Santarus, Inc. (F3Q08) Earnings Call Transcript

| About: Santarus, Inc. (SNTS)

Santarus, Inc. (NASDAQ:SNTS)

F3Q08 Earnings Call

November 3, 2008 at 5:00 pm ET

Executives

Martha Hough - Vice President, Finance and Investor Relations

Gerald Proehl - President, Chief Executive Officer and Director

Debra Crawford - Senior Vice President, Chief Financial Officer

William Denby - Senior Vice President, Commercial Operations

Analysts

Ian Sanderson - Cownen & Company

Annabel Samimy - UBS

Operator

Welcome to the Santarus third quarter 2008 financial results conference call. At this time, all participants are in a listen only mode. Following managements prepared remarks we will hold a Q&A session. (Operator Instructions). As a reminder, this conference is being recorded November 3, 2008.

I would now like to turn the conference over to Martha Hough. Please go ahead, ma'am.

Martha Hough

Thank you, Kara. Good afternoon and welcome to today’s call. This is Martha Hough, Vice President of Finance and Investor Relations. Joining me on the call today are Gerald Proehl, President and Chief Executive Officer, Debbie Crawford, Senior Vice President, Chief Financial Officer, Treasurer and Secretary, and Bill Denby, Senior Vice President, Commercial Operations.

Earlier today, Santarus issued a press release announcing our 2008 third quarter financial results, which is available on our website. This call is also being broadcast live over the internet at www.Santarus.com and a replay of the call will be available for the next two weeks under the Investor Relations section of our website.

Please keep in mind that risks and uncertainties involved in the Company's business may affect the matters referred to in forward-looking statements made during today's call. As a result, the Company's performance may differ from those expressed in or indicated by such forward-looking statements, which are qualified in their entirety by the Cautionary Statements contained in the press release and the Company's Securities and Exchange Commission filings.

The content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, November 3, 2008. Santarus undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. With those comments, I would like to turn the call now over to Gerry Proehl. Gerry?

Gerald Proehl

Thank you, Martha, and my thanks to everyone for joining us this afternoon. We are pleased to report record ZEGERID net product sales of $28.1 million in the third quarter. This represents a 44% increase compared to 2007 third quarter and a 17% sequential quarterly sales growth.

Our strong ZEGERID sales performance resulted from solid prescription growth and continued improvement in our average selling price. Our 2008 third quarter total revenues of $32.2 million were up 22% over the prior year period. The prior period revenues included $5 million milestone receives under our OTC agreement with Schering-Plough. Our growing sales, we continue to manage our expenses resolving in a further nailing of our estimated net loss for the year. We believe we will have continued strong financial performance in the fourth quarter and we are revising our 2008 guidance to increase expected total revenues to in excess of $125 million into the lower, the expected net loss to less than $8.4 million for the year.

I would like to review several highlights of the quarter and recent events.

Last month, our sales organization begins detailing GLUMETZA, a once daily extended release formulation of metformin that incorporates patented drug delivery technology and is indicated as an adjunct to diet and exercise to improve glycemic control in adults with Type 2 Diabetes.

We believe GLUMETZA has attributed to differentiate it from other metformin products. It is total ability profile may help address some of the limits of traditional metformin to the GI side effects. In particular, a [3.58] position to titrate more patients up to 2000 milligrams per day dosage recommended by the American Diabetes Association to achieve optimal glycemic control.

We also believe GLUMETZA is sensitive to promotion as good prescribing overlap in our called on primary care physicians. Bill Denby will provide more detail on our sales and marketing activities later in the call.

We licensed the GLUMETZA under an exclusive US co-promotion agreement with Depomed which we ended in July 2008. The terms, the agreement provide the Depomed will continue to record net sales of GLUMETZA and we will paced them towards a monthly promotion fee of 75% to 80% of the gross margin US sales of the product. Depomed recently reported third quarter product sales of GLUMETZA of approximately $13 million and approximately $23.8 million for the nine months ended September 30, 2008. The third quarter nine months results included a one-time recognition of $6.3 million in net product sales related to previously deferred revenue.

The gross margin and net sales of GLUMETZA for the third quarter of 2008 was approximately 84%. To give a more normalized view of recent GLUMETZA sale trends, Depomed reported $5.2 million in GLUMETZA net product sales in the first quarter of this year and $5.4 million in the 2008 second quarter. Given that week, commence our detail in [5.36] but we expect to begin earning GLUMETZA revenue in the fourth quarter of this year.

As we have just recently launched our GLUMETZA promotion activities, we believe that the net impact of GLUMETZA transaction will be neutral in the fourth quarter of 2008 and accretive in 2009 and beyond.

Turning to our patent claims litigation with Parr, discovery activities are continuing and Markman hearing is currently scheduled for November 5th in the Delaware District Court. Markman hearings also known as Claim Construction Hearings are held to resolve any disputes concerning the meaning of a certain patent claims prior to the trial. In papers submitted in advance prior to the hearing, Parrs dispute the meaning of certain terms in some but not all the patent claims we have asserted.

We anticipate that the Court will issue its ruling in the Markman hearing within 30 to 60 days following the hearing, although the decision may be made sooner or later than expected. The trial is currently scheduled for July 2009. We continue to have full confidence in and are prepared the vigorously defend and force upon discovering our ZEGERID products.

In September, I will go to summarize in positive data from a pharmacodynamic study with ZEGERID in two branded delayed release PPIs as posted on the website of the Journal of Clinical Gastroenterology. This article will also be published in an upcoming edition of the printed journal. This data were presented in the abstract and poster in May at the Digestive Disease Week Meeting. The study results indicate after seven days of pre –breakfast dosing, ZEGERID capsules produced significantly longer and significantly faster control of gastric acidity compared with Prevacid delayed release capsules and Protonix delayed release tablets in patients with gastroesophageal reflux disease. This data has been incorporated to our sales literature and reprints of the article are available to physicians.

We continue to make good progress on the swallowable tablet development program for ZEGERID that we announced in May of this year. This new tablet formulation combines immediate-release omeprazole with a mix of buffers. We have completed the clinical work that we believe is required for filing, a new drug application and early stability data looks good. If everything continues to progress its plan, we expect the ZEGERID tablet NDA in the first quarter of 2009.

I would now like to turn the call over to Debbie Crawford to discuss our strong third quarter performance. Deb.

Debra Crawford

Thank you, Gerry, and I would like to add my welcome to those joining us this afternoon. I will review highlights of our third quarter statement of operations and balance sheet, and also discuss our outlook for the remainder of 2008. Additional financial information will be included in our Form 10-Q for the quarter ended September 30, 2008, which we expect to file with the SEC later this week.

As Gerry mentioned, total revenues for the third quarter of 2008 were $32.2 million, which consisted of the $28.1 million in net product sales and contract revenue of $4.1 million. Total revenues for the third quarter of 2007 were $26.5 million, which consisted of $19.5 million in net product sales and $7 million in contract revenue. The contract revenue number for 2007 included the $5 million milestone which was earned in July 2007 for progress achieved under the OCT agreement with Schering-Plough.

Net product sales for the third quarter of 2008 of $28.1 million or 44% compared with net product sales of $19.5 million in the third quarter of 2007. In both periods the net product sales included sales of ZEGERID capsule and suspension products.

ZEGERID average selling prices continued to increase in the third quarter, building on the positive trend we saw in the second quarter of this year. We believe that this provides further evidence that we are seeing a favorable impact of our pricing actions taken earlier this year.

Contract revenue in the third quarter of 2008 included compensation under our co-promotion agreements with Victory Pharma and CB Fleet and amortization of previously received upfront payments from Schering-Plough and GlaxoSmithKline.

Contract revenue in the third quarter of 2007 included the Schering-Plough milestone and amortization of the upfront payments from Otsuka America and Schering-Plough. We terminated our co-promotion agreement with Otsuka America as of June 30, 2008 and as we have previously discussed, the remaining balance of the upfront payment from that agreement was recognized as revenue in the second quarter of this year.

We concluded our [10.55] promotion activities as of September 30, 2008 under the agreement with Victory Pharma, which was terminated by mutual agreement on October 1st. In addition, the CB Fleet agreement expired on October 1, 2008 at the end of its one-year term.

Going forward, in addition to ZEGERID net product sales we expect sources of revenue will include GLUMETZA and the amortization of the upfront payment from Schering-Plough and GlaxoSmithKline, as well as any additional milestone or worthy revenue earned from those last two agreements.

We reported a net loss for the third quarter of 2008 of $4 million or $0.08 per share compared with a net loss for the third quarter of 2007 of $6.9 million or $0.13 per share.

Our cost of product sales was $1.9 million in the third quarter of 2008 or 7% of net product sales compared with $1.8 million in the third quarter of 2007, which was approximately 9% of net product sales. The decrease in cost of product sales as a percent of net product sales was primarily due to increase average selling prices was for ZEGERID products and certain fixed overhead cost being applied to increase sales volume.

Santarus reported license fees and royalties of $3.6 million in the third quarter of 2008, which consisted of approximately $1.4 million in royalties payable to the University of Missouri based on ZEGERID net product sales. A $1.8 million accrual related to a potential $2.5 million one-time sales milestone also payable to the University of Missouri if annual ZEGERID net sales, including sales under the license and distribution agreements with GlaxoSmithKline reach $100 million in calendar 2008 and $375,000 in amortization of the $12 million upfront fee paid to Depomed in July 2008 for exclusive US promotion rights GLUMETZA. The upfront fee is being amortized on a straight-line basis through mid-2016.

This compares with license fees and royalties of $2.7 million in the third quarter of 2007, which consisted of royalties payable to the University of Missouri and to Otsuka America. With the termination of our co-promotion agreement with Otsuka America as of June 30, 2008, Santarus is no longer obligated to pay. A high single digit royalty to Otsuka on ZEGERID net sales.

Selling, general and administrative expenses were $28.5 million for the third quarter of 2008 compared with $27.8 million for the third quarter of 2007. The increase in SG&A expenses was primarily due to costs associated with sales training and promotional activities for GLUMETZA, as well an increase in legal fees associated with patent litigation. These expenses were offset in part by a decrease in ZEGERID promotional activities and a decrease in stock based compensation. We have previously indicated that we expected an increase in third quarter SG&A expenses in preparation for the promotion of GLUMETZA by our sales organization.

For the nine months ended September 30, 2008, we reported total revenues of $92.7 million, which increased approximately 40% over the prior year period. The current period total revenues consisted of %71.5 million in net product sales and $21.2 million in contract revenue. This compares with total revenues of $66.1 million for the nine months of 2007, which consisted of $55.3 million in net product sales and $10.8 million in contract revenue.

We reported a net loss of $8.4 million or $0.16 per share for the first nine months of 2008, which decreased 77% compared with a net loss of $36.3 million or $0.71 per share for the first nine months of 2007.

Moving on to some balance sheet highlights. As of September 30, 2008 we had cash, cash equivalents and short-term investments of $34.4 million compared with $64.7 million as of December 31, 2007. The decrease of $30.3 million resulted primarily from our net loss for the nine months ended September 30, 2008 adjusted for non-cash stock based compensation and changes in operating assets and liabilities, as well as the $12 million upfront fee paid in July to Depomed for US promotion rights to GLUMETZA.

Our operating cash burn for the third quarter was $4.6 million.

In addition, due to the illiquid state of our auction rate securities, we reclassified the fair value of these securities from short term to long term investments in the nine months ended September 30, 2008. The fair value of our auction rate securities was approximately $3.9 million as of September 30, 2008. Last month, Santarus received an offer of Auction Rate Security Rights from its investment advisor, UBS Financial Services, Inc. to purchase the Company’s auction rate securities at par value any time during the period of June 30, 2010 through July 2, 2012. Under the Rights agreement, UBS has the discretion to purchase or sell the Company’s auction rate securities at any time without prior notice so long as Santarus receives a payment at par value upon any sale or disposition. Santarus is assessing the offer of Rights and plans to make a decision prior to the November 14, 2008 expiration date of the offer.

We believe that we will not need to raise additional funds to finance our current operations for at least the next 12 months. However, we may pursue fund raising in connection with licensing or requiring new products. Sources of additional funds may include funds generated through strategic collaborations or licensing agreements or through equity, debt, and/or royalty financing.

Turning to our financial outlook for 2008. Today, we are pleased to announce that we expect to report total revenues in excess of $125 million, which is above the high end of our previously announced range of $115 million to $125 million. We have also increased our expectation for year-over-year growth of ZEGERID net product sales to at least 25% compared with the previously announced range of 15% to 25%.

We continue to expect to achieve breakeven in the fourth quarter of 2008 including contributions from existing contract revenue sources, the components of which may include milestone or other payments. With the achievements of our goal of breakeven in the fourth quarter, we would expect to report a net loss of less than $8.4 million for fiscal 2008 compared with our previously announced guidance of less than $12.5 million and our prior year net loss of $44.3 million.

With those comments, I would like to turn the call over to Bill Denby.

William Denby

Thanks, Deb. Growth in ZEGERID prescriptions continued to outpace the branded PPIs during the third quarter. Our total ZEGERID branded prescriptions of approximately $276,000 or up 20% and ZEGERID capsule prescriptions of approximately $250,000 or up 26%. Those compared with the 2007 third quarter. This double digit prescription growth outperformed the larger PPI brands such as Nexium, Prevacid and Aciphex whose prescriptions as prescriptions as a group declined approximately 5.5% in the 2008 third quarter compared with the prior year.

In comparing this year’s third and second quarters, the ZEGERID prescriptions increase 5.5% sequential while Nexium, Prevacid, and Aciphex as a group were essentially flat. The PPI market continued to evolve with the introduction of generic 40 milligram omeprazole in July. We launched a 40 milligram generic omeprazole did not significantly impact ZEGERID prescriptions during the third quarter, having its primary impact on the Prilosec 40 milligram brand and 20 milligram generic omeprazole.

At the recent American College of Gastroenterology Annual Meeting, our sales group distributed copies of the article published in the [Peer review] Journal of Clinical Gastroenterology that Gerry mentioned earlier in the call. The article was authored by Dr. Colin Howden, a thought leader in gastroenterology and the Northwestern University Feinberg School of Medicine.

In summary positive results from a crossover study in 51 patients with immediate release of ZEGERID capsules and Prevacid delayed release capsules as well as Protonix delayed release tablets. The study evaluated the effective chronic morning PPI dosing on 24-hour gastric acid control in patients with symptoms of GERD. The result showed that the control of gastric acid is measured as the time gastric ph was greater than 4 was 14.3 hours for patients taking ZEGERID compared with 11.7 hours for patients treated with Prevacid. A significant difference with a Ph-value of 0.005 and 10 hours for patients treated with Protonix, again, a significant difference with a Ph-value of less than 0.001.

In addition to our longer duration of acid control ZEGERID also reach the ph greater than 4 in 20 minutes, which was significantly faster than Prevacid and Protonix. This data showing ZEGERIDs acid control in the daytime adds to our previous two clinical studies that demonstrated ZEGERID’s ability control acid when taken at night on an empty stomach.

We believe this kind of positive clinical data particularly against to compare the drugs have helped our sales force to further differentiate ZEGERID and will continue to support ZEGERID’s growth in this highly competitive PPI market. It is noteworthy that neither Protonix nor Prevacid were being promoted at the ACG meeting this year. As discussed in past calls, we believe that the reduction in competitive noise in the PPI market is changing the relationship between reach, frequency, and prescriptions, even with the introduction of 40mg generic omeprazole in July.

Promotion for Protonix was withdrawn earlier this year after the launch of generic competition late last year. As for Prevacid, Takeda Pharmaceuticals, North America, recently announced that the FDA will take off to an additional three months to complete its review of Takeda’s NDA for new PPI that is a follow on compound to Prevacid. We are not sure what the impact is. Regulatory delay will have on Takeda’s promotion of Prevacid over the short term.

Our other key area of focus is on GLUMETZA. During the third quarter, we worked with Depomed to develop promotional literature for the GLUMETZA launch and trained our reps. We are seeking to communicate the message that patients taking GLUMETZA may have the potential to achieve 2000mg per day of metformin without significantly increasing GI side effects. The 2000mg daily dosing level is the goal standard recommended by the American Diabetes Association for optimal glycemic control. Many patients are not reaching the ADA recommended level of metformin dosing, due to their inability to tolerate the GI side effects associated with higher dosages of metformin.

In one Multi clinic retrospective review of patients taking metformin, the data indicate that the average daily dose is less than 1300mg, a sub optimal level. We believe the tolerability profile for the GLUMETZA as reflected and the pivotal trial data will be considered by physicians to be at positive clinical benefit. This data that significantly more indicated that significantly more patients treated with GLUMETZA reached the ADA recommended goal for glycemic control compared with patient taking immediate release metformin.

Our initial commercial activities focus on direct face to face selling to educate physicians about the benefits of therapy with GLUMETZA and provide samples for trial of the product. We are also undertaking a variety of non-manpower promotional tactics that are designed to build awareness of GLUMETZA. We have recently amended our service agreement with Inventive and exercise our right to extend it for two additional one year term. Therefore, in addition to approximately 200 Santarus sales representatives, approximately 100 Inventive sales representatives are promoting ZEGERID and GLUMETZA.

I had the chance that our sales meeting for GLUMETZA to observe first hand our sales organization’s enthusiasm for this opportunity. Within the first few weeks of promoting this product, we have found physicians to be very responsive. Our short term goal is to stabilize prescriptions, which have been slowly declining over the past two quarters. We then plan to build a solid and growing base of GLUMETZA business over the long term. I look forward to reporting on our progress with GLUMETZA in our next conference call.

In closing, we are committed to growing our ZEGERID franchise and gaining PPI market share and are optimistic about the opportunity GLUMETZA presents. With that update, I would like turn the call back over to Gerry.

Gerald Proehl

Thanks Bill. Before I open the call for questions, I want to emphasize that we are executing on our strategy to build Santarus into a successful, specialty Pharmaceutical company. In the near term, we remain focused on increasing the revenues and managing expenses. We plan to accomplish our goal like focusing on growing US sales for ZEGERID capsules and suspensions, continuing to build the ZEGERID patent portfolio while vigorously defending our current ZEGERID patent. Working with Scherring Plough to gain approval of ZEGERID OTC, which would result in future milestone payments and royalties, and working with [GFK] to develop and launch ZEGERID throughout many countries in the work resulting in future royalty payment.

We are focused on successfully re launching GLUMETZA to endocrinologist and primary care physicians, establishing GLUMETZA as a preferred branded metformin product for patients with type 2 diabetes.

We will also continue to look to add additional marketing product to sell to Gastroenterologist, endocrinologist, and primary care physician. By adding marketing products, we believe we optimize our sales force capacity, grow revenues, and improve the bottom line. Finally, we will continue to evaluate late stage development products that would be complimentary to our current portfolio and provide the company of longer term growth potential.

With that overview, I would now like to open the call for questions. Operator?

Question-and-Answer-Session

Operator

Ladies and gentlemen (Operator Instruction)

Gerald Proehl

While we are waiting for questions, I would like to inform you that we will be presenting at the Rodman & Renshaw Tenth Annual Healthcare Conference, taking place at the New York Palace Hotel on November 12, at 9:55am eastern time. We invite you to meet with us in person if you are attending the conference. If you are unable to attend, a web cast of our corporate presentation will be available on the Santarus website. Okay operator, we are ready for the first question.

Operator

Your first question comes from Annabel Samimy – UBS

Annabel Samimy – UBS

Just have a quick question regarding the NDA for the tablet formulation of ZEGERID; can you just remind us again how it is different than the capsule?

Gerald Proehl

The tablet product has multiple buffers as part of the product; there are some other features that would differentiate it for the capsule. At this point in time for competitive reasons, we are not disclosing those other features, but we will certainly at the time of approval.

Annabel Samimy – UBS

Okay. And you said, you are going to file the NDA, when?

Gerald Proehl

On the first quarter of 2009.

Annabel Samimy – UBS

Okay. Are you doing this strictly as a life cycle management deal or is it more to offer more formulations to differentiation for one single reason or another, like some patients do not like the capsule. Can you give the reason for providing the tablet?

Gerald Proehl

It is obviously part of a lifecycle management strategy. We also think that the swallowable tablet will offer patient some other added advantages that the capsules does not.

Annabel Samimy – UBS

And there are descriptions of those advantages?

Gerald Proehl

Not at this point.

Operator

Your next question comes from Ian Sanderson – Cowen and Company

Ian Sanderson – Cowen and Company

Actually, a follow up to Annabel’s on the ZEGERID tablet. Will that formulation be covered by the new 772 patent or the buffer is different enough that it falls outside the patent?

Gerald Proehl

It will be covered under the 772 patent, and yes.

Ian Sanderson – Cowen and Company

Debbie, could you give us any further details on how much the ZEGERID price was raised earlier this year? And also, your guidance implies a decline in the SG&A spending in Q4 versus Q3 and maybe if you could talk about where those savings might come from?

Debra Crawford

Yes. First in your question on average selling prices with regards to our [wav] price on ZEGERID capsules. We have taken an increase in the earlier in the year is about 9% both in first quarter and then a subsequent increase in second quarter of the similar amount. In such a big extent that some of our contracts are based upon discount of the [wac] price were you beginning to realize some of that benefit. There are certainly some of the higher [25:19] plans that would have contracts that are more fixed in nature over a period of time. So that is why you would not expect to see the entire benefit of the [wac] price increases in our net ASP. But we are certainly beginning to see the benefit of that as we saw in second quarter and again here in third quarter.

So, we continually assess our pricing. In the PPI market, I think it is pretty typical that the players take one to two price increases per year.

Ian Sanderson – Cowen and Company

Do you see that changing now that we have got multiple generics out there in the market?

Debra Crawford

I think we will have to wait and see what happens with the other brands. But certainly, the generics are targeting a certain customer profile and I think there are still other customers that are interested in branded products. And then in terms of our expenses, I think it is important to just think about third quarter in light of GLUMETZA promotional activities. So, we have those expenses without the benefit of any revenue from GLUMETZA. But as we move into the fourth quarter, we expect to continue to have expenses for GLUMETZA promotion, but would also expect to have some revenue on that line. So, I think as a Company, we have demonstrated our ability to manage our operating expenses to a level we feel is appropriate but at the same time we’re in the midst of launching GLUMETZA, we certainly feel we need to put some promotional spending behind that product.

Ian Sanderson – Cowen and Company

Lastly, have you had any interaction with the FDA at this point regarding the review of ZEGERID OTC?

Gerald Proehl

Obviously, the NDA was submitted by Scherring Plough. They would be the company that would have the direct interaction. We certainly have been very involved with Scherring along the way. What I will disclose is that the review processes going along as we would expect. Nothing out of the ordinary has come up at this point in time. And so, we certainly are still feeling very good that the FDA is moving along on the review and hopeful that we will see an approval somewhere around the PDUFA date.

Operator

(Operator Instruction) Your next question comes from Annabel Samimy – UBS

Annabel Samimy – UBS

Just one quick follow-up. You mentioned that you reduced commercial expenses on ZEGERID. Exactly what did you do in terms of your promotional effort, and where did you cutback the most and what activities for example?

Debra Crawford

We are constantly making assessment with respect to where to spend our money on ZEGERID. So, in any particular quarter, you may have fewer speaker, or promotional meetings. You may have less than the way of general advertising and things of that nature. So, we do not really get into, specifically, describing all of our activities. But we assess it on a go-forward basis with regards to what we think make sense, given the competitive noise level that is out there as well. I do not know Bill if you would like to add any.

William Denby

I think Annabel, what we have been able to do is continue to grow the brand and in terms of life cycle management as we move forward, we are growing the brand and the face of generics. As you know, ZEGERID has its unique attributes. This has really served us well. We have done this three head studies, we were able to grow the brand even on the branded PPIs are going down. I mean, the key point is that with Protonix and Prevacids sort of intermittently promoting, it has allowed us to maintain our shared voice while trying to trim some of the expenses that Debbie just talked about. So, we are doing it very carefully and we are trying to make sure that we were underwriting the growth of ZEGERID at the same time.

Annabel Samimy – UBS

And then really quickly on the question of Markman hearing that is coming and you mentioned some of the clean [29:43]? Can you elaborate on that a little bit?

Gerald Proehl

Yes, I do not know Annabel that I want to give into specifically each one of the clients. There are, as I said, there as some claims that Parr has challenged. They have not challenged all of our claims. We feel very good about out claims construction and we plan on certainly defending our claims construction and we will see at the end, whether or not we are right.

Operator

There are no further questions at this time. Please proceed with your presentation or any closing remarks.

Gerald Proehl

Thank you, everybody. Let me close by saying again that we appreciate your interest in support. And we look forward to keeping you apprised of our progress. We are pleased in today’s report record quarterly ZEGERID sales and look forward to reporting revenue for GLUMETZA sales beginning the fourth quarter. If you do have any questions, please feel free to contact me, Debbie Crawford, or Martha Hough. Thank you.

Operator

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and now you can please disconnect your line.

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