Burning Rock Biotech (NASDAQ:BNR) Q2 2020 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by and welcome to the Burning Rocks 2020 Second Quarter Earnings Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expects, anticipates, future, intents, plans, beliefs, estimate, target, confident, and similar statements.

0:58 Statements that are not historical facts, including statements about Benningroth's beliefs and expectations, are fault-looking statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors. all of which are difficult to predict and many of which are beyond Burning Rock's control. Fault-looking statements involve risks, uncertainties, and other factors that could cause actual results to differ materially from those contained in any such statements. Burning Rock does not undertake any obligation to update any fault-looking statement as a result of new information, future events, or otherwise except as required under applicable law.

1:50 And now I'd like to hand the conference over to the management team of Burning Rock. Thank you. Please go ahead. Good morning and good evening, everybody. This is Leo, Chief Financial Officer of Burning Rock. I have today with me our founder and CEO, Yusheng. I have our Chief Operating Officer, Shannon, and myself. The three of us will be presenting and answering your questions today. So I'd like to pass on to our founder and CEO, Yusheng, please.

2:23 Good evening, ladies and gentlemen. This is Yusheng Han, founder and CEO of Earning Lab. Welcome to our first Earning Call today. We are delighted to be listed in NASDAQ in June this year and broaden our shareholder base to include many experts in the industry across both Asia and U.S. We actually celebrate our IPO by having an evening of social events and followed by three full days of management discussion and planning sessions. We do have much to do on our two business areas, which are therapy selection and early reaction.

3:09 We started therapy selection when we were founded in 2014, and now we have become the market leader in terms of R&D, market share, and registration. and we provide high quality of products, which I think that Shannon might mention later on for the FE2C study initiated by the US FDA. We have, I mean, US FDA has a comparison among Burn Log and the other top peers in the world and our performance was quite good. and we are also strong in registration.

3:56 The first NGS case was on college. We got it approved in 2018 and we know a lot about the registration in China. And also we have a strong sales channel covering over 600 hospitals in China. And in terms of the business model for therapy selection, the two models, the first one is the central lab, which is similar to World Foundation of Medicine and Garden Health doing in-virus. I mean, they collect the samples from the prescription from the doctors and do the lab in our central lab. And the other model is in-hospital model.

4:42 We sell the whole NGS platform into the hospital and continuously to sell the region and consumables to the hospital. And they do the test in their own site. And this is quite unique if you want to compare it with the U.S. situation. Because most of the top hospitals in China want to have their own platform. and we are quite successful in that model and it grows faster than the central lab model. And also in the in-hospital model, we take around 80% market share. But four years ago, we realized that the combination of MGS, machine learning and epigenomics lead far more beyond just therapy selection.

5:38 We can combine them to lead to early detection for PEN cancer. So we started our R&D efforts on early detection four years ago using the technologies I mentioned above. And in the last four years, we have already accumulated 8,000 samples in different types of cancers. The promising results we obtained gave us strong confidence. So in May this year, We started the PREDICT trial. There's a clinical trial called PREDICT. This is a pan-cancer prospective trial that will test 14,000 patients in the coming three years.

6:23 We're looking forward to that. So this is generally what we're doing. I'm going to pass it to our CEO, Shannon Chai, to talk about more in detail. Shannon? Yes, hi. Thanks, Yusheng. This is Shannon. I'm the Chief Operating Officer of Burning Rock. It's my pleasure to walk you through some of the key progress that we have made during the second quarter. So we listed our recent progress on page five. So in terms of the therapy selection business, the first and foremost is that we have continued to publish a lot of our research collaborations with our are key doctors, collaborators, and pharmaceutical company collaborators in China. And these publications represent strong validation of our products and also the adoption and endorsement from our collaborators. These include a few studies, including the BENEFED study, the blood-based micro-satellite instability validation study, and also our liquid-based real-world validation compact study. All of these were published in the second quarter recently, and all of them are validation on our liquid biopsy products called Lung Plasma.

7:53 And in addition, we have also published quite a few clinical validation or genetic landscape studies on our other products, including tissue-based testing. are multiple cancer types still expanding from our key business in lung cancer into other cancer types as well, including the breast cancer, lymphoma, colon cancer, et cetera. And then the second thing we wanted to mention is in terms of the registration efforts. In the second quarter, we formed a formal collaboration deal with Illumina on NAC sequencing, I'm sorry, the NAC-Seq 550DX The aim of this collaboration is to develop Burning Rock's IVD kits on this sequencer. So this takes the way of registering more channels from Burning Rock in China for the NMPA. And also just to remind you, our former collaboration with Illumina on their smaller sequencer, the Mi60X, which led to the first NMP approval in just China, which happened in 2018. So we believe this collaboration on this larger sequencer will continue our leadership in the registration situation in China. And then in terms of our collaboration with the pharmaceutical companies,

9:26 we are very happy to announce that we have had a companion diagnostic on co-development deal with Z-Stone for their rat inhibitor. So this will be one of the first few CDX type of collaboration in China, meaning the NGS test goes together for approval with the corresponding drug. And then in terms of our early detection R&D efforts, We have progressed the training and validation from our three cancer type tests into a six cancer type test. So in this progress or extension, we not only expanded the cancer type that we can cover on early detection accuracy, but also more importantly, we have embedded the tissue of origin analysis or tissue of origin analysis effort capabilities within this early detection assay. So we are currently working on validation of this cancer type assay. And then we have also, as Yusheng has mentioned, we have also launched a 14,000 patient study called PREDICT. This will ultimately help us to develop and validate our and the ultimate form of early detection assay which will

10:58 cover at least nine cancer types. So on page six, just to refresh your memory, we listed our roadmap for developing early detection products here again. So we have actually finished the first two are the proof-of-concept studies for both single cancer type artery detection and three cancer type artery detections. For the single cancer type, we already have the methodology paper, the manuscript submitted for publication, and it's under review, and we expect it to come out in a few months. And then for the three cancer types of the study, we have recently presented that result in the AACR Special Conference in January earlier this year. This one covers lung, colorectal, and liver cancer. And then, as I mentioned, we are now expanding into this six cancer type test. And we expect the readout of this test covering both the early detection accuracy and the tissue of origin analysis accuracy.

12:13 These results, we think we will be able to release it in the fourth quarter next year in some conference. And we also listed the six cancer types that are being covered in this new essay here. And then eventually, through PREDICT, we will be able to validate our ultimate early detection products, which will cover at least nine cancer types. And then on page seven, we listed briefly the near-term catalyst that we are expecting. First, as Yusheng already mentioned, this FQC2 study initiated by FDA is a study that we think is a very rare and precious opportunity for Burning Rock to be able to be compared head-to-head for Apple to Apple with quite a few U.S.

13:11 SA developers. And this FQC2 study has two different parts, including the tissue-based comparison and liquid-based comparison. Both parts have been summarized and submitted for publication through manuscripts. So they are being submitted as two separate manuscripts, each to a very top-notch journal. and we are expecting that the publications will be able to come out and further strengthen the endorsement of Burning Rock's technology capabilities. And then in terms of the regulatory, we are still expecting two approvals for the kits in 2021. One is on the BRCA kits, the other one is the three cancer multiple gene NGS kits, and both of them we expect to be approved next year.

14:11 And then in terms of MRD product development, we wanted to mention briefly that we have a study called Meadow Study that we launched two years ago, and we expect the readout for the baseline results for Meadow to be released later, sometime later this year, in the second half of the year. And then in terms of the early detection, as I mentioned before, the technology paper or the methodology paper has been submitted for some time and it's under review. It should come out soon. And then on the six cancer type test, we expect to release the validation results on both early detection accuracy and tissue of origin analysis on the first quarter next year.

15:00 And then for the predict, we are due under the same timeline that we have already original blend. So we expect to have the phase one model lock in for nine cancer types in 2021, by the end of 2021. And then we expect to start the, to really read out from phase one and start phase two enrollment sometime in 2021. So those are the near-term capitalists that we are expecting. So Leo, it's Leo for our operating metrics and financials. Sure, thanks, Shannon. First of all, I'd like to cover our top line.

15:48 And I think under the unprecedented COVID environment, we'd like to be more granular. Thank you very much. Going into March, we started to see sequential improvements on a week-over-week basis. And for the month of April, we closed that month at around 35 million RMB revenue, up 30% on a year-over-year basis.

16:36 And I'm speaking of round numbers here. May, we had an unexpected dip, which we disclosed in the IPO prospectus. We did 30 million RMB, and we were flat on a year-over-year basis. June, we saw resumed year-over-year growth. We did 40 million RMB revenue and the growth rate was higher than the month of April. And for the month of July, we had similar round rates in terms of dollar value compared to June. So that's what we're seeing at the moment. And the round rate we did for July We're now back to the full run rate that we achieved or we saw in the first three weeks of January prior to COVID. So that was still our high point in terms of run rates for the year. By region-wise, eastern China has been strong. Northern China has been weak.

17:33 And we had a few top centers in northern China and more so in the in-hospital channel compared to the central lab channel. So Northern China has had an impact for us. Then breaking down our revenues into channels. First, I'd like to talk about the in-hospital channel. We grew this quarter on 69% year-over-year, high double digits. And we continue to make new progress in terms of converting hospitals into contracted hospitals. And by the way, it is only with the contracted hospitals that we book revenues. So we were able to add three more contracted hospitals during the second quarter, extending the progress that we made back in January, which we added two. So for the first half of the year, we've been able to add five more hospitals into the contracted status, and these are contributing towards our high double-digit revenue growth for the in-hospital channel, because in the base last year, we did not have those hospitals.

18:38 And for hospitals that we already contracted prior to 2019, They showed actually divergent trends. Eastern China grew strong during the second quarter, but Northern China has been weak. Next, I'll talk about our central lab channel. We have had stable ASP for the second quarter. First quarter this year was an outlier in terms of revenue and also cost base, but we did not see those trends in any major way for the second quarter, so the second quarter was more normalized. We grew volume 20% for the second quarter of this year for the central lab channel, and the top-line growth rate was at 18%, so very similar to the volume growth that we did.

19:27 Next, talking about our GP margins, the margins have been largely stable, and the details are in the earnings announcement in terms of breakdown by channel and also the qualitative description on trends. Moving on to OPEX, we actually are largely stable in terms of our OPEX base compared to the first quarter, with the difference being that we had an additional share-based compensation related to our R&D team in the second quarter, so that led to the biggest jump in terms of OPEX expenses for the second quarter compared to the first quarter. and the details of our OPEX trends are available in our earnings announcements.

20:13 Next, I'd like to move on to our guidance and to recap again the trends that we disclosed in our IPO perspectives quantitatively for April and qualitatively for May, the dip. So we actually make two observations. One is that we are able to see share gain by Burning Rock, us growing Thank you very much. And given where China is on the COVID trajectory, i.e., China had a very tight lockdown during the outbreak period and a relatively small case number before reopening and quarantine requirements for cross-border traffic movement. Our base case is that China will come out of COVID over time.

21:26 And it is in this context that we are providing our guidance. We should point out that there are risks of a return of COVID in China. We're not factoring those probabilities into our numbers and the guidance does not factor into account a return of COVID in China. So with all those contacts in mind, our full year top line revenue guidance is 420 million RMB. And this implies RMB 246 million for the second half of the year, which implies a 28% year-over-year growth rate compared to the second half of last year. And if we look at this in terms of the monthly run rate, this would imply RMB 41 million revenue monthly run rates for the second half of the year, which is higher than the second quarter monthly average run rates, but similar to the run rates that we're doing in July.

22:23 So that's the context of our guidance. And I'd like to call out Lastly, the lumpiness of our in-hospital channel revenues. When we think about our second half year guidance and particularly around third quarter back into 2019. So for the in-hospital channel, our revenues are more concentrated in terms of number of customers. It's more lumpy in this channel in terms of the revenue spread across hospitals. So we do We do have impacts when we have very large centers that are signed on, which happened for the third quarter last year. So we had lumpy revenues in the third quarter last year, but relatively light revenue for the fourth quarter due to timing differences on the revenue and Cox bookings. We're not expecting any lumpiness on that scale for the second half of this year.

23:26 So the trend should be smoother and easier to digest for the remainder of this year. But when we're making third quarter year-over-year comparisons, we like to call this out and probably more representative to look at our year-over-year growth trends comparing to the second half average of last year. So that concludes our prepared remarks and we are open for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question now, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Once again, ladies and gentlemen, it's star 1 for questions. Our first question comes from the line of Doug Shankle from Cohen.

24:13 Please ask your question.

24:17 Hey, good evening and good morning to everyone on the line and congrats to the team on your first earnings call. So I want to talk about three things. One is the PREDICT study, just a couple of follow-ups there. Two is just on commercial trends in the central lab. And then three is just the clarification on guidance. So first on PREDICT, I'll start there. It's good to hear a bit more about the 14,000 patient, nine cancer test prediction, I'm sorry, PREDICT study. You positioned this as a training validation study in your deck. I'm just wondering, does this mean there would be another follow-up study planned? I ask because I'm wondering if you envision having to do something that resembles what Grail is doing in terms of scope and size for their asymptomatic multi-cancer test. So that's the first part, and I'm just wondering if there's anything about this study design specifically that you believe would limit the utility of this test to China versus other global geographies.

25:26 Yeah, this is Shanna. I can take that question. So first of all, there is a follow-up factor in the predict design. We actually, as we mentioned, there are two phases for predict. In phase one, it's mostly for training and validation. And then by the end of phase one, the model, the SDA, and the cutoff will all be locked. And then phase two will be a blinded study, which means that all the team within Burning Rock, the essay team and the analysis team, they will all be blinded from the identity of all the samples. And then the validation will be a blinded and independent validation. And then within that phase two, we do have a follow-up module, which means that for those turned out to be a healthy control, which are tested positive. We will have up to 12 months of follow-up on them to, for one, to give them a second test and to see whether the specificity will improve by a second test.

26:35 And then for two, to test on whether there are any two positives within them. And then for three, more importantly probably, is to test on the utility of the test, which means that among those healthy controls, if you are tested positive, down the road, how much effort you would need to take in order to either exclude the cancer probability or to diagnose or to make sure that you go through the full diagnosis process for your and Xiaozhi Hu. So that sort of mimics the DTAC-A study in some of the design perspectives.

27:26 So the short answer is yes, there will be some follow-up module embedded in PREDICT. An applicability of this predict results to other geographical regions. We don't really think for an early detection trial, the results would be very applicable to different ethnicities or races per se. Because early detection, we expect it to be very population specific. because it was linked to people's genetic or epigenetic faces and also to their particular local living habits and also health check routines, etc. So we don't expect that to be applicable to other areas anyway. So if we do plan to expand to other areas, and many other places or countries, we will have to do a separate trial in that particular region anyway.

28:38 Thanks for all that. Yeah, that's great, Shannon. And the only thing I don't think you touched on was just the size of the follow-up studies. Is it just too early to comment on that? Right, right. For the six cancer type tests, we are shooting for 98% specificity, so you can sort of estimate the size of the cohort, but we don't know for sure yet, so we will see more results when we release the six cancer type assay results.

29:22 Okay, super helpful. Just pivoting to a commercial question specific to the central lab. So if we look at Q1 and then look at the number of ordering physicians and number of hospitals that were active, you had a pretty notable drop in Q1 relative to previous quarters, which I think we all know was largely, if not wholly, a function of what was going on with the pandemic. If we then look at what happened in Q2, mathematically, you recovered about 90% of the central lab ordering physicians you lost in Q1 and over 70% of the ordering physicians. I'm guessing that's kind of an oversimplification, but really what I'm getting at is how much of the Q2 central lab recovery was a function of essentially getting those doctors and those hospitals back versus actually moving beyond kind of same-store sales and playing offense and actually adding first-time hospitals and first-time ordering physicians?

30:25 Yeah, so I think on the last point, it is more to do with same-store, so existing physicians that we work with. And this you can look at. Actually, you can look at our number of ordering physicians, 1,175 for the second quarter. We're not back to the number we did in fourth quarter last year, which is 1,222. So there is still some restrictions or limits that our sales team, limiting our sales team's capability to reach the physicians or interact with them at the way they would do prior to COVID. So that is one factor. And also looking at the physicians or the hospitals where they work, there is some capacity caps. So the hospitals are knocked back to 100% capacity in terms of biopsies or even the number of visits, appointments they're able to have. And this varies by region.

31:30 So in general, eastern China has recovered better. Compared to Northern China and we have a nationwide business, so the pockets of weakness would have an impact on us. So if you look at the numbers here, the number of patients tested grew better for the second quarter compared to the number of ordering physicians. So for the physicians that our sales team are able to reach and interact with and resume contacts, those have shown recovery, but there are positions that we're just not able to reach and still not able to resume.

32:09 Okay, understood. Last one, a quick one. I'll direct this at you, Leo. Guidance seems to imply that you're basically assuming not a whole lot of improvement relative to the June and July revenue run rate, specifically If you take first half revenue and add 40 million RMB per month for the second half, you end up within 5 to 6 million RMB of your full year revenue guidance. Assuming I'm just doing that basic math right, is this just an acknowledgement that you don't want to assume the environment improves or deteriorates relative to trend just given the inherent uncertainty associated with the pandemic? I don't think we are holding back our numbers per se.

32:58 I do think that there are uncertainties and there have been volatilities on COVID. And if we look at the news on a more granular level, and particularly for northern China, there are outbreaks that we do see in a few cities, not just one in northern China. When those happen, the hospitals are typically More impacted compared to other service industries. So we are, I would say, more sensitive to that compared to other industries in China, which some of them have resumed rather well. It is with that background, I think, when we think about our guidance for the second half of the year, we have to...

33:46 We have to base that on what we've seen, and this is what we've seen. Okay.

33:53 All right. Thank you for all the detail. Really appreciate it. Thanks, Doug. Thank you. Our next question comes from the line of Sean Wu from Morgan Stanley. Please go ahead.

34:06 Hello. Thank you very much for taking my question. Congratulations, Leo, Yusheng, and Shannon for very good results in facing the COVID-19 problem. So I actually have some questions, maybe you can help others as well. It's basically, your business model is a bit kind of unique. You do both tissue samples and essentially liquid biopsies, unlike kind of gardens in the U.S., purely focusing on liquid biopsies. So people would wonder whether the advantage or disadvantage of both going on. And also, General Chang reported pretty good results for the first half.

34:51 And they employed another different base model. They have NGS and also have non-NGS diagnostic testing stuff. It appears the non-NGS part is performing pretty well. So what do you compare your base model with that? And also, you mentioned earlier about your are taking market shares and your market share is kind of increasing. Can you tell us about the overall market share both for the central level and also for the in-house segment for the first half of the same quarter if you have numbers that can help the investors? Thank you very much.

35:40 Well, I think that in terms of the... A different technology platform. I would say that Burning Rock now is focused on more about the NGS platform because we think that it is the future. And we didn't pursue the COVID testing opportunity like three months ago because we think that there was very low entry barriers in terms of technology. and we have witnessed that any technology without energy barrier in the long run will go into a drastic completion. So we didn't pursue that opportunity.

36:27 And I don't think we should be able to comment on our peers Q2 financial report. And in terms of the technology platform, if you mention some PCR platform for brain tumor, yes, I think Jincheng does have that part, but we don't know what number that is. So I don't think it's suitable for us to comment on that.

37:04 And in terms of the market share, Since we don't know too much information about what the other players are exactly doing, if we look at the oncology market for solid tumors, I would say that from our perception, our position in the market is still very strong. And that is the thing that I can answer. Any additional comments, Shannon or Leo? According to the tissue versus liquid platforms, we do think being able to do both tissue and liquid does give us quite a bit of advantage in terms of both the technology development and also the commercialization channels. So being able to do and to collect both tissue and liquid These samples actually gives us opportunity to test on the two positives and two negatives on the liquid-based technology. So it gives us more data to play with to refine our assay and algorithm for the liquid-based testing. And also in China, actually, the consensus among the doctors are for first-line patients, tissue is still are the main

38:36 sample stores, the gold standard in terms of the therapy selection test. So doctors would prefer to do tissue-based testing at baseline or at the first-line treatment, i.e. patients. However, more and more doctors are adopting the concept that liquid biopsy does have its advantage at the later lines of treatment. Being able to do both tissue and liquid, we give the doctors the choice to choose whichever sample they feel most comfortable with. And that also helps us to cover all their needs no matter what they live in. So I think being able to do both does give us some advantage.

39:27 OK, great. Thank you so very much. Thank you. Once again, ladies and gentlemen, if you wish to ask a question now, please press star 1 on your telephone. Our next question comes from Jiraj Bharu from Bank of America. Please ask a question.

39:55 Yeah, hi. Sorry, guys, I joined the call a bit late, but just on the Magnus PR, have Have we commented on when the approval is expected from the NMPA?

40:13 Shannon? I'm sorry, I didn't catch the question. I know it's about MAGDIS-BR, but what exactly are you asking?

40:22 Do you mind? Yeah, just asking when is the approval expected from the China regulator? Oh, thank you. So we already had the Type 1 approval from the NMPA. We already got that, and actually it just happened in July for our Magnus VR. We didn't mention that in particular in the slide deck because we are now working on the Type 2 registration, which we think would be the key, and also will be able to help us differentiate that machine Thank you. And on the predict study, just remind us, what are the end points of the predict phase one? The end point would be the sensitivity and specificity as well as the tissue of origin accuracy. So those three statistics would be our end point.

41:42 Sorry, go ahead.

41:47 I just want to remind Shannon that you are asking the first one end point. Great. Yeah, that is for the first one.

41:59 So when you actually validate the technology using these two criteria, you are looking at certain benchmark endpoints that it should cross this level of specificity and sensitivity to take it as a positive trial. Is that correct? Right, so from a classical design for a trial, you should be able to, you should do that. However, for early detection trial, because there isn't anything to compare to, so what you see people nowadays are doing is that they design the trial large enough so that they have a precise enough estimate on the sensitivity and specificity, but they don't have a particular bar they preset to cross so that they can claim a positive or negative result.

43:00 So that's also what we are doing with Predict as well. But I think down the road, once the first special product is on the market, and then for the next generation of products, people will have something to have to compare with. And then design will follow the more classical design in the future.

43:26 Right. And then last one was on the contracted and pipeline hospitals. I mean, assuming that your guidance, of course, says that you have not factored COVID return, would the pickup in terms of pipeline and contracted hospitals increase materially? Because if you look at the previous growth rate was higher. and this year, of course, that addition of new hospitals has kind of seen an impact. But where do you see this number going by end of the year? Yeah, so in terms of guidance, we have guidance for our overall top line. We don't have specific guidance or breakdowns by channel.

44:15 But qualitatively speaking, when we look at in-hospital channel, It is driven by both new hospitals getting signed on, getting into the contracted status, and also existing hospitals ramping up their volume. So if you look at the first factor, we've been able to add five new contracted hospitals in the first half of the year, compared to seven for the full year of 2019. So that's what we've been able to achieve for the first half of the year. And if you look at existing hospital ramparts, we have seen better ramparts for eastern China, but weak number for northern China. So that's the qualitative trend.

44:59 Thank you so much. Thank you. Our next question comes from the line of Derek Wu from Nomura. Please ask your question.

45:14 Thanks for the presentation and congratulations for a good result. So on behalf of Esther Wen from Nomura, I have one question about our prospective study, which launched in May this year. So men know the average R&D expense for each enrolled patient in this study. So maybe we can have a breakdown of patient recruitment expenditure, testing fee, and payment two doctors. So could you please tell some detail about this expense? Thanks. Sure. Sure. I'd like to take a step back and provide the overall expense for the PREDICT program that we expect to be around 30 million USD.

46:02 We don't actually provide specific breakdowns by components of that number. So that's what we foresee for Predict. And taking a further step back, that would imply that given our current burn rates prior to the start of the Predict study and with Predict, we are able to fund ourselves for the next three years or so given our current cash balance after the IPO.

46:33 Okay, thanks. Thanks for the answer. Thank you. Thank you, Derek. Thank you once again, ladies and gentlemen. If you wish to ask a question, now please press star 1. Thank you. Is there a note for the question? That does conclude our conference for today. Thank you for participating. You may all disconnect.