Codexis, Inc. (NASDAQ:CDXS) Q2 2024 Earnings Call Transcript

Codexis, Inc. (NASDAQ:CDXS) Q2 2024 Earnings Call Transcript August 8, 2024

Codexis, Inc. misses on earnings expectations. Reported EPS is $-0.32 EPS, expectations were $-0.26.

Operator: Welcome to the Codexis Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this event is being recorded. And now I’ll turn the call over to Carrie McKim, Director of Investor Relations. Please go ahead.

Carrie McKim: Thank you, operator. With me today are Dr. Stephen Dilly, Codexis’ President and Chief Executive Officer; Kevin Norrett, Chief Operating Officer; Sri Ryali, Chief Financial Officer. Dr. Stefan Lutz, our SVP of Research, is also here and will be available for any questions during the Q&A. During this call, management will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our guidance for 2024 revenue; product revenues, and gross margin on product revenues; anticipated milestones, including product launches, technical milestones, and public announcements related thereto; as well as our strategies and prospects for revenue growth and successful execution of current and future programs and partnerships.

To the extent that statements contained in this call are not descriptions of historical facts regarding Codexis, they are forward-looking statements reflecting the beliefs and expectations of management as of the statement date, August 8, 2024. You should not place undue reliance on these forward-looking statements because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond Codexis control and that could materially affect actual results. Additional information about factors that could materially affect actual results can be found in Codexis filings with the Securities and Exchange Commission. Codexis expressly disclaims any intent or obligation to update these forward-looking statements such as required by law.

And now I’ll turn the call over to Stephen.

Stephen Dilly: Thanks Carrie, and thanks everyone for joining. Just a year ago, we announced our strategic priority, focusing on two key areas. Firstly, growing our revenue-generating pharmaceutical manufacturing business, and secondly, enabling the manufacture of siRNA therapeutics through our ECO Synthesis manufacturing platform. We’re making great progress across both fronts. Sri will provide more of the details on our Q2 performance, but I want to highlight that we are exactly where we expected to be and are reiterating our full year 2024 guidance. We have clear visibility to delivering a strong second half of the year, including achieving double-digit product revenue growth for 2024. Our pharma manufacturing business has a deep pipeline of named product opportunities going into late-stage clinical trials and commercialization, which will drive our near-term product revenue.

Q&A Session

In parallel, we remain focused on adding new screening and evolution programs to the top of the funnel. We expect that this will drive sustained growth throughout the decade, a key part of reaching positive cash flow around the end of 2026. Zeroing in on these streamlined priorities has enabled our team to focus on returning the pharma manufacturing business to product revenue growth this year, driving our emerging double-stranded RNA ligase business, and advancing our vision of becoming a direct producer of siRNA with our ECO Synthesis manufacturing platform. Our plans and revenue targets are ambitious, but we’ve laid out a calculated, stepwise approach to how we get there. To take you through that, I’d like to pass the call over to Kevin.

Kevin Norrett: Thanks, Stephen. We are seeing continued momentum across each of our key strategic priorities, and I want to spend most of my time today outlining our commercial strategy. I’ll start with a recap of the recent TIDES USA meeting. From there, I’ll cover the roadmap to commercialization for our evolving siRNA manufacturing services offering, including more information on our anticipated revenue streams. Before I jump into those updates, however, I want to start on Slide 3 by highlighting that we have further strengthened our commercial organization, with the addition of a new Senior Vice President of Commercial Operations, Britton Jimenez. Britton has more than 20 years of experience in the CDMO space, and he brings valuable insights as we position Codexis for our next phase of growth.

Part of that next phase of growth includes our pharma manufacturing business, which, as Stephen just mentioned, we expect to be strong for the second half of the year, due to orders that already exist or are expected. Turning to the ECO Synthesis platform, from a technical standpoint, we are ahead of where we thought we would be a year ago. This has accelerated our commercial momentum, and we are now engaged with the major players in this space. When we began working on this technology, we envisioned a platform that could be put into customers’ hands so they could manufacture their own siRNA. While this is still a primary part of our plan, over time we see ourselves growing thoughtfully into a direct producer of significant quantities of GMP-grade siRNA to capture the most value.

This is not a minor undertaking. As you’ll hear today, we are already underway on our plans to produce GLP-grade material, and we envision a stepwise approach to moving up the rest of the value chain. To walk you through our strategy, let me first set the stage by taking you back to the recent TIDES USA meeting on Slide 4. There, we announced two important updates on our progress. First, we demonstrated the sequential synthesis of a full-length oligonucleotide. Second, we rolled out our double-stranded RNA ligase screening and optimization services, which builds upon our years of experience in ligase enzyme engineering. Having firmly established our proof of technology, the players in this space have taken note. Taking a closer look at our TIDES presentations on Slide 5, we highlighted both the capabilities and flexibility of our ECO Synthesis platform, synthesizing all of the nucleotides from starting material through the attachment of a targeting moiety.

What you may have missed from our presentation is that we synthesized one of the lumasiran strands at full length. We also synthesized an extended fragment of a givosiran strand, which can be ligated to make the full-length therapeutic acid. We believe that these real-world examples highlight the dynamic nature of our platform. As we shared at TIDES, in addition to incorporating all of the necessary nucleotide modifications, we consistently achieved coupling efficiency of greater than 98%, which is on par with phosphoramidite chemistry. We also executed the enzymatic attachment of a conjugation moiety and confirmed the lack of notable impurities typically observed when using chemical synthesis methods. We are currently in conversations with many large pharma players, who are interested in this groundbreaking capability, and later in this presentation, I’ll share how that interest could translate into revenues.

Moving to Slide 6, we continue to view our double-stranded RNA ligase program as the bridge into enzymatic solutions for customers who are currently using traditional chemistry. We know that large pharma and CDMOs already using phosphoramidite chemistry are increasingly interested in using enzymes in siRNA manufacturing, due to the potential for increased efficiency, and improved margins. This is particularly valuable in assets targeting large indications, where drugs tend to be priced lower and higher margins, become much more impactful as volume increases. We have continued to say ligation combined with traditional chemistry, is the next natural step. This became abundantly clear during our interactions with customers at TIDES USA, where they immediately recognized the benefits of our engineered ligase.

Here you can see a comparison between our engineered variant versus the wild type or natural enzyme. There are several reasons behind why customers are interested in using engineered ligases. First, they can drive higher volumetric productivity. This translates into fewer batches, to make the same amount of API, offering immediate cost savings with reduced time and purification, as well as potentially higher product yields. Second, engineered ligases can offer superior performance across a broad range of modified RNA oligonucleotide substrates, which offers versatility in design strategies and mitigates the need to adjust the starting substrate, to fit a single enzyme. These are just two of the potential benefits that should enable broader adoption of our ligation technology across a diverse set of siRNA assets.

With the potential to significantly reduce COGs, our library of engineered ligases provides a clear financial incentive for companies to look at switching from wild type, even for later stage assets. In fact, we saw this dynamic with our first large pharma customer. They determined that the benefits of our engineered ligase were compelling enough to test in clinical scale-up for a Phase 2 asset moving into Phase 3. This is an encouraging signal, and we are focused on generating additional orders. More importantly, we expect the double-stranded RNA ligase program to become a repeatable, sustainable business that translates into meaningful revenues and supports our path to positive cash flow around the end of 2026. On Slide 7, you can see a case study comparing the revenue opportunity for a single asset using our ligase versus a typical single pharma manufacturing enzyme.

Assuming a large indication, siRNA therapeutic, with a projected peak annual sales of just $1 billion, an estimated 10% cost of goods sold is about $100 million. This COGs percent is in line with what we’re hearing at the $1 million per kilogram for a commercial drug with 100,000 patients treated per year. Customer feedback indicates that ligation can impact roughly 20% of their COGs, equating to the potential annual savings of approximately $20 million for the pharma customer, at peak for the single asset. If Codexis were to capture roughly $10 million of those savings, that’s double what a top-performing pharma manufacturing enzyme can deliver in a single year. Just imagine if this case study were for a drug in a mass market indication like cholesterol control, which targets millions of patients, where an asset could reach $10 billion in sales at peak.

There, using the same math, the revenue opportunity to Codexis could potentially be five to 10 times higher on an annual basis. Given our current pharma manufacturing run rate of roughly $40 million, it doesn’t take many ligates programs for that to become the biggest driver of our business. The economics get even more compelling, if we move up the value chain, potentially providing kilograms of siRNA for use in clinical trials. On Slide 8, you can see the siRNA therapeutic revenue opportunity to Codexis for a given asset by stage based on what our market research says customers are currently paying. What we’ve heard from potential customers is that today, development stage assets entering the clinic are seeing bottlenecks, due to lead time and raw materials required to establish new manufacturing protocols.

As a result, early stage programs carry a much higher cost per kilogram, and are at risk of timeline delays. Based on this dynamic, we estimate that the revenue opportunity per preclinical asset using the ECO Synthesis platform is more than $1 million. The nice thing about these early stage assets, is that they require a relatively small volume of material that can likely be handled within our ECO Innovation Lab currently under development. As you move through clinical trials, the cost per kilogram comes down, but the quantities needed go up so dramatically that the revenue opportunity becomes incredibly significant. Following the visual here, Phase 1/2 assets could generate somewhere between $4 million to $8 million in top line revenue for Codexis, similar to what we see in our pharma manufacturing business.

However, by Phase 3, we estimate a per asset opportunity of roughly $100 million, followed by a potential annual revenue of $150 million for commercial drug volumes. At that annual revenue figure for 10 years, a single product could become a $1.5 billion opportunity for Codexis. With the potential for 50%, or greater gross margins for this business, it’s easy to see why we want to climb the value chain, to become a direct producer of GMP-grade siRNA. On Slide 9, let me walk you through how we get there. First, as I mentioned earlier, we are already generating orders from our double-stranded RNA ligase program. Second, we are also in conversation with several large pharma and CDMOs, to deliver specific constructs using ligation and/or sequential synthesis, which they can compare to their chemically derived ones, an important proof-of-concept.

Third, the consolidation of our siRNA manufacturing capabilities in the ECO Synthesis Innovation Lab remains on track for completion around the end of the year. Centralizing our efforts in one dedicated space, will drive efficiency for us and our customers. Fourth, we expect to use a flexible combination of ligation and sequential synthesis, to produce GLP-grade siRNA in 2025, representing our first step toward becoming a CDMO. Through our ECO Innovation Lab, we expect to supply customers with tens to hundreds of grams of material, which will allow them to get through toxicology studies in preparation for an IND. Finally, the next natural step in becoming and siRNA provider is to build our own GMP facility that can deliver approximately a few hundred kilograms of material annually, to supply customers clinical trials.

While we have already started scoping this facility, which would likely take up to three years to complete, we are also engaged in partnering conversations, to provide customers with a nearer-term path to GMP manufacturing using our technology. We also know that we need to address the raw material supply chain for both partnering and our own GMP facility. While we see building our GMP footprint as – important to climbing the value chain, I want to be clear that we are not relying on revenue from that facility, to get to positive cash flow expected around the end of 2026. That path is based upon growth from our existing pharma manufacturing pipeline, plus a couple of double-stranded RNA ligase orders, and we will be very thoughtful on what we believe is the best way to fund this GMP investment without compromising that trajectory.

On Slide 10, I want to briefly summarize the various revenue streams that flow, from the commercialization plan that I just laid out. First, we expect to drive near-term revenue through our customized double-stranded RNA ligase screening and optimization services. For assets that require customized engineering, this will likely be R&D revenue with the potential to translate into product revenue, as customers scale their clinical trials. Alternatively, we could see near-term product revenue, if we identify a suitable engineered ligase variant from our extensive library, and they can scale quickly. Second, and critical to our longer-term value creation, we could also take on development projects through our ECO Innovation Lab, where we can do ligation and sequential synthesis to create customers’ desired siRNA constructs.

Third, as I mentioned, the small quantities of GLP-grade siRNA we expect to produce in the ECO Innovation Lab, could provide modest service and product-related revenue over the next few years. Finally, beyond 2026, we expect to generate revenue by providing customers with GMP-grade siRNA, initially through CDMO partnerships, and then with our own GMP footprint. Moving to our milestones on Slide 11, as you have seen, the TIDES meeting has become an important venue for us to showcase technical updates, and to advance commercial discussions. At the upcoming TIDES Europe meeting in November, we expect to show continued validation of our ECO Synthesis platform, with customers and partners publicly expressing their excitement about our technology.

With that, let me turn the call over to Sri, to discuss our financial results and outlook for the rest of the year.

Sri Ryali: Thank you, Kevin, and good afternoon, everyone. Starting on Slide 12, Q2 revenues were exactly in line with our expectations, and the guidance we provided during our last call. Looking ahead, we continue to see a strong second half to this year, and we have a clear line of sight, to delivering on our full-year guidance of at least 10% year-over-year product revenue growth. I’ll walk through key elements driving our second half revenue expectations shortly, but let me first review Q2. Total revenues were $8 million for the second quarter of 2024, including product revenues of $6.3 million and R&D revenues of $1.7 million. As expected, this is down compared to Q2 of 2023. We were always projecting that Q2, 2024 would be our lowest product revenue quarter of the year, which is the opposite of last year, where Q2 was our highest quarter.

The decrease in R&D revenue primarily reflects having biotherapeutics revenue last year, as well as a non-cash $5 million license fee we recognized in Q2, 2023. Product gross margin was 45% this quarter. This was down compared to Q2, 2023, largely driven by product mix. Turning to expenses, R&D expenses for the second quarter of 2024 were $11.4 million, compared to $17.3 million last year. You can see the continued benefit of the expense actions we took last year reflected in the 34% year-over-year reduction in R&D expenses. I also want to note that Q2, R&D expenses were up a little compared to Q1 of this year, and we expect to see a slight ramp-up in the second half of the year for ECO Synthesis Innovation Lab investment. SG&A expenses were $15.7 million compared to $13.4 million in the second quarter of 2023.

This was primarily driven by a one-time, non-cash, stock-based compensation modification expense of $2 million. Excluding this one-time charge, SG&A expenses were $13.7 million in the quarter and flat to last year. Now I want to take a closer look at our 2024 revenue dynamics. The graph on Slide 13 shows a historical distribution of our product revenue, excluding tax loaded, across the first and second halves of the year for 2020 through 2024. As you can see, and as we have discussed before, we typically see an uneven distribution of revenue throughout the year, primarily driven by timing of customer orders. As we have previously communicated, roughly 40% of our product revenue is weighted in the first half of this year, making 2024 look more like what we saw between 2020 and 2022.

The takeaway here is that our product revenue tends to be lumpy, and instead of focusing on any single quarter, the overall annual trends are much better indicators of our progress. Taking a closer look at our product revenue trends, the graph on Slide 14 shows a year-to-date comparison for the last three years. As you can see, we have reduced revenue concentration in the big three commercial pharma manufacturing products as our pipeline programs continue to advance. Over time, we expect this diversification to smooth out some of the quarter-to-quarter lumpiness. Turning to guidance, we are confident in reiterating our 2024 product revenue in gross margin ranges, and here’s how we get there. Our actual first half product revenues of $15.8 million are expected to make up roughly 40% of the year, with roughly 60% weighted to the second half.

Importantly, most of the second half revenue comes from existing and expected orders. This includes orders where we already have binding commitments, or very strong indication of likelihood. As an example, we are contracted to deliver the $2.5 million double-stranded RNA ligase order from a large pharma customer in Q4. We also expect the product mix in the second half of the year to include higher margin products as compared to the first half of the year. To help with modeling, we expect Q3 product revenue to be in line with Q1 of this year, followed by a strong Q4 and an overall return, to at least 10% product revenue growth versus 2023. Shifting to Slide 15, as we previewed in May, our Q2 R&D revenue was roughly in line and actually better than this year’s Q1 R&D-based business.

Now, when we talk about our base business, we are excluding revenue from nonrecurring items and discontinued programs like biotherapeutics. Looking at our full year R&D guidance range of $18 million to $22 million, let me take you through how we get there. Our R&D-based business run rate is approximately $6 million to $7 million. In Q1, we also recorded $6 million related to the double-stranded DNA ligase agreement with Roche. Looking ahead, the rest of our 2024 R&D revenue will come from new projects, and other one-off license fees anticipated in the back half of this year. To drive that, we have continued to make significant progress in getting several new screening programs off the ground across mid-sized pharma and large biotechs. We expect these programs to translate into R&D revenues later this year.

In terms of modeling, Q3 R&D revenue is expected to be roughly in line with Q1 and Q2, followed by a strong Q4 based on the factors I just outlined. Moving to Slide 16, we ended the quarter in a strong cash position with $73.2 million in cash, cash equivalents, and investments, which we continue to expect will fund our planned operations through positive cash flow anticipated around the end of 2026. That path to positive cash flow means a roughly doubling of product revenue by 2026. As you heard today, we have a clear path to get there, primarily based on growth that’s already baked in via our existing pharma manufacturing pipeline, plus a couple of double-stranded RNA ligase orders. From there, we see an even higher trajectory for Codexis as we climb the value chain, and become a full-fledged siRNA service provider.

And now I’ll turn the call back to Stephen.

Stephen Dilly: Thank you, Sri. As you can hear from today’s commentary, we have a strong conviction in our path to becoming a major player in siRNA synthesis. In addition, we’re focused on maintaining our path to positive cash flow around the end of 2026. There are just a few things that you have to believe for us to get there. First, a strong second half of this year in product revenues, driven by existing and expected orders, including our first double-stranded RNA ligase order from a large pharma customer. After that, we expect that today’s pharma manufacturing pipeline, plus only a few additional ligase orders, will drive product revenue growth in 2025 and 2026. Finally, we remain focused on adding a new screening and evolution programs, to drive near-term R&D revenue in pharma manufacturing and product revenue growth beyond 2026.

On top of that, our ECO Innovation Lab and the potential Codexis GMP-grade facility can provide significant upside for Codexis’ future. Now, we’d be happy to take your questions. Operator?

Operator: Thank you. [Operator Instructions] Our first questions come from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed with your questions.

Unidentified Analyst: Hi, this is [Iona Mind] for Kristen. Thanks for taking our questions. One question we get a lot is on how the ECO Synthesis platform could be leveraged for drugs that are currently in clinical testing. What work would a company need to do to potentially consider switching the process? And have you – if you could just elaborate more on whether you’ve been approached by companies or are currently in discussion with them? Thank you.

Stephen Dilly: Thanks very much for the question. The way that I’d I think rephrase it is to talk about how applicable is our platform to drugs already in development or even on the market. And Kevin is in the midst of these conversations, so I’m going to throw it over to him in a second. But yes, we are being approached by the companies that are already on the market and in clinical trials, looking at how our platform can synthesis their drugs. So Kevin?

Kevin Norrett: Sure. Absolutely. They’re super interested based upon the margin improvement that you can see we outlined in the slides today. First and foremost, with the double-stranded RNA ligase, they see an immediate impact because they can synthesize shortmers through PAC, phosphoramidite chemistry, derive shortmers and then ligate them together. That offers an immediate cost savings. And is really applicable for products that are in clinical trials today and looking at that large-scale commercial growth in the later years. Also with the full ECO Synthesis platform, the same technology can be applied, we are doing sequential synthesis of shortmers and ligating them together, and that’s where we’ve had some really exciting conversations with customers today.

Operator: Thank you. Our next questions come from the line of Tycho Peterson with Jefferies. Please proceed with your questions.

Matt Stanton: Hi, thanks. This is Matt on for Tycho. Thanks for taking the questions. Maybe first one, you outlined in the press release that the technological process is a bit faster than expected. Can you just remind us what’s left in terms of technical milestones between here and pilot and commercial launch? And then around your comments on the first technical collaboration for ECO by year-end. Can you just talk about your level of visibility into that? And then what exactly that looks like in terms of a collaboration? Is there some type of upfront payment? Is it a partnership type collaboration? Just any more color on that would be appreciated?

Stephen Dilly: Thanks, Matt. And I’m going to ask Stefan to pitch in and talk about what we’re working on next in terms of the platform. But we’re super pleased both in terms of the progress and also the flexibility of the platform to get to different constructs with the different methods that Kevin described, both the shortmer and ligation, but also sequential synthesis. And then Kevin, if you could talk about where we are in terms of the thought process, and the conversations around the technical partner. So Stefan?

Stefan Lutz: Thanks, Stephen. Yes. So 2024 for us is still very much an enzyme engineering process development year. The two of the key priorities we’re focusing on that will get us to commercial relevance is the cycle time for each iterative addition. The other aspect is the supply of critical reagents for, which we are developing an enzymatic route that we see highly advantageous, both from an economic and from a technical perspective.

Kevin Norrett: Yes. And this is Kevin. I can add from a technical collaboration standpoint, what customers are asking us to do is do proof of concept with delivering their constructs so they can compare them to their phosphoramidite chemistry counterparts. So that has been accelerated by the technical progress you just heard Stefan outlined, and I’d like to point out that what you guys have seen from our TIDES USA presentation. We’re probably six months ahead of that in terms of where we’ve gotten to versus what you saw then. I would say from an outline of that collaboration, still on the technical front, I think as Stefan outlined, we have to solidify a path to having raw materials done being an enzymatic synthesis method as well as a few other process development specifications before we can put it in the hands of customers.

And that’s where I’m super excited because the ECO Innovation Lab will allows us to do that going into ’25 and we’re already doing that for a few customers now.

Matt Stanton: Great. And then maybe one on the optimization service you launched coming out of TIDES. We look to work to optimize ligase for your customers. I think you offered two options, both order kit and send it and then you guys doing it in-house, which I think was a bit faster, just given kind of the deep libraries you guys have. But can you just talk a bit about kind of demand funnel now, it’s been a few months out of TIDES and any mix between more for the kits or sending it to you guys to work on as far as the optimization service?

Stephen Dilly: Sure. So we are super excited about launching that service because up until then, we really were just sending out samples to customers. And what we don’t want to happen there is not having them testing them on parameters and other elements we might be able to counsel them on. By then, sending them their substrates to us to the through our ligase screening and optimization services, really done as part of our ECO Innovation Lab. We think the speed is critical to identifying the variant and the conditions they want to be able to use it in. And there’s been more receptivity from customers doing that in the last couple of months since they’ve seen us roll out that service. So we offer both paths. And we’re obviously excited about having customers send us their substrates to be able to do it more rapidly and scale up.

And as a result, we’ve also developed a bigger pipeline of other potential candidates, which gives us the confidence in not only getting a couple more ligase orders from our existing customers, but also bringing new ones on board, which could maybe even outpace that growth in the next couple of years.

Matt Stanton: Yes, thanks. And maybe just one more if I could squeeze it in here. Can you just talk about the rationale to bring Britton onboard to head up Commercial Operations and then some of the key areas of focus in the coming months now they’re on Board? Thank you.

Stephen Dilly: Sure. So bringing Britton on Board is an important part of the next stage of evolution for Codexis as a whole, where we as a team have been looking around the table to see where we have relevant skills needs and other gaps in the organization. Britton brings 20 years of experience in the CDMO space, which is something that Codexis doesn’t necessarily have in droves. So we thought it prudent to bring on somebody with that type of experience as we go into the next phase of Codexis’ build-out and growth for the future.

Matt Stanton: Okay. Thank you.

Operator: Thank you. [Operator Instructions] Our next questions come from the line of Matt Hewitt with Craig-Hallum. Please proceed with your questions.

Unidentified Analyst: Hi guys. This is [Jack] on for Matt. Just considering the macroenvironment, we’ve heard from others in the pharma and biotech industry that the funding environment is improving throughout Q2. Could you just provide some insight on what you guys are hearing or seeing from your customers? Thanks.

Stephen Dilly: Kevin, do you want to take that?

Kevin Norrett: Yes. We’ve heard relatively positive feedback, especially as it relates to innovation budgets. We haven’t experienced a lot in terms of pushback on budgetary considerations or what not. So I think really, it’s been set up as a result of pharma companies are looking for ways to leapfrog technology and progress here in a period of time where people might not be as focused or I think, really, just – the simple answer is we just haven’t seen any pushback on that at all, like really exciting progress and willingness to fund projects in this space.

Stephen Dilly: Right. And one thing I’d add, Kevin. I think you’d agree with is with more money for innovation and particularly earlier phase stuff that really raises the game for us in terms of not just having to think about making the product, making the siRNA, it’s also providing the regulatory backing, the analytical framework, all that good stuff. So we truly are a full service provider of the solution to take the siRNA forward. So it’s – in the long-term, it’s all good news, but there’s a lot of work to do.

Unidentified Analyst: Yes, that’s great to hear. That’s it for me. Thanks.

Operator: I’m showing there are no further questions. I’ll turn the call back over to Stephen Dilly for closing remarks.

Stephen Dilly: Well, thanks again for joining us today. And as you hear, we’re underway on a very busy second half of the year. So please stay tuned as we share the updates on our progress over the next few months. Obviously, the events around TIDES Europe will be a highlight for us. And we’ll also see many of you through our slate of fall investor conferences and look forward to connecting then. So thanks again.

Operator: Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.