Nektar Therapeutics (NKTR) 2002 Q2 法說會逐字稿

Good afternoon and welcome to today's Inhale second quarter results conference call. Following today's presentation, there will be a formal question and answer session. At that time, instructions will be given should you wish to ask a question. Until then our lines will remain in a listen-only fashion. As a reminder, this call is being recorded at the request of the company. Should you have any objections, you may disconnect at this time. I would now like to turn the conference over to our leader, Mr. Robert Chess, Chairman. Sir, you may begin.

Yes. Thank you. Welcome to the Inhale's analysts' conference call to review our second quarter results. I am Robert Chess, Chairman of Inhale. Joining me today are Brigid Makes, our Chief Financial Officer; Ajit Gill, our President and CEO; and Milton Harris, the President of our Shearwater subsidiary. Before we get started, I need to read our Safe Harbor statement. The following presentation contains forward-looking statements that reflect our current views as to the company's business strategy, future products, product developments, clinical trials, manufacturing scale-up, and other future events and operations related to the company. The forward-looking statements also involve uncertainties and risks that are detailed in Inhale's report and other filings with the Securities and Exchange Commission including our Form 10-K for the year ended December 31, 2001. Actual results could differ materially from these forward-looking statements. With that out of the way, we can get on with the call. Today, we would like to discuss our financial results and review our progress towards our twin goals, building the leading provider of drug delivery solutions and expertise and of achieving operating profitability by the fourth quarter of 2005. We saw profits on both fronts in the past few months. First, we announced two additional development projects. These newly initiated programs are direct results of our strategy of building broader collaborations with partners to leverage our technologies to build their pipelines. In total, we now have eight new partner-drug programs this year. Second, we saw progress in the clinic. One of our partners moved to PEGylated into the clinic, bringing the total number of products that use our technology that are in clinical testing, five or approved to 20. Another of our partner started a pivotal trial in the US and yet another received approval to market a product in Europe and received expedited review for a combination product in the US. In addition, we saw encouraging phase to Exubera inhaled insulin data. As the focus of this call will be on our progress, we will discuss all of these achievements in more detail later. But first, Brigid will review our quarterly results and our guidance for the next quarter in the remainder of the year. Ajit will then follow with a review of progress in our milestones for the next 9 to 12 months and I will conclude with the summary and then we will open the call off to questions. Brigid.

Thanks Rob and welcome to everyone on the conference call today that will discuss our second quarter financial results. First, if I could provide an overview of the quarter's results. We continued in the second quarter to make progress toward our previously stated 2002 financial goals. We reported revenue of $22.3 million, an increase of 32 percent over the same quarter last year. As we noted last quarter, revenue for the second quarter was not expected to be as strong as the first quarter of 2002 since the first quarter included substantial shipments of clinical and pre-clinical free or our pre-launch supplies to total 49 million dollars compared to 30 million dollars during the first 6 months of 2001, an increase of 59 percent. We reported a net loss of 24.8 million dollars for the 3 months ended June 30th 2002. The 2002 net loss for the 3 months ended June 30th includes the loss on investments of 0.4 million dollars or 1 cent per share associated with shares held by the company of Alliance Pharmaceutical Corp. We had targeted our net loss at this quarter to be between 23 and 25 million dollars, and we were within that range. Operating expenses including cost of goods sold for the second quarter of 2002 were 44.9 million dollars, which is about the same as the first quarter if you exclude the one-time payment of 5.25 million dollars, made to Alliance Pharmaceutical.

Our operating expenses for the quarter totaled 45 million dollars that compares to operating expenses of 39 million dollars for the second quarter of 2001. This increase in spending over the prior year was almost entirely offset by higher revenues from product sales and partner funding of Inhale's .

We ended the quarter with a cash balance of approximately 336 million dollars versus 358.5 million dollars at the end of the first quarter 2002, reflecting a net cash burn for the second quarter of 22.6 million dollars, lower than the first quarter of net cash of 22.9 million dollars. Of this amount, 18.4 million dollars was attributed to operating activities and 4.2 million dollars associated with other activities, primarily capital expenditures. Overall the results of the second quarter were in line with our expectations for both revenues and spending.

I'd now like to discuss our guidance for the remainder of the year and for the third quarter as well. We have provided guidance in our last two conference calls that noted our targeted loss for the year was expected to be in the 105 to 110 million dollars range and we are reconfirming this guidance. In addition we noted that we expected to end the year with cash reserve in the range of 255 to 265 million dollars assuming payments from partners are received as planned. Revenue for 2002 is expected to increase 15 to 25 percent over 2001 versus our prior guidance of 10 to 20 percent increase. Unfunded R&D for 2002 is expected to be in the 80 to 85 million dollars range. To summarize, the increased targeted loss in 2002 over 2001 is primarily due to three areas. First, scale-up in commercial readiness costs associated with insulin and our SEDS technology. Approximately 20 to 25 million dollars of these costs are expected to be either one time in nature or become part of cost of goods when we begin commercial operations marking increased funding of Inhale proprietary products. Currently 10 percent of our pipeline represents Inhale initiated products. Our goal is to increase this percentage to 25 percent by 2004, by initiating additional proprietary programs during 2002 and 2003 across all three platforms. Some of these products should start clinical testing later in 2002 and in 2003. Finally, up to 50 percent of the incremental net loss in 2002 is attributed to the change in our net interest. There is a shift from net interest income to extend from 2001 to 2002 respectively. They represent the reduction of net interest of approximately 16 million dollars in the third quarter. For the third quarter of 2002, our net loss is targeted to be in the 27 to 29 million dollars range. Expenses will increase quarter over quarter primarily due to the continuing and increasing focus on certain scale-up and commercial readiness activities during the second half of the year that are associated with both drug and device manufacturing. However the timing of certain expenses may result in some variability quarter to quarter, but it is not expected to impact the total year targeted net loss. Revenues for the third and fourth quarters are not expected to be quite as strong as the first quarter, but more comparable to activity in the second quarter. As I previously stated, revenues in the first quarter were higher since. In the first quarter we included substantial shipments of clinical and free launch supplies. The number of outstanding shares at the end of the second quarter remained relatively unchanged and totaled 55.3 million. The outstanding shares number has remained much the same for the past year but may be impacted in 2002 by additional conversions by certain holders of our convertible debts, the exercise of stock options or other actions as determined by the company. I would now like to turn the call over to Ajit, who will discuss our progress and milestones for the next 9 to 12 months including new collaborations and the advancement in the clinical products using our technology. Ajit.

Thanks Brigid and good afternoon everybody. I too would like to welcome you to the conference call to discuss our second quarter results and our progress towards achieving our goals. Before discussing our progress, I'd like to take a moment to quickly reiterate our strategy and goals. Our goal is to become the leading provider of drug delivery solution. Our strategy is to help biopharma companies maximize the performance of their drug compound to enable them to create breakthrough products by applying our leading drug delivery technologies. We believe that the opportunity for drug delivery technologies has broadened and Inhale is poised to take advantage of the new opportunities resulting from this broadening.

We are now uniquely positioned to apply our advanced technologies to improve drug characteristics for our partners throughout the development process and we have seen progress as we implement the strategy.

As we said in last quarter conference call, we now have a broad diversified product pipeline and business base that provides a situation that is rare in biopharmaceutical companies our size. Namely, the ability to become a multi hundred million dollar business and reach operating profitability independent of the fate of a specific product, including Exubera or even several products. I would like to reiterate the plan we discussed last quarter to reach operating profitability by the fourth quarter 2005 and full year profitability in 2006 and then review our progress against this plan.

Inhale's profitability will be driven principally by two key factors. First, we expect revenues from products, milestones, and contract research to be over 200 million dollars by 2006, independent of the Exubera inhaled insulin product. If Exubera launches in this time frame, our revenue could double and profitability could be earlier. The revenue growth will be lead by new product approvals. Second, we plan for our unfunded R&D to significantly decrease from the current level of approximately 80 million dollars due to completion of scale of activities for insulin and the inhaler device, and the shifting of significant portions of quality and manufacturing infrastructure costs for Exubera from R&D to product cost for goods sold.

As you know, we now have 20 products that use our technology in the pipeline or filed or are approved. Three products are already approved. Two products are awaiting FDA approval. So, an additional 15 products are in various stages of clinical development. As part of our plan to reach profitability, we are assuming that two partner products that are awaiting FDA approval; PEGASYS and Somavert will be approved in the US.

The second part of the revenue equation to reach profitability is gaining approval through 2006 of 4 of 9 targets. Excluding Exubera, out of the 15 others currently in the clinic.

Now, let us look at the progress that we have made towards achieving these goals. First, we have seen progress toward approval of one of the two products already filed for approval. The FDA granted a 6-month priority review for Roche's combination therapy of PEGASYS and drive the viral tablets for the treatment of chronic hepatitis C. PEGASYS as you know, uses PEGylation technology licensed by Roche from our subsidiary, Shearwater. In addition, PEGASYS was recently approved in Europe.

Second, we have seen progress toward our goal of gaining approval of four of nine additional products or 10 if you count Exubera. Last, our partner Confluent moved their spray gel surgical adhesion product into pivotal testing in the US. This product is already approved for marketing in Europe. With the advancement of this product, we now have three products in US pivotal testing, excluding Exubera, Eyetech's aptamer product for macular degeneration and spray gel.

An additional program, CDP870 with Pharmacia for rheumatoid arthritis is expected to end the phase III testing later this year. So, by the end of 2002, of these nine programs, we expect to have three programs in pivotal testing, four others in phase II trail along with two programs in phase I testing. In addition, Exubera, as you know, is also in pivotal testing. The nine targeted products, which do not include Exubera, employed proven approaches. PEGylation for injection of pulmonary delivery to treat local lung conditions. Four of these programs offer molecules that are already approved in another delivery form and one is for a product already approved in Europe that needs to undergo testing in the US. The large number of products in late-stage testing combined with a high number of products using proven molecules and proven technical approaches give the confidence our revenue goal can be achieved.

In addition to our clinical success, we have seen progress on other fronts in the past few months towards becoming the leading provider of drug delivery solutions. In the past year, we have targeted multiple product deals with partners. These broader deals enable us to develop strategic relationships with pharmaceutical and biotechnology companies. The advantage to Inhale is that we can apply our technology more broadly across their pipelines, which in turn increases our product flow and reduces our sale cycles. In the second quarter, two of these collaborations resulted in additional development projects.

First, Chiron will develop inhaleable PA2794, a proprietary anti-infective from a class called macrolytes used to treat pulmonary infections. The companies believe that an inhaleable version of this proprietary antibiotic by treating lung infections directly, will enable easier delivery to the fight off of infection with potentially more rapid resolution of symptoms and reduce gastrointestinal side effects. As you will recall we are also... Second, Enzon has chosen inhalable leuprolide, a peptide used to treat prostate cancer and endometriosis as its first laboratory project. Other than the investigation of pulmonary single chain anti-bodies, under our broad strategic alliance announced in January, this particular project also reflects positively on the progress of our proprietary clinical programs. As you will recall, we conducted our own clinical trial of inhalable leuprolide, prior to partnering it with Enzon. The results of this trial showed that inhaled leuprolide was well absorbed and potentially could be given as once a day, single inhalation. These results will be the starting points to perform the necessary studies to prepare the products for follow on phase one work. In 2001, worldwide sales of injectable formulations of leuprolide acetate were reported to be approximately 1.5 billion dollars. With these two new collaborations, Inhale has announced a total of eight collaborations in the first seven months of 2002 across all three platforms, including three that will use our inhalable technology. Unimed for THC, Enzon for leuprolide, and Chiron for the new anti-infective product. Three that will use our PEGylation technology, three dimensional pharmaceutical product who treat low blood platelet count, Eyetech's product who treat macular degeneration, and Pharmacia CDP870 for rheumatoid arthritis, and two that will use our supercritical-fluids technology including a manufacturing relationship with Johnson and Johnson. We believe that this is an impressive number of collaborations and shows the broad interest of biopharma companies of using our technologies to grow and increase the value of the pipeline.

Next, we are seeing additional progress in the clinic. Several of our partners have presented data that clearly illustrate the value of our inhalable and PEGylation technologies. I would like to take the time now to review two of these. First, at their analyst meeting last week, Pfizer provided an update on Exubera. According to Pfizer, they are very encouraged from their review of interim data from ongoing and said that the data indicates that the small changes in pulmonary function calculated from previous results are not progressive. While we have not seen the data ourselves, and do not have any update on their filing strategy, we are certainly encouraged by Pfizer's characterization of the data. They, from these results and their belief that they need to augment the available long-term safety data for the FDA filing; they have already initiated some additional Type 1 and Type 2 trials. In May and June, Pfizer and Aventis had reported additional encouraging results from Phase III studies. In summary, the most recent data corroborate previous conclusions that, first, Exubera provides a in terms of glucose lowering compared to insulin injection. Second, Type 2 patients achieved improved glycemic control with Exubera, when is used alone or in combination of oral agent, compared to oral-agent therapy alone. Third, Type 1 and Type 2 patients reported greater overall treatment satisfaction and acceptance of Exubera compared to both insulin injections and oral agents.

nothing new. Small relative decreases in one of the full new function tests was seen in the as we already stated 57 are conducting additional studies to further confirm that these decreases are not progressors. In , there was an increased instance of antibiotic and patients were used Exubera but there did not appear to be any related clinical significance. Next we saw a new product using our regulation technology into the clinic. The generon moved into phase 1. Ascipine is a genetically engineered version of the naturally occuring human protein known as factor or CMTF. Pre-clinical studies have shown that injected ascipines travells through the blood stream to reach a critical area of the brain that regulates food intake. Acsipine has moved to bind the specific receptors and activate key signalling pathways in the brain that separates and subsequently reduce body weight. Free clinical results reported by regenoron indicated that with these animals from lost weight retreated with ascipine. Moreover, following suffational treatment, the animals did not exhibit the bench over eating and immediate rebound rate gain that is characteristic of diving. The generon's 12 month phase trial for the original form of ascipine is scheduled to be complete at the end of the year. The peglated ascipine is a second generation molecule designed to remain at the blood stream longer thereby possibly enabling low dosing regiments and less frequent dosing. The original ascipine has taken via the injection. I would like to now review progress that gives a 12 month milestone that we lifted in our conference call last quarter. First we said we that we anticipated 2 to 3 new products going into the clinic during the next year. has entered for this one. Second we said that we anticipated one of those products filed for reproval to be approved. Of these, pegasis was approved in Europe and received review as the combination product started share in the US. Third, we said that we anticipated the confluent surgical would start pivotal testing this year. Confluent Confluent initiated pivotal trial of SprayGel in June. Fourth, we said that we anticipated that would select us first product for colloboration. Enzone and Inhale are now for selection of Inhale's June. Now let us turn to our milestones for the next 9 to 12 months. We anticipate first, continung of the

accelerated pace of colloborations we have seen over the last year and the announcement of several additional colloborations. Second, the US approval on on the combination therepy. Third, possible just a reminder is pharmaceutical therapy for the treatment of that uses our PEGylation technology. Fourth, the start of the also a pharmaceutical product originally developed by , a large UK bio technology company. It is therapy to treat rheumatoid arthritis. Fifth, also 1 phase 2 trial start. This is an inhalable product to treat genetic emphysema being developed by . Sixth, clarity of the filing date for Exubera and seventh, an additional want-to-do products to enter the clinic.

Thank you Ajit. In summary, several years ago, we initiated a strategy to achieve leadership in the drug delivery market, as we saw broadening of the need for drug delivery technologies. We believe today that we are positioned to take advantage of this broadening of drug delivery needs and that the biopharma industry recognizes the value of our technologies and expertise. With eight new programs announced during the first seven months of this year, we are adding partnerships at a rate unprecedented in the drug delivery industry. Our pipeline continues to grow and mature as new products enter the clinic and others start pivotal trials and reach the final stages of FDA approval. The past few months have seen continued progress towards our goals of broadening Inhale values at the pharma industry and bio-pharma industry `our goal profitability`. There are now 20 products using our technology that are approved, filed for approval and clinical trials. We are working on an initial 60 plus projects currently, including the exploration of a half dozen proprietary projects across all three platforms. In the next 9 to 12 months we expect to see continued progress towards achieving our goals that will include additional collaborations and progress in the clinic of products that use our technologies. That concludes the formal part of the conference call. I would like now to open up to questions. Operator, would you please call for questions.

Sure. At this time if you would like to ask a question, please press 'star' then 'one' on your touch-tone phone. If you are using speaker equipment, you may need to lift your handset prior to pressing 'star one'. To withdraw your question, please press 'star two'. Once again that's 'star one' to ask a question and 'star two' to cancel. One moment please for the questions to register. Our first question is from Ian Sanderson of SG Cowen. You may ask your question.

Good afternoon.

Hi Ian.

Couple of questions if I could, first, on the three collaborations that had been announced so far this year, using the PEGylation technology, how should we characterize this? Are those new collaborations under the, you know, more generous economics to Inhale or are they collaborations, you know, that were in feasibility with Shearwater that had just been formalized and we should assume the old economics? Secondly, any updates on the J&J multi-product collaboration and might we hear some news out of that and then third, the PEG Somavert with Pharmacia, not expected to be a big product for Pharmacia, do you think there might be any risk to that post the merger with Pfizer?

Ian, let me take the one on the economics and on, Somavert, may be, Ajit, do you want to take the one on the J&J multi-product?

Sure.

Okay, first of all on PEG Somavert, I mean, I think in general, let me just kind of see more broadly if the Pfizer merger goes through with Pharmacia, I mean, I think in general that actually should be quite positive for Inhale, because, you know, obviously we have, you know, excellent relationships in, very deep relationships across Pfizer, so, and we have a number of programs with Pharmacia, I mean both CDP870, Somavert that you mentioned, and the others work and so actually I think in general that should be actually a very positive event for Inhale. understand that, that was the product that they mentioned during their analyst's call, the meeting that Pfizer had a week ago, you know, in discussing the merger in general and Pfizer's position. So we take it as a positive sign that there was something that they mentioned and brought up during there, they as a product at that late stage that I think has the potential for several hundred million in sales. I think obviously that should be a positive product for Pfizer is part of that and so it is not something that at least at this point we would see that as a concern. Now in reviewing the three products that you mentioned, 3D Pharmaceuticals, Eyetech and CDP870. In general, I don't want to characterize the economics of any individual deal, but in general, the deals that we are signing now, whether they were done in feasibilities earlier or kind of newer programs in general have improved economics over the deals that we signed a few years ago. We don't want to characterize any individual and I think that is certainly a general statement that we can make.

Okay. So all three of those fall into that bucket.

I mean, obviously some deals have better economics than others, but I think they all are, you know, if we sort of characterize some of the early deals that is having, in some cases being no royalties at all and just manufacturing markups. Typically the deals being signed now either are royalty-based deals or if are manufacturing markup, have significantly more manufacturing markups than the earlier deals.

Okay. Thank you.

And Ian on the J&J program, that program had been, I think, moving along fine. Those are earlier stage relationships. And so I don't anticipate any significant news in the near term regarding any of those molecules.

Thank you.

Our next question is from Hari Sambasivam of Merrill Lynch. You may ask your question.

Yes. Perhaps a question for Brigid. You mentioned in the guidance, the percentage of proprietary products or how much you are spending on R&D on proprietary products. And you mentioned that you were going to change that, that it was going to increase, and I am wondering whether you could maybe clarify your total R&D spend and how it would look once you are actually expanding your proprietary development pipeline? And I think I missed that, when you were explaining that particular portion.

Yes Hari. We indicated in the call that we were spending somewhere with our unfunded R&D, which includes spending on the scale of cost in the commercial readiness of 80 to 85 million dollars. So embedded in that number is spending on our proprietary programs as well. We do expect to increase the spending on proprietary programs and one of the things, we have not given specific guidance on that, but one of the things that we expect is that we would take about 25, we would target having about a quarter of our pipeline being proprietary products. And with to being partnered as we further approach the 2004-2005 timeframe and that's where we talked about how we would decrease that spending as those proprietary programs moved from being Inhale-funded to partner-funded.

clearly the R&D stand. Some of that would be offset by the transition of the R&D that's currently part of our scale-up and commercial readiness.

Just on that point, is it 25 percent of compounds or is it 25 percent of spend? How do you characterize that?

I would say that its 25 percent of the compounds.

Yeah. I mean I think really the way we are looking at it and Ajit, you may well as comment also is that we are looking, I think, longer term that try 20 percent, 5 percent of the value of our pipeline as opposed to any specific numbers, you know, 25 percent of the value of our pipeline really being attributed to programs that we initiate ourselves.

And rough time frame to achieve that 25 percent type of goal?

I think we are targeting sort of by this 2004 time frame.

Maybe a question for Robert. Ajit here that type of products that you are trying to make into proprietary products, could you give us may be some of the criteria that you might be using to select these compound? Is it ease of delivery, is it intellectual property. What is it that sort of goes into your thinking to pick these products?

Ajit, do you want to take that and kind of add anything to that?

Sure. Purely, Hari, the first, sort of, part on, selecting those products is where does our technology make a difference and one of the first way to think about it is where is it, does, using our technology, changing either the root of administration or reducing the number of injections in the case of PEGylation, where is that of, sort of, a significant value. The second thing that we are doing as part of that is that looking and saying 'okay, what else could we be doing to this product to actually make it a better product', as opposed to just a product that's delivered in a better way. Because if you look, for example on the PEGylation side, on some of the clinical data that has been presented on some of the products not only do you end up with products where you have fewer injections, you also have potentially products that are better products, increased , you know, fewer side effects and so on. And so it is sort of two step, the first screen being where is our technology applicable and in a way where it makes a difference and then what else can you do to come up with a better product? Okay?

Great. Thank you.

Our next question is from Steven Rosten of Kline Capital management. Sir, you may ask your question.

Yes. I was just going to follow up on the year-end question on the three announced collaborations for PEG. You said that the collaborations that you are signing now have improved economics versus before. What I am clear is, there is some of us, we don't know when those three, what timeframe they were signed or knows when they were announced. Is it in a more favorable economic timeframe or you don't want to discuss that?

This is Robert. I can take that. Actually each of these was signed during the course of the last several months.

The final economic terms, you know, and the final development deals, you know, were signed recently.

That's very clear. Thank you.

And once again, that's 'star one' if you would like to ask a question and 'star two' to withdraw your question. Our next question is from Kurt Lamister of MPM Capital. You may ask your question.

Hi Rob.

Hi Kurt.

Question for Brigid. It looks like the quarter loss lined up with your cash burn pretty well, but if you go forward the next two quarters, regarding to a cash balance of 255 to 265 millions dollars at year end and a loss in the third quarter of 27 million to 29 million dollars and if just sort of do the math at least your cash burn is somewhere in the fourth quarter over the next six months is greater than the loss you are running at. What makes up the difference there?

Kurt, actually if you look at our CAPEX for the first half of the year, it was well behind sort of the plan spending for at least it was not on a levelized basis, if you will. But most of the difference is clearly going to be in the increased capital spending that is associated with scaling up, some final scale-up in investments in the drug and device worlds as well as investments in scaling up manufacturing for its Shearwater as well as Bradford.

Is the majority there Exubera-related in the scale of CAPEX area?

I would say it probably has fifty-fifty, that its effect is probably a little less, maybe a third Exubera and the rest is scaling-up in other areas.

Okay. Then a question for Ajit and Rob. At least in the bio that came up this week, there is a quote talking about the Pfizer people trying to get a better time horizon on the Exubera filing strategies and they claim, at least Peter Corr, claims that they should have it in the late third quarter. Is that something that has sort of gone through your thinking as well?

Obviously, we may have all things that through our thinking, but its really Pfizer and Aventis' decision on that. I mean, I can mention something that, you know, you might be aware of that Peter Corr mentioned during the analyst's meeting that they had last week, which was, they had planned to get together with Aventis, you know, to specifically discuss the filing strategy given the, you know, their encouraging data that they saw from the, you know, 12 months safety data, you know, and that has been, you know, postponed, somewhat, you know, specifically because of the Pharmacia, you know, Pfizer merger and people like Peter Corr being a little distracted right now. But, you know, our assumption is that once they work themselves through that, they still get together and hopefully have more clarity there though, you know, that's clearly going to be their decision on both, you know, on the timing of that and the timing that they want to talk about it publicly.

And the capital expenditures, you were saying that were capital in the next six months, at least on the Exubera timeframe are following the same timeframe of an approval, or I should say, a filing and free for Pfizer Aventis?

We clearly cannot discuss, you know, cannot discuss, you know, sort of the matching of possible, you know, capital expenditures, to filing, though obviously one thing that we need to be quite aware of in our spending is we need to be, you know, given whatever the strategy turns out to be, we need to be ready to execute it.

Okay and last

Lock down on now manufacturing runs?

But we are continuing, as we have noted in sort of our 10-K and 10-Q filings. We are still finalizing sort of some of the manufacturability issues in getting those issues dissolved.

Okay. Thanks.

And once again that is star one to ask question.

At this time, I show no further questions and I would like to turn the conference back over to Mr. Chess.

Great. If there are no further questions, we just like to thank everyone for listening to the call in today. I think as you can see, we have made a tremendous amount of progress, both this last quarter and the first half of this year at Inhale in building our pipeline and progressing it and gaining an adoption of our technologies probably throughout the pharma industry. If you are sitting with further questions, feel free to call my cell, Ajit, Brigid, Joyce Strand, our Director of Communications. Thank you.

Thank you.

Thank you.

Thank you for participating in this afternoon's conference call and have a nice day.