Novavax Inc (NVAX) 2012 Q2 法說會逐字稿

Good day, ladies and gentlemen and welcome to the Novavax second quarter earnings conference call. (Operator Instructions). I would now like to turn the conference over to your host, Mr. John Hermann. Please go ahead, sir.

Thank you. Good morning, everyone. This is John Hermann, Vice President and General Council of Novavax. Thank you for joining us on today's second quarter 2012 financial results conference call. Both the earnings release from this morning and an archive of this earnings call can be found on the Company's website at novavax.com.

On today's call are Novavax's President and CEO, Stan, Erck, our Vice President and CFO Fred Driscoll, our Chief Medical Officer Dr. Greg Glenn, and our Vice President of Medical Affairs Dr. Lou Fries. Before we begin our prepared remarks, I remind you that we will be making Forward-looking statements during this teleconference that may include financial, clinical or commercial projections. Statements relating to future financial or business performance, conditions or strategies and other financial and business matters including expectations regarding revenue, operating expenses, cash usage and clinical developments and anticipated milestones are all Forward-looking statements within the meanings of the Private Securities Litigation Reform Act.

Novavax cautions these Forward-looking statements are such to numerous assumptions, risks and uncertainties which change over time. Further information on the factors and risk that could affect Novavax's business, financial conditions, and results of operations are contained in Novavax's filings with the SEC which are available at www.sec.gov. These Forward-looking statements speak only as of the date of this call and Novavax assumes no duty to update such statements. With that said, I will now turn the call over to Stan.

Thanks, John and good morning, everyone. As we have discussed in previous calls, the last year and a half has been spent building our management team, developing an infrastructure that will allow us to ultimately take a product into the market place, and building and managing alliances to support our products into a global market. All though we are far from finished, I am pleased to report that we are beginning to see the fruits of these efforts.

In the last six months, we have initiated three clinical trials vaccinating more than 1100 subjects. Data from these trials are beginning to come out. We have recently reported on the first of these trials and expect to report data on our two pandemic influenza trials within the next 90 days.

In addition, we have launched two new collaborations, continue to advance our preclinical and clinical vaccine programs both at Novavax and with our joint venture partner in India, and have strengthened our balance sheet. We are now in a stronger position to execute on our clinical and commercial plans, and with that deliver enhanced shareholder value. I will first talk a little about our recent accomplishments and then turn the call over to Fred to summarize the quarterly financial results. After that we will take questions.

I know some of you may have technical and scientific questions about our programs and vaccines, and I have asked Dr.sGreg Glenn and Lou Fries to be here to help get you answers. Well let us start with our seasonal flu vaccine program and the positive topline results we announced last week from the Phase 2 dose ranging clinical trial of our quadrivalent vaccine. As you saw in our recent press release, this study was designed to evaluate both immunogenicity and safety of three dose levels of our quadrivalent vaccine and help the adults between the ages of 18 and 64 years old.

As we reported the trial reached its primary influence of demonstrating safety and immunogenicity in all three dose levels. As always we first looked at safety. Good safety results are key not only to this product, but to our entire product platform.

I am happy to report that we again saw in this trial a clean safety profile and did not see anything that causes us concern for going forward. I should note that with this last trial, we now tested our Influenza VLP vaccines in over 5,000 subjects. To demonstrate immunogenicity we measure hemoglobin inhibition or HAI responses at day 21.

The two primary measurements of immunogenicity that are commonly used for an influenza vaccine are the level of seril protection which is the percent of vaccineees that achieves a certain level of HAI titers and seril conversion which is the percent of vaccinees that achieved a four-fold increase in the level of HAI titer. Our quadrivalent vaccine met FDA sale protection requirements for all four viral strains and seril conversion levels for three out of the four strains. Seril conversions for the remaining strain the B_Brisbane fell below the FDA guideline.

There are a few potential reasons for this. We have already initiated a number of actions to address this issue before we launch our next Phase 2 study in 2013. These studies include looking at the details of how one should measure these titers when using a VLP-based vaccine rather than traditional egg-dry vaccine and also looking at a variety of process-development experiments that might further improve the immunogenicity of that single strain or for that matter, all the strains. Another aspect of this trial that marked a first for Novavax, we met a manufacturing milestone by producing our vaccine in a thousand liter scale bioreactor.

In fact, we produced each of the strains using a single-use technology process in a scale that could be easily commercialized both in large markets and in smaller geographic markets. In short, we are all encouraged by these results. We plan to report the full clinical results at future scientific meeting. We reviewed the preliminary findings in detail with our colleagues at BARD.

We will continue moving forward working under the BARDA contract as we design and execute our future seasonal flu program and look forward to opening the data later this year from our pandemic flu trials. On that note, our pandemic flu program is also making great progress under our contract with BARDA. As you all saw, we have two Phase 1 trials ongoing with H5N1 pandemic influenza vaccine candidate in adults 18 to 49 years old.

These randomized observer blind dose ranging placebo-controlled trials are identical except for the use of two different adjuvants. The trials are now fully enrolled with topline data expected in the fourth quarter of this year. We expect the results of these trials will enable us to select the best adjuvant with which to move forward in the Phase 2 clinical testing next year. Turning to RSV. Our efforts to develop a vaccine to prevent RSV were strengthened as a result of the signing of our collaboration with PATH.

As we announced a few weeks ago, PATH has agreed to provide approximately $2 million in initial funding to support our Phase 2 dose ranging clinical trial in women of childbearing age. We plan to launch this trial in the fourth quarter of this year. Following this study, PATH has the option of continuing to support the maternal immunization program by through to commercialization by reimbursing us for 50% of our external development costs. This is a really important point because this collaboration effectively can provide nondilluted financing for Novavax and its shareholders by paying for a significant portion of our external expenses for the RSV vaccine while allowing us to retain global rights to the vaccine.

We believe this is a great commercial opportunity for Novavax. As I have said, There are no RSV prophylactic vaccines approved at present, the total RSV market opportunity may exceed $5 billion worldwide. If our studies and development program are successful, we will potentially have the first vaccine approved for this disease.

The PATH collaboration will build upon the excellent safety and immunogenicity results already reported in Phase 1 stay of our recombinant nanoparticle vaccine candidate. On the basis of these findings, we are moving ahead with the Phase 2 study in women of childbearing years that I mentioned earlier to expand the safety and immunogenicity database for our RSV vaccine. We are also planing to initiate a Phase 2 study in elderly patients later this year.

We have not lost sight of the fact that RSV is a serious cause of death and hospitalization in the elderly at a rate similar to influenza and thus an important unmet need and large vaccine market opportunity which we intend to pursue. At least from what has been publicly disclosed, we believe that with the imminent initiation of these Phase 2 trials, our RSV recombinant vaccine will be the most advanced RSV vaccine candidate currently in the clinic today.

In addition to the PATH collaboration, we recently launched a collaboration to develop [ ]vaccine with CPL Biologics. Our join partner in India. In collaboration with CPLB we are now working with India's international center for generic engineering biotechnology to develop a novel Malaria vaccine. This you unique public/private partnership will combine the advanced vaccine technology of Novavax with the centers Malaria vaccine research capabilities and CPLB's vaccine manufacturing capabilities.

The project is being funded by India's Department of Biotechnology Vaccine Grant Challenge Program, and will be managed by the Malaria Vaccine Development Program. A New Delhi based not-for-profit established to support the development of Malaria vaccines. CPLB has been a great strategic partner, and we congratulate them on their continued success.

On the capital resource front. We recently straightened the Company's balance sheet by completing the $12 million equity sale to a single institutional investor. This financing along with cash from our partners and higher second quarter revenues have improved our cash position and will allow us to maintain a strong momentum in each of our vaccine programs. However, we appreciate the importance of managing our resources prudently and applying them carefully . I believe this commitment is reflected in our second quarter results which Fred will review for you.

Before I turn the call over to Fred, I would like to leave you with the following key takeaway points. First, our recombinant platform technology has now delivered a broad pipeline of vaccine candidates targeting seasonal and pandemic influenza, RSV, rabies and Malaria. We are also working on other targets to add to this pipeline which we will disclose at a later date.

Second, over the next few quarters we will release clinical data from our four clinical trial in pandemic influenza and RSV which we believe should create significant shareholder value. Third, we have strengthened our balance sheet substantially over the past six months, and finally, we continue to create important collaborations such as with BARDA, PATH, LG Life Sciences, ICGEB and Cadilla, all of which are designed to help us reach our commercial potential. With that, I will now turn the call over to Fred.

Thank you, Stan. For the second quarter , we reported a net loss of $5.9 million or $0.05 per share, compared to a net loss of $5 million or $0.04 per share for the second quarter of 2011.

For the six months ended June 30, 2012, the net loss was $13.3 million or $0.11 per share compared to a net loss of $12.4 million or $0.11 per share for the same period in 2011.

Revenue in the second quarter of 2012 increased to $7.1 million as compared to $3 million for the same period in 2011 which represents a 137% increase as a result of the Company's contract with BARDA. In conjunction with this increased BARDA revenue, cost of contract revenue increased to $5.1 million in the second quarter of 2012 as compared to $1.2 million for the same period in 2011.

Research and development expenses increased to $5.2 million in the second quarter of 2012 as compared to $4.4 million for the same period in 2011 primarily due to higher employee-related costs and expenses associated with our new manufacturing facility.

General and administrative expenses decreased to $2.7 million in the second quarter of 2012 as compared to $3.3 million for the same period in 2011 primarily resulting from lower employee- related costs, partially offset by noncash expenses associated with our new office facility.

As of June 30th, 2012, the Company had $26.5 million in cash, cash equivalence and short-term investments compared to $18.3 as of December 31st 2011.

Net cash used in operating activities for the first half of 2012 was $10.3 million as compared to $17.4 million for the same period in 2011. A 41% reduction from the prior year period. Again due primarily to revenue under the BARDA contract.

At June 30th, 2012, our working capital position increased from $18.6 million at the end of Q1 to $25.6 million, a 37% improvement. That concludes our prepared remarks

Operator, we will turn the call over for questions.

Thank you. (Operator Instructions). And and our first question is from the line of Edward Tenthoff of Piper Jaffray. Your line is open. Please go ahead.

Thank you for the update. Lots of progress in the quarter. Perhaps we can start out with the pandemic opportunity here. You mentioned that you have completed enrollment and will be getting data in the fourth quarter. What are the steps beyond that towards commercialization or procurement?

This is Lou Fries. We of course need to continue with the clinical development and this would proceed step wise through one rather quickly accomplished step and then two further steps in the clinic. The first will be to look at the results of the two Phase 1 trials, excuse me, and downselect on one of the adjuvants. To date, we know nothing about the immune responses because the testing is just getting ready to get started after the receipt after the first set of sera.

We know so far that neither of the adjuvants have been was associated with a problematic safety profile. We will go through a set of decision criteria and downselect on the most advantageous of the two adjuvants in consultation with our colleagues at BARDA. We have then elaborated for BARDA and [ ] a plan for Phase 2 in which we will optimize the antigen and the adjuvant doses in a trial of young adults of a factorial design in which will vary both the antigen and adjuvant dose.

When we have results from that, when we have the say first three months results from that , we will take those data and use them to fuel a similar design in elderly subjects. As you are well aware, influenza vaccine responses are generally less in the elderly and both adjuvant and antigen and doses may have to be adjusted for use in elderly subjects. We will try to do that in a way that we actually use one formulation and can simply use different volumes in young adult and elderly subjects. When we have data from the elderly and from young to younger adults to optimize the dose, we will then proceed to an end of Phase 2 meeting with Sieber.

We will design a Phase 3 trial which because there is no pandemic vaccine -- pandemic disease, will be based on immunogenicity, and we will target in that the Sieber guidance values for both sero protection and sero conversion against an H5 strain. Probably in parallel with that study or conceivably after it depending on Sieber's viewpoint, we would do a relatively small study in children simply to show that children can receive the vaccine safely and have appropriate responses. Sieber has been very sensitive to the use of pandemic vaccines in children because they receive no immediate benefit from it. But we will establish the basis for approval based on immune responses in young adults and elderly adults will demonstrate that children can receive the vaccine safely in a small study , and that will constitute the data set that we would take forward for accelerated approval under current Sieber guidances.

That is a very helpful, very detailed update. I appreciate it.

Thank you. Our next question in queue is from the line of George Zavoico of MLV and Company. Your line is open. Please go ahead.

Hi, everyone. Thanks and congratulations on tremendous progress this quarter. Looking forward to seeing the results later on. I have a similar question regarding the RSV.

You are going to women of childbearing age. So they are not yet pregnant. If you show safety -- sorry? Oh, sorry. If you show immunogenicity the next step the is to go into women are pregnant? Is that the next step on that one.

As you know we have partnered with PATH, and that decision on the full clinical development plan has not been -- will be coordinated with their outlook. We would believe that the next trials will involve expanding the safety database in women of childbearing age before we go to pregnancy. But we have not determined what the safety database number will look like. It is likely the next trial would expand and focus on the dosing in the population that are not pregnant.

How do you see -- sorry.

The other piece to that is that this trial in women who are pregnant will require what we call reprotox study in animals where we study the vaccine. It is a very routine type of toxicology study to do if you are immunizing in a population like this. We would do a reprotox study that could take approximately a year.

Okay. But ultimately the $5 billion that you are talking about in terms of market size, what does that include? Does that include maternal immunization, infant and toddler immunization as well?

So What it encloses is actually four out of the five indications that we see. We have done a market study, and we limit it to the U.S. and came up with some pricing estimates and some peak sales estimates, and it includes introducing the vaccine for youngsters 0 to 2 years old, for toddlers 2 to 5, for the elderly as an annual seasonal vaccine and women of pregnant women to protect the youngest infants. What it does not include, but we think is a big opportunity for us to be studied is the combination of our flu and RSV vaccine for a seasonal respiratory vaccine in the elderly which we think is a great opportunity but requires a lot more development work.

And getting -- switching over to the seasonal, a quick question about -- in your prior press release, you mentioned you were doing process and assay improvements. Could you elaborate a little bit on that? The assay part you covered. You basically want to make sure that the assay is for the right antigen in the VLP versus the egg-based vaccines. Is that correct?

That is correct. There are a number of ways to do -- the primary assay has been used to license influenza vaccines is the hemagglutination inhibition assay as Stan has said earlier. And that typically uses antigens that are produced in eggs, and it is really optimized to match egg-derived vaccines. We do not know if that is the best way of assaying the responses to our vaccines. It may.

But it also may not be. And there are a number of possible variations on that. You can use the VLPs themselves as the source of antigen. The VLPs may be somewhat more closely similar to viruses that actually circulate in mammals than are the egg-derived viruses.

And the typical indicator cell hemagglutination inhibition assay is an avian cell, either a turkey or chicken red cell. And we have also initiated experiments looking at mammalian cells because they might match the VLPs a little bit better. It is not at all certain what way those results will go, but we need to explore those types of assays.

In addition, it is important to remember that the VLPs are designed to deliver with intent and focus on a second antigen which is neuraminidase. Neuraminidase is always the little brother of hemagglutenin in influenza vaccine responses. But neuraminidase has been shown to have significant - - antibodies to neraminidase are known to have significant capacity to modulate influenza disease.

Our vaccine delivers neraminidase. It has been shown to produce responses to neuraminidase and those can contribute -- those can be measured directly and they can also contribute to neutralization of the virus. We are expanding our net to look at neutralization assays and to look at neuraminidase inhibition assays. So we will examine all aspects of the vaccine's activity.

In terms of the process, as we refine our process, we are getting a much better handle on the amount of process residuals that we need to deal with. Bacular virus proteins, proteins from the cellular production system that need to be removed. And indeed live insect bacular virus that needs to be removed.

That is entirely nonpathogenic for mammals. It is not a pathogenicity concern, but we do want to control it closely as evidence of vaccine purity. As we refine our process, we are learning a lot more about exactly how much of those residuals we have to remove, and the steps that you take in the process are not necessarily benign to the vaccine.

They may actually impair the ability of some of the proteins in the vaccine to cause an immune response. So the more carefully we can adjust and refine the conditions that we used to remove residuals and inactivate viruses, the more likely we are to be able to deliver a more immunogenic vaccine. We are in the process of examining a lot of those variables right now with some positive results.

If the process has changed too much though there comes a point you might have to go back and do a new safety study, or is it not going to go that far?

We are very mindful of that . And we are very mindful of staying of inside the envelope of adjustments , and I use the word adjustment quite specifically talking about small changes in the levels of certain reagents that we use or the conditions with which certain steps are done.

But we have quite intentionally avoided anything that would represent a major change in the unit operations in the process. In addition, we are through a number of new hires that have occurred in the first half of the year. It is really strengthening our analytical group.

We are much better able to characterize the product that we have now. And we can look at the product that comes out of the old process and look at the product that comes out of the new process by a suite of characterization assays that we didn't have available to us before and able to give regulatory authorities confidence that, well, this is what we started with and this is what we have now. These are the improvements that we made, and it did not really change the profile of the product.

This is not something that needs to go back to square one. So we are paying close attention to that point.

And one final last quick question. If you switch from in the assay part from avian turkey -- from chicken cells to mammalian cells. Let us say for example it gives you better results, that would have to then of course I would think be approved by Sieber as well as a appropriate test for immunogenicity

It would be. But I think in the long run the negotiation with Sieber is to exactly what is the underpinning of the approval. It is one that we will have when we have an entire data package.

There is nothing that Sieber guidances that dictates exactly how you have to do the assay. Every single one of them elaborates, this is what we do now if the Company can present appropriate data that another assay is appropriate. We will consider it. Yes, it is easier to do exactly what is done now, but obviously if it is more advantageous to adjust to methodology, and we go with an adequate and convincing package to Sieber. We can have that negotiation.

Thank you very much. Look forward to continuing progress.

Thank you, George.

Thank you. Our next question in queue is from Kevin Degreeter with Ladenburg. Your line is open. Please go ahead.

Yes, good morning. Thanks for all of the color. A number of my questions have been answered, but maybe a couple housekeeping ones. Let us go ahead get Fred in here for a moment. Fred, what was the share count at the end of the quarter?

Share count at the end of the quarter was total shares outstanding about $132 million.

Great, and it looks like from that number you were relatively used the ATM in a relatively limited way in the quarter. In light of the financing that was done in the quarter, how do you view the utility of that at least through the remainder of calendar, 2012?

Well, let me say that the capital raised in the quarter was from the raise that we did that Stan mentioned, the $12 million raise to the single investor. As we have said, Kevin, we will continue to be opportunistic about utilization of the ATM. I think the good news here as Dan mentioned with the collaboration with PATH, $2 million coming into the coffers nondilutably is what we like to see .

And we also ended the -- noteworthy, we ended the quarter with a very heavy receivable from the government. So we also will see again cash infusion from BARDA coming in early in this next month. from operations. So I think my view financially the BARDA contract as I said has really improved the liquidity of the Company. We have seen almost a halving in the cash usage year-over-year, and we certainly expect that to continue and to get better as the program increases. So that is the guidance I give you on cash.

Terrific. I appreciate that. And then maybe just one on the clinical side.

Have you decided on a final set of dose range for the RSV programs and whether or not you plan to include adjuvants in one or both of those studies? And if you have not are there specific metrics that you are looking at to before you make that decision , additional preclinical data,perhaps specific set of discussions with outside advisors? Can you just walk us through kind of the timeline to make that decision. So we can kick off the study late this year Phase 2.

Thanks, Kevin, this is Greg. These next two trials we will do a trial in women of childbearing age and a trial in the elderly. We will ask very similar questions in both those trials that relate to the dose of the antigen, the role of the adjuvant, and in the case of the women of childbearing age, whether the one or two doses will be required based on our Phase 1 data.

Those trials will give us guidance for the future dosing and the inclusion of the adjuvant Now I should mention that our adjuvant not a novel adjuvant. It is allum, and that is a relatively benign regulatory pathway in terms of adjuvant evaluation. So we do consult with - - as you know we have a very strong outside scientific advisory board.

We have a group that devises both for the women of childbearing age maternal immunization effort as well as the elderly. And we will, with these trial results, our routine is to consult with them, share data, get their opinions going forward. Those pieces of information will help us determine the upcoming trial designs.

Terrific. Thanks so much.

Thank you, Kevin.

Thank you. And our next question in queue is from Chris Marai of Wedbush. Your line is open.

Hi, good morning. Thanks for taking my questions. First, I wanted to ask about the potential for a commercial partnership for RSV.

Given the collaboration with the nonprofit organizations have I noted that it was just for one of the four indications you talked about exploring for RSV? One, does this suggest that you maybe interested in division of responsibility for each RSV indications in a potential commercial partnership with say a partner executing on some understand locations while you guys are executing on others. Two, in a potential commercial partnership, are you looking at maintaining some of the commercial responsibilities as well in terms of marketing and rights in certain jurisdictions?

And three it sounds to me like the $2 million from the PATH organization can go a long way in the Phase 2 trial in women of childbearing age. For modeling purposes, roughly how large will that trial be? Thanks.

This is Stan. Thanks, Chris. I will answer the third question first on the PATH the $2 million that is coming in.

That is designed to support just this one trial that is coming up. I think it was 330 -- the subject population is 330 women.

Chris, this is Fred. I would subject that we do not disclose that. We would not disclose it. I would say the funding would substantially and provide a significant portion of the funding of that trial.

For partner, as we have said in the past, and first of all, I do not predict timing of partnering of our programs with pharmaceutical companies. As everybody knows these are long discussions . Data has to be exchanged.

There is lots of back and forth and the timing of these partnerships are completely unpredictable. So I will not predict. I will say that since we have been disclosing publicly our data , we have suspected and found out that all of the large vaccine companies are interested in an RSV program.

They either already have their own program going on, or they are looking for a new one or both. And as we have said, we think we represent the most advanced at least publicly disclosed the most advanced program. We are talking to all of the interested parties and our goal will be to ultimately find a partner who could finance the later stage Phase 2s and Phase 3s for this program. Whether it is on a regional basis or global basis that will be negotiated. And what residual rights we have depends precisely on those negotiations.

Great. And then in terms of your responsibilities though, you talk about a partner who can finance the later stage. Would you also be responsible for some of the execution on those trials and potential commercialization, or how are you looking at it at this point in time? Thank you.

Yes, again , that depends on what region we are discussing with the partner. It depends on what the partner's capabilities are versus ours. We currently have the capability to manufacture sufficient material, sufficient quantities to launch a product.

And we have the infrastructure both clinically and regulatory to take it through to licensure with what would be an expanded group if we are funded to do that. Again it is a negotiation. We are taking it through the manufacturing process and started into Phase 2 clinical trials on our own, and how much further we go depends upon the partner.

Great, thanks. Very helpful.

Thanks, Chris.

Thank you. And our next question is from the Edward Tenthoff from Piper Jaffray. Your line is open.

Great, thank you. Just a quick follow-up on the new partnership in India and the Malaria program. This is pretty interesting. Can you just run through what the process might be there, and maybe even add a little detail on how big that opportunity ultimately could be?

Well let me start on that. So they actually came to us. The ICGEB is an international research organization based in three different countries. One of their bases is in Delhi.

They were funded by the Department of Biotechnology which is part of India's equivalent of Health and Human Services. They know us fairly well. We have been to see them over the past couple years since we have gotten to know the Indian Health Service HHS equivalent. They saw the opportunity for using our VLP technology, our recombinant nano partical technology to make an approved vaccine -- what could potentially be an improved Malaria vaccine both more potent and broad and as you know India has -- Malaria is a large problem within India.

So the government has decided to fund the initial stage which is to take -- for us to clone a Malaria vaccine candidate and to purify it and provide material to the ICGEB who will then -- who has an infrastructure set up to do animal models. And based upon the data of the animal models, we would then seek funding for the later stage development in Phase 2s and ultimately Phase 3s. We envision right now that we would support the -- not only the cloning and purification and process development effort, but we would work with our partner in India which is Cadilla Pharmaceuticals Limited Biologics CPLB who has a GMP manufacturing facility all the way through fill and finish who would pick up the manufacturing of this vaccine for late-stage clinical trials and in conjunction with ICGEB, we would conduct those trials .

We expect the program to be fully funded as we go down the road by the various Malaria not-for-profit vaccine institutes and governmental organizations . I cannot put a number on what the market opportunity is. We all know that Malaria is a pathogen that causes hundreds of cases of Malaria every year. It is the number one infectious disease as Dr. Fries just tells me.

I believe the numbers on the order of their three quarters of a people die annually of Malaria. So it is number one disease. Obviously markets we would be selling the product would be primary low-income markets, and so the pricing would have to reflect that. There are lots of organizations who would like to support the distribution of a Malaria vaccine in Africa and India.

Excellent. That is really helpful.

Thank you. And with that I am showing no further questions. I would like to turn it back to Mr. Hermann for any further comments.

I will -- this is Stan. Thank you all for listening in. We look forward to reporting to you next quarter.

And again, thank you ladies and gentlemen for joining today's conference. You may now disconnect. Have a great day.