MaxCyte, Inc. (MXCT) Q2 2023 Earnings Call Transcript

MaxCyte, Inc. (NASDAQ:MXCT) Q2 2023 Earnings Conference Call August 9, 2023 4:30 PM ET

Company Participants

Sean Menarguez - Head-IR

Doug Doerfler - President and CEO

Douglas Swirsky - CFO

Conference Call Participants

Julie Simmonds - Panmure Gordon

Dan Arias - Stiefel

Jacob Johnson - Stephens

Madeline Mollman - William Blair

Vidyun Bais - BTIG

Steven Mah - TD Cowen

Operator

Thank you for standing by, and welcome to MaxCyte's Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the call over to the Head of Investor Relations, Sean Menarguez. Please go ahead.

Sean Menarguez

Thank you, [Ottis], and good afternoon, everyone. My name is Sean Menarguez and I am the Head of Investor Relations here at MaxCyte. Thank you all for participating in today’s conference call.

On the call from MaxCyte is Doug Doerfler, President and Chief Executive Officer; and Douglas J. Swirsky, Chief Financial Officer.

Earlier today, MaxCyte released financial results for the second quarter ended June 30, 2023. A copy of the press release is available on the company's website.

Before we begin, I need to read the following statement. Statements or comments made during this call maybe forward-looking statements within the meaning of federal securities laws. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in any forward-looking statements due to a variety of factors which are discussed in detail in our SEC filings. The company has no obligation to publicly update any forward-looking statements, whether because of new information, future events or otherwise.

Now with that, I will turn the call over to Doug.

Doug Doerfler

Thank you, Sean. Good afternoon everyone and thank you for joining MaxCyte's second quarter 2023 earnings call. I will begin with a discussion of our business and operational highlights during the quarter, followed by a detailed financial review from DJ, our Chief Financial Officer. We will then open up the call for questions.

MaxCyte reported $9 million of revenue in the second quarter as we experienced softness in the cell therapy industry. The cell therapy industry has prioritized pipeline programs which has resulted in nominal growth in R&D spending. Less R&D spending in the industry, we believe has resulted from a challenging and evolving macroeconomic environment. Despite this, we are confident in our updated annual outlook for 2023 and continue to be excited about the health of our long term business.

Our partnership pipeline is robust, highlighted by our five partnerships so far this year. Customer engagement remains high and I remain extremely excited about the opportunities for MaxCyte's platform as the premier sell engineering, technology and support for the growing industry.

You'll note that our second quarter revenues including our core business revenues are down from the same quarter last year. As discussed on last quarters call, 2023 has been a challenging year for the industry which has been impacted by multiple macroeconomic factors including the challenging capital markets environment. The biotech industry continues to prioritize pipeline assets for R&D investment, especially with small development stage cell therapy companies focused on programs in late stage preclinical and early stage clinical trials.

With this backdrop, we are seeing continued cautiousness in capital investments from our customers, resulting in extended purchasing cycles for instruments and processing assemblies. Our negative growth rate in the first half of 2023 were exacerbated by difficult and year-over-year comparisons, which DJ will discuss in a few minutes.

While some of our customers are now in their investments, we are encouraged by our clinical SPL partners progress, where we are generally enabling their lead or second assets. These assets remain our partners active focus for their development, investment, and progression through the clinic. Outside of these evolving headwinds, the cell therapy industry continues to move briskly toward non-viral cell engineering approaches with an increased focus on more complexed engineered cell therapies, often including multiple engineering steps and molecules across an expanding variety of cells and disease types.

We believe these industry trends play to the strength of the MaxCyte platform, which has driven a continued high level engagement on current and prospective customers. Our robust pipeline has led to five SPL partnerships being signed this year, which supports our view of the value derived from our platform.

In July and August, we announced three new SPL partnerships including Lyell Immunopharma, ViTToria Biotherapeutics and Prime Medicine. Our partnerships with Lyell and ViTToria diversify our portfolio into new therapeutic modalities, expanding our exposure to next generation autologous CAR-Ts from previously only allogeneic CAR-Ts.

In addition, Lyell expands our exposure to solid tumor indications which opens up a significant commercial revenue opportunity for MaxCyte. First generation autologous CAR-Ts including [indiscernible] consists of one engineering set, insert your transducing the CAR into T-cells with a viral factor.

As the field evolves to expand the applications for cell therapy, developers are focusing on more complex approaches with additional edits and unique gene editing tools, which has further accelerated the shift and non-viral cell engineering approaches.

Furthermore, as highlighted in the Lyell and ViTToria partnerships, the field continues to advance complex nonviral cell engineer techniques in both autologous and allogeneic settings. MaxCyte is well positioned to address these evolving market trends.

The breadth of our SPL partnership funnel is the result of broad engagement with academic clinical translational centers and commercial customers. We have developed new SPL partnerships in both customer segments with ViTToria being a recent example of our work with University of Pennsylvania's GMP translational center. ViTToria is working toward commercializing their proprietary cell therapy 3.0 technology, which was developed out of the University of Pennsylvania

Our partnership with Prime Medicine supports their prime editing technology platform, which is a novel next generation gene editing tool targeting the repair of almost all types of genetic mutations across a broad range of tissues, organs and cell types. Prime Medicine is another example of expanding applications and cell therapy, many of which the backside platform is at the forefront of enabling.

Given the evolving operating environment, our SPL partners are often narrowing their focus to their lead assets which they continue to progress through the clinic. The progression through the clinic of such programs and their positive clinical data readouts are critical events in the current funding environment and have led to capital raises in recent months.

We are also seeing our existing partners pursue new indications including for example, the expansion of CAR-T applications to autoimmune diseases. As cell therapy indications expand into autoimmune or solid tumors, for example, they often require multiple doses. This is where the performance and scalability of the MaxCyte platform has a key competitive advantage. Based on our partners decisions, we believe is clear that the MaxCyte platform is the platform of choice for innovative cell therapy development.

We look forward to the first commercial approval of a product enabled by our platform, Vertex and CRISPR exa-cel program. Earlier this year, the exa-cel program announced the completion of BLA submission to the FDA for sickle cell disease and transfusion dependent beta thalassemia.

More recently at the European hematology conference, Vertex presented updated data from exa-cell showing pivotal trial data for beta thalassemia and sickle cell disease that met primary and key secondary endpoints. The pivotal data was integral to the exa-cell receiving PDUFA dates for sickle cell and beta thalassemia of December 8, 2023 and March 30, 2024 respectively. This application approval would be the first non-viral engineered cell therapy product granted by the FDA and would further validate the utility of MaxCyte's sites platform as the premier enabler of non-viral engineered cell therapies.

Our unique partnerships provide MaxCyte with tier medium term and long term revenue potential where MaxCyte has the opportunity to share the performance of partners programs, as those programs reach commercialization. To provide more context on the scale of our commercial opportunity, we highlighted this potential on new Slide 15 in our corporate presentation. As you may be aware, we are approaching the first wave of partner commercial approvals, which include the potential launch in 2024 of exa-cel in sickle cell disease and beta thalassemia, followed shortly thereafter by a second commercial wave of seven potential therapies with expected launch potential between 2025 and 2027.

The second wave of therapy spans across blood cancers, including lymphoma and leukemia, solid tumor and genetic diseases. The third commercially potentially includes eight partner therapies with a launch window between 2028 and 2030. The commercial revenue opportunity for MaxCyte from the success of only a portion of these partner programs is substantial and our portfolio of commercial opportunities continues to grow in preclinical development as well, with more than 20 preclinical programs currently being developed by our partners.

Additionally, following the signing of five strategic partnerships to date this year, the total pre commercial milestone revenue potential has increased by about 30% or $500 million to approximately $2 billion across 23 announced partnerships.

In 2023, we focused on effectively fortifying our petition in the market, with targeted investments to support our future growth, driven by our customers and expanding SPL partner base. These investments include enhancing our process development capabilities and ongoing product and technology development to best serve the market.

In addition, we continue to make investments in our applications lab which will enhance our ability to support next generation cell therapy innovators that are pursuing complex cell therapies. We believe these are the right investments to ensure the long term success of MaxCyte in support the growth of the cell therapy sector.

Our ExPERT VLx Large Scale Transfection System launch continues to be focused on working with early access customers to define the value proposition for applications. The potential of the VLx is across several applications such as transient protein manufacturing and is currently focused on preclinical development in early stage clinical trials. The key capabilities of the VLx instrument enable customers to shorten development timelines and have broad compatibility including workflow integration and flexibility. We look forward to further engagement with early access customers so they can provide the market with applications data, large scale transfection solution to address current bottlenecks in the bioprocessing market.

In summary, our team members are working through an evolving and challenging operating environment this year, which will impact the timing of our customers, development programs and capital investments. However, we are confident in our updated full year outlook and long term strategic goals. The substantial promise of the cell therapy industry over the long term remains intact. And importantly, we maintain a high degree of confidence in the value our technology provides to the industry. We are excited by the potential of the SPL partnerships we signed in 2023 and a robust pipeline of additional opportunities. We are honored to support our partners and believe we remain the partner of choice for non-viral cell engineering technology.

With that, I will now turn the call over to DJ to discuss our financial results. DJ?

Douglas Swirsky

Thank you, Doug. Hello, everyone.

Total revenue in the second quarter of 2023 was $9 million compared to $9.6 million in the second quarter of 2022, representing a 6% decline. In the second quarter, we reported core revenue of $8.3 million compared to $9.6 million in the comparable prior year quarter representing a 14% decline. This includes revenue from cell therapy customers of $6.6 million, and revenue from drug discovery customers of $1.7 million, which both declined to 14% year-over-year.

The decline in revenues was the result of the challenging operating environment oftentimes leading to prioritization of pipeline assets for R&D, causing elongated purchasing cycles from customers and instruments and PAs. Recall that in the first half of last year, the core business at MaxCyte benefited from some pent-up purchasing demand as customers returned to lab work following COVID policy changes. In addition to strong revenue growth from a later stage SPL partner approaching commercialization.

We recognized $0.8 million of SPL program related revenue in the second quarter of 2023 as our partners continued their progress through the clinic, compared to no material SPL program related revenue in the second quarter of 2022. To provide more color on the core business, instrument and PA sales were down 24% for the first half of 2023 compared to the comparable prior year period.

As previously discussed, within the challenging funding environment we're seeing increased cautiousness in capital investments from our customers resulting in extended purchasing cycles for instruments and PAs. The lower PA utilization seen in the first half of 2023 was primarily impacted by deprioritized research and development programs at earlier stage customers and lower PA demand from a later stage program that has progressed to the regulatory filing stage. Excluding this particular partner, the PA utilization of our platform by clinical SPL partners remains a bright spot and grew year-over-year. Revenues from leased instruments also remain stable with a growth of 2% for the first half of 2023 compared to the prior year period driven primarily by our SPL partners.

Moving down the P&L, gross margin was 85% in the second quarter of 2023 compared to 88% in the second quarter of the prior year. Margins were negatively influenced by the ramp up of in-house manufacturing and related production costs. Total operating expenses for the second quarter of 2023 were $20.7 million compared to $17.2 million in the second quarter of 2022. The overall increase in operating expenses was primarily driven by increases in R&D, sales and marketing headcount and to a lesser extent, legal and strategic consulting expenses.

The company continues to invest in commercial sales and marketing operations, innovative product development, field application scientists, automated manufacturing capabilities, as well as business and corporate development to drive long term growth. We finished the second quarter with combined total cash, cash equivalents and short term investments of $216 million and of course, no debt.

Moving to our full year 2023 guidance, we're updating our outlook and now expect core revenue for 2023 to be comparable to 2022. And SPL program related revenue expectations remain unchanged from a previous guidance at approximately $6 million for the year. Our updated guidance incorporates cautiousness around the challenging macro environment and the timing of purchasing patterns from our customers and partners.

As we have discussed previously, the timing of partnership revenue is predicated on our customers clinical and regulatory progress and therefore is fundamentally more difficult to predict than core revenues.

And finally, I want to note our strong financial position as we still expect to end this year with approximately $200 million in cash, cash equivalents and short term investments, and no debt. Our cash position is a strategic asset for the company as we are funded well into future profitability, allowing us to focus on realizing the long term potential of our business model.

Let me close by saying that overall we are confident in our updated 2023 revenue outlook. And we believe that our modest cash burn and debt free balance sheet will support our future plans for profitable growth.

Now I'll turn the call back over to Doug.

Doug Doerfler

Thank you, DJ.

In summary, we are excited about our partnership progress during the first half and are increasingly optimistic about the long term outlook for MaxCyte and the depth of our partnership pipeline. We are committed to strengthening our opportunity to lead the industry as the premier cell engineering platform technology, supporting the development of advanced cell based therapeutics for patients who may not otherwise have treatment options. As always, we thank our MaxCyte team, as well as our board, suppliers, investors, partners, patients, and the amazing industry that we have the honor of serving.

With that, I will turn the call back over to the operator for the Q&A. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Julie Simmonds of Panmure Gordon.

Julie Simmonds

Thank you very much. A couple of questions, please. Firstly, just about the sort of slightly lighter cell therapy revenues coming through. Is just wondering how much of that is to do with customers delaying because of sort of financial reasons or do you think there's anything to do with the delays coming through for potentially looking at alternative methods that non-viral manufacturer that that they could be looking at. And is there any competitive angle to it? Is that causing any sort of pricing issues that that could also be causing the slowdown?

Doug Doerfler

Hi Julie. It's Doug. No, we're not seeing any major competitive issues there's always some people coming in and out. We have Thermo Fisher in doing their Xenon we've had - we've had I'm sorry, Lanza with their product so that - it comes in and out. I think when we look at all the data, we look at all the sales reports. It's really based on the belt tightening of the early kind of the early stage companies, product developers, that's where we're seeing the shortfall.

We're still seeing significant strength in the SPL part of our business. But it's these companies that really aren't very well funded, they're typically either just recently received Series A or Series B funding. And it's, as you can imagine, it's pretty tough out there. And they're all tightening their belts.

Julie Simmonds

So - there's nothing coming through that's the sort of interfering with your lead to the market. And just wondering in terms of timing, versus Q3, Q4 probably want to detail this one - normally there's been a sort of big boost, as far as Q4 is concerned, well because companies get towards the end of the year, they're making decisions on these things. Are you looking for a similar sort of profile this year? Or do you think it's going to be more measured throughout, given the first half of last year was so strong?

Douglas Swirsky

Thank you, Julie. We're expecting, you know, clearly a heavier Q4. And that's based really on looking at, you know, the book of business and specific opportunities when we think that purchases are going to occur. So, we do not provide quarterly guidance, as you know, but I would definitely be thinking to wait slightly heavier in Q4 versus Q3 based on what we see specifically as well as, you know, history here.

Julie Simmonds

Okay. Thank you very much.

Douglas Swirsky

Thank you.

Operator

Thank you. Please stand by for our next question. Our next question comes from the line of Dan Arias of Stiefel.

Dan Arias

Good afternoon, guys. Excuse me. Thanks for the questions. Doug, one of the details or nuances that seemingly emerge as a part of this belt tightening that you're referring to, it's just been this observation that some companies are pulling back and definitely and some are just sort of delaying purchases or extending purchase timelines. Can you just talk about what you're seeing from your seat when it comes to the product, prioritization that you're talking about? And then the follow up question for DJ would be sort of along the lines of the last one, which is, you know, looking at the back half of the year, can you just talk about that confidence that you expressed on the revived outlook flat for the year, but you're down mid teen so far. So, you know, maybe a comment on the extent that the order book is informing the back half view and the visibility that you might have to stepping up to a higher growth summer? Thanks, a bunch.

Doug Doerfler

Thanks Dan. Nice to hear your voice. So a couple of things. One is when we were talking, obviously, the softness really is in those companies that are not our partners at this point. They're typically I assume we're really early - kind of early stage preclinical partners. We're seeing them pulling back pretty substantially across the board in rationalizing their product portfolio. We've had some of these companies raising Series A and Series B.

You've seen their pipeline charts, they have been dramatically cut over the last, I want to say six to 12 months. Unfortunately, we're seeing layoffs in the field. And we're seeing restructuring. We're seeing, folks basically abandoned certain programs, even if they're in late stage preclinical. We're also seeing most recently, announcements by companies that they're taking their assets that look like we're going to have to invest quite considerably to move through to pivotal.

And they are talking about, trying to partner those off to the big companies or other ways of gaining, getting revenue - getting capital for those. So it's across the board. I don't think we're seeing anything in particular, I think you've covered the waterfront pretty well. It's all those different things.

Douglas Swirsky

In terms of looking at the back half of the year revenue. I think we've had good line of sight into, how our revenue model gets put together. I think we've already factored in all these headwinds that Doug just mentioned, we've looked at, particular pieces of the business and opportunities, and we've reflected that in terms of, moving those out of our projections for 2024. So, I understand that the first half was down, and we need a very reasonable second half to get back to level four for in terms of a year-on-year comparison.

But we're reasonably confident in our forecast here with an emphasis on Q4. I think, working hard to make sure we have a reasonable Q3. But I think looking at the back end a year. I think Q4 is where we're going to make the most of the deficit up in terms of reaching a comparable level for revenue for the year versus 2022.

Doug Doerfler

And then let me add to what DJ saying I think we're also seeing on the commercial side a significant increase in the amount of activity going on in the marketplace in the first half of this year, which we really hadn't seen. Until recently, people back in business, they want to go to meetings, they're attending meetings, we're getting really good attendance at trade shows, Booth traffic, and a lot of leads coming in. I think, also, we've made as some investments in sales and marketing over the last, let's say, six to 12 months, new salespeople coming in the organization. They are finding their way of building their book of business. So I want to add that to the confidence that DJ said, as well as the activity we're seeing in the commercial marketplace.

Dan Arias

Okay, appreciate it, guys. Thank you.

Operator

Thank you. Our next question comes from the line of Jacob Johnson of Stephens.

Jacob Johnson

Hi, thanks. Good afternoon. Maybe a question on the recent SPL additions, looking at some of these companies, they have some decent cash balances seem to have stronger balance sheets, I'm just curious, is this something you're being more selective about on your end or do this just happen to be the opportunities that are coming your way right now?

Doug Doerfler

Yes, you know, it's I think what we're finding is that we're spending a lot more time with folks to have more advanced programs. Obviously - as our Head of Commercial Operation says, we do a lot of check, before we get too far down the path of some of these negotiations. So I think it's a combination. But I also want to just, recognize that, some of these deals we did this year are really kind of pushing the envelope in terms of the whole field of engineered cell therapies.

And, obviously, the last one prime is an example of us being at the forefront of this whole area. So maybe that maybe that comes with more, more capital for these companies as they're moving into new more novel ways of treating and potentially curing some of these diseases.

Jacob Johnson

Okay. Thanks for that Doug, and maybe one for you DJ, just on kind of OpEx and managing expenses in this environment, obviously, kind of a lighter revenue outlook than the start of the year. Are you all trying to manage OpEx a little bit more in this environment, like your customers are?

Douglas Swirsky

100%, we have, although we're moderating our revenue guidance, we're still maintaining a goal here, of ending the year with $200 million in cash and equivalents, and short term investments. So, we are mindful of operating expenses, they did grow year-on-year for the second quarter, but I think - that growth is slowing. And we're going to continue to work hard to make sure that we treat the cash that we have as a strategic asset.

And we're going to protect that by being mindful of our spending. At the same time, we still really believe in the long-term viability of this industry that we're supporting and our business model. And so perhaps, we'll be mindful on the G&A side, but in terms of investing in R&D, and in sales and marketing, I think those are items that we need to continue to invest in because again, we want to fully take advantage of the opportunity in front of us.

Jacob Johnson

Got it makes sense. Thanks for taking the questions.

Douglas Swirsky

Thank you.

Operator

Thank you. Our next question comes from the line of Matt Larew of William Blair.

Madeline Mollman

Hi. This is actually Madeline Mollman on for Matt. I just wanted to ask about gross margin. I know it sits down a little bit this year, year-on-year. And you said that was from increased costs for moving into the new facility and things like that. I just wondering how much of the gross margin is tied to the lower revenue volumes versus how much is tied to ramping up in the new facility and additional costs.?

Douglas Swirsky

The absolute bulk of that relates to a decline in PA margins related to ramping up manufacturing in the facility.

Madeline Mollman

Great. Thank you. And then how do you anticipate that to the cadence of gross margin over the back half of the year?

Douglas Swirsky

I think gross margin is going to be heavily dependent obviously on product mix. We also are anxiously awaiting some additional milestone revenue which comes at no additional cost to us. So I think the overall gross margin, is to be heavily influenced by the achievement of those milestones. In terms of operating margins on the PAs, we'd expect those to get higher over time as we sort of worked through getting the facility up and running, which, investing in automation and things like that.

Madeline Mollman

Great, thank you.

Operator

Thank you. Our next question comes from the line of Mark Massaro of BTIG.

Vidyun Bais

Hi guys. This is Vidyun on for Mark. Thanks for taking the questions. I'm sorry. SPLs on I already beat the high end of your outlook of signing three to four per year there. So I guess looking beyond the core revenue guide, is there any impact to your SPL visibility or funnel? I think you've talked about the dynamic in the past that SPL will generally the therapeutic candidates. So I'm also wondering if you could maybe comment on how many programs under SPL are active in the clinic factoring into new additions during the quarter? Thanks.

Doug Doerfler

Well could you repeat part of the question, and I didn't so on the SPL revenues you are asking which of the SPL we signed, which of those relationships are around lead assets? Is that question.

Vidyun Bais

Yes I guess. Yes, I just want to broadly, I was just asking if there's any impact, obviously, the guide down was on core revenue, but you're still feeling good about SPL. And the cadence deciding three to four per year, in the coming years?

Doug Doerfler

Yes, absolutely. And we also make - let's see we talked about [indiscernible] about that later, I guess. So yes, no, I think that the majority of these programs, are there lead assets they're working with. And these are tough, tough companies. So, we're quite excited about the prospect and the prospects for this year next year.

Vidyun Bais

Okay, perfect. And then I guess, yes, I know, it's, it's difficult to kind of quantify the contribution from your first partner approval, but obviously a key topic, key upcoming event here. But as we get closer to your end, if we were to maybe model a mid-single digit milestone payment, and thinking about a low to mid-single digit royalty rate, and out years, we'd be in the right ballpark there?

Doug Doerfler

No, we've always said low to mid-single digits would be the percentage of the top line of the partner. So when you model that, I think that would be the more appropriate number of low to mid for the total, and that would include royalties, instrument leases, and single use disposable revenue.

Vidyun Bais

Okay, perfect. Thank you for taking the question.

Doug Doerfler

Thank you.

Operator

Thank you. [Operator Instructions] And next question comes from the line of Steven Mah of TD Cowen.

Steven Mah

Hi guy. So, thanks for taking the questions. A lot of ground covered already. So just some follow-up questions. So follow-up question on the guide. Given that the SPL revenue was maintained at 6 million, what gives you guys some confidence on that, given the macro softness and longer sales cycles, you guys have mentioned?

Doug Doerfler

It as big as the question, how confident we are in the $6 million guide that we're maintaining for about them?

Steven Mah

Yes, that's right.

Doug Doerfler

I mean, we're very confident in that number. So we've modelled out and risk adjusted that and come up with a few scenarios, how we feel pretty good about that. And you can imagine that there's a particular approval that we have our eyes on, and that would heavily influence achievement of that or not.

Douglas Swirsky

I think also we're going to add to that, these companies, we're working with the SPL partners, generally, well, pretty well financed. And again, we're working with their first or second asset, which is where they're prioritizing their investment right now, so we're not seeing them backing off from us.

Steven Mah

Okay, great. And then a follow-up question on the gross margins on the PAs that were impacted based on the in-house manufacturing. I'm assuming that's due to scale that you just amortizing the fixed costs over a smaller number of products. If that's the case, when should we start to see the gross margin impact on that in-house manufacturing normalizing? Thank you.

Douglas Swirsky

Again, I don't think we have a timetable. I think it is influenced by volume. And I think we'd expect that number to trail up. I can't give you specifics on moving sort of cross back into historical margins. I think bring the manufacturing in-house of some of these PAs, did it for a lot of reasons, and some of which is related to costs, but a lot of it's related to other items such as controlling our own destiny, and being able to support our partners in particular.

Operator

Thank you. At this time, I'd like to turn the call back over to Doug Doerfler for closing remarks. Sir?

Doug Doerfler

Okay. Well, thank you all for participating. And thank you, operator and thanks, everyone for joining our earnings call today and we look forward to providing an update on the third quarter later this year. Thank you very much.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.