Vaxart Inc (VXRT) 2003 Q1 法說會逐字稿

Good afternoon and welcome ladies and gentlemen to the Nabi Biopharmaceuticals First Quarter Earnings Conference Call. At this time, I would like inform you that the conference is being recorded and that all participants are on a listen-only mode. At the request of the company, we will open up the conference for questions and answers after the presentation. I would now like to turn the conference over to Mr. Mark Soufleris, Vice President of Investor and Public Relation.

Good afternoon and welcome to the Nabi Biopharmaceuticals Conference Call and Webcast to review 2003 First Quarter Results. Before we begin, I would like to remind you that remarks made in this conference call and web cast may contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Please be cautioned that, any such forward-looking statements are not guarantees of future performance and involves significant risks and uncertainties.

Actual results may vary materially from those in the forward-looking statements as a result of any number of factors, including, but not limited to, risks relating to the cost of research and development, the company's dependency upon third parties to manufacture its products, the impact of current industry supply and demand factors on the company and its products, the ability of the company to meet its contractual obligations, the future sales growth prospects for the company's biopharmaceuticals products, and the likelihood that any product in the company's research pipeline, can receive regulatory approval in the United States or abroad or be successfully developed, manufactured and marketed.

Such risk factors are disclosed more fully in Nabi Biopharmaceuticals most recent Form 10-K, filed with the Securities and Exchange Commission and any subsequent SEC filings. Information discussed in today's call and webcast, is time sensitive and is accurate only as of today, April 23rd 2003. Any redistribution, retransmission or rebroadcast of this call, or the webcast in any form, without the expressed, written consent of Nabi Biopharmaceuticals, is prohibited. I will now turn the conference over to David J. Gury, Chairman and CEO of Nabi Biopharmaceuticals.

Thank you very much Mark, and thank all of you for joining us to discuss our First Quarter 2003 Results. Joining me this afternoon is, Thomas McLain, our President and Chief Operating Officer and Mark Smith, our Senior Vice President of Finance and Chief Financial Officer. I'll begin with a brief overview of our key goals and significant developments for the quarter. Tom and Mark will then discuss the company's operational and financial results for the quarter and update our expectations for 2003.

I would like to start by saying that we had a strong beginning to 2003, we're continuing to live our company's vision of unlocking the power of the human immune system, to help people with serious unmet medical needs. By combining our strong scientific and technical expertise in the human immune system with our innovated business approach of applying proven technologies for conjugate vaccines and antibody therapies in new and novel areas, we're attacking major health care problems such as, serious bacterial infections, hepatitis and nicotine addiction.

As mentioned during our year-end call in February, Nabi Biopharmaceuticals has six keys strategic priorities for 2003: First, we must continue to build value in our operating business. Second, we must advance the clinical trial programs for StaphVAX. Third, we must continue to advance developing vaccine manufacturing capacity for StaphVAX. Fourth, we must accomplish important clinical milestones in developing Altastaph, Civacir and NicVAX. Fifth, we must execute on business development opportunities that can provide us with incremental cash returns, giving us additional capabilities to advance our product pipeline. And finally, we must continue to develop and build strong leadership and a corporate culture that is committed to quality, values integrity and the highest ethics in everything that we do. During the first quarter, we've continued to exhibit the business discipline necessary to successfully implement our plans for building long-term values for our shareholders by advancing against these key objectives. First, we continue to leverage cash flow from current operations to fund the research and development of our rich and deep pipeline.

Sales of our biopharmaceutical products increased by 48%, from the first quarter of 2002. We continue to build our existing biopharmaceutical business, by pursuing new markets and indications for our flight ship product Nabi-HB.

In January we learned that the FDA designated our biological license application for Nabi-HB, intravenous for priority review, indicating the significance and medical need that Hepatitis B liver transplant patients have for this type of treatment. We continue to drive the advancement of our product pipeline by beginning new clinical trials and developing our commercial vaccine manufacturing capability. StaphVAX, material manufactured at our contract manufacturing facility, will be filled on schedule so that we can begin our immunogenicity trial by mid-year.

I'm pleased to announce that today we have finalized the protocol design for the StaphVAX Phase III confirmatory trial to the satisfaction of the FDA. Tom McLain will provide some additional comments about this development later in this conference call. We recently announced the hiring of Dr. Raafat Fahim as Vice President, Vaccine Manufacturing Operations. His immediate focus will be on achieving key strategic and business goals for the manufacture of StaphVAX. We continue to work closely with the FDA to finalize our protocol for Altastaph clinical trial in low birth-weight infants that we expect to initiate later this year. During the quarter, we signed an agreement with Duke University to conduct this important trial with us. We are awaiting the analysis of clinical samples from the NIH for our Civacir trial in liver transplant patients and expect to report on the results of this trial later this year. The NicVAX Phase I, II trial in smokers and non-smokers that was initiated at the University of Nastract (ph.) in the Netherlands is now fully enrolled, and we continue to prepare for the initiation of a NicVAX Phase I II trial, in smokers in the US, later this year.

Finally, let me say a word about our recently announced licensing agreement with Pharmacia Animal Health and now a part of Pfizer. Staph infections in cattle are an enormous global problem for the diary industry; in fact, the U.S. Mastitis (ph.) counsel estimates that annual losses to the diary industry, in our country alone, are nearly $2 billion. By licensing our Staph. aureus wholesale vaccine technology to Pharmacia Animal Health, a leading provider of animal health care products, we have successfully leveraged the value of our gram positive technology, to deal with this important veterinary issue. This agreement affirms the importance of our Staph. aureus technology and the strength of our patent position. It advances our business strategy; this agreement allows us to capitalize on the value of veterinary application of our technology while we continue to focus Nabi biopharmaceutical resources on the human health challenges associated with staph bacterial infections. By doing this, we are working effectively to maximize the return to the Nabi biopharmaceutical shareholders.

I am please to -- in summary, with the excellent progress that we have made during the first quarter. As I look forward to the remainder of the year, I am confident that we have the management team, necessary experience, a well-developed strategy and a financial strength to successfully execute our business plan and build long-term shareholder value. Tom McLain will now provide some further comment on our operations, as well as, plans for the remainder of the year.

Thank you. As Dave described, we've had an excellent start to 2003. The major focus for operations during the first quarter was to continue generating strong cash margins from biopharmaceutical product sales, to support increased spending on our important R&D programs and we achieved our goal. Several important factors contributed to that achievement. Most significantly, we continued to drive strong gains in use of our biopharmaceutical products at the patient or end-user level during the quarter. In fact, end-user sales for Nabi-HB, WinRho and Aloprim are at the highest levels they have ever been for any first quarter, in the history of these products. This continued success underscores the importance of these products, in addressing unmet medical needs. And, these results also reflect the outstanding capabilities of our 40-person hospital-based sales force in positioning these well-established products, to achieve new records in patient use and sales.

The most significant contributors to our strong performance in the first quarter continued to be WinRho and Nabi-HB. Sales of WinRho almost tripled from 2002 levels; this performance reflects continued growth in end-user sales as we capture share from traditional IV IG therapy. Our first quarter performance is in line with our expectation of achieving modest double-digit growth in sales of WinRho for the full year.

Nabi-HB revenues grew 14% compare to the first quarter of 2002. This represents the fourth consecutive period of quarter-on-quarter growth for this important product and its performance is in line with our expectation for high single-digit sales growth for Nabi-HB this year.

We are also continuing to pursue additional opportunities to build the Nabi-HB franchise this year and for the future. These efforts include our BLA for Nabi-HB intravenous, which has been accepted by the FDA for priority review. We anticipate a response from the FDA during the second quarter. In addition, we expect to begin recording sales under the international distribution agreements that we signed in 2002, in the second half of this year. And, to further drive non-U.S. sales of Nabi-HB, we are also preparing to file for registration in individual counties, where we believe we can successfully build a market for this product.

Another area of continued emphasis in 2003 is increasing utilization of our biopharmaceutical manufacturing plant. During the first quarter, we increased production of Nabi-HB, as we worked to rebuild inventories to meet 2003 demand, following record patient use of this product in 2002. As a result, we fully absorbed the cost of operating the plant in the first quarter. In order to meet this important business objective, we delayed a scheduled plant shutdown until the second quarter. This will be an extended shut down, while we make modifications to the plant that are excepted to improve the cash flow from manufacturing operations, in future periods. We also continue to focus on performance and operating efficiencies to drive stable and predictable cash returns from our antibody collection operations. We are concentrating on increasing our specialty antibody production for anti-hepatitis B and anti-D plasma.

During the first quarter, we achieved a 21% increase in overall plasma productions compared to first quarter 2002 levels. Importantly, specialty plasma production at our centers has increased to 52% of total plasma production, however; there are challenges ahead. We have one major contract for production of anti D plasma with the purchaser of our antibody collection centers that extends through the end of 2004.

Our production to date is not at a level that will allow us to meet the increased obligation under this contract in 2003 and to also sell anti-D plasma to other customers. In addition, political instability has affected quarters from a major customer for tetanus plasma during the first quarter. As a result, we may not fully achieve our cash return objective for plasma sales in 2003. We are actively working to address these challenges and I will update you on our progress in future quarters.

Before I discuss our progress in the development of our product pipeline, I would like to comment briefly on Dr. Rafaat Fahim who recently joined our senior management team as Vice President, Vaccine-Manufacturing Operations. Dr. Fahim is a tremendous addition to our company, having joined us after an extensive career that included 14 years with Aventis Pasteur. There, he held a number of senior level development and manufacturing operations positions.

His unique background and expertise extends through all phases of the vaccine product life cycle, from discovery, through development and on through commercialization. This is particularly important to us, as move into the final stages of StaphVAX's development.

Our product development focus in 2003 continues to be on advancing our attack against hospital acquired Staphylococcus aureus bacterial infections. StaphVAX and Altastaph are both being developed to address this serious unmet medical need. We are on schedule to begin filling the first clinical lot of StaphVAX produced by our commercial contract manufacturer next week. We plan to begin an immunogenecity study with this vaccine during the second quarter of 2003. And with good results, we will then begin the confirmatory Phase III trial of StaphVAX during the second half of this year.

As Dave indicated, today we are able to announce that the protocol for the Phase III clinical trial has been finalized to the satisfaction of the FDA. The primary end point of the trial will be the reduction of infections from a single injection of StaphVAX through 8 months. The trial will also include a booster dose of the vaccine at 8 months. We will continue to follow patients for an additional four months after the booster dose to evaluate any further reduction in infections as secondary end-points.

Based on the encouraging results from the initial Phase III trial and booster study, finalizing the Phase III trial protocol and successfully producing the vaccine at our contract manufacturer, we are well positioned to move this important program in to the final stages of its development during 2003.

Our Phase I, II clinical trial with Altastaph in adults with persistent Staphylococcus aureus blood infections continues to enroll patients. And we are in final discussions with the FDA regarding the initiation of a Phase II Altastaph clinical trial in low birth weight newborns in conjunction with Duke University. We expect to begin this trial mid-year.

We continue to make significant advances with the other products in our development pipeline during the quarter. We are awaiting analysis of clinical data from the NIH sponsored Sephus (ph) Year trial in liver transplant patients and expect to able to report on these findings later this year.

We are also very pleased with the progress of our second NicVAX clinical trial. This trial, which is being conducted in smokers and non-smokers in the Netherlands, represents our first clinical trial conducted outside the United States. We have now completed patient enrollment. The primary end points of the study will evaluate nicotine specific antibody levels and safety of the vaccine. Secondary end points will include evaluating abstinence from smoking and the time it takes to relapse. We plan to begin an additional NicVAX clinical trial in smokers in the United States later this year. This trial will be funded in part by our grant from NIDA, the National Institute on Drug Abuse.

As we've previously stated, our goals for leveraging the cash return from our current operations and infrastructure also include product acquisition and in licensing opportunities. We've built a solid Biopharmaceutical business through successful product acquisition and we continue to work diligently to add one or more products to our portfolio between now and the launch of StaphVAX.

And partnering of our pipeline products continues to be an important focus of our business development activities. We've remain committed to finding the right partners for our product development programs. As Dave has already described, we've successfully met that objective for our Staphylococcus aureus whole cell vaccine with our licensing agreement with Pharmacia Animal Health. This agreement affirms the strength of our Staphylococcus aureus technology and patents and will allow us to focus on our StaphVAX program, thereby maximizing the return from these important technologies for our shareholders.

In closing, we're very pleased with our operating performance during the first quarter. Although we will face challenges with our antibody operations for the remainder of the year, we expect our cash flow from operations will continue to drive the important investment in our R&D programs in 2003 and in the future. Our business strategy is clearly focused on key priorities. We are strong financially. We have a clearly defined company culture and we have a talented and capable management team that is going to lead us to new successes in 2003. Now I would like to introduce Mark Smith, who will review our financial performance for the first quarter and discuss our updated 2003 expectations.

Thank you Tom. As Dave and Tom have highlighted through our ongoing focus to drive operations to unlock the value of our research and development pipeline, Nabi Biopharmaceuticals achieved a very strong operating performance this quarter. Net income was $.5m or one cent per share on a diluted basis for the first quarter of 2003; this result was in line with the external expectations. Earnings before interest, taxes, depreciation and amortization totaled $3.1m verses $2.8m reported in 2002. We consider this statistic an important measure of the cash return from our operations to fund our investment in research and development program. We fully utilized the cash generator from operations to fund prepaid property insurance for the full year 2003, our continuing in investment in StaphVAX manufacturing, and to build Nabi-HB inventory levels in anticipation of a scheduled plant maintenance shutdown, ending the first quarter with $47m in cash and cash equivalents on hand. Total sales comprised of Biopharmaceuticals products sales and antibody product sales were $52m, sales of the Biopharmaceutical products were $23m for the first quarter 2003, a 48% increase from the comparable period in 2002 of $15m.

As we communicated in reporting 2002 results, we'll report individual product sales information for our lead Biopharmaceutical product Nabi-HB in WinRho SDF. We'll report comparative historical sales information for these products, as we report our results throughout the year. Sales of WinRho SDF increased almost three fold to $11.3m in the first quarter of 2003, compared to $3.9m for the comparable period 2002. As Tom has noted, we've reported records levels of patient demand for this product during 2002 and patient use of WinRho SDF continues to be very strong.

Sales of our lead product Nabi-HB increased 14% to $10.3m in the first quarter of 2003, compared to $9m in the first quarter of 2002. This gain, which was in line with increased patient demand for this product, represented the fourth consecutive period of quarter on quarter growth for Nabi-HB. These increased sales are very important to us. As Nabi-HB is our highest margin product, increased sales requirement drive higher production levels, further benefiting us through greater utilization of Boca Raton manufacturing facility.

Sales of Autoplex T and Aloprim were 55% lower compared to the first quarter of 2002. The first quarter 2003 sales of these products were limited due to product supply short falls from the manufacturers of these products. Antibody sales were $29m in the first quarter of 2003, compared to $26m in 2002. After $23m in non-specific antibody sales reported in the first quarter, $18m were to a single customer under an arrangement, whereby we purchase plasma from the acquirer of the majority of the antibody collection business and then sell the plasma to our customer at no margin. We report revenue under this arrangement, because we retained the credit risk from the end customer. Product provided to the customer in the first quarter, essentially completed this contractual obligation, as a result we do not expect to report revenue under this arrangement in the second quarter and the agreement, which ends in May 2003 will not be renewed.

Sales of non-specific plasma from our own plasma collection centers totaled $5m in the first quarter, this level of quarterly nonspecific plasma sales is consistent with our expectations for nonspecific plasma sales per quarter for the balance of 2003.

Sales, of specialty antibodies in the quarter, were $6.1m compared to $7.2 in the first quarter of 2002. This decrease included lower sales of Anti-HBS plasma. This material, which is the primary raw material of the Nabi-HB was used to support the increased production of Nabi-HB reported in the first quarter and was limited to sale to third parties.

Our gross margin was $16.6m for the first quarter of 2003, compared to $14.1m in 2002, the increased dollar amount of gross margin reflected sales gains for our higher margin Biopharmaceutical products in the first quarter of 2003. Offset by the impact of royalty expense due on higher sales of WinRho SDF and lower sales of specialty antibody products.

Gross margin in the first quarter of 2003, benefited from virtually no excess plant capacity costs. By driving production for Nabi-HB in the quarter, in response to patient demand and to build inventory in preparation for a plant maintenance shut down, to occur this second quarter, we fully absorbed our plant operating costs. In the first quarter of 2002, excess plant capacity expense was $500,000. Gross margin this quarter also benefited from a non-performance penalty of $2.2m from the manufacturer of Autoplex T, this compares with $1.2m in the first quarter of 2002.

During the first quarter of 2003, we received no shipments of Autoplex T from the manufacturer. All reported sales were made from existing inventory on hand. As we have described before, in periods when the manufacturer of Autoplex T fails to provide us contracted product minimum, they must pay us a penalty for the loss margin.

Operating results this first quarter included research and development expense of $5.8m, an increase of $1.4m from the comparable quarter in 2002. Research and development costs were driven by our continued investment in Nabi Biopharmaceuticals gram-positive and NicVAX programs, as well as support for our on-going Civacir (ph.) clinical trial and our (inaudible) Nabi-HV intravenous. Selling, general and administration expenses were $10.1m in the quarter. These costs were higher than the comparable period of 2002, due to increased use of consultants in the quarter. In addition we also received payments from the acquirer of the antibody collection business for providing administrative and support services that are reported as an offset to SG&A expense. These payments are reduced in 2003 including this first quarter compared to 2002.

Nabi Biopharmaceuticals first quarter provision for income taxes was $184,000, for an effective tax rate of 25%. This rate differs from statutory rates due to the expected benefit from tax credits, primarily research and development tax credits. Now turning to our overall financial position. In communicating our operating strategy to you over the last several quarters, we have emphasized that will generate the cash from operations to fund research and development and capital spending. At March 29, we had approximately $47m cash on hand, net assets of $190m, and no outstanding debt. We believe this demonstrates our continued financial strength and our ability to

continue support for our key research and development programs. We expect to further strengthen our overall financial position by entering into a new credit facility this year.

Looking ahead to the remainder of 2003. We continue to expect an overall increase in biopharmaceutical sales of approximately 5% from 2002 levels, as Tom noted we continue to expect modest double digit growth for WinRho SDF in 2003, building on the growth we reported in 2002 and driven by the continuing level of patient demand for Nabi-HB, as well as the other significant activities Tom outlined in his remarks, we continue to estimate an overall high single digit growth rate for Nabi-HB in 2003.

We do however anticipate continued supply issues for Autoplex T. Normal shipments of Aloprim resumed in April with the delivery of back ordered products from the manufacturer. We continued to focus antibody cells to the full year 2003 to be approximately 70% of 2002 levels, this planned decrease reflects expiration of the sales arrangement with a single customer for which contracted product supply was completed in the first quarter as described earlier. We reported $56m in sales in 2002 under this contract {inaudible] no margin.

Driven by higher levels of demands for Nabi-HB, utilization of the plant is expected to increase for the full year 2003, limiting plant - - excess plant capacity costs to approximate $2.5m, this forecast expense is higher than was communicated on our February conference call due to higher than expected operating cost, primarily property taxes. This excess capacity expense will be significantly incurred the second quarter, due to the schedule maintenance shutdown.

Research and development spending is still expected to increase over 30% in 2003 from 2002 levels, driven by cost to develop the manufacturing process at commercial scale and commence our consummatory phase III clinical trial with StaphVAX. Other significant and fiscal include commencing a Phase II trial for AlaSTAT in low birth-weight newborns and clinical trials in NicVAX here and in Europe. We project our effective tax rate will be approximately 30% in 2003 as we continue to benefit from research and development tax credits.

We now expect to return net income from current operations for the full year, although at a lower level than the 2002 net income. This projection comprises those matters known to us that is systemic to our on-going business, and do not include any potential material one-time expenses that may occur in the future. We may incur loses in certain quarters, due to the timing of research and development spending and in this second quarter, when we will shut down our Boca Raton manufacturing facility for scheduled maintenance. We continue to expect to incur significant additional expenses - - expenditures for the acquisition of the manufacturing rights at DOW’s facility. As a reminder, this right represents our securing use of that facility for the future commercial manufacture of StaphVAX. Our current agreement with DOW has been extended through April of this year, and we anticipate concluding an amendment to this agreement extending it's term until the facility is ready for the commercial manufacturer of StaphVAX.

Now let me turn things back to Dave Gury.

Great, thanks very much Mark, and I understand that perhaps for a little bit of time in Mark's comment that the line may have gone down, so if - - without knowing exactly when that happened it's difficult to go back, but hopefully it was very much of that - - that period. In closing we are really pleased with the operating performance we had during the first quarter and we expect that will continue to drive the important investment in our research and development programs this year and on into the future.

Our business strategy is clearly focused on key priorities, we are strong financially, we have a clearly defined company culture and we have a talented and capable management team that's going to lead us to new successes in 2003.

And at this time I would like to ask Heather if you would please open up the line for questions.

Thank you sir. The question and answer session will begin at this time. If you are using a speakerphone please pick up the handset before pressing ay numbers. Should you have a question please press star followed by one on your push button telephone. If you wish to withdraw your question, please press star followed by two. Your question will be taken in the order it is received. Please stand by for your first question.

Our first question comes from Tom Shrader with GKM. Please state your question.

Good afternoon, thanks for taking my questions. Hello?

Hey Tom. We are here.

Just a --- Mark I heard all of you so, there was no problem here.

Good to everybody else there too but we heard there might be some down time.

Okay but --- you talked about Civacir samples, are we waiting for one of the big bacterial meetings for that or one of the big infectious disease meetings? Is that ---?

No with the Civacir trial it's an NIH sponsored trial, so they actually will collect and analyze the samples and we will get the results from the NIH and then be able to announce the results of the trial.

So you expect a press release, we are not waiting for one of the meetings?

We would expect to press release the results when we have them, but we would also look forward to an opportunity to present the results if its merited an infectious disease conference.

Okay. In terms of the big StaphVAX trial, it sounds like there is a little change there, is that right that if the boost is gone from six to four months?

That's correct.

And now there is an efficacy component to the secondary end point?

No. What I tried to say was there is a primary end point, which is the reduction of infections through eight months after a single dose. And we will do the booster, and rather than a six month follow-up period, what we've set is a four month follow-up period. So the time line for the full trial [here] of 12 months is the same time line that we had on the first phase III trial. And we will at secondary end points in the trial time, Tom, will continue to follow those patients for the additional four months, and if we do see additional reductions in infections we'll gather that information but as secondary, not primary end points.

And just the --- what's the motivation? Why did the FDA say don't follow them so long? What's going on? It just seems odd.

What we had worked out with the FDA was a time line that we felt was appropriate, and a time line that would help us meet our objective of getting the product to market as soon as possible. And that's all based on the fact that we believe we've seen in the initial clinical trial, that we have a product that works. And lining the clinical trial up with the manufacturing at DOW we want to optimize the time to market.

Right, it seems like it is good news.

We think its very good news.

I had one question about the comments about the plant shutdown. Does that mean we should expect no sale of specialty antibodies in the second quarter?

No that doesn't relate to specialty antibodies. What that does relate to directly is that our excess manufacturing costs for the plants, the majority of that will be incurred in the second quarter. Also, because we won't be in production of Nabi-HB in the second quarter that will allow us to sell some of our Hepatitis B plasma production in the second quarter. Something we weren't able to do in the first quarter because we were in full production mode.

Okay, well thanks a lot.

Great thanks Tom.

As a reminder should you have a question please press star one on your push button telephone.

Our next question comes from Russell Gilbertson with Roth Capital Partners. Please state your question.

Good afternoon gentlemen. My question is also regarding the plant shut down that's planned in the second quarter. My understanding is that there is a $2.5m charge that you will be taking in that quarter? And in conjunction with that question, how long do you anticipate the shutdown to last? And do you have enough inventory of Nabi-HB? And how much?

Great, great questions and we will try to follow-up on each of them. First of all the $2.5m number that Mark talked about is our expectation for the excess manufacturing cost for the full year. That compares to an excess manufacturing cost of $3.5m last year. And that in part reflects our success in increasing utilization of the plant. What we tried to communicate is because this shut down will be approximately two and a half months of the quarter, that we will incur a significant portion of that excess manufacturing cost in the second quarter. We won’t incur all of that in Q2.

And what I also tried to do in my remarks was to indicate our utilization of the plant in the first quarter had two purposes. First it was to rebuild inventories at Nabi-HB because of the record patient use of that product in 2002. And also to assure that we would have sufficient inventories of Nabi-HB to last through the plant shut down period and our resumption of production in the third quarter. So there isn't a reason to believe that we would have any shortage of Nabi-HB products to support patient demand and our revenue goals for the year.

Great thank you.

Thank you Russell.

Thank you our next question comes form Jason Iria (ph.) with (inaudible) Equities. Please state your question.

Congratulations on all the progress guys. A few quick questions, number one, was the plant shut down an expected event? Number two does - is that why we are expecting earnings to be below last year's level with higher revenues? And number three could you give us Mark the gross margins could you break it out for the biopharmaceuticals products, not by products just over all.

Jason the plant shut down was initially scheduled for the first quarter. And when we looked at inventories of Nabi-HB in the field we made a determination midway through the first quarter to delay that shut down until the second quarter. That was one of the reasons we had initially expected a loss in our first quarter results if you recalls Mark's remarks at the February conference call. When we talked - I'm sorry the second question related to the plant was that the contributor to our reduced earnings expectations.

Exactly.

Actually what we factored in there Jason was the remarks that I made about anti-D plasma and with the purchaser of the antibody collection centers, we have an increased commitment to provide them with anti-D plasma this year. And at this point our production levels aren't sufficient to meet both that commitment and to sustain the level of third party anti-D sales that we had last year. We are working hard to try to increase our production and to minimize the impact of that. But we have factored that into our expectations through the remainder of 2003.

And Jason you asked what the gross margins for biopharmaceutical products were in the first quarter. They were $15.4m for the first quarter of 2003. And that would compare with $11m for the first quarter of 2002.

Right, thank you very much gentlemen.

Thanks Jason.

As a reminder should anyone have any further question please press star followed by 1 at this time. Our next question comes from Tony Green with Craig Hallum. Please state your question.

Hi good afternoon, I have a question on the facility shut down. Does that affect your contract manufacturing deals as well? And is there a revenue impact with that if it does?

No, this is schedule plant shut down. So we have to do this every year to do the maintenance that we need within the plant and it's factored into our production schedule. What's going on this year is it's an extended shut down because we are adding some equipment in the plant that we hope will allow us to increase the cash return on the production that goes through the plant in the future. So it won't have any impact on production of our own products or on the contract manufacturing commitments that we have in the plant for the year.

Okay I understand thank you.

Thank you.

As another reminder ladies and gentlemen should you have a question please press star 1 at this time.

Okay I think - Heather thank you very much. I would like to wrap up the Q and A period and thank you all for your continued interest in Nabi Biopharmaceuticals. A replay of this call will be available through April 30th '03 at 5 p.m. eastern time. The replay may be access in the U.S. by dialing 1-800-428-6051, internationally dialing 1-973-709-2089 or through the web at www.companyboardroom.com .The replay pass code for the call and the web replay both use the same number, it's 287770, that's 287770. To repeat the call in numbers US 1-800-428-6051, internationally 1-973-709-2089, through the web www.companyboardroom.com, replay pass code is 207770. Thank you all very much.

Ladies and gentlemen this concludes our conference for today. Thank you all for participating and have a nice day. All parties may now disconnect.