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Flamel Technologies S.A. (NASDAQ:FLML)

Q2 2013 Earnings Conference Call

July 29, 2013, 08:30 AM ET

Executives

Bob Yedid - ICR, Investor Relations

Michael S. Anderson – Chief Executive Officer

Sian Crouzet – Principal Financial Officer

Analysts

Matthew Kaplan – Ladenburg Thalmann

Operator

Good morning, ladies and gentlemen, and welcome to the Flamel Technologies' Second Quarter 2013 Earnings Conference Call. Please note that this call is being recorded. I would now like to turn the call over to Mr. Bob Yedid. Please go ahead sir.

Bob Yedid

Good morning, and welcome to Flamel Technologies’ second quarter 2013 conference call. This is Bob Yedid of ICR, Investor Relations.

Before we begin I’ll like start with some cautionary statements. The following presentation regarding Flamel Technologies S.A. includes a number of matters, particularly as related to the status of various research projects and technology platforms that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The presentation reflects the current views of Flamel’s management with respect to future events and is subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. These risks include risks that product and development stage may not achieve scientific objectives or milestones or meet stringent regulatory requirements, uncertainties regarding market acceptance of products and development, the impact of competitive product and pricing, and the risk associated with Flamel’s reliance on outside parties and key strategic alliances. These and other risks are described more fully on Flamel’s public filings, including the Form 20-F for the year-ended December 31, 2012.

Except as required by law Flamel does not intend and disclaims any duty or obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events or otherwise. After the prepared remarks we’ll be opening the call to a question-and-answer period. At this time it’s my pleasure to turn the conference over to Mike Anderson, Chief Executive Officer of Flamel Technologies. Mike?

Michael S. Anderson

Good morning, ladies and gentlemen. Thank you all for joining us today. I am pleased to report that Flamel continues to make great progress in our transformation from being a standalone drug delivery company to a specialty pharma company with outstanding drug delivery capabilities. We believe as described in the past that this is a very important distinction and we are pleased to see advancement on a number of products. We are focused on the development of our own proprietary drugs to drive sustainable revenue and earnings growth for Flamel, not only in the short-term but in the long-term as well.

In parallel we continue the drug development side of our business with several pharma partners. We believe that we have excellent technology and we intend to broaden its use. Moreover we continue to make solid progress on the business development front and will share more details on new deal in the coming quarters.

The most exciting news of the quarter was the NDA approval for Bloxiverz, the first FDA approved version of neostigmine sulfate an injectable product used in hospital operating rooms. This is Flamel first NDA approval and it’s an important positive step in our new strategy of seeking our own NDA approvals for drugs that will be 100% controlled by Flamel. This was the first filing that came out of Eclat's pipeline and there are three more of those products that we are steadily advancing.

Neostigmine, our recent approval is used to reverse the effects of neuromuscular blocking drugs in surgical procedures. Neuromuscular blocks are used to paralyze the patient’s muscle as the surgeon cuts through muscle during procedures that require it. By using neostigmine near the end of the procedure the goal is to make sure that the patient has the ability to move muscles, speak and so forth just as the anaesthesia wears off.

The drug is widely used in hospitals worldwide and we estimate that approximately 4.8 million vials of neostigmine are used annually in the U.S. Neostigmine is a classic example of what are described as unapproved drugs that are available for use in the United States. Many of these drugs were available in [inaudible] as they predate the Food, Drug and Cosmetic Act of 1938.

These products never had to undergo the rigorous testing and NDA review process by the FDA that has been in effect for decades. There are several thousands of these unapproved products being sold in the U.S. today. The FDA has a general policy to encourage drug manufacturers to submit a new drug application for these unapproved products in order to improve the quality and control applied to these pharmaceuticals.

The incentive for the drug company that goes through the effort and expense submitting an NDA if approved is if the FDA will remove the unapproved versions from the marketplace overtime. In general the FDA does give itself a leeway on the timing of these removals. Later in our discussion I’ll review how that FDA process has the potential to benefit Flamel.

In terms of current competition there are three manufacturers of unapproved versions of neostigmine being sold on the market today. There have been periodic shortages of neostigmine over the past few years. And generally the product is in short supply today, meaning of course that there is limited excess inventory in the channel. Generally product shortages in the market occur for a number of reasons, first one is because manufacturers may have facilities there are not in compliance with current CGMP standards.

With that background I will briefly discuss our launch strategy for Bloxiverz now that our FDA approval has been received. First, in terms of pricing. Flamel has set a price for Bloxiverz that represents a premium to the prices currently being charged for the unapproved products. We believe this reasonable premium is justified as it reflects Flamel’s effort, substantial investment and the risk it took in giving the filing of an NDA for Bloxiverz. This pricing will provide Flamel a gross margin not unlike gross margins seen in other specialty pharma companies, particularly for hospital-based products. Clearly it will take us a few quarters to ramp up our share.

Second we started shipments of Bloxiverz through the trade last week. Even though we will not be naming our contract manufacturer you should note that we’ve selected this well respected company because we have confidence in their ability to supply us and because we believe their operations to be fully CGMP compliant, an important criteria in today’s pharmaceutical business. Initial orders have been shipped to major wholesalers who provide distributions to hospitals in the United States.

Since we are now shipping product we will have sales in the third quarter. However I do want to caution that pharmaceutical products take time to ramp up and Bloxiverz is no exception. Please note that it is also typical for hospital products to be accessed through contracts with group purchasing organizations or GPOs. We are working now with the major GPOs to put these contracts in place and many are complete. However as the only FDA approved product in the marketplace it is possible that many hospitals will seek to buy Bloxiverz immediately without waiting for a GPO contract to be finalized.

Finally as I mentioned previously there is a policy that the FDA follows when deciding to remove unapproved products from the marketplace. According to a recent FDA guidance updated most recently, I believe in September of 2011 the FDA looks at a number of criteria for removing unapproved products from the market.

Some of those considerations include the following. First if there an FDA approved drug. Bloxiverz of course checks that box. Second are there issues that would constitute a health risk to consumers if the FDA were not to act. Bloxiverz carries an FDA approved label that is different from the unapproved labels in dosage in administrative section, that is Bloxiverz’s dosing instructions which are approved by the FDA are different than those of the unapproved products despite being of the same concentration.

We clearly believe that having the same product available with different dosages does constitute some risk. We are hopeful that the FDA may view the dosing instructions on competitors product as being different than our approved label and their lack of paediatric dosing instructions as constituting a public health risk.

There are additional criteria that the FDA examines in this decision as to the timing for removal of unapproved products. Then once those criteria have been examined they will pay particular attention if current manufacturers are viewed as being out of compliance and that has in the past been an issue in this marketplace. Even after the FDA asks a manufacturer to exit the market they typically have 180 days with which to do so and they do not need to recall what has been sold into the channel to-date.

So this will be a slow but hopefully steady process. However Flamel’s management team and our regulatory counsel will aggressively pursue our belief that these products should be removed from the market sooner rather than later. Moreover Flamel will be communicating extensively with all hospitals in the United States to make them aware of the availability of Bloxiverz. We do not believe you can go wrong by relying on the professional judgment of hospital pharmacists.

As we have stated on previous calls we believe this first NDA product could contribute up to $25 million to $35 million in peak annual revenues for Flamel. We are maintaining that guidance for now, given that the launch has just started and there are many variables that we face, principally customer acceptance, getting Bloxiverz manufactured into the channel, pricing and even the uncertainty that there could be other NDA approvals for neostigmine. Items that could lead us to revaluate this guidance more positively would be the order patents, favorable GPO contract pricing and acceptance and the speed with which FDA takes unapproved products off the market.

Now I would like to move on to discuss our second NDA filing out of the Eclat portfolio. As we announced on July 1st, Flamel has resubmitted its second NDA to the FDA. This resubmission required a $500,000 filing fee to be paid to FDA and our Principal Financial Officer, Sian Crouzet will discuss that in her section.

This NDA was originally filed in the first quarter of this year and we received a refusal to file letter in the second quarter. The resubmission of the NDA was consistent with the company’s planned time-table. The next step is that we are waiting to hear back from the FDA, if they have accepted this revised NDA filing for review. If the filing is accepted then we will be informed of the PDUFA action date. To remind you, the PDUFA action date ties to the submission of the application and not to the acceptance date.

We are excited about our business strategy and our pipeline of products. We hope that you can now understand why we will not discuss more information about the molecule or indications for our certain of our pipeline products, since doing so simply discloses sensitive information for our competitors and reduces the value of these products for all Flamel shareholders. However, we will be updating investors at the appropriate time with substantial information about our products.

I will come back to discuss the rest of our pipeline and strategy after Sian Crouzet, our Principal Financial Officer discusses our financial results from the second quarter. Sian?

Sian Crouzet

Thank you, Mike. Good morning. Flamel reported total revenues during the second quarter of 2013 of $5.5 million compared to $6 million in the second quarter of 2012. Revenues were lower principally due to a $0.4 million decrease in license and research revenue. License and research revenues were $1.7 million during the second quarter of 2013 compared to $2.1 million in the prior year quarter as Flamel is increasingly focused on our internal pipeline products and revenues from contracts with other drug companies declined.

Products, sales & services were $2.2 million in the second quarter of 2013 compared to $2.1 million in the prior year period. Other revenues consisting primarily of royalty income from GSK on the sales of Coreg CR were $1.7 million in the second year of 2013 versus $1.9 million in the prior year quarter.

Costs of goods and services sold for the second quarter of 2013 were $1.3 million compared to $1.5 million in the second quarter of 2012 due to reduced production costs. Research and development costs in the second quarter of 2013 totalled $7.3 million versus $7.7 million in the prior year, principally due to the timing of our pre-clinical and clinical studies. As Mike previously mentioned, R&D expenses for the second quarter 2013 included $0.5 million paid to FDA for the resubmission of Flamel’s second NDA.

Selling, general and administrative expenses for the second quarter of 2013 decreased to $2.7 million compared to $2.9 million in the prior year period due principally to reduced non-cash stock compensation expenses. Excluding the re-measurement expense of acquisition liabilities operating expenses in the second quarter of 2013 decreased by $7.03 to $11.3 million compared to $12.2 million in the second quarter of 2012.

I would like to take some time explaining an accounting item of Flamel’s income statement. In the acquisition of Éclat, Flamel acquired several pipeline products that management believed could be commercially attractive. As part of the acquisition Flamel incurred obligations owed to the former Éclat shareholders that are contingent on the approval and market potential for those products. Because the outlook for the potential value of the Éclat pipeline products owned by Flamel has improved, including the recent FDA approval of Bloxiverz, Flamel expects to owe more to the former Éclat shareholders than was estimated previously.

To be clear, the improved outlook for our products drive an increase in the measurement of the acquisition liabilities and does not reflect any changes to the terms of the Eclat acquisition. The specific terms of the acquisition of Eclat in March 2012, included a $12 million note whose payment is tied to the approval and net sales of certain Eclat products, 3.3 million warrants and earn-out payments include the 20% of the gross profit earned on certain Eclat products that are FDA approved and launched. In addition the company February 2013 financing of $15 million included a royalty of 1.75% of net sales of certain Eclat products that maybe approved and launched. These commitments are re-valued and reassessed at each balance sheet date based on information and data available at that time.

For the second quarter of 2013 we had a $28.6 million non-cash operating expense and $2 million in non-cash financing expense compared to a modest non-cash operating expense of 0.2 million in the second quarter of 2012. This quarterly re-measurement effectively increased the company's total cost and expenses by $28.4 million over the -- compared to the prior year period.

This change in the re-measurement of these liabilities was the largest source of change in the company's total cost and expenses, which on a GAAP basis were $39.9 million for the second quarter of 2013 compared to $12.3 million in the prior year period. Total interest expense of $0.6 million for the second quarter of 2013 included interest on the additional debt financing completed during the third quarter of 2013.

In the second quarter of 2012 the company had interest income of $0.3 million. Net loss for the second quarter of 2013 was $32.9 million compared to a net loss of 5.9 million in the prior year period. Loss per share was $1.29 in the second quarter of 2013, versus $0.24 in the second quarter of 2012.

Excluding the impact of the re-measurement of the fair value of acquisition liabilities and royalty net loss and loss per share for the second quarter of 2013 were $2.2 million and $0.09 respectively, compared with $5.7 million and $0.23 in the prior year period. With respect to cash and marketable securities we ended the second quarter with $9.7 million compared to $16.4 million at the end of March, which reflects a decrease of 5.6 million. This cash balance is less than we had anticipated.

During the second quarter of each year Flamel typically receives an annual payment from the French government in recognition of the research and development conducted by Flamel in France, effectively an R&D tax credit. However this year the R&D tax credit of $6.7 million was delayed by a few days to July 3rd. Had the payment been received in June Flamel would have ended the second quarter with a cash balance in $16.4 million.

We estimate that our current cash balance is sufficient to fund the launch of Bloxiverz and we have the means to advance our extensive R&D portfolio and to pursue business development opportunities on a selective basis. As part of the launch of Bloxiverz we estimate that the working capital needs will be very manageable.

With regard to our debt Flamel has two major debt obligations. In February 2013 we closed a $15 million debt financing with Deerfield Management that has a 12.5% interest rate and a 1.75% royalty on net sales of the Eclat products that are produced. The interest on this debt is paid in cash quarterly. The debt must be repaid over four years with the initial payment of principal due in 12 months time.

As I mentioned previously the other obligation is a six year, $12 million senior secured note issued in connection with the acquisition of Eclat. The interest rate on the note is 7.5% and it is accruing rather than being paid in cash. The current balance of the note at June 30th was $13 million. Under the terms of the note the accrued amount would be due in February 2014, nine months after the first Eclat approval and then we will have the next cash interest payment on the note.

With that I will not turn the call back over to Mike.

Michael S. Anderson

Thank you, Sian. At this point I would like to provide a little broader discussion of Flamel’s operational progress and our corporate strategy. Our new strategy has broadened Flamel’s revenue base from a drug delivery company with just one source of revenue a year ago to a specialty pharma company that now has three distinctive sources of revenue covering the short term, the mid-term and the long term.

As we discussed at our recent JMP Healthcare conference presentation which was posted on Flamel’s website we have more than a dozen molecules in our new term and midterm pipelines in various stages of R&D completion and development, including several approaching the clinic. Those products cover a gamut of therapeutic categories including CNS, heart disease, pain management and others.

For example, as we announced in late May, Flamel has exercised its right to regain control of two drugs that use it's Trigger Lock delivery technology that were formally being developed in partnership with an undisclosed partner. We are very pleased to have these two drugs under Flamel’s full control now for key development and regulatory decisions.

Trigger Lock is Flamel’s proprietary abuse resistant technology for long acting opioid analgesics. Trigger Lock products are designed to be resistant to abuse by extraction, crushing, snorting as well as being resistant to alcohol induced dose dumping. We believe that Trigger Lock may very well be one of the few technologies capable of meeting the FDA’s new draft guidance on abuse resistant requirement.

In the near term we are focused on the products from the Eclat pipeline. We are very excited about the ongoing launch of Bloxiverz and intently focused on activities to maximize the value of our first approved product. Our second Eclat NDA was re-submitted at the end of the second quarter.

However, we anticipate the potential filing of additional NDAs from the Eclat pipeline in either late 2013 or very early 2014. In the midterm Flamel has a series of four internal proprietary products in our pipeline some of which are getting close to human clinical trials and other products that are in pre-clinical testing. In each case these products utilize one of Flamel’s proprietary drug delivery technologies that will either A, increase the efficacy of the drug; B, reduce the cost versus alternative therapies, and/or C, reduce patient side effects and thereby improve patient compliance, which ultimately reduces healthcare costs in the longer term.

We are self-funding each of the mid-term products. We believe as a general rule they will be faster and less expensive development projects and ultimately less risky, although technical hurdles are always possible when you add drug delivery to molecules. If we are correct then our shareholders should see these programs advance much faster than has been the case in the past.

At a logical stage of the development process management will evaluate whether we can effectively commercialize them ourselves or whether our shareholders would be better served by our finding commercial partners who can more effectively create value in the market place. We believe that several of these midterm pipeline products could have very high commercial value.

For the long term we continue to leverage our world class drug delivery platforms to aggressively pursue product partnerships with large and small pharma partners where they pay for the development costs.

We have a number of programs in process in both clinical and pre-clinical stages. Please recognize that most of these projects are dependent on our pharmaceutical partners’ actions and are in some cases out of our direct control. However this area of our business continues to progress well. We believe this three pronged corporate strategy is the one that takes the greatest advantage of Flamel’s technologies, personnel and other assets.

We are committed to increasing the visibility to our shareholders into our pipeline as our programs advance and we look forward to sharing meaningful updates from our pipeline as they become available. We’re also seeking to increase investor knowledge of Flamel and will appear at selected healthcare investment conferences throughout the year.

While we have spent much of the past year working on our pipeline and executing our strategy we now feel very comfortable discussing the tangible results of strategy that is evidenced by the recent approval of Bloxiverz, with both investors and analysts. Our objective is to build a company with substantial revenue and profit and we believe we’re on the way. In sum I’m excited about Flamel’s prospects. There is a lot to accomplish yet in 2013 and 2014 and we’re aggressively focused on the important activities to move Flamel forward.

We appreciate your participation on today’s call and at this point operator I would like to open the call for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). We ask you that you please limit yourself to two questions. (Operator Instructions). And we’ll take our first question from Matthew Kaplan with Ladenburg Thalmann.

Matthew Kaplan – Ladenburg Thalmann

Hi, good morning.

Michael S. Anderson

Hi, Matt. Good morning.

Matthew Kaplan – Ladenburg Thalmann

Just wanted to start with a few question on Bloxiverz. Congrats on getting the approval and the launch. Can you give us a little bit more color in terms of the pricing of the products you mentioned that you have...

Michael S. Anderson

Yes, I will. So Matt, the price of the -- wholesale acquisition cost for the product is $15.75 a vial. We'll obviously be contracting with GPOs. So the likelihood that we are able to get all of that $15.75 is highly suspect. But that’s where we’re starting with going out of the gate. And we feel like that’s the average price, while it’s been short it’s almost looked like a spot market in other industries for a while and runs the gamut from less than $5 to right around $10. So, we have priced it as a premium. We don’t believe it’s egregious and we think folks so far have been of the belief that people certainly understand that and find it quite modest frankly.

Matthew Kaplan – Ladenburg Thalmann

And in terms of the timeline for the removal of the non-FDA products could you, you gave us some details, like could you give us a little bit more of a sense in terms of how you expect that to play out? It seems as though it should be pretty fast?

Michael S. Anderson

It’s very difficult to understand as an outsider how the FDA looks at each and every one of these things. We’ve seen examples where they’ve been quite quick with them in the past. We’ve seen other examples where they’ve utilized the decision making to slow the process down. We’re going to be quite proactive and try to encourage them because of the issues that we cited earlier on the call. We’re going to do everything that we can to make sure that they understand these differences and our belief that there is public safety issue here and you have a number of other issues working as well. While we don’t control that we’re going to do everything within our power both from our regulatory perspective and otherwise to try to best take advantage of these opportunities quickly as we can, but ultimately as you know we don’t control that.

Matthew Kaplan – Ladenburg Thalmann

With the shortages that have occurred in the marketplace I guess with the launch should we expect to see some significant stocking revenues so to speak during the quarter?

Michael S. Anderson

Well I don’t know that I would expect very, very large stocking revenues. Obviously as you may know that the way the way the marketplace works is you offer people the initial opportunity to buy the drug each and every one of the customers that would have any kind of application, from a distribution perspective for the drug has put the drug in, has ordered it.

We have -- we are being very careful about making sure that we have an even distribution pattern. In this business sometimes people put so much inventory at wholesalers you don’t orders again for four months time and we are not interested in doing that. We understand that our business is going to ramp up.

We understand that we are going to have to have supply of product all during the course of that ramp-up period and we are taking every step we can to make sure that we are able to maintain the inventory and not give FDA a reason not to remove those products because we are not in an ability or position to be able to supply. Did that answer your question?

Matthew Kaplan – Ladenburg Thalmann

Yeah, that’s great. And then couple of more but on Bloxiverz, could you talk about your capacity to supply the market right now. You said there are about almost 5 million vials…?

Michael S. Anderson

Yeah, we believe that we have a production schedule and production planning and a supply chain that’s going to make sure that we have constant ability to supply the marketplace. If tomorrow you were to snap your fingers and the FDA removed every product and recall what was in the marketplace which they won’t do, we don’t have five million vials in our warehouse, in our distribution service.

We think that over a period of the next several months we will have plenty of excellent supply. We don’t anticipate that to be an issue at all. Part of our selection process for a third party manufacturer was to make sure that they had the ability to supply the product. And so we are comfortable we will be able to do that. If the FDA were to announce tomorrow that they are removing the unapproved products from the marketplace then typically what they have done in the past is that have given people up to 180 days with which to exit the marketplace and they do not force people to recall product that’s in the market. And so you would expect that there will be some inventory out there. If they were to do that tomorrow we would be comfortable though we would be able accommodate the entire needs by sometime in the fall. But we think our supply is more than adequate for now and we don’t any issues with that.

Matthew Kaplan – Ladenburg Thalmann

Great. And then can you talk about the competitive landscape in the market. You mentioned some in your prepared remarks but specifically I guess now with Sugammadex panel meeting being cancelled a week or so ago, how does that work in terms of your competitive landscape and what do you think about Sugammadex, will it reach the market, and what is the competitive potential there?

Michael S. Anderson

Well that’s a great question, Sugammadex which is Merck's new reversal agent is a product that was turned down here I think three or four year or five years ago by the FDA for approval, they had some issue associated with hyper sensitivity and I think there is another issue as well. If you look in Europe where Sugammadex has been available that’s my understanding that their market share is somewhere just north of 10% after about five years which is relatively small. Neostigmine is still the gold standard in Europe as it is in the United States.

We believe that if Sugammadex were to be approved and I mean I think as being conservative you have to assume that sometime it will be approved that its ability to take market share would be somewhat, I mean it would also a slow steady ramp. And you remember that with these kinds of products you really don’t anticipate a long period of exclusivity, the reason being is that now that Bloxiverz is an approved NDA product someone could very easily go out, create a generic alternative to it since there is no IP and submit an application to the OGD for an approval of the generic.

So we don’t know how long that will take, average queue time I think at OGD now is about 28 months but I think we’d be foolish not to expect that somebody from the generic perspective will do that. And that will make Sugammadex all the more difficult to sell because the pricing will decline. We have to -- we only have our product to sell and we know we have to make sure that we get it into the environment as best we can and as fast as we can and do what we can to assure that FDA does what they’ve suggested in their guidance that they will do and what they’ve done in the past.

Matthew Kaplan – Ladenburg Thalmann

And what’s the current pricing of Sugammadex in Europe?

Michael S. Anderson

I don’t know in Europe but I’ve seen the reports that the expected price would be somewhere between $200 to $300 a vial in the U.S.

Matthew Kaplan – Ladenburg Thalmann

And then just…

Michael S. Anderson

I don’t know but I can't -- please don’t take that. I mean that’s just what I mean I’ve seen the written by analysts.

Matthew Kaplan – Ladenburg Thalmann

And then just shifting gears a little bit in terms of the second NDA, when do you expect to hear about the acceptance from the timing of that and drug…?

Michael S. Anderson

Well technically they have 74 days from the time you’ve filed in your application to the time that you typically would give acceptance to file letter or refusal to file as we did in the past. There is no guidance and regulation requires them to take that long but I think for all the practical purposes you should think about it in that fashion. Obviously as you know do the PDUFA action date relates to the date you’ve filed and not the date you get an acceptance.

Matthew Kaplan – Ladenburg Thalmann

So that's the secondly filing that will be associated with or proposed in terms of PDUFA?

Michael S. Anderson

Correct.

Matthew Kaplan – Ladenburg Thalmann

And then what’s the market potential for this product, you gave us some color on the first one, what -- 25 to 35.

Michael S. Anderson

We haven’t given any, Matt at this point in time, we haven’t given any kind of guidance with respect to the second product. We’ll probably do that once we get an acceptance letter.

Matthew Kaplan – Ladenburg Thalmann

Okay. And then…

Michael S. Anderson

We’ll probably try to give it just like we did our previous one.

Matthew Kaplan – Ladenburg Thalmann

And then in terms of the proprietary pipeline, could you give us a sense in terms of timing or potential update with respect to either pre-clinical data from those programs?

Michael S. Anderson

We’ve put on our -- it’s on our website today, our expectations about our mid-term, if you will pipeline and we’ll actually have products it will be in humans with this year so we have a number of things we are working on and as those things give a little closer because we will have IP that protects them we’ll probably be more open about both those and I think you will see at that time that some of those maybe will have some very significant potential in the marketplace.

Operator

(Operator Instructions). And at this time I would like to turn it back to our speakers for any closing or additional remarks.

Michael S. Anderson

Yes again we want to thank you very much for joining us on the call today. And we look forward to updating you further in the coming months about the progress that we continue to make in our business and in our business model. Thank you all very much and have a great day.

Operator

That concludes today’s conference. Thank you for your participation.

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