Ligand Pharmaceuticals Inc (LGND) 2016 Q3 法說會逐字稿

Greetings and welcome to the Ligand Pharmaceuticals quarterly earnings conference call. At this time all participants are in a listen-only mode. A brief Q&A session will follow the formal presentation. (Operator Instructions). As a reminder this conference is being recorded. I would now like to turn the conference over to Todd Pettingill, Associate Director of Corporate Development and Investor Relations. Thank you. Please begin.

Welcome to Ligand's third quarter of 2016 financial results and business update conference call. Speaking today for Ligand are John Higgins CEO, Matt Foehr, President and COO and Matt Korenberg, CFO. As a reminder, today's call will contain forward-looking statements within the meaning of Federal Securities Laws. These may include but are not limited to statements regarding intent, belief or current expectations of the Company and its management regarding its internal and partner programs. These statement involve risks and uncertainties and actual events or results may differ materially from the projections described in today's press release and this conference call.

Additional information concerning risk factors and other matters concerning Ligand can be found in Ligand's earnings press release and public periodic filings with the Securities and Exchange Commission which are available at www.SEC.gov. The information on this conference call related to projections or other forward-looking statements represent the Company's best judgment based on information available and reviewed by the Company as of today, November 3, 2016 and do not necessarily represent the view of any other party. Ligand undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

At this time I will turn the call over to John Higgins.

Thank you. Good afternoon, welcome and thanks for joining us on our third quarter 2016 earnings call. Ligand posted strong growth in revenue driven by record third quarter royalties of $15.7 million. That's up 61% over the second quarter. We have had a productive last few months in our new licenses and further expanding the portfolio, and there have been important developments for some of our late stage partnered assets.

Of note, Promacta and Kyprolis again achieved all-time high revenues in the third quarter which will drive our royalties for the fourth quarter. Novartis announced Promacta Q3 revenues of $168 million. That is up from $117 million in Q3 last year, and up from $158 million last quarter. This is the highest quarterly sales ever and on their quarterly earnings call slides Novartis highlighted Promacta as one of 7 of its strongest performing global growth products and as a key growth driver of their innovative medicines division.

Now another product I will add some comments about is Kyprolis. And investors who follow us know Kyprolis is Amgen drug that uses Captisol in its formulation. We have a license agreement with Amgen but are not involved in the commercialization or development of the drug.

Kyprolis posted sales of $183 million in the third quarter. That is up from $172 million last quarter. Ligand earns royalties on Kyprolis sales.

Amgen's executives on their earnings call last week noted Kyprolis' sales increase was driven by higher unit demand. And specifically mentioned that they think Kyprolis within the dynamic field of multiple myeloma as "the superior proteasome inhibitor for relapsed multiple myeloma patients". It was also highlighted on that call that early launch results in Europe are seen as encouraging. In late September Amgen reported the Phase III CLARION trial did not meet its primary end point. The trial results are disappointing but on their earnings call last week Amgen commented, and I quote, "we are committed to advancing Kyprolis in a first line therapy."

And Amgen mentioned study designs being finalized that are to do just that. Now (inaudible) EVOMELA partnered with Spectrum Pharmaceuticals. Spectrum launched EVOMELA in Q2 of this year and reported partial quarter sales in that quarter of just under $1 million. Today Spectrum reported $5.9 million in Q3 revenues for EVOMELA significantly higher than our expectations coming off of Q2. In our view that puts the product on track to potentially do more than $13 million in a partial year of sales in 2016.

This product is an important new innovative medicine with an improved stability and safety profile and an appropriate label. Of note, Ligand earns a 20% royalty on EVOMELA sales. Ligand has enjoyed a few years of strong growth in both profits and cash flow and we are pleased with the financial performance of the business, with the expansion of the portfolio and with the positive pipeline developments reported by many of our partners.

As Matt Korenberg will discuss we forecast 2016 revenues coming in lighter through the end of the year then earlier planned due to lower Captisol orders. We have consistently commented that Captisol orders are lumpy in timing and are in some part tied to clinical and regulatory events that are visible to us but beyond our control. Our goal is to be as transparent as possible with investors. Given the recent developments related to clinical events, drug filings and time for approvals for some programs we see the business coming in a bit lower this year for Captisol.

And at the same time we do see the overall business as solid and becoming more diversified in its financial contributors. Now, (inaudible) our business model and the market environment we are in at this time. Ligand is a company focused on two main things. First, we're focused on discovery of new drugs and technologies to help make new medicines possible through partnerships. And, second, we look to acquire companies, assets and technologies to expand our portfolio with programs from which we can generate potential royalties.

In terms of our discovery work our goal is to participate in the industry by innovating. By discovering new medicines and utilizing drug technologies that improve health, extend people's lives, improve drug safety, lower the cost of manufactured drugs and possibly even lower the cost of care by improving outcomes. We are proud of our innovation record and our growing list of over 90 partners in the industry is a testament to our ability to add significant value to discovery and technology. Now, in terms of our acquisition work we are continually evaluating opportunities. As we all know markets move in cycles.

We do not need to acquire to grow the business. But when we see significant market dislocation and markets that view attractive unfavorably as we did several years ago when we acquired three distressed public biotech companies, or when we see companies with strong technology platforms that we can leverage and grow faster such as CyDex and OMT we will work to complete deals. Of note, our acquisitions have brought to Ligand royalties or rights to products such as Kyprolis, EVOMELA and carnexiv and some recently approved or soon-to-be filed biosimilars. In development stage drugs such as our (inaudible) diabetes program Retrophin, Sparsentan and Merck's base program for Alzheimer's disease, to name just a few, all came to Ligand from our acquisitions.

We are in a market cycle once again where values have come down and we are seeing attractive valuations for some companies and assets. We will continue to evaluate new acquisition opportunities while staying true to our discipline on valuation and business strategy. Ligand has a strong balance sheet and robust cash flow and over the past several weeks we have done some share repurchases of Ligand stock.

Now, in summary we anticipate numerous substantial partner events happening over the next three to six months and we are now tentatively targeting hosting an Analyst Day event in February or March of next year. Over the past few years we have hosted these events in the November time period, but looking forward several months we anticipate we will have more to report on early next year. We are presenting at the Stevens Healthcare conference next week on November 9th in New York City.

I will now turn the call over to Matt Foehr.

Thanks, John. I'm going to start off this afternoon reviewing some additional developments with our partner programs. I'll also provide updates on our licensing activities and the progress of our Phase II diabetes program. I will begin with some recent partner program developments. Our Captisol technology has seen some significant late-stage events recently. I know Lundbeck's US approval of carnexiv, which is a Captisol enabled intravenous form of carbamazepine for short-term replacement therapy for seizures. This approval came in early October so the $1.25 million milestone associated with the approval will be in our fourth quarter results.

We are now set to receive a 2.75% royalty on net sales following Lundbeck's expected launch of Carnexiv early next year. It's worth noting that Carnexiv's approval expands the regulatory safety database for Captisol given that it further raises the per unit per therapy dosing of Captisol used in the US approved product. This can become important for current and future partners as they incorporate Captisol into their programs.

In addition to the long patent coverage through 2033 and the validated GMP and multi metric ton scale of manufacturing at multiple manufacturing sites the expanded safety database for Captisol continues to be a significant value driver for partners and is a key element when speaking with potential new partners who may require higher concentrations of Captisol to solubilize their active ingredients.

In late October our partners at Melinta Therapeutics announced submission of their NDA for Captisol-enabled Delafloxacin-IV for treating patients with acute bacterial skin and skin structure infections. This NDA submission follows Melinta's announcement of positive Phase III data for the program in early 2015. Given the drug's qualified infectious disease product designation Melinta has indicated that they could receive a regulatory decision for Captisol-enabled Delafloxacin-IV by the middle of next year.

Switching gears now to Sparsentan. In early September Retrophin announced positive top-line results from their DUET trial which tested Sparsentan patients with focal segmental glomerulosclerosis, or FSGS. In that Phase II trial the combined Sparsentan treatment group experienced a reduction in proteinuria of more than 44%. Which was more than double the reduction of irbesartan achieving statistical significance in the trial's primary end point. We look forward to further updates from Retrophin as they progress development and to their upcoming presentations at kidney week in Chicago the week after next. Sparsentan is a drug for which Ligand could earn a 9% royalty on future net sales.

I'll also mention a couple of other assets briefly. One's that may not be as visible to investors currently. Our current partner Aldeyra recently announced their updated plans for Captisol enabled ADX-102 which formerly was known as NS2. Those plans include Phase 2b and 3 trials in multiple opthalmology related indications.

Eli Lilly has recently presented data for prexasertib, or LY 2606368. This is a part of the platform Captisol agreement that we entered into with Eli Lilly in late 2011. And that's an agreement that's now yielded a number of programs in various stages of development. At the Annual Meeting last month data was presented demonstrating activity of prexasertib in patients with BRCA wild type sporadic high-grade ovarian cancer. Given the clinical resources Lilly is putting toward the program with nine trials currently recruiting patients this is one that we continue to watch closely.

We're looking forward to the upcoming American Society of Hematology Annual Meeting which will be held here in San Diego in the first week of December. We were pleased to see the abstracts for the ASH annual meeting posted this morning and note a number of Ligand partner drugs, or drugs that use our technologies will be the subject of data presentations including Novartis' Promacta, Amgen's Kyprolis, as well as (inaudible) and Vertex's VX-970.

In recent months we have disclosed multiple new OmniAb licenses. Including new licenses with Gilead, Epistar and Tineobio. We're very pleased with the current and potential new deal flow around OmniAb and we expect to continue to add more partners as others continue to understand the value that OmniAb brings to the efficient discovery of fully human therapeutic antibodies.

And I will conclude with a brief remark about our internal pipeline and specifically our Glucagon Receptor Antagonist, or GRA program. As planned we started our Phase II trial for LGD-6972 in Q3. Since the time of trial start-up engagement from investigators at our 30 clinical sites has been high and enrollment is progressing well. We continue to see ourselves as on track for the trial to yield data in the second half of next year. If the trial is successful, we plan to partner the program consistent with our business model.

And with that I'll turn the call over to Matt Korenberg to review the financials.

Thanks, Matt. I'll start today with a review of some of the financial highlights from our earnings release issued earlier today. Total revenues for the third quarter of 2016 were $21.6 million and include a royalty revenue of $15.7 million. The royalty revenue increase of 61% versus a year-ago period largely reflected higher Promacta and Kyprolis royalties in the addition of our CorMatrix royalty income.

Captisol material sales for Q3 were $4.2 million which was in line with our expectations and license fees and milestones for Q3 were $1.7 million which includes the revenue from the newly acquired OMT. I'll turn next to gross margins. Associated with our material sales. In the third quarter as expected mix was heavier on the commercial side and margins were a touch lower than the first half of 2016. We expect this to be the case for the remainder of 2016.

Related to cash expenses as Matt fore-mentioned our GRA trial is proceeding well and the related accelerated R&D cost for the trial will be in the expenses in Q4. At this time we're tracking towards $28 million for cash expenses for the year generally in line with our outlook. For the quarter we reported adjusted net income of $13.5 million, or $0.62 per diluted share.

We had GAAP net income of $.6 million or $0.03 per share. As mentioned in the press release we're evaluating the provision we booked for deferred tax assets in the third quarter of 2015. These changes will not impact our 2016 income statement. As background we closed the acquisitions for Metabase and Neurogen in 2009 and 2010. At the time the tax treatment regarding a certain portion of NOLs relating to capitalized R&D expenses were not limited by acquisition tax accounting.

After consideration we're evaluating approximately 10% of the $217 million deferred tax asset recorded in the third quarter of 2015. In the event we determine to revise these numbers the accounting presentation will not impact Ligand's right to pursue the additional tax benefits in the future, if appropriate. On the balance sheet we ended the quarter with approximately $124 million of cash and investments. With operating cash flow of over $18 million during the quarter we have now generated over $42 million for the nine months of 2016 driven by our growing royalties and other revenues combined with our stable low cost expense structure.

Next I'll comment on share repurchase. In September 2015 our Board of Directors authorized a share repurchase of up to $200 million for our common stock from time to time over a period of up to three years. During the past several weeks Ligand has repurchased 35,500 shares for an aggregate of $3.4 million given the macro environment and the confidence we have in our business we are pleased to have been able to repurchase these shares at this time.

As discussed in our earnings news release we are adjusting our full year 2016 guidance. Previously, we expected $115 million to $119 million of revenue. We now expect full year 2016 total revenues to be between $110 million and $114 million. This represents a 53% to 59% growth over the 2015 actual revenues. For adjusted earnings per diluted share we now expect to be between $3.37 and $3.44 per share as compared to the previously disclosed range of $3.41 to $3.46. This adjusted guidance implies $39 million to $43 million of revenue for Q4, and $1.29 to $1.36 for Q4 adjusted EPS. For 2017 we're maintaining our previously disclosed guidance of greater than $160 million of revenue and greater than $5.03 of adjusted EPS per share.

Adjusted earnings per diluted share guidance excludes stock-based compensation expense, non cash debt related costs, amortization related to acquisitions, changes in contingent liabilities, non cash net loses of Viking Therapeutics, fair value adjustments to Viking Therapeutics convertible note receivable and warrants, mark-to-market adjustment for amounts owed to licensor's, non cash tax benefit or expense on issued shares related to the senior convertible note and adjustments for discontinued operations net of non cash tax expense. With that, I'll turn the call back over to the Operator for questions.

(Operator Instructions). Our first question comes from the line of Matt Tiampo with Craig-Hallum. Please proceed.

Good afternoon, gentlemen. Maybe quickly we can start with Spectrum. We saw Spectrum's report of just under $6 million of EVOMELA but they've pushed out their call and it looks like they're doing-- they're looking at from the accounting around acquiring that program in the first place? Maybe if you could just provide us with some color, whatever you might have about their initial launch and whether or not there's any meaningful stocking orders in that $6 million? And then also, if you have any insight into what they're looking out on the accounting side, that would be helpful as well.

Yes. Matt this is Matt Foehr. I can comment qualitatively on the launch. Obviously we really value the partnership with Spectrum. It's been a great partnership. They've done good work getting the product approved and launched. We, because of our heritage with the product in having developed the formulation and done the initial clinical work negotiating the regulatory path and then starting the pivotal trial, obviously know many of the investigators and the key opinion leaders in the area.

The feedback we get both from them as well as from Spectrum has been very positive. I think the product seems to be very well received given the innovation that Captisol has brought to (inaudible) in terms of how it can be delivered in that setting. So, from our perspective things appear to be going well. It's still obviously early in the launch but we're excited about the product. I'll let Matt Korenberg comment on the accounting element.

Yes. We don't know the specifics of what's the accounting issues are at Spectrum related to the product, but the only thing we do know is that they have confirmed for us it doesn't have any impact on us, number one. And number two, they continue to pay us on time and deliver royalty reports on time and all that sort of stuff. So there's no issue from our standpoint.

Okay. Great. And then maybe if you can give us a little bit of color around the Captisol? I don't want to call it a push out, maybe, or-- Is that revenue that you think will be recouped in 2017? Or do you think maybe just-- how should we think about the lumpiness of the Captisol revenue in Q4?

Sure. Yes. Thanks, Matt, for the question. This is Matt Foer. Just in a general sense kind of two major parts of Captisol. As you know, the clinical orders as well as commercial orders, clinical generally has a higher gross margin. Commercial we enjoy for the most part we enjoy royalties as well as Captisol material itself. As we have said many times, Captisol is lumpy. A variety of things of going into production planning but also as we said, clinical and regulatory events can drive a Captisol material sale.

So for instance if a regulatory filing goes in slightly later than maybe a partner expected, that could impact when a partner might make scale-up and validation batches, for instance. Or if a trial reads out and indicates that more clinical work is going to be necessary, that can affect whether a label gets expanded or not and that can drive planning and ordering and things like that. While we have, I'll say, good visibility, very good visibility with our partners, we're in constant contact with our partners from a planning perspective and an ordering perspective. We obviously don't have control over when they need to take in the material, test it put it into their systems get it into their warehouses and manufacturing plants. So definitely some lumpiness there. We think it's largely a timing element.

Okay. So you would expect to see a good portion of that volume in 2017?

In general, yes.

Great. Maybe just, Matt, briefly it doesn't sounds like it but you still plan to file your Q on time despite looking back at that tax -- at the (inaudible)?

Yes.

Great. Thanks, guys.

Thank you. Our next question comes from the line of Joe Pantginis, with ROTH Capital Partners. Please proceed.

Hey, guys. Good afternoon. Thanks for taking the questions. Two questions regarding internal operations and then two that might be a little more speculative because they're your partner product. First internally, John, you emphasized today obviously part of your ongoing business strategy about always looking at acquisitions but the markets are taking a hit again. A lot of valuations have come in. Do you think there's any increase in the active nature in your "acquisition mode"?

Yes, Joe. Thanks for the question. The answer is yes. There's perhaps an increase in opportunities or the number of targets we're more actively evaluating. We have a got a really sharp team here that is continually looking at M&A ideas. And notably in January we closed a significant acquisition of ONT, but market values frankly were a lot more expensive 18 months ago. And now for in some cases, the same quality of assets the markets are looking unfavorably and valuations. We have seen values move down and that creates an opportunity. We are a very value conscious team. Targets need to fit in our business model, low cost structure, a chance to have partnerrable technologies, or IP, but also we're very value-conscious.

As I said, we do not need to acquire to grow this business financially. We have strong platforms we can continue to license, we have a discovery engine. So really the last year or so we have seen a very prodigious licensing record, but now in this environment we are more actively looking. Now, we don't telegraph deals, we don't guide to any deal expectations, but we will be opportunistic. And comparison now versus a few years ago obviously several years ago we saw a week financial markets for pharma and bio tech stocks. That was an era where we are not profitable or cash flow positive and frankly had a very limited balance sheet capacity. And now, frankly, the environment for purchasing is quite a bit different with a stronger balance sheet.

That's helpful. Thanks. And then you mentioned OMT as part of your answer so that's a good segue. With Captisol as an example you just need to manufacture more to be more simplistic about it. With OmniAb obviously it's much more in depth with regards to antibody development in the platforms. So right now you have about 15, I think or so, of signed deals with OmniAb. You're looking at potential more. Do you have currently, I guess, a cap or a capacity for that program?

Yes. I'll give a brief remark and ask Matt Foehr to add more color. The number is 22 is actually the number. We have done 7 or 8 deals this year since we have acquired OMT. So that portfolio continues to expand. There is definitely a difference with Captisol it's more of a formulation an (inaudible) based technology. And the development, or the formulation costs are fairly low. Our investment is on improving the IP even though how the safety database.

With OmniAb, though, it's still a fairly low cost structure. As you may know we have with our OmniAb platform three different species of genetically modified rodents that are the basis for antibody discovery and that's ultimately what we're licensing out. We are looking for deals where partners assume most of the research and development work. So we are able to enter those sort of turn-key deals with some up front payments and annual maintenance payments but really looking at back end milestones and royalties.

I'll just add on to that, Joe. As I said, we continue to see OmniAb as a key driver of new partnerships. There's a lot of interest in the platform and one of the other elements that I think is sometimes missed while John was mentioning that number of partnerships we have added, the number of programs and targets that are being tested by those partners is actually much higher than just the number much partnerships. So there's a lot of work going on, a lot of investment by these partners and the more we interact with them the more excited we become about the technology.

Thanks for that. So sorry for getting the number wrong. Like I said, it's very easy if you blink to miss a few of those. You guys are signing new deals so fast. But with regards to partner products I just wanted to focus on the women's health franchise for a second. And I mentioned this on the last call as well. Duavee Scripts tend to be pretty flat still over the last quarter or so and with that said, I know you maybe discuss this too much but wanted to see if also could get a quick update with your deal with Sermonix for lasofoxifene.

Yes. Good question, Joe. Thanks. Obviously Pfizer remains committed to Duavee, they have got a dedicated sales force to it and are continuing to promote it in a high call position. So we're cheering them on. We're noticing the same things you see on the scripts but also see this as a product that has a real important place in treatment of menopausal symptoms. Sermonix, it's great to bring it up. Earlier a private company not as visible to investors but they have had some successful financing events and have been aggressively pursuing regulatory paths. A lot of interaction with the FDA and we're cheering them on as well. There's probably more updates to come on that in terms of more precise timing, but that's what I can offer now.

That's helpful. And thank you for the patience. I mean my last question had to deal with and I guess it's the most speculative part with Sparsentan, obviously the DUET data outperformed the -- Retrophin did announce today in the press release that they're looking for their regulatory discussion to happen around January. So I was just wondering, and this is a speculative point, you know, the indications to this point have been around the possibility for this phase to be to represent a potential pivotal study. Do you have any comments supporting those notions?

Yes. Joe, obviously we saw Retrophin's update just came out little bit ago. Obviously, they have got a meeting planned for January with the FDA to figure out the most expeditious regulatory path for it. We were really pleased with the data when it came out in September. It was impressive data that looked very good. So we feel like Retrophin has a good package of data but really that's for them to comment on and update after they have their regulatory discussion.

Yes. And that's in January so we'll know more as the markets will. They do have more clinical data coming out later this month at a major medical conference. So obviously we're eager to see what is reported out at that event as well.

Absolutely. Thanks a lot, guys.

Joe, thank you.

Thank you. (Operator Instructions). Our next question comes from the line of Drew Jones with Stephens. Please proceed.

Hey, guys. This is Garrett on for Drew. How are you all doing?

Good, Garrett.

Just first a quick one kind of realizing you had kind of a slight reduction there for the 4Q versus expectations. How should we be thinking about I guess the pacing of 2017 and then kind of getting a feel of the royalty break down versus material sales and licensing revenue?

Yes. Hey Garrett. It's Matt. I think as we said, we reiterated the guidance for 2017. We still see it playing out that way. And nothing about sort of pacing or correlating timing really will change all that significantly. Royalties will still be booked on a quarter lag and as a result Q1 will have a very high royalty number based off of Q4 2016 sales. And then Q2 will reset and we'll increase through the balance of the year. We would still expect to see material sales as they will this year maybe not as exaggerated but as they will this year Q4 will still be bigger than any of the other quarters. And same thing for next year, Q4 will be likely bigger than Q1, Q2 and Q3. And then on the milestone side, that's harder to comment on specifically.

Okay. That's it. Thanks.

Thanks, Garrett.

Thank you. Our next question comes from the line of Eugene Fox with Cardinal Capital Management. Please proceed.

Congratulations, guys. Matt, you started to allude to it but can you comment about sort of the things that you have been able to accomplish with OMT since you have made the acquisition?

Yes. Yes. Thanks, Gene. Obviously we have added a number of new deals highlighted a deal with Gilead, with F-Star, with Tineobio. We did a deal earlier in the year with Emergent Biosystems and some others. So we continue to add on more partners. (inaudible) is another example of a company with a great cancer pedigree, a great pedigree of cancer researchers that also took a license from us for OmniAb. So we have been able to expand the partner base.

I also think we have spent a lot of time, much like we did with Captisol after we bought it in 2011 we have spent a lot of time on customer service. On interacting if you will with the partners making sure they're getting the support they need to increase their probabilities of developmental success. We see that as very important. We have invested substantially in the intellectual property and are seeing some meaningful expansion of the IP and also in next-generation animals as well that can expand what's called the antibiotic repertoire offered by (inaudible). So we have spent a lot of time and effort on that and continue to and plan to continue to.

So we see it as a real exciting technology. I will also add upcoming here in San Diego in December there's a big annual IBC antibody conference and at that meeting are actually getting all of our partners together as well as some prospective partners who have a lot of interest in the technology, as well as some of our service providers who service some of our partners either supplying the animals or doing certain testing. Getting all of them together for something of a partner showcase, if you will, at that conference. Really creating even more visibility for that targeted audience. Again, something similar to what we did with Captisol when we bought that as well really focusing on that market.

And we continue to see through these interactions the partner progress we expect we'll see some phase 1 trials start next year. And the more we interact with partners the better we're feeling about the work that they're doing.

Thanks. Next question I had is Novartis has been very successful growing the Promacta franchise. What do you all see on the horizon for additional uses for Promacta and where do they stand in terms of the clinical and regulatory structures?

Yes. Yes. Thanks, Gene. Obviously, Novartis is obviously best to comment on precise plans around the brands. It's approved now for three indications (inaudible) both in adults and children, and severe aplastic anemia as well as in boosting platelets in patients with hepatitis C. Just looking at the ash abstracts that came out this morning there's whatever 13, 15 abstracts or so if not a little more showing Promacta use in expanded settings in aplastic anemia as well as in a number of oncology indications. And so that's really probably where we'll see the next stage of data coming out for Promacta. In the mean time we have been very impressed with the work that Novartis has done expanding the global footprint and really growing the brand substantially since they took it over.

Last question for me. Any thoughts that you have on sort of the path towards first line use in the first line for Kyprolis in terms of where do we go beyond the CLARION study?

Yes. Gene, thanks. Obviously we don't control the development of Kyprolis it's Amgen's drug. They're best to really comment on that directly. They commented on that at their earnings call last week and reiterated hair their commitment to expansion of Kyprolis and getting it into more patients hands who need it. So I really would direct you to Amgen.

Okay. Thanks gentlemen. Nice job.

Thank you, Gene.

Thank you. We have reached the end of our Q&A session. I would now like to hand the floor back over to management for closing remarks.

Well, again, thank you for joining us. It's been a busy year and the next two months our outlook is full with a number of internal activities. Again, overall we're pleased with the business and how the portfolio is expanding. We have had substantial news flow from our partnered programs and look forward to not only continuing licensing to grow the portfolio through internal licensing but also as we discussed earlier to potentially taking advantage of the market environments. We appreciate your time on the call. Again, we will be at the Stephens conference next Wednesday and we will be meeting with investors later in the week as well. Thank you very much.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.