Elutia Inc (ELUT) 2020 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Aziyo Biologics Third Quarter 2020 Earnings Call. (Operator Instructions) Please be advised that today's conference may be recorded. (Operator Instructions) I would now like to hand the conference over to your host today, Leigh Salvo, Investor Relations. Please go ahead.

Thank you, Sarah, and thank you all for participating in today's call. Joining me are Ron Lloyd, Chief Executive Officer; and Matt Ferguson, Chief Financial Officer. Earlier today, Aziyo released financial results for the quarter ended September 30, 2020. A copy of the press release is available on the company's website.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that do not relate to matters of historical fact or relate to expectations or predictions of future events, results or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance, the impact of COVID-19 on our business and prospects for recovery, expense management, expectations for hiring, growth in our organization, market opportunity, guidance for revenue, gross margin and operating expenses, commercial expansion and product pipeline development, expected future product launches and milestones, and expected results and performance of our partnerships and commercial products, including patient outcomes, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our 424(b)(4) filing with the SEC on October 8, 2020, in connection with our initial public offering.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today November 19, 2020. Aziyo Biologics disclaims any intention or obligation, except wired by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.

Also during this presentation, we refer to gross margin, excluding intangible asset amortization, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to most directly comparable GAAP financial measure is available in the company's earnings release for the third fiscal quarter ended September 30, 2020, which is accessible on the SEC's website and posted on the Investor Relations page of Aziyo's website at www.aziyo.com.

And with that, I'll turn the call over to Ron.

Thanks, Leigh. Good afternoon, everyone. I'm pleased to welcome you to Aziyo's first earnings call to review our third quarter results. Joining me today is Matt Ferguson, our Chief Financial Officer.

As many of you know, we completed our initial public offering in October, raising approximately $43 million in net proceeds. I'd like to express my sincere appreciation to all the investors who participated in the offering. As this is our first call as a public company, I'll use the first few minutes of this call to lay out our vision for the company, provide an overview of our businesses and then move to an update on our third quarter accomplishments. Matt will then offer some additional commentary on our financials, and then we'll open up the call for questions.

Aziyo's mission is to provide advanced regenerative medicine products that improve outcomes in patients primarily undergoing implantable device-related surgery. Our vision is to build Aziyo into a leading regenerative medicine company comprised of multiple high-growth product lines that will create sustained and substantial value for our shareholders. We currently focus on 3 main markets: implantable electronic devices, bone repair and soft tissue reconstruction. We have a commercial organization that calls directly on physicians in the implantable electronic devices and soft tissue reconstruction markets. And for the bone repair space, we partnered with established commercial leaders, including Medtronic and Surgalign.

This hybrid commercial structure makes for a cost-efficient operating model that should ultimately generate significant profitability while also maintaining robust top line growth. Importantly, we've assembled a high-performance team led by experienced executives across all parts of the business. This team has a track record of developing differentiated products, growing businesses into the hundreds of millions of dollars as well as identifying opportunities for growth through partnerships and acquisitions. We intend to pursue all 3 of these strategies as we continue to develop Aziyo into a leader in the regenerative medicine market.

I'll now drill down a little deeper into the specifics of our business. Starting with the market opportunity. Last year, approximately 2 million patients in the United States received implantable devices. These devices included pacemakers, defibrillators, hardware for spine and orthopedic procedures or other devices for reconstructive surgeries. Based on the material and the implantable medical device and the location in the body, a number of complications can arise. These include scar tissue formation, device migration and erosion, nonunion of implants and device rejection. As an example, a fibrotic capsule that forms in a patient with a pacemaker is problematic because of the limited battery life requires these devices to be replaced. Often, physicians need to perform a capsulectomy, which can result in longer surgical times, increased risk of infection and increased risk of bleeding.

All of our products are designed to reduce the complications associated with these implantable medical devices. We do this through our unique and proprietary platforms based on our deep understanding of the science related to cells, growth factors and the structural matrices that best optimize our tissue products.

From a product perspective, we brought 3 new products to the marketplace over the last 12 to 18 months; and we've executed commercial partnership agreements with Medtronic, Boston Scientific and Biotronik to enhance our presence in key markets. Our first franchise, implantable electronic devices, is a $600 million market with about 600,000 procedures performed in the U.S. in 2019. This is primarily comprised of pacemakers, defibrillators, and to a lesser extent, neurostimulation devices.

Our primary solution for device complications in this market is CanGaroo. CanGaroo is an extracellular matrix that regulates the biologic healing response to decrease inflammation and stimulate the formation of healthy tissue. Essentially, a healthy envelope forms around the device that's been implanted. This is the only product that revascularizes and remodels into tissue for the life of the device. And the remodeling benefits of healthy tissue actually help address the complications that I mentioned.

We have our own sales force for this particular market, which includes 25 representatives across the country as of September 30. Additionally, our partnerships with Boston Scientific and Biotronik provide support from over 1,400 sales professionals at these companies, therefore, enhancing our commercial efficiencies and expanding our breadth and depth in this market.

Turning to our next product group and market. The orthopedic and spine repair market is a $2 billion market opportunity. There are 1.5 million annual orthopedic and spine repair procedures that are using bone repair materials. The complications in this market is inadequate bone formation caused by apoptosis and cell death, which can result from nonunion or nonfusion following a procedure. Our product platform for this market consists of FiberCel, ViBone and OsteGro V. These products are designed with the manufacturing process geared towards reducing the factors that impact apoptosis. With respect to our commercial strategy, we are leveraging our partnerships with Medtronic, Surgalign and others.

Lastly, our third product group of market is soft tissue reconstruction, which is a $500 million market opportunity. There are roughly 100,000 procedures using human dermis in this market, and complications arrive when native tissue is not substantial enough to repair the area from the original procedure. Our SimpliDerm product is manufactured through a patented process that decellularizes. It enables the product to more closely resemble natural occurring tissue. Our near-term objectives for SimpliDerm are to increase product awareness, build clinical evidence and expand market access.

There's a lot of opportunity in front of us to penetrate the 3 markets I just discussed. We estimate that the total U.S. market opportunity for our current commercial and pipeline products is over $3 billion. Collectively, we refer to these areas just described as our core products.

We also do a small amount of tissue processing work for a range of third-party health care companies, which leverages our key capabilities and contributes positively to our bottom line. We refer to this contract manufacturing business as our noncore products.

Turning to our recent commercial financial performance. Net sales for core products were $10.3 million for the third quarter of 2020, which represents a year-over-year growth of 31%. Sales of our noncore products declined year-over-year to $1.4 million. But in aggregate, we still grew overall net sales to $11.8 million, which equates to a year-over-year increase of 6%.

Although our core products had shown solid growth in the first half of this year despite the impact of COVID-19, we are very pleased to see the growth accelerate in Q3 based on increases in hospital procedure volumes coupled with our strong market adoption and commercial execution. Our core products are relatively new to market, and we plan to continue expanding adoption of our products in existing accounts as well as opening new customer accounts in the U.S. through our direct sales force and in collaboration with our key partners.

Recently, we are pleased to announce a new partnership with Premier and an expanded agreement with Surgalign. Our recent agreement with Premier designates CanGaroo as breakthrough technology and makes it available to their alliance of 4,100 hospitals and 200,000 other providers to address the complications associated with implantable electronic devices. Premier viewed CanGaroo technology as breakthrough because CanGaroo is completely different -- completely differentiated from any other product within the space. We also expanded our partnership with Surgalign to include an additional viable bone product.

The product added is ViBone Moldable, a next-generation moldable cellular bone matrix product. ViBone Moldable is produced using our proprietary methods to protect and preserve the health of native bone cells to potentially enhance new bone formation. It contains cancellous bone particles as well as demineralized cortical bone particles and fibers, delivering the necessary components for bone formation along with excellent handling and cohesive properties. These agreements are a testament to the value that our products bring to both physicians and their patients.

Turning to investments in new technologies. We are confident in the expansion through our pipeline based on the clinical data that we've been able to generate from our products to date. For example, we've been able to complete feasibility studies for adding antibiotics to our CanGaroo product, which demonstrate that we're able to get the release profile of these antibiotics to reduce the risk of infection in patients receiving implantable electronic devices. We remain on track to launch our next-generation CanGaroo product in the second half of 2022, with our next major milestone being the locking of final product design by the end of next quarter.

Looking ahead to next year and beyond, we're very excited about the potential for incremental revenue growth that can be achieved from our on-market and pipeline products. We believe that as we continue to penetrate our target markets and realize returns on our investments in new technologies and an expanded commercial presence, we'll see those initiatives benefit growth in our core products. We also anticipate a return to stable growth in our noncore business based on the visibility that we have from several recent contracts.

As we highlighted in our recent public offering, we've identified several key priorities, and we are confident we'll drive Aziyo's long-term growth. These include: one, expanding our direct sales organization for CanGaroo and SimpliDerm; two, continue to launch new and enhanced orthobiologic products; three, generating additional clinical data for our core products; four, the development and launch of our next-generation CanGaroo product; and finally, continuing to explore opportunities to add synergistic products through partnerships or acquisitions.

In summary, we've been able to accomplish quite a bit in a very short period of time, and we're very excited about our future. We believe these commercial and pipeline product initiatives will help us build on our success to date. Moreover, we believe we are poised to realize our vision to establish our differentiated and proprietary products as the standard of care for treating patients undergoing a wide range of implantable device-related procedures.

With that, I'll now turn the call over to Matt, who will provide a review of our third quarter results.

Okay. Thanks, Ron. As mentioned, net sales for the 3 months ended September 30, 2020, were $11.8 million, a 6% increase from $11.1 million in the same period of the prior year. This included a 31% increase in sales of core products, partially offset by a 56% decline in our noncore products. While our top priority is continued growth in our core products, we do expect our noncore business to return to growth in the coming quarters as we recently signed several new contracts that will drive this business going forward.

Gross margin for the third quarter of 2020 was 47% as compared to 50% in the corresponding prior year period. We also look at gross margin excluding the impact of noncash amortization of intangible assets. And on that basis, Q3 would have been 54% versus 57% in the year-ago quarter. The modest decrease in gross margin in Q3 2020 primarily resulted from a 2-week shutdown of our main production facility, which allowed us to bring forward maintenance activities that would otherwise take place closer to year-end.

Total operating expenses for the third quarter of 2020 were $8.2 million, an 11% increase from the $7.4 million in the third quarter of 2019. The increase was attributable to increased R&D expenses related to the anti-infective version of CanGaroo mentioned above, and G&A expenses in anticipation of our IPO.

Loss from operations was $2.7 million for the third quarter of 2020 as compared to $1.8 million as a loss for the year-ago quarter. Net loss for the period was $6.7 million as compared to a net loss of $3.1 million in Q3 of 2019. Loss per share in the third quarter of 2020, which includes the accretion of noncash deemed dividends to our preferred shareholders prior to our IPO, was $15.79 per share compared to a loss of $4.81 per share in the year-ago quarter.

We ended the third quarter of 2020 with $1.6 million of cash and cash equivalents. But as Ron mentioned, we completed our initial public offering in early October, which generated net proceeds of approximately $43 million. Following the completion of the IPO, we now have approximately 10.2 million shares of common stock outstanding. And based on the IPO closing date of October 12, we expect to have a weighted average share count for the fourth quarter of approximately 9 million shares.

Turning to our outlook for 2020. We are cautiously optimistic about the remainder of the year, although we have seen some recent impact on the procedure volumes due to a resurgence of COVID cases around the country. We expect our fourth quarter revenue to be at or slightly above our third quarter revenue. And that said, our outlook assumes only minor impacts on procedures due to COVID for the remainder of the fourth quarter.

And with that, I'll turn back -- turn the call back to Ron for closing comments.

Thanks, Matt. Our vision for Aziyo is bold, and we believe that we're just at the beginning of this wide open opportunity. I'm so grateful for the strong team that we've assembled at Aziyo. Our progress is truly a testament to their enthusiasm and hard work. And I feel very privileged to work alongside this team as we continue down a path of growth and innovation. We're also grateful to our newest investors who are providing the means for Aziyo to carry on our mission to reduce implantable device complications. We look forward to updating you on our business in future quarters.

And with that, we'll now open it up to questions. Operator?

(Operator Instructions) Our first question comes from the line of Matthew O'Brien with Piper Sandler.

I guess, Ron or Matt, just for starters on this commentary about Q4, I just want to make sure everybody's level set. You had a really good Q3 here. Sequentially, I don't know how much of that was maybe some catch-up from Q2 versus just good solid organic growth and if you could talk a little bit about that and then what we should expect for Q4 in terms of a little bit of a sequential bump or how much headwind we should anticipate because of the recent outbreak of the coronavirus.

Sure. Thanks, Matt, for the question. I'll start, and then I'll have Matt add some additional commentary. So yes, we're very pleased with our Q3 performance. Again, our core business grew by 31%. Again, we believe that's due to partly our strong execution, adoption of our products as well as some additional volume increases due to the procedures that were probably scheduled in Q2 and due to the COVID impact, were then rescheduled in Q3. So that helped us to a little extent.

And going forward, again, we're very excited about the future of Aziyo base and the momentum that we continue to build for our core products. We do recognize though that there are increased rates of infection across the country. And due to that, there can also be impact then, obviously, on surgical procedures as we look into Q4. So again, we're giving you our projections looking -- forward-looking numbers here is based on our knowledge as we know it today. However, obviously, that could change based on the impact of COVID-19.

Yes. Ron, I certainly agree with all that, and I would just add that we've heard some anecdotes recently about hospitals shifting their attention towards full -- being full with COVID patients and so that having some impact on semi-elective procedures, which can have an impact on our sales. But those have mainly just been in pockets around the country as opposed to a widespread phenomenon. But I think we're all obviously watching very closely what happens with COVID and the situation has certainly changed and deteriorated a bit over the last couple of weeks. And so we just want to be cautious about what may happen over the course of the rest of the quarter. Although what we've seen so far in the quarter is pretty good for us.

Got it. And then heading over to Premier. I know it's -- I guess it's more of a hunting license than anything, but I would love to hear about your plans as far as really pushing CanGaroo with that breakthrough designation that you have and getting access to all these hospitals on a much broader base in '21. How big of a contributor should we think about that being? And how much of that was contemplated during the IPO process?

Yes. We're very excited to have the rare agreement, which begins December 1, but we're even more excited by the designation of having breakthrough technology. And again, Premier looked at CanGaroo, looked at our product, recognized the benefits as the only product that remodels and to form native tissue to protect the patient for the life of the device. So we're excited about this opportunity. We are looking forward to going out and reaching out to Premier hospitals. As you said, it is a hunting license.

We have been underrepresented in terms of our CanGaroo sales in Premier hospitals when compared to other GPOs and their hospitals. So we're excited about this opportunity and then having the designation of breakthrough certainly makes it easier as we go out to those hospitals to get CanGaroo added to their VAC committees and on the shelf.

It is part of our plan for next year, is to penetrate those products. It was originally in our plan to continue to expand market access for CanGaroo as well as our other core products. So within our overall plan to continue to improve market access, we are actually very excited to have the designation of breakthrough. And we have a very tight execution plan to go out now to drive forth that contract into Premier accounts and get CanGaroo available for patients for implantable devices.

Okay, Ron, but just to make sure I'm completely clear, that's all compelling to hear, but is the breakthrough designation an incremental bump beyond what you were kind of expecting as you were thinking about accessing Premier heading into '21?

We were assuming that we would get on the Premier contract, Matt, and that was part of our expectations going forward. We're very pleased that they were looking at the product, put it into the designation of breakthrough. So I actually think that's probably an upside for us. And the fact that having the breakthrough designation will certainly make it easier for us to get on to more hospital contracts because the Premier members will recognize that Premier has already done some of that initial product assessment and has given it the characterization of breakthrough. So I do think that will help accelerate our ability to get into these Premier hospitals sooner than what we had anticipated before when we put our original forecast and thinking about the future growth in 2021 and beyond.

Our next question comes from the line of Josh Jennings with Cowen.

I was hoping to just start off with the question on the third -- strong third quarter performance from the core product lineup. I know you don't want to break out specifics of the different product lines. But any -- from a high level, was it consistent growth from all kind of 4 major product categories? Were there any outliers on the higher side or lower side that you can share?

Sure. Thanks, Josh. As we think about 2020, we've been very pleased with the performance of our core products throughout the entire year. Even the first half of the year despite COVID, as you know, our core products grew by 14%; and then obviously, we're very pleased to see the acceleration growth in Q3 up to 31%. And I think the -- again, the growth rate is a testament to the products that we have, the differentiation that our products serve and improving the outcome of patients and then our go-to-market strategy of both our direct sales force supplemented with our partnership agreements. As we think about it, again, we think our diverse portfolio, it has been a benefit and continue to be a benefit during these periods of COVID-19, and that we're not dependent on just one product.

But to address your question, again, we're not going to go into specifics related to individual product performances. But to call out in terms of which products -- the best -- actually, our viable bone products were the largest contributor of growth during Q3.

No, I appreciate that. And just -- you mentioned your direct and distributor partnerships. We've gotten some questions since the IPO around the sales force structure and whether it's the optimal one. We're very high on it. But maybe you could help investors understand why the hybrid structure is optimal for Aziyo and why the partnership strategy is in place.

Sure, Josh. So as we think about it, our main purpose here is to bring forth these differentiated products to instantly reduce the complications associated with implantable medical devices. And then we determine what's the best approach to bring forth those products in the marketplace so that the most patients can benefit. We have a direct sales force for our CanGaroo product and for our SimpliDerm product. We complement that direct sales force with our partnerships with Boston and Biotronik to help support the selling of CanGaroo.

And then on the orthobiologics side, we actually then partner directly with companies such as Medtronic and Surgalign. They handle the commercialization. We focus on the R&D product development and data generation for those products. And we think that, again, this hybrid model gives us a chance to drive sales and revenue penetration. But it's also more efficient in that we're able to partner with companies with already established commercial infrastructures to help drive our sales. And by doing so, we're able then to obviously have a better P&L and have a lower total SG&A spend compared to other companies our size. So we think actually this hybrid is a very effective model. And I think you get from our performance, it's also -- from a revenue growth perspective, it's been very effective, again, posting 31% year-over-year growth based on our Q3 results.

If I could just squeeze one more in. I believe that the Tissue Bank Association has been lobbying the FDA for human acellular dermal matrices to remain as a 361 product across the board. And can you update us on those efforts? And any progress and then what that could mean for the SimpliDerm franchise?

Sure, Josh. Yes. So the tissue bank is working with the FDA as it relates to regulation of human dermis tissue products. Again, we all have a broad, general label, but they have a specific label for promotion within breast. The question is do we -- are we required to run studies for that or is it accessible to be able to promote those products under our 361 tissue category. So those discussions are still ongoing with the FDA. I think to some degree, they've probably been slowed down due to COVID-19 and FDA's distraction on other matters. We'll continue to monitor the progress of those discussions.

Again, as we think about this space, we're very excited about SimpliDerm. We have shown in a number of studies that our product's unique and different from other products that are within this space, and we've shown the benefits of SimpliDerm in a number of studies. So we actually are excited about the opportunity. We want to be able to promote it long term for breast reconstruction. And if the Tissue Bank Association is successful and it remains at 361, then we'll promote it under those terms. If the FDA regulates it differently and requires it to be perhaps a PMA, we believe that the product differentiation, the market opportunity, again, would warrant the investment to have a label for this area of use. And so we'll continue to monitor discussions with the FDA. We'll continue to get clinical feedback on our product, and then we'll determine the time that make the right investment, if needed, to run clinical studies to get an indication.

Our next question comes from the line of Kaila Krum with Truist Securities.

So one follow-up on your fourth quarter commentary and then one on Surgalign. So first, on the fourth quarter and just to put sort of a finer point on your comments, I mean, we're sitting here in mid- to late November. In order for your quarter, your fourth quarter to be in line with the third quarter levels, the business trends need to get better from here. Do they need to just be consistent with October? I'm just curious if you guys can put sort of a finer point on that comment.

Sure. So in Q3, we were certainly very pleased with the results and what seemed to be a really rapid bounce back from the second quarter that I think was tough for everyone in spite of our ability to grow overall on our core product sales for the first half of the year. But there probably was a little bit of catch-up in Q3, and so we've seen strong case volumes over the course of the quarter so far. But as I mentioned before, we've just seen pockets of deterioration around the country, and it's not surprising given what we're all seeing in the news on a daily basis. That could have an impact over the remainder of the quarter.

So we're in an unusual situation here, seeing our first quarter out, where we're reporting our results a little more than halfway through the quarter. So certainly, our experience so far is relevant. But we've got nearly 1.5 months left, and the situation out there is somewhat uncertain. But the most important thing is we've got a strong underlying business. We're seeing good reception within the accounts and the physicians using our products. So even if there's a little bit of a dislocation in the remaining weeks of Q4, we still think we'll have a good quarter, and more importantly, we think we're well positioned going into next year.

Great. No, that makes a ton of sense. And then you guys had a press release that Surgalign expanded distribution agreement. So can you just help us understand what specifically that does for you going into 2021, how that sort of -- how that agreement has changed?

Sure. So we have an agreement with Surgalign for ViBone. They commercialize our ViBone product. ViBone is, again, off our proprietary platform. We're able to produce a viable bone matrix that's demonstrated that we have less apoptotic cells compared to other products in the marketplace. ViBone is a particle-based product in that it has a particle consistency to it.

And as we think about surgeons, surgeons are receptive to our viable bone matrix messaging, but there's also certain handling characteristics that they also want within products. And so working with our partner, we were able to develop a second product for them under the ViBone brand, ViBone Moldable. This is a product that has both the particles as well as fibers, and so it offers different handling characteristics. And so now they have a broader portfolio to offer to their surgeons for expanded use of our cellular bone matrix product platform.

So it's, again, a chance then for them to capture additional sales and revenue by having a broader portfolio based on handling characteristics. So we're excited about this expanded opportunity and offering more solutions through our partnership with Surgalign.

Our last question comes from the line of Brandon Folkes with Cantor Fitzgerald.

Congratulations on a good quarter out the gate. Maybe just drilling down a little bit more into something that has been asked before. But we've heard some companies talk about the growth that they saw in elective procedures really spike in July and somewhat flattened a bit June, August and September and sort of guide towards that flatter trend for 4Q. Can you maybe just talk a little bit about the trends you saw between a month in 3Q? And then following on from that, maybe within your core products, are there any products you think may be more exposed to these pockets of COVID spikes versus others that may be more resilient? And then, Matt, maybe for you, just on the gross margin, any color on the impact of that shutdown in terms of gross margin basis points in the quarter?

Thanks, Brandon. In terms of the surgical volumes, I don't think we want to probably get into performance by month here during this call. But let me just get at a higher level, say that, again, we were pleased in the first half of this year during COVID that we're able to show growth. Again, I think it's due to our products that we have, the differentiation within these products and that they tend to be used for more acute conditions where it's less likely you can really delay or cancel that procedure to some degree. So that benefit us in the first half, and we're optimistic that, again, as we go forward in Q4, that our portfolio of products will continue to perform well.

But of course, if a hospital shuts down completely all procedures to clear space, then everybody is impacted. And so I think that's some of the discussion that Matt has as it relates to our Q4 numbers, is somewhat hard to predict performances going forward here in surgical volumes given the ever-changing incident rate of COVID-19.

And then, Matt, do you want to address the margin question?

Yes. On the margin question, the plant shutdown that we had during the third quarter, I would say, was material to the quarter in terms of the overall gross margin. It probably accounted for probably 3 points or so of gross margin impact. And -- but that is -- it's a set of maintenance activities that we generally do on an annual basis. So that may be a bit of a benefit in Q4 to the extent that we don't have to perform some of the maintenance activities in the current quarter. Does that get at your question, Brandon?

Yes. That is very helpful. Appreciate the color.

This concludes today's question-and-answer session. I would now turn the call back to Ron Lloyd for closing remarks.

Thank you. Again, we're very excited about how much we've been able to accomplish here at Aziyo and again, in a very short period of time. And I think we're even more excited about our future. So thank you for participating today, and we look forward to giving you continued updates on our future performance at our next quarterly call. Thank you, everyone.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.