Accelerate Diagnostics, Inc. (NASDAQ:AXDX) Q4 2022 Earnings Call Transcript

Accelerate Diagnostics, Inc. (NASDAQ:AXDX) Q4 2022 Earnings Call Transcript March 29, 2023

Operator: Good afternoon, and welcome to the Accelerate Diagnostics Fourth Quarter 2022 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Laura Pierson. Please go ahead.

Laura Pierson: Before we begin, it is important to share that information presented during this call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include projections, statements about our future and those that are not historical facts. All forward-looking statements that are made during this conference call are subject to risks, uncertainties and other factors that could cause our actual results to differ materially. These are discussed in greater detail in our annual report on Form 10-K for the year ended December 31, 2022, and other reports we file with the SEC. It is my pleasure to now introduce the company’s President and CEO, Jack Phillips.

Jack Phillips: Thank you, Laura. Good afternoon, everyone, and welcome to our fourth quarter earnings call. Today’s call will focus on our fourth quarter and full year results. I will also provide an update on three important strategic priorities; one, building financial strength. This includes restructuring our current debt obligation and reducing our cash burn while improving our operational efficiency; number two, growing market share through our Becton Dickinson partnership; and number three, delivering on innovation by advancing our next-generation susceptibility platform. Before providing additional detail on each of these areas, I would like to hand it over to our outgoing Chief Financial Officer, Steve Reichling to review our fourth quarter financial results. Steve?

Steve Reichling: Thank you, Jack, and good afternoon, everyone. Net sales were $3 million for the quarter and $12.8 million year-to-date. This compares to $3.3 million and $11.8 million for the same period in the prior year. This represents a decline of 9% as compared to the fourth quarter of 2021, while full year revenues grew by 8% year-over-year. This fourth quarter 2022 decline was due to fluctuations in the timing of capital revenue. Meanwhile, recurring revenues continued to grow sequentially quarter-over-quarter and over comparable periods from the prior year. As communicated during our last earnings call, we came in just below the low end of our annual guidance of $13 million to $14 million. Cost of goods sold were $2.1 million for the quarter and $9.4 million year-to-date, resulting in gross margins of 28% and 26%, respectively.

This compares to cost of goods sold of $6.7 million and $12.2 million, inclusive of a onetime $4.5 million inventory write-down, making this year-over-year comparison not meaningful. We continue to see headwinds from a gross margin perspective, inflationary pressures on both direct and manufacturing costs, among other contributing factors. Selling, general and administrative expenses, excluding noncash stock-based compensation expense, were $6.8 million for the quarter and $30.7 million for the year. This compares to $8.3 million and $31.6 million for the same period from the prior year. SG&A reductions over these periods were driven by streamlining our spend within sales and marketing within the scope of our BD commercial collaboration. Noncash stock-based compensation expense and SG&A was $2 million in the quarter and $8.5 million year-to-date compared to $3.2 million and $17.6 million for the same periods in the prior year.

Research and development costs, excluding noncash stock-based compensation expense, were $5.7 million for the quarter and $25.5 million year-to-date. This compares to $4.8 million and $17.8 million for the same period in the prior year. These increases were the result of accelerating investment in our next-generation AST platform Wave. Specifically, our recent investment included delivery of approximately 20 development units of the Wave instrument and purchasing of equipment to finalize our consumable manufacturing line. Noncash stock-based compensation expense in R&D were $0.4 million for the quarter and $1.4 million year-to-date. Our net operating loss, excluding noncash stock-based compensation expense was $11.5 million for the quarter and $52.2 million year-to-date.

Our GAAP net operating loss was $14 million for the quarter and $62.8 million for the year, resulting in a net loss of $0.15 and $0.76, respectively. Net cash used was $9.8 million for the quarter and $50.4 million for the year, excluding cash flows from financing. We ended the year with cash and investments of $45.6 million. Before I hand it back to Jack, I wanted to take this moment to thank my hard-working team, our analysts and our investors for these past 10 years. This will be my last earnings call with Accelerate Diagnostics. And I’d like to introduce you to David Patience who will be joining Jack on the rest of this call and to lead accelerate into the future. I have worked closely with David, and he has my complete confidence and I wish he and the company tremendous success.

I will now hand it back to Jack to review our fourth quarter results and 2023 priorities in greater detail. Over to you, Jack.

Photo by National Cancer Institute on Unsplash

Jack Phillips: Thanks, Steve. I will quickly cover our fourth quarter results and turn my commentary to our company priorities. In the fourth quarter, the U.S. contracted three new Pheno instruments and brought another five instruments live. We ended the quarter with a revenue-generating installed base of 325 Pheno instruments and a backlog of 69 Pheno instruments, pending implementation. While our fourth quarter commercial results did not meet our expectations. As mentioned on the last call, we restructured our commercial team late last year and turned our focus to setting BD up for success. We remain encouraged given the strong momentum being built with our BD commercial partnership. Now I would like to provide an update on three important strategic priorities financial strength, market share growth through our Becton Dickinson partnership and delivering on innovation by advancing Wave.

Starting with financial strength, I want to provide an update on our debt restructuring. As you may know, our 2.5% convertible senior notes matured and became due and payable on March 15 of this year. On March 9, we entered into a forbearance agreement with the notes trustee and an ad hoc group of holders of approximately 85% of the outstanding notes, which became effective on March 13. Pursuant to the forbearance agreement, the holders agreed and directed the trustee to forbear the — from exercising their rights and revenues under the indenture in connection with certain events of default under the indenture until March 29. We continue to work with the holders of the notes and other key stakeholders and have agreed to an extension of the forbearance period to facilitate those continued discussions.

Moving to our next priority, growing market share with Pheno and Arc through our Becton Dickinson partnership. As a reminder, last quarter, we announced the formation of an exclusive global commercial partnership with Becton Dickinson. BD is the global leader in microbiology with thousands of customers spanning most countries globally. Nearly every clinical microbiology lab in the world uses at least one of BD’s products. Much of the quarter was spent taking the necessary time to train the BD commercial organizations. Activities included training on the clinical value of rapid positive blood culture susceptibility with our proven body of evidence and combining our sales processes into a single joint sales process. Together, we successfully launched the only end-to-end complete microbiology workflow for combating bloodstream infections with our combined BD and AXDX product portfolios.

This end-to-end product offering from specimen collection to growth and detection of positive blood culture samples and finally, through identification and susceptibility testing enables faster reporting of targeted antimicrobial therapies to pharmacists and physicians. This exciting value proposition is truly unique within clinical microbiology and the rationale for bringing our portfolios together to combat the sepsis burden and growing antimicrobial resistance. There are three principal drivers for us joining forces with BD. First, to significantly improve our commercial reach, both in the U.S. and abroad; second, to improve our selling effectiveness by combining our offerings with BD’s portfolio; and lastly, to collaborate on future innovation.

In the U.S., we launched our commercial partnership in January of this year, after spending the fourth quarter aligning our sales and marketing teams to ensure we improve both our commercial reach and selling effectiveness. Since launch, our sales activity has dramatically increased, which is an encouraging indication of our commercial reach is strengthening. Specifically, we saw a 400% increase in new opportunities thus far in Q1 versus our sales funnel from the fourth quarter of 2022. We have a joint target of bringing significant new Pheno opportunities into our sales funnel this year, and we are tracking ahead of plan thus far. Improving our sales effectiveness is our second focus. Our joint sales process highlights key roles and responsibilities between the BD territory managers and our Pheno specialists to drive meaningful funnel progression, winning more accounts and faster clinical implementations.

Our joint marketing, sales and contracting processes are focused on delivering improved deal economics by offering strong synergies across our highly customized bloodstream infection workflow solutions. For example, we have an active program, which allows customers to renew existing BD systems and as a part of the renewal customers can evaluate and implement Pheno for rapid susceptibility. We anticipate many of our current and new opportunities will close in the second half of 2023, and early ’24, driving meaningful market share growth. In summary, we are quite enthusiastic from the early progress in the U.S. to date, but there’s still work to be done. In EMEA, we launched our commercial partnership this month. EMEA is a more complex healthcare system — delivery system requiring country-by-country logistical and market access considerations.

For example, we are adapting our commercial playbook to serve tender-driven markets such as Italy and the U.K., which differ from capital acquisition markets such as Germany and the Nordic countries. This led to a slight delay in launching abroad, but we are encouraged by the team’s enthusiasm and progress in the early days. We are commercializing both Arc and Pheno in EMEA, thus bringing in even more cost-effective and automated workflow solution to combat bloodstream infections. An Italian evaluation site will be presenting an Arc abstract during the upcoming ASM in June, and the author will be publishing a full study readout in a local European journal. We will be leveraging this peer-reviewed publication for our selling efforts in EMEA in the future.

We continue to see strong market demand for Arc in the U.S. and are eager to bring our commercial learnings to the U.S. with Arc after FDA approval. The U.S. market is eager to gain access to an automated cost-effective sample preparation solution for positive blood cultures. As discussed on our prior calls, we continue to pursue Arc as a Class II 510(k) device with the FDA and remain in active dialogue with them. We will not have a forecasted launch date in the U.S. until we begin clinical trials, which is expected in Q2. Lastly, with our BD partnership, we will begin to collaborate on future product developments. The first area of focus is streamlining our upfront workflow for Wave for positive blood cultures and isolated colony samples. In summary, our work with BD is off to a good start.

We have launched in both the U.S. and EMEA with strong customer engagement and focus from our joint commercial organizations. Now turning my comments to our third strategic priority, delivering innovation with our next-generation platform, Wave. We continue to make very good progress with our Wave development program. As discussed previously, we have taken delivery of over 20 alpha instruments, which are up and running in our core laboratory. This is very exciting and has significantly sped up our development efforts. As a reminder, the Wave platform will be able to provide rapid susceptibility test results for both positive blood culture and isolated colony samples on a single system with significantly improved platform economics over Pheno.

Our customers have confirmed a consolidated susceptibility approach will have a superior advantage over traditional isolate-based platforms on the market today. For Accelerate, Wave significantly expands our revenue and wallet share per customer while restating our platform economics. Our target is to have our preclinical data readout complete by the end of the year and start clinical trials shortly thereafter. In summary, we will be looking to update the market with further details on our three strategic priorities; building financial strength; growing market share with Becton Dickinson; and delivering on innovation by advancing Wave. On a personal note, I wanted to take the opportunity to thank and recognize Steve Reichling for his years of service as our CFO.

I look forward to continuing to work with Steve in an advisory capacity. Moving forward, I have great confidence in David Patience as our new CFO, and look forward to everyone getting to know David as he takes over for Steve. I would now be happy to answer questions from our analysts. Should others on the call have questions not addressed, we would welcome you to send these questions or request for a follow-up meeting to investors@axdx.com. Thank you.

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Q&A Session

Operator: Our first question is from Alex Nowak with Craig-Hallum. Please go ahead.

Alex Nowak: Okay. Good afternoon, everyone. And good luck to Steve with his future projects and welcome David. The first, I guess, a couple of questions here is really around the BD partnership. I mean — how should we be trying to think about tracking the success of the launch of Pheno so far? We’re not giving sales guidance right now. I mean is it fair to say it’s limited visibility — I mean how should we be thinking about it? Because when we take the 400% comment, you did 19 placements in 2022, 400%, that gets to 80 systems. I mean do you think you could place eight systems in the second half of this year?

Jack Phillips: Alex, it’s good to hear from you, and this is Jack and David is in the room with me as well. So great first question. So as we said in the commentary, the BD partnership is going very well in the U.S. We’re off to a later start in EMEA based on just the complications of doing business in EMEA with the multiple countries. We are looking at providing more actionable guidance as we go throughout the year. We’re not providing it right now, Alex, just because, again, we just went live in January — live, meaning that we literally have BD sales reps about 50-plus of them selling in the U.S. that we just literally trained at the end of Q4. We were at their sales meeting. It was a really great meeting. We also had a lot of extensive follow-up training with them.

And we’re off and running. And the first two, three, almost three months — three months now of the new year, I mean, we’re very excited about the activity around reach and access. We’re making a lot more sales calls about funnel improvement and progression. We’re adding more accounts to the funnel, but we’re also progressing a number of deals, thanks to this BD partnership. But it is going to take — as I said, it’s going to take some time to really start getting these deals through the funnel. We restructured our sales force back in August and significantly downsized our sales force. So really, we were left in that transition period of training BD, getting them up to speed and so forth. We — again, as we go through the year in the next couple of months, we look to provide more specific guidance.

We believe, again, the greater growth in new account closes, we’ll see, we’ll be in the — in the second half of the year. We’re very optimistic about that for Pheno. And then obviously, with Arc, we’ve got to get on market from an FDA approval standpoint before we can significantly start marketing Arc in the U.S.

Alex Nowak: Okay. That all makes sense. And can you remind us again on BD? I mean, are they really a funnel driver at the end of the day and it’s still up to accelerate in your sales team to close this deal once you get those inbound inquiries? Or how is the handoff between BD and the Accelerate teams go and ultimately have a compensation work between the sales teams?

Jack Phillips: Yes. Let me — I’ll turn it over to David to answer that. Obviously taken over the rein from Steve as the CFO, but prior to David stepping into his role, he’s literally — his life has been focused on a successful integration with BD. So he’s been very much down into the weeds on all of these topics. And again, good question from you as is basically, how does the sales process work, David, and I’ll let you go ahead and respond.

David Patience: Yes. Thank you, Alex. As Jack mentioned in his prepared remarks, it’s about reach and effectiveness. So reach would be just bringing folks into the funnel for us. But we spent the better half of the fourth quarter, very much focused on integrating our sales process with their sales process. So that’s the roles and responsibilities by sales stage. And you’d imagine that we’re very good at certain aspects of the sale, and that would be driving clinical value through rapid susceptibility. But also BD has a very thorough relationship with the hospital, the labs and all the key stakeholders. And so it is an amalgamation of bringing our specialties together. So by no means is them feeding us opportunities. They’re a true partner in this process.

And so the BD rep and the Accelerate rep are working in tandem identify key stakeholders by stage to drive more effective closes as we move these new opportunities through the funnel into close. Does that answer your question?

Alex Nowak: Yes, it does. Yes, it does. And then I guess maybe the last question I’ll ask here to kind of multiparter again here. But the big elephant in the room here is the — is the debt overhang. We’ve reached the end of the forbearance or the original forbearance extension, meaning can you give us what the new extension date on the notes is, what’s the kind of the terms around that extension are? And then just bigger picture, I mean, ultimately, how to resolve this? What additional details can you give for, whether it be shareholders or debt holders around getting this resolved in a good way for the company and ultimately the stakeholders?

Jack Phillips: Yes, absolutely. I expected the question. So first of all, I totally recognize that for our shareholders, for also our employees and also the debt holders. I mean this is — this is the big question. And I would say this, first and foremost, we’re working day and night to come up with a good solution here. We’re active in — in active dialogue with an ad hoc group of debt holders, about 85% of the overall debt holders are represented in this ad hoc group. The reason why we’re extending the forbearance again or from what we did is — the reason why we’re extending is because we are in active dialogue and productive dialogue. You — I can share that the forbearance extension is through April 5. That is, I would also say that’s extendable beyond that to April 14 right now, but we’ve extended it to April 5.

We will come to a resolution on this in some way. And again, we are optimistic at this point that hopefully, it will be a consensual agreement that we come to. And again, we’re working literally day and night on resolving this. And I can say in the next couple of weeks, I’m confident that we’ll have an update on where we’re at in the form of an 8-K likely.

Alex Nowak: Okay. I appreciate the update. Thank you.

Jack Phillips: Thank you.

Operator: The next question is from Andrew Brackmann with William Blair. Please go ahead.

Dustin Scaringe: Hi, guys. This is Dustin on for Andrew. Maybe just a question about current access levels. Obviously, this has been mentioned many times in the past that dynamic has affected your ability to sell there. But what are access levels like now? Has the pandemic faded away and that’s why you’re not seeing any more impediments to selling in labs and reaching out to lab directors?

Jack Phillips: Yes. Dustin, so one of the metrics that we’re tracking, frankly, every week, we look at this every Monday morning is access, number of sales calls we’ve made, both in-person, sales calls that we’ve made on Zoom that are remote, and we’re looking at this across the entire for now U.S. organization will be doing it in EMEA as well. And I would say without a doubt the amount of access that we’re getting, both from an in-person and on a Zoom type call meetings is exponentially greater than where we’re at over the past year. So it’s absolutely playing out the way we expected it to, which is with BD’s access and reach, they have over 50 people selling in the U.S. and then a lot of marketing and support folks as well.

That’s one factor. But I would say that hospitals are continuing to — the access in hospitals are continuing to improve as well. And then the open positions and open headcount within hospitals is also starting to, I would say, maybe settle down a little bit, but it’s still — that’s still a bit problematic as well. The turnover that health care is dealing with is real, and it is something that’s a challenge. But overall, very optimistic about the reach from where we were at, all is looking to do better, and we’re tracking that, again, literally every week, I have an 8 a.m. call to look at these metrics.

Dustin Scaringe: Understood. And related to that, how are you guys thinking about hospital CapEx expectations over the next few months and year? And then kind of related to that, do you see any potential benefit from BARDA happening in the next year or 2? And if so, what would be the magnitude of that potentially?

Jack Phillips: Yes. Great. You got two questions there. I’m going to let David take the CapEx healthcare question, and then I’ll address BARDA.

David Patience: Yes. Thank you for the question. So when it comes to hospital CapEx, that obviously has been a bit of a rocky road since COVID. But I think the one thing that we’re very excited to see is the BD reach into the hospital has created an opportunity for us to access more capital just in terms of the size and the scope of the deals they’re doing with the institutions. Were — prior to the partnership, we were a one-off stand-alone acquisition. And with that, we’re now being part of larger hospital considerations. And so at the end of the day, we did see less capital last year than we were used to, but we’re looking forward to seeing the capabilities that BD has in terms of contracting going forward. So when it comes to the hospital, there is capital.

It’s just very finite how they’re spending it. And they tend to be on larger products, and there’s no better partner than BD with their total lab automation, and we fit right in the center of that with Pheno and Arc.

Jack Phillips: And then, Dustin, as a follow-up to your second part of your question, which is BARDA. As a reminder, we still have an application in with BARDA that’s still active. We recently submitted this over the last months or so, have not heard back from BARDA. And then I would also remind everyone that the problem of antimicrobial resistance continues to be the much larger pandemic globally. It’s regularly now seen and written about by CDC, BARDA, it’s still a major initiative for BARDA. And globally, this is still a major problem in healthcare and the lives of people globally. So needless to say, it’s still a priority in the U.S. It’s still a priority for BARDA. And while we’re not counting on BARDA from a funding standpoint in our financial planning models, it is something that is still a possibility for us that we’re still pursuing.

Dustin Scaringe: Okay. Understood. And then lastly, just some more specifics on the BD deal. Wondering how your product is fitting with the existing BD Phoenix system? And then more broadly, how are you guys thinking about competition now that you’re partnered with BD against some of the other existing players on the market?

Jack Phillips: Okay. So great question. So first question is around Phoenix. And just for everybody’s knowledge, Phoenix is a BD platform that’s a very successful platform for Becton Dickinson. It’s a platform that — it actually produces susceptibility results through basically isolates. It does not do positive blood like Pheno does, and it’s not considered a rapid susceptibility system, okay? So with that, Pheno is a true complement to Phoenix in a big way. And the way this is, is that for rapid susceptibility testing in positive blood culture, it’s really the choice is Pheno. You can run ID, AST on one platform. You could run another ID and run AST only on Pheno and then for the workflow of customers that have Phoenix as well for those isolated colonies where they need to run susceptibility, they would just run those on the Phoenix platform, sorry, on the Phoenix platform.

And so it’s really a — it’s not duplicative. It’s actually additive, and it’s really, as David mentioned in his earlier comments, it’s one of the selling effectiveness opportunities where it allows a BD rep to really kind of work with their Phoenix customers or new opportunities on Phoenix and bring in Pheno together as a solution that would really be a total solution for all susceptibility testing. And then moving forward, down the road, Wave will be that competitor to a Phoenix because Wave will have the ability to offer both susceptibility testing in an isolated format colony, but also in positive blood both together. And in that situation, that’s where there’s going to be a competitive situation with Phoenix. But again, that’s our next-generation platform.

BD is very involved in that platform, by the way, and we are doing regular innovation updates. I think you had a second question, and I’m totally…

David Patience: Emerging competition.

Jack Phillips: Yes. Thank you, David. The second question was around emerging competition. As expected, it’s not a surprise. This market is becoming more crowded with competitors. And I think it’s a resounding indication of why this is a much underserved need in healthcare to provide rapid susceptibility testing for sepsis patients, for the reasons of antimicrobial resistance that I stated. And so with that, there’s more and more competitors emerging. We believe we are well suited — very well suited with BD as a partnership to compete with not only competition of today but the emerging competitors. With our total solution of Rapid ID/AST on Pheno, with our AST-only solution for those customers that want an AST-only platform, working with BD on bundling opportunities and bringing total solutions together with BACTEC and Phoenix and Pheno.

It’s a great total solution opportunity. And then in Europe, not yet in the U.S., in EMEA, I mean, you’ve got Arc as well, that’s a great opportunity to optimize workflow and throughput for ID on MALDI platforms and then follow that up with Pheno and AST susceptibility. So again, we believe we have multiple options for customers. We give customers flexibility. And then with BD, it’s just a tremendous complement to their total solutions that they’re selling. One last thing I would mention that is, I think, an important mention here. I mentioned it in the prepared remarks, but BD and Accelerate, we’ve jointly collaborated on a lot of things over the past quarter, training, sales alignment, pricing models, et cetera, et cetera. But one of the really exciting work streams that I was a part of was the bloodstream infection workflow solution that was spearheaded by BD’s global marketing folks and our team.

And really, it lays out very, very clearly the benefits of looking at bloodstream infections in a holistic manner from sample collection all the way through to rapid susceptibility testing on Pheno. This is something that — if it’s not yet, will be available on BD’s website. It will be showcased at ECCMID next month in Copenhagen, Denmark. It will be part of their overall pitch and strategy at the ECCMID Conference, which is the largest global microbiology conference in the world that will be showcased there. And clearly, Pheno will be there and Arc will be there as well, which is a big, big part of this bloodstream infection strategy for BD. Dustin, did we answer all your questions? Do you have any follow-up questions?

Dustin Scaringe: No. You answered all of them. That was great. And that’s it for us. Thanks for taking the questions.

Jack Phillips: Great. Thank you, Dustin. And Gary, are those all the questions for today?

Operator: Yes, sir. There are no further questions.

Jack Phillips: Okay. Thank you. So in summary, first of all, I want to welcome David Patience to the leadership team of Accelerate as our new CFO here. As you heard today, David’s wasted no time in jumping in. He’s been deep into all aspects of our business from many aspects of finance, but all the way through in the commercial business and then obviously the BD integration. So we’re thrilled to have him on board and thanks, Steve, again for his tremendous contributions over the past decade at Accelerate. I want to remind you of three important strategic priorities as we close out. Very near term is the financial strength and stability of Accelerate. And I just rest assured, I want everyone to know that we’re working day and night to solve our debt overhang issue with the current debt holders.

We expect in short term to have a resolution that we’ll be able to clearly communicate to all shareholders and investors and more to come on that. But rest assured, we are in good faith negotiations currently, and we expect them to continue and lead to a productive and positive outcome. The second thing I would say that I know investors, shareholders are wanting more information on is how are things going with BD? How is this producing market growth opportunities? How is it producing new placements, new deals? Rest assured, that is another item that we are working on hard every day. We are up and running. We’re active in the U.S. We’re coming along in EMEA. And we — again, we expect closes to be more towards the back half of the year, but we will and do expect to provide more detailed metrics and update on our progress.

But overall, going very well and what a great partner that we have in BD, and it’s a true complement. Our solutions are just a total complement for microbiology and susceptibility testing globally. And then the last thing that we’ll continue to update on that is extremely exciting is our next-generation platform Wave as we drive innovation. And also, what I didn’t talk much about today is Arc and really continuing to move Arc forward as we work with the FDA to get Arc on market in the U.S. Wave is an exciting platform that will really change the financial dynamics for Accelerate because of the cost of goods sold. From a market standpoint, it’s going to open up an entirely new segment of the market for us, that high-volume, low acuity market in susceptibility testing that’s focused on isolate samples.

But we’ll also be backing that up with our legacy system, our legacy solutions in positive blood cultures as well. So it will be an integrated platform. We’re looking at preclinical readouts at the end of the year in Q4. We’re looking at starting clinical trials sometime thereafter. And again, it will be an exciting leap forward for Accelerate as we continue to move the needle in this space. So with that, I’ll bring this call to a close. As I mentioned in my remarks, if you would like a further dialogue or have questions, please go to the website and request a meeting or ask those questions, and David and I will certainly respond in a short, short order. So thank you very much, and I hope everyone has a great day. Bye-bye.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.