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spk06: Greetings. Welcome to Axiogen Reports' third quarter 2021 financial results call. At this time, all participants are in a listen-only mode. In question and answer session, we'll follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. At this time, I will now turn the call over to Peter Mariani, Executive Vice President and CFO. Mr. Mariani, you may now begin.
spk02: Thank you, Rob. Good afternoon, everyone. Joining me on today's call is Karen Zatteray, Axigen's Chairman, Chief Executive Officer, and President. Karen will begin today's call with an overview of our third quarter performance, an update on our operational highlights, and a review of our revised financial guidance. I will then provide an analysis of our financial performance, followed by closing remarks from Karen and a question and answer session. Today's call is being broadcast live via webcast, which is available on the Investors section of the Axigen website. Within an hour following the end of the live call, a replay will be available in the Investors section of the company's website at www.axigeninc.com. Before we get started, I'd like to remind you that during this conference call, the company will make projections and forward-looking statements regarding future events. We encourage you to review the company's past and future filings with the SEC, including, without limitation, the company's Forms 10-K and 10-Q, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward-looking statements. These factors may include, without limitation, statements related to the expected impact of COVID-19 on our business, statements regarding our growth, our 2021 financial guidance, product development, product potential, regulatory process and approvals, APC renovation timing and expense, financial performance, sales growth, and product adoption. And with that, I'd like to turn the call over to Karen. Karen?
spk03: Thank you, Pete, and good afternoon, everyone. Our total revenue for the third quarter was $31.2 million. representing a 7% decline versus the prior year period. Excluding the impact of revenue from a live soft tissue membrane and deferred procedures in the prior year period, revenue growth for the quarter was approximately 9% year over year. We're encouraged by the underlying growth in our business in light of the difficult operating environment across our industry during the third quarter. Although we believe the incidence of trauma increased during the third quarter compared to both the prior year and prior quarter, surgical schedules and procedure volumes were negatively impacted by the surge in COVID-19 cases and hospital staffing shortages. These challenges caused some procedures to be deferred, most significantly in the month of August. We saw volumes begin to improve in September, and remained consistent in October as hospitals continued to adapt to these challenges. We view the negative impact to our procedure volumes as transitory in nature, although the timing of recovery is difficult to predict in light of the ongoing staffing shortages being experienced by many of our customers, the continued uncertainty of COVID-19, and ongoing product shipping and transportation challenges. Nevertheless, we remain highly confident in our commercial execution, the underlying demand for our products, and the ability of our customers to overcome the present challenges to deliver important healthcare to patients, including the surgical repair of nerve injuries. We expect to see improvement in our procedure volumes as pressure on hospital operating schedules continues to abate. The impact of the Delta variant and staffing shortages on the quarter varied across nerve repair applications, similar to our experience during previous surges in COVID-19 cases and hospitalizations. Our breast, OMF, and surgical treatment of pain applications were impacted more significantly due to the elective nature of these procedures. While we believe the incidence of trauma increased in the quarter, Our trauma business was impacted by ER and surgical capacity constraints, resulting in deferrals of nerve repair for traumatic injuries. As we experienced last year, we would expect many of the deferred nerve repair procedures will ultimately be completed as surgical schedules improve. However, unfortunately for patients, there will be also a portion of injuries that are ultimately not repaired. As a reminder, while optimal outcomes are achieved by repairing the nerve in a very timely manner, nerve repair can result in positive outcomes months after the nerve is injured. Turning now to commercial execution. We ended the quarter with 109 direct sales representatives in the US compared to 110 one year ago. We expect to end the year with approximately 115 direct sales representatives as we strategically expand our sales team to support growth in 2022 and beyond. Our direct sales channel continues to be supplemented by independent sales agencies that represented approximately 10% of our total revenue for the third quarter. Our commercial team remains focused on our strategy of driving deeper penetration within customer accounts as a key driver of revenue growth, and we are well positioned to continue to drive growth as procedure volumes recover. Another aspect of our strategy is to increase the number of accounts performing nerve procedures using the Axigen algorithm. Earlier this year, we introduced a new account metric that we believe demonstrates the strength of this strategy, which tracks those accounts that have developed more consistent use of Axigen products in their nerve repair algorithm. We refer to these as core accounts. defined as accounts that have purchased at least $100,000 in the last 12 months. Our core accounts typically contain at least one surgeon who has adopted the oxygen nerve repair algorithm for the majority of his or her nerve injury patients, and other surgeons who are at earlier stages of oxygen product adoption. In the third quarter, we had 292 core accounts, an increase of 18% from 248 one year ago, and down from 306 in the previous quarter. Poor accounts continue to represent approximately 60% of our revenue. We continue to see significant opportunity to drive increased revenue as more accounts reach this level of adoption, and as surgeons within these accounts increase their adoption across their nerve repair applications, including extremities trauma, pain, breast, and OMS. The year-over-year growth of core accounts reflects our strategy to develop long-term users of the Axigen portfolio, while the sequential decrease is consistent with the procedural impact in the third quarter. We have also historically reported our number of active accounts among the estimated 5,100 healthcare facilities that treat nerve injuries in the U.S., These accounts have a lower adoption threshold of at least six orders in the past 12 months. In the third quarter, our active accounts increased to 954, representing a 9% increase compared to 873 one year ago. Active accounts have consistently represented approximately 85% of our total revenue, with the top 10% of our active accounts representing approximately 35% of our revenue each quarter. Turning now to our continued focus on building market awareness. During the third quarter, we participated in two clinical conferences, the 76th Annual American Society for Surgery of the Hand and the 103rd Annual American Association of Oral Maxillofacial Surgeons. We were pleased with the opportunity to engage with customers in person at these conferences. and with the numerous sessions on nerve injury, nerve repair, and neuroma pain. Axygen's nerve repair portfolio was featured in clinical and scientific sessions at each conference, and we hosted an educational symposium at the Hand Society Conference titled Innovations in Nerve Surgery that Transformed My Practice. We also continue to build awareness among patients of the important benefits of nerve repair. In October, We supported Breast Cancer Awareness Month with several activities highlighting re-sensation, a surgical technique designed to restore sensation to the reconstructed breast post-mastectomy. To raise awareness of the surgical treatment of pain, we are partnering with the U.S. Pain Foundation. Each November, the Foundation runs a campaign called No-vember, where they explore and educate on a unique area of pain management through events social media content, and more. This year, the foundation is focusing its campaign to raise awareness of peripheral nerve pain and its treatment options. As the leader in nerve repair, we continue to invest in surgeon education and advocate development and are excited to have returned to hosting in-person national surgeon education programs in the second half of 2021. We remain committed to providing education and training for each class of fellows. And as in prior years, we trained more than three quarters of the hand and microsurgery fellows in the recently graduated class of 2021. For the current class of 2022, we held three in-person national programs in the last two months and are holding two more programs in November. This fall, we are similarly returning to in-person national programs for surgeons of all experience levels to learn best practices in nerve repair from our expert faculty. We continue to expand our body of clinical evidence in support of our product portfolio and increasing surgeon adoption. Our ranger and match registries continue to enroll, with over 2,500 nerve repair is now enrolled in ranger. In 2020, analysis of the match registry data, which is a comparative population of conduit and autographed subjects for ranger, demonstrated that advanced neurographed outcomes were statistically better than conduit and were similar to those for autographed. Data from these two clinical programs continues to play an important role in informing surgeons' clinical decision making. Our recon study remains on schedule after completing enrollment of 220 subjects in July of 2020. As a reminder, RECON is our phase three pivotal study supporting our biologics license application, or BLA, which upon approval will transition our advanced neurograph from a section 361 tissue product to a section 351 biological product. We have completed final subject follow-up and we anticipate a top-line study data readout in the second quarter of 2022, followed by filing of our BLA in 2023. Enrollment in the comparative phase of REPOSE, our study of Axigard nerve cap, compared to standard treatment for symptomatic neuroma, is well underway, and we expect enrollment to be completed in Q1 of 2022 with a preliminary study data readout in Q2 of 2023. I'd like to share a few highlights from a recent Ranger publication and some data presentations from this year's ASSH conference. We are excited to see a new publication from the Ranger investigators on the role of advanced nerve graft and nerve reconstruction following the resection of painful neuromas. The study evaluated 25 subjects with painful neuromas who elected to undergo surgery for their neuroma pain. The study found that 80% of subjects who had their neuromas resected and had the resulting gap reconstructed with advance reported an improvement in their pain. Furthermore, 88% of the subjects reported meaningful return of sensory function. Reconstruction with advance enabled the return of function following removal of the painful neuroma, an outcome that is typically not achievable with standard neuroma resection and termination techniques. Additionally, a group of investigators presented on the patient's perspective of nerve autograft harvest, the traditional nerve repair technique. The study surveyed a group of patients who had undergone nerve repair with autograft and assessed multiple factors related to the donor site, function, and pain. Critical findings from this study included 88% of patients reported pain at the autograft harvest site. 75% reported persistent and bothersome loss of sensation distal to the harvest site, and 50% of the subjects reported cold intolerance and thermal sensitivity in the harvest site limb. The findings highlight the compromise that patients and surgeons commonly face when choosing to repair nerve injuries with autograft. We've believed that with the growing body of clinical evidence on the performance of advanced nerve graft, the increasing understanding of the true morbidity and functional loss of nerve autograft harvest, and the benefits of early referral for nerve surgery. Surgeons will continue to adopt advanced nerve graft as their standard of care for managing nerve gap repairs. Collecting clinical data in peripheral nerve repair takes a significant amount of time, effort, and expertise. Axigen has made it a priority to build and develop the knowledge, systems, capabilities, and capacity to deliver high-quality, impactful, and relevant clinical evidence in peripheral nerve repair. Nerves regenerate slowly, which often necessitates long follow-up times to assess treatment effects and gathers the meaningful clinical data that surgeons, payers, and regulators have come to expect when making clinical care decisions. We're fortunate to have an established body of clinical evidence supporting advanced nerve graft, including 145 peer-reviewed clinical publications, along with more than 50,000 advanced implants since launch. We remain committed to obtaining the clinical evidence to demonstrate the safety, performance, and utility of our nerve repair solutions to support the continued adoption of the Axigen algorithm across our full portfolio of nerve repair products. Before I turn the call over to Pete, I'd like to spend a moment discussing our outlook for the remainder of 2021, including our revised financial guidance. We now expect the full year 2021 revenue will be in the range of $127 million to $129 million versus the prior range of $134.5 million to $137.5 million. And we continue to expect full year gross margins to remain above 80%. Our revised guidance reflects the extended period of impact from the Delta variant and ongoing hospital staffing challenges which continue to pressure nerve repair procedure volumes. We are remaining measured in our expectations for the fourth quarter as hospitals address these challenges. To help provide further context around our updated guidance, we believe that the low end of our range represents a continuation of our current run rate through the end of the quarter while the upper end represents a modest, steady improvement as our customers continue to adapt to the challenges they've been facing. We believe that our revised guidance for 2021 has no impact on the longer-term growth outlook for our business. Though we currently anticipate that there will be a more gradual ramp in procedural volumes, we remain confident in the growth prospects for our business. As we look forward to 2022 and beyond, We continue to view Axigen as a long-term growth company, delivering sustainable annual revenue growth in the high teens to low 20%. We're confident that our commercial execution, combined with our substantial investments in clinical data over the past decade, will continue to support surgeon adoption and our long-term growth as we continue our mission to revolutionize the science of nerve repair. Now I'll turn the call over to Pete for a review of financial highlights. Pete?
spk02: Thank you, Karen. Our third quarter revenue of $31.2 million represents a decrease of 7% versus the prior year. Our lower than expected revenue was the result of a 10% decrease in unit volume and a net 3% increase in changes in prices and product mix. Prior year revenue included approximately $3.3 million from procedures deferred from the first half of 2020 as a result of the initial impact of the COVID-19 pandemic and approximately $1.5 million from a live soft tissue membrane for which we voluntarily suspended market availability as of June 1st of 2021. Excluding the impact of both of these items, Revenue growth for the third quarter would have been approximately 9%. Gross profit for the third quarter decreased 6% to $26 million compared to $27.7 million in Q3 of 2020 as a result of lower sales. Gross margin was 83.2% for Q3 compared to 83% in the prior year. Total operating expense in the third quarter increased 13% to $32.7 million compared to $28.8 million in the prior year. Total operating expenses in the third quarter included $2.9 million of non-cash stock compensation consistent with the prior year. The increase in total operating expenses reflects higher facilities costs as well as increased compensation, travel, and project costs as we have returned to more normalized spending levels over the past few quarters following the steep reduction in spend in Q2 of 2020 as a result of the company's cost mitigation initiatives enacted at the beginning of the pandemic. These increases were partially offset by lower bonus commission and stock compensation charges in the third quarter primarily due to lower revenue expectations for 2021. Sales and marketing expense in the third quarter increased 4% to $18.4 million, compared to $17.7 million in the prior year. As a percent of total revenue, sales and marketing expenses increased to 59% for the three months ended September 30th, compared to 53% in the prior year. Research and development spending in the third quarter increased 51% to $6.4 million, compared to $4.2 million in the prior year. Research and development costs include product development, including the non-clinical expenses in support of our BLA for advanced nerve graft and expenses for all clinical research. The increase in R&D expenses reflected increased spending in specific programs, including the BLA for advanced nerve graft and a next-generation advanced product. As a percentage of total revenue, research and development expenses were 21% in Q3 compared to 13% in the prior year. General and administrative expenses in the third quarter increased 16% to $7.9 million, or 25% of revenue, compared to $6.8 million, or 20% of revenue, in the prior year. Adjusted net loss and net loss per share in Q3 of 2021 was $3.6 million and 9 cents per share compared to adjusted net income and net income per share in the prior year of $1.5 million and 4 cents per share. Adjusted EBITDA loss in the quarter was $2.5 million compared to an adjusted EBITDA of $2.3 million in the prior year. The reconciliation of these non-GAAP financial measures to GAAP can be found in today's earnings release and on our website. The balance of cash, cash equivalents, and investments on September 30th was $98.1 million compared to a balance of $106.2 million at the end of Q2. The decrease includes facilities capital expenditures of $8 million, including 1.2 million of capitalized interest, primarily on our new biologics processing center in Dayton, Ohio, and net operating cash burn in the quarter of $200,000. We expect completion of the Dayton facility early next year, followed by a one-year validation process, and expect to begin production in the new center in early 2023. Turning to guidance, as Karen noted earlier, we are revising our revenue guidance and now expect full year 2021 revenue will be in the range of $127 million to $129 million, compared to our previous range of $134.5 to $137.5 million. Additionally, we continue to expect full year gross margins to remain above 80%. Although we remain measured in our expectations for the fourth quarter, As hospitals address capacity constraints and surgical schedules, we're confident that our commercial execution and the underlying demand for our products position us to see improvement as hospitals continue to adapt to these challenges. As we look toward 2022 and beyond, we believe the strength of our strategy and the execution in this underserved healthcare market will allow us to continue to be a long-term growth company delivering sustainable annualized revenue growth and the high teens to low 20%. And with that, I'd like to hand the call back over to Karen.
spk03: Thank you, Pete. I'm proud of the achievements of the entire Axigen team in the face of the headwinds during the quarter. We remain committed to delivering our innovative nerve repair solutions to patients, surgeons, and hospitals. And I believe we're well positioned for success as we move through the final months of 2021 and beyond. At this point, I'd like to open up the line for questions. Rob?
spk06: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you, and our first question comes from the line of Danielle Antalfi with SVB Laring. Please proceed with your questions.
spk04: Hi, this is Erin. I'm for Danielle. Thanks for taking your questions. Just a couple from me. I was just hoping you could maybe talk about the impact of hospital staffing shortages and if there's any steps that you could possibly take to mitigate these impacts. And then also just as it relates to the mix of procedures by setting, was there a certain setting, maybe like the ASC, that was less impacted by these shortages versus the hospital? And just do you expect to see a shift of procedures to the ASC going forward? Thanks.
spk03: Sure. Great question. Definitely we saw impacts of actually the combination of the COVID-19 Delta variant rise in certain parts of the country and then complicated by the fact that the hospitals have staffing shortages. And so the first thing that we saw impacted were our more elective procedures. So breast reconstruction is a great example in that it's always an inpatient procedure. It takes a lot of OR time. And it is deferable without significant complication to the patient. And so that's usually for us the very first sign that hospitals are starting to push procedures out. But we also saw that in the surgical treatment of pain and oral maxillofacial surgery, all of those being very elective procedures and all of them impacted and delayed as hospitals are trying to manage their flow. In the traumatic injuries, it's actually not quite as clear because it really depends on the circumstances of the hospital and what they're trying to do on these more emergent procedures. And so the first thing that we see, and similar to what we saw last year, is that these procedures were moved to alternate sites of care. So in the early days, in some of the areas where you saw Delta variant in particular starting to creep up, we saw an increase in move to either outpatient surgery centers or ambulatory surgery centers, which were less affected both by the staffing shortages at that stage and Delta variant. But as Delta variant became pretty strong, all of those staffing shortages kind of came to a head, and we saw procedures delayed and deferred even more. So this is going on in an ongoing basis. We hear from CEOs of hospital systems that they certainly have today's staffing problems, but there could potentially be another wave of staffing issues as Delta variant wanes, but there's more resignations that may come And so we're just trying to be cognizant of that and try and support the hospitals as they go through this, recognizing that our elective procedures will continue to be deferred, but at the same time trying to bring back those traumatic nerve injuries as soon as possible so that those patients can get the best possible care.
spk04: Great, thanks. And then just on the 2021 outlook, it seems like your, you know, updated guidance implies about $32 million in revenue for 4Q. Considering that you did about 31 in 3Q and, you know, it seems like things are getting better since the lows of August. They've gotten better in September and have continued into October. Just kind of want to understand the puts and the takes that are being contemplated. And then also just if you could, you know, talk about the backlog and, you know, if we should think of the – is that contemplated in the 2020 outlook or should we think of any backlog procedures that are made up in 4Q as upside?
spk02: Thanks. Yeah, I think our outlook is really reflective of the fact that we've got a lot of – we got a lot of confidence in our ability to come in and help hospitals get through these procedures, but they are challenged with how they are going to schedule these procedures. And so where we saw an uptick in September, that September run rate sort of ran consistent for us through October. We didn't see the additional pickup as in the month of October that we would have liked to have seen to have provided a little stronger outlook for the fourth quarter. We're trying to put the puts and takes. We're looking at our current run rate, and if we maintain that through the end of the year, that pretty much defines the bottom end of our guidance. If, as we expect, hospitals are able to get these procedures done and work through some of these challenges that they have with staffing, that we'll see a moderate improvement, and that kind of moves us through the top end of the range. So we're not trying to bake in any exceptional growth in Q4, and if we see more procedures coming in more quickly, then that's going to move us up in the range. But we wanted to sort of set the bottom end of this at a current state business. And specifically to your deferred procedure, we think those procedures are going to come in. It's just us trying to figure out what is the pace of getting those scheduled and getting those procedures done. Last year we saw experiences where those deferred procedures came in very, very quickly. But as Karen pointed out, these staffing shortages are causing us to be a little more measured in the pace at which those procedures might come back.
spk04: Great. Thanks so much.
spk06: Our next question is from the line of Anthony Patron with Jefferies. Pleased to see you with your questions.
spk01: Great. Thank you. First question on our end relates first the recon study, just an update on next steps into year end. and just, you know, whether or not you're seeing any notable impact from COVID just in terms of timelines there. And then in terms of just sort of FDA developments during the quarter, Integra had a panel meeting on Surgimend, acellular dermal matrix products for breast reconstruction. Obviously, a mixed vote from the panel. You know, when you look at the breast neurotization opportunity for oxygen, you know, anything from that panel meeting that potentially maybe a tailwind for the Avent business or otherwise. Thanks.
spk03: Sure. Thank you. So on the recon study, again, we completed enrollment and follow-up of all those subjects. And so at this point, there's not an impact in hospital staffing. associated with the study as we have this with the CRO to complete the data table. So no, we don't see any impact on recon despite the staffing challenges at hospitals and we still look forward to having the top line data readout in second quarter of next year. In terms of the, looking at this recent panel that happened, I think we've read through it and looked at what was going on there. I think it is important to make sure that in communicating with these panels that it is not just a statistically significant difference, but also a clinically relevant and clinically meaningful endpoint is an important measure to put in place. And I think in this particular case, at least as I read the panel, I think there was varying thought processes among the panel members around the presentation on clinically meaningful endpoints. And so I think it's a very good reminder to all of us that when we're doing these trials, we want to make sure that we're showing both of those points. Fortunately for us, as we've designed RECON, those are both baked into RECON It's also information that we have, and we would pull data from Ranger and Sensation Now to support our broader label claim. And all of that was kept in mind when we set those studies up. So I'm anticipating that we have that information in a form that the panel, if there is a panel, that the panel would be able to understand it.
spk01: And if I can, if I could sneak one follow-up in there, which would be on the core business and kind of shifting to the core accounts, that new category announced last quarter. You know, when you think about some of the headwinds you saw in 3Q, Delta and staffing shortages, you know, how did that play in those core accounts and are they, is there a portion of those accounts that are more insulated or was it evenly dispersed, you know, across the entirety of the accounts in the quarter. Again, the pressures on Delta and staffing. Thanks again.
spk03: Well, Delta definitely had regional differences across the country. So Florida, the Southeast, Tennessee, the Tennessee Valley area, all of those had a greater impact overall on volume. and on those core accounts in those regions. But the staffing is much more broadly impacted. If you look at it, we still did show an 18% overall growth year over year in those core accounts. So we see that as still a continuing funnel and fuel for our overall growth. both increasing the number but also increasing the penetration or volume within an account. Remember the $100,000 is a floor, it's not a ceiling, that's just getting into that category and our largest accounts are over a million dollars. And so while we saw staffing affecting accounts across the board, we still see that distribution of driving penetration and that's as their staffing We see that we believe we'll come back up to continuing to drive on those two dimensions, both continuing to increase the number of core accounts, taking from our active accounts and moving them to core, and increasing the revenue per account.
spk06: Thank you. Our next question is from the line of Kyle Rose with Canaccord. Please proceed with your question.
spk05: Great, thank you for taking the question. I wondered if we could just get a little more commentary on what you're seeing just with respect to staffing shortages. I mean, some of the diligence we've done is suggesting that Yes, there are staffing shortages, but that's more related to the inability to flex for overtime or additional operating hours, but the queue is full, so it's hard to flex higher, as we do see in some Q4s. Is that what you're seeing, or are you seeing actual decreases in procedure volumes in the markets you serve?
spk03: Yeah, I have to give a different answer for different segments. So for those elective procedures that require a hospital stay, we are seeing that the staffing shortages are causing those to be pushed out and either not scheduled at all or scheduled way out into the future. Because I would say more acutely, the staffing shortages are in the hospital floors, not necessarily ORs. Hospitals are trying to keep the ORs moving at as much capacity as they can. Now, I've talked to some hospital CEOs that have in their systems hundreds or thousands of backlog procedures that they need to get through. So there are some sizable amounts of backlog and what the shortages are causing in the OR is, as you said, the inability to flex and create more capacity so that they can both deal with the current procedure volume and the backlog at the same time. Doesn't mean they won't get to it. It's just gonna be working it off will take a little bit more time.
spk05: Okay, that's helpful. And then with respect to guidance, I just wanna make sure I understand it appropriately. If you see kind of status quo, the exit rate of October for the rest of the quarter, that brings you to the low end. And if you see maybe some gradual improvements, that takes you to the high end. But maybe just talk to us about how October trended on a month-over-month basis relative to September.
spk03: Yeah, we saw things get better in September, but then going into October, it remained relatively consistent. Slightly better, but still, I would say relatively consistent. So we think that, and that's why we set the low end of the guidance there, is to say, let's just assume that because of these headwinds, we remain flat through the quarter. And then, of course, if we can start to get the volume back up to what I would consider a normal through flow and or start to tackle some of the deferred procedures, we would see some increasing through the quarter, which would be the higher end.
spk05: Okay. Very helpful. That's all for us. Thank you.
spk06: Thank you. We've reached the end of the question and answer session. I'll now turn the call over to Karen Zadary for closing remarks.
spk03: Thank you, Rob. I want to thank everyone for joining us on today's call. We look forward to speaking with many of you at the Jeffries London Healthcare Conference and at the Canaccord MedTech and Diagnostics Forum later this month. Thank you.
spk06: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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