德康醫療 (DXCM) 2006 Q1 法說會逐字稿

Good day everyone, and welcome to today's DexCom first quarter results conference call. Today's call is being recorded. (OPERATOR INSTRUCTIONS). At this time for opening remarks, I would like to turn the call over to Andy Rasdal, CEO of DexCom. Please go ahead, sir.

Good afternoon. Thanks for joining us. Just a real quick run through of the topics we intend to talk about today. But first we will turn over to Steve Kemper to just do a quick review on the financials. I want to give an update to the progress of our STS launch. Talk a little bit about some new clinical data, both current and upcoming. Talk a little bit about the product pipeline, litigation, reimbursement, and then finish with some news on our long-term sensor program. And then turn it over for a few minutes of Q&A.

At this time I will turn it over to Steve Kemper, our Chief Financial Officer.

Good afternoon everyone. We will be making forward-looking statements on this call regarding various aspects of our business, so please refer to our 10-Q, our K, our S-1 and all of our filings with the SEC for a full discussion of the risk factors.

DexCom today reported a net loss of 10.9 million, or $0.43 per share, for the first quarter of 2006 compared to a loss of 6.1 million, or $0.236 per share, for the first quarter of 2005. The per share amounts are not directly comparable due to the low number of common shares in the 2005 quarter, as it was before our IPO and the related conversion of our preferred stock into common.

Both the quarterly net losses reflect share-based compensation expenses, which were approximately 1.3 million in 2006, the first quarter, compared to 585,000 for the quarter in 2005 under the old APB 25.

I'm very pleased to report today DexCom's first-ever revenues of approximately $15,000, which reflected meeting our objective of launching immediately after our approval. We recognize revenue when we ship products to our patients. Our cost of sales was approximately 2.1 million for the first quarter compared to 0 for the same quarter during 2005. These costs primarily represent our fixed overhead to support our manufacturing operations, and include labor costs, support groups like quality, manufacturing, engineering, procurement, supplies, depreciation. At initial volumes we are not absorbing most of these costs into inventory, but this absorption will increase as we scale our production and our revenues.

Research and development expense, including share-based compensation, was basically flat year-to-year with 5.5 million of expenses for the first quarter of 2006 compared to 5.4 million for the first quarter of 2005. However, the cost elements within R&D shifted. We saw approximately a 1.1 million increase in our development expenses; however, those are offset by a 1.1 million decrease in manufacturing expenses that are now classified in cost of sales for the first quarter of 2006. These expenses were previously reported in R&D during our development stage.

Changes in the research and development expenses were driven by approximately 1.2 million in increased salary, fringes and share-based compensation expenses, as well as higher tooling and fixturing costs. But that was partially offset by lower clinical trial expense and product design costs.

Our selling, general and administrative expense, including share-based compensation, increased approximately 3.2 million to 3.8 million for the first quarter of 2006 compared to about 700,000 for the first quarter of 2005. The increase was primarily due to 1.5 million in our initial sales and marketing costs. We had virtually none in the previous quarter. 800,000 in higher legal expenses, and 700,000 of expenses related to operating as a public company. So this comparison of this quarters with our last quarter as a private company which was the first quarter of 2005.

Interest income and other income increased $347,000 to 483,000 for the first quarter of '06, compared to 136,000 for the first quarter of 2005. That increase is due to higher cash balances primarily related to the cash raised at our IPO, as well as higher interest rates.

On the balance sheet side for the first quarter we used 11.8 million in cash, which included approximately 1 million for capital equipment. We started the first quarter with the proceeds from our IPO one year ago in the bank, 50.5 million. So while we ended the quarter, this first quarter, with 38.7 million in cash, as you know, we raised 47 million net in our recent follow-on offering. We intended on raising a smaller around but due to high demand, we upsided the offering both for primary shares and secondary shares. And the underwriters exercised the over allotment within a few days of closing. So we're well capitalized head into our launch.

As we noted in our roadshow, we moved from what we thought would be one-third of the market position a year ago to a leadership role, and the first to launch on a national scale. So we're quite pleased to have the additional cash to allow for greater market development and a more methodical approach to our rollout.

That is all for my compared comments, and I will turn it back to Andy Rasdal.

I would start with a quick overview of where we stand with the STS launch, realizing it is still early in the experience, try and provide some flavor. Just to review the timeline, first we received approval on our fax machine late on Friday, March 21. We announced that approval on Monday 27. We met our goal of shipping commercially sellable product to some of our reps that same night. And we actually sold our first set of commercial product very late on Tuesday night, March 28.

And we said all along over the last year that our goal was to be able to initiate product launch immediately upon approval. I'm very proud of the organization's ability to accomplish that timely launch, especially when there was no approval period typical of a PMA, and the STS is DexCom's first-ever commercial product.

From a selling standpoint today we have a field-based selling organization of approximately 23, and would expect to add a few more clinical educators over the next quarter or so. For competitive reasons we will no longer comment on the specifics or the exact structure of our selling organization.

We also in the first quarter added Tae Andrews as our Vice President of Marketing. Tae brings very relevant and important experience to DexCom, having been the Vice President of Marketing at TheraSense. Up until the acquisition by Abbott, responsible for the launch of the freestyle blood glucose meter. We expect Tae will be able to bring more methods to both of our launch, and as we move into the future, looking at some consumer related marketing efforts.

Currently we are fulfilling orders for two customers and patients via sales reps, via phone, fax, and now via our Internet I store where patients can order directly online. Our sales and marketing organizations are fully focused on optimizing, as Steve said, our earlier mover advantage and launching very methodically on a national basis. Our initial goal has always been to rapidly gain experience and establish DexCom at the larger regional diabetes centers. We believe these centers who control large patient populations are often at the leading edge of diabetes management, offering the most leverage for our selling efforts.

In the first four to five weeks after approval, all of our selling organization found it very difficult to focus solely on these regional centers due to strong interest by individual patients and patients outside these regional centers. We tried to strike a balance between being sensitive to the needs of individual patients and physicians with diabetes, and our focused strategy into the larger regional centers. In the last two weeks we have been able to sharpen our strategic focus of optimizing this early mover advantage in these large regional centers with a number of programs.

Today manufacturing capacity is adequate to support our current launch strategy and needs. As we have always said, this is a first generation product and a new category of diabetes management. But we believe it is very important, and we expect to learn a great deal about what patients want and desire by initially launching the STS. With a first generation product we hope to be able to establish a strong beachhead for DexCom and for continuous monitoring, and then too rapidly bring new product iterations through PMA supplement to broaden our appeal to a greater number of people with diabetes.

Since the launch we have had a number of wonderful anecdotes for new users who found benefit in our STS system. For instance, some flavor to those, one user wrote us to say that even though she had been managing her diabetes for more than thirty-five years, she now realizes with the STS that she had been deaf and blind before, and now feels the STS has taken out her year plugs and removed her blindfold.

Another user told us that the STS made him feel normal, like he did not have diabetes for the first time he could remember in his adult life. Others have been reported being awakened at night via a loud beeping noise, and finally recognized it as the low alarm on their STS receiver. And then confirmed the fact that they had gone hypoglycemic with a fingerstick measurement. I think these anecdotes that we continue to receive show that the value of continuous monitoring is both the additional information it provides, and a more convenient and predictable lifestyle for patients in managing this difficult, chronic disease.

As we also expected, we have had some challenges being the first to fully nationally launch a product. Perhaps first, we are left with a skepticism from people of the unfulfilled promise of others before us, which has raised I believe the performance threshold and expectations for DexCom.

We have had some patients experience performance issues with their systems. None of these have had any safety implications, and these complaints represent a low-frequency of occurrence. But nonetheless we have been quite responsive, and we appear already to have eliminated the top two of the three complaints within the first week weeks of launch. We also believe that the seven-day sensor we plan to file as a PMA supplement this quarter will address many of these issues and needs and wants that have been raised by a number of the patients in the early use of the product.

We continue to be confident that our STS represents a significant and important advance in the management of diabetes. And feel we're continuing to build momentum in the STS launch and with DexCom as a company.

On a clinical data standpoint, we believe we continue to create the clinical evidence from our studies that builds the momentum for both the category of continuous glucose monitoring and DexCom's products within the category. We sponsored a symposium on continuous glucose monitoring at the recent annual meeting of the American Association of Clinical Endocrinologists, or ACE. We had seats for 325. And even though the symposium was at the very unattractive hour of 6:15 AM on Saturday morning, we have a standing room crowd of approximately 370 people. And we are pleased to continue to see the response and the interest in the category.

The results from our seven-day STS study conducted last summer, presented for the first time at ACE, in summary the results focused on the accuracy and stability of the seven-day STS over the full seven-day period. Again, we ran three consecutive seven-day periods for those patients, 86 in total.

And although not scientifically valid to draw conclusions between our three-day and seven-day studies, the seven-day STS perspective mean absolute relative difference, or MARD, which is an important measure of accuracy, is 15.7% for the seven-day, while the MARD was 21.2% in our three-day STS pivotal trial.

For the seven-day the MARD was 15.7 on day seven itself, demonstrating the stability of the sensor over the full-time period. Our median ADR, or median absolute relative difference, which is what some of the other companies have chosen to report instead of mean ADR, was only 11.4% over the full seven-day period. 97.2% of the more than 6,800 [pair] points from the seven-day study fell into the A and B regions of the Clark Error Grid, and there were no E points. So we are extremely pleased with that product's performance, literally just months after completing the first pivotal trial in the three-day.

Looking forward to the upcoming annual meeting of the American Association of Diabetes for the ADA meeting in June, we have now had four data sets from our STS clinical trials accepted for publication. Two of those have been dubbed for oral presentation. One of those was just accepted as a late-breaking abstract presentation.

The data that that will presented will include several topics. The first is the actual clinical improvement and outcomes from our seven-day studies, which we believe reveal important new clinical findings that we have not published on before; additional accuracy data from our seven-day STS and subsequent studies; data from our replacement claim feasibility trial, showing how the device could be used as stand-alone replacement claim for fingersticks in therapeutic decisions; and finally, the pulmonary results from our repeated use trial showing a statistically significant reduction in the A1c levels for the first 60 of 140 patients having completed the full 90 day period.

Just a quick overview of that particular study, which we believe is meaningful. The first 60 patients who completed the full 90 day course of those 140 patients, demonstrated a full half-point reduction in A1c levels with increase in hypoglycemic exposure. This reduction was statistically significant. Perhaps more interesting, the group of patients starting with a baseline A1c of 8.0 or greater decreased their A1c levels over a full point, again without increasing exposure to hypoglycemic.

Finally approximately 40% of the first 60 patients have Type II diabetes and showed an average .6 reduction in A1c compared to a .4 average reduction for the Type I, we believe providing some of the first clinical outcomes evidence that Type II can benefit from continuous glucose monitoring.

We realize, as we said, that the future of DexCom is to establish a beachhead with the STS, and then to be able to rapidly iterate it through a series of PMA supplements. We're on schedule to file our PMA supplements for the seven-day sensor this quarter. The final patient completes the study supporting the additional product improvements tomorrow. And so we're on track to complete that filing by the end of the quarter.

The seven-day STS we believe offers improvement just beyond functioning for seven-days. For instance, we believe as the data just showed, it shows improved accuracy and stability over the full use period. It further reduces the needle size for the insertion, which has both comfort and performance benefits. The data supports a full waterproofing claim without the use of a shower cover, we believe. And we have improved the receiver software and screen displays based upon patient feedback and desires.

Secondly, our professional PC software to allow healthcare professionals to download, analyze and print data from the STS receiver is just now being made available. And so that will be available through physicians interested in the system, and to be able to use it to help advise their patients moving forward.

Just as exciting, I think we have spoken a little bit on this before, we now have begun some of the additional development and testing for hospital use continuous glucose sensor, and expect to conduct our first human feasibility trials now before the end of Q3. Recent publications have demonstrated that improved glucose regulation, in ICU patients specifically, significantly reduces death and complication, both in people with and without diabetes. We believe the hospital application of our core continuous glucose monitoring technology provides a very large and attractive market opportunity, complementary with our current STS platform.

From a litigation standpoint, as we had announced towards the end of last quarter, the U.S. Patent Office has granted our request for re-examination of all claims on all four Abbott patents cited by Abbott in their infringement complaint against us last August in the District of Delaware. The Patent Office granted these requests based upon new evidence raising a substantial new question of patentability. Some data around that. The average patent re-examine takes about 21 months, and 74% of re-examinations result in invalidated or reduced claims. On the basis of this re-examination we filed a motion to stay the case, and this motion has not yet been ruled on.

We recognize that reimbursement is very important, and we continue to work methodically, effectively but patiently towards that end. Our first objective was to make the product available to patients, which means being approved, to be able to provide the product. The next step is to make it accessible, meaning that it is reimbursed for more patients.

We had a very good opportunity. We presented for both the oral and written record, along with Medtronic and the Juvenile Diabetes Research Foundation at the reason CMS hearing on trading HCPCS codes for continuous glucose monitoring. With our recent FDA approval, peer review publication showing superiority to fingersticks on clinical outcomes, and a national launch of the STS, along with information presented by Medtronic and JDRF, we believe a compelling argument was made creating HCPCS codes for continuous glucose monitoring. However, we can't predict whether this will be sufficient for a favorable decision by CMS later this fall.

We will continue to submit additional data from our study supporting continuous glucose monitoring, as we expect will other companies in the field, such as our A1c reductions, up until the time CMS has made -- expected to make a decision on creating HCPCS codes later this fall.

We're also now aware that both physicians and patients have petitioned their own private insurers to reimbursement for our STS. We are not yet aware of any decision, either positive or negative, this early in our launch.

From a long-term sensor standpoint, despite all the activity around the approval and launch of the STS, the long-term team implanted a small feasibility study in humans outside the U.S. with the G3 sensor utilizing the improvements in biomaterials that we've made. It will be a couple of months before we can meaningfully analyze results of these implants, however, the improvements we have made look very compelling in our animal models. But we also recognize that animal results never completely correlate perfectly with human results. In a couple of months we hope to be able to understand the impact these improvements have had on the long-term program.

With that, that finishes the end of my prepared comments. We have time to take a couple of questions.

(OPERATOR INSTRUCTIONS). William Plovanic with First Albany Capital.

Congratulations on the launch here. Just -- you always do such a great job in answering all the questions. It is kind of hard to kind of think of any. So just in terms of competition, I know that Medtronic is pushing more towards the pump users, where yours is open architecture. But have you seen them out there yet? Do you think they have gone national? Just any feedback on that would be helpful.

I don't know the answers ultimately to exactly what they're doing with their product or how they're doing it. We have not run across them as any kind of obstacle related to our rollout here initially into the larger centers.

You did address it somewhat just in terms of reimbursement. At this point is it a -- how would you characterize that as an obstacle for the early adopters?

I think companies have historically been able to blame two things. One is the FDA for not moving fast enough, and the other is reimbursement. Clearly, having reimbursement where people don't have to pay out of their own pocket would always make it easier. Nonetheless we think we have something of value in the large patient population. And I think it is too early to draw any conclusions one way or the other. But we continue to believe that even with some patients having to pay for it themselves that we can provide something that is of value and of meaning to them. And then we will continue to work patiently and methodically. We have always said it is important not to go prematurely for reimbursement. This recent HCPCS hearing created a unique opportunity, given our recent approval. We will continue to take those opportunities as they arise.

In the meantime there is support coming from the grass-roots level of patients and physicians beginning to petition private payers who will become aware of us. And we continue to package up the data and show a reasonable adoption from a meaningful number of patients then we can begin to formalize the processes.

And then the last question. Just in terms of -- you had the study out there with the 20 sites that you were working on. Have you been able to -- in your prepared remarks I think you mentioned that you're being kind of pulled in many directions. Have you been able to at least in-service those sites, and get those first 20 that you were really focusing on up and running?

I think the 20 sites, we had I guess the fortunate experience of having a slightly earlier than expected approval, and so we never got to the full 20 sites in repeated use trials. The people who had been fully enrolled in repeated reuse trials are obviously more familiar with the product, and that is being reflected in our results. I don't know if one for one the other 13 or so sites, whether those will specifically be trained, but clearly they would be top of the list, and I would expect that they had.

Ben Andrew with William Blair.

I just want to ask you a couple of quick questions. You mentioned that you have been able to solve or address the top two of the three main complaints. Can you tell us what those three complaints have been?

For obvious reasons, I don't want to be specific in those. They primarily relate to usability type issues, and the large number of those are generally addressed by training proactively or answering questions. And I think probably we will stay general in those points because, well, for one thing we could end up with another three to come to the top of the list in the next six weeks. But I think the key thing is that we are able to get those, rapidly address them and move on.

Can you give us some sense on the consistency with which the sensors are performing up to plan?

I think that from everything we have today they are performing consistent with what we saw in the clinical trials. I think certainly no matter how you run a clinical trial it never perfectly simulates real-time use by people who will use them. And certainly as a number of logs show, people want to take them as quickly and as far as possible. But I think thus far we have been pleased, especially for a first generation product.

When do you think you'll have a patient version of the software available? You had mentioned the physician version.

I think -- I don't have a specific timeline. Obviously, that would just be a revision of the physician software. I think we would like to fully test the physician software at least for several months before we decide the best way to provide that to patients.

And you said you're going to be -- you are rolling out that physician software now?

We are. We're beginning to make it available immediately.

And then a couple of other things. As you have looked at the clinical studies, are you looking at testing the device in patients under the age of 18? Because I know that is (indiscernible) label.

Yes, I think the areas that we have spoken about previously of interest for future clinical studies obviously relate to the pediatric population. That is a very important population to us for a number of reasons. And we had hoped to cooperate with a number of site centers to get those studies done, and then to formally seek the labeling for under 18 usage. As well as some of the initial data here at ADL will be published on our thoughts about replacement claim. We still would like to move towards replacement claim studies, and potentially obtaining that labeling as the data warrants as well.

Are there any physical or software changes to the seven-day sensor versus the three-day sensor?

I am sorry -- again?

Are there any physical or software changes to the seven-day sensor you are testing in studies?

There is to the system, not necessarily to the sensor. But a couple of them we talked about, changing the receiver software and the way that it displays and interacts with the patient based upon the feedback that we have received. That is currently being tested in the study, and we would expect to file that. Also some of the physical changes include things like a further reduction in needle size for insertion of that device.

To what do you attribute the improvement in the median MARD, or mean MARD, numbers versus the three-day?

There have been a number of changes. I think the biggest pieces of which have come is just the product which we launched was essentially designed in November 2004 and manufactured in January for a pivotal trial to follow. I think we have learned an awful lot about how to stabilize the way that we produce repeatably for those things, as well as a little bit in the sensor chemistry, and those changes would be reflected in the seven-day sensor.

And then last question, and probably a tougher one for you to answer, but I know this is what everybody wants to know about. As you have looked at the productivity of the salesforce you mentioned they haven't been able to get as focused on the large centers. Has that dragged down the salesforce productivity in terms of getting patients on to systems in the first five or six weeks here?

I don't know that I can comment to whether it has dragged down productivity in terms of any numbers of patients on the sensors. I think what it has is forced them to try to straddle between staying focused on say 20 accounts per week or two as opposed to running to address patients. And so clearly the focus I can speak as knowledgeable to is based upon the strategy. I don't know that I can comment on whether it had any impact on patient uptake or not.

Alex Arrow with Lazard Capital Markets.

The starter kit that you have been offering and the option to buy more sensors, would you be able or willing to describe the purchasing patterns? I know in this initial -- initial sales data so far. But could you say are there more people that are buying lots of sensors upfront, or buying just the two sensors that come in a starter kit, and then waiting to buying more. In other words, if someone is buying a full year's worth of sensors upfront that is a particularly encouraging sign I would suppose. Any comment on how many sensors people are buying?

I have to agree with you, at this point it would be too early to make a comment or guess about any patterns related to either upfront sensor purchases as being sustainable or whether there is repeated use. I guess what we have always looked at, and it will take several months to figure that out, is continued sensor reorders by patients on an ongoing basis.

The timing of the replacement therapy indication, did you make a comment? You were speaking a little too quickly for me to hear. Did you say that on this call?

We didn't provide any specific timing.

Have you in the past, and would you be willing to?

I think we said we would hope to complete those trials by the end of year. And if the data is sufficient and warrants then to be able to file for PMA supplement for that labeling.

The anecdotes that you shared with us about good patient feedback so far, were there any of those in which someone could say that they saved their life because of an alarm that one off in a hypoglycemic episode while they were sleeping? That could be a significant attention getter if that were the case.

I think the answer is, yes, but certainly we couldn't ever say we want to make that claim about the device. I think that was the implication of all of theirs, those getting woken at night.

If you go hypoglycemic at night, is it necessarily a fatal event?

No, you would have to go severely hypoglycemic and continue on a downward trend to some very low level before it would become necessarily fatal. But certainly it is harder for people even who have hypoglycemic awareness to detect that at night when they are sleeping. And we hope one of the benefits of continuous monitoring of all systems would be to help mediate that.

And last question. Would you be willing to say anything about your ASPs so far?

No.

Steve Ogilvie with ThinkEquity.

I just have a few small things. You have labeling for hospitals sales, Have you don't any of that or is it all patient-based?

It is all patient-based. As we've said, we certainly are attracted to that opportunity. And I think we would like to conduct a series -- have a feasibility trial in that environment with those patients to make sure that we have a full characterization of that device before we would begin launching it. And also that we really understand the channel and the decision-makers so that when we do launch, we can do so most effectively.

My understanding is the patient needs a LifeScan meter in order to calibrate. Is that correct, and if so, do you help them get one? Is there some arrangement you have with J&J on that?

We have no formal arrangement with J&J related to the use of the Ultra with our device. To date the initial approval of that allows it to be heart connected to automatically calibrate. It is both our intention and expectation that we would continue to be probably neutral on particular meters going forward, and hope to facilitate any number of meters being used by patients. And let that be their decision for calibration purposes.

As far as crediting a sales rep for a sale, if the stuff is coming in online, do you just know -- you look at the doctor who wrote the prescription and find out the sales rep that did it, or do you think you're going to -- I guess really what I'm asking is are you going to generate sales independent of a sales rep? If so, how are you going to account for it in terms of rewarding the sales rep for a sale?

Territories are well-defined. So I suppose orders from Georgia would be credited to the Georgia rep, not the California rep, I think is how we foresee that.

Lastly, and I understand you don't want to talk about ASPs, but obviously they're listed online. Would you be willing to comment if they just are holding at that level?

I would be happy to comment on list prices, which is $800 for the starter kit and $35 for replacement sensors in packages of 5. I think trying to comment on any data other than that this early in the launch would just potentially be misleading.

[Caroline Corner] with Montgomery & Co.

First of all, just a point of clarification. In the second quarter the PMA supplement you are talking about for the product update where you are addressing two or three complaints, that is the same PMA supplement as the seven-day? I mean, you are addressing it by developing the seven-day product?

What we're filing is a PMA supplement, and it is the seven-day sensor -- the seven-day STS. This PMA is not being filed to address any complaints that we have received since launch. It was always developed -- we always felt that we certainly learned a lot since we began to study the STS in our pivotal trial in January of '05. And I think what we have said is that all of the things that we have learned between then and almost now, both in terms of technology and usability features from our experience, would try to be factored as much as possible into the seven-day STS.

Very good. And then once the seven-day product is approved, if and when it is approved, you will be switching all patients from the three-day to the seven-day? Will the sensors that are associated with this three-day device work on the seven-day if those patients already purchased them?

I don't think we have commented or determined a final strategy on how we would handle the three-day or the seven-day implementation, based upon I think given that we've got some time before that seven-day would get approved as a PMA supplement. We will continue to learn from the three-day launch, and then make an ultimate determination how we handle that going forward.

That sounds good. The FDA meeting, the CMS meeting started where many meds went before the CMS trying to get a tracking code out of HCPCS code. You mentioned that on a call, and maybe I missed it. Can you give a little overview of what happened there, what the opinion was, whether it was positive? Did it encourage you, or any comment there?

I think it was a very productive meeting. I think the Medtronic folks did a good job of laying out their case. I think the Juvenile Diabetes Research Foundation did a very -- made very compelling set of arguments, both emotionally and intellectually, as to why this is so important in the future of the management of this disease. We had a representative from DexCom who spoke to our status to approval, the labeling around that, which we think is very favorable, far beyond just a simple diagnostic.

As we talked about on our call, it ran through our peer review publication data. And then also a clinician who had experience with our sensor system also presented. And so I think that the majority of questions appeared to have been directed to [Andy Baylow] who represented us, and Dr. Edelman at the meeting. And I would say they were inquisitive. I don't think I'm probably capable, not having been there to interpret the exact mood or read between the lines so to speak. But I think we recognize this is very fortuitous timing to lay out a case for why HCPCS codes should be created.

Great. Thanks for taking my call, and congratulations on the launch.

Thank you.

Thank you.

All right. Thanks all.

Ladies and gentlemen, this does conclude today's teleconference. We appreciate your participation. You may disconnect your phone lines at this time.