STAAR Surgical Co (STAA) 2005 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the STAAR Surgical first quarter results conference call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded today, Thursday, April 28, 2005.

I would now like to turn the conference over to Doug Sherk with the EVC Group.

Please go ahead, sir.

Thank you, operator. Good afternoon, everyone. Thank you for joining us this afternoon for the STAAR Surgical conference call to review the financial results for the first quarter of 2005 that ended April 1, 2005. The news release reviewing the first quarter results as well as a separate release regarding the appointment of new chairman of the board and senior management team changes crossed the wire this afternoon shortly after the market closed. If you haven’t received a copy of the release and would like to do so, please call our office at 415-896-6820, and we will get one to you immediately.

Additionally, we have arranged for a taped replay of this call which may be accessed by phone. The replay will take effect approximately 1 hour after the call’s conclusion and remain in effect through midnight Pacific Time on Thursday, May 5, for 7 days. The dial-in number to access the replay is 800-405-2236 or for international callers 303-590-3000. Both numbers need a passcode of 110285553#. This call is being broadcast live and an archived replay will also be available. To access the webcast, go to STAAR’s web site at www.staar.com.

Before we get started, during the course of this conference call the company will make projections or other forward-looking statements regarding future events including the expected cash burn for the full year 2005. There are risks and uncertainties involved in these statements and they include our ability to implement our cost-saving strategies and realize our expected savings. They also include our limited capital resources, the success of our efforts to realign our management team, and the results of our response to FDA observation, as well as our ability to reverse the decline in domestic sales of IOLs, our ability to successfully introduce and gain market acceptance of our redesign three-piece Collamer IOLs and insertion assistance, our ability to maintain or enhance our existing product sales and gross profit margin and reduce compliance expenditures, the need to obtain regulatory approval for new products and acceptance of new products by medical practitioners and consumers, the rapid pace of technological change in the ophthalmic industry, our ability to compete with major larger ophthalmic companies, general domestic and international economic conditions, access to financing and other factors beyond the control of STAAR Surgical Company, including those detailed from time to time in STAAR Surgical Company’s reports filed with the SEC. STAAR Surgical Company assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not and does not intend to do so.

Now I’d like to turn the call over to David Bailey, President and Chief Executive Officer of STAAR Surgical Company.

Thank you, Doug.

We have a lot to cover today, including our first quarter performance, FDA’s data regarding the ICL approval, and the progress of our three-piece Collamer lens, the changes in our senior management leadership team, and the changes we’ve made at board level to enhance corporate governance.

Let me start with the changes we’ve made at the senior management level and introduce [Deborah Andrews] [ph] who has been promoted to vice president and principle account officer and has agreed to become interim CFO with John Bily’s resignation. Deborah has been with STAAR for 10 years and has made a very significant contribution in the areas of finance and financial compliance and the new title is well deserved. I’m delighted Deborah has also agreed to take on the interim CFO role, and you will be hearing more from her later regarding the first quarter performance.

The other key change we announced was the appointment of Charles Kaufman in the new role of general counsel. We are delighted that Charles has joined the company and feel this new internal position will strengthen us going forward as well as lowering costs in certain key areas. Charles is very familiar with the company, having worked with STAAR as an outside attorney at Sheppard Mullin over the last 4 years. He brings a wealth of experience, with the added bonus of having worked in Japan and being very familiar with the Japanese language. This will help us as we move to make our Japanese venture with Canon more productive and profitable. Given the issues we have been facing, we feel that Charles will provide us with improved operating efficiency in the future.

On the business front, international continues to do well, and we have good reason to expect that it will continue to do well. Toric ICL sales as a percentage of total ICL sales continue to accelerate, with total sales growing 30% versus prior year, and 19% over the fourth quarter. This has been achieved just by aggressive marketing of the [inaudible] by AMO and Optic] [ph]. Controlled international rollout of the new multifocal lenses by Alcon and AMO is not affecting that growth because those lenses are targeted at a different patient group. As these products rollout in the U.S., they will grow the number of refractive procedures and increase practice revenues significantly. We believe this will hope the growth of refractive overall and further develop the market for the ICL technology. We expect new regulatory approvals over the course of this year to provide additional traction for the international business and the ICL business in particular. We are optimistic of Korean approval for the Toric ICL in the second quarter and approval for both the ICL and the Toric ICL in China during the fourth quarter. Given the opportunity for refractive growth in these Asian markets, we [inaudible] one of our most successful specialist to the region in order to manage the distribution channel and the rollout more effectively. We will back fill his position in Switzerland to ensure our momentum in existing markets continues with both the ICL and the preloaded IOL. The latter is growing well and we expect the launch the [inaudible] of the preloaded silicone lens late third quarter in the EU region. This will open up additional opportunities ahead of our [inaudible] production of at least part of this range of preloaded ICLs to our facility in Monrovia from our [inaudible] in Japan, resulting in significant cost of goods improvement.

At the [ESCRS] [ph] in early September we are planning a unique live surgery session. We have asked the organizers to allow one of our users to perform bilateral Toric ICL surgery during one of the 15-minute live surgery sessions. The surgeon is doing this routinely in his existing practice and reported on his outcomes at the recent ASCRS meeting in Washington. They are incredible. Let me quantify. In the U.S. clinical trials, 95% of patients have 20/25 best-corrected visual acuity before surgery and achieve the same acuity with no correction in place after they have had the Toric ICL surgery. We believe the technology will continue to do well for 2 reasons. It is compatible with modern day surgical techniques and two it’s compatible with the requirements of a modern day refractive center in terms of outcomes in patient profitability. The Toric ICL builds on all of this by adding the customized outcomes, the ultimate goal of any large commercial refractive center.

Regarding the U.S. approval for ICL, we continue to work diligently with the 2 key groups within the agency. The office of device evaluation will issue any approvable letter for the ICL and the office of compliance who are concerned with the audits of our facility, particularly in Monrovia. The dialogue with ODE around approvability is a critical milestone in early May when we expect to have all outstanding questions submitted to STAAR by ODE. This process has taken longer than we had first hoped, but there seems to be a mutual willingness to [inaudible] in the very near future. On the compliance front, we have had no formal communication with FDA since our meeting on the 27 of January when they informed us that Collamer material issues have been addressed to their satisfaction. This involves 7 of the 36 observations originally made by the inspector. Since that date, we have continued our internal work in anticipation of re-audit and believe we’ll be well prepared. We are being guided in our efforts by internal and external audits and believe we have done everything reasonably possible to prepare for a re-audit. There can, however, be no guarantee, and hence, I do not want to speculate on when ICL will be approved. For the Toric ICL, however, in the U.S. trial in particular, I can provide an update. Within the next 60-90 days we expect to have the data in house to complete the trial and to begin compiling the submission for the FDA. As we have stated in the past, the delays in the ICL approval have shortened the timeline between approval of the 2 products. I would reiterate, the outcomes of the disc lens are exceptional and are truly customized and they in general avoid the need for additional surgery. Re-treatments are dramatically reduced versus other treatments.

Our mere challenge with the business overall is the decline in U.S. sales. Delays in the ICL and the compliance overhand have exacerbated this trend. As we have stated, the key in the short term when turning this around is to rule out the new Collamer three-piece lens with injector, which we showed at the ASCRS meeting, and is on track to meet our Q2 deadline for rollout. Based on the clinical feedback so far, we expect this product to meet our anticipated goal of a $3 to $5 million run rate after the first 12 months of launch. Then from these numbers we would expect a meaningful impact to U.S. sales in our total P&L by the fourth quarter. We will continue to control expenses very tightly, particularly in the U.S., and consider additional structural changes if our cost-saving initiatives do not meet our stated goals. Deborah has been given the task of working with me to drive in efficiency out of the U.S. business. Our financials already reflect this activity, but we will be relentless in the pursuit of our cost reduction and efficiency programs.

Turning to our last call, we announced we were working with Morgan Stanley to explore strategic options. This activity continues and will be ongoing with a focus on maximizing shareholder value. At the board level, I am very pleased with the changes we have announced today. These changes are aimed at keeping start the forefront of current corporate governance trends. We have attracted outside directors of the [inaudible] and Don Bailey [inaudible] is very exciting and gives us a much stronger platform from which to build shareholder value. I would reiterate at this point within the press release that there is no relationship with Don and myself. Same surname, no relationship. I am pleased to be handing over the chairmanship to Don and will ensure that he is close enough to the operational issues to communicate effectively with shareholders. Don has the time to devote to the Company with his background experience and successful track record he will provide a very valuable perspective of both myself and further operational management. In addition, Don will provide other board members with a unique, independent perspective, as well as playing a major role in the evaluation of various strategies we are currently studying to enhance shareholder value. We look forward to his contribution.

I would now like to hand over to Deborah for opening up for questions.

Thank you, David.

Although I’ve been with STAAR for 10 years, for many of you this will be our first introduction. For today’s call, I will be focusing on some key financial measures of the Company. In addition to the regulatory issues we face, of uppermost concern to us is cash flow and reversing the trends that led to the going concern opinion and subsequent financing. Our efforts have already resulted in a lower than projected cash burn for operating activities during the first quarter of approximately 900,000, with cash flow from operating activities totalling 2.5 million for the first quarter of 2004 versus 3.1 million for Q4 2004 and 2.7 million in Q3 2004. This has been achieved through cost containment efforts in the U.S. and from our international operations which generated more cash than anticipated. We continue to gain traction in international markets with the ICL which grew 30% over first quarter of 2004 and 19% over fourth quarter of 2004. The ICL now represents 10% of consolidated worldwide sales. Our Swiss facility is realizing 64% standard margins on distributor pricing based on increased sales of ICL and Toric ICL. As a result, they were able to pay down their line of credit with UBS by $1.2 million while retaining availability under the line. Sales of preloaded injectors are also gaining momentum internationally and have really made an impact in our Australian subsidiary based on premium pricing. Preloaded IOL sales now represent 9% of total IOL sales for the Company. They are beginning to make [inaudible] in Germany where we have a very strong cataract franchise. International sales now represent 63.5% of the Company’s total sales, up from 59.2% in the first quarter of 2004, and 61.2% in the fourth quarter of 2004. Of perhaps greater significance is the fact that ICL sales now represent 15% of total international sales and growing. Although the ICL and the preloaded injector is doing well for our facility, the decline in Collamer IOL sales in the U.S. has forced our Swiss subsidiary, who manufactures the product, to reduce its workforce in response to the lower demand. This action taken in March 2005 is expected to rollout over the next 4 months and should result in a savings of approximately 250,000 this year or $500,000 on an annualized basis.

The most significant issues that we face in terms of cash flow have been and continue to be in the U.S. where total sales declined 10.1% from the first quarter of 2004 and 8.1% in the fourth quarter of 2004. Gross profit has been significantly eroded by lower volumes from IOLs, increased overhead, and reduced [inaudible] due to compliance activities, which took place in the second half of 2004. We are pleased that gross profit did not fall below its fourth quarter 2004 level of 47.2% and believe that with manufacturing improvements that have been introduced and increased volume, we will begin seeing at least some marginal improvement in manufacturing costs in the second quarter. The launch of the three-piece Collamer IOL will also improve absorption of overhead in Monrovia and will begin to help improve unit costs as volume increases significantly to little impact to gross profits by overall changes in average selling price between the first quarter of 2005 and the first quarter of 2004.

From an expense standpoint in the U.S., we previously announced various cost savings measures that were implemented in the first quarter, which we expect to total 3 million annually. We believe that we are on track for these cost reductions and continue to take other measures throughout the organization to drive out discretionary spending. Previously announced 3 million targets did not include the reduction in Switzerland I referenced earlier. Our biggest risk to achieving our cash flow forecast is in the continued decline in U.S. sales and as Dave referenced, we believe that with the rollout of three-piece Collamer IOL and injectors this has the potential to offset any underlying sales decline in the U.S. and drive sales growth [inaudible] of the year. This will have a significant impact on U.S. cash flow, which will add to the already positive trend we’ve seen internationally.

Looking ahead, we are not providing any revenue guidance for the second quarter during today’s call. However, I can tell you that based on the first quarter results and out actions to reduce costs, we expect total cash burns for 2005 to be at or below the cash burn of 2004, which was 9.6 million, including the proceeds of the private placements.

I would now like to hand over to Dave to open up for questions.

Thank you, Deborah.

Just before we open up to questions, I would just like to briefly comment on the international business. As you all appreciate, STAAR’s progress in the U.S. is dependent on the FDA approvals where this is not an impediment overseas. Although we will not see the potential for ICL fully realized in international until we have the positive effect from an FDA approval in the U.S., the business is, nonetheless, performing very satisfactorily, as is the cataract segment of that business. In quarter one ’05, we achieved revenue growth of 8.3% versus prior year. In the quarter, as Deborah said, we were cash flow positive in international and to finish we expect to replicate and, indeed, substantially exceed that type of performance in the U.S. market as and when ICL has approval.

I would now like to open it for questions.

Thank you, sir.

Joanne Wuensch, Harris Nesbitt

Hey, guys. Deborah, congrats on the promotion.

Thank you.

In terms of the three-piece Collamer in the U.S., you’re still targeting it for a second quarter launch for roughly a month into the second quarter. Tell me what – do you need FDA approval? Do you need to build inventory? What are the steps between today and a successful launch in the next few months?

We’re building inventory. We’ve increased the shifts, increased the overtime and we’ll double the shifts so that we’re building IOL inventory. We’ve been carrying out clinical evaluation prior to the ASCRS and subsequent from the ASCRS. We have some final steps just to sign-off documentation and pull things together, and we would expect to release the product into inventory in May and continue the rollout thereafter. So it’s well into the quarter 2 target that we said, Joanne. So we’re almost there.

But I mean do you need to get FDA approval for that?

Oh, no. That – this product is – already has regulator approval. The injector system was 510K approved mid last year. The lens enhancements that we’ve made were year-end submissions so there is no approval barrier. They’ve all been overcome so it really is just the internal quality sign-offs and the design trial sign-offs.

While we’re on the FDA topic, I know you don’t want to set timelines for approval for the ICL, but can you give us a little bit of qualitative information of where you are in your discussions?

Yes. I think focusing on ODE, which is the office of device evaluation, who are the people that would issue an approvable letter. We have an early May timeline where we would expect to get any and all outstanding questions over the file from them, and I think it’s fair to say that we don’t expect too many or them to be of a particularly substitutive nature. We expect to answer those very quickly, and we have talked to them, and there seems to be a willingness on both sides to try and get things closed off fairly quickly. So while I cannot give absolute, there is an absolute early commitment in May to have any and all questions back from them. We will turn those around very quickly, and based on what we’ve seen in the past, the turnaround and the closeout has been pretty quick once we have had the questions. So I would be looking to be for the next – for next month, May, to be a critical period with that ODE activity.

On the compliance front, we expect re-audit. That could be at anytime. It could be tomorrow. We are just pursuing our internal activity boasted by internal audits and external people auditors to make sure that we’re in the best shape possible. So for compliance it’s a little bit more difficult to put a timeline on but literally they could come tomorrow to re-audit, if they choose to re-audit and that’s what we’ve expected. That’s about as specific as I can be on the compliance front, Joanne.

Okay. Thank you very much and good luck.

Kate Sharadin, Pacific Growth Equities

Hi everybody. Can you just clarify, did the – you said the re-audit could happen anytime. What’s the difference between you guys requesting a re-audit and them just showing up [inaudible]?

Yes. FDA can come and re-audit any company at anytime, particularly in a situation we’re in. So I’m being advised that they could – you know, just to reiterate what I’ve said on prior calls, they could choose not to re-audit and take further action against the Company. Obviously, we’ve not seen that. They can re-audit at anytime or they can accept a request from us to have a re-audit, and it really is in their – it’s up to them what they do. We don’t have much control over that. So therefore as we’ve said in the past, we said [inaudible] which used the time effectively to internally prepare for what we believe will be a re-audit and that’s what we’re doing, Kate. But they – we could be re-audited at anytime and we could go and ask for a re-audit. At the moment, our approach has been to use this time to work very diligently internally with our new team to make sure that we’re in the best possible shape and feel that we’ve made huge progress in that regard. We’re closing out the items from the last audit and generally improving our systems and using those systems to demonstrate and verify compliance such as the whole project around the three-piece Collamer which is under the new design control system.

Okay. Do you – so are you – if you’re planning your strategy, do you guys have something on the calendar that you say, okay, we’re going to work through everything and this is kind of our goal that we would actually request or are you just kind of – you say using the time. I’m just trying to figure out if there is a goal in mind for yourself to ask them to come back or if that’s just not a good idea in your mind?

The internal goal is to work as hard as possible, which is what we’ve done, and then to get verification from our internal audits and using external people we’ve used 2 groups [Quintile and King and Folding [ph] to give us the confidence that we’re truly ready for a re-audit. Even if we request a re-audit, and that’s not an unreasonable strategy, there is no guarantee that it will occur in the timeframe we would want, Kate. So it’s a little uncertain even if we have a solid strategy, and I believe we do.

Since you do have some, you know, some sort of counsel on some of the stuff, you’re consultants, etc., are they telling you what might [inaudible] doing right now? I mean, it sounds like obviously it’s in their court. It’s in your court in terms of you guys continuing to pursue things, but with respect to them contacting you or showing up or whatever, what’s going on on their clock right now, do you think – best guess.

Difficult to say. Even the experts find difficulty in answering that. The more solid comment I’ve had is that the longer time goes on the more likely there is for a re-audit and that that could occur anytime. I mean, the longer the time that’s gone on since the last audit, the more chance there is of a re-audit which could occur at anytime. I know that sounds vague, Kate, but we’ve taken the best advice possible and that, in essence, is the advice that’s being given. The longer the time goes on, the more chance there is of a re-audit.

Okay. I’ll move on. I’m curious on the multifocals. You know, we’re familiar with what’s going on there and know it’s a different sort of target audience, but I think you made a comment about how some of the effort here as well as overseas that would perhaps drive the refractive business. Can you comment on that a little bit further?

Yes. I think generally there is a move to refractive surgery within the eye, intraocular refractive surgery, and that’s being driven by phakic implants and by the newer multifocal implants. The big – so I – you know, in the U.S., I think with the new approval, that is going to occur more and more. I think the multifocal implants, of which I’m very familiar and have been involved in, are generally targeted at the people who have presbyopia and the cataract market, but the pricing that they’re giving them is clearly focused at the presbyopic market and the very early cataract market. So I think that will drive refractive. That will drive more surgeons into refractive intraocular surgery and they will want to look at additional modalities to extend that refractive ridge and the ICL falls right into that given that it gives them a refractive option for patients in the mid 20s to the presbyopic age or further if they choose to.

So it just turns the attention then on the whole landscape of [inaudible] intraoculars? That’s what you’re saying?

Yes. Absolutely.

Okay. Fair enough.

And the more tools the doctor has to exploit that refractive market, the more it’s going to grow overall.

Okay. Just finally – you’re growth – ICL international, you guys generally quoting on dollars, right? Basically growth in dollars and is there anything to say on any change in ASPs or units or is it pretty steady?

It’s pretty steady. We invoice in dollars or we have so there is no currency impact and ASPs are actually up. We’ve actually had some price improvement and the margin that Deb recorded was 64% is on a distributor business, so that’s very healthy.

Okay. So just – will the ASP then kind of pick up if we start to [inaudible] Korea [inaudible] myopia.

I think you can expect that. As the mix of Toric increases, the price will push for sure.

Okay. Great. All right. Thanks very much.

Thanks, Kate.

Larry [Hamovich, HMGC] [ph]

Good afternoon, David. Sorry I missed you at [inaudible]. I know you had a very busy schedule. Just to reiterate your comments about the Toric ICL, I was at several of the papers that were talking about the Toric ICL and I talked to one doctor afterwards and he said – I can’t quote him exactly because the word was a four-letter word but he said it was something unbelievable the results. So I certainly concur with your comments on that. I wanted to clarify your regulatory path. It sounded like you were saying that the one-year followup period for that group comes up pretty soon. Did you say that you will follow with that data once the 1-year data is available and can be compiled into finishing up the PMA?

Good question. We need 125 primary eye with 1-year follow-ups. At the moment, we’ve got data on a number of eyes and a number are scheduled, so that within 60 to 90 days from now we expect the 1-year data on the whole 125 primary eye in house. Once we have that data – it could be as soon as 60 days, it could be as long as 90 days, then we can begin compiling the file for submission to FDA, and that usually takes a few months, and then we would submit, and we always said that we would want an approvable letter, or approval of the ICL before we submitted the Toric ICL.

So until the ICL either gets approvable or approved, you won’t file the Toric ICL?

I think that’s correct, but my timings look to be reasonably sequential. To relate to my comment on May with ODE and 60 to 90 days for the data and some time to compile, that could flow quite nicely, so I’m very pleased with that.

You lead to my next question, which is ODE and the ICL. The first question is you went to panel in October of ’03, if I recollect, and I’m just surprised that it’s not until May of ’05 that all the issues related to the approval X clients in California are not complete. Now did I – is there something I’m missing here, David, or has it indeed taken that long?

You’re not missing anything, Larry. It’s taken that long and it’s a lot longer than we believe. I think that there’s no doubt that the compliance issues have probably slowed things down even with ODE because we know they’ve been asked to comment on many of the compliance observations and that has taken ODE’s time. So, for example, on the material issues which accounted for 7 of the 36 observations, we know ODE [inaudible] asked to comment and help provide guidance on that and that’s what we were pleased about. So it’s no doubt they’ve had extra work as a result of the compliance issues and generally that will slow things down. So I think it has taken longer. I don’t necessarily think that it’s because of any fundamental problems with the file. We have had interesting discussions which would indicate that we’ve dealt with things pretty quickly and well and, as I said, there seems to be a willingness based on our conversation to try and bring this to a conclusion.

Okay.

And, you know, there is a school of thought that would say that ODE would not give approval before compliance is resolved. There is also a school of thought that says sometimes there will and any approval will be subject to resolution of compliance. So maybe it’s a combination of factors, but [inaudible] clearly we would have hoped it would take a lot less time, and there is nothing that we’ve seen in the dialogues with ODE that would indicate that there is a major problem with the product.

One more follow-up question with regard to what you just commented on, and I’ll jump back in queue, and that is, is there anything significant about an approvable letter before compliance in California is cleared beyond, hey, that feels good. It says Washington is happy with us, which is obviously a good thing from a feel-good standpoint, but is there anything practically valuable that we should say if we see that that we go, wow, isn’t that great news, beyond the fact that, well, now ODE is happy with the file. I mean, is there some more significance beyond that, David?

I would be pleased to have an approvable letter –

Oh. We all would be pleased.

[inaudible] compliance issues.

Yes. But still you’ve got the compliance – I mean, if you got an approvable letter in a month but the compliance issues in California were still ongoing, it would be a limited feel-good, I guess, is the way to say it.

Correct.

Okay. Very good. I just wanted to clarify your thoughts on it. Thanks so much, David.

Thank you.

[Tyson Halsey, Halsey Advisory Management] [ph]

I’m glad that you guys are making good success with reducing your operating expense [inaudible], David. You mentioned in your comments Don Bailey and the successful track record. Can you tell us a little more about Don Bailey and his track record?

Yes. Don Bailey is chairman of [Comarco] [ph] which is a U.S. public company. He used to run that company as president and CEO. We were delighted to have him come on the board. Clearly, he has got a strong knowledge of running a U.S. public company, and we said about late last year strengthening the board with that particular skill base, and the first step was bringing David Schlotterbeck on board, who has an excellent track record, one in the medical device arena. I think Don’s got a very strong track record, not in the medical device arena but, nevertheless, somebody who has run a U.S. company and is also chairman of that same public company, so he has a good background in terms of being the chairman of the public company that he used to run as president and CEO. So I think that’s only going to help. In 1998, he was elected chairman of the board and then assumed that non-executive role but prior to that he had run Comarco which he joined in 1980 and he became CEO in 1990. So during the 10-year tenure of Comarco, he clearly developed significant skills and strategy development and execution. He did a lot of change management, business building, acquisitions, divestiture of certain segments of that business, and good balance sheet management and oversaw some significant gains in shareholder value. So with that track record, I’m hopeful that shareholders will be excited about the contribution that Don can make for the company.

[Inaudible] shareholders?

I don’t have them quantified but pretty significant.

The last question when I was at the ASCRS, I think I ran into somebody that gave me the impression there might be an approval of the ICL in China this summer. I guess that was mistaken. Is that correct to your comments in the fourth quarter?

I can’t comment on what people told you at ASCRS but our current position is that we feel that could be in early fourth quarter with Toric ICL in Korea earlier than that. In fact, we estimate some time this quarter Q2.

How do the economics on that play out? That’s a split situation with [inaudible] and how large is that market in China?

The market in China is huge. The Lasik market currently is around 800,000 procedures in China. In terms of disapproval, it’s for the STAAR Surgical project and we [inaudible] anticipation of that we’ve actually moved somebody to the region to manage that rollout and that’s already beginning in terms of training costs, etc. So very excited and good potential and, obviously, as we’ve said in the past, Asia represents a highly myopic market with significant stigmatism and so I think the – I’m excited about getting Toric approval in Korea to build on our ICL approval and I’m excited about both products in China. Although the – and it helps, although it’s a huge geography, a lot of the volume is focused on specific census so that we can get reasonable coverage with certain specific high volume standards and, hopefully, build the business nicely from there.

Thank you for your time.

Management, we have no further questions. Do you have any concluding comments?

Excellent. No. Just thank you everybody for participating, some excellent questions, and we look forward to making further progress during the second quarter. Thank you very much.

Thank you. Ladies and gentlemen, this concludes the STAAR Surgical first quarter results conference call. 1