Emergent BioSolutions Inc.
Q2 2008 Earnings Call Transcript

Published: 7 Aug 2008

[Operator:]

Good day, ladies and gentlemen, and welcome to the second quarter 2008 Emergent BioSolutions Inc. earnings conference call. My name is Katina and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator instructions) I would now like to turn the presentation over to our host for today's call Mr. Robert Burrows. Please proceed.

[Robert Burrows:]

Thank you, Katina. Good morning, ladies and gentlemen. Thank you for joining us today as we discuss Emergent BioSolutions financial results for the second quarter and for six months of 2008. As is customary, our call today is open to all participants. In addition, the call is being electronically recorded and is copywrited by Emergent BioSolutions. Joining me on the call this morning is Fuad El-Hibri, our Chairman and Chief Executive Officer, and Don Elsey, our Chief Financial Officer. Additional members of our senior management team will be present on the call for purposes of the Q&A session if need be. The agenda for today's call is as follows Following my brief introduction, Fuad will provide comments on corporate accomplishments in Q2 2008 and key objectives for the remainder of 2008. Don will then discuss the 2Q and for six months of 2008 financials as well as comment on our 2008 financial guidance. We will finish the call with the customary Q&A session. Please note that any statements about the company's prospects or future expectations are forward-looking statements. As you know, forward-looking statements involve substantial risks and uncertainties and actual results may differ materially from expectations. Please refer to the press release issued earlier today and importantly to our filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ. Also, Emergent BioSolutions assumes no obligation to update the information in today's press release or as presented on this call except as may be required by applicable laws or regulations. Today's press release may be found on our Web site at www.emergentbiosolutions.com under Investors/Press Release. And with that introduction, I would now like to turn the call over to Fuad El-Hibri, Emergent's Chairman and CEO. Fuad?

[Fuad El-Hibri:]

Thank you, Bob. Good morning, ladies and gentlemen and thank you for joining us today. This morning we reported financial results for the second quarter of 2008. I am very pleased with our financial results for the second quarter and first half of 2008. Our revenues for the first half of the year are a record for our company and we continue on the past for our seventh year of operational profitability. In a moment, Don will take you through a more detailed review of our results for the second quarter and first six months of 2008. For my portion of the call this morning, I would provide an update on our operational accomplishments including marketing and sales, product development, manufacturing, and business development. But, first, for those investors who are new to Emergent, let me briefly tell you about our mission and business focus. In short, we are dedicated to one simple mission, to protect lives. We develop, manufacture and commercialize vaccine in biotherapeutics that assist the body's immune system to prevent or treat infectious and other life threatening diseases. And we consider ourselves as a leading biopharmaceutical company that is focused on immune-related biologics. Within immune-related biologics we are currently focused on infectious diseases that will continue to offer significantly consider other immune-related candidate. As we continue to develop Emergent's leadership position in the biopharmaceuticals base, we believe that our business focus will lead to build the long-term value for our customers, partners and shareholders. With that introduction, let me now turn to our operational accomplishments for the second quarter. I will begin with an update on our marketing and sales revenues. During the third quarter, we continued to deliver BioThrax to HHS for inclusion in the Strategic National Stockpile under our current multiyear contract. As a reminder, this is a $448 million contract that includes the procurement of a total of 18.75 million doses of BioThrax over a three year period. We anticipate delivering approximately 7 million doses to 8 million doses under this contract this year and the balance in 2009, ahead of schedule. We expect to complete delivery under this contract sometimes during the second half of next year. The Department of Defense requirement for BioThrax is projected to remain at a historical level due to the continued need for doses under existing mandatory Anthrax vaccination program. These levels have historically ranged between 1.5 doses to 2 million doses per year. By the end of this year, we anticipate entering into a separate contract with the U.S. government for the procurement of BioThrax to meet the requirements of the military active immunization program. Also, separately, we have begun discussions with HHS regarding additional dose requirements for the SNS, above and beyond, the 18.75 million doses under the current HHS market. As you may recall, we have applied to the FDA to extend the expiration dating of BioThrax from three years to four years. In the event that FDA approves this extension of dating, HHS has agreed to increase the price per dose under the agreement of 13.25 million doses sold under this contract. The aggregate value of this price adjustment is $34 million of which approximately $60 million could be recognized as 2008 revenue if approval is received this year. Internationally, we completed another meaningful sale of BioThrax to an allied foreign government. And we continued to pursue license for BioThrax in select foreign market which we believe will facilitate sales to government in these markets for both military and civilian stockpiling purposes. We remain confident the demand for BioThrax will continue to come from both the U.S. government and from other international governments. Let me now turn to our key product development accomplishments for the quarter. First, with respect to our biodefense portfolio. For our licensed product, BioThrax, we remain on track with a very enhancement programs for our Anthrax vaccine, namely, the dose reduction study, and move out of administration intramuscular, and the expansion of the product labels that include post exposure use. We expect to conclude these initiatives over the next two years. Our other key contract initiatives is our programs to extend the shelf life to four years from the current three years which I mentioned earlier. We filed an application for four year gain with the FDA in 2007 and anticipate we will receive approval at a later this year or some time next year. During the first half of the year, we completed two key acquisitions that certainly bolster our BioThrax portfolio. First, we acquired the Recombinant Anthrax Vaccine Candidate, rPA 102, (inaudible). Recent improvements to the formulation of the rPA vaccine were made to enhance the product facility. As a result of these improvements, we believe that it is well-positioned to be a leading candidate for an award under an RFP, recently issued by HHS, procure up to 25 million doses of the recombinant anthrax vaccine for the SNS. As we announced last week, we submitted what we believe to be a strong proposal in response to the HHS RFP. The government has stated that they will make up the tool work by the end of the year. Importantly, our rPA candidate has the potential to become the complementary product to BioThrax, the world's only FDA licensed anthrax vaccine. We believe that the U.S. government will continue to buy BioThrax in addition to an rPA vaccine, including ours, when available for the SNS over the long run. Also, earlier this year, we acquired a polyclonal anthrax monoclonal therapeutic from AVANIR. This product is a fully human monoclonal antibody that blocks toxin activity to a novel mechanism of action compared to other monoclonal candidate. We have submitted the development proposal to the U.S. government in response to an RFP that will fund advanced development of this candidate. Differences, we expect that this advanced development award to be in the tens of million development, and with respect to future procurement company. And based on an existing HHS procurement contract with another company, we estimate that current market opportunity for anthrax monoclonal therapeutic to be in the hundreds of millions of dollars. Finally, enlightening of our anthrax franchise, our anthrax IG therapeutic continues to advance under the $9.5 million development contract we were awarded last year from BARDA specifically, to continue to conduct the necessary nonclinical trials in advance of initiating the typical human trial which we expect to commence by the end of the year. Based on an existing HHS procurement contract with another company, we estimate that the current market opportunity for anthrax IG therapeutic to also be in the hundreds of million. In summary, with our multiproducts offerings for the anthrax that we are well-positioned to provide both the U.S. government and other governments internationally with the full complement of medical countermeasures to protect both military and civilian population. With respect to our other biodefense franchise, Botulism, we recently received an NIH grant of approximately $2 million to further develop our novel recombinant trivalent botulinum vaccine. In addition to the development of the botulinum vaccine, we are looking at opportunities for development of a potential botulinum therapeutic. With respect to our commercial portfolio, let me briefly comment on our clinical program. For our single dose, oral typhoid vaccine candidate we initiated a Phase IIb trial in the United States following a successful Phase II trial in Vietnam which was completed last year. Importantly, this product will be the world's first single dose drinkable typhoid vaccine, which would provide significant advantages over the two currently licensed typhoid vaccines in the U.S. In terms of market opportunity, we see significant potential market growth in providing differentiated product for typhoid. Analysts estimate the market to be near $200 million annually within five years. However, our product candidate would be a single dose oral product with potential effectiveness in young children among other attributes. We're confident our product offering could expand the market not only in the U.S. and EU, but also within endemic regions and specifically, the growing populations in India and China. The economic conditions are increasingly improving in both India and China and even a small percentage uptick from these countries would provide a substantial additional market opportunity for our oral typhoid. Regarding our hepatitis B therapeutic vaccine candidate we have been conducting a Phase II study in the U.K. and Serbia to evaluate the safety and immunogenicity of this oral vaccine as a standalone monotherapy of chronic HB carriers. We already have completed recruitment for the first of three study cohorts, enrolment of appropriate subjects, and to the remaining piece of cohort has proven to be challenging in the standard of care in the developed world. As a result, we have key recruitment for this trial, and we will be completing the study as soon as feasible [ph]. Data collected from all enrolled subjects will be analyzed in full accordance with the study cohort. However, given the type of (inaudible) vaccinated today as well as the small (inaudible) we do not expect the data to be sufficient to show human proof of concept from this trial. With that said, we are in the process of identifying alternative trial side in an endemic areas of the world where we hope recruitment of suitable chronic carriers will be (inaudible) and that will allow us to adequately test effectiveness of this therapeutic (inaudible). As a result, we are reducing development spending for our (inaudible) vaccine candidate until the new human proof of concept study is initiated in an endemic area in the near future. And finally, let me address the status of our Group B Strepto candidate. As we have outlined in the past, we rigorously evaluate all of our candidate programs in an effort to optimize the allocation of resources in the future period. As a result of this should give in light of additional new programs we have acquired, we are lowering up by – and another alternate as for Group B Strepto vaccine candidate. Considering the long (inaudible) of clinical development and the complexity of multiple working candidate we have concluded the other development candidate in our pipeline or of a higher near-term priority. Accordingly, we expect that social development costs for our Group B Strepto candidate will be reduced for the foreseeable future. Let me now turn to our manufacturing accomplishments for the quarter. With respect to our new state-of-the-art large scale manufacturing plants in Michigan, we're currently conducting facility, equipment and utility validation activity. We are also performing engineering one to support process development board in preparation of manufacturing consistency lots in 2009. Remember, this facility is containable, it has been designed and constructed to enable us to manufacture on a large scale basis BioThrax as well as other vaccine products, including our recently acquired Recombinant AA Anthrax Vaccine Candidate. With respect to our existing facility, we plan to continue to manufacture at capacity. Our output target for 2008 remains at around 7 million to 8 million doses. Lastly, let me review key accomplishments with respect to our business development objectives. Consistent with one of ours strategic goals of growth for selected acquisition, we have pursued a two pronged approach for expanding our product cycle. As mentioned earlier, on the biodefense side, we acquired both an advanced recombinant anthrax candidate for anthrax vaccine portfolio as well as a human monoclonal antibody candidate to anthrax therapeutic portfolio. On the commercial side we have recently announced an exciting joint venture with Oxford University to develop a novel next generation tuberculosis vaccine. This is the world's most advanced next generation TB candidate. The Oxford-Emergent consortium is working with the Aeras Global TB Vaccine Foundation to evaluate the efficacy of this candidate and have been in a Phase IIb proof of concept trial, anticipate that begin in early 2009. As you know, TB is the major global health problem. Over 2 billion people worldwide have been infected with the bacteria and positive TB, and 1.5 million to 2 million people die from TB every year. This meaningful joint venture was formed specifically to support manufacturing and clinical development of this candidate. The University of Oxford has exclusively licensed this candidate and related technology to the consortium. We are pleased that the consortium has already secured approximately $60 million from the Wellcome Trust and the Aeras Global TB Vaccine Foundation to fund this Phase IIb proof of concept trial. Under agreements with the consortium, Emergent BioSolutions has the exclusive right to commercialize the MVA Phase IIb vaccine candidate in the developed world and selected developing countries. And Aeras Global TB Vaccine Foundation will have distribution rights in the rest of the developing world to ensure availability and access to the vaccine for those needed. The other commercial initiatives which I would like to provide you an update is our proposed transaction with Protein Sciences Corporation, and the acquisition of their Novel Flu Vaccine FluBlok, which we announced in May. As you may be aware bringing the transaction closure is taking longer than expected. We have filed a lawsuit against Protein Sciences and we continue to pursue our legal options in this suit. At the same time we will continue to engage in discussions with the Protein Sciences board of directors. And it is important to note that we are continuing to explore ways to find a positive manner in which to complete this transaction. FluBlok would be an excellent position to our infectious disease vaccine portfolio and we will benefit from the application of our core expertise and product development, manufacturing, and government contracts. Lastly, we continue to devote time and attention this year in securing additional NGO and government grant funding to advance multiple products in our pipeline. In conclusion, we are building on our past achievements and are making further progress towards achieving our goals for this year. Such momentum is the reason why I remain confident that we will continue on a path to achieving our goals in the near and medium term. That concludes my prepared comments. Don will now discuss our financial results for the second quarter and first six months of 2008. Don?

[Don Elsey:]

Thank you, Fuad. Good morning, everyone. As Fuad mentioned, we released our second quarter 2008 financial results this morning prior to the opening of the markets. The press release is available on our Web site. Today we will be filing our quarterly report on Form 10-Q with the SEC. The 10-Q will also be available on our Web site and on the SEC's Web site once it has been filed. Our financial performance for the second quarter and first half of 2008 reflects significant progress for attaining our financial goals for 2008 We continue to deliver doses of BioThrax for inclusion into the Strategic National Stockpiling pursuant to our current multiyear contract with the U.S. government. We are also expanding our manufacturing and product development infrastructure and we are investing in strategic acquisitions of partnerships to further bolster our product pipeline. Our acquisition of both a human monoclonal antibody as a therapeutic for anthrax infection and Advanced Recombinant Protective Antigen Anthrax vaccine during the first half of this year strengthened our anthrax franchise and enables us to offer solutions to all three phases of anthrax infection. Now, I would like to give a summary of our financial results for the second quarter and first six months of 2008. And I'll start with product revenues. Second quarter 2008 product sales increased by $19.8 million or 88% to $42.3 million, up from $22.5 million for the comparable period of 2007. The increase was primarily due to a 98% increase in the number of doses of BioThrax delivered. Product sales for the second quarter of 2008 consisted of BioThrax sales at HHS of $41.9 million, and an aggregate international and other sales of $0.4 million. For the six month period of 2008, product sales increased by 35.9 million, or 75% to $83.8 million, up from $48.09 for the comparable period of 2007. This was primarily due to an 82% increase in the number of doses of BioThrax delivery. Product sales for the six month period of 2008 consisted of BioThrax sales at HHS of $83.1 million, and an aggregate international and other sales of $0.7 million. Turning to contracts and grant revenues, second quarter 2008 contracts and grant revenues increased by $0.5 million, or 74% to $1.2 million, up from $0.7 million for the comparable period of 2007. Contracts and grant revenues for the second quarter of 2008 consisted of $0.8 million from the Sanofi Pasteur collaboration related to the company's Meningitis B Vaccine candidate, and $0.4 million from NIAID. For the six month period of 2008 contracts and grant revenues increased by $0.7 million or 42% to $2.4 million, up from $1.7 million for the comparable period of 2007. Contracts and grant revenues for the six month period of 2008 consisted of $1.6 million of revenue from the Sanofi Pasteur collaboration and $0.8 million from NIAID. Moving on to the cost of product revenues and gross margins. Second quarter of 2008 cost of product sales increased by $2.8 million or 49%, to $8.7 million, up from $5.8 million for the comparable period of 2007. For the six month period of 2008 cost of product sales increased by $5.3 million or 47% to $16.7 million, up from $11.4 million for the comparable period in 2007. The increase for both the second quarter and six month period of 2008 was primarily due to significant increases in both periods in the number of doses of BioThrax delivered. Turning now to research and development expense. Second quarter 2008, R&D expenses increased by $3.9 million, or 29% to $17.2 million, up from $13.3 million for the comparable period of 2007. This increase reflects higher contract service costs and asset and technology acquisition costs, and includes increased expenses of $2.6 million on product candidates that are categorized in the biodefense segment, $0.9 million on product candidate is categorized in the commercial segment, and $0.4 million is for other research and development expenses which are into import of technology platforms and central research and development activities. For the six month period of 2008, R&D expenses decreased by $0.2 million or 1% to $20.7 million from $28.9 million for the comparable period of 2007. This decrease reflects lower contract service costs and includes decreased expenses of $3.2 million on product candidates that are categorized in the biodefense segment, partially offset by increased expenses of 2.3 million on product candidates categorized in the commercial segment and 0.7 million in other research and development expenses as in the second quarter in support of technology platforms and central research and development activities. Next, SG&A expense. Second quarter of 2008, SG&A expenses increased by $2.4 million or 19% to $15 million, up from $12.7 million for the comparable period of 2007. This increase was primarily attributable to an increase of approximately $2.1 million resulting from the addition of personnel, and increased legal and other professional services related to the company's headquarters and staff organization to support the overall growth of the company. And an increase of $0.2 million in sales and marketing expenses related to the growth of staff in this area and an increase in selling and marketing activities. For the six month period of 2008, SG&A expenses increased by $3.2 million or 14% to $27.1 million, up from $23.9 million for the comparable period of 2007. This increase is also primarily attributable to an increase of approximately $2.8 million resulting from the addition of personnel, and increased legal and other professional services related to the company's headquarters and staff organization to support the overall growth of the company. And to finish up on the P&L, we'll look at net income. For the second quarter 2008, our reported net income was $1.8 million or $0.06 per basic and diluted share, a significant improvement from our net loss of $5 million or $0.17 per basic and diluted share for the second quarter of 2007. For the six months of 2008, our reported net income was $8.8 million or $0.30 per basic and diluted share, again a substantial improvement from our net loss of $7.7 million or $0.27 per basic and diluted share. In both instances, our average outstanding shares for the second quarter and first six months of 2008 increased by well over 1 million shares or approximately 5% over the share count at a comparable period of 2007. Turning to the balance sheet, cash and cash equivalents at June 30th, 2008 were $84 million compared to $105.7 million at December 31st, 2007, a $92.7 million at March 31st 2008. The net decrease in cash and cash equivalents for the six month period resulted primarily from net cash used in operating activities and investing activities of $0.7 million and $22.5 million respectively, offset by net cash provided by financing activities of $1.6 million. Of the $22.5 million of cash used for investing, this includes $10 million to advance Protein Sciences under our asset purchase agreement. Finally, I want to state to our 2008 financial guidance. As of today, we are reaffirming our expectations for full year 2008 total revenues of between $100 million and $195 million, with the volumes with the low end of this range. With respect to our revenues guidance, it is important to note that our projections are driven by a number of variables, some of which may drive revenues for the upper end of the range. In our projection towards the low end of the revenue forecast, we have not included the potential approval of four year dating. While we remain confident that the approval for four year dating is achievable we perceive it may be in 2009 rather than 2008. As Bob mentioned, the impact of four year dating for 2008 is estimated at approximately $60 million. With respect to full year 2008 earnings, we reaffirm our expectations for continued profitability at a level of approximately $20 million in net income over the year. Additionally, our projections do not reflect the potential acquisition of Protein Sciences. That concludes my prepared comments. I will now turn the call to the operator so that we can begin the question-and-answer portion of the call. I will take just one moment and that it's been highlighted that I misspoke on our revenue guidance, I said between $100 to $195 million which will be quite a range, it's between $180 and $195 million as we have guided in the past. So with that I will turn it back to the operator. Thank you very much.

[Operator:]

Thank you. (Operator instructions) Your first question comes from the line of Eric Schmidt representing Cowen & Company. Please proceed.

[Eric Schmidt:]

Hi, good morning. Thanks for taking my call. Don, in terms of the operating cash used in the quarter, are you owed some payments from HHS or shipments is delivered they haven't received cash for is that made operating cash went down?

[Don Elsey:]

The operating cash went down on a number of reasons, but yes. Our AR has increased over what it was before we're now at an AR level of $22 million.

[Eric Schmidt:]

And in terms of the subtle change to revenue guidance highest toward the lower end of the previous range, is the only change there that you're now not necessarily show about four year dating or have you taken out any initial DoD revenues I assume that's also –

[Don Elsey:]

Clearly, there are a number of factors that play in the overall revenue projections. I would say the primary influence is the four year dating in, I would want to stress it's not that we're changing our view on the achievability of four year dating, it's strictly a timing expectation that instead of being that in this year, it might go out into the first quarter of next year.

[Eric Schmidt:]

And I take from Fuad's comments that you're basically planning to sell out your capacity this year 7 million to 8 million doses BioThrax to HHS, if you got some orders from DoD, could you fill them or would they not be applicable to the guidance for 2008 either?

[Fuad El-Hibri:]

Currently – let me just answer that question, if I may. We are confident that we will be delivering everything we produce this year. So, whether it is under HHS or DoD, this is something the government will work out between them. So, point is that we believe that we will be able to sell all that we can produce this year. Eric Schmidt – Cowen & Company Thanks a lot.

[Operator:]

Next question comes from the line of Cory Kasimov representing JP Morgan. Please proceed.

[Cory Kasimov:]

Hi, good morning, guys. First question is on rPA. Can you expand a little bit on the stability improvement that has been made there over the issues that VaxGen hadn't, the reasons for your confidence that these issues have been adequately answered?

[Jim Jackson:]

Hi, Cory, this is Jim Jackson.

[Cory Kasimov:]

Hi, Jim.

[Jim Jackson:]

Yes. Basically, what we have done is that we have improved final formulation of the vaccine compared to what it was the fact that VaxGen was using and is the initial clinical trial. And we have animal and stability data now, indicating that this stability profile will be much enhanced over what it was initially. So, very strong those data, we think we are going to be able to meet or exceed HHS requirement for second generation stability product.

[Cory Kasimov:]

Great. And then regarding this pending rPA contract that's out there, can you talk a little bit about how large you think this could actually be both in dose and dollar terms? I know it's the $25 million – 25 million dose contract, but we heard rumbling that it actually could be larger or how this potentially be split out?

[Don Elsey:]

I think it's safe to say that the government has stated that there could be as many as two awards. The question is could there be two awards of 25 million doses each. That's the possibility. Could be that within the 25 million doses requirement that they split it in one way or another. So that's one factor in terms of determining the size of a potential contract. The other factor of course is pricing which is a very competitive issue. But in terms of looking at what vaccine would cause – if you look at the former VaxGen contract, was that around $11 to $12 a dose, that for 75 million dose, so obviously, there is some economies of scale those in there. So, we would expect that for a lower quantity that price go up some. So, again, you can use the price somewhere north of that, and quantities that anywhere from 0 to 25 million doses per award.

[Cory Kasimov:]

And then assuming this rPA contract is awarded, do you think that would have any potential downstream impact on government's requirements for the BioThrax vaccine beyond 20 time or the current contract doses?

[Don Elsey:]

We believe not, because as I mentioned earlier in my prepared presentation that we believe that the government is committed to purchase BioThrax in the long-term, if the license product – even if the second license product commercially be available, five or more years then I think it allows the government to continue purchasing from two suppliers and two products that are licensed.

[Cory Kasimov:]

And then lastly, you also indicated in your prepared remarks that there is the potential that the HHS extend this contract or it goes above and beyond the current 18.75 million doses. Can you go into that a little bit more and talk about maybe the rationale there and when we could hear on something like that?

[Don Elsey:]

The rationale is that the government remains committed to purchasing BioThrax and to purchasing much as we tend to produce in order to increase the supply for this Strategic National Stockpile, and given that we project that by the second half of next year, we would have supplied the full 18.75 million doses that we have already started discussions, preliminary discussions with the government for an expansion of that contract above that 18.75 million doses.

[Cory Kasimov:]

Great. That's helpful. Thanks for taking the question.

[Don Elsey:]

I like to remind you also that the government has stated and we stated over and over again that their requirements is 75 million doses. That's as far as we understand the stand. Even that the doses that we have supplied into the SNS, some of them have expired or are expiring so it's – the needs to continue – continues to be a requirement for rotation after that.

[Cory Kasimov:]

Thank you.

[Don Elsey:]

Thank you very much.

[Operator:]

(Operator instructions) Your next question comes from the line of Tim Gray representing Potomac Capital. Please proceed.

[Tim Gray:]

Hi, there, good morning everybody. Just a quick reiteration on the guidance, again, it was to see on the low end here because of the four year dating not being included into this fiscal year versus any reduced expectations on deliveries or even margin on a pricing on the deliveries (inaudible).

[Don Elsey:]

Good morning, Tim, this is Don Elsey. Yes. That's correct. That is we have decided in the guidance that it's more prudent to view that four-year dating occurring in 2009 versus 2008, that's the primary input. Underneath that, there are certainly a number of much more minor changes that are moving in various directions. That's the primary one. I would say that the pricing delivery schedule, everything else with respect to HHS absolutely remain in place.

[Tim Gray:]

Thank you very much.

[Fuad El-Hibri:]

Thank you, Tim.

[Operator:]

There are no further questions in queue at this time. I would now like to turn the call back to Mr. Burrows for closing remarks.

[Robert Burrows:]

Thank you very much. Ladies and gentlemen, that concludes today's call. Thank you for your participation. Please note that today's call has been recorded and the replay will be available beginning later today through August 21st. Alternatively, there is available a webcast of today's call, an archived version of which will be available later this morning. Thank you again and we look forward to speaking to you all in the future. Good bye.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day.