Exelixis Inc (EXEL) 2002 Q3 法說會逐字稿

Test test. Please stand by, please stand by.

Good afternoon. My name is Molly and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Exelixis third quarter financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, press the pound key. Thank you. Ms. Green, you may begin your conference.

Good afternoon, everyone. Thanks for joining the Exelixis management team on the third quarter 2002 financial result conference call. Participating in this call are George Scangos, President and Chief Executive Officer; Glen Sato chief financial officer and vice president of legal affairs, and Jeff Duyk, executive vice president the scientific officer. Following this introduction, George Scangos will provide a brief perspective on the quarter and our performance to date. Glen will review the financial performance and provide guidance for the remainder of 2002 and then George will provide additional commentary on our performance and outlook. We'll then open with -- open the call for questions. Please be advised that the following discussions contain southern statements that are forward-looking, including answers to questions at the end of the formal remarks. These statements are only predictions and are based upon our current expectations. Forward-look statements involve risks and uncertainties. Our actual results in the -- and the timing of evens can differ materially from these and anticipated in our forward-looking statements as a result of many factors. These include our ability to enter into new collaborations, continue existing collaborations and receive milestones and royalties derived from future products developed from research efforts under collaborative agreements. The rate of growth, if any, in license and contract revenues. The timing and level of expenses associated with the growth of proprietary programs, the abilities to successfully to identify and develop compounds against proprietary cancer target, the amounts and timings of investments in manufacturing and clinical development of our Rebeccamicin analog which is in phase for clinical studies and the timing of the filings for and investment in our initial proprietary small molecule IND. These and other risk factors are discussed under risk factors in our quarterly report on form 10-Q and elsewhere in annual reports on 10-K for the year ended December 31, 2001 and other SCC reports. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained here in to reflect any change in the expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Now we turn the call over to George Scangos.

Thanks, Jane. This is an exciting time for Exelixis and I'm happy to be able to convey some good news today. As you know, we have recently mobilized our creativity as an organization to establish a ground breaking partnership with substantial financial upside with GlaxoSmithKline. We're proud of this achievement were certainly gratified by GSK’s confidence in our abilities. We believe that JFK will be a great partner. The magnitude surpasses anything that our industry has seen for some time, in terms of financial upside and the innovativeness of the partnership. It brings us significant committed funding and substantial milestones and those have the capacity to double in size, making this one of the largest Parma biotech relationships ever established. We're proud because establishing this partnership was a major promise that we made to all of our investors and shareholders for this year. And we're able to deliver on that promise, even though the environment for partnering this year was especially a challenging one as many of you know. Our financial performance has been very good. In terms of cash burn for the year, it will be approximately one third lower that our expectations at the beginning of the year. Obviously good news. Similarly, our year-end cash balance will be over 50 million dollars greater than we expected at the beginning of the year. Also good news. Aside from JFK and the financial performance, our progress on all other programs has been substantial and we're making substantial progress in meeting all of our internal deadlines and we'll go into the progress on each of our projects a little later on in the call. So all in all, this has been a great year for us, great three quarters. We believe that we're entering a new phase for our company, and our output on all fronts has been really substantial. So I'll turn this over now to Glenn. I -- before I do that let me comment on one more issue, actually and this is the restructuring that we implemented recently in the past few weeks. That resulted in the elimination of a number of positions at Exelixis. We will talk to you about that in a few minutes. We implemented this now when we're in a position of strength in order to make room and enable us to bring in some new technologies and to be even more aggressive in achieving our strategic goals. As we look ahead to the end of 2002 into 2003, we are confident that our company is on track and our business strategies are the right ones and that we have a very bright future ahead of us and I now turn it over to Glenn.

Thanks, George. I want to reiterate the fact that we're pleased with our performances especially this quarter. My presentation will focus on the details of the quarter, offer a little bit of guidance with respect to the JFK revenue and how we will recognize going forward. Also provide some guidance for fourth quarter and the remainder of the year. Finally, I'll talk of the financial impact of the restructuring we have announced. In the third quarter 2002, our overall financial performance was better than expect. Our revenue increased 5% from the second quarter levels which is due principally to an increase in revenue from three of our chemistry collaborators and a recognition of revenue related to milestone payments with GMS and Bayer. Due to significant efforts to control head counts and administrative and lab expense, our expenses decreased 2% from the second quarter level. This is not resulted any reduction in our investing and our development programs. In particular, we continue to invest significant sums including manufacturing of our Rebeccamicin analog, investments in IDA for the small molecule candidates as well as advancing our other pipeline programs to meet our development goals. With respect to the specifics of our quarterly performance as in the past, we are reporting results both including and excluding non-cash charges and discontinued operations. Reference to non-cash is stock compensation expense and amortization of intangibles. For third quarter of 2002 with respect to net loss, our pro forma net loss was approximately 22.1 million or 39 cents per share, excluding non-cash charges and discontinued operations. This compares to a pro forma net loss of approximately 13.4 million or 28 cents per share in the third quarter of 2001. Including non-cash charges and discontinued operation under GAAP, we reported a net loss of 22.9 million or 41 cents per share for the third quarter of 2002, compared to a net loss of approximately 16.5 million or 35 cent per share in the third quarter of 2001. As George indicate at September 30, 2002, cash and investments and restricted cash totaled approximately 159.1 million compared to 173.3 million at June 30th. This does not include any cash received from the recently signed JFK deal. With respect to revenue for the quarter ended September 30, 2002 total revenues were 10.4 million, compared to 11.9 million for the same period of 2001. This decrease in revenue for the quarter from 2001 levels resulted primarily from the absence of revenue from the pharmacy due to the September 2002 conclusion of the collaboration. This decrease is partially offset by revenue from compound deliver and our chemistry collaborations. With respect to R&D costs, research and development expenses for the third quarter of 2002 were approximately 28.5 million including stock compensation expense of 400,000. This compared to approximately 21.3 million excluding stock compensation expense of 1.1 million for the corresponding quarter of 2001. This increase was driven primary by expansion of our drug discovery and development operation, including increased staffing and purchasing of lab supplies to support collaborative agreements and expansion of our drug discovery operations. Consulting costs associated with the third party manufacturing of our Rebeccamicin analog, expenses associated with advancing SL 784 through quick clinical toxicology testing and preparation for the filing of the R&D and costs associated with advancing our other proprietary compounds. With respect to G & A , our expenses for the third quarter of 2002 totaled approximately 4 million dollars, excluding stock compensation of 300,000 dollars, compared to 4.8 million dollars including stock expenses 600,000 for the third quarter of 2001. The year over year decrease of expense resulted primarily from a decrease in legal and accounting expenses, recruiting charges and other corporate services expenses. Let me give you a little bit of guidance now with respect to revenue recognition for the JFK collaboration that we signed in the fourth quarter. With respect to the committed funding levels under the deal, first the upside of 30 million dollars in the premium portion of the equity purchase will be deferred and recognized as revenue at a rate of 4.7 million per year. In addition the 90 million dollar committed research funding payments will be recognized as follows. 10 million per year during the first two years, with an increase to 17.5 million per year during each of the last four years. This amount could significantly expand if the parties elect to expand the deal. Milestones will be recognized ratably and the impact will depend on the timing on the achievement of the milestones. There will be no revenue recognized in connection with the 85 million dollar loan amounts initially provided under the collaboration. With respect to guidance for the fourth quarter, assuming no additional deals in the quarter, we anticipate that revenue will increase in the range of 14 to 18% from the third quarter 2002 levels. And the operating expenses will increase in the range of 8 to 12% from the third quarter levels. Again, these exclude non-cash charges. For the year, 2000, due to the timing of the GSK collaboration and revenue recognized under that collaboration, only for the final two month of the year, we anticipate that revenue for the year will increase in the range of 5 to 8% over the 2001 levels and operating expenses will increase in the range of 38 to 42%. Per cash, we anticipate to end in excess of 210 million which is a significant increase over our previous guidance. As we indicated in the press release, the upfront funding was 79 million, 54 million of which has been received to date. For the year to cash burn is expected to be in the range of 45 to 50 million which is also significant reduction from our previous guidance. This includes 10 to 14 million in worldwide capital expenditures. In a minute, George will discuss in greater detail the strategies underlying the restructuring but I want to emphasize the fact that the reductions in force was 8% of our north American on rights and really was done from the position of strength. The majority of the reduction came from our R&D headquarters in south San Francisco with a smaller number from our Portland base, the operations. Earnings rates we have provided severance to employees who have left the company. The financial impacts of the restructuring which became effective November 1st is anticipated to be less than 1 million dollar and we record these in the fourth quarter of 2002. I want to emphasize that we have also initiated a strategic initiative to split up our business represented by Artemis in cologne, Germany. That should result in a reduction of operating expenses going forward of 1 million beginning in 2003 and will result in a reduction of head count of approximately 38. The entirety Deverfish operation remains part of the Exelixis family of companies and it has been transferred to a new subsidiary Exelixis’s Deutschland and is remains unaffected by the plans for Artemis. Let me turn it know to George.

Thanks, Glenn. I’ll start by offering a little more perspective on the new partnership with JFK, I will talk of the restructure strategy and who how we're reshaping the organization to meet the demands of our growing discovering developments pipeline, give you a brief update on the progress of the internal program the Rebeccamicin analog as well as the XL 784 which is in preparation for the IND filing. Now, for JFK, we're very pleased to sign this relationship and we're very appreciative of the almost universally positive reaction we have received. From my point of view, this brings us two important factors, the first obviously is cash. And the second is GSK’s expertise and success in drug development. The cash enables us to be more aggressive about moving compound into the clinic and through the clinic and GSK’s experience will enable us to make better progress on those compounds as we move forward. So the result of the collaboration will be more compounds and better compounds moving through the clinic. Some of these compounds will be our own. Some of them will be part of the JSK relationship and I know that everybody is anxious to know the specifics about what compounds will belong to whom. And simply too early for us to talk about that now. We don't know, but I think the important point here is that as a result of the partnership we're likely to have substantially more compounds moving through the clinic than otherwise would have had and those compounds are likely to be better compounds and enable us to develop them in more intelligent ways as a result of the input that we'll get from JSK. Obviously, one of the post experienced developers of drugs. So I have more to say about who owns what early next year, but regardless we're going to have access in a financial statement increased number of high-quality compounds as a result of this collaboration. This I think is a wonderful collaboration with -- for Exelixis. Let me talk a little bit about the restructuring. Exelixis has always been a company committed to a aggressively adopting and integrate new technologies that help us achieve our strategic goals. We continually expand in our technology base and we have vertically integrated the company to be able to discover and develop compounds through phase two now. We have achieved that goal, but we can't stop now. Technology is not something that's static. It is evolving and we need to continue to morph the company as we move forward, and as we look to build a company that will be a leading company for the next five years and beyond, it isn't the same mix of skills and technologies that got us to where we are today. Accordingly, we took a hard look at the organization, and we eliminated a number of positions at Exelixis to make room for new people and new technologies that will enable us to be even more aggressive and give us a higher success in achieving our strategic goals. Now, we implemented this restructuring about a week ago and as Glen said this resulted in a reduction of our north American head count by about 8% or 43 positions. Now, it's never easy to eliminate positions. You know, 43 people to many of you are -- or the number to those people at Exelixis, those are 43 friends and colleagues who don't work here anymore. And we take this decision very seriously. We actually eliminated more positions than that, but we were able to reassign a significant number of people in our research group whose skills could be redirected to support our collaboration with GSK and our internal discovery program. We have also combined certain areas within research to ensure ongoing, uninterrupted support of our collaborations and our internal programs. And we have achieved the level of consolidation to permit the addition of head count in other areas of the company that will be necessary to meet our expand obligation in 2003 and beyond. Although this was a difficult decision, it was the right thing to do for the company, and that by doing this restructuring now from a position of strength, we have positioned the company on -- and we've given the company a basis to go forward, and aggressively pursue our strategic goals for 2003 and beyond. Now, as to the employees, we are trying to treat them and we are treating them I believe with compassion, respect, fairness and the support that they deserve. They're excellent professionals and they obviously made a significant contribution to Exelixis to get help get it where it is today. We're doing what we can to help them in their successful career transitions, and we're also working with the employees who have taken on new responsibilities to help them be successful and our entire employee population to make this restructuring as smooth as possible and I believe it's gone quite smoothly. Now, let me talk about the Artemis initiative. As you know, Artemis in Germany really had two basis. One was a knock out mouse capability and the other is zebra fish. What we are talking about here is the part of Artemis that has to do with knockout mice. The people at Artemis have made a remarkable technical achievement that have really eliminated some of the main limitations of knockout mice to date in terms of the time it takes to make a mouse and the sophisticatation with which one can regulate genes. The result is that they can go from cells to mice to cells extremely rapidly in a way that hasn't been possible previously. And of course the cells they work with are stem cells. So we saw an opportunity in Artemis to form the basis for an exciting new company, that can really take a new approach to stem cell biology in a way that hasn't been possible up until now because of a technical limitations of knockout mice which Artemis has overcome. So for that reason, we will split off Artemis, including all the people and the company will pursue potential investors, and pay independent funding. We have begun discussions along those lines. So that's a divestiture expected to occur in early 2003. We will maintain a close relationship to Artemis, continue to have access to their technology and the mice that they generate, but they function as a separate and independent entity and they have the opportunity to fully exploit their technology in important new ways that will provide economic benefit for Artemis, for the investors in Artemis and for Exelixis to the extent that we continue to own some of Artemis. Now, aside from all of those, our internal programs are on track. Our critical goal in our internal strategic planning over the last several months is to ensure that we have no interruption in the ongoing program and also to move forward to enable us to hit the ground running in our GSK collaboration and that our programs are on track and we succeeded. We continue to be pleased with the progress of our Rebeccamicen analog, in terms of manufacturing we are working with two external suppliers. They're making significant progress and we're quite confident that we'll have adequate clinical supplies to support the initiation trials in the first half of 2003. We're continuing to explore synthetic manufacturing process, as we mentioned. We have made significant progress in establishing the Exelixis for pivotal studies of Rebeccamicen as a kind of cancer treatment and most likely focus on initially on bile duct tumors. As you know, those tumors are very rapidly progressing. There is no approved therapy and we believe this is a registration strategy that will allow us to bring this compound to market relatively quickly. We continue to enjoy a high level of support from the NCI, as well as our outside panel of clinical experts. And they're all interested to see this compound progress into full development. We believe that we should be ready to initiate a conversation with the FDA concerning the next development steps around the end of the year, early first quarter. Our goal is to establish in a initial dialog that’s productive and collaborative and we want to make sure that our first interaction with the FDA emphasizes our commitment to conducting high-quality clinical programs and we get off to a positive start and we believe that the discussions will lead to more conclusive decisions later on in the quarter that will enable us to implement our registration trials. So we anticipate beginning those registration trials in first half of next year and this continues to be on track. Now, in terms of XL 784 which is our own lead compound, it is progressing well and we remain on track for the filing in first quarter of '03. We continue to conduct regulatory toxicology studies and the drug continues to look safe. Assuming this profile continues to hold up, we anticipate new studies and assembling our IND somewhere in the March time frame. Our initial plan is to conduct phase one studies in normal volunteers and the reason for this is while our initial focus will be on cancer, we believe the compound may have utility in other therapeutic areas such as inflammatory disease and we want to maintain a maximum flexibility in this development. As we get ready to file the IND, it will be prepared to more fully discuss the target, the compound and more complete understanding of the data that supports the development of the compound. In the meantime, we'll continue to work aggressively and we are very pleased with the progress. And all other areas of the company, we remain on track. Our work continues to go well on our programs and our own preclinical cancer cost line. Some of these will become eligible for consideration by GSK and some will remain in Exelixis's proprietary program. So there's no question that the GSK deal will enable us to be more productive and move more compounds forward. Now our relationships with our existing partners also continue to be productive and remain on track and committed to meeting the goals of those partners. We have excellent relationships with our existing partners and we intend to continue to be very aggressive in our pursuit of the goals of those partnerships as well. Now, Exelixis is a very exciting place to be right now. The investment we have made in creating an integrated research and development platform with the critical mass to drive product development is clearly paying off. Our internal programs are progressing, our partners are pleased with our progress wand GSK we have created a landmark alliance that's different in scope and size from anything our industry has seen in quite a while. In a year when the capital markets have been very tough and significant Parma deals have been scarce, we and GSK have together set a new standard for partnering. We have built our company to be able to establish products, focus relationships such as this one and to make them successful. We have a clear vision of a company we're building of where we're going, of the internal and external strategies we want to pursue in order to realize that vision and the route that we have to follow to get there. We hope that you'll continue to keep us an eye on us as we continue to execute on our plans and fulfill our promises. I think we have entered a important new stage in our evolution and we are feeling very confident about our future. Now, before we start the Q&A, I want to add a personal note to the discussion. Last month, Lloyd left Exelixis to become CEO of an innovative, private company in San Diego. Lloyd, as you know is responsible for managing --building the company’s agricultural business and he was a significant contributor to the Exelixis team. While it's never enjoyable to say good-bye to a friend and colleague, we're happy for Lloyd and believe this is a great opportunity for him. I think he'll be a great CEO the company he's joining is lucky to have him. Everyone at Exelixis wishes Lloyd all the best. I'll stop there and I think we can hope open up the conference for Q&A.

At this time, I would like to remind everyone in order to ask a question, please press star and then the number one on your telephone keypad now. We'll pause for a moment to compile the Q&A roster. Your first question comes from Jim Reddoch.

Hi, everybody. Thanks for taking my call. The question that I had -- a couple of questions but first one is, in talking about the Glaxo deal and the number of compounds, you said that the number of compounds was going to be increased, and this some would be your own and some would be GSK, did I hear that right? Does that mean that they're contributing some pre-existing candidates or are they contributing to the library or how --

No, no. I certainly don't mean that. I mean that with the funding from GSK that we'll be able to pursue more come pounds, move more compounds into the clinic. We can have more medicinal chemistry, we can be more aggressive on moving the compounds forward. And I think it's obviously very important for us to fulfill the goals of the GSK relationship and we are committed to doing that. It's also very important perhaps to have some of the own compounds moving forward outside of the GSK relationship. So the combination will be greater than we otherwise would have had.

Okay. Got it. Do they contribute to the library that you're using to screen?

No.

They don't at all? Okay.

No. Under this relationship, GSK is contributing money and expertise and guidance. GSK obviously has a lot of experience in drug discovery. And these are as you move into drug discovery and clinical development, obviously, the money that it takes to do that is substantial. And so you want to avoid mistakes with projects aren't going to work, you want to kill them as soon as you can. Projects that do have potential you want to develop them in the most efficient and most productive way. And we are very confident that GSK will provide us with substantial experience and help in making the right decisions for those compounds. That can only improve the quality of the pipeline.

Is Artemis a contributor to revenue?

Artemis has a relationship with Merck for delivery of Tran genomic animals. It very small in terms of revenue, not a substantial contributor.

Okay. Is your compound library development for Élan, et cetera is that at a material point yet?

Glenn, you want to take that?

It's not, Jim. I wish it were. But given the size of the GSK deal, it's getting farther away, even though it's drawing a rapid rate.

Okay. Thanks.

Your next question comes from Jeff Zekauskas.

Caller: Hi, good afternoon. Is the ability to double the size of the collaboration with GSK a moving target in the sense that, you know, maybe for one reason or another it isn't doubled two years from now, but, you know, it could be significantly expanded in year three or four? Is that the way it's structured or is two years somehow a magic date?

Let me talk about that a little bit. There is a time in the contract that -- at which there's an option for the parties to expand the relationship. So there is a date. At which the collaboration can or may not be expanded. But of course outside of that date that's nothing to preclude us from expanding the relationship at any time if both parties want to do that. So the answer to both questions is yes. And -- but I think the important thing is that even without that potential doubling and it's only a potential doubling, let's be very clear about this, this is a substantial relationship and our strategic plan for going forward is based on the collaboration as it stands. So that we haven't built into any of our financial planning, an expansion of the relationship where if that does, that's only the upside, of course, and that's great. But we're not counting on it. If it happens, that's great.

Let me try the same question one more time then.

Okay.

What is the date and it would seem to me, you know, if it takes maybe two years to get from the IND to phase two early efficacy, that pretty much --the date sort of coincides with whatever is happening with XL 784?

No, no, look. Let me make -- be clear about this, and it's hard here because I don't want it to involve a lot of details about the contracts we have with GSK, because both we and I consider that proprietary information. On the other hand, we want to be fairly clear about this. This has nothing to do with 784 or any of the other compounds. It's an option that we have, and this GSK has in the future that may or may not be exercised. And we are going to diligently work to meet the goals of the agreement, to fulfill all our obligations under the agreement. We're confident that we will do that. And any possible expansion of the relationship is at some point in the future. But I think it's wrong to focus on that right now, because the issue for right now is getting the collaboration moving forward moving compounds into the clinic, generating data on those compounds and identifying those compounds that will identify positive data, both on behalf of GSK and Exelixis. And with or without it doubling, this is an extremely interesting collaboration for us.

Okay. How about the date?

The date is one of the things that I think we have not been --well, yeah, I guess we have disclosed that. It's two years.

Okay. Thanks very much.

Your next question comes from Matt Geller.

Yes, hi George. Can you help us distinguish which compounds --distinguishing between the relationships, the different relationships, TDL, Bristol and Glaxo, which compounds go with which and in what areas do you have potential to develop things that wouldn't go within any of the three partnerships?

Sure. We can do that. Both Bristol-Myers' relationship and the PDL relationship have exactly the same feel. Which are certain aspects of oncology. And in that field, the DMS has right to half the small molecules targets. We have rights to the other half of the small molecule targets and to compounds that are based on those targets. PDL has rights to make antibodies against targets in that same field that arrive out of that same body of that research. And I think the important thing to say is that research is defined by mechanism. All right? So there are certain genetic screens that we carry out as part of the relationships, and the work that comes out of those relationships is in the field of the DMSPDL. There are other aspects of cancer that are not committed to the DMS and PDL where GSK has exclusive rights to target and compound. All right? And we have not made public exactly where the boundaries are between those, because that obviously gets into proprietary information of both of our partners, and we are reluctant to do that, obviously, to respect their proprietary information. So we will have -- as you know with PDL we have rights to co develop co antibodies and out of the DMS relationship we have rights to small molecule targets, which are plenty for our own pipeline. More than we can utilize on our own behalf. That's why we don't feel that we're compromised in our ability the move our own compounds forward. Additionally, of course, outside of those fields we do have biological expertise and some targets as well, but we are -- I think we'll right now focus on the cancer compounds that we have.

Great, thanks a lot.

Your next question is a follow-up question from Jeff Zekauskas.

Hi, I guess I've got a question for Glenn. I was hoping you could make the numbers, the GSK numbers with the original release. And now the up-front funding is 79 million and then there's 140. Can you reconcile that to the original I guess 30 million up-front payment?

Yeah, okay. Jeff Zekauskas, the up-front payment includes -- or the up-front money that we gearing to receive is first year of R&D funding 10 million dollars, plus 25 million of the loan, plus 14 million in equity that was purchased. So that's how you get the 79 million on top of the 30 million up-front fee. Then we said there's 90 million of committed R&D funding in total so 10 million of which is in the upfront and the 80 million is remaining. Plus there's an a additional 60 million under the loan available from GSK. That so that's the 140 million.

Okay.

Does that work for you?

That's good. Also, you mentioned that the incremental revenue and the --it was 10 million in each of the next two years. What do the incremental costs?

We haven't matched the cost that way, Jeff. I think it's fair to say that in the near term our drug discovery platform will be dedicated to GSK as we build the company. So we basically are doing some risk sharing along that line in the first instance. So I don't know when you say cost, how do you want me to calculate that relative to cash or relative to revenue?

In other words, in first ten million of revenues that you get, is all of that devoted or more than 100% devoted to the funding of the project or less than 100%?

This is George, Jeff. You know, if you look at the cash we are receiving here over the first couple of years of the collaboration, it is a lot of money, so it's wrong to look at it as 10 million dollars. We have the up-front payment, we have the premium portion of the equity. And so there is more than 10 million if you average that out it is much more than 10 million a year over the first two years.

Caller: I realize there's a difference between the economics and the accounting presentation. I was just interested I guess in the accounting presentation a little bit. Also, you spoke of acquiring new technologies.

Yeah.

What are the new technologies you plan to acquire?

Maybe, Glenn, you want the take that one?

Well, I mean, some of us --our focus is obviously expanding our drug discovery capability. We are very biologically focused interns of thinking about new technologies around pharmacology’s and better modeling of disease. But in general, we have seen a general transition over the last five years from reliance on almost exclusively invertebrate genetic models, increasing reliance on -- and sort of translation of reverse genetic strategies of invertebrate models. We have an investment that came on line this year and will continue to expand in structural biology as ad juncture underlined to our capabilities. So we'll continue to make investment in those areas.

Okay. Thank you very much.

There are no further questions at this time.

Okay. If there are no more questions, let me thank everybody for your interest, your participation in the call. And just reiterate the fact that we're I think this is the best position that Exelixis has been in a while. We are very excited about our prospects going forward and we expect to continue to execute on all of our commitments and all of our goals, both partnered and for other programs as well. So thanks again.

Thank you for participating in today's teleconference. You may now disconnect.