Lannett Company Inc (LCI) 2011 Q1 法說會逐字稿

Welcome to the Lannett Company fiscal 2011 first quarter financial results conference call. My name is Monica, and I will be your operator for today's conference. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to Robert Jaffe, Investor Relations for Lannett Company. Jaffe, you may begin.

Good afternoon, everyone. Thank you for joining us today to discuss Lannett Company's fiscal 2011 first quarter financial results. On the call today are Arthur Bedrosian, President and CEO, and Keith Ruck, Chief Financial Officer. Please be advised that this conference call is being broadcast live on the internet at www.lannett.com. A playback of this call will be available for three months, and may be accessed on the internet at Lannett's website.

I would like to make the cautionary statement and remind everyone that all of the information discussed on the call today is covered under the Safe Harbor provisions of the Litigation Reform Act. The Company's discussion today will include forward-looking information reflecting management's current forecast of certain aspects of the Company's future, and our actual results could differ materially from those stated or implied. This afternoon, Arthur will review the Company's business highlights, then Keith will discuss the financial results for the quarter in more detail, followed by Arthur's concluding remarks. We will then open up the call for questions. With that said, let me turn the call over to Arthur Bedrosian. Arthur?

Thank you, Robert, and good afternoon, everyone. Before we begin, we think it's important to take a moment on Veterans Day to acknowledge the brave men and women in our armed services. Lannett's employees (inaudible) and we would like to thank the members of the military past and present for their service to our country.

Now, moving on to the Company's business. As expected, sales in financial performance in the quarter was impacted by competitive pricing pressure, reduced demand for certain key products, and lost revenues resulting from the FDA's action to force all but one competitor to cease distributing Morphine Sulfate Oral Solution. We continue to be optimistic about receiving FDA approval within the next two months for our NDA for Morphine Sulfate Oral Solution, with an expected relaunch of the drug in early calendar year 2011.

During the fiscal 2011 first quarter, we received FDA approvals for Phentermine HCl, blue and white seed capsules USP, 30 mg, and Ondansetron Injection USP 2 mg/mL single-dose vials. The approval of Ondansetron single-dose vials is in addition to the one we received earlier in the year for our Ondansetron multi-dose vials. Both the single-dose and multi-dose vials of Ondansetron Injection came from our joint venture with Wintac Limited. We plan to launch Phentamine in our fiscal third quarter, and while we received a reduction in our transfer pricing from our partner Wintac, the market for Ondansetron injectables remains unattractive.

Also during the quarter, we purchased approximately 20,000 shares of Lannett common stock in the open market and open market transactions. And the FDA completed inspections of the Company's facilities in Philadelphia with no observations, and our Wyoming facility with two minor 483 observations. With that, I'd like to turn the call over to Keith for an overview of our financial results for the quarter.

Thank you, Arthur, and good afternoon, everyone. For the fiscal 2011 first quarter ended September 30, 2010, net sales were $25.4 million compared with $31.4 million for the first quarter of fiscal 2010. Our net sales were down compared with previous quarters due to the loss of revenue approximating $2.8 million associated with the FDA's actions on Morphine Sulfate Oral Solution, price reductions granted on two of our largest products due to pricing pressures from the marketplace, and recording of approximately $1.4 million in shelf stock adjustments on those two products in order to retain one of our largest customers on those products.

Gross profit was $5.9 million compared with $11.5 million for the same period in the prior year. The decline in gross profit was due to decreased revenues mentioned above, as well as a change in product mix. Research and development expenses decreased to $2 million from $3 million in fiscal 2010 first quarter. Selling, general, and administrative expenses rose to $4.6 million from $3.8 million in the same quarter of the prior year, primarily due to increased legal costs related to litigation with the FDA regarding Morphine Sulfate Oral Solution, and the Company's grandfathered products as well.

Operating loss was $726,000 versus operating income of $4.7 million in the fiscal 2010 first quarter. Net loss attributable to Lannett Company was $404,000 or $0.02 per share compared to net income attributable to Lannett Company of $2.9 million of $0.11 per diluted share for the prior year first quarter.

Turning to the balance sheet, as of September 30, 2010, cash, cash equivalents, and short-term investment securities available for sale were approximately $17.8 million. Long-term debt, including the current portion, was approximately $7.7 million. During the fiscal 2011 second quarter, we expect to close the financing of our Townsend Road project, which will increase our cash position by approximately $5 million. This is the amount we previously spent to purchase the building and complete the fit-out. We will record a corresponding increase to debt by that same amount.

With that brief financial overview, I will now turn the call back over to Arthur. Arthur?

Thank you, Keith. Currently, in our fiscal 2011 second quarter, we launched Fluphenazine HCl tablets USP, the generic equivalent of Prolixin, in 1 mg, 2.5 mg, 5 mg, and 10 mg dosage forms. For the 12 months ended September 2010, Fluphenazine HCl USP 1 mg, 2.5 mg, 5 mg, and 10 mg had US sales of approximately $28 million at average wholesale price according to Wolters Kluwer.

With regard to our shelf registration, we filed the shelf to accelerate the Company's growth and to enhance our margins. The shelf, which has been approved by the SEC, gives us the option to quickly raise funds for an acquisition or vertically integrate our operations. Our team has been active on both fronts. We are evaluating plans to expand our pain management business by adding APIs and investing in infrastructure to add capacity. We are also assessing a number of business opportunities, including an acquisition and purchasing ANDAs and licensing complementary products.

Looking ahead, and as we previously said, we expect the balance of calendar year 2010 to continue to be challenged by pricing pressure on some of our key products, as well as by the FDA's decision ordering our Company and others to cease manufacturing Morphine Sulfate Oral Solution. However, as I mentioned earlier, we're optimistic about receiving FDA approval for our new drug application for Morphine Sulphate Oral Solution within the next two months, and expect to relaunch the drug in early calendar 2011. We also expect to receive approval of some of our ANDAs pending at the FDA over the next two quarters.

Moreover, we continue to invest in product development. Currently, we have 19 product applications pending at the FDA, two of which we believe are first time generics. We have an additional 60 product candidates in various stages of development. This si the largest number of products we have ever had in development, and compares favorably to companies much larger than Lannett.

With the time available, we would now like to address any questions you may have. Operator?

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Scott Henry of ROTH Capital. Please go ahead

Thank you. Good afternoon, Arthur and Keith. I guess, just starting from the press release, I noticed you mentioned you were going to reduce your paying workforce, which I thought was surprising given that you do expect approval coming up pretty soon. Is that -- are those temporary workers, are those people you can bring back on once you get the morphine approval?

No. Actually, this was done early on when we lost the court's decision regarding the temporary restraining order we were trying to obtain. At that point, we had to stop manufacturing the Morphine Sulfate Oral Solution at Cody Laboratories, and we had access staff that were being used to manufacture the product. Now we had no manufacturing work for them. We hope to bring those people back into the operation once we relaunch the product. But we have inventory, and until we go through the inventory that we have on hand and need to manufacture more, it may not be until the third quarter or possibly fourth quarter when we bring them back. The issues are --

Go ahead

As far as whether they are qualified, some of the people were temporary staff, for example, but others were long-time employees capable of manufacturing product. Trained staff. And as you know, in our business, you can't just bring someone in from the street and have them operate in your business. They have to be trained. We do hope we'll be able to bring these people back into our company

Okay. And what were pain sales in the quarter? I know that will be in the Q, but just wanted to get a sense.

We quoted in the past as percentages, and Morphine Sulfate was a bulk of that. I would have to look it up. I can do that while we're talking. But I would expect it to be less than 5%.

Okay, and when we think about --it sounds like you're going to one more challenging quarter until things start falling into place. In broad terms, this was the first quarterly loss in awhile. Do you think you can still be profitable in the second quarter? Or should we really be focusing on the January quarter?

The second quarter is going to be challenging. It is possible to be profitable, but it will obviously depend on what happens. One of my concerns is that with the loss of Morphine Sulfate, and we are experiencing a slight slowdown on one other Cody product, that we might have some vital capacity costs again hitting the bottom line in our second quarter. But assuming Morphine Sulfate comes back third and fourth and we see a slight pickup again in that other Cody product, as we sit here today, it's possible, very possible, that we would be profitable also in the third and fourth quarter

Okay, and I guess a big picture question for Arthur. When you think about 2012, and I'm not asking for your guidance, but internally, would you say that your outlook for 2012 remains unchanged? Just trying to understand if all of these are what you would call temporary impairments, as opposed to long-term issues.

Absolutely. 2010, we expect a number of ANDAs to be approved over the next two quarters actually, as I said earlier. So, between the approvals of some of those products, and its conceivable up to four of them might get approved, 2012 looks very good. As we said previously, as well, we thought that the year would be good.

The remainer of this year, I'm optimistic will be profitable, because we're confident we will get the Morphine approved. I said two months because I'm pretty comfortable, based on the impact of the discussions we're having with the (inaudible), we're dealing with the license and the additional data that they requested. We're pretty confident it will be approved shortly. Once that's approved, again, we have the inventory sitting on hand. We will be able to recapture most of the marketplace. To be an optimist, the remaining company, the one that's exclusively out there now, did raise their prices. So, we'll be going back into the market at a higher price level than when we left

Okay. So it does seem just a temporary hiccup.

Scott, just to get back to you on that pain management question. When we publish the 10-Q, we will show that we'll have $2.9 million in pain management over the $25.4. So, it will be more than 10%

That's actually not that bad of a number. I guess, just wrapping up the call. I always ask every quarter. Levothyroxine and Digoxin really drive the ship. Are there any changes to your expectations for the competitive environment? And by that I mean we know more competition is coming for Digoxin, but is there any change in your outlook for the rate of competition?

Well, we're having some aggressive competition on the Digoxin, where they're really coming in with rather low prices to try to take customers away. They haven't been successful in the taking of the customers, but it has caused me to have to reduce my prices and, ultimately, my profits. Levo, we have faced a lot of competition from one competitor that's selling on price and price alone, because they have had issues in the past. And most of our customers have not reacted to that because they know that the other company hasn't been a good supplier or a reliable supplier. But every once in awhile, the price becomes important. We're in a commodity business where price is the commodity for sales, generally. So, I would continue to think that Levo and Digoxin will come under pressure, and that's one of the reasons we filed so many applications, to try to not be dependent on just two products.

Okay. Well, thank you for taking all the questions. Appreciate it.

Thank you, Scott.

The next question comes from Marco Rodriguez of Stonegate Securities. Please go ahead

Good afternoon, guys. Thank you for taking my call. Following up in regard to a previous question, and obviously the commentary you were talking about on the pricing pressure. I know that last quarter you talked a bit about that coming into play. Can you discuss maybe a little bit, was the pressure that you saw this quarter higher or lower than what you were expecting? Can you talk about whether or not there was any kind of linearity in terms of that pressure, whether it accelerated or decelerated?

I would just say that sometimes your competitors do some surprising things. They normally don't reduce prices so dramatically. This particular quarter, we found two competitors that did exactly that. Surprising, because they have never behaved that way in the past, and I wonder why anybody would drop a price so dramatically. They didn't gain anything. They didn't pick up a customer. They just cost me to lose profit margins.

Some people I guess when they are not getting ANDA approvals need to do something else to increase their sales. But usually when you just lower price, the other guy who is selling to that customer is usually allowed to match it any way. So, price usually doesn't get you anything. It seems like this quarter there was some bizarre behavior, or behavior that doesn't make sense to us, from the standpoint of, what was there was to gain by doing what they did? They weren't interested in harming Lannett, it wasn't anything personal. I just think sometimes people make mistakes in the quotations they give out.

Can you quantify the magnitude of that reduction that you saw out there from your competitors?

Well, you have to remember, we obviously sell both Levo and Digoxin to multiple people. In the case of Levo, the pricing pressure came on one large customer from one large competitor. And I can't say too much, but it has significantly impacted the profitability of the Levo product for Lannett. But we've only seen that pressure once, at least through as we sit here today.

On the Digoxin, even though Digoxin's a smaller volume for us than the Levo, we saw approximately two to three events of pricing pressure. An yes, we also reduced the price there. Levo was a little less profitable -- sorry, Digoxin was a little less profitable than Levo, so the pricing decreases on the Digoxin product were not as dramatic, and had much less of an impact to us

You continue to anticipate this pricing pressure into the December quarter?

In our business, it's always there. I've been in the business a very long time, and it's always been a price business. I don't believe that's ever going to change. It's just sometimes you have more irresponsible behavior on the part of some companies that do some strange things that are hard to believe they are doing them, when you're not gaining anything. Can I expect that going forward? There's always irresponsible behavior, but we're not counting on it.

One of the reasons we try to broaden our product line is to overcome the dependence on one or two products, so that when you're dealing with this, it doesn't impact you as much as this has done to us. But do I expect this going forward? No. At some point when people don't gain anything from quoting lower prices, they tend to abandon that strategy

Okay. Then the $1.4 million in the rebates. That affected the top line correct and not the cost of sales?

Yes. They were shelf stock adjustments and yes, they came right off the top line

Okay. Then, so from the gross margin perspective, you mentioned mix and then obviously the decreased revenues were the impact on the gross margin. Can you quantify which had a heavier hand?

The pricing pressure and the shelf stocks had the most impact to the quarter. The Morphine Sulfate was, I'll say, second and the product mix was third

Lastly, just kind of a housekeeping item here. On your balance sheet, your inventories moved up again, quarter-over-quarter -- or rather, year-over-year, excuse me. I wouldn't have expected that

Unfortunately, when we had to take back the Morphine Sulfate that had been in the marketplace, we put it back in the inventory. That's part of the increase in the inventory levels

Got it. Okay. Great. Thanks a lot, guys.

Thank you, Marco.

Our next question comes from George [Gastar], private investor.

Good afternoon. I got on this call late. First of all, can you explain again the increase in SG&A?

The SG&A is -- the increase is primarily due to our increased legal costs related to our current litigation with the FDA over the Morphine Sulfate product

That was going to be my second question. Maybe you already covered that, but what's the status on the lawsuit with FDA? Is that still intact? Has anything transpired on it? Where do you stand on that?

If you recall, we asked for a temporary restraining order, which was initially turned down by the court. Then the court prepared a document that dismissed our claim. We went back to the court claiming that in his ruling at the bench, when he refused the TRO, he did not dismiss the case. He reconsidered, and he allowed the case to go back on to his calendar and asked for both sides to prepare motions. He held the hearing on October 5 on those motions, and we're waiting to hear from him.

Those motions have to do with whether or not we're entitled to a trial on the merits of this case. And the FDA, of course, believes that we're not entitled to a trial. We're waiting for the judge's ruling. We believe that there's no other way to resolve our differences other than to go to trial and be able to prove that this product is grandfathered.

I see. Okay. This is exclusive of trying to get back on track with FDA and your ability to bring this product back into the marketplace, looking at hopefully early 2011?

Yes. What we did is, rather than put all your eggs in one basket, we took the conservative approach of filing a new drug application, as opposed to an abbreviated new applications, with the agency when we continue to litigate the status of the product. So, regardless of whether or not the product is approved, the litigation will go on.

The issue is to whether or not this drug is grandfathered is important, and it doesn't end if the product is approved. As you know, there are other products that we sell that are grandfathered, and maybe other products that we want to sell that are grandfathered. We think the issue needs to be resolved, and unfortunately, litigation is the only way to resolve it. We have a difference of opinion with the agency with to regards the status of this product. But aside from that, our relations with them are very good

Okay. All right. Then on the space utilization side. You're clearly moving along in Philadelphia and getting yourself organized for potentially sizable increase. At one point, I believe, the Company was theorizing doing contract manufacturing. Has anything transpired on that? How do you intend to use that space? What's going to lift it off, in terms of getting utilization to the level or what you thought you were going to be able to get to?

First of all, when we moved into the third building and we moved the warehouse from the second building, let's say, we freed up about 28,000 square feet of space that's going to be converted into manufacturing space. That building already has a manufacturing license in place from the FDA. But we're very careful in the way we spend our capital expenditure money. Because if the FDA delays the approvals, then I don't need the capacity. So, we have been cautious in putting the money to work in building out that building until we know a little bit more about when we're going to get these approvals.

Now, some of the approvals, as you know, went from 9 to 14 months, to 18, to 19, to 21, now to 26.5. I can tell you we have applications at the agency that have now gone beyond 26.5. We don't know from the agency when those are going to be approved. They don't tell you when they are going to be approved. So it's hard to plan.

We do know that they have 2,200 applications on backlog there. We also know they have 3,800 supplemental applications that in the blog from the FDA they advised they are not going to do anything with those supplements, and assign that staff over to the ANDA division. And only if a supplement has some real need, let's say, will they take a look at them. These all are happening without us being aware of them. We find out after the fact.

So, it's hard to plan what to produce, what equipment to buy, what to be expecting in an approval. When we went into this third building, we knew there that with the 20 applications at the agency, were they to be approved, some of them required additional space. Some of them required higher capacity space to be able to make larger batch sizes than we were capable of making, and we needed to gear up for that. Otherwise, I'd have a situation like I had with the Phentermine capsule. It was approved awhile ago and I'm not going to be launching it until January.

Normally, we like to have the product ready, in stock, and when I get the approval, launch it. But we don't know when they will be approving things, so if I manufacture the product too early, I have the expiration date running against me. If I don't manufacture it early, I lose the opportunity of having the approval for a few months. The same kind of thing applies with equipment. If you set up a facility too quickly, you have all your money tied up and nothing to produce there.

So, we have plans in place. We have firms ready to gear up to equip the facility, but we're being a little bit cautious in our approach. We're taking -- instead of doing it all at once as we originally planned, we're taking a step-by-step approach to it. We're already gearing up to manufacture some new dosage forms in that space, and that's the limited amount of activity we have in that 28,000 square feet. But we needed the space. In our business, it takes a long time to equip a facility and get it up and running and validated. You can't do all these things at the last minute.

So, planning is involved. But unfortunately, without having the FDA act like they normally do, your plans get pushed around. It's almost in a storm. You don't know which way to go because you don't know when they are going to approve anything. But we do know that the applications will get approved. They're at the agency. While I have no control over it, I am trying to [husband] the cash and be careful how we invest our money in the fill.

And the one last question. I don't know if you made a comment on this earlier, but two parts. One would be on the acquisition side. Are you looking at anything in here? And secondly, where do you -- I don't know if you've made any comments on your past comments on shelf registration status. Can you comment on either of these?

Yes. We have been actively discussing an acquisition with a small company. When I say active, it's just at the talking stages at this point. But we continue to look for additional opportunities.

With regards to the shelf, if we were going to make an acquisition, clearly we'd probably pull down from the shelf application some funding so that we could go ahead with the acquisition. And that was the reason behind getting the shelf approved. If I didn't have the shelf approved and I found an acquisition target, I wouldn't have the money. I wouldn't be able to get the money quickly, and I don't have the SEC to approve the application in advance. Having done what we did, I have that flexibility. If something comes along that we'd like to acquire, I can raise the funds. And that's really what motivated us to get the shelf registered.

We do have some active plans and we are actively looking at some acquisition opportunities. The shelf will come to play once we identify any of those, or if we identify anything to purchase. Or some licensing opportunities that we're in discussions with that might require us to come up with additional cash. Or any patent challenges, for example, where we would need additional cash to engage in that area.

I see. Okay, thank you.

(Operator Instructions) Our next question comes from Michael Anthony, private investor.

Good afternoon, gentlemen. My question is, you all have been around since 1942. You're saying you may acquire companies. I know King Pharmaceuticals, a generic drug company, it was acquired my Pfizer. Has anyone approached you all l about being acquired yourselves?

No. No one has acquired us. No one has approached us about acquiring us. You're talking about since 1942, yes we have had people -- at least two companies that I'm familiar with in recent times, and prior to that. To be frank, I tried to acquire the Company in the 1980s.

So yes, Lannett as a business has had offers made to it. But nothing recently. The past I'm talking about in 2004 and probably around 2006 when we were approached, and actual due diligence was conducted. But not since then.

Lannett doesn't really actively believe it's for sale or should be for sale at this level, because we're executing our business plan. And the value is still hidden away within Cody laboratories, and until we really exploit that, we're not going to get the best value for our shareholders. And quite frankly, our shareholders would much prefer a higher offer than we would get otherwise. So, we really need to make sure that Cody's value is being exploited to its fullest in order for anybody to come in and pay us what we might think the Company is worth

Our next question is from Kevin McDevitt of UBS.

Good afternoon, gentlemen. I just had two quick questions. One, you made a repurchase of 20,000 shares. Can you disclose the average purchase price?

Yes. Actually, it was probably around $4, just under $4. Maybe a little over. We had a nice (inaudible) on that purchase.

You will see, when we publish here shortly, that the amount of money we used for that was about $83,000

Okay. I don't know if you have any inclination of what has driven the stock up recently to hit $7. There was quite a bit of volume. Have you investigated that at all? Who is behind that?

I don't know who is behind that. We certainly welcome additional shareholders, but we do know that it was some small institutions that caused that volume increase recently. I would just suspect that there's -- the hidden value of Lannett is becoming more aware to people

Okay. Thanks. Then the second question. You had mentioned, with regard to the shelf registration, you're looking at acquisitions, and one of the use of the funds was the infrastructure buildout, is what you said. Is that at Cody? Or are you referencing still the Philadelphia facility?

We were referring to Cody there

Okay. Thanks, guys.

Thank you very much. Take care, Kevin.

Our next question comes from Tom [Harenburg] of (inaudible).

Good afternoon, fellows. On the Morphine Sulfate solution, once you get FDA approval, will those be in the same dosage sizes as what you had? Or will there be additional dosage sizes with.

They would be in the same dosage sizes as before. It's the same product that we were selling previously that we filed on

Okay. And there were some competitors that also had their comparable drug removed. Where do they stand in the reinstatement procedure?

As far as we can tell, no one else has bothered to refile, or do anything. They just removed themselves from the market. So, it remains currently one sole source. And with our approval, it should be a second source

Okay. How many employees do you currently have in Cody?

Approximately 65 to 70, roughly

Is that an increase over six months ago or a year ago?

No. It's a decrease. There were as high as 90 people, if my memory serves me.

Okay. On several occasions, I had attempted to visit that facility and possibly get a tour, and was turned down. Can you explain the reasons for that?

Yes. As a matter of fact, we have very serious security in all our buildings. We would not allow anybody touring a building, almost under any circumstances. At Cody in particular, the security there is extremely high. You actually have to go through metal detectors similar to what you do at an airport.

Any pharmaceutical company that I know of, whether it's Pfizer, or Teva, or Watson, or Mylan, don't give tours of their facilities for a number of reasons. Proprietary technology being one of them, but also the danger of walking people through a pharmaceutical plant where you have a lot of different drugs being manufactured. So, from a safety point of view it would be frowned on, on a security point of view because we are in the narcotics business, and the DEA believes the security begins by keeping people out of the building that don't belong in there. So, I believe that there would never be an occasion where we would give tours of the facility.

If there was a request, we might do something with a video and put it up on the website, because I'm sure some people are interested to see tablet presses and the type of equipment that might be used. That might be a solution. I don't blame you for wanting to know more about the Company, but that might be a way around this issue of security

I think that would be beneficial

All right. I'll make a note of it. Thank you

Thank you

Our last question comes from Michael Anthony, private investor.

My question is, you say on the news wire you all have some new medications coming out on the market. I have another question or two, but how is that going to add to your revenue?

We believe there's at least two applications that are very shortly going to be approved. I don't have a number off the top of my head as to what our projections are. I'd have to check with sales on that. Again, until we get the product approved, we really don't do that last-minute estimation until we relook at the market, see if there's been any change in the marketplace, and then give the production department our estimations and forecasts for production and for sales to accounting. But we do expect two approvals of 19 that are at the agency. That's in addition to the Morphine Sulfate we spoke about. So, that would be three approvals. It's possible we could have a fourth before our fiscal year ends June 30.

Each one of those, we are ready to launch them. They should be able to be incremental increases in sales and profits for us. Some of them we do believe are going to be -- the margins are good on them. That would be the way in would help us overall.

Not getting the approves hurts us, because we're trying to squeeze more juice out of a grape that's already been squeezed

I'm also disabled and I know about generic drugs. I know they are a lot cheaper and that's what Medicare actually wants you to get on the Medicare Advantage plan, which are a lot cheaper. And I know that's what you all are in, is generics. Like you said earlier, a lot of companies can't compete with you because you are a generic drug company. That's correct right?

That's correct . Even the generic drug companies are competitive to each other.

They are very few and far between, isn't it?

No. The competition within the generic industry is extremely fierce. I know if you're a brand company, you're not happy when a generic company introduces a generic to your product, because of the profit margins that they suffer losses on, and I understand their dilemma. But within the generic industry itself, we're a commodity. We're not [unlike] gasoline. You're not going to pay one company more than you're going to pay another for something that you believe is the same. Unfortunately, everybody believes all generics are the same. Sometimes they are not because there are a quality companies out there, and companies that don't pay attention to quality, as we all know, within the generic field. Also within the brand field.

But it's a commodity business. Our problem is to always remain as efficient as we can an d economical as we can in the way we produce product, keep our places lean with the overhead control. And that's what we try to do at Lannett

We have no further questions at this time. Mr. Bedrosian, would you like to make any closing remarks?

I would like to thank everybody who joined us today and participated, and especially those that asked some questions. We do appreciate the questions. And again, thanks, everyone, for their time

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may all disconnect.