Lannett Company Inc (LCI) 2012 Q4 法說會逐字稿

Welcome to the Lannett 2012, fourth quarter and full year financial results conferences call. My name is John and I will be your operator for today's call. At this time all participants are in listen only mode. Later we will conduct a question and answer session. I will now turn the call over to Mr. Roger Pondel. Mr. Pondel, you may begin.

Thanks so much, John, and good afternoon everyone and thank you for joining us to discuss Lannett Company's fiscal 2012 fourth quarter and full year financial results. On the call today are Arthur Bedrosian, President and CEO, and Marty Galvan, the Company's Chief Financial Officer. Please be advised that this call is being broadcast live on the internet at www.lannett.com. A playback 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 will include forward-looking information reflecting Management's current forecast of certain aspects of the Company's future and actual results could differ materially from those stated or implied. This afternoon, Arthur will review the Company's business highlights and Marty will discuss the financial results for the quarter and year in more details followed by Arthur's concluding remarks. We will then open the call to questions. So with that said, let me now turn the call over to Arthur.

Thank you and good afternoon everyone. Looking at our fiscal 2012 full year results, you will see that we met our expectations and delivered on our promise to get the Company back on track after a challenging fiscal 2011. The growth of our top and bottom line in fiscal 2012 was largely due to improved sales of certain key products in our base business as well as the eight product approvals we received. Included in these approvals were seven ANDAs and one supplemental ANDA. By contrast due to a backlog at the FDA in the prior fiscal year, we received only two ANDA approvals and one new drug application approval. The launch of these products positively enhanced our manufacturing efficiency and helped increase our gross margin to 32% of net sales from 22% for fiscal 2011.

During the past year, we made changes to our board of directors and management team, adding seasoned professionals with relevant industry experience to help guide the Company toward the future. We were more aggressive on the investor relations front. Over the past year, we met with and made presentations to the professional investment community at a number of prestigious healthcare investor conferences. You may be interested to know that later this month on September 19, we intend to present at the 2012 UBS Global Life Sciences Conference in New York.

As I mentioned on previous conference calls, we continue to work with appropriate government officials in an effort to rectify or at least mitigate the impact on Lannett of costs related to the Patient Protection and Affordable Care Act, or PPACA. This relatively new legislation requires pharmaceutical companies to rebate a portion of the cost of branded prescription drugs for Medicare Part D beneficiaries. We believe the PPACA has been inappropriately applied to our levothyroxine product, which was approved as a new drug but is marketed as a generic. Accordingly, we contend that our levothyroxine product is outside the spirit and intention of PPACA. Until the situation is resolved, we will continue to record and accrue this charge which was approximately $450,000 for the fiscal 2012 fourth quarter and $1.8 million for the fiscal year.

With that brief introduction, I'd like to turn the call over to Marty for an overview of our financial results. Marty?

Thank you, Arthur, and good afternoon everyone. For the fiscal 2012 fourth quarter, net sales rose 40% to $35.7 million from $25.5 million in the fiscal 2011 fourth quarter. By category, net sales were thyroid deficiency, $14.1 million; cardiovascular, $6.6 million; pain management, $6.3 million; gallstone, $1.7 million; obesity, $1.2 million; migraine, $1.4 million; antibiotic, $1.9 million. Gross profit more than tripled to $12 million from $3.8 million for fiscal 2011 fourth quarter. As a percent of net sales, gross margin was 34% compared with 15% for the fiscal fourth quarter of last year. The higher gross profit percentage was due to favorable mix -- sales mix that is, price increases and enhanced manufacturing efficiencies.

Research and development expenses rose to $4 million from $3 million in last year's fourth quarter primarily reflecting our increase investment in new product development. SG&A was $5.4 million compared with $4.2 million for the same quarter of last year. The increase was primarily due to our investment in the C-Topical test marketing program as well as performance incentives in 2012 which were not earned in the prior year. Operating income was $2.6 million versus an operating loss of $3.4 million for the comparable quarter last year. And lastly for the quarter, net income attributable to Lannett was $1.4 million, or $0.05 per diluted share, compared to a net loss attributable to Lannett of $1.9 million, or $0.07 per share, for last year's fiscal fourth quarter.

Comparing full year of fiscal 2012 with fiscal 2011, net sales rose 15% to $123 million from $106.8 million. Gross profit increased 67% to $38.9 million from $23.3 million. And as Arthur mentioned, gross profit percentage improved to 32% of net sales from 22%. Operating income was $6.9 million versus an operating loss of $1.2 million. Net income attributable to Lannett was $3.9 million or $0.14 per diluted share compared to a net loss attributable to Lannett of $277,000, or $0.01 per share. Now turning to the balance sheet, as of June 30, 2012, cash, cash equivalents, investment -- and investment securities were approximately $29.2 million. I am pleased to report that our free cash flow in the fourth quarter was the strongest quarter this year.

Turning to our outlook for fiscal 2013, in the coming year we expect our top-line and gross margin to increase over fiscal 2012 levels. We expect to make a major investment in drug development, having identified several product candidates with significant market potential. Our outlook for fiscal 2013 also takes into consideration the FDA's new generic drug user fees, otherwise known as GDUFA fees. As a result, we currently anticipate our fiscal -- earnings -- our earnings for fiscal 2013 to be steady and comparable to fiscal 2012. Regarding our quarters in fiscal 2013, earnings are not evenly distributed due to the timing of our C-Topical clinical trial and vial studies. We expect EPS in Q2 and Q3 to be lower than in Q1 and Q4.

More specifically, for fiscal 2013, we anticipate full year net sales of $132 million to $136 million, full year gross margin as a percent of net sales to increase in the neighborhood of 3 percentage points over fiscal 2012's actual gross margin percentage of 31.7%. With respect to operating expenses, we expect full year R&D expense to be in the range of $18 million to $20 million and SG&A expense to be in the range of $21 million to $23 million. Finally, we expect capital expenditures to be approximately $10 million to $12 million. And with that brief financial overview, I'll now turn the call back over to Arthur. Arthur?

Thank you, Marty. Overall, we are very pleased with our financial performance in fiscal 2012. We also delivered on our promise of significant improvement to our financial results in the second half of our fiscal year. Looking ahead, we believe we'll see continued top line and gross margin improvement. We have a strong line of products in development being prepared for submission or already at the FDA, which includes approximately 40 in various stages of development and an additional 14 product applications pending at the FDA. As Marty said, we intend to invest heavily in the Company's future by ramping up our product development efforts.

For the coming fiscal year, we have increased our R&D budget by $6 million to $8 million. The major portion of that increase is earmarked for clinical trials related to our C-Topical branded drug strategy for which we are utilizing a 505(b)(2) to gain FDA approval. We expect the C-Topical clinical trial to be completed and to file a related new drug application by the end of fiscal year 2013. We have engaged the marketing partner to test market C-Topical in certain geographies around the country. The firm has begun detailing the product using a dedicated sales force. In the fiscal year just ended, we invested approximately $1 million toward the marketing effort and have earmarked a significant amount in fiscal 2013 for the clinical testing. We signed a contract for the clinical testing utilizing our own API and expect those results in due course. We are on track and on budget with the marketing effort and expect to see initial results beginning in the second quarter of fiscal 2013. We believe our R&D investments will pay off handsomely in terms of expanding our product portfolio with the kinds of products from which we expect higher revenues and higher margins than we typically enjoy.

Let me highlight another one of our product opportunities. We completed developing the chemotherapeutic drug, thalidomide, a generic version of THALOMID, which according to IMS has annual brand sales of approximately $277 million. Our bioequivalency studies began this week and it is still looking like a first-to-file candidate. Needless to say, product candidates that are first-to-file often generate significant sales and carry higher margins.

We continue to grow our pain management franchise in which we seek to demand a major presence in the multi billion dollar market. According to trade sources, the potential market for pain management drugs ranges from $15 billion to $35 billion globally. The controlled substance market alone represents a substantial opportunity for our Company. Our plan is to become a one stop shop for all controlled substance dosage forms. Over time, we believe we can capture a significant share of the finished dosage market and be vertically integrated on those APIs as well. Cody Labs is focusing on developing all controlled substance APIs for all finished dosage forms that are currently being marketed or that are in phase 3 studies in the United States. We recently passed the DA inspection of our three facilities in Philadelphia and we enjoy a good reputation for compliance. We are optimistic that our financial and operational momentum will continue.

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

Thank you.

(Operator Instructions)

Our first question comes from Scott Henry from Roth Capital.

Thank you and good afternoon. I guess just for starters, Marty, you know, I didn't get all of the product segment. I missed a couple of those. Do you mind just running through that quickly one more time?

Sure, Scott, no problem. Let me grab my note here. Thyroid deficiency is $14.1 million. These are all dollars, of course. Cardiovascular is $6.6 million. Pain management, $6.3 million. Gallstone, $1.7 million. Obesity, $1.2 million. Migraine, $1.4 million. Antibiotic, $1.9 million.

Okay. Great.

Okay?

Now shifting gears, I appreciate the detailed guidance. The revenue total number looks very good at $132 million to $136 million. Could you comment on where you expect the growth to come from in 2013? What should be the biggest growth drivers?

Probably the Levothyroxine Sodium that we continue to grab market share away from the Synthroid brand product and as a result our market has continued to grow every year and we expect growth there in particular. We also expect to see some growth in some of the new ANDA as we just got approved. We are projecting some sales growth there because we'll have one of those ANDAs for the full year where we only received six months of benefit from it previously. That drug was approved back in December as I recall. And then certainly the pain management products, we expect to see some significant growth.

Okay. And when I put in the prescriptions for a lot of these generic products, I notice in the Digoxin market it looks like Westward is fading. At one point that was 25% of the Digoxin market, now it's 5%. Anything going on there that you're aware of?

Yes. If you recall they've been under our -- an FDA warning letter. And they had an issue of -- I call them obese tablets. They're actually double punched tablets so that the amount of active ingredient in each tablet is greater than the label claim. And as a result, they have really been off the market for a while with the Digoxin product. And of course we benefited to some degree from that withdraw. They didn't actually withdraw the product but they stopped manufacturing and supplying the product.

Okay. Now shifting gears, $18 million to $20 million in R&D investment -- can you quantify how much of that is C-Topical?

Yes. Approximately $5 million of that will be the C-Topical clinical study.

Okay. So we should probably -- when that goes off the books in 2013, we would expect that R&D to come down in the following year? I mean barring something new coming out?

That's correct.

Okay. Thanks. That's helpful. And then just with regards to the pipeline -- Dioxide -- I know that was expected to be kind of a $10 million to $15 million product down the road or -- how is that doing basically?

It's doing very well, actually. That's the one I was alluding to will be part of the growth for this year. We only had it for six months in the last fiscal year and now we're going to enjoy that product for the whole year. We were anticipating some competition returning to the market, but that seems to have been delayed. The prices are still holding up and we are getting some very good business on that product right now. We are anticipating holding that for the year, but of course we're in a generic market place and you never know when the competition will come in. But right now, we are enjoying increased sales.

Okay. And then just with regards to what I look at as kind of the big four pipeline products. I thought you said -- so the C-Topical NDA should be filed by the end of fiscal year 2013, correct?

That's correct -- before the fiscal year ends.

Okay. And then I believe you were going to start selling -- were you going to start marketing the non-approved cocaine topical in fiscal year Q4 2012 -- or right around now? How is that progressing?

That's -- we have been selling that product but we have actually now started selling it as a branded product. So we are literally detailing doctors. The beauty of that particular product is there is nobody detailing anything against that product. Currently, doctors use a combination of generic lidocaine and generic epinephrine and they combined the two in an injectable form. The product is then injected in the patient and then they have to wait 30 minutes for the on set.

In the case of topical cocaine, they're able to get quick on set and they get the same benefit -- same analgesia benefit. And of course the side effect of cocaine topical is vasoconstriction. So they get the added benefit of that product as well -- that effect, I should say. As a result the doctors have been very receptive to the product and we have been getting some very good results with regards to the acknowledgment of the medical community that this is a product that's needed in the market place. And of course, we have been getting a lot of cooperation from the FDA with regards to our filing and the protocols and the approvals of those protocols. So all of that is in the works. An agreement's been signed with the clinical laboratory already and they have already started recruiting patients for the clinical studies. So we are comfortable that this product will have a successful clinical outcome and we also feel that the marketing effort will be successful as well. But again, we won't know that until the test market's over in December.

Okay. And then the [Solidamide] -- when do you expect to file that product?

Right now, it's looking like probably by Christmas time we'll have filed that application. The bio study's just been started, literally this week.

Okay.

We expect to file sometime by Christmas, I'd say.

Okay. So it would launch probably in first half of 2014?

Yes.

Okay. And the final question, the Phentermine resin -- when do you expect to start selling that product?

Well, that's been delayed. The -- unfortunately the company that supplied the resin no longer will supply GMP resin. They offered us non GMP resin. It's a technical -- a technicality food grade, for example. Nevertheless, when we decided we were able to use that material, because the process is really almost considered an intermediate step, they decided not to sell that product. We then went to another firm. They have offered the material to us. Then they've changed their mind. We finally found a third company and we have been testing their product. So we have had a bit of a setback in getting the resin from the resin supplier. Currently, that's being tested and evaluated. So there is no deadline I can give you right now. But there are some interested parties in that product right at the moment. But it's going to be at least a year off.

Okay. Great. Thank you for taking my questions.

Okay. Thank you.

Laura Engel from Stonegate Securities.

Good afternoon. Thank you for taking my question. As far as the last quarter and just recent releases, we haven't seen a lot of new product approvals. Do you feel like there is anything as far as FDA, bottleneck or any issues coming back around? Or is it just simply timing of the specific filings and you feel that it's in the near term?

I think it's just FDA delay. Remember they're really tied up now with this GDUFA. They have to determine what the fees are. And they do get a fee for the backlogs. So I don't think they were incentivized to actually push any approvals through for anybody because the more approvals they sent out, the less incentives they got or less payment.

No, we don't see any problems. It's really just a backlog. And we do expect some approvals momentarily. There are a couple that are literally within the next few months, I would say, approvable. But they're certainly going to come in after the GDUFA fee goes into effect in October. So next month we'll pay a backlog fee and then any new filings, of course, we'll have the supplement application fee and a separate fee for ANDAs and we expect approvals. You know, there is probably about four pending approvals too that I would say are close to the next few months. The other two may be a few months after. As we mentioned previously, three of our applications are being held up because the supplier of the two ophthalmic products, for example, and one of the injectables is Wintac in India. They received a warning letter and they've been resolving that warning letter with the FDA. But for that warning letter, those applications would have been approved. So unfortunately we have to wait for the FDA problems to get cleared up.

Okay. And then you referenced also improved manufacturing efficiencies, I guess. Could you give me a little bit of detail on that and then also an update on Cody?

Yes, Laura. Hi, this is Marty. So on the manufacturing efficiencies, a good deal of that is the extent to which our volumes have been increasing significantly both at Cody and at the Philadelphia site. So just in terms of the fixed overheads, we have been able to absorb a lot of our overhead now with the increased volume, particularly when you compare it to last year's volumes where sales were down so much. In addition to that, there is the usual tightening -- upper tightening of the purse strings if you will and controlling expenses throughout the manufacturing organization. I don't know, Arthur, if you want to comment on Cody?

No. That really covers Cody as well. You know, Cody is always more susceptible to the delays of quota. So it's always more difficult to discuss what Cody's benefits will be because sometimes they lose months waiting for quotas to be approved and it's a little more difficult for them to manage their business than it is for us on the dosage side.

Right. But as far as the quota currently, you are fine and you have what you need for the API to progress?

Yes. For now we are, but we still have some pressing applications for additional quota that are before the agency that we haven't been made aware what the responses will be yet. So there are still some things outstanding. And we certainly could never have enough quota, quite frankly.

Right. Okay. And then lastly, related to the PPACA legislation on the rebates, have you all heard of anyone else that is in a similar boat or is having any issues that -- they've had any success at -- I guess getting a favorable determination on this and what might the timing be on that? I guess you said there was about $1.8 million reported for the year. What might the timing be on something like that?

Well we do have disputes filed with CMS on the prior filings and the payments that we made to them and trying to recover that money. And going forward, this issue seems to be one that's going to have to be dealt with legislatively. Nevertheless, we are meeting with CMS. And we are engaging Washington council with our lobbying efforts because we believe that CMS may realize that Levothyroxine is a generic and remove it from the part D. If they refuse, then we'll have to go the legislative route. But we are working on it. We don't expect that to be resolved for another six months in terms of any legislative or CMS activity. With regards to disputes, those should be resolved in the next couple months one way or another. We are waiting for access to audit the findings down at their facility.

Okay. Well, I appreciate the detail and especially the guidance.

One other thing. You said there are other companies impacted by it. All the authorized generics are impacted by this as well because all of those products are considered brands because they have new drug applications filed. So they're a little bit unhappy about this dilemma as well.

Right. Okay. Great. Well, thank you. I appreciate it.

You're welcome.

Chris Holterhoff from Oppenheimer & Company.

Good afternoon, guys. Thanks for taking my question. You mentioned part of the reason for the increase in gross margin this quarter was just related to price increase. So I am just wondering what the major products were that you took price increases on? And kind of how you're thinking about having any additional room for price increases in the future?

First of all, I'll point out, Chris, that we call it price increase but in the spirit it is probably more so just a mix of customers kind of point where being generics -- as you know -- it is not where we necessarily can increase our prices. And often it is just a channel matter -- distribution of where the product is going -- which customers. We have seen some price increase in certain categories. Pain, we saw some. We don't get too specific, as you know. But we did see some price increase there.

For example on the C-Topical, because of the cost of the detailing program and converting the product to a brand, you can't continue to sell something at generic prices when you are detailing doctors. If we don't detail the doctors, we can't expand that market place and, clearly, the market for that product has been projected to be rather large in the $58 million to $111 million range. We were doing roughly $18 million with the product. So in anticipation of the cost to market that product in a branded way, we have begun raising prices on that product as well.

Got it. Okay. Thanks. And then as far as your 2013 revenue guidance, I am just wondering what is implied there in terms of your expectations for new product launches? Maybe, you know, just the number of product launches and sort of the magnitude of the difference between revenue this year -- fiscal year 2013 and fiscal year 2012. That would be helpful.

Yes, Chris. I'll answer that. I'll say that in our planning for 2013, the impact of any new products is very limited. As it works out, we do have the effect, as Arthur mentioned, of the dioxide or generic (inaudible). We do have an increase there because they have a full year effect. That's one of our larger increases on a year-on-year comparison. But yes, in terms of new products it's very -- it's limited. It's under $1 million of new products. We try to be conservative there, just never being sure obviously.

Sure. Fair enough. Okay. Thanks. And then just lastly, on the C-Topical program, I know you mentioned you are selling your branded version of that. I think, if I am correct, you have about three to four reps currently selling that. I know you were looking at possibly adding some more, maybe up to 15 or so. I guess I am just wondering, are you really waiting for the results of that marketing study that's out there or could you possibly increase those number of reps by maybe the end of this calendar year?

I will answer that, Chris. The plan was that in December we would evaluate the test market results for the six months. And then if they've been successful, the plan was to begin hiring an additional 16 sales people. We believe we needed 20 total to cover the United States because this drug is used in the hospital setting or surgery centers, emergency rooms. So it's not like we have to call on GPs or internists. And as a result 20 should cover the main hospital groups across the country.

And we won't hire them, of course, day one because recruiting these people is going to take some time. And we are trying to recruit only those experienced reps in the pain management field that already know some of the requirements for detailing a product like this. So you are not going to see a big jump in January. But in January, we'll certainly begin hiring people because we do think this product's going to be successful. So far the very early indications are that the response from the physician market is very overwhelmingly positive. And as a result, we expect that we'll see those results show up in sales.

Okay. Well, thanks a lot there for the added color and congratulations on a good fourth fiscal quarter.

Thank you.

Thank you.

Greg Hillman from First Wilshire Securities.

Good morning, gentlemen. Also congratulations on the progress you are making at the Company. Arthur, first of all, for the C-Topical filing at the middle of next year, will that get expedited approval with FDA or will that be just normal?

It's a PDUFA filing so it will get expedited. We are expecting maybe 7, 8 months outside 11 for approval.

Okay. That's great. And then in terms of coming up with different forms of narcotics such as liquids or nasal spray, can you just tell me what progress you are making there in terms of getting narcotics in different administration forms and how you are doing in liquids in general?

We're doing very well. We actually have been talking to a couple of brand companies on that hydromorphone nasal delivery product. We are moving and we have actually successfully completed a bio study for one of the nasal products that we'll be filing shortly. So that end of the business is doing extremely well. We've gone into some new dosage forms, nasal just being one of them. And we have been successful in taking on these new areas, new dosage forms heretofore new to Lannett anyway. And as a result we expect to do a lot more with it.

We are partnering with people because we can develop more nasal products in the brand area than we would be capable of manufacturing and marketing ourselves because we are not a real brand company. So as we're gradually getting into the branded market, some of these drugs -- the opportunities are too big for us to take on, let's say. In other words, if I were to launch the hydromorphone nasal I probably couldn't do as good of a job as if one of the larger [DMA] companies -- the pharmaceutical brand companies were to take on. So we are in negotiations with one of them now that have expressed an interest in these products. And we'll probably announce shortly whether we're going to do anything with one of them in a joint venture where we will be the API supplier in terms of Cody's raw material. And our colleague that makes nasal deliveries exclusively for us will be the manufacturing site for the products. And then of course the joint venture partner will do the marketing. So we're looking at partnering with people that can benefit Cody and benefit Lannett even though Lannett won't be the actual marketer of that product.

So presently these are people that have trouble swallowing that can use the nasal.

That's one reason. Also it uses smaller molecules so there's less side effects. And it's -- in the case of the hydromorphone, the initial work they did, there was a quicker on set with nasal than injectable version of that same product. So that there seems to be multiple benefits here. Plus the main benefit -- it's an abuse to time product because within the device you are only getting 1/10 of 1 ML of the liquid. So there's no incentive to break the product apart to try to capture the 1/10 of 1 ML to abuse the drug. So there is no abuse with these devices either.

Oh, that's pretty neat. And you would be the -- one of the first to market? Is there a nasal one on the market now?

Not for the pain management. There is, as you know, a fentanyl nasal delivery and there's other forms of delivery of migraine products delivered by nasal. The hydromorphone, that would be the first product in nasal delivery.

Okay. Great. And then just one final question for Marty. You know, you said the GAAP EPS would be back loaded to the last two quarters -- the next fiscal year we are in now. Is that correct? And so that would mean like the first two quarters would be like zero basically?

No, Greg, I think -- just to clarify -- what we are saying was that the -- first of all the quarters aren't even. So what happens -- and what we said was that the second and the third quarter actually are down from an EPS perspective. And it is primarily related to the phasing of the expense for the C-Topical trial. So as you look at the quarters, the first quarter is -- from an EPS perspective, is almost similar to the quarter we are just finishing now, the fourth quarter. Then there's a dip in the second and third. But then the fourth quarter, EPS is -- we think -- we expect it to be back up again due to the timing of some of our R&D related expenses such as bio studies and outside developing work we have planned.

Okay. So basically a lot of the earnings -- or the GAAP earnings would occur in the fourth quarter then of next year -- I mean the lion share.

It's more evenly distributed between the first and the fourth.

Between the first and the fourth. Okay. Thanks very much. And then just -- well, the biggest wild card for the Company is still just disapprovals? Is that correct, more or less?

Unfortunately, yes. On an immediate basis, that's the wild card. On a long term basis, the more we vertically integrate with Cody's supply us raw material, the higher profit margins we enjoy. So we continue to push Cody to make more API for us so we can file more applications. And then the profits just roll in after that. Because the market -- you know we've proven we can certainly capture market share. We have proven we have good regulatory compliance. So the typical problems that affect other people we don't have. Once these products start getting approved, it's a fait accompli that we'll be a very profitable Company on these vertically integrated products.

So really, if one was thinking about (inaudible), Marty, one should really take out R&D because that's really an investment -- or the R&D spent on the topical to get more of a normalized earnings.

Well certainly, yes. I think on one of the earlier call and one of the earlier questions was more about would we expect to see earnings go back up after that spend is over for the trial. And it's, yes, on that same vein. It's a nonrecurring expense.

Okay. That's great. And then it's really high. It's almost certain that the thing is going to pass the trial because you've had such good experience already with the product.

Yes, absolutely.

Okay. Thanks, guys.

Thank you.

Take care. Thank you.

(Operator Instructions)

We have no further questions at this time. Do you have any closing remarks?

I'd like to thank you all for joining us today. If anyone has any further questions, please do not hesitate to contact the investor relations team at Lannett. That concludes our call and thanks again for joining us today.

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