Teva Pharmaceutical Industries Ltd (TEVA) 2007 Q4 法說會逐字稿

Good morning. My name is Jackie and I will be your conference operator today. At this time I would like to welcome everyone to the Bentley Pharmaceuticals fourth-quarter and full-year 2007 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer period. (OPERATOR INSTRUCTIONS). It is now my pleasure to turn the floor over to your host, Richard Lindsay, Chief Financial Officer. Sir, you may begin your conference.

Thank you, Jackie. Good morning, everyone, and thank you for joining us. Before we begin I would like to remind you that today's call will contain forward-looking statements. By their nature forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future.

There are a number of factors that could cause actual results and developments to differ materially from these statements. For a discussion of the principal risks and uncertainties affecting Bentley, please see Item 1a called Risk Factors in the Company's annual report on Form 10-K for the year ended December 31, 2006; Bentley's subsequent periodic reports filed with the SEC as well as Item 1a Risk Factors and CPEX's Form 10 filed with the SEC on December 21, 2007.

I would also add that the Company uses both GAAP and certain non-GAAP measures to assess performance. The Company's management believes that these non-GAAP measures may also provide useful supplemental information to investors in order that they may evaluate Bentley's financial performance using the same measures as management.

The Company's management believes that, as a result, the investors afford it greater transparency in assessing the Company's financial performance. These non-GAAP financial measures should not be considered as a substitute for nor superior to measures of financial performance prepared in accordance with GAAP.

With that I will turn the call over to John Sedor, Bentley's President. After John's remarks I will review our financials and then we will take your questions. Please go ahead, John.

Thanks, Rich. And thank you, everyone, for taking the time to join us today. Our generics and drug delivery businesses both performed well in the fourth quarter. With solid sales of generic products in Europe and growth in drug delivery royalties from Testim, total revenues grew 29% from the fourth quarter of 2006 to a record $34.8 million. Adjusted for the rising value of the euro, total revenues were up 16% on a constant currency basis.

Looking at the full year, 2007 marked our seventh consecutive year for both top-line growth and profitable operations. Total revenues for the year increased 14% from 2006 to a record $124.7 million. Expressed in constant currency, the year-on-year increase was 5%. Net income for the full year grew to $2.8 million from approximately $1 million in 2006.

With that as background I'd like to highlight three key areas I will cover in my remarks this morning. First, I will discuss recent developments in our generics business. Second, I will cover the drug delivery business, focusing on both Testim and Nasulin. And third, I'll provide a quick update on our plan to spin off CPEX, our drug delivery business.

Turning first to generics -- the fourth quarter is typically strong for us, and this year was no exception, as our generic business reported its best sales quarter ever. Although lower reimbursement rates are continuing to affect our revenues and gross margins in the Spanish market, unit volume for our generic products in Spain increased 36% from the fourth quarter of 2006.

The demand for generics in Spain remains very robust and our subsidiaries continue to be aggressive in launching products into the growing market. As previously announced, we received five generic product approvals from the Spanish Ministry of Health in the fourth quarter and we have several additional products in the approval pipeline as we begin 2008.

Given the reimbursement environment and resulting pricing constraints in Spain, we were pleased with our gross margins in the generics business this quarter. Looking forward, as we ramp up commercial production at our expanded API facility in Spain, we expect to see improved gross margins for omeprazole and other key products in 2008.

We've made a strategic priority over the past few years to expand beyond Spain and capitalize on growing demand for generic pharmaceuticals in other European markets. Executing on this strategy in the fourth quarter we received approval to market versions of the cholesterol-lowering drug, simvastatin, and the osteoporosis drug, Fosamax, in Ireland. We also have received approval to market a generic version of Prevacid in France. Prevacid is used to treat acid reflux disease and gastric ulcers.

Reflecting the expansion of our generics business in markets outside of Spain, non-Spanish revenues increased 72% this quarter compared with the fourth quarter of 2006. For the full year revenues from product sales outside of Spain increased nearly 36% to $32.4 million.

Just last month we announced a multiple approval through the mutual recognition process to market our omeprazole products in the major markets of Germany and Italy, as well as other EU countries. Omeprazole is indicated for gastric ulcers and marketed under the trade name Prilosec in the U.S. and Losec in Europe. Additional approvals for other Bentley products are pending and we expect that commercializing these products along with omeprazole in our new European markets will grow our generic revenues outside of Spain in excess of 25% in 2008.

I would like now to turn to our drug delivery business. On October 23, 2007, we announced our intention to spin-off our drug delivery business as a new company, CPEX Pharmaceuticals, Inc. We identified four key value drivers for the CPEX business. These include -- first, maintaining and growing our revenue base; second, continuing to develop Nasulin to achieve its maximum value; third, expanding and developing our internal pipeline of products beyond Testim and Nasulin; and fourth, outlicensing our CPE-215 permeation enhancement technology to potential partners that have products that can benefit from this technology. Let me give you an update on each of these key value drivers for CPEX.

On the first of these, with respect to growing our revenue base it was a milestone quarter for Testim, a testosterone gel marketed by our licensing partner, Auxilium, and Bentley's first licensed drug delivery product. As you know, we have been working for several years to expand and strengthen our patent position for Testim. As the announced in January, the USPTO granted Bentley a new U.S. patent for Testim that protects our intellectual property until the year 2025 or 20 years from the filing date of April 2003 plus an additional two-year extension.

In addition to the U.S. issuance, we recently received our European patent and foreign filing issuances in six other countries. This news was a major milestone for Bentley. Testim's share of the U.S. testosterone gel market is now more than 22% compared with approximately 19% in 2006. And prescriptions for Testim have grown nearly twice as fast as the market over the past year. As a result, our drug delivery revenues for the fourth quarter of 2007 grew 43% from the same quarter a year ago.

The second critical value driver for CPEX is Nasulin. Due to the significance of Nasulin we continue to focus a great deal of our resources on building its value and attracting a suitable licensing partner. The withdrawal from the market of inhaled products by Pfizer, Novo Nordisk and Eli Lilly leaves a vacuum for the right product for diabetes, a product with the right clinical profile as well as one that offers better delivery options. We believe that product can be Nasulin and we continue to move it forward in development.

We have developed an ongoing strategic planning process that continually monitors and assesses the goals and objectives for our Nasulin program. Although there is insufficient time to provide complete details of that assessment here, I would like to describe for you today how this ongoing process allows us to adapt our Nasulin program as new data becomes available to increase the value of Nasulin for CPEX, its shareholders and to a perspective licensing partner.

When we first began the development of intranasal nasal insulin we believed that the value driver was the CPE permeation enhancement delivery technology that we had demonstrated in Testim. We also believed that providing a product that liberated the patient from injection, targeting nasal delivery instead of the lung and demonstrating glucodynamic equivalence with existing insulin products would radically improve compliance and lead to better clinical care along with commercial success.

We were happy with the validations we saw in our early clinical studies and the advances we have made in our registration efforts. By last summer however it became apparent that the product profile emerging in the latest Phase II data that we presented at the ADA National Conference was different from the pharmacokinetic profile of existing insulin products.

With nasal spray administration Nasulin showed a rapid delivery to the bloodstream, but also a shorter duration such that the insulin decreased in the circulation within a matter of hours. We came to realize that this characteristic more closely mirrors the action of natural insulin produced by a healthy pancreas and by itself could be the major driving force for the product.

By its rapid appearance we believed that the delivered insulin could be a signal to shut down excessive glucose production after a meal, reducing the requirement of insulin administration. By its shorter duration, similar to endogenous insulin, we believed that the risk of hypoglycemic -- caused by insulin persisting long after it's needed could be reduced. We have therefore modified our Nasulin program to demonstrate these potential advantages and adjusted our clinical strategy as initially developed.

We reported on Phase II studies in India in February. That study was designed according to our original product profile to demonstrate equivalence in glycemic action and tolerance and safety of the drug in regular three times per day use for a three-month period. As we reported earlier, the data was unclear in regard to our projected PPBS and our HbA1c criteria since they seem to be met in the patient's at two months but not at three.

We were satisfied with the tolerability that the product showed because we had no patients withdraw related to complaints about nasal adverse affects or other product-related phenomenon. Although our original intent had been to use this study as a lunch for moving forward in Phase III trials in India, demonstrating glucodynamic equivalence with available insulin products, we believe that we can achieve greater value overall by redirecting our clinical development goals to demonstrate better glycemic control and less hypoglycemia.

We estimate that to achieve this product profile we need to conduct additional clinical trials, based on the amount of new data we believe will be required and also in light of the FDA's recent guidelines regarding the licensing of new insulin product, our goal is to conclude these studies with an end of Phase II meeting with the FDA in the second half of 2009. At that meeting we plan to discuss the roadmap we have created that could be used to conduct Phase III studies and move to final product approval.

In addition to clinical progress and plans I have outlined, we are continuing to build value in other areas that are important for a potential licensing partner. We are currently negotiating with contract manufacturers to secure the capacity to meet all our manufacturing needs -- for Nasulin, for the rest of our clinical development, and for the first couple years of marketed sales.

The third key driver for CPEX's business strategy is to continue to develop a pipeline of products that we can either license or eventually take to market. This will create long-term value for the company and lead to a sustainable business model. We are assessing a number of candidates with an objective of moving at least one of them into clinical development over the next year. We are amenable to developing these compounds in-house or if we can create value by acquiring compounds that will benefit from our technology. We will have updates on our development product pipeline as the year progresses.

The fourth key value driver for CPEX is to partner our CPE-215 platform technology. As we stated in our prior conference call, we also believe that our platform can be applied to a large range of molecules. We have discussed making that technology available to a number of biotechnology companies and will also be providing updates on that in subsequent conference calls as CPEX moves forward.

I'll conclude with a brief update on our plan to separate our drug delivery business from our generics business. As you know, our newly formed subsidiary, CPEX Pharmaceuticals, filed a Form 10 with the SEC in late December. Completion of the proposed spin-off is subject to numerous conditions including the Form 10 being declared effective by the SEC and approval by Bentley's Board of Directors.

In addition, as previously announced, we're continuing to explore strategic opportunities for our generics business. Now I'd like to turn the call over to our CFO, Rich Lindsay, for a discussion of our fourth-quarter financials. Rich?

Thanks, John. Consolidated revenues for the fourth quarter of 2007 increased 29% to $34.8 million from $27.1 million reported in the fourth quarter 2006. Expressed in constant currency, revenues were approximately 16% greater than the comparable quarter in 2006. The increase in revenues was driven primarily by growth in the generics segment and specifically revenue growth outside of Spain.

Consolidated gross profit for the fourth quarter 2007 was $16.9 million, a 17% increase from $14.4 million reported in the fourth quarter 2006. Consolidated gross margins were 49 and 53% for the quarters ended December 31, 2007 and 2006, respectively. 60% of the increase in gross profit was due to the generics segment with the remaining 40% resulting from increased drug delivery royalties. Adjusting for the favorable effect of foreign currency, drug delivery royalties contributed the majority of the increase in gross profit during fourth quarter.

Consolidated operating expense for the fourth quarter 2007 was $15.9 million compared with $11.6 million reported in the same quarter of 2006. The $4.3 million increase included increased sales and marketing expenses of $0.9 million, general and administrative increases of $1.5 million and research and development increases of $1.8 million. The remainder of the $4.3 million increase included $0.9 million in 2007 separation costs offset by $0.7 million in 2006 litigation costs that were non-recurring in 2007.

Both operating segments evenly contributed to the total increase in operating expense. The operating expense increases also included an unfavorable currency effect of $1 million. Consolidated operating profit for the fourth quarter 2007 was $0.9 million compared to $2.9 million reported in the same quarter of 2006. The $2 million reduction in operating income resulted from the $2.5 million increase in gross profit offset by the $4.3 million increase in operating expense as previously discussed. The operating income reduction also includes an unfavorable currency effect of $0.5 million.

Consolidated net income for the fourth quarter was $0.3 million or $0.01 per share compared with $4.4 million or $0.19 a share a year ago. The $4.1 million reduction in net income resulted from the $2 million decrease in operating income and a $2.6 million comparative change in consolidated tax provision.

The $2.6 million change in provision arises from $1 million booked in the fourth quarter of 2007 compared to the $1.5 million credit tax benefit that we recorded in the fourth quarter of 2006. The fourth-quarter income tax provision in '06 included a benefit of $2.7 million or $0.12 per diluted share resulting from a litigation settlement reported in the third quarter of 2006.

As we've discussed in previous calls, pre-tax losses generated by the drug delivery segment are subject to a valuation allowance and as a result are not offsetting pre-tax income generated by the specialty generics business for the purpose of determining the provision for income taxes. This has the effect of increasing the consolidated effective tax rate for GAAP reporting purposes for the Company.

Net income from the generics segment was partially offset by a net loss in the drug delivery segment. Favorable fluctuations in foreign currency provided a benefit of $0.4 million or $0.02 per diluted share in the fourth quarter of 2007. Cash, cash equivalents and marketable securities were $34.7 million at December 31, 2007 and $15.6 million at December 31, 2006.

In June 2007 our Spanish subsidiary borrowed approximately EUR11 million or $14.8 million U.S. The proceeds are being used to help fund our capital and research and development projects. The loan carries a variable interest rate equal to the Euro offered rate plus 0.5%, payments commence in December 2008 and end in December 2013.

During the fourth quarter we invested $2.5 million in fixed asset additions and $0.9 million in drug licenses. This compares to additions of $3.2 million in fixed assets and $1 million in drug licenses during the fourth quarter 2006.

The Company invested $10 million in fixed assets additions in 2007 compared to $15.3 million in 2006. We invested $2.7 million in drug licenses in 2007 compared with $2.8 million in 2006. The Company expects to invest between $15 million and $17 million in fixed asset additions and drug license additions during 2008.

Turning to segment information -- specialty generics revenues of $31.5 million were up 27% and 13% in constant currency for the quarter driven primarily by expansion in European markets beyond Spain. Reduced selling prices on the Company's Spanish pharmaceutical products following the implementation of price reductions by the Spanish government on March 1, 2007 continue to impact revenues. This impact was partially offset by rising generic revenues outside of Spain which, as a percentage of total generics revenue, increased 31% for the fourth quarter 2007 from 23% reported in the fourth quarter 2006.

Specialty generics gross profit of $13.7 million was up 13% for the quarter as growth in revenue outside of Spain plus favorable foreign exchange rates offset the mandated reductions and reimbursement rates in Spain. Gross margins of the specialty generics business were 43% and 49% for the quarters ended December 31, 2007 and 2006, respectively. Specialty generics operating expense for the fourth quarter 2007 was $10 million compared with $7.6 million reported in the same quarter of 2006.

The $2.4 million increase included increased sales and marketing expenses of $0.9 million, G&A increases of $0.9 million and research and development increases of $0.4 million. The remainder of the $2.4 million increase included the effect of $0.7 million in 2006 litigation costs that were non-recurring in 2007. The operating expense increase also included an unfavorable currency effect of $1 million.

Specialty generics operating income for the fourth quarter 2007 was $3.5 million compared with $4.6 million reported in the same quarter of 2006. The $1.1 million reduction in operating income resulted from the $1.5 million increase in gross profit offset by the $2.4 million increase in operating expenses previously discussed. The operating income reduction also includes am unfavorable currency effect of $0.5 million.

Specialty generics net income for the fourth quarter was $2.8 million or $0.12 per share compared with $6 million or $0.26 per share a year ago. The $3.2 million reduction in net income resulted from the $1.1 million decrease in operating income and a $2.6 million comparative change in the consolidated tax provision. As discussed previously, the $2.6 million change in provision arises from the $1 million booked in the fourth quarter of '07 compared to the $1.5 million tax benefit recorded in the fourth quarter of '06.

The fourth-quarter income tax provision in '06 included a benefit of $2.7 million or $0.12 per share resulting from a litigation settlement reported in the third quarter of 2006. Favorable fluctuations in foreign currency provided a benefit of $0.4 million or $0.02 per share in the fourth quarter of 2007. And finally, specialty generics EBITDA for the quarter was $5.5 million, down 6% from $5.9 million reported in the fourth quarter of 2006. EBITDA for the full year was $23.5 million.

Drug delivery revenues were up $1 million or 43% versus the fourth quarter 2007 on increased royalties related to Testim sales. Drug delivery operating expense for the fourth quarter 2007 was $5.9 million compared with $4 million reported in the same quarter of 2006. The $1.9 million increase included G&A increases of $0.6 million and R&D increases of $0.5 million. These increases were due to changes in headcount and clinical trial activity. The remainder of the $1.9 million increase included $0.9 million in 2007 strategic consulting expenses incurred in connection with the planned spin-off of the drug delivery business.

Drug delivery net loss for the fourth quarter 07 was $2.5 million or $0.11 per diluted share compared with $1.6 million or $0.07 per diluted share reported in the same quarter of 2006. The $0.9 million change in the net loss resulted from the $1 million increase in revenue offset by the $1.9 million increase in operating expenses as previously discussed.

For the full year 2007 the Company's total revenues increased 14%, or 5% in constant currency, to $124.7 million from $109.5 million in 2006. Licensing and collaboration revenues increased by 2.$8 million or 32% compared with 2006 primarily reflecting the increased royalties on the sales of Testim.

Gross profit increased to $60.7 million in 2007 from $59.6 million in '06. Gross margins on net product sales decreased to 43.4% from 50.4% in 2006 primarily due to reduced pricing in Spain. Operating expenses decreased by $1 million to $53.2 million from $54.2 million in 2006. Prior year operating expenses included $10.9 million of litigation settlement expenses and current year operating expenses including approximately $2 million of strategic consulting expenses and $1.4 million of impairment charges.

Net income was $2.8 million in 2007 or $0.12 per share compared with net income of $1 million or $0.04 per share in 2006. Fluctuations in foreign currency provided a benefit of $0.04 per share in 2007. This concludes our prepared remarks. Jackie, you can open the call for questions now.

(OPERATOR INSTRUCTIONS). David Maris, Balyasny.

Good morning, guys. A question on the strategic options on the generic business, without going into any details since I'm sure you wouldn't -- what's been the reaction since the announcement? Can you characterize any of the interests, the level of interest? Are they Indian companies, U.S. companies, multinationals, European companies? How would you gauge the interest at this point?

Dave, I'll start it and then I'll ask Rich to talk to it. First of all, I don't think it's appropriate for us to get into any discussion of our strategic options and where we're actually at with that today. Rich, if you want to comment.

Yes, David, it is definitely a fair question and it's not the first time that we've had these types of inquiry. All we can say now is that during October we announced that we're getting into this process in a public fashion and at this point the Company has no further comment on the process until we resolve it at the end. So I'm afraid we're not going to be able to answer your question directly.

Then separately, when would you hope that the strategic review process would be over?

Well, that the process itself is a fairly active process and these types of process, when we're trying to determine a course of strategy, as we learn more information our path may change. So I don't think I can give you a definitive timeline at this point.

Okay, thank you very much.

(OPERATOR INSTRUCTIONS). Kenneth Smith, Lenox Equity Research.

Thank you. John, can you characterize or quantify at all what sort of gross margin improvement you might be able to realize in '08 from bringing on your API facility for those products you mentioned?

Ken, let me look at Rich on this one here because --.

Ken, what we expect on the API plant is -- we've already started to produce some of our own API in Spain in the fourth quarter of '07, the late fourth quarter. A lot of the activity is around pilot batches to get us ready for full production in '08. What I can characterize is that we are producing that material significantly cheaper than our purchase price.

We do expect it to impact margins on -- very favorably on our omeprazole products in '08 in Spain, which is our largest product by volume that we have. But I struggle with trying to communicate any type of forward-looking statement on how that impact the overall gross margin in that it would really vary on our product mix going into the year.

Okay. So I should just look at the omeprazole sales alone and estimate some kind of gross margin improvement on that if I wanted to guestimate the impact on the Company?

Yes, that's correct. Initially that plant will have the ability to produce different types of API, but our focus on 2008 is on omeprazole.

Okay. And then switching over to the fixed asset additions in R&D, I'm a little unclear. You said you had $10 million in fixed asset additions in '07 and there were 2.7 in drug licenses.

Right. We capitalized certain expenses in Spain around the drug license process. As I mentioned last year, we put about $2.7 million in drug licenses in '07. John had talked about we're increasing our presence outside of Spain. We anticipate having more of these drug licenses and some of that will be capitalized. So I would expect that number to go up in '08.

Okay. How much will just the fixed asset additions alone be roughly compared to '07? Shouldn't that drop off materially and be mostly drug license additions in that range you gave?

No, because we anticipated spending more in the fixed asset additions in '07, so we have some carryover related to the API plant. Remember the guidance that we had -- full-year guidance we had given previously where we actually came in several million dollars short.

Okay. I thought the plant was done and that's why we drop off. You're saying there's still some work to do there?

Yes, we still have some work to do.

Okay. And then what will the R&D budget be in '08 versus '07?

the R&D budget is -- we're not giving forward guidance on the R&D budget at this time.

Is there the possibility it could ramp up dramatically from where it was?

It's really going to be dependent on where the clinical trial activity takes us. John had talked a little bit about some of the interesting things that have occurred this year. And I think at this point I don't think it would be appropriate to lock down in a full R&D budget.

So it's still a work in process?

Yes.

And Ken, it's clear our focus is Nasulin.

Sure. I was thinking about it from the financial aspect.

Yes, okay.

Thank you.

David Maris, Balyasny.

A couple of follow-ups. First, can you update us on the status of the Biocon study of Nasulin, where they are right now and would we expect to get some data and when? And then separately, what are you targeting for either number of approvals or different launches in other territories in Europe this year.

Dave, I'll take it. If you remember, we reported that the Biocon study had been completed, the Indian study had been completed, but we hadn't had -- completed the report to be submitted to us. And that's still pretty much the case. We're still waiting from Biocon to do the assessment of the study and then get back to us on it. So to give you some data, I really can't give you a date when that thing will come back.

With respect to the number of approvals that we expect to have in '08, we do have products pending in the pipeline and -- Dave, I'll ask -- Jim, wants to comment.

This is Jim Murphy. We have a number of submissions filed throughout Europe. There are two types of submissions, there is a national approval, will you file in the individual nation only; and then there's also, as you know, MRP approvals. So we're really at the mercy of how quick the regulatory agencies can review and respond and approve.

We make filings in anticipation of market formation of course, but we do have a number of MRPs where we have designated 11 to 13 other major European markets and a number of national ones. Most of those national ones are within the nation of Spain.

So we do have a robust pipeline. I can't give you a specific number because we don't know when they're going to be approved for the Ministry of Health or the mutual recognition process. So we try to update everybody as soon as we get approvals.

David, the only thing else I would add to that is that although the number of approvals might vary, we're looking at probably a 25% increase in revenue outside of Spain and a large part of that is going to be these approvals.

Great, thank you very much.

(OPERATOR INSTRUCTIONS). Kenneth Smith, Lenox Equity Research.

John or Rich, whatever, as you grow your sales outside of Spain, what is the net impact on your operating margin at the generic business? Does it tend to increase it, is it about the same or is it less?

I'll go ahead and take that. What we find on average is that the gross margins of the export contract type work, which does not include any sales and marketing investment by the Company, runs at about 80% of the margin that we get for prescription products where we have a full sales and marketing. So that's kind of the dynamic there. And so what we find is that in absence of kind of abnormal price reductions or something like that that the margins tend to be fairly comparable.

The operating margin?

Right.

Okay. Thank you very much.

(OPERATOR INSTRUCTIONS). Stephanie Haggerty, Register & Akers.

Good morning. I just wondered if these new federal regs for how you do diabetic product studies as has changed what you have to do in terms of getting filings ready and how the Biocon study might be affected?

I think it's a good question. What I'd like to do is turn that question over to Dr. Feldman you can give you some insight into that.

Thanks.

Hi, Stephanie, this is Fred. We saw the regs come out about a week or so ago and we've seen the impact on others who have drugs that look like they're advanced in the pipeline. And what we've seen is for the most part that the projections are that those programs probably will be delayed some because of increased requirements for larger patient numbers in Phase III studies.

We are taking that into account and in terms of our timeline projections for end of Phase II meetings, we have taken -- we are incorporating our new strategic guidelines for attempting to demonstrate that we have clinical superiority for Nasulin along with the understanding what the FDA wants to see for further development into Phase III in that.

We expect that probably those things will impact everybody in diabetes drugs, especially given the problems that have surfaced in the last year with inhalation products as well as with oral antidiabetic medications. So we are taking that into account and we're still hopeful that as we meet with the FDA that we can get from them a high level of excitement that could potentially facilitate our progression even faster than what they've published.

But you're not planning right now for any delay because of that?

We're not in Phase III yet. I guess until we meet with the FDA and see how excited they are and whether they will require us to have that same patient number as well it's hard to tell. But it's not affecting us right now.

Thank you very much.

Thank you. There are no further questions. I would like to hand the floor over to Richard Lindsay for any further or closing remarks.

I would just like to thank everybody on behalf of the Company for joining us today and, John?

Thanks, Rich. First of all, just if we take a look at the fourth quarter, we had a record quarter and we had a record year, close to $125 million. Our sales outside -- our strategy was clearly to grow our sales outside of Spain and be less dependent on the Spanish market and the pricing there and that has been successful. And we're pleased with the progress that we're making in our drug delivery business and the fact that Testim using our CPE-215 technology is just doing such a great job in the marketplace.

That being said, I'd like to thank all of you for your participation and I look forward to speaking with you again next quarter. Thank you.

Thank you. This does conclude today's Bentley Pharmaceuticals fourth-quarter and full-year 2007 earnings conference call. You may now disconnect your lines.