Standard BioTools Inc (LAB) 2016 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Fluidigm first-quarter 2016 financial results conference call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Ana Petrovic, Director of Corporate Development and Investor Relations.

Thank you. Good morning, everyone. Welcome to Fluidigm's first-quarter 2016 earnings conference call. Before the market opened today, Fluidigm released earnings results for the first quarter ended March 31, 2016.

During this call, we will view our results and provide commentary on recent commercial activity and market trends. Following these comments, we will host a Q&A session.

Presenting for Fluidigm today will be Gajus Worthington, our President and CEO, and Vikram Jog, our Chief Financial Officer. This call is being recorded and the audio portion will be archived in the investor section of our website.

During the call and subsequent Q&A session, we will be discussing plans and projections for our for our business, future financial results, and market trends and opportunities, including, among others, statements regarding Avinta and the anticipated impact of recent organizational changes and other business strategies, expectations for the single-cell biology in applied markets, and our prospects and growth opportunities in such markets, our anticipated product launches and impact of our product pipeline. The impact of product performance, our views of our competitive market position and the impact of competition. Seasonality and product revenue trends and current estimates of 2016 total revenue including, in particular, expectations with respect to revenue growth in the second half of 2016, the seasonal and/or unusual nature of certain SG&A expenses, GAAP and non-GAAP operating expenses, stock-based compensation expense, depreciation and amortization, interest expense, capital spending, cash and cash equivalents, and investment balances, and currency related impact on 2016 revenue.

These statements are forward-looking and are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from currently anticipated events or results. Information about these risks and uncertainties and other information affecting our business and operating results are contained in our annual report on Form 10-K for the year ended December 31, 2015 and our other filings with the SEC. Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended March 31, 2016 to be filed with the SEC. We advise investors to review these risk factors carefully.

The forward-looking statements in this call are based on information available to us as of today's date, May 5, 2016. Fluidigm disclaims any obligation to update these forward-looking statements except as may be required by law.

During the call, we will also present certain financial information on a non-GAAP basis. This non-GAAP financial information discussed during the call excludes the impact of, among other items, various non-cash and other one-time charges. Fluidigm has chosen to provide this information because it believes it enhances an understanding of our ongoing economic performance and because it permits investors to perform comparisons of operating results in a manner similar to Fluidigm's internal operating analysis. Reconciliation between GAAP and non-GAAP results presented in the table accompanying our earnings release which can be found in the investor section of our website. I will now turn the call over to Gajus.

Thank you, Ana. Good morning, everyone. In the back half of 2015, we stabilized our business. 2016 is about returning to growth. And with that objective in mind, 2016 is off to a good start.

Our first-quarter revenue of $29 million was up 9% from the year-ago period. Growth drivers were those that we projected for this year, namely, single-cell biology, production in general mix consumables and new products launched in 2015.

Before I go through the highlights of the first quarter, would like to update you on our strategic initiative to realign our commercial organization begun a year ago.

We made the decision to build out a dedicated team for our production general mix business to enhance our focus on this distinctive customer group and to enable our sales force on the single-cell side to concentrate on research-focused customers. By the end of the fourth quarter of last year, this commercial reorganization was essentially complete. It included a number of new hires of senior commercial leadership and the buildout of sales, support and marketing with these primary areas in mind.

We believe we entered 2016 with strong experience and dedicated teams on both sides of our business. The strategic rationale to build a commercial team dedicated to production genomics was motivated by the fact that purchasing decisions in this customer group are distinct from single-cell customers in academic research.

However, over the past year, we saw the adoption of single-cell technologies expanding into the applied markets, especially biopharma and CROs. As a result, classifying accounts by single-cell or production techniques was less relevant, and it became more sensible to orient our commercial organization based on whether the target customer was in an academic research or an applied setting.

Single-cell has become central to both. It's exciting to see the drug discovery paradigm in several key areas including immunology and oncology beginning to embrace single-cell as a more fundamental practice. So we made the decision last year to task the team we've built, formerly focused solely on production genomics, with applied markets.

Hence, this morning, in our earnings press release for the first time we are externally reporting a product revenue categorized by research or applied markets to align with the new structure of our commercial teams. The research market refers to our customers principally in academic making groundbreaking discoveries with our platforms. Applied markets refers to the businesses that we historically referred to as production genomics including clinical labs and Ag-Bio, but with the addition of biopharma and CRO customers. Importantly, we still plan to provide our current single-cell biology metrics. These metrics will continue to be directly comparable to those we have previously provided.

Total product revenue, which excludes service from research customers, was $15.7 million, up approximately 3% or $0.5 million year over year, driven by higher instrument sales. Total product revenue from applied customers was $9.7 million, up approximately 10% or $0.8 million year over year, driven by higher consumables sales.

As I mentioned earlier, the main growth drivers were exactly what we projected during our last earnings call, and I will now go through some detail on each.

Most importantly, single-cell biology product revenue was up approximately 15% year over year. Our Protonix product line delivered solid year-over-year growth in both instruments and consumables across research and biopharma customers. Adoption of our single-cell technologies in biopharma is a major opportunity for us, and this has only just begun.

In the context of our performance in single-cell biology, I would like to take a moment to share our progress on resolving the C1 Doublet issue. As part of our customer outreach program, we have now spoken with hundreds of customers. We are grateful that, by and large, our efforts in communication have been met with support and expressions of confidence.

Last week, we began shipments of a new medium-cell 96 IFC that substantially improved single-cell capture based on an optimized capture-side architecture. The performance of this IFC demonstrates that we can address this issue not only for this IFC, but also for the medium-sized, high-throughput IRC.

On that note, when we introduced the new medium-cell 96 IFC we also announced that we fast-tracked the development of a new small-cell, high-throughput IFC, which we now expect to introduce in early Q3. That is, we changed the order of the medium and small high-throughput IFCs in our development pipeline, simply swapping their availability dates. As a result, we now expect the medium-cell, high-throughput IFC to be introduced in early Q4.

After our announcement of the availability of the new IFC and the timelines for these other IFCs, there was some speculation that we had run into technical challenges with the medium-sized, high-throughput IFCs, and that was in fact the reason for the change as scheduled. Not so. We simply reprioritized the small-cell IFC due to growing interest in the fields of immunology and immuno-oncology. There was also conjecture that this schedule implied a slip in our 10,000-cell chip. That is also not case. These two projects are independent and both are proceeding apace.

We are pleased to report production genomics consumables overall rebounded in the first quarter, delivering robust growth of over 30% year over year, driven by increased sales of genomics analytical IFCs. This is a welcome result. As we have noted in the past, consumable streams can fluctuate quarter over quarter, and we expect that pattern to continue as our applied markets team gets fully productive.

While genomics analytical consumables were up year on year, our pull-through for preparative systems is down. This is partly due to the effects of the doublet issue on C1 consumables, but actually more the result of the decline in access array chips. We are generally guiding our customers through a transition from the access array to Juno. We believe the shortfall will be temporary but may continue in the near-term. Encouragingly, the Juneau platform, which includes new preparation chemistry and new IFCs, has been well-received. Our enthusiasm is bolstered by the pipeline of opportunities building for Juno, especially in our applied markets group and anticipate its impact to build over the course of the year.

New products which include Juno, Polaris and Callisto were another primary contributor to growth in Q1. Customers are starting to have meaningful success with Juno and Polaris in particular. And based on this and our pipeline, we feel confident that these new products will contribute to growth in 2016, as we have previously guided.

For 2016, our revenue guidance of $124 million to $128 million is unchanged. We continue to expect that our guidance will be supported by growth in single-cell biology, growth of consumables and applied markets, and new products launched in 2016. Notwithstanding our results in Q1, we still expect growth to be concentrated in the second half of the year. Historically, our revenue contribution in the first half has been approximately 45% of our total and we expect 2016 to reflect this pattern.

In closing, we had a solid start to 2016 and are continuing our efforts to lay the foundation for sustained growth in our target markets.

Thanks, Gajus, and good morning, everyone. I will now walk you through our first-quarter 2016 operating results and highlights.

For the first quarter of 2016, total revenue of $29 million was up 9% year over year. Total instrument revenue of $13.8 million increased by 5% or $646,000 year over year in the first quarter, primarily due to sales of Helio systems and contribution from other new products launched in 2015.

Approximately 65% of the Biomark HD system sold during Q1 were motivated by single-cell research. And approximately 15% of C1 systems sold in the quarter were combined with the Biomark HD system.

Total consumables revenue of $11.6 million, which includes IFCs, assays, reagents and antibodies, increased by 7% or $730,000 year over year for the first quarter, primarily from increased sales of genomics analytical IFCs and proteomics reagents.

Sample prep IFCs revenues declined year over year.

Our genomics analytical IFC pull-through for the first quarter tracked within its historical range of $25,000 to $35,000 per system per year, while our genomics preparatory IFC pull-through tracked below its historical range of $15,000 to $25,000 versus the full year. Our proteomics analytical pull-through tracked slightly above its historical range of $50,000 to $70,000 per system per year. Total service revenue of $3.5 million increased by 34% or approximately $892,000 year over year in the first quarter.

Total product revenues by customer, which exclude service revenue, for the first quarter 2016 were as follows. Total product revenue from research customers was $15.7 million, up approximately 3% or $526,000 year over year, driven by higher instrument sales. Total product revenue from applied customers was $9.7 million, up approximately 10% or $848,000 year over year, driven by higher consumable sales. Our total instrument installed base was approximately 1,700 instruments at the end of the first quarter, of which approximately 850 systems were designated for single-cell biology research. Approximately 880 units of the installed base were analytical systems, compared to approximately 855 units at year-end 2015, with the balance comprising preparatory systems.

Geographic revenues as a percentage of total revenue for the first quarter 2016 were as follows. United States, 45%; Europe, 32%; Asia-Pacific, 21%; and 2% other. Please note that Japan represented 6% of total revenue and is included in AIPAC. Going forward, we plan to discontinue reporting Japan separately.

Geographically, the year-over-year total revenue growth rates for the first quarter 2016 were as follows: Europe up 35% and Asia-Pacific up 15%. United States down 5% and other down 39%. Japan, now reported as part of Asia-Pacific, was down 5%.

Net loss for the first quarter of 2016 was $19.9 million, compared to a net loss of $15.9 million in the year-ago period. Non-GAAP net loss for the first quarter was $11.5 million, compared to the $7.3 million non-GAAP net loss for the year-ago period. GAAP product margin was 58% for the first quarter of 2016 versus 58% in Q4 2015 and 59% for the year-ago period.

Non-GAAP product margin was 72% for the first quarter of 2016, compared with 74% in the year-ago period and 70% in Q4 2015. The sequential increase in non-GAAP product margin was primarily due to favorable reagent manufacturing costs and higher instrument selling prices. The year over year decline in non-GAAP product margin was mainly due to lower instrument capacity utilization.

Turning now to OpEx, research and development expenses were $10.4 million in the first quarter of 2016, compared to $9.7 million in Q4 2015 and $10 million for the year-ago period. Both the sequential and year-over-year increases were due to higher personnel costs.

SG&A expenses were $25.5 million for the first quarter of 2016, compared to $22.1 million for Q4 2015 and $20.1 million for the year-ago period. The sequential increase in SG&A expenses was primarily due to increased personnel costs. The year-over-year increase in SG&A expenses was mainly due to higher headcount.

Please note that historically SG&A expenses in the first calendar quarter are seasonally higher compared to subsequent quarters. In addition, Q1 2016 also included certain unusual expenses including severance costs. The aggregate seasonal and unusual expenses in Q1 2016 were approximately $2 million.

Moving on to the balance sheet, total cash, cash equivalents and investments were $95.2 million at the end of the first quarter of 2016, compared to $101.5 million at the end of Q4 2015, a decline of $6.3 million in Q1 2016. Notably, our accounts receivables decreased by $5.8 million, improving DSO by 14 days to 61 days as compared to 75 days at year-end 2015.

We also received a $2.3 million final milestone payment related to the sale of our investment in [Beranata]. This was offset by an increase in inventory of $1.7 million.

Net cash used in operating activities was $7.8 million for the first quarter of 2016 versus $9.8 million in the prior-year period and $4.4 million in the fourth quarter 2015.

Moving on to our financial guidance, our financial outlook for the full year 2016 is as follows. We expect revenue to be in the range of $124 million to $128 million. We now expect the currency-related impact in 2016 revenue to be minimal. Operating expenses are now projected to be between $132 million and $137 million on a GAAP basis, compared with our prior range of $134 million to $138 million.

On a non-GAAP basis, operating expenses are projected to be between $114 million and $118 million. Our non-GAAP operating expenses exclude approximately $5 million of estimated depreciation and amortization expense and $14 million of estimated stock-based compensation expense. Our prior stock-based compensation expense estimate was $16 million. Interest expense is projected to be $6 million, capital spending is expected to be between $4 million and $6 million. Total cash outflow for 2016 is expected to be between $25 million and $30 million. Cash, cash equivalents and investments are expected to be approximately $70 million to $75 million at the end of 2016.

I will now turn the call over to the operator to open it up for questions.

(Operator Instructions) Bryan Brokmeier, Cantor Fitzgerald.

Given the change in currency rates, you are effectively reducing your constant currency growth forecast. Are you seeing anything to cause that growth outlook to be lower? Or are you just reluctant to increase total revenue growth forecast given that you expect growth to be concentrated in the back half of the year?

Bryan, this is Gajus. I think your question -- you are talking about currency but I think your question is why is guidance remaining unchanged generally. Is that right?

Yes, that's generally it because previously you are expecting currency, I believe, to be 2%. Now you're saying relatively no impact on the full year. And so effectively, the organic -- the constant currency growth forecast is coming down.

It's not that the impact is zero. It's just minimal if you're talking circa 1% or so. So it's just within the guidance that we have previously issued. It's just not a big number one way or the other.

Okay. And AIPAC ex Japan was strong; turned around in the quarter from quite a few quarters in a row that you had of declines. Is that largely the Chinese academic market, and could you talk about any trend that you're seeing?

Yes, China has been strong for us. And that is actually both within the academic research market and, in particular, for single-cell biology within the academic research market. But also it's been healthy from an applied markets perspective as well with the adoption of our technology for various types of testing.

Okay. Thanks a lot.

Dan Leonard, Leerink Partners.

First off, Gajus, can you give us an update on your market development efforts for Polaris?

Sure. One notable thing that is an update for Polaris is that we are starting to have customers now who are presenting their results -- good results at that various different gatherings around the world. And so we are pleased by the fact that we do have customers now that are doing really important experiments and they're getting good data off of that.

That's important -- that actually is a very important development in the market. And development of product is one of the things that you really don't have control over but that is frankly necessary when you are developing the market for a new product is having very reputable, ideally key opinion leader customers who use it, are very successful, and start to talk about it and show what can be done with it.

The pace at which that happens is completely unpredictable because it relies on -- they are entirely reliant on the design of experiments by your customers and then ultimately that those things work. And obviously they are doing biology -- they are doing science, and sometimes the fundamental hypotheses don't bear out.

But in any case, that's a positive development for Polaris and one of the things that gives us confidence that -- as stated when we first issued guidance for the beginning of the year, that new products will be contributors to growth during fiscal year 2016. And new products include, of course, Polaris.

Okay. But it sounds like your ability to influence that pace is limited. You are more reliant on your customers there?

Well, it's out of our control, meaning we can't schedule it. But we definitely can influence it, and we do the best that we can there. You can influence it by customer support and even collaborations in some cases. I don't mean to say that you can't influence it; you definitely can influence it. It's just that we can't schedule it; we can't make it happen on a date that certain. But we can definitely make it happen more quickly than it would otherwise, and we are absolutely doing that.

Okay. And then my follow-up question, it sounds like Japan was still weak in the quarter. Can you comment on your outlook for that region?

It really hasn't changed. It's volatile, and it continues to be that way. There continue to be uncertainties related to budgeting cycles. And even when some confidence starts to build about a release of budget, there is an underlying fear that that will be reversed, as it has been in the past.

So we remain very cautious about Japan, and I wouldn't -- we are certainly not ready to declare, nor do we expect we will be for some time, that things have really stabilized and are starting to be predictable there.

Okay. Thank you.

Sung Ji Nam, Avondale Partners.

First of all, congratulations on the quarter. Was wondering in terms of -- you talked about single-cell biology being up 15% year over year. Is that largely due to the Helios product line? Or maybe could you talk about how the single cell genomics performed in the quarter. Understanding that there's some issues -- you guys were working through the doublet issues on the C1 but just for the biomarker system and others.

Sure. The growth was largely due to the adoption of the Helios system. And you laid it out exactly the way it played out. We are still working through the -- during the quarter, still working through the launch and the availability of the first medium IFC that was free of the doublet issue. And that was definitely a headwind for C1 and one that we anticipated. So it wasn't anything other than what we expected.

Biomark continues to be a very relevant, very important tool for single-cell biology. And particularly, as we move into fields where there is more acumen in cell biology and less that is conventionally associated with genomics, it is quite appealing. And it's appealing versus next-generation sequencing because of the still-radical complexity associated with analyzing data sets by next-generation sequencing.

So we are -- I'm not calling out Biomark as a growth driver, but it remains a solid contributor and in particular in single cell. I'm sure you also saw that 60% of the Biomarks that refilled were motivated by single cell. That's been a solid trend for quite some time now.

Okay, great. And then Vikram maybe can you talk about in terms of gross margins, what were the key drivers for the decline year over year? Thanks.

Yes, year-over-year decline for the non-GAAP product margin was mainly due to our lower instrument capacity utilization. So the year-over-year, it rounds to two, but it's actually about 140-basis-point margin reduction. and the bulk of that is for the reasons I just mentioned.

Okay. Thank you.

Bill Quirk, Piper Jaffray.

Just a question on just kind of what the deal pipeline is looking like, Gajus. I'm thinking specifically around some of the single-cell prep instrumentation. Obviously you had a competitive announcement at AGBT. Congrats on obviously releasing the upgraded IFCs regarding the doublet issue. And just given those two moving parts, just curious, like I said, what the deal funnel looks like at this point.

Well -- hi, Bill. It looks like what we had anticipated. So we are now four months, starting early in the fifth month of the year and things are unfolding the way that we had planned. And so the pipeline that we see for the C1 going out through the remainder of the year is very much consistent with the plan that we put together late last year, the early part of this year.

There are those two dynamics that you mentioned. We are not alone in this market anymore. And, frankly, we were alone a lot longer than any of us expected that we would be. And the doublet issue was an unfortunate thing that we had to deal with. And I think I'm very, very pleased with how our R&D team and our commercial teams have done that. I think we've earned ourselves considerable credibility with our customers for transparency and also for -- when we have a problem, we own up to it and we fix it.

However, the C1 remains totally unique in its breadth of capability for single-cell biology. For doing targeted genome sequencing, whole-genome sequencing, whole-exome sequencing, and single-cell level micro RNA, targeted gene expression. And the data quality from the C1, frankly, is unrivaled.

So there are these other dynamics that you refer to. However, the C1 continues to be the broadest and, in our opinion, the best system for doing single-cell sample preparation for genomics. And these attributes continue to make it, in our opinion, the most important technology for sample preparation out there right now.

Got it. And then just two quick ones on a couple of new products. Can you talk -- maybe spend a minute just on the Helios subgrades? What interest level are you seeing there?

And then secondly on Polaris, obviously very innovative system. Can you just talk to the initial customer groups? Are these predominantly people that have previously had some single-cell experience, or are you picking up some new-to-the-category customers as well? Thanks.

Sure. So there's definitely interest in Helios upgrades from our legacy first-generation and second-generation CyTOF installed base. I wouldn't characterize it as a major driver right now. It is certainly there and the interest is certainly there and we do do upgrades. But when we are referring to real growth drivers within the Helios product line, it is really primarily due to adoption by new customers or customers increasing their stable of Helios systems.

With respect to Polaris, I'd make the same comments that I did earlier that -- and the new news is that we've got customers now that are reporting really interesting results. And those customers are people that have done single-cell biology before.

So the strategy with Polaris was to take the experimentation of single-cell biology from what I will call a sort of two-dimensional experimental regime, which is some amount of stimulation followed by genomic measurements, to a level where you can do those things essentially simultaneously. Where you can control the environments that the cell is subjected to, the conditions that the cell is subjected to while making measurements and making observations. And we think that that is the way that single-cell biology is going to move in the future.

So, consequently, the initial install base of Polaris systems is almost entirely people who already have done single-cell biology experimentation. And we don't expect it to generate new entrants into the market for a while.

Got it. Appreciate the color. Thanks, guys.

[Eric Kriskralo, Mizolo.]

Just on the US research or I guess kind of the sluggish parts of the business, was that due entirely to the doublet issue? Or were there other factors in those markets that kind of suppressed growth a little bit this quarter?

It really -- it wasn't just that. It was also just the continued play-out of time constant, if you will, associated with the issues that we had last year that were continuing to resolve. So -- and as I mentioned in previous situations, some of those were organizational, some of those were related to the structural orientation of the sales force with respect to single-cell versus production genomics. And so -- and, frankly, really not unexpected -- or that is to say, rather, expected in the guidance that we had given the beginning of the year and that we have reiterated in our press release and in this call.

And we feel good about the prospect for North America. But as I mentioned several times and want to reiterate, that we continue to believe, based on all of our forecasting and internal processes which certainly over the last three quarters have proven reliable, that the growth will be concentrated in the back half of this year.

Okay. Thank you. And then now that you are bifurcating the research in the applied businesses, did that involve any further reorganization of the sales force? And is there some type of risk involved in that if those sales forces did get restructured again?

There was additional restructuring, certainly by definition, when we changed -- when we expanded the remit of what happened in production genomics to include biopharma and CROs, and that is clearly a change. A necessary one for the reasons that I laid out earlier, those customers in biopharma and CROs have re similar purchasing criteria as they are kindred spirits in other parts of production genomics.

Change is -- always involves with it some amount of risk. There's no two ways about that. However, it is something that Fluidigm is very accustomed to. We've been through many inflection points during the course of the Company's history as we have evolved from developing basic technology to commercializing it to figuring out the first killer ops to developing those. And those all -- everyone of those phases involve some kind of meaningful organization and cultural change. And this is another example of that. It's one that is familiar territory to us. So indeed while every organizational change involves some amount of risk, we are very confident that we are navigating it well.

(Operator Instructions) Doug Schenkel, Cowen and Company.

First question is on C1 utilization. This was below expectations in the quarter. You provided a few explanations. It seems fair to conclude that this is mostly but not solely but mostly related to the doublet issue, so maybe you can correct me if I'm wrong on that. And then I guess the second part of the C1 specific question is given your description of -- and your positioning of the progress addressing the doublet issue, and your positive characterization of customer feedback in spite of the changing utilization, can we assume that your guidance still incorporates the assumption that this doublet issue and the impact that it had on C1 utilization will subside and rebound and as a result, C1 utilization will rebound over the course of this year?

So first the impact on pull-through of C1 was really entirely due to the doublet phenomenon. And, again, something that was expected in the guidance that we provided in the early part of this year, and it played out essentially the way that we thought based on the early customer feedback which, frankly, was more positive with respect to that and then continued use of the product than we and maybe some others had expected.

And then going forward, our guidance assumes that things will get better. But we are not going to declare ourselves out of the woods and we're not going to assume -- we don't expect to be, frankly, for some time. And that will be towards the end of the year. And we will want to see in our reported results some consistent behavior on the part of our customers that really shows that indeed based not only on the feedback that we are receiving but on the use of the product, that we put that entirely behind us.

So with the launch of our upcoming products, the small-cell high-throughput chip then followed by the medium-high-throughput ship and then later much higher throughput solutions in combination with all the other attributes which I laid out earlier, we believe that the C1 is very well-positioned. But those things for the most part are coming in the very -- in the back half of the year and the early part of the next year. So it will be some time before the C1 in our view is in a position of being a major contributor to growth. But we feel pretty good about the way things are going with it right now.

Okay, thanks for that. But just to be clear, that expectation is that for the year C1 utilization will still be in your prior guidance range in terms of pull-through per instrument per year. And if so, I just want to make sure that any exchange programs -- we've heard about those in our chips -- that some of the chips that are out there that have not worked to spec will be replaced over the course of the year at no cost to the customers. I just want to make sure that that is fully captured in that dynamic. Thank you.

Yes. And as our practice with previous quarters, we don't change our pull-through metrics until we have got some multiple-quarter behavior that has been consistent over -- for similar reasons. So we are not updating our pull-through -- we are not updating our historical pull-through rates at this point time. And indeed, the remediation programs that we provided for our customers are things that we fully contemplated at the beginning of the year.

I am showing no further questions at this time. I would now like to turn the conference back to Ana Petrova.

We would like to thank everyone for attending our call. A replay of this call will be available on the investor section of our website. This concludes the call and we look forward to the next update following the close of the second quarter of 2016. Good morning everyone.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.