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spk08: Thank you for standing by, and welcome to the Schrodinger conference call to review the company's second quarter financial results. My name is Kevin, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star 1 on your telephone. If you require any further assistance, please press star 0. Please be advised that this call is being recorded at the company's request. Now I'd like to introduce your host for today's conference, Tracy Lesser, Executive Director of Corporate Communications. Please go ahead.
spk00: Thank you, and good morning, everyone. Welcome to today's call, during which we'll provide an update on the company and review our financial results for the second quarter of 2021. Earlier this morning, we issued a press release summarizing our financial results and progress across the company, which is available on our website at www.schrodinger.com. Here with me today are Rami Farid, President and Chief Executive Officer, Karen Atkinsania, Executive Vice President, Chief Biomedical Scientist, and Head of Discovery R&D, and Joel Lebowitz, Executive Vice President and Chief Financial Officer. Following our prepared remarks, we'll open the call for Q&A. I remind you that during today's call, management will make statements related to our business that are forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation statements related to our future financial performance, including our outlook for the full year 2021, the potential advantages of our platform, our strategic plans to accelerate the growth of our software business and advance our collaborative and internal drug discovery programs, risks relating to the COVID-19 pandemic, our expectations related to the use of our cash, cash equivalents, and marketable securities, as well as our future operating expenses. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies, and prospects, which are based on the information currently available to us and on assumptions we have made. Actual results may differ materially from those described in the forward-looking statements and are subject to a variety of assumptions, uncertainties, risks, and factors that are beyond our control, including the demand for our software solutions, our ability to further develop our computational platform, our reliance upon our drug discovery collaborators, and other risks detailed under the caption risk factors, and elsewhere in our most recent Securities and Exchange Commission filings and reports. Except as required by law, we undertake no duty or obligation to update any forward-looking statements discussed in this call as a result of new information, future events, changes in expectations, or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today. With that, I'd like to turn the call over to Rami.
spk02: Thanks, Tracy, and thank you, everyone, for joining us today. At Schrodinger, we have developed a computational platform that is transforming the way therapeutics and materials are discovered. The platform is enabling our customers and our internal teams to discover high-quality molecules for drug development and materials application faster, at lower cost, and with, we believe, a higher probability of success compared to traditional methods. We license our platform to pharmaceutical, biotech, and materials companies and universities and government labs worldwide. As Karen will review shortly, we are also advancing an internal drug discovery pipeline and leveraging our platform in a number of drug discovery programs in collaboration with pharmaceutical and biotech companies. We announced a new drug discovery collaboration this month with Xylab. The collaboration marks the first time we have the opportunity to co-develop and co-commercialize a therapeutic. XyLab has a deep pipeline in oncology with multiple approved products, and we are excited to be working with them. The collaboration with Xy will focus on a target in the area of DNA damage response, an important therapeutic strategy for a broad range of cancers, and builds on the knowledge we have gained working on our own programs in this area. Under the terms of the agreement, Xy will make an upfront payment to help fund our share of research costs. We have co-development and co-commercialization rights that will allow us to share equally in the profits of a future marketed product in the U.S. if we choose to co-fund U.S. development. We are also eligible to receive up to approximately $338 million in preclinical development, regulatory, and sales-based milestone payments, as well as royalties on net sales outside the U.S. This collaboration provides us with the opportunity to gain expertise in late-stage clinical development and commercialization, as well as the ability to participate more significantly in the downstream value of a program. As you will hear shortly from Joel, we reported a strong second quarter with 29% revenue growth compared to the same period last year, and we ended the quarter with cash resources of $617 million. Our financial strength allows us to continue to invest in advancing our science and invest in growing our software business, advance our internal pipeline, and add new talent to support our strategic initiatives. We are excited by the progress we've made as we continue to transform the way therapeutics and materials are discovered. I'll now turn the call over to Karen for an update on our drug discovery programs.
spk01: Thank you, Rami, and good morning everyone. We are continuing to make important advances on many fronts across our internal pipeline and portfolio of collaborative programs. We have collaborations with both biotech and large pharmaceutical companies spanning a broad range of target classes. And in these collaborations, we are leveraging our platform at the same scale we do internally. We believe this level of large-scale deployment enables us to more rapidly identify high-quality development candidates. We expect several collaborative programs to continue to advance in the clinic and new programs to enter the clinic this year. We are excited to begin working with our new partner Xilab on a program targeting DNA repair vulnerabilities in cancer that we anticipate will be synergistic with PARP inhibitors. Marketed PARP inhibitors have demonstrated efficacy in multiple cancers But new regimens and combinations that result in durable responses are needed, especially in patients who relapse or become resistant to treatment. We are also continuing to build early stage clinical experience to support the advancement of our internal program. Today, I will highlight our three most advanced programs, MALT1, CDC7, and WE1. We have initiated IND enabling studies for our development candidate targeting MALT1, and we are working towards the nomination of development candidates for CDC7 and WE1. Subject to completion of the preclinical data packages, we expect to submit up to three IND applications in 2022, with our first submission expected in the first half of next year. Starting with our MALT1 inhibitor program, MALT1 inhibition is gaining increasing attention as a therapeutic strategy to treat certain relapsed or resistant B-cell lymphomas and chronic lymphocytic leukemia. The MALT1 enzyme is downstream of BTK in the NF-kB signaling pathway, and constant activation of NF-kB is a hallmark of several types of lymphoma. Preclinical data previously presented from our MALT1 programs showed potent in vitro inhibition of MALT1 enzymatic activity and in vivo antitumor activity in mouse xenograft models of diffuse large B-cell lymphoma. Additionally, in in vivo patient-derived tumor mouse models, our MALT1 inhibitors demonstrated dose-dependent antiproliferative effects as monotherapy and in combination with abrutinib and venetoclax, which are approved BTK and BCL2 inhibitors, respectively. In the second quarter, we selected a development candidate for this program and have since initiated GLP-TOX studies required for IND submission. All our IND-enabling activities are on track, and we expect to submit the IND and begin Phase I studies in patients with hematological malignancies next year. Now I'll turn to CDC7 and WE1, two programs that target cancer through replication stress and DNA repair mechanisms. CDC7 is thought to be linked to cancer cells' proliferative capacity and ability to bypass normal DNA damage responses. Targeting proteins that play important roles in DNA replication and replication stress is gaining momentum as a therapeutic approach for cancer. Earlier this year, we presented preclinical data from our CDC7 inhibitor program, which showed that our compounds are synergistic with several approved and investigational cancer therapies that modulate apoptosis, DNA repair mechanisms, and DNA checkpoints. These compounds significantly inhibited tumor growth in mouse models of both acute myeloid leukemia and colorectal cancer. The data we have generated to date suggests that we have an opportunity to develop a best-in-class inhibitor with a very favorable pharmacokinetic profile. Our other DNA damage repair program targets V1, a tyrosine kinase regulator of the G2M cell cycle checkpoint, which when inhibited reduces cell viability by inducing apoptosis of cancer cells. We1 inhibitors from other companies have shown clinical proof of concept as monotherapy in uterus serous carcinoma. Combinations with chemotherapy, PARP inhibitors and PD-1 antibodies are being pursued by others in the clinic. We have identified multiple We1 inhibitors that are highly selective for We1 and show strong pharmacodynamic responses and anti-tumor activity in vivo. Our molecules also have optimized drug-like properties, including no observable inactivation of CYP3A4, a key liver enzyme. We believe this profile limits the potential for accumulation and the need for dose adjustment of combination products. In summary, we have multiple programs advancing towards the clinic to enable up to three IND submissions in 2022. As these programs advance and transition into development, we are initiating new programs. We have begun drug discovery on an undisclosed target in immunology and have prioritized several additional program opportunities with human genetic support and emerging pharmacology data in oncology and immunology that we expect to advance this year. We are excited about the progress that we and our collaborators are making and look forward to updating you on our R&D activities throughout the year. I will now turn the call over to Joel to review our financial results.
spk10: Thank you, Karen, and hello, everyone. This morning, I'm pleased to discuss our financial results for the second quarter of 2021, and I'll also review our outlook for the year. We reported total revenue of $29.8 million for the second quarter, up 29% compared to the second quarter of 2020. Software revenue was $24.1 million, representing 15% growth compared to the second quarter of 2020. The growth in software continues to reflect increased adoption of our platform by existing customers and the addition of new customers. Drug discovery revenue was $5.7 million for the second quarter, compared to $2.2 million in the second quarter of 2020. Second quarter drug discovery revenue included $3.3 million recognized from our collaboration with Bristol Myers Squibb. Discovery revenue also included a payment from a collaborator associated with the acquisition of intellectual property following the achievement of a lead optimization milestone. Gross profit was $12 million in the second quarter of 2021 compared to $13.6 million in the second quarter of 2020. Software gross margin was 77% in the second quarter of 2021, compared to 82% for the same period in the prior year, reflecting our planned investment to drive and support long-term large-scale adoption of our platform. Operating expense was $42.3 million, compared to $30.7 million in the second quarter of 2020, reflecting our investment in R&D to advance our pipeline and our technology, the addition of staff to drive long-term software sales growth, and expenses required to build a public company infrastructure and support the company's growth as we scale globally. Another expense, which includes changes in the value of equity investments, was $4.6 million in the second quarter of 2021, driven primarily by a loss of $4.9 million from the mark-to-market of our shares in Morphic Therapeutic. This compared to $13.1 million in income for the second quarter of 2020. As we revalue our shares each quarter, we can experience significant fluctuations in the value of our holdings, depending on stock price movements. The value of our shares in Morphic recorded on our balance sheet as of the end of the second quarter was $48 million, demonstrating the value we have helped create through this collaboration so far. We recorded a net loss after adjusting for non-controlling interest of $34.6 million for the second quarter of 2021, compared to a net loss of $3.4 million for the same period last year. This year-over-year change is driven by quarterly fluctuations in the value of our collaboration equity, particularly our shares in Morphic, as well as planned investment in our business to drive long-term growth. We ended the second quarter with cash resources of $617 million, compared to $649 million at the end of the first quarter of 2021. In March, we provided our financial outlook for the full year, and today we are reaffirming that guidance. We expect total annual revenue in 2021 to be in the range of $124 to $142 million, which includes software revenue of $102 to $110 million and discovery revenue of $22 to $32 million. Also, we expect the majority of our second half growth in software revenue to occur in the fourth quarter. Drug discovery revenue can be highly variable based on the timing of potential milestones related to collaboration agreements. As we've said before, we anticipate that full year operating expense growth will be higher than the 42% annual growth rate we saw in 2020, primarily driven by our commitment to fund R&D to advance our technology and our internal drug discovery pipeline. We also anticipate that software gross margin will be lower than the 81% reported in 2020, reflecting investment to drive and support large-scale adoption by our customers. We continue to execute on our strategy across our business. Our new collaboration with Xilab enables us to more significantly participate in the downstream value of the programs. Our collaboration programs and internal pipeline are progressing, and we are continuing to make scientific advances in our software to drive large-scale utilization, both in drug discovery and material science. And finally, we have the resources to invest in our long-term growth strategy. I'll now turn the call back over to Rami.
spk02: Thanks, Joel. As we pass the halfway point in the year, we are very pleased with the progress we are making across our business. We continue to innovate, and our technology is having a significant impact on our collaborative and internal drug discovery programs. Our internal programs are advancing toward the clinic. Our software customers are increasingly recognizing the benefits of deploying our solutions at scale. and we are growing our team of exceptional scientists and professionals to deliver on our mission of transforming drug discovery and materials design. At this time, we'd be happy to take your questions. Operator?
spk08: Ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touch-down telephone. If your question has been answered or you wish to move yourself from the queue, please press the pound key. Our first question comes from Michael Yee with Jefferies.
spk03: Hi, good morning, and thanks for the update. Thanks for the question. We wanted to ask around the confidence around your guidance and reflecting the confidence in your business.
spk04: Specifically, you're maintaining the guidance halfway through the year of 102 to 110 for software, but it feels like the low end of that would be a pretty big deceleration, not only year over year, but also just from the first half of what's going on this year. So two parts. One, can you just comment on the lower half of your guidance and why you're maintaining the overall guidance and your confidence and hitting the higher end. And then secondly, if COVID may or may not be picking up, is that actually a headwind or tailwind to your business? Maybe just talk about how COVID, if at all, impacts things. Thank you so much.
spk02: Joel, you want to take the first part of that question and I can?
spk10: Sure. Thanks, Mike, for your question. Sure. So as you mentioned, we're maintaining our overall guidance and our software guidance as a part of that. And obviously that annual guidance provides you with our expectations for the back half of the year. So we have pretty good visibility on our business based on the fact that we have very high historical customer renewal rates. but there is some inherent variability in the business, particularly with regards to new customers that we add each quarter, as well as decisions from our large customers who might be making commitments for much larger deployment of our solutions in a particular quarter, which, as you know, is a key growth strategy for us. So some of these decisions actually, individual decisions can be quite large and can have pretty significant impact on a particular quarter growth rate. So as we look out to the rest of the year, we think that the guidance that we've provided appropriately captures some of this inherent short-term variability, and so that's why we reaffirmed the guidance.
spk02: And with regard to COVID, as we talked about in 2020, I think a lot of software companies did the same thing. There did seem to be some sort of interesting uptakes and renewed interest in computational methods as a result of scientists essentially being locked out of their labs. I'd say at this point, and I think this is what we're hearing from a number of other companies, the sort of accumulation of sort of the long-term absence of travel and face-to-face interactions, I would say is not helping. It's making it, of course, more challenging to initiate strategic discussions. It's not impossible, obviously, but it's more challenging, again, especially given that it's now been, I think, a year and a half or so since of essentially zero travel.
spk04: That's very helpful. Thank you, guys, on both of those.
spk08: Absolutely. Our next question comes from Michael Raskin with Bank of America.
spk06: Hey, guys. Thanks for taking the question. Really quick follow-up on what Mike was just asking about. You mentioned sort of strong renewal rates in the software business. Could you quantify that a little bit? How has that trend in the first half of the year? You know, are you still in the high 90s? You know, any impact as we sort of lap the comms from last year?
spk10: Sure. Thanks, Mike, for the question. So that's one of our annual key performance indicators, and we don't provide specific guidance or reporting on the mid-year performance. numbers as they can be affected by timing. But what I'd say is that, you know, last year we came in at 99% renewal of those contracts over $100,000. And over the last seven years, it's never dipped below 96%. So we're pretty confident in our ability to continue to achieve a very high customer renewal rate.
spk06: Okay. I'll take that. And then On the Xilab collaboration announced recently, you know, you mentioned, first of all, the upfront payment. Could you give us a sense of sort of how sizable it would be? We saw some details there in terms of the potential milestones, but specifically about the upfront and when it will be recognized. And then sort of bigger picture question on that, should we expect more deals like that? You know, you have a couple different ways of working with Biopharma between the software business, the JVs, the partnerships, and now this is, again, something a little bit new. Is this another avenue we expect you to sort of explore more going forward?
spk10: Sure. I'll answer the first part, and maybe Ronnie might want to add to the third. So with regard to the size of the upfront payment, we didn't disclose that. It is to help us fund some of our research activities. And we are still evaluating the accounting around this deal, but we expect that, like many of these types of deals, that the upfront payment will be recognized over a period of time. And I think if you think about typical deals where there's upfront payments that we've talked about in the past, that has been the case. And in many cases, it's been over several years.
spk02: And with regard to, yeah, this kind of deal, yeah, we're very excited about this kind of deal. We are in discussions with a number of companies around sort of innovative types of deals. This is the kind of thing, as we've sort of talked about before, you know, we're not only innovating in the science. We're definitely, I think, pretty creative in the types of deals we've done, as you can see from the history of the company going all the way back to Nimbus. And we're very pleased with the nature of those interactions now and certainly expect to do other collaborations in the future.
spk08: Okay. Thanks so much. Of course. Our next question comes from Gary Nassman with BMO Capital Markets.
spk09: Hi. Good morning. First, for MALT-1, what's involved in the IND-enabling studies? What will be included in the preclinical package that you plan to file next year? And I think you'll be presenting some preclinical data for one of your programs in the second half. In what form do you think that's going to be? And then last one, so it seems like you're looking to expand your platform to other areas and materials like aerospace and electronics. How much of an initiative will you have behind those efforts? And how aggressive will you be finding partnerships in those areas relative to the life sciences that you've been doing more of.
spk02: Thanks. Great. Karen, you want to take the first two and I'll cover the last one?
spk01: Yeah, sure. So with respect to the MALT 1 program, we will be presenting the IND enabling package to the FDA, which will include the results of GLP-TOP studies, all of our CMC support that we've got for our clinical product and really the typical package that you would expect to see going into the FDA to support approval of an IND and initiation of clinical studies. With respect to the science, we've continued to make great progress there. We've characterized our MALT1 inhibitors in a number of different models and have new data with respect to how MALT1 performs, both alone as monotherapy and in combination with other products. As you can imagine, we've been putting together abstracts and sending them out to the regular scientific forums, and so we expect to be able to share some of that in one of those scientific meetings later on this year. So looking forward to that.
spk02: Yeah, and with regard to material science, thanks for asking about that. We're, of course, very, very excited about the progress we're making on that business, the increased adoption of the technology by, as you correctly pointed out, by a pretty diverse set of industries. We are, as we've said before, we are leveraging a lot of the existing technology, but as we get deeper and deeper into this field, we are recognizing areas where we can build on the existing technology and develop new advances, and we are absolutely investing and that as a result of this sort of clear interest in computation in quite a number of these different fields. So it's a very active area of research. Again, it's very important to point out it leverages a lot of the existing technology, and we're building on that. Oh, and then you asked about collaborations. That's absolutely something, as we've talked about before, that we're pursuing. We're very pleased with the progress that's being made there with regard to discussions around collaborations, and you should absolutely expect to hear more about that in the future about collaborations following a very similar path that we took with life sciences a number of years ago. I already mentioned Nimbus, and of course we've mentioned Morphic. We learned so much from those collaborations. They generated a lot of value. Those were incredibly important For Schrodinger, that's not lost on us, and that's something that we absolutely intend to pursue on the material science side as well. Okay, great. Thank you.
spk08: Our next question comes from David Leibowitz with Mortgage Daily.
spk05: Thank you very much for taking my question. When you look back at 2020, there was a huge step up in ACV technology. I believe 10 companies went from 10 to companies to 16 companies for companies over in ACV. What quarters did you see the bulk of that shift? And I guess when do renegotiations with those particular companies, when are they on tap?
spk10: Sure, I can talk about that. Thanks, David. So I think consistent with what we've been talking about this year, that fourth quarter is expected to provide most of the growth in the second half of the year. Just because of the seasonality and calendarization of our business on the software side, we do see a lot of contracts and a lot of large contracts renewing and obviously making decisions on what size to renew at in the fourth quarter. So we see it throughout the year, really, but the fourth quarter there can be a concentration. I'm sorry, the second part of your question was, again, remind me, please.
spk05: I guess following up on that is when do negotiations for those particular contracts contract start? Is it something that would start this early or does it really come down much closer to the actual renewal date when the discussions occur? Historically, what's the precedence? Are big purchasers typically more likely to continue being big purchasers?
spk02: With regard to your question about when the negotiations start, they actually really happen throughout the year. There's constant interactions with the companies throughout the year. We're not just sort of sending the software over the fence and not speaking to them until a few weeks before the renewal. So we're learning about the impact the software is having on the technology, talking to them about new advances. Remember, we have four releases a year. So every time there's a release, That's an opportunity to reach out, talk about the new products that have come out, new technologies, new impacts that we're seeing from the collaborations. And so the discussions are really happening throughout the year, obviously intensify as you get closer to the renewal. So I hope that answers that part of the question. And then I think you asked – oh, yeah, go ahead.
spk05: Are they the ones that usually keep moving higher?
spk02: Well, again, when you see the kind of retention rate that we're having, right, in the very high 90s, there's no, right, that's the answer there, right? If there were, we wouldn't have that kind of retention rate if, you know, a meaningful, any, yeah.
spk10: And the one thing, sorry, Brian, and one thing I can add to that, David, is that we're very pleased that in this quarter that we're seeing the continued momentum of and trends that we saw in previous quarters, which is driving the growth on the software side, which is not just the addition of new customers, but also customers increasing the adoption of our solutions. So we've seen that for several quarters as an ongoing trend. And so, you know, we think that we can continue in the future in encouraging customers to increase adoption of the solutions. at higher levels.
spk05: Yep. And one additional question. On the drug discovery side, is it possible you could run through the drugs from partners that we could expect to see data from before year end, and which drugs might actually step into the clinic?
spk02: I guess we're all thinking about who should answer that. So, you know, I think Joel kind of hinted at that. Itís very difficult to ñ first of all, itís difficult for us to predict, you know, when those sorts of events will happen. But itís also, you know, because of the nature of the agreements and confidentiality and so on, you know, thatís not for us to be presenting. Thatís really for the collaborators. A number of them have been pretty open about that. I mean, one of them is a public company. A number of them have been very open about where their programs are and their plans for the clinic. So I think that's the kind of information that's pretty straightforward to get from the collaborations that we have where they have more advanced programs. A number of the other collaborations that we started more recently, of course, are earlier and are still in sort of, you know, stealthy mode. And so it'll take a little bit longer, of course, to hear about that. But I hope that's answering the question. If not, please ask it a different – yeah, go ahead.
spk05: Oh, thank you very much for taking my questions.
spk08: Okay, great.
spk07: Our next question comes from Matt Hewitt with Craig Howland. Good morning, and thank you for taking the questions. A couple on utilization, then I've got one regarding the new collaboration, but regarding utilization, Can you give us a sense for how many of your customers are coming back multiple times during a year to increase their capacity versus just coming in once a year and adding what they believe they will need for the upcoming year?
spk02: Sure. Yeah, that's a good question. We can't really quantify that, but what we can say is the very, very large majority of deals are – are annual. There are a few examples of customers that purchase the software in a way that does require upping during the year as the number of compounds that they're running calculations on as they hit the limits that they purchase. But that's unusual. The large, large majority are annual licenses. Just going back, I think, to the question just before, I'm really sorry to do this. This is a little bit of information that might be useful to have. We currently have six of the collaborative programs that we're involved in, our 90 enabling studies, and four are in phase one, just to give a sense of sort of where those programs are. I'm so sorry to do that, but I just wanted to throw that in there. Did you have another question? Yeah, I did.
spk07: No, that's fine. Regarding visibility, how much visibility do you have into your current customers' utilization trends? And does that enable you, you know, given where we're at at this point in the year, you know where the customer is at from a utilization perspective and you can see the growth. Does that really help you from a projection standpoint on what that customer is likely to renew at?
spk02: No, we do not have insight into their usage. That's something that is closely held to the customers. That's not something that we have the ability to quantitatively look into that. We do, however, of course, know one thing that's important here, which is we know how they're capped. Obviously, we know how many licenses they have. We don't know if they're maxing those out, but we know what their maximum is. And we know that in almost every one of our customers, including the largest customers, the maximum number of calculations they can run is still an order to two orders of magnitude lower than what we're using in our collaborations and what we're using internally. And we can have those sorts of discussions, and we're engaged in those discussions. So even though, again, we don't have access to the exact usage day to day, There is that general knowledge, and that's what the nature of the discussions generally are. First of all, pointing that fact out, what I just said, and then talking about how are we going to get to those higher usage, and often that requires training, expertise, both, by the way, technical, both on the technical side. So, for example, obviously to be able to run that number of calculations requires You need access to a lot of computers, and that generally occurs through the cloud, so there's training there in how to use the cloud at this large scale and obviously deploying the technology from the point of view of the science as well.
spk07: That's really helpful. Thank you. And then I guess one last one for me, shifting gears a little bit. Regarding the collaboration with Xilab, were they an existing customer, or how did that relationship come about? And as you look at adding more of these types of partnerships there, Are you typically seeing that these customers are new to the platform, or are the existing customers saying that, you know, we would really appreciate your help and assistance to kind of work through these calculations and this work?
spk02: Yeah. Thinking back at all of the collaborations we've done, either they were with companies that were newly created, so of course, you know, didn't know, but but there was somebody either in the VC that funded them or one of the founders that knew Schrodinger from a previous interaction. Remember, we're pretty well-known in the field, and I think it's hard to find somebody who doesn't know who Schrodinger had some kind of experience with the software, either in the current position they're in, or from a previous position. That was the case with Zai as well. We've known them for a while. We've known members of the board. They were involved, you know, things like that. And so, you know, that's generally how it's – there isn't usually some sort of, you know, surprise or, you know, an interaction where there wasn't already some previous sort of, you know, interaction with some key person at the company. I hope that's answering the question.
spk07: Yeah, that helps. Thank you.
spk08: Well, ladies and gentlemen, this does conclude the Q&A portion of today's conference and also concludes the conference call for today. You may all disconnect and have a wonderful day.
spk10: Thank you. Thank you, everybody.
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