hi Klaus, hi, bill. Can you talk a little bit about the four centers in Spain that you're announcing tonight as far as implementation I mean are they going to be using the INTERCEPT on both platelets and plasma? Do they have the equipment right now? How soon could we see an impact from them?

I'll give you a little bit more. So these are for platelets, all four, and they are already as far as I know using or in the beginning process of starting to use the product, so we expect to see sales ramping up as the year progresses and they go to 100% conversion.

Okay. And can you remind us what that market in Spain for platelets is? You said it's 20% of the market?

Well, we said actually it's 20% of the population that's covered by those centers, so it's not exactly 20% of the market. I don't know how much of a difference it is. But it makes it easier for us to report that way. The Spanish and Portuguese market together for platelets and plasma is $36 million, and that's the addressable market, so we haven't actually isolated numbers for Spain for platelets.

Okay.

We can provide that to you afterwards if you want.

Okay. And then just to stay on platelets, do you have customers right now that are using the INTERCEPT on platelets and getting a seven day shelf life for them and if they are, do you have any kind of data on their discard rates how that's impacted them?

We do. I think the best documentation is the paper that has been published by a customer in Belgium that saw the discard rate go from about 9% to less then 2%, as they went to seven day storage which they were able to do because of INTERCEPT. That's probably the best published in a peer reviewed setting.

Okay, thank you.

Thanks.

(OPERATOR INSTRUCTIONS). We have another question from Liisa Bayko with JMP Securities.

Just one quick follow-up. Is there any, can you remind us is there any currency impact?

Well, we sell, as you know, Lisa, we sell in Euros, so as the dollar continues sliding, we get a benefit from that, if you wish. But we also have our cost of goods sold in Euros, so we have a natural hedge. Right so the margins the same? Yes.

Okay. Thank you.

Thanks.

Our next question is from Brett Rice with Janney Montgomery Scott. Please proceed with your question.

Thank you for taking my questions. Any progress with BioOne in the Far East and anything you can say on the cancer vaccine program?

We'll start with the second part of the question. As you know, we spun off that cancer vaccine program, so we are no longer actively involved. We are a 15.5% minority shareholder in that. So we follow them a little bit less actively than we did before, and I don't really have any real news from that front except that I think they are making continued clinical progress for the products that are in the clinic right now and they don't have any final data. With regards to BioOne, we repeat what we normally say. They paid us quite a lot of cash and stock for the rights and they do have the marketing rights and the license for that territory, and I think we have said in the past that their progress has been slower than the expectations they created with us, while we signed that deal, but I think that they are, they have some small sales in a few countries but nothing big in Japan nor in China where the big markets are.

All right, thank you.

Thanks.

(OPERATOR INSTRUCTIONS). There are no more questions at this time. I'd like to turn the floor back over to Management for any closing comments.

Thank you for joining us today. We look forward to updating you on our second quarter conference call. Thanks.

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.