Nephros Inc (NEPH) 2020 Q1 法說會逐字稿

Good day and welcome to the Nephros first-quarter financial results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kirin Smith. Please go ahead.

Good afternoon, everyone. This is Kirin Smith with PCG Advisory Group. Thank you all for participating in Nephros's first-quarter 2020 conference call. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements regarding the operations and future results of Nephros.

I encourage you to review Nephros's filings with the Securities and Exchange Commission, including without limitation, the company's Forms 10-K and 10-Q, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Factors that may affect the company's results include, but are not limited to, its ability to successfully, timely, and cost effectively develop, seek, and obtain regulatory clearance for, and commercialize its products and services offerings, the rate of adoption of its products and services by hospitals and other health care providers, the success of its commercialization efforts, the effect on its business of existing and new regulatory requirements, and other economic and competitive factors.

The content of this conference call contains time-sensitive information that is accurate only as of the date of the last call, today, May 6, 2020. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call except as required by law.

I would now like to turn the call over to Daron Evans, Nephros's CEO. Daron, please go ahead.

Thank you, Kirin, and good afternoon, everyone. Welcome to Nephros's first-quarter 2020 earnings conference call. This is a very unusual time for everyone. I want to thank all the frontline health care workers and all those providing the essential services that are keeping us all fed and safe while putting themselves at risk. It's just impressive.

Today, we're going to run the call a little different.

I will not spend much time talking about the first quarter. Instead, I'll be talking about our view of what might be the new normal. I'll then turn the call over to Dr. Kimothy Smith, Vice President of our Pathogen Detection Systems group, who will spend a little time talking about his team's work and some of the main issues buildings will face as we try to get America back to work. Dr. Smith will then turn the call over to Andy Astor, our Chief Operating and Financial Officer, who will do a deep dive into our Q1 2020 efforts.

Overall, Q1 2020 revenues were up 42% versus the year before. Q1 generally provides a very clear view of our base business as the first quarter of the year is generally [about a time where] many outbreaks occur due to the colder weather, and this was no different. We were pleased with 43% revenue growth, but did take note that only 8% of our Q1 revenue was from new customer sites compared with the prior average of 30% to 40%.

We look at this as a leading indicator of a coming change in customer prospect priorities due to COVID-19 and begin to realign some of our activities. As we moved into the second quarter, we identified a few key risks that needed to be addressed to ensure our ability to maintain our high-growth momentum.

First, because we manufacture our medical device ultrafilters in Italy, the location of the first non-Chinese hot zone, we were very concerned about particular supply disruptions. To mitigate that risk, we increased our order sizes and added about $1 million of additional inventory to manage through what could have been up to a six-month shutdown. Thankfully, to date, our Italian partner has been able to manage through the crisis, and we've had no significant shipment disruptions.

Second, we recognized, as the others in our industry, the risks associated with stagnant water in the place of office buildings, hotels, dormitories, and other buildings that have had less than usual occupancy over the last few months -- stagnant warming environments that are natural breeding grounds for waterborne pathogens. To that end, we accelerated some of our pathogen detection research and expect to release a white paper in the coming weeks comparing the building bacterial biome of an unoccupied building to that of an occupied building. This is a real risk, and we're working to understand more.

Third, we recognize that our customers will need to be severely focused on their COVID-19 response programs and the Nephros products while still critical to their infection control programs would take a backseat for a period of time. Accordingly, we're shifting our focus towards the next steps in the life cycle of this crisis.

Among other focused areas, we're using our time to run more experiments to bolster our pathogen detection programs.

We've made great progress in our DialyPath system, which is designed to provide real-time endotoxin level estimates for dialysis clinics. We've also made significant progress on our SequaPath system, which is designed to provide a bacterial census of a building's water system and estimation of a building's bacterial biome from a database of over 20,000 different bacterial families. We'll soon be releasing the white papers on these different results from these two systems.

Before turning the call over to Dr. Smith, let me provide a quick update on our hemodiafiltration system program. We are still on target to file the special 510(k) this summer. We're currently in the process of manufacturing the systems and disposables that will be used for the last steps before completing the regulatory package, the verification, and validation testing.

Thus far, we have not had any COVID-related delays in this project. We'll hopefully continue to avoid delays in this process, but we'll be using contract research firms to perform some of the testing as we finish the program. Therefore, we could be subject to their timelines.

Now I'll turn over the call to Dr. Smith who will talk more in detail about the most recent analyses we're performing to better understand the microorganisms around us.

Thanks, Daron. It's my pleasure to be on the call today and to discuss a bit about our line of pathogen detection products: PluraPath, DialyPath, and SequaPath.

First, let's talk about PluraPath. PluraPath is a mobile, quantitative polymerase chain -- that is, qPCR -- waterborne pathogen detection system that could provide onsite actionable data to infection control teams on up to 15 different pathogens in under an hour.

PluraPath allows our customers to understand the breadth of waterborne pathogens in their premise plumbing systems, not just Legionella, but Pseudomonas, non-tuberculosis-causing microbacterium, Burkholderia, and many others. These pathogens are major concerns for certain segments of the population that are associated with HAIs, hospital-acquired infections.

PluraPath is also appropriate for identifying pathogens in cooling towers, which are external to building plumbing systems. Cooling towers have been a difficult case for PCR-based methods in the past because of heavy metals and other substances causing inhibition of a test. We've developed a rapid enhanced sample preparation kit which removes the inhibiting compounds that retains the DNA needed for the PluraPath testing protocol.

Our second pathogen detection product, DialyPath, will be released later this quarter. DialyPath is designed to provide real-time endotoxin levels estimates for dialysis clinics by detecting and quantifying endotoxin-producing gram-negative bacteria. In simpler terms, this means that DialyPath can identify bacteria, which can cause inflammatory reactions before they impact patient health.

The DialyPath system is extremely sensitive and specific. It can detect levels of gram-negative bacteria as low as one bacterium per 100 mls of dialysis water, or around 1 trillion for the gram of endotoxin per milliliter of water. And it can provide the specific identity of the predominant bacteria in a water sample.

The third product in our pathogen detection roster is SequaPath. This will be released later this year and will provide a window into the true microbial diversity in a building's plumbing system. SequaPath extends the technologies of PluraPath and DialyPath with the power of rapid, targeted DNA sequencing. We'll provide an opportunity to understand the microbial community dynamics of building biomes.

As Daron mentioned earlier, there are risks associated with stagnant water and unoccupied office buildings, hotels, dormitories, and other buildings that have had literally no occupancy over the last three months. We're collecting water samples now and expect to write a white paper in the coming weeks on this topic comparing the bacterial signatures, the building bacterial signatures in unoccupied and occupied buildings. We're working to understand the potential risks of stagnant building water from a holistic perspective rather than through the lens of a single pathogen.

I'm now going to turn the call over to Andy for a financial overview. We seem to be having a system malfunction. Hold on.

Wait a minute. I apologize. I am back. Can you hear me now?

We can.

Yes, please go ahead.

I'm so sorry about that, everyone. Thank you, Kimothy. I will now provide a look at our financial results for the first quarter ended March 31, 2020. And I'm very pleased to kick that off by reporting our 15th consecutive quarter of year-over-year net revenue growth with an average growth rate of 62%.

Nevertheless, as Daron outlined, we have seen significant changes in customer priorities, and early Q2 has been a slower than -- have seen a slower than planned start, particularly with respect to new customer acquisition.

As Daron pointed out, about 8% of our revenue in Q2 was from -- I'm sorry, in Q1 was from new customers rather than the normal 30% to 40% that you see in a quarter, which of course, we attribute to the COVID-19 outbreak.

Nephros reported net revenues in the first quarter of $2.5 million compared to $1.8 million in the same period last year, an increase of 43%. However, 99% of these revenues were generated by the water filtration business segment, and net loss in that segment was $0.6 million compared to $0.8 million in 2019.

Adjusted EBITDA in the segment was negative $0.4 million compared to negative $0.3 million in 2019. Please refer to today's press release for more details about the calculation of adjusted EBITDA and its reconciliation to GAAP net income and loss.

Additional information about our water filtration and renal products business segments and their operating results can be found in today's filing on Form 10-Q. Also, beginning with today's report, we are recognizing our pathogen detection business which Kimothy runs as a third business segment within Nephros.

On a consolidated basis, net loss for the quarter was $1.1 million compared with $1.3 million in 2019, a 19% improvement.

While consolidated adjusted EBITDA in the quarter was negative $0.8 million compared with a negative $0.9 million in 2019, a 7% improvement.

Cost of goods sold in the first quarter was $1.0 million compared with $0.8 million in 2019, an increase of 35%. Gross margins in the first quarter were 59% compared with 56% in 2019, and we expect future gross margins to continue in the 55% to 60% range.

Research and development or R&D expenses in the first quarter were $0.6 million compared with $0.8 million in 2019, a 26% increase. Depreciation and amortization expenses in the first quarter were $46,000 compared with $50,000 in 2019, an 8% decrease. Selling, general, and administrative or SG&A expenses for the first quarter were $1.9 million compared with $1.5 million in 2019, an increase of 30%. And our cash balance at the end of the quarter was just about $9.0 million.

I'd like to stop for a second and take this opportunity to briefly highlight the charitable efforts our own staff led by Michael Milman, our Vice President of R&D, and working with personal funds from the Nephros team. Mike and his team, his staff worked tirelessly to import thousands of NIOSH-certified N95 masks, which they then donated to more than 20 health care teams in the New York-New Jersey metropolitan area as well as other geographies throughout the US.

In closing, we remain resolute about staying strong during these extraordinary times and remain very excited about our future growth prospects. We look forward to seeing many of you virtually at the national conferences this spring, and at our annual meeting which will be held virtually on May 21. More details will be released soon.

In the meantime, please always feel free to contact Daron or I directly at info@nephros.com. And this concludes our formal presentation remarks. I would like to personally thank all of our stakeholders for your continued support and look forward to speaking with you again soon.

We'll take questions from the audience now and also answer emailed questions if we can. Operator, please open the call for questions.

(Operator Instructions) Howard Halpern, Taglich Brothers.

Hi. Congratulations on the quarter, guys. Good work during this tough environment.

Thanks, Howard.

The first question, I guess, is in regards to -- I know you talked about the mix with new customers, but what do you see or what do you anticipate seeing in terms of lead time as your distribution network gets back to -- I don't want to say more normal, but I think you understand what I mean. Are you going to have a good lead time as to when they're going to start shifting around and the environment starts shifting?

When you say lead time, are you talking about the time to close a sale?

No, no. In terms of them making the shift to where they might go to circle after -- going at the new customers again, expanding their base.

I'm sorry. Yeah. I think that the reduction of new customers is just a direct result of the fact that everybody's got their heads down on the big problem, the 800-pound gorilla. And as soon as things return to, as you said, somewhat normal given our customers -- infection control and waterborne pathogens and the identification of waterborne pathogens through our testing systems remains a super important priority.

And so I think that -- I don't know exactly how long it takes for us to get back to normal. But we're certainly seeing some activity, some early signs of new activity. And we think it's coming and try to quantify that, frankly. We're all -- none of us have [to know this] before. We don't really have a way to project.

Okay. And in terms of -- as you start ramping up the testing, the pathogen detection side of the business, you have adequate ability to produce in this environment, I'll say it, but test kits, the kits that go into your device, do you have enough capacity for what you believe could be a potential ramp in sales of that -- of the testing?

It's a loaded question, Howard. Yes, we have significant capacity for building bigger capacity right now in an internal manufacturing facility that we are putting up, and we think we're good for strong demand. Hopefully, we're planning on a strong first year for pathogen detection. Let's put it that way.

Okay. And what (multiple speakers)

And [Howard, we're] scaling that. We're making robotic capacity, which means we can -- almost an [infinite] scale and we're planning on doing that. And we could see it in a very precise way. And long term, I've talked about this where we want to use our SequaPath and understand a building's biome and understand where their problem mechanisms, the problem bacteria. And then create (inaudible), and we'd be able to press print whenever we need to press print. So we're going after that.

Okay. So the SequaPath, is that going to -- is it the same distribution network you're going to use, or are you going to expand on that since so many things have closed down? Is there -- I don't know if it's -- or like I said, is it the same or are you going to have to expand your distribution network -- distributor network?

It really is the same as the -- the beauty of this pathogen detection world is that -- the same people that put our focus on are the ones that organize and manage testing on sites. And so it's the same pipeline of people. And so really, it's about educating our current water treatment and consultant network on how to use it and how to integrate it with their water management plans, and then be able to just deliver.

And there will be different levels of expertise in the field and we've designed PluraPath to be able to be done by anybody. You might as well have (inaudible). So we're trying to make PCR level technology come to the masses.

Okay. And so the dialysis part of the testing, is that the same distribution or -- because I would think if people get back to the centers and the hospitals, they might be confident to know that they're doing that type of tests. So I don't know if it is easier to get that test into dialysis centers or dialysis part of hospitals?

So most of dialysis is run by two companies. And we have big conversations with both those companies. And they really run their own shop. And so it's not the same fragmented federalist-type system that the hospitals have.

When you sell them to the DaVita or you sell them to Fresenius, you sell that to a few people that then touches all 2,000 or 3,000, whatever you have, sites. So it's a very different type of sale and it doesn't mean a part of the same footprint, but it is the same pipeline.

Okay. And last one from me on -- it's sort of like a commercial side. I don't know if you are tweaking the commercial side a little bit given the environment, but are you able to go into assisted living facilities and nursing homes now with, I guess, both the hospital quality and your commercial type of filters with their protection, I guess?

We actually sell to a lot of nursing homes now and generally during outbreaks because most of them are one-story, two-story facilities with mostly residential plumbing, which is pretty good about not going bad then. But when they do, it's got to be cleaned out and it's got to have time to get there.

So we -- our current network of water treatment professionals, those who respond to those emergencies and what [officially] they bring, they don't use that many of the commercial side filters, the paper to scale for coffee and tea and pickles. As you would expect, one of our markets is Las Vegas and that's (inaudible) are gone now. We have to have a [team and] roll through it -- change out yet, but [bar citation] is that the longer the pauses -- they may hold off a little bit, but when they're turned back on, they turn back on right.

Okay. Okay, I will jump off and let someone else hop on. And thanks again for all your guys' work during the pandemic.

Thanks.

Anthony Vendetti, Maxim Group.

Thanks. Good afternoon. Maybe we can talk a little bit about your current client and whether you've seen an increase in orders of your products for the current hospital clients that already have your products. Are they ordering more for different units like ICU, critical care, emergency rooms?

And then as this plays out, as this pandemic continues to play out, how do you see the need for your business? We just finished up a big Infectious Disease Conference yesterday, and we certainly believe that there's going to be a heightened awareness on all types of pathogens. So do you see the adoption rate either dramatically increasing, incrementally increasing in the long term? Thanks.

Why don't I take the first part of that, and then maybe Daron will want to add. We are seeing ongoing purchases from our hospital customers and few of our distributors. This is not a time where -- the last eight weeks or so have not been times where we're seeing big increases because a big increase means a decision making. And decision making right now is all around COVID, which is an airborne pathogen, not a waterborne pathogen. So what we're seeing now is a lot of keeping the wheel turning but not changing the wheels a lot.

So in the second half in terms of what we see going forward, I think as you pointed out, Anthony, I'd like to say there's a billion people who know the word pathogen today that didn't know that word six weeks ago. I don't know if my numbers are accurate, but I think you get the point. And so we do think that in the long term, this is -- that this awareness of pathogens and their effect on the community is good for us. And exactly what that schedule would look like, we just don't know.

And that same new awareness is about PCR. I mean, one of our challenges going into this was trying to educate folks on PCR being a standard of care is possible. There's maybe half a billion -- you know what PCR means now, especially the ones that have gotten the test. So that's now becoming -- if we thought that the acceptance of PCR and technology was going to take a couple of years, it just got fast forward. So the word PCR negative exclusion is something that we're not going to have to repeat and define, which is fantastic for our business.

And as well as people know what a virus is and they know it's a big deal. From the floating world, there's not a lot of viruses that float around in the water, but the ones that do, they migrate. And we're only the ones who got it. So that was a checkbox positive in the past and that could become a leverage point in the future.

So at the end of the day, the world will be more knowledgeable about small things that hurt you. And we make things that help you see the small things and help stop the small things. So it's probably going to be a net positive, but we can't calculate that -- that much now.

Sure. Makes sense. And just as a last follow-up question. Daron, you've spoken about the QSR opportunity. I would assume based on this pandemic that most of the decision making around that has slowed and put on hold. But I would also think that at some point, if not now, in the near future, the pipeline for that business should also increase. Is that accurate on both sides? Or if you could just comment on that, that would be helpful. Thanks.

Yeah, there is -- we believe there had been thought delays in that sector and then this whole group just kind of have been turned off. But I'll say that we're pretty comfortable that we talk about the [wheel going faster] that there's going to be -- we'll just have some success in that space this year.

So we see that as a growth area. That hasn't changed at all. There might be a month or two delays and things, but it's still a good space for Nephros to be in, and it's a good complimentary product for our other products.

And there may actually be -- to that last question -- a lot more discussions that we could have with the QSRs or about their pathogen detection programs. So that's one of those discussions we probably could have a couple of years from now once we're providing the service for a while. But it's obviously one where we can sell here as well. So there's a lot of more opportunities for people who now might be more of the ones to discuss what small [bugs] do in a lot of different places that didn't use to think about it.

Okay, great. That's helpful. Thanks. I'll jump back on the queue.

Bob Wassermann, Benchmark.

I'll say, congratulations, guys, on a good quarter and new product launches. Real quick, can you give me a little color on new -- you said you had 20% on the growth from new customers this year. Can you give me a little color on where -- what sectors that came from and maybe what groups did not close on new accounts and might do it later this year?

I'm not sure -- did you say a 20% number there in the introduction?

Yes. I didn't understand. You say that you're -- usually have quite a bit of growth from new accounts and you didn't see that this year. (multiple speakers)

Yeah, yeah. Yeah. And that -- we attribute -- I mean, in the first half of the first quarter, we saw a normal growth of new accounts. And then in the second half of the first quarter, we saw new accounts deeply depressed. And we took that as a leading indicator -- or there's an indicator, let's just put it that way, of hospitals and medical centers and care facilities that were in the middle of a sales process with us that simply had to turn off their attention. So we are -- instead of having our normal 30% or 40% of our revenues come from new customers, we had 8% come from new customers as a result of that.

Okay. So you're saying that the 8% was from early in the quarter, and trying -- in fact, maybe step back on that -- your typical past later in the year. In the commercial side, are you seeing those same type of numbers? Are your commercial customers open at this point or not even open?

Well, our commercial customers, for the most part, are hotels and restaurants and chain stores. So I think you know the answer to that. So they're mostly closed. And that business was -- definitely took the hit in April just because they're just not open. But that's not -- that hasn't been the case on the medical side, which is 90% of our business.

Okay, great. Thanks. Thanks a lot.

Sure, sure.

[Lewis Snyder, Maximus].

Yeah. I came in kind of late. Just interested in knowing since the cruise liners are extremely depressed and minimal reservations -- is there any area within the cruise ship lines that we could see some entree with filters?

We've actually talked to some cruise companies in the past, and they've been scared about water for a long time because of a lot of water and norovirus outbreaks. And what they generally have is six, seven or eight or nine RO systems to provide water. And they do a lot of chlorine to go on the cruises, which they haven't been in a long time. They tend to have that and the chlorine taste. So they take a lot of precautions and try not to have filtrations.

Where the medical opportunity is in the testing side. They want to do more thorough testing of their site, just as any building would. And not just because the cruise ship should be sitting around for a while, but just every time a cruise ship comes in and gets cleaned out, that they want to have a check.

So that's a place where we can go look. Maybe it's a bandwidth thing at some point in time. We'll see what we can do to get some interest there.

Thank you.

(Operator Instructions) Scott Weis, Semco Capital.

Hey, guys. How are you? Congrats on the quarter. I have a couple of questions. First off, I want to go back to the existing customers and new customers and just have a quick question. Over the last several quarters, you guys have grown revenues between roughly 60% and 90%. Can you break out the historical growth from existing customers versus new customers?

I don't have that handy, Scott. We could do that. But clearly, when -- if you just look at the fourth quarter of 2019, our average sales was 63% existing customers and 37% new. So if that number goes from 37% to 8% in this prior quarter and yet our growth is 43% for the quarter, you can pretty much say that the growth for the existing customers is there and the growth for the new customers is not. That's sort of how I read the numbers.

Okay. Okay. In conversations with distributors, customers, sales, do you have -- are they giving you any visibility on when hospitals are likely to step back into the market and then just start purchasing? And I'm referring to new customers.

Everybody's trying to open as fast as they can, and hospitals are going -- are probably going to be a little conservative about it. So I don't think they're going to open tomorrow. Will they open on June 1 or July 1 or August 1? I just don't know.

Okay.

We're just about to see.

Shifting gears to costs, given there's fewer flights by airliners, and if I'm not mistaken, you've historically gotten your product using airlines. Have you changed how you get your product and how is that -- and with fewer flights, how has the cost affected your SG&A line?

It's a great question, and it's a thoughtful one. Thanks for asking it. In the early days of the pandemic, in the March timeframe, you're correct. We have traditionally -- because of our growth rate, we've had to bring in our filters mostly by air, which is expensive. And in the month of March, those costs went up just because there were fewer flights.

But happily, because we've spent the last previous three, four, five months building inventory pretty strongly -- it's up from 2.5 million to 3.5 million this last quarter -- we're now bringing most of our products over by ocean. So our costs are actually going down right now in the shipping where we can. And where we have an occasional strong need for a product, we'll ship it by air. But I don't think there's been a significant impact on the SG&A line there, except for maybe a small blip in late Q1.

Okay. Do you think this is going to be a permanent shift? Are you going to maintain the higher levels of inventory going forward, and therefore continue to use the cheaper ground transport, ocean liners versus airlines?

We'll do that analysis. But certainly, we were looking for a way to transition to ocean before there was a global pandemic. That's one of the reasons we were building our inventory early. And so I do think that we will continue to try to optimize our costs on our shipping wherever we can.

Okay. And then last question on the testing side of the business. I don't think you've given guidance on the revenue ramp for the testing, but can you give some visibility on when we can expect to hear more about commercial placements and that ramping?

The ramping of the testing products? Yeah, that's actually why we broke it out as a business segment in Q1. Unfortunately, only a few weeks after we launched -- the launch basically got canceled by the pandemic. But there was $18,000 worth of revenue in this quarter, in the pathogen detection business. So you'll see that broken out going forward from now on. Does that answer your question?

And can you quantify what kind of feedback you got from customers that were using it?

Yeah, qualitatively, it's just superb feedback. Really excited by what we have got, intrigued. They like the depth and breadth -- in other words, the specificity of the product as well as the ability to look for multiple pathogens simultaneously in one test. And the pricing of it seemed rational to them. And in a couple of weeks, we had our -- we had $18,000, $20,000 worth of sales, so very promising first couple of weeks.

(inaudible) can you give us sort of a high level when you left the meeting, how do you feel -- what questions were asked or are we meeting the needs? Do you think we're going to fit in the market?

I do. Yeah. And one of the things that you said earlier, Daron, that your daughter can run the PluraPath system. People who were aware of qPCR, who are aware of PCR testing that happens on a centralized laboratory, and never thought that they would be able to run it themselves onsite at a facility. And they're thrilled by having that power in their hands and being able to provide a really huge breadth of information and actionable information to a client.

What they used to have to wait minimum 24, but usually 72 or more hours to get, that can now get within an hour. The excitement that that generates, the ability to look at bacteria in residents and in premise, performing in a localized lab is do something about it in a matter of hours. That can mean a huge difference in terms of lives. So a lot of positive feedback from the field at this point.

If you look forward, say, three, four, five years or even beyond, which has bigger potentials, the testing business or the water filtration business?

(inaudible) If you look at the markets in general, if you look at the Legionella testing in the global markets, it's over [$1 billion]. And if you look at the water filters, it's -- the commercial side is $2 billion to $3 billion (technical difficulty) as we see in the medical side is smaller. To be able to do this -- to do what people were saying, to have it by the hundreds (inaudible) faster and faster and more specific.

So we talked about our ability to make a custom test for a building. If you've got a problem, well, you've got to watch for -- then you want to watch that for product, and maybe two, three more. So we can increase the number of samples you can run at once. So we can do things that -- running your multiplex and we can customize. So our ability to today understand the buildings, the full biome, to an extent, is possible with our process and be able to provide custom rapid tests.

We think we sort of changed the game. And there are companies out there that are starting to make their onsite Legionella test. But really, it's all about the biome, and it's obviously a lot more than Legionella that makes people sick. And this is the way to address it fast. That's what we're thinking.

And this is probably our major product that could go grow. So that's going to be -- (inaudible) and through the global, this would probably have the most opportunities to be able to go quickly and meet the needs in a lot of places. We've got inbound calls from other countries already. People are doing water treatment. And it's just going to -- it's a neat tool.

Great. Thank you. I appreciate, guys. I'll get back in the queue.

Thank you, Scott. Okay. Thank you.

(Operator Instructions) We have no further questions over the phone at this time.

Okay. Thanks a lot. I want to say thank you, everybody, for joining us. At the same time, stay safe. So [the message is] do what you can, and as we get America back to work. There will be a new normal, but it will be a much more informed normal. And we'll do what we can to make everything -- the water safe. Thanks a lot.

Thanks a lot. Bye-bye now.

This concludes today's call. Thank you for your participation. You may now disconnect.