Quotient Limited
Q4 2015 Earnings Call Transcript

Published: 19 May 2015

[Operator:]

Greetings. And welcome to the Quotient Limited Fourth Quarter and Fiscal 2015 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stephen Unger, Chief Financial Officer for Quotient Limited. Please go ahead, sir.

[Stephen Unger:]

Thank you, Kevin. Good morning, everyone. And welcome to Quotient’s earnings conference call for our fourth quarter and fiscal year ended March 31, 2015. Joining me today is Paul Cowan, Chairman and Chief Executive Officer of Quotient. Today’s conference call is being broadcast live through an audio webcast and a replay of the conference call will be available later today at www.quotientbd.com. During this call, Quotient will make forward-looking statements, including guidance and projections as to future operating results, because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in Quotient’s filings with the U.S. Securities and Exchange Commission, as well as in last night’s release. The forward-looking statements, including guidance and projections provided during this call are valid only as of today’s date, May 19, 2015, and Quotient assumes no obligation to publicly update these forward-looking statements. We have slides for the presentation on our webcast, which we intended to be self-directed. But apparently the system down, so we will ask you to move the slides along with us during the call. With that, I’d like to turn the call over to Quotient’s Chairman and Chief Executive Officer, Paul Cowan.

[Paul Cowan:]

Thanks, Steve. Good morning, ladies and gentlemen. Thank you for joining this call to review Quotient’s operational and financial results for the quarter and fiscal year ended March 31, 2015. During our latest fiscal quarter, we continue to make excellent progress on bringing MosaiQ to market. Installation of the MosaiQ consumable manufacturing system at our Eysins, Switzerland facility is set to commence next week and we expect to receive the first MosaiQ instruments for further validation and field trials towards the end or final validation and field trials towards the end of 2015. The latest performance evaluation data for assays to be incorporated on the blood grouping and disease screening consumable have also continued to be very positive and we remain on track for the commercial launch of MosaiQ in Europe during the second half of 2016. Moving to slide four of the presentation, looking at the year as whole, we have achieved all of our key goals, we set out to achieve at the beginning of the fiscal year. We successfully completed our IPO and follow-on private placement of equity, raising gross proceeds of $67 million. Additionally, $35 million of proceeds are expected to receive in fiscal 2016 following the excise of the company’s IPO warrants. We have made substantial progress on the development of MosaiQ, with initial commercial launch remaining on plan for the second half of 2016. We will talk more about this in later in the presentation. We ended into a commercial partnership with Ortho-Clinical Diagnostics to commercialize MosaiQ in the global patient testing market. Very importantly, Quotient has retained the commercial rights to MosaiQ in the key North American and European markets with donor testing. OCD will commercialize MosaiQ in the donor testing market in territories other than those Quotient will commercialize MosaiQ and we believe this partnership validates MosaiQ, but technically and commercially. In connection with the OCD commercial partnership, we also received $25 million of upfront project funding and agreed $59 million of milestones linked to regulatory approval and commercial launch of MosaiQ. Quotient has retained all commercial rights over MosaiQ outside of blood grouping and serological disease screening. And our conventional reagent business while impacted towards the later part of the year by adverse exchange rate movements has had yet another solid year and has now stands ready to support the commercial scale up of MosaiQ. Moving to slide five, our mission remains to deliver improved patient care and major cost savings to our customers by developing and delivering the next-generation automation platform for transfusion diagnostics. This platform will combine blood grouping for donor and patient blood, and serological disease screening for donor blood. Following completion of our current mission, we will look to expand the application of the MosaiQ technology into adjacent diagnostics applications, including clinical chemistry and nucleic acid or molecular testing. Moving to slide six, MosaiQ will be the first truly multiplex testing solution to address transfusion diagnostics market, allowing for consolidation of both multiple instruments and multiple consumables. As such, it will be the first fully automated testing solution for transfusion diagnostics allowing for the comprehensive characterization of donor and patient blood, while eliminating the need for routine manual testing. MosaiQ will significantly simplify testing with one consumable for blood grouping and one consumable for disease screening. In the high-volume donor testing laboratories, the multiplex capability offered by MosaiQ will allow for the consolidated -- for the consolidation of three current instrument platforms on to a single instrument platform. Moving on to slide seven, this next slide summarizes the latest performance evaluation data for antigen typing assays to be included on the blood grouping consumable. Results continued to be very positive with 100% concordance across all blood groups specificities tested. This interim data is used to confirm the final formulation of antibodies to be included in or on the blood grouping consumable in advance of those assays being transferred to final production which will take place before the end of this year. We expect to complete a further more substantial study to validate the MosaiQ methodology for blood group -- for blood grouping during the summer. Moving onto slide eight, as already reported development of assays for inclusion on the MosaiQ disease screening consumable has progressed very positively. It will -- internal targets to establish feasibility have been comfortably exceeded for CMV, Syphilis and Hepatitis B surface antigen. We are now advancing our assays for Hepatitis B antibody, Hepatitis C, HIV, HTLV and Chagas disease, which we plan to transfer to final production in the first half of next year. We will continue to report the results of these initial studies as they are completed during this year. Moving to slide nine, MosaiQ is in an advance stage of development with their efforts now focused on industrial scale-up for final product validation and commercialization. Conversion of Eysins, Switzerland facility is substantially complete and next month, we’ll start installing the key elements of the initial manufacturing system for the MosaiQ consumables. We expect to complete formal validation of initial manufacturing system before the end of 2015. We also expect to begin transferring to production individual assays for the blood grouping consumable in the second quarter of 2015 with completion expanded -- expected before the end of 2015. We also expect to transfer production to CMV and Syphilis assays for initial disease screening consumable in the fourth quarter of 2015, with remaining planned disease screening assays for inclusion on the full disease screening consumable expected to be transferred to production in the first half of 2016. Development of the MosaiQ instrument has also advanced considerably. We have received advanced prototype instruments from STRATEC for evaluation, which have met our expected functional requirements. We expect to use these prototype instruments to undertake further large-scale -- a further large-scale validation study in the middle of 2015. We also expect to take delivery of the MosaiQ instruments for use in final validation and field trials before the end of 2015. We plan to commence formal field trials in the first half of 2016 and file necessary regulatory submissions in the second half of 2016, first in Europe and then in the United States, to obtain required marketing clearances. If licensed for sale, we continue to anticipate commercial launch for both the MosaiQ blood grouping consumable and the initial MosaiQ disease screening consumable in Europe during the second half of 2016 and in the United States during the second half of 2017. We expect commercial launch of the full MosaiQ disease screening consumable in Europe during the second half of 2017 and in the United States during 2018, quicker than previously anticipated. Moving onto slide 10. This slide depicts the manufacturing process for the MosaiQ consumable. The process is now well understood and all elements of the initial manufacturing system have either been procured or will shortly be installed in the Eysins, Switzerland facility. We continue to develop, sorry -- moving to slide 11, we continue to develop the initial MosaiQ instrument at a pace with our instrument partners, STRATEC, instrument form and function is complete and feedback from prospective customers has been very positive. Moving onto slide 12. This slide illustrates the magazine format that will deliver consumables to the magazine, sorry -- to the MosaiQ instrument. In a donor testing environment, the magazine will contain 250 consumables and users will be able to load up to four magazines on the instrument at any one time. For low volume users such as hospitals, magazines will contain 50 MosaiQ consumables. Moving onto slide 13. In January 2015, we entered into a commercial partnership with OCD to commercialize MosaiQ in the global patient testing market and the donor testing market in territories other than those where Quotient will commercialize MosaiQ. Key to this collaboration, Quotient has retained broad commercial rights for MosaiQ in the important $1 billion donor testing market, including North America, Europe and Asia Pacific excluding Japan. Additionally, MosaiQ retains rights to commercialize the MosaiQ platform for all diagnostics applications outside of blood grouping and serological disease screening. OCD will commercialize Mosaic exclusively in the $1 billion global patient testing market where the MosaiQ platform will complement OCD’s existing product offering. In connection with the OCD partnership, we received $25 million of upfront project funding, including a $10 million investment in Quotient ordinary shares at $22.50 per share. Additionally OCD agreed to make milestones to Quotient totaling $59 million upon the achievement of agreed-upon regulatory and commercial launch milestones. Quotient will be responsible for supplying MosaiQ consumables to OCD with transfer price step-ups based on agreed-upon revenue targets. Moving to slide 14, the OCD partnership will accelerate the global commercialization of MosaiQ, advancing our goal of the more comprehensive characterization of donor and patient blood. The partnership will add meaningful recurring revenues and profits leveraging OCD's existing sales and service infrastructure worldwide. The partnership also validates the innovation of MosaiQ and strengthens Quotient's position as emerging leader in the in vitro diagnostics field. Our conventional reagent business continued to progress to plan during fiscal 2015, despite the negative impact on reported revenue of a stronger than forecast U.S. dollar during the last two quarters of the year. While this only had a limited impact on our reported operating results in fiscal 2015, revenue growth over the next 12 months will likely be impacted by the recent depreciation of the U.S. dollar against the euro and the British pound. Conventional reagent revenue growth will also be impacted by a shift in production to support the commercial scale of MosaiQ in fiscal 2016. With that, I’d now like to hand back to Steve who will present the financial overview.

[Stephen Unger:]

Thanks, Paul. Looking at slide 15, for our fiscal fourth quarter, total revenues and product sales were $3.9 million, a decrease of 16% from last year’s fourth quarter. Higher sales volumes were offset by a $0.3 million negative impact of a stronger U.S. dollar relative to the British pound and euro, which we have previously discussed. Product sales in last year’s fourth quarter also included approximately $0.3 million of bulk antisera shipments to OEM customers that were not expected to repeat in future quarters. OEM sales of $2.7 million represented 68% of product sales, down 13% year-over-year while direct and distributor sales of $1.2 million represented 32% of product sales, down 22% year-over-year. OEM sales growth was impacted by the stronger U.S. dollar relative to the British pound and euro and the extra shipments of bulk antisera last year. Direct sales in the United States increased 10% year-over-year while direct sales outside of the United States declined 62% year-over-year as a result of the stronger U.S. dollar and our decision to rationalize our product offerings in Europe. Gross profit on total revenue and product sales was $1.5 million, compared with $2.5 million last year. Gross profit on product sales was impacted by the stronger U.S. dollar as well as higher shipping costs and incremental manufacturing costs which we have previously discussed. Gross margin on product sales was 38.4%, compared to 54.1% last year. In the fourth quarter, the operating loss was $9.8 million compared with $4.6 million last year. Operating expenses increased $4.1 million from last year to $11.3 million, with a $2.5 million increase in R&D expenses to $5.6 million and a $1.6 million increase in general and administrative expenses to $5 million. Sales and marketing expenses of $0.7 million were flat from the prior year. The increases in R&D expenses reflected greater investment in MosaiQ following the completion of our initial public offering and R&D expenses also included a $1 million payment for intellectual property license that we recognized as an expense in the fourth quarter. The increases in general, administrative expenses reflected the impact of increased personnel, increased facility rental charges and greater corporate costs, including the costs associated with our transition to a public company. Stock compensation expense was $324,000 in the fourth quarter versus $232,000 last year. In the fourth quarter, net other income was $7.3 million compared with $0.6 million of expense last year. Net other expense consisted -- net other income, excuse me -- consisted of interest expense of $0.7 million and a $10.6 million unrealized gain related to the change in fair value of the warrants issued with our IPO, which we are required to mark-to-market as a balance sheet liability. We also recognized a foreign exchange gain of $1.6 million and had $0.4 million of asset write-downs related to our Eysins, Switzerland facility conversion and $3.8 million of Ortho transaction costs and other advisory fees. Overall, our net loss for the quarter was $2.4 million or $0.14 per ordinary share. Moving to slide 16. For the fiscal year, total revenue was $18.4 million, a decrease of 7% when compared with $19.8 million last year. Product sales were $17.7 million, an increase of 4% when compared with $17 million last year. Higher sales volumes were offset by a $0.3 million negative impact of the stronger U.S. dollar relative to the British pound and euro. Excluding the adverse impact of foreign exchange, product sales growth in fiscal 2015 would've been approximately 6%. We also recognized $750,000 of product development fees in fiscal 2015, compared with $2.8 million last year. OEM sales of $12.4 million represented 70% of product sales, growing 5% year-over-year, while direct and distributor sales of $5.3 million represented 30% of product sales, growing 1% year-over-year. OEM sales were impacted by the stronger U.S. dollar and the extra shipments of bulk antisera in last year's fourth quarter. Direct sales in the United States grew 18% year-over-year, while direct sales outside the United States declined 29% as a result of the stronger U.S. dollar and our decision to rationalize our product offerings in Europe. Gross profit on total revenue was $8.6 million, compared with $11.3 million last year. The decrease in gross profit was primarily attributable to the recognition of less product development fees in fiscal 2015. Gross profit on product sales was $7.9 million, a decrease of 8% when compared with $8.6 million last year. The decrease was primarily attributable to the impact of adverse foreign exchange movements along with higher shipping costs and incremental manufacturing costs, partially offset by higher sales volumes. For the fiscal year, gross margin on product sales was 44.7%, compared to 50.5% last year. For the fiscal year, the operating loss was $29.7 million, compared with $8.9 million last year. For the year, operating expenses increased $18.1 million to $38.4 million, with an $11.2 million increase in R&D expenses to $19.2 million and a $6.9 million increase in general and administrative expenses to $16.4 million. Sales and marketing expenses of $2.8 million were flat from the prior year. Stock compensation expense was $1.1 million versus $0.9 million last year. For the year, net other expense was $29.3 million, compared with $1.3 million last year. Net other expense consisted of interest expense of $2.3 million and a $23 million unrealized loss related to the change in fair value of the IPO warrants. We also recognized foreign exchange gains of $1.1 million, had $1.4 million of nonrecurring expenses and recognized $3.8 million of Ortho transaction costs and other advisory fees in the fourth quarter. Overall our fiscal year net loss was $59.1 million or $4 per ordinary share. Moving to the balance sheet, cash and cash equivalents were $37.5 million on March 31st, while long-term debt was $15.3 million. We also have an additional $35 million of potential funding from the exercise of ordinary share warrants issued with our IPO, which are currently in-the-money. Accounts receivable totaled $1.8 million and inventories totaled $4.6 million. Capital expenditures totaled $10.4 million in the fourth quarter and $24 million for the year. During the fourth quarter, we invested approximately $5 million in the MosaiQ manufacturing facility and $5 million in the initial manufacturing system for consumables. For the year, we invested $8 million in the MosaiQ manufacturing facility and $14 million in the initial manufacturing system. Before I move to our financial outlook, I want to discuss a matter associated with our year-end audit. Our consolidated financial statements have been prepared on a basis that assumes we will continue as a going concern. We expect our operating losses to continue for at least the next two years as we continue our investment in the development and commercialization of MosaiQ. We ended the fiscal 2015 with $37.5 million in cash and cash equivalents and our operating plans for the financial year ending March31, 2016 reflect an expectation that substantially all of our outstanding warrants from our initial public offering, which expired on October 25, 2015, will be exercised before that date. If significant exercises of these warrants do not occur, we may need or decide to raise additional funds. If we are unable to obtain needed financing on acceptable terms or otherwise, we may not be able to implement our business plan. Although our audit is not yet completed, we expect that our auditors will include what is referred to as an emphasis paragraph in their audit report, drawing attention to certain conditions concerning our overall liquidity position that raise substantial doubt about our ability to continue as a going concern. Moving to slide 17 and guidance, our outlook for 2016 reflects the stronger U.S. dollar relative to the British pound and euro, which we expect to have a meaningful negative impact on product sales relative to the prior year. Our revenue forecast currently assumes an exchange rate of $1.50 per British pound and $10.10 per euro. For fiscal 2016, we forecast full year revenue in the range of $19 million to $20 million, which includes $1.9 million of product development fees. We anticipate product sales revenue in the range of $17 million to $18 million, which includes a $1 million or 5% drain on growth from the stronger U.S. dollar. We forecast an operating loss in the range of $50 million to $55 million, which includes R&D expenses of $35 million to $40 million. We would expect R&D expenses to be meaningfully lower in fiscal 2017, as MosaiQ production costs currently included in R&D expenses are expected to start being recognized as cost of goods sold as we began commercial production in our fiscal third quarter. For our fiscal first quarter, we expect product sales in the range of $4.3 million to $4.8 million, compared with $5.3 million in the first quarter of fiscal 2015. This includes a 10% or $0.5 million drain on growth from the stronger U.S. dollar. We expect to report a June 30, 2015 cash balance in the range of $15 million to $20 million. I would now like to make some brief comments regarding our intermediate term outlook, which encompasses both fiscal 2017 and 2018. In terms of forecast expenditure, we are now approximately halfway through our plan for the development and commercial scale up of MosaiQ. We remain on target for the commercial launch in Europe for both the MosaiQ blood grouping consumable and the initial MosaiQ disease screening consumable during the second half of fiscal 2017. In fiscal 2017, we are anticipating a significant reduction in our reported operating loss with plan completion of initial product development and preproduction activities for MosaiQ in the middle of that year. Our preliminary forecast for fiscal 2017 includes total revenues in access of $45 million, which includes revenues related to MosaiQ in access of $25 million. MosaiQ revenues include product sales starting in the fiscal fourth quarter and milestone receipts with respect to our agreement with OCD. Achievement of these revenues will be contingent upon CE Marking and the subsequent commercial launch of MosaiQ in Europe. Provided this occurs, we would expect to generate a modest operating profit in the third and fourth quarters of fiscal 2017. In fiscal 2018, we are planning for total revenues in access of $100 million and a positive operating profit for the full fiscal year. Our preliminary forecast for fiscal 2018 includes revenues relating to MosaiQ in access of $75 million, including product sales in Europe and the United States, and further milestones receipts with respect to our agreement with OCD. MosaiQ milestone and product sales revenues in the United States will be contingent upon MosaiQ beinglicense for sale by the FDA and the subsequent commercial launch of MosaiQ during fiscal 2018. Given the anticipated timing of the achievement of milestones, we would expect to generate a modest operating loss in the first and second quarters of fiscal 2018, which were than be more than offset by operating profits in the third and fourth quarters. I’ll now turn the call back to Paul.

[Paul Cowan:]

Thanks, Steve. Quotient has been established presence in transfusion diagnostics with over three years experience developing, manufacturing and commercializing transfusion diagnostics products worldwide. MosaiQ represents itself our new automation platform represents a major advanced in the field of transfusion diagnostics, delivering a highly disruptive automation solution that we expect will transform transfusion diagnostics. MosaiQ is at an advanced stage of industrial scale up with the initial market to be address by Quotient being the $2 plus billion donor testing market, where 20 customers account for the testing of over $38 million donations annually. The OCD partnership validates MosaiQ technicallyand commercially, and Quotient has retained extensive future commercial rights over the platform. European commercial launch remains on plan for the second half of 2016 with the U.S. commercial launch expected one year later. With that, I’d like to thank everyone at Quotient for their continued efforts. And I’ll now ask the operator to begin the question-and-answer session.

[Operator:]

Thank you. [Operator Instructions] Our first question today is coming from Andrew Peters from UBS. Please proceed with your question.

[Andrew Peters:]

Hey, guys. Thanks for taking the question and congrats on all the progress.

[Paul Cowan:]

Thanks, Andrew.

[Andrew Peters:]

So, I just wanted to circle back on some of the timelines. And I guess, to see if kind of every things are going to plan as you thought about it? I think in my head I had anticipated a field trials sometime around 4Q ‘15 and it seems like that been pushed back a bit but the commercial launch appears not those changes. Wanted to see kind of how development in execution is going according to plan. And I just wanted to confirm that you planned to submit in the EU, as well as get approval in the second half of ‘16, again just kind of focusing a bit on the timelines and have a follow-up as well?

[Paul Cowan:]

Sure. Thanks, Andrew. And yes, as we clearly have gotten a phase so to finalizing the development of MosaiQ and now we’re very much in the planning phase for field trials. Given that we had previously anticipated starting prior to year end, we complete --concluded it would be best that we target a stock in January in Europe to stock with. It gives us a little bit more breathing space on final debugging of the instrument but also avoids at holiday period. And so, we expect to commence field trials early in 2016 in Europe and then we’ll essentially undertake any further debugging before we move the field trials to the U.S. And then with that timeframe, we are and remain on plan to submit our regulatory approval in Europe in the second half and then as we talked about to launch product in Europe in the latter part of 2016. We could commence our commercial efforts before we get the final approval in Europe. And that’s our part of our plan and indeed its part of our plan for selecting field trial sites as well. And then as I mentioned, we will then move from Europe to undertake our field trials in the U.S., post completion of the field trials in Europe. And we would expect to be filing in the U.S. before the end of 2016, launching in late 2017.

[Stephen Unger:]

And you are right, Andrew, the commercial launch date for Europe is unchanged.

[Andrew Peters:]

Okay. Thanks. And then just secondly, wanted to kind dig into -- you mentioned the plans to expand into adjacent diagnostic application, clinical chemistry, nucleic acid. So, on the slide you say initial feasibility is underway by third party, is that something that we can get clarity on what are the timelines for that in terms of just general feasibility, is that something that you are going to be communicating and -- ?

[Paul Cowan:]

Yeah. Our plan is to communicate that as it’s completed later this year. Internally, I want to keep the team entirely focused on delivering blood grouping and serological disease screening to completion this year. And so, we choose a number of external partners to consider or two partners to assist us with the early feasibility on clinical chemistry and molecular. And I’d expect that we will be reporting on that before the end of this year, the initial feasibility study that is.

[Andrew Peters:]

Okay. Great.

[Paul Cowan:]

The plan is that the development team will then -- all going well, we will then transaction into that work beyond 2016.

[Andrew Peters:]

Okay. Perfect. Thanks, again.

[Paul Cowan:]

No problems. Thanks Andrew.

[Stephen Unger:]

Thank you, Andrew.

[Operator:]

[Operator Instructions] Our next question today is coming from Josh Jennings from Cowen and Company. Please proceed with your question.

[Lin Yu:]

Hi folks. How are you? This is actually Lin calling in for Josh. Just two questions for me. Kind of pressing on Andrew’s question little bit. In terms of the field trial, how long do you expect to complete and does the field trial include blood grouping and the full diseases screening or just the CMV and the Syphilis and have a follow-up question?

[Paul Cowan:]

So physical field trial work, we expect to take no more one to two months and then the balance of time is required just for aggregating the data. At this point in time, we are planning that the field trials in Europe will be for blood grouping and the initial diseases screening consumable, which will comprise the CMV and Syphilis assays. And then depending on timing, we may actually do the field trials in U.S. incorporating or depending on how we progress to production, we maybe in a position to accelerate the field trials for the full disease platform or full diseases screening consumable to run in parallel with blood grouping in the U.S.

[Lin Yu:]

Great. Thanks. Just a follow-up question. In terms of gross profit, it’s coming down a little bit and do you expect that to kind of continue to get pressured in fiscal 2016? And going forward, how do you expect to -- kind of, in terms of operating expenses, are you expecting them to be tracking along the same line as how you exit the 4Q ‘15 or how should we think about this? Thanks guys.

[Paul Cowan:]

Okay. So if we talk about margins, the pressure is primarily driven by the foreign exchange to be frank and lower volumes. Our manufacturing base is primarily fixed cost base. So if we lose a dollar on an exchange rate movement, then we’ll lose a dollar in gross profit and that will have an impact on the overall margin. That said, we envisage strong recovery in gross margins in the current financial year and returning to normal levels or approximately normal levels that we’ve had previously. As regards to the G&A, sales and marketing, we will start to see some modest build up in those costs in fiscal 2016, as we enter the commercial launch phase in Europe and the U.S. in 2016-2017.

[Stephen Unger:]

And then just to give you some color on gross margins. In the previous year, we had significant product development fees that were generally 100% gross profit. In fiscal '15, we saw a decline in those revenues. In fiscal '16, we are anticipating an increased level of product development milestones for the conventional reagent business associated with our [RASCAT] [ph] product line that would be roughly $1.9 million. So we are expecting to see an increase in the overall gross margin in fiscal '16. And then as far as product sales are concerned, and for now we can’t predict exactly where these currencies are going to go, and currency does have an impact on the gross margin. But for now, we do expect product sales gross margin to be better in fiscal '16 than it was in fiscal '15.

[Lin Yu:]

Great. Thanks. And congratulations on the good quarter.

[Paul Cowan:]

Thanks a lot.

[Stephen Unger:]

Thanks Lin.

[Operator:]

Thank you. We have reached end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments.

[Paul Cowan:]

Thank you. And thank you everyone for joining the call today. We look forward to continue with the successful progression of the MosaiQ project to final commercialization and reporting on that further as we progress through the next financial year. Thank you very much.

[Operator:]

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.