ChemoCentryx, Inc.
Q4 2016 Earnings Call Transcript

Published: 15 Mar 2017

[Operator:]

Good afternoon and welcome to the ChemoCentryx Fourth Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference call will be recorded. I would now like to turn the call over to your Susan Kanaya, Executive Vice President, Chief Financial and Administrative Officer at ChemoCentryx. Ms. Kanaya, please go ahead.

[Susan Kanaya:]

Thank you. Good afternoon and welcome to the ChemoCentryx fourth quarter and full year 2016 financial results conference call. This afternoon, we issued a press release providing an overview of results for the quarter and year ended December 31, 2016. This press release along with a few slides, that you'll find helpful while you listen to this call, are available on the Investor Relations section of our website at www.chemocentryx.com. Joining me on the call today is Dr. Thomas Schall, President and Chief Executive Officer of ChemoCentryx, who will provide an overview of our recent corporate highlights and anticipated milestones. Following his comments, I will provide an overview of the financial highlights for the fourth quarter and year ended 2016 before turning the call back over to Tom for closing remarks. During today’s call, we will be making certain forward-looking statements. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These risks are described in our filings made with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed on March 14, 2017. You are cautioned not to place undue reliance on these forward-looking statements, and ChemoCentryx disclaims any obligation to update such statements. In addition, this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, March 14, 2017. ChemoCentryx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. I will now turn the call over to Tom Schall.

[Thomas Schall:]

Thank you, Susan, and good afternoon everybody. Thank you for joining us on our fourth quarter and full year 2016 conference call. On today's call, I'll concentrate on three topics. First, I will outline our strategic focus as we advance our drug candidates from our broad chemoattractant receptor platform. Second, I'll review in that strategic context, our fourth quarter and full year especially the transformative results of our partnership with Vifor Pharma or you might say we've gone from zero to 150 in less than10 months and giving us a clear track to ultimately launching our own commercial operation in the United States. And third, I'll give you a preview of what you expect in 2017. Then, I will turn the call back over to Susan who'll provide a detailed review of our financial results after which I'll open up the call to your questions. Let me start with our strategic focus. We're segmenting our chemoattractant receptor inhibitor platform into early stage and late stage compounds to help us manage the wide array opportunities. I'll talk about kidney disease first then I'll narrow it down to explain why we're currently focusing on rare kidney disease and how we create value overtime. For those of you following on with the slides, I'm now on Slide 3 and here we'll focus on two unique drug candidates avacopan formerly known as CCX168 and CCX140. Our kidney franchise employing these two novel drug candidates has now advanced to late stage clinical development; and if successful, we can see a clear pathway to our first regulatory approvals and commercial sales. This initial focus on renal disease reflects with the science and our business development efforts that led us, but it also makes sense in human terms given the severe unmet medical needs in the area of kidney health. Kidney disease both common conditions such as diabetic nephropathy and in rare conditions such as the ones I'll mention in a moment is growing, taking lives and causing untold human suffering including among young people. So, we're starting with kidney disease, but we're planning overtime to bring forward our promising drug candidates from other areas of autoimmune, inflammatory disease and cancer. Our ability to develop candidates from multiple diseases will grow as we increase our scale and start to earn revenues and royalties from the commercialization of our kidney medicines. Our drug candidates are small molecules which are orally administered. They offer significant quality of life benefits. Patients simply swallow a pill or capsule instead of incurring the inconvenience and expense of a visit to the clinic for an infusion or having to take repeated injections. Payers stand the benefit too, but payers will be most interested in the clinical promise of medicines that can prevent patients from progressing into end stage renal disease, which means dialysis or kidney transplant and is the single most costly condition in the Medicare budget and one which threatens the very financial viability of some health plans. Within kidney disease, we've chosen to focus initially on rare or orphan indications. For a company of our stage of development, this tight focus offers several potential advantages in terms of being able to control our own destiny and generate excellent returns for investors, which I'll briefly outline for you now. First, we can pick areas of clear unmet need where the current standard of care is insufficient to halt the progression of the disease or where today's treatment options come with serious side effects such as those which a company the prolong use of cortical steroids. There are several of these areas in kidney disease. Second, candidates which received orphan drug designations tend to enjoy a more direct path to market, formal recognition by regulatory authorities of their urgent need for focused treatments to tackle disease while alleviating suffering. The FDA has already granted orphan drug status for our lead drug avacopan in two indications and provided a grant to help the development of avacopan while the European Medicines Agency gave avacopan its coveted prime designation to expedite clinical development and to accelerate its potential market authorization. Third, as you know while the patient populations involved in orphan drugs are by definition small, they bring great value to patients in areas where there're often no modern therapies available and therefore represent an attractive composition to investors. Finally, as I'll describe later this rare disease focus does not preclude development in broader [audio gap] patients as well. With that explanation of our strategic focus, let me now summarize how the quarterly results we announced earlier today fit into this context. The fourth quarter reflected the year as a whole, with strong progress in both clinical development and crucially in strengthening the financial position of the Company as our lead candidate enters Phase III. In all of the programs I discuss today, I want to emphasize that ChemoCentryx retains the rights entirely to sell the drug in the United States. In late December, we announced that we had licensed to Vifor Pharma the rights to commercialize our late stage drug candidate CCX140 for FSGS outside of the United States and China following our earlier deal with Vifor Pharma for the rights to avacopan for orphan and rare renal diseases in certain international markets. FSGS or focal segmental glomerulosclerosis is a disease for which no FDA approved treatment exists and which if left untreated leads to end stage renal disease. Our alliance with Vifor Pharma, a European giant in kidney disease care, ensures international reach as we ourselves focus on the lucrative U.S. market. Vifor Pharma co-funds and caps the financial risks of our clinical studies while we at ChemoCentryx control the development fate of our orphan drug candidates. This control makes sense given the unique knowledge base that we have in the science and mechanism of action and also the breadth of our recent clinical experience in orphan kidney disease. Moreover, such control is something that we and others have learned from experience is of fundamental importance. But our alliance with Vifor Pharma is not restricted to orphan diseases. Vifor Pharma has the option at a future time to find in our agreement to develop CTX140 for more prevalent forms of chronic kidney disease and for which we would receive promotion right in the United States. Should Vifor Pharma exercise its future option? We estimate that the clinical development and regulatory processes would conclude at roughly the same time as our orphan drug exclusivity period for FSGS, providing us with a potential fresh source of revenues from that drug. Last month, we aligned the geography of our global kidney health alliance across both drug candidates avacopan and CCX140, so that Vifor Pharma has the commercial rights in markets outside the United States and China. In these international territories, Vifor will pay us double digit tiered royalties on net sales. This geographic alignment now includes Japan in which we had a competitive process where more than one party was interested in acquiring the rights. But we concluding that harmonizing through Vifor Pharma made sense for economic and operational efficiency reason. Turning to Slide 4, the partnership that we initiated with Vifor Pharma in 2016 is key to creating value for shareholders. The three deals we have announced amount to $155 million in upfront cash payments and commitments, strengthening our balance sheet so that we can move forward with confidence on our late stage clinical study. Besides putting us in a strong financial position as we enter those late stage clinical studies, the licensing of the international rights for the two late stage drugs allows us to focus on commercializing in what we believe to be the world's biggest market, the United States. We will avoid the expensive cost structure and complexity of operating in multiple international markets instead looking forward to a healthy stream of royalties from abroad while we concentrate on forward integration. By forward integration, I mean building a commercial operation to address the specialty clinicians most interested in our orphan drug candidates. I note here in passing that we would have the choice to co-promote in the United States and to scale up this capacity, if Lifor Pharma exercises its option to develop CTX140 in the much larger patient population, who suffer from chronic kidney disease such as in the context of diabetes. But that is some years down the road and not something we need to focus on or be distracted by now. Let me turn to our Phase III trial for avacopan in ANCA-associated vasculitis or AAV. In December, we initiated the ADVOCATE trial for avacopan and the treatment of AAV, an inflammatory disease that attacks and destroys blood vessels and then vital organs such as the kidney. Our randomized double blind trial will involve as many as many as 200 sites around the world and 300 patients. We held extensive discussions with the FDA and the European Medicines Agency who have both bought into our plan for Phase III. That's the overview in clinical study terms, but let me explain what we're setting out to prove for orphan patients who have been wandering for years in the medical wilderness in which there are simply no good options. In AAV, 11% or more of patients die in the first year following diagnosis, most of those die not from the disease itself, but from the current therapy. Ironically, steroids can help in the short-term, but they come with nasty toxicities and have to be tapered. So, roughly, one third of patients relapse in AAV within 6 to 18 months. Instead of this paradigm, our goal is to create the world where patients come in from the wilderness and say my, life is better, I'm less sick from treatment and I'm feeling better more quickly than with other therapy. While in clinical trials, regulatory authorities are forced to use relatively crude clinical assessment instruments such as BVAS or Birmingham Vasculitis Activity Score, a method developed many years ago to measure symptoms rather than progression of the underlying disease. Our Phase III trial sets out to show, not only a decrease in the science and symptoms of vaculitis, but also faster remission, improved quality of life, and fewer side effects due to the elimination of steroids. As I mentioned earlier, the science has led us into the kidney disease, but our proprietary system to block the spread of inflammatory disease inducing cells shows promise in many other areas of medicine as well. So, before I conclude, let me touch briefly on our early stage pipeline as seen in Slide 5, we've candidates for developments in cancer and in inflammatory autoimmune diseases such as inflammatory bowel disease, skin pathologies including psoriasis as well as other diseases. I'll just mention one today following some encouraging science in Phase I. We're planning a Phase II trial of our CCR2 inhibitor known as CCX872 in combination with the checkpoint inhibitor for the treatment of patients with advanced non-operable pancreatic cancer. We'll keep you updated when we've other significant news on our progress with early stage pipeline candidates. Finally, let me say a word about what you should expect to see from us in 2017. Publication of clinical studies including the Phase II results of avacopan for ANCA vasculitis. Also the launch of other registration grade clinical end point studies for avacopan in diseases such as C3 glomerulopathy, which is a debilitating kidney disease that strikes adolescence and young adults, also for avacopan in atypical hemolytic uremic syndrome or aHUS, a rare life threatening disease. And finally for CCX140 in FSGS expect also regulatory advancements including our pursuit of orphan drug designation for avacopan and CCX140 in additional clinical indications. We'll also continue to look for opportunity to form alliances to help develop our early stage pipeline where this alliance would benefit our shareholders and the clinicians and patients whom we aim to serve. With that, I will turn the call back over to Susan to detail some of our results.

[Susan Kanaya:]

Thank you, Tom. Our fourth quarter 2016 financial results were included in our press release today and are summarized on Slide 6. Revenue was 4.9 million for the fourth quarter and 11.9 for the full year ended December 31, 2016, compared to zero in 2015. There were two sources of revenue amortization of the upfront payment from Vifor Pharma from the avacopan agreement and grant revenue from the FDA to support the clinical development of avacopan for the treatment of patients with AAV. Research and development expenses were 9.3 million for the fourth quarter, up from 8.2 million for the same quarter in 2015. For 2016 as a whole, R&D expenses rose to 38 million from 33.2 million from 2015 primarily due to higher expenses associated with startup activity related to the avacopan Phase III ADVOCATE trial in patients with AAV. This increase was partly offset by lower expenses for Phase II development of avacopan due to the completion of CLEAR and CLASSIC phase 2 clinical trial. General and administrative expenses were 3.6 million for the fourth quarter, a margin increase over the 3.4 million we recorded in the fourth quarter of 2015. Full year 2016 G&A expenses increased slightly to 14.7 million from 14.5 million in 2015, primarily due to higher professional service fee related to business development. We recorded net losses for the fourth quarter of 7.7 million compared to 11.6 million in the fourth quarter of 2015. And our full year net losses at $40 million or 15% lower than our 2015 net losses of 47.3. Total shares outstanding at December 31, 2016 were approximately 48.1 million shares. Finally, as Tom mentioned earlier, we ended the year with a healthy balance sheet with 194 million in pro forma cash, cash equivalent and investments which includes the 70 million up front commitment in connection with the December 2016, CCX140 agreement and the February 2017 amendment to the avacapon agreement. We expect to utilize cash and cash equivalence between 50 and 55 million in 2017. Tom?

[Thomas Schall:]

To summarize, 2016 was a transformative year for ChemoCentryx both in terms of moving into late stage development for some critical unmet needs in kidney disease and in terms of strengthening our financial position through our partnership with Vifor Pharma. Now planning for success, we can focus on launching our first drug onto the United States market through our own direct commercial operation. Our strategic focus is clear, our momentum is good and we are working on the clinical studies we need for submission for approval to regulatory authorities in Europe and the United States. Our early stage pipeline offers opportunities in other critical disease areas including other inflammatory autoimmune diseases and cancer, and we'll continue to take advantage of favorable partnership opportunities that create value and will be rewarding to our patients and our shareholders alike. With that, I will now turn the call back over to the operator, and I will look forward to your questions. Operator?

[Operator:]

[Operator Instructions] Thank you, and our first question comes from the line of Mike King with JMP Securities. Your line is now open.

[Mike King:]

I wanted to ask you about CCX140 and FSGS, on those that Retrophin recently got a approval to proceed into a registration trial based on the reduction in proteinuria. So, I was just wondering. if you can comment about your strategy there and moving forward in FSGS and would you plan a similar trial with 140 in diabetic nephropathy?

[Thomas Schall:]

Sure, Mike, good question. Let me first say that, yes, we're planning for a proteinuria-based study as the assumption is that will be prevalent point in FSGS. You may recall that we did a large Phase II trial in diabetic nephropathy where protein lowering sustained over 52 weeks with CCX140 was the primary endpoint, which we hit very nicely; so not only do we know that our drug has the ability to lower protein and people with elevated protein in the urine, but we've a great database now for safety over 52 weeks. Since the rare disease of FSGS, we thought at the time and certainly that's been reinforced recently with the FDA pronouncements to Retrophin would we believe have an endpoint where proteinuria would actually be the endpoint for approval. And then when our science led us to that area as CCR2, the target of CCX140 being a bad actor in FSGS, we thought that that was a very important direction for us to take. So, yes, we're planning a study, we hope to device a study which when we launch it this year will support indeed the registration of 140 in FSGS. It will be a robust enough study, large enough and covert for that particular endpoint. We anticipate finalizing that trial design in FSGS with the FDA sometime this quarter and hope to initiate the trial round about the midpoint of this year and, we'll have more to say about those details at that time. So, we're enthusiastic about the developments in that space and think we've a great promise with our mechanism of action in our drug for with which we already have a lot of human experience. Was the second part of your question on whether or not we would also consider moving forward in diabetic nephropathy as well, Mike?

[Mike King:]

Yes, right, with the proteinuria endpoint?

[Thomas Schall:]

Yes, well, the reason diabetic nephropathy, well obvious you know why it's very important. I mean there're many millions of people with diabetic nephropathy, so it's a huge indication. The larger realm of diabetic nephropathy however like other very prevalent forms of chronic kidney disease, it's still a little bit mysterious how you get the drug actually approved and while there's been a lot of discussion over the years with regulatory agencies including the FDA about using protein lowering as the registration endpoint, really it’s thought that you will need a longer term outcome endpoint in diabetic nephropathy as contrasted to FSGS. And that longer term end point is thing are things like how does the glomerular filtration rate improve overtime and that takes a few years to measure. It is widely regarded that a lowering of protein predicts the enhancement and preservation of renal function as later assessed by improvements or at least less decline in glomerular filtration rate or GFR, but the agencies are not yet to a place it seems where they will approve a drug for diabetic nephropathy based merely on proteinoria. They certainly take it as an encouraging sign in Phase II. For those reasons diabetic nephropathy while an enormous opportunity and certainly one which needs to be addressed is a bit of a larger investment, both in terms of time and money. Now having said all of that, the alliance with Vifor Pharma is elegantly structured in so far as while we are pursuing the relatively quicker, relatively cheaper, relatively the more direct path of approval for CCX140 and FSGS a rare chronic kidney disease where proteinoria lowering is the end point apparently. Later on Vifor Pharma can come in and exercise an option at a defined future time in our contract to undertake at their expense the larger, longer relatively more expensive endeavor proving that the drug could work in diabetic nephropathy. And so again, the beautiful way the contract is structured is that as they undertake that exercise or they opt to do, so that would take them a few years to get done and we would be probably reaching the end of our orphan drug statuses and protections in both Europe and the U.S. while there's still plenty of patent life left on the drug. So, if successful in DN, we could launch it into the much larger indication, and the number of patients served will obviously increase dramatically, and the returns on the investment of the drug will still be very robust going forward even as we have to presumably price it for that larger market. So, the answer to your questions is, yes, proteinoria and FSGS that's what we're pursuing now, and we think that that study will launch in fairly short order. Downstream, yes, Vifor Pharma has the option that their sole expense to take on the much larger channel and of course we will enjoy jointly the rewards of that endeavor if it’s successful in diabetic nephropathy as well.

[Mike King:]

Right, that's very helpful Tom and then just an extension of that as well an extension on avacapon. Have you thought about other kidney disorders where heavy doses of steroid are required as another potential pathway for avacapon? Thank you.

[Thomas Schall:]

Great question. Mike, I frequently used the colloquial expression of avacopan being a pipeline in a drug. And as you know while we focused a lot on ANCA-associated vasculitis over the past couple of years for variety of reasons, not the least of which it is still a very bad disease with just inadequate therapies. We're branching out obviously virtually immediately into such places as C3 glomerulopathy, and this is a very -- it's a terrible disease. There's no FDA-approved treatment. Adolescence and young adults developed this disease through a dysregulation, genetic dysregulation of their complement system and complement protein gets deposited in the kidney and causes the kidney to fail. So, relatively, in fact very young people go into end stage renal disease. They go into dialysis for a number of years. They may get a transplant typically from mom. The transplant works well for a year or so and then the transplants succumb to the same underlying condition because obviously we haven't cured the disease. And then they go into end stage renal disease and dialysis again, and there's very little that can be done for them overtime. So, these young people who are on six, seven, eight different kinds of immunosuppressive therapy suffer not only from essentially being in dialysis and basically losing their life and livelihood that way, but also the consequences of all these heavy doses of immunosuppressives including steroids. So we've treated a young man in England since September of 2015, a year and a half or so under our compassionate use protocol equivalent and we stabilized his disease. He had a transplant from mom which was failing, and he's been fairly healthy ever since and living a normal life. We're going to start a controlled trial in C3G, and believe me, there's a lot of enthusiasm in the kidney community about that. I've talked a little bit about the opportunities as well in aHUS, we won't go too much into that point today. We think that's although a difficult area to work in there's definitely opportunity there and in many ways it's an opportunity we can avail ourselves with relatively limited amounts of patient data. Beyond that, there're several other areas where complement in general and the C5a and C5a receptor specifically are thought to be involved, and there's no doubt in my mind as we establish our beachhead in some of these first indications that we'll continue to expand the indication spectrum for avacopan overtime. So, I'm very optimistic about the future of that molecule, and I think that it'll continue to grow in its utility and creating value over a number of years now.

[Operator:]

Thank you. And our next question comes from the line of Anupam Rama with JPMorgan. Your line is now open.

[Unidentified Analyst:]

Hi, this is Yugo [ph] on for Anupam. Thanks for taking our questions. Currently, ChemoCentryx retains all rights to China under the Vifor partnership. What are your current thoughts there in terms of a strategic partnership?

[Thomas Schall:]

Well, it's a very good question and so, we've been trying as have others do find ways to work in an innovative and high value way in China. We were very happy that we could retain the rights to China under the contract, the current agreements with Vifor Pharma. We don't have much to say about that for the moment, but as some of those programs or conversations mature we'll certainly bring the community up to date on our plans there. So, I think that for the moment, I would like to just leave it that that and we'll come back to that as we have more concrete facts to offer around our opportunities in China.

[Operator:]

Thank you. And our next question comes from the line of Eric Schmidt with Cowen & Company. Your line is now open.

[Eric Schmidt:]

Maybe first as a follow-up to Mike's line of question around FSGS. Tom, you mentioned that there's bad biology about CCR2 in this indication, could you give just a little bit more flavor for what your basic science is now that you're going for the target in that indication.

[Thomas Schall:]

Sure, Eric so I think I referred to CCR2 as a bad actor at FSGS, we've been able to show in a couple of different ways that CCR2 is definitely present in this indication and then link it mechanistically with what appears to be deleterious effects when CCR2 is operating in the kidney. So for example, we showed a couple of months ago, at least a snapshot or two of renal biopsies taken from FSGS and also compared to renal biopsies taken from kidney, sports injury of kidney, and we were able to show I think quite clearly that CCR2 was standing the immunohistopathology or immunochemistry staining was really markedly up regulated in the FSGS renal biopsy relative to the normal or non FSGS kidney biopsy as a control. And the expression pattern of CCR2 in the kidney really goes beyond what the classical idea of CCR2 is, CCR2 being mostly involved, historically with infiltrating inflammatory cells. So, there's been a lot of data and our immunohistochemistry seems to support it that CCR2 is actually expressed directly on functional sales in the kidney beyond just these infiltrating inflammatory cells, and I think that it's all starting to really provide a very-very broad base of data to suggest that CCR2 get expressed in a stressed kidney as in FSGS potential on the proto sites, and we know FSGS is to some degree a proto psychopath, not to get too technical for other listeners, but we see some expression of CCR2 on proto sites. We see CCR2 on the cells that proto sites are derived from in the kidney and FSGS and in a couple of very other interesting areas. We've alluded to and we will soon be publishing and certainly projecting at meetings some of our mechanistic model date as well for the best animal models of FSGS. When I say, best, they're still rather limited, but nevertheless I think people will agree that such models as the nephrectomy model where you basically take out a whole kidney of an animal, a mouse in this case, and two-thirds of the remaining kidney that manifests features that are much like FSGS and we talked about in the past with our CCR2 inhibitory work that we can really markedly and rapidly reduce the amount of protein in the urine of those animals with a very short course of CCR2 inhibitor therapy and we've expanded upon that well I've a lot more to say about that I hope at the European Renal Association and European Dialysis and Transplant Association Meeting this spring, a beautiful set of experiments that ties to mechanism nicely, so I think that we were very encouraged. There was one piece of corollary data coming out of the 52 week diabetic nephropathy study as well, which basically suggested that the patients that came in at baseline with the highest proteinuria that has -- those have looked most like FSGS and there are those that actually think that very high proteinuric diabetic nephropathy is a form of secondary FSGS as you probably know. In any case, those patients experienced the greatest benefit in protein lowering when they had CCX140 on board. So, a small subset, it was pre specified. I'm not making too much of that data, but I thought it was interesting. So, all of those factors are sort of coming together to suggest that we've something that's quite interesting here.

[Eric Schmidt:]

Thank you. Switching over to avacopan, you mentioned of course we've known this for a while that the drug has prime designation in Europe. Just curious, if you've also filed for breakthrough designation in the U.S.?

[Thomas Schall:]

Eric, we're in a process, as you know breakthrough is as much a process as anything else, and so we continue to bolster our package, and we will be continuing our aim for breakthrough designation as well. We don't have that designation in the U.S. as of yet.

[Eric Schmidt:]

Last question, it may be too early but the ADVOCATE trial, the pivotal study in AAV for avacopan. I know it's just three months in, but can you give us any flavor for how sites were opening up and how enrollment is going?

[Thomas Schall:]

So, as I mentioned we've selected 200 sites and so right now we're just starting that part of the curve where it's really taking off, site activations are in progress both in the U.S. and in Europe; Australia and New Zealand will start very soon. So, it really has a global trial. As we're already screening patients, we're expecting randomizations to start flowing in very-very shortly and as I said it's a number of sites increases as you know that's when the enrollment tends starts taking off. So, we'll have more to say about enrollment rates and prognostications as we get. What I hope to be at most of the sites enrolled sometime by the middle of the year. So, I'll be able to give you a lot more flavor around where we are, but I consider it to be a very good launch so far. We've had good investigators meetings both in North America and in Europe, and clearly the enthusiasm there is carrying over now into getting the sites up and running. So, I think that's a very good sign.

[Operator:]

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back to Dr. Tom Schall for any closing remarks.

[Thomas Schall:]

Well, I would like to thank everyone for joining our call today, and we very much look forward to ChemoCentryx to updating you as we execute further on our plan. And with that, I wish everyone a great day and talk to you next quarter.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may now all disconnect. Everyone have a great day.