MorphoSys AG (MOR) 2008 Q3 法說會逐字稿

Good morning and good evening. I am Envy, the operator for this conference. Welcome to the MorphoSys Q3 report 2008. Please note that for the duration of the presentation, all participants will be in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator Instructions). At this time, I would like to turn the conference over to Claudia Gutjahr. Please go ahead, madam.

Thank you. Good afternoon and welcome. This is Claudia Gutjahr-Loeser, Head of Corporate Communications and Investor Relations for MorphoSys. With me is Simon Moroney, our CEO and Dave Lemus, our CFO.

First, we would like to welcome you to our Q3 conference call and thank you for participating. During the call, we would like to talk about the Company's financial results for the first nine months of 2008. Simon will begin by giving you an overview of the third quarter. Then Dave will review the financial results for the first nine months of 2008. Afterwards, we will open the call to your questions.

Before I start, I want to remind you that during the conference, we will present and discuss certain forward-looking statements concerning the development of MorphoSys' core technologies, the progress of the current research programs and the initiation of additional programs. Should actual conditions differ from the Company's assumptions, annual results and actions may differ from those anticipated. You are, therefore, cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. I would like now to hand over to Simon Moroney.

Thank you, Claudia. Also from me, a warm welcome to today's call. While the previous quarter was a turbulent one for the world's capital markets, MorphoSys' business remained well on track. The Company is well-financed with a strong cash balance and significant cash flows sustainably supported by the Novartis deal. MorphoSys is, therefore, is not only well-positioned to weather the current adverse economic climate, but enjoys a high degree of financial and strategic freedom and remains committed to value creation through targeted and increasing R&D investments.

My report for the third quarter will be in three parts. I will cover first our private therapeutic business; second, our proprietary pipeline; and third, our research antibody segment, AbD. Starting then with our partnered therapeutic activities, we continue to make very good progress in this our core business. Our largest partnership, that with Novartis, is progressing well. The published progress during the quarter and very much the tip of the iceberg of our collaboration was Novartis' announcement that BHQ-880, their most advanced program, will shortly enter a Phase I/II clinical trial. BHQ-880 is a first-in-class, fully human, anti-DKK1 neutralizing antibody designed to restore the balance between brain formation and degradation, which is often disrupted in multiple myeloma patients.

According to Novartis, preclinical studies support the hypothesis that BHQ-880 promotes bone formation and thereby inhibits tumor-induced osteolytic disease. The program has an attractive track record so far. At our end, it is being completed and handed over to Novartis within 11 months and subsequently, advanced into clinical trials by Novartis in an additional two years.

Elsewhere on this collaboration, the number of active programs continues to increase as planned when we entered the expanded deal in December of last year. We hope to say more about individual programs as they progress into clinical trials.

During Q3, we made three announcements regarding our other collaborations. In July, both Boehringer Ingelheim and Astellas exercised pre-existing options to use our proprietary RapMAT technology. You'll recall that RapMAT is a recent technological development here at MorphoSys, which enables much more rapid optimization of antibody properties, particularly their affinity. We have found that RapMAT can reduce the time to an optimized drug candidate by roughly five months on average. The technology is robust and we expect it to lead to further increases in productivity at BI and Astellas.

At the end of the quarter, Shionogi elected to extend their research collaboration with us. Under the agreement, Shionogi secures access to our HuCAL GOLD technology for research purposes for a further three years.

The announcement of the new agreements with Boehringer Ingelheim, Astellas and Shionogi once again underlies an important fact of our collaboration with Novartis. That its structure, not such as to make it impossible for even undesirable for our other partners to continue working with us.

Overall, our partnered pipeline now comprises 55 active therapeutic antibody projects at an increase of five from the end of 2007. We now count three active programs in clinical trials. But only counting active programs, we have concluded the [GPC] program, [1GO9C3]. We are in discussions with GPC regarding how this program is best advanced.

In addition, there are currently 29 programs in preclinic and 23 in discovery. Noteworthy is the increase in the number of preclinical programs, which is up by six in comparison to year-end 2007. Consider the source of the next wave of clinical candidates. At the beginning of this year, we predicted that one or two new INDs could be filed by partners before year-end. Today we can confirm that we expect still one IND this year.

I am sure you're all well aware that our partnered therapeutic antibody business is both a source of near-term revenues, as well as a significant driver of long-term value for MorphoSys. The near-term revenues comprise technology license payments and R&D funding. The longer-term value creation derives from the products that are being developed. As they progress, they generate milestone payments and when they reach the market royalties.

The status of the partnered pipeline is therefore an important metric on MorphoSys' value proposition. We would like to take this opportunity to project how that partnered pipeline may develop over the coming months. We currently have in a best case scenario visibility on up to six new programs, which could enter the clinic during 2009. To be precise, six partner programs that are currently in preclinic have timelines that would see them enter the clinic during 2009, providing that their development continues according to plan. If this indeed transpires by the end of next year, our partner clinical pipeline could comprise 10 programs, of which three could be in Phase II.

I want to emphasize that these numbers do not take attrition into account and for planning purposes, we therefore adopt a somewhat more conservative projection. But we do want to give you a picture of the near-term potential in the partner business.

In the longer term, based now on standard industry attrition rates for the development of therapeutic antibodies, we can confirm a number that was communicated earlier this year, namely that from our current partnered pipelined, plus from the already committed programs, some 17 HuCAL antibodies could make it to the market. These numbers show that the partner discovery business is in excellent shape today and is promising to be a very lucrative value driver for the future of the Company.

I would like to turn now to our proprietary pipeline. The MOR103 Phase I study continues according to plan. All dosing has been completed and we are currently in a follow-up analysis stage of the study. We were, in fact, able to add two additional cohorts. The reason for this was that the early cohorts revealed no safety or tolerability issues and we therefore took the chance to add two higher dose groups. This, of course, made the Phase I study longer than originally planned with the result that final reporting will probably fall into Q2 of next year rather than Q1 as originally communicated.

It also means that certain other development activities, including for example some additional manufacturing and clinical material, had been pushed from this year into next. We are convinced that adding the two higher dosed cohorts was the right thing to do as it increases the flexibility we have to design a meaningful Phase II trial. The side effect is that the postponement of some activities contribute to a reduction in R&D expenditure this year, which in turn has contributed to the increased operating profit guidance that we communicated today. I want to emphasize that we are talking about a postponement of our R&D expenses. The cost is simply pushed from this year into next.

Although our prime focus is rheumatoid arthritis, we believe the MOR103 antibody also has potential in other diseases. We're therefore currently conducting preclinical investigations and models of respiratory diseases and multiple sclerosis. The outcome of these experiments will guide our decision on whether or not to pursue Phase II development of MOR103 in indications beyond rheumatoid arthritis.

During the quarter, some of our data on the MOR103 antibody were published in the Journal of Molecular Immunology. Of particular note is the extraordinarily high affinity of the antibody for its target, human GM-CSF. This, we believe, may turn out to be a major advantage for a resulting drug, both in terms of efficacy, as well as dosage, both of which are important factors in the drugs of chronic disease.

As previously announced, we will release the preclinical data we have generated in this program at the Human Antibodies & Hybridomas Conference in New York on November 13.

Regarding MOR202, there is little new to report at this stage. The program continues according to plan.

Last but not least in this section, we announced during the quarter that we had exercised our first option on a co-development program with Novartis. Recall that our recent agreement with them provides for us to (inaudible) codevelop a number of programs. Forthcoming stages of the work in this first program will be funded by Novartis until such time as a development candidate moves into formal development, at which stage we will start to share costs.

You will also recall that we have the ability to decide what proportion of the developed costs we carry and that they are entitled to the same share of profits on a resulting drug. Although this is a joint program and our participation clearly goes well beyond those in our standard partner discovery business, and therefore we include this and subsequent codevelopment programs under the heading of proprietary pipeline.

The third and last part of my review will cover the AbD Research product segment of our business. During the quarter, we announced that the first HuCAL antibodies and diagnostic kits have reached the market. Products concerned are two autoimmune detection kits marketed by Phadia, the Swedish diagnostics company and these HuCAL antibodies serve as controls or standards for calibrating the detection of certain analytes.

Due to the fact that the antibodies are recombinant, the reproducibility of the test is substantially enhanced compared to the alternative, which relied on anti (inaudible) isolated from patients. This is an area where we see increasing opportunities for HuCAL as a recombinant antibody technology.

The AbD unit is now consistently in profit. Despite the market for research reagents, which is heavily influenced by government funding, continuing to be a challenging one. Currency effects also continue to be against us. Although we are seeing some improvements in the exchange rate against the dollar, the currency in which most of our revenue is generated. At constant exchange rates, revenue development would have been approximately flat compared to last year. Nonetheless, top-line development was disappointing in this quarter. Notwithstanding this, we remain confident that the unit will make the all-important transition to overall profitability this year with an operating profit margin of between 5% and 10%.

That concludes my review of this quarter. I would now like to hand over to Dave for the financial review.

Thank you, Simon. Let's start the financial review with revenues. Through the first nine months of 2008, group revenues increased by 21% to EUR53.3 million compared to last year's EUR44.1 million. This increase is mainly due to higher levels of Therapeutic Antibody segment revenues. Using constant foreign exchange rates at the average rate for 2007, group revenues would have amounted to EUR54.6 million. Revenues in the Therapeutic segment increased to a total of EUR39.9 million, including success-based payments in the amount of EUR7.3 million. Revenues for the AbD segment decreased in the nine months by 10% to EUR13.4 million. The main reasons for the decline in sales included adverse foreign exchange effects and weaker-than-expected sales.

Moving to expenses, for the first nine months of 2008, total operating expenses, which include stock-based compensation, increased approximately by 3% to EUR38.2 million. Expenses for R&D increased by EUR2.6 million to EUR18.3 million. This was mainly due to higher personnel costs in the Therapeutic Antibody segment, increases in proprietary drug development and partnered activities and an increase associated with intangibles.

In the first nine months of 2008, the expense for proprietary products and technology development amounted to EUR3.6 million and EUR0.4 million respectively compared to EUR3.1 million and EUR0.9 million in the same period of the previous year. The reason for the lower-than-anticipated R&D spend was mainly a shift in developmental expenses in the current year to future years, as well as lower actual expenses than planned.

SG&A expenses decreased slightly by EUR0.9 million and EUR14.6 million. This decrease resulted mainly from lower cost in the AbD segment and lower legal costs. The operating profit amounted to EUR15.1 million in the first nine months of 2008 compared to an operating profit of EUR6.9 million for the same period in 2007. The AbD segment continued to show a financial operating profit of EUR0.3 million.

In the first nine months of 2008, net income more than doubled to EUR11.8 million. The diluted net profit per share for the nine months amounted to EUR1.58 per share compared to EUR0.68 per share in the same period of the previous year.

Moving quickly to the balance sheet. At the end of the third quarter, MorphoSys' liquid funds amounted to EUR127 million compared to EUR107 million at December 31, 2007. Cash flows from operations in the nine months of 2008 amounted to EUR18.7 million compared to EUR6.5 million in the same period of 2007.

I would like to end my brief overview with an update and financial outlook for 2008. We continue to believe we are on track to achieve our revenue target. Although it would take the [occasion] (inaudible) slightly narrower revenue range to EUR73 million to EUR76 million and where we end up in that range depends largely on the level of revenue milestone payments achieved from partnered programs on the therapeutic side of our business in the fourth quarter.

On the AbD side of our business, we expect revenues now to be closer to EUR19 million rather than our previous estimate of EUR20 million. Adverse currency effects and difficult markets were the main reason for our downward sales revision. That being said, we are still striving to hit this year's original goal towards an operating profit margin of somewhere between 5% to 10% in that segment.

We expect the year's operating profit to be significantly higher than originally expected, mainly as a result of lower-than-anticipated R&D expenses. As a result of shifts in R&D costs into next and future years and related downward revised cost estimates for these expenses, we now anticipate expenses for proprietary drug and technology development in the amount of EUR9 million for the full year, down from our original estimate of EUR13 million. That would result in year-end operating profits of up to EUR15 million to EUR16 million compared to our original estimate of EUR9 million to EUR11 million.

That concludes the financial analysis for the first nine months of 2008. I now hand back to Claudia for the Q&A session.

Thank you. We will now open the call for your questions.

(Operator Instructions). Peter Christian, Sal. Oppenheim Research.

Yes, good afternoon, lady and gentlemen. One very brief question to start with. Simon, you mentioned that attrition adjusted 17 HuCAL antibodies could make it to the market. Now does that include the Novartis partnership as well or excluding Novartis?

And my second question if I may goes to Dave. I see that you remain quite ambitious for the AbD segment in revenue-wise, so if you could give us some color where your optimism comes from that you will add about EUR6 million in additional revenues in the fourth quarter. Thank you.

Hi, Peter. So let me start with the first part of that question. Indeed, this projection of 17 HuCAL products could make it to market, indeed influence not only those programs that are in development at the moment, so the 55 extrapolating forwards from those, but it also includes the programs that we will start with Novartis and others in the years ahead. And if you add all of those existing and future programs together, apply standard industry probability to a successful development to that number, you can project a number of 17. This is not a new number. This is a number we actually presented at the year-end results conference back in February. If you look back at the presentation, you can see how the number was derived. As I said, it basically projects the total yield that we think could derive from the partnered discovery side of the business.

Okay, thank you.

Hi, Christian. To answer your question regarding the optimism of our Q4 AbD sales forecast, it is a balance point that we do expect a higher level of sales in the fourth quarter roughly. To hit the EUR19 million target, you have to turn over roughly EUR5.7 million in the final quarter, which is approximately EUR1 million higher than we have done this year and the highest quarter that we have done in terms of sales.

That being said, we think we have some favorable tailwinds behind us. One of which is that OEM sales we feel have a pipeline, which makes us optimistic in terms of hitting that goal and of course, OEM sales are very bulky, but we do feel good that we should be able to ramp up those OEM sales in the fourth quarter.

The other thing that we feel is a nice tailwind behind us for the fourth quarter is that the currency effects, which have been adverse to us during the year, have in fact turned and we feel (inaudible) things should be able to help us to achieve a higher level of revenue in that fourth quarter.

All right. Thanks a lot.

Thomas Cornelia, WestLB.

Hi, good afternoon and thanks for taking my question. I actually have a number of questions on your financials, one of them was already asked regarding the AbD segment. The one is you are now guiding for EBIT of EUR15 million to EUR16 million in 2008. Now, you are already at EUR15.1 in the third quarter, so you are not expecting to have much in terms of EBIT in the fourth quarter. Is that correct?

That's correct.

Okay, so you are expecting to increase spending this much over the fourth quarter?

Yes, and maybe just to quickly respond to that, if you strip out the proprietary products then that we had published in our quarterly numbers throughout the year, you will see that our run rate was roughly EUR5.5 billion per quarter on average throughout the year, which basically then implies that the R&D will increase, vis-a-vis, that number by about EUR5.5 million to EUR6 million in the fourth quarter.

Okay, I see. All right. Of the costs you are savings this year that is being shifted into 2009, can you give us an idea as to the sort of percentage that is of the costs you're saving this year because you presently said that some of the cost savings were due to external costs not being as high as anticipated. So I am assuming that some of that is going to be shifted.

I can't actually give you a number right off the top of my head, but I can state that the bulk of the savings that we are in this year are being shifted into next year and future years. So it is not just being shifted into 2009.

All right. One last question regarding milestone payments in the fourth quarter. You are guiding for something like EUR4 million. Now obviously, I know that milestones come whenever they come, but sort of looking back, the five big quarters look pretty low on milestones now in the EUR34.6 million. Just wondering how certain are you about the milestone payments in Q4 2008?

Of course, we always make our best effort to be as certain as we can when making these forecasts and it is true that one event happened or not happening can significantly affect that result. And I think it is a fair comment to say that, in assuming that EUR4 million, we would be rather at the lower end of our revenue guidance than at the higher end.

So that being said, I think we have a fair degree of confidence in hitting that EUR4 million. Whether or not we can actually outperform that is to be seen. That being said, I think in terms of our track record in previous years, we have been rather, I think, conservative as some analysts have coined us in terms of projecting those revenues. But, of course, in the final weeks of the year, it becomes very difficult to project those things because often what will happen within pharmas is they will realize they have some budget left for the year and may decide to early trigger some milestones as has been the case in previous years by us.

Okay. Thank you very much.

To answer your question, we feel pretty confident.

Wendorff Daniel, Commerzbank.

Yes, good afternoon. Maybe a follow-up question regarding your operating profit guidance and even if I really push up on the expense in the fourth quarter, that could also mean that I would have to put in quite a high number for SG&A costs in there so that I only get marginally profitable, So my question there would be what would the trigger for such a high cost? Also regarding your own R&D expense, you now assume probably to spend around EUR5 million on R&D in the fourth quarter. What would that mainly be used for? So why is that such a high increase versus the last quarter? And last question, Simon, you mentioned potentially six new programs and partners could enter the clinic in 2009. Could you give us already an idea about which indications we are talking about there? Thank you.

Okay, I will handle the first part of that question. And perhaps there might have been a misunderstanding there, Daniel, in terms of our run rate for R&D, as I think I believe I mentioned in response to an earlier question. Our run rate for each quarter has been roughly EUR5.5 million per year and what I tried to explain a bit earlier was that we feel that that run rate, which is very much associated with the activities that we do on behalf of our partners, so research that we do for the likes of Novartis and our other partners, that run rate is roughly EUR5.5 million. In addition to that, in the fourth quarter, we expect to spend roughly EUR5 million additional to that, which is mainly proprietary product spend.

And as you can see, or as we have publicized in our report in the third quarter, we had roughly EUR4 million spent and that last quarter will imply that we will have an additional spend of roughly EUR5 million to that in terms of proprietary product spend.

What triggers those expenses I think was another question you had. That is very much the result, I think, of three things. Number one, additional clinical trials that we have been doing for MOR103 and as Simon alluded to, we have decided to include two new cohorts. Additionally, we are starting now to spend some money in terms of manufacturing and setting up cell lines for MOR202, which, I think, tends to be more of a frontloaded expense than a backloaded in terms of development expense. And last but not least, we have also ramped up our own proprietary product efforts as it relates to brand new starts, which have not been separately identified on this call.

Okay.

And Daniel, from me, coming to your question about the new programs that could enter the clinicals, I want to emphasize that is a projection which doesn't include attrition (inaudible). If you look at the split of indications that we're working on all our collaborations across the 55 programs going on, it continues to be roughly half in oncology, roughly a quarter in inflammation and autoimmune diseases and the other quarter split between infectious diseases, musculoskeletal, CNS and so on. And if you apply that same rough split to the six, you would get a rough idea of the kinds of indications of those compounds that could enter the clinic next year.

Okay, thank you.

Hanns Frohnmeyer, LBBW.

Hi, good afternoon. I have a couple of questions, some of them are related to former ones. So maybe start with the MOR103 project. You mentioned that you will start the Phase Ib/IIa trial in the first half of 2009. Could you give us some ideas about the design of the trials, patient number, geographic regions and so on? And then on a second one, the AbD business, so you said you are optimistic that people will get some additional OEM [box] in Q4. Is this also the reason why you expect to [have] this higher or increasing EBIT operating margins for 5% to 10% or do you have other reasons for this business? Thank you.

Okay, let me start, Hans, with the MOR103 question. What I can tell you, at this stage, is that we are still working on finalizing the trial design. It will be a trial of rheumatoid arthritis patients. I can tell you it will be a trial in Europe. It will involve a number of European countries. We haven't yet finalized the choice of countries, but we are looking at four different European countries. I use the term Europe in its broadest sense there, meaning that we are also looking further east for the countries and we are also currently evaluating the specific sites where the trials will be conducted in those countries.

We are currently looking at a total patient number of somewhere around 100, but again, that is something that hasn't yet been finalized and will, obviously, be something that we will conclude before the trial design is complete. So I think at this stage, that is basically all we can say to you. Roughly 100 patients spread across probably four countries throughout Europe.

And are you looking more for short-term effects then?

Sorry. Are we looking for short-term effects, did you say?

Yes, on an efficacy [level], yes.

The precise administration regime has not yet been finalized, but we certainly intend to include longer-term follow-up of those patients. Given that we would expect an antibody, a human antibody with a rather longer half-life compared to, obviously, a small molecule drug to have a longer-term effect, we would certainly anticipate that a longer-term follow-up would be a part of the trial.

Thanks.

With regard to your question on the AbD segment, your point is valid. We have made a profit of roughly about 2.5% of sales in the AbD segment to date and the question, if I understood it correctly, was how do we expect to increase that, will that simply arise as a result of revenues. The answer is yes partially, but also the answer is to be found in the fact that there is some discretionary spending in that unit that we have assumed in the first three quarters that we feel we could pull the plug on so to speak as the year goes on. As an example, we have accrued full bonuses in that segment, which, of course, if these targets are not met, would have to be downwardly revised and perhaps partially reversed in the fourth quarter.

Okay, thanks. That helps.

(Operator Instructions). Daniel Wendorff, Commerzbank.

Yes, hi, again and thanks for taking this follow-up question. And sorry to bother you again with regards to the operating profit guidance, so I believe I quite understood now the metrics behind the R&D expense line. But that would have to almost double my SG&A expense for Q4 on the model for Q3 in order to achieve a very small profit only in the fourth quarter, operating profit. Could you give us a bit more light how that can be explained regarding the SG&A expenses and maybe regarding financials and what do you intend to do with the increasing amount of cash over the, let's say, next 12 to 24 months? Thank you.

Daniel, I would like to help you, but I am having difficulty doing that without seeing your model. What I can tell you is that no significant ramp up in SG&A expense is planned in the fourth quarter. And perhaps to the extent that I can understand that, perhaps you might be able to call me afterwards and we can sort that out.

Regarding the cash, yes, we do have more than EUR125 million worth of cash. We have that invested in the two largest banks in Germany. We feel, based on multiple reviews and continual reviews of the banks' security and their credit worthiness, that we feel that these deposits, which are essentially money market deposits, which are easily tolerable, that these deposits and this cash is in very good hands and given the current market circumstances, more or less as safe as it could be presently.

Perhaps just to follow on to that. So we certainly continue to intend to use that cash to drive growth in the business. We said in the past and we can repeat that now that we are interested in acquisitions, both on the AbD side of the business and also increasingly on the Therapeutic Antibody side of the business. And we believe that as the conditions, financial conditions get tougher, we believe that there could be actually more and more opportunities for acquisitions as perhaps other biotech companies get into increasingly financial difficulty. So we think that opportunity should only increase for a company such as ourselves.

I want to emphasize though that we see no need for that cash pile to drive operations. We have sufficient cash flows in the business, operating cash flow to drive our increased investment in R&D and that is something that you should expect to see continue to increase. We are committed to building the proprietary pipeline and we are committed to using the cash flow that we have, the very stable cash flows that we have from the partnerships -- Novartis, of course, foremost amongst those -- to drive an increasing level of investments in R&D.

Okay. Thank you.

Blum Holger, Deutsche Bank.

Hi, Holger Blum, Deutsche Bank. Just one question, might be a bit premature, but maybe looking one year out in terms of maybe your general target and balancing earnings growth versus pipeline spend, what is your current thinking about focus on bottom-line growth versus building a bigger pipeline for the period of time? How well do you see your priorities developing compared to the past? Thank you.

I think what we can really learn today is something that we've said repeatedly in the past and that is that we certainly don't see the Company going into loss. I think what we can't yet say is exactly what proportion of that cash flow would be put into proprietary investment. That is, what is the impact on the operating income line.

I think I would encourage all of you actually to look at us from two perspectives. One is look at our top line. Our top-line development will be, I think, a very good metric for the health of the Company and how well the business is doing. So that is certainly one to pay attention to. The other will be how the pipeline develops and how we exactly balance that. That is how much of the revenue that we generate gets pumped into the proprietary product development. We can't give you any guidance on today, but I think those, more importantly than earnings per share, will be the metric on which you should base the valuation of MorphoSys. Dave, do you want to add anything to that?

No, I think that was a very salient explanation and I have nothing further to add to that.

That's fine. Thank you.

(Operator Instructions). There are no more questions at this time. I hand back now to Dr. Moroney for his closing remarks.

Thank you. To conclude the call, I would like to remind you of the key takeaway messages. First, the partnered discoveries business continues to perform extremely well and we expect to see an increased number of HuCAL antibodies entering clinical trials and advancing into Phase II trials over the coming months and years. But proprietary programs are also on track and were supplemented in Q3 by the first joint program with Novartis. Finally, the AbD segment is now consistently in profit and on track to record a healthy profit for the full year.

That concludes the call. Also, we are here in Munich, in the Munich office for the remainder of the day if any of you would like to follow up with us directly. Thanks, again, for your participation and goodbye.

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.