IntelGenx Technologies' (IGXT) CEO Horst Zerbe on Q4 2015 Results - Earnings Call Transcript

| About: IntelGenx Technologies (IGXT)

IntelGenx Technologies Corp. (OTCQX:IGXT) Q4 2015 Earnings Conference Call March 23, 2016 9:00 AM ET

Executives

Edward Miller - Director, IR

Horst Zerbe - President & CEO

Andre Godin - EVP & CFO

Analysts

Greg Ison - Singular Research

Swayampakula Ramakanth - H.C. Wainwright

Patrick Tully - Endeavor Asset Management

Operator

Greetings and welcome to IntelGenx Fourth Quarter and Full Year 2015 Financial Results Management Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded.

I would now like to turn the conference over to Edward Miller, Director of Investor Relations at IntelGenx. Thank you, please go ahead.

Edward Miller

Good morning, and thank you for joining us today for the IntelGenx fourth quarter and full year 2015 management call. With me on the call today are Dr. Horst Zerbe, President and CEO; and Mr. Andre Godin, Executive Vice President and CFO.

Before we begin, I'd like to remind you that all amounts are in U.S. Dollars, and today's remarks contain forward-looking information that represent our expectations as of today, and accordingly are subject to change. We do not undertake any obligation to update any forward-looking statements except as maybe required by U.S. Security and Canadian Law. A number of assumptions were made by us in preparing these forward-looking statements which are subject to risk. Results may differ materially, details on these risks and assumptions can be found in our filings with the Canadian and Security Exchange Commission.

I would now like to turn the call over to Dr. Zerbe.

Horst Zerbe

Thanks, Eddie. Good morning, and welcome to IntelGenx fourth quarter and full year 2015 results conference call. First of all, and most importantly, we're pleased with the record results in 2015. IntelGenx has been undergoing a transformation the past year as we work to strengthen our management team with the clear goal of accelerating the execution of our business plan, coupled with the goal of establishing our new state-of-the-art manufacturing facility for our VersaFilm products.

With that we believe we're demonstrating to the industry that IntelGenx is becoming one of the global leaders in pharmaceutical oral film development and manufacturing. On today's call we will receive the continued sales growth Forfivo sales on the last quarter, then we will talk about developments in our product pipeline and finally on today we will review our financials from fourth quarter and full year 2015.

First a few words about the Forfivo performance, sales of Forfivo continued to grow in the fourth quarter. Net sales of Forfivo were $3 million, an increase of 24% for the fourth quarter from the third quarter and for the full years of 2015 net sales totaled $9.3 million, an increase of 102% compared to the 12 months period in 2014. Similarly, the prescriber base has doubled since December 2014 and continues to grow monthly.

Forfivo is now performing to our expectations and we believe that Edgemont pharmaceuticals is optimizing its marketing tools with a greater degree of sophistication in reaching an wider prescriber base going forward. When examining where IntelGenx is today, what is most exciting is the true value of our pipeline. Much work in the past year was performed in advancing these products to the forward to future launches.

With respect to RIZAPORT as announced earlier we received approval for RIZAPORT by the German Federal Institute of Drugs and Medical devices. The so called NAA was submitted under the European E-centralized procedure with Germany and Luxembourg as the reference member states. The approval has opened up opportunities to partner the product throughout Europe and other territories. We are now in the process of manufacturing submission batches and plan to file a re-submission of the NDA with the FDA in the fourth quarter of 2016.

This re-submission requires a level 2 review by the agency which means the review time will be approximately six months once the application has been accepted for review. Now, a few words about the power projects. As mentioned in the last quarter PAR pharmaceuticals was acquired by Endo Pharmaceuticals at the end of September 2015. This transaction created redundancies in Endo's product portfolio and required PAR to return two of the three projects that the companies were jointly working on.

The termination agreement was signed recently and under this termination agreement IntelGenx retains full ownership of the data generated under the agreement with no obligation for the company to return any of the development expenses incurred by and paid for PAR. The relationship with PAR remains very strong and we continue to work together on the opioid dependency project which is the most advanced and economically most attractive project of the three programs. The opioid dependency project has been under review at the FDA since July 2013 and since over two years IntelGenx and PAR are being sued for patent infringement under the paragraph IV of the Hatch-Waxman Act.

And as a matter of fact the litigation actually drives the timeline. The court case took place in December 2015 and we expect a ruling to be made public by the third quarter of 2016 and we are confident we will prevail. The opioid dependence market is a very significant market for IntelGenx to enter. With the returning of the two projects we were fortunate to have PAR as I mentioned before who paid for the development cost and advanced these projects forward to Forfivo equivalency. And this is allowing us to seek new partners.

The two programs continue to be progressing according to plan. The second project is on track for an FDA submission in mid-2016 and for the third project we recently demonstrated by equivalency and now are manufacturing pivotal batches with the intent to conduct a pivotal bio-study later this year. With respect to our Tadalafil program, we have also made significant progress with our reformulated VersaFilm Tadalafil product. Tadalafil is indicated for the treatment of erectile dysfunction and pulmonary hyper function. In July 2015, IntelGenx received the results of a pilot bio study confirming that the product is fully bioequivalent with the brand product Cialis tablets. The company plans to submit a 505(b) (2) NDA in 2016 to have the product ready for commercialization upon expiry of the substance patent in 2017.

We expect that the brand owner is going to defend the brand product with all tools available and in that respect we believe that with our film product we have a very strong IP position compared to generic tablets which should make the film product very attractive licensing opportunities. So, considerable work was done with the marketing of the project and we have engaged top business development practicing firm to help secure a commercialization partner.

Few words on our loxapine program. Loxapine is indicated for the treatment of anxiety and aggression in patients suffering from schizophrenia and bipolar 1 disorder. The loxapine oral film will utilize the company's proprietary VersaFilm technology allowing for an improved product to offer patients significant therapeutic benefits compared to existing medications. Fast acting loxapine oral dosage form can be used to treat effectively acute agitation associated with schizophrenia or bipolar 1 disorder in non-institutionalized patients while we using the risk of pulmonary problems as it could substantially reduce potential risks of violence and injury to patients and others by preventing or reducing the duration and severity of an episode of acute agitation.

Our first clinical study of this product which was completed in Q4 of 2014 has suggested in improved bioavailability and a faster onset of our film product compared to the currently approved tablet. The second pilot clinical study is confirming the improved bioavailability compared to the current tablet and that study was completed late in 2015. We are now further optimizing the program with the intent to achieve an even faster onset of actions.

I will now turn to an update of our public strategy. At every stage of the company's evolution it is time to transform and grow to the next level. IntelGenx therefore recently announced some key appointments to the team with the objective of strengthening our organization by assembling a team of world class pharmaceutical executives with proven track records to help accelerate the execution of our business plan. In response to some feedback I received I would like to ease the concern of some of our shareholders and emphasize that we continue to be very focused in managing our cost in the most conservative manner. This company has a record of managing its cash very carefully and we will continue to do so.

We're pleased to announce the completion of the construction of our new state of the art manufacturing facility. There is still considerable work to do in the meantime before the FDA will visit the facility or our first pre-approval inspection. We're waiting the arrival of a critical mixing and packaging equipment by the end of April. This equipment will then have to be installed and qualified, and following that we will proceed with manufacturing submission batches of products to be submitted to the FDA for review and approval.

We have refined our strategy for identifying new opportunities, and we are now focused on areas where oral films are particularly well suited. And our product portfolio are therefore includes first, products that provide a tangible benefit to patients leveraging oral films such as reduced side effects, improved viability or a shorter response time versus existing drugs. Secondly, we are looking at first to file generic opportunities where high technology barrier entry exists in reproducing branded films. We are further looking at repurposing existing drugs on new indications using oral films. And finally, we are looking at life cycle management opportunities.

And I would now like to turn the call over to our CFO, Andre Godin, who will review our Q4 and full year 2015 financial results.

Andre Godin

Thank you, Dr. Zerbe. As you know we had a record 2015 at IntelGenx in terms of revenue and net profits. We continue to focus on managing our costs in an effort of keeping our strong financial discipline.

Both the revenues for the fourth quarter were $1.5 million, representing an increase of 82% compared to our fourth quarter of 2014. Total revenue for the 12-month period in 2015 amounted to $5.1 million, representing an increase of 207% compared to the 12- month period of 2014. The increases for the three and 12-month period ended December 31, 2015 compared to last year are mainly attributable to the attainment of milestone totaling $2.7 million from IntelGenx licensing partner, Edgemont Pharmaceuticals, triggered by Edgemont reaching in July 2015 $7 million of cumulative net trade sales of Forfivo XL over the preceding 12 months.

From the $2.7 million milestone, $1 million was received in the third quarter, $1 million was received in the fourth quarter and finally the last million was received in the first quarter of 2016, with revenue to be recognized in the first quarter of 2016 of $333 thousand. Nevertheless, three-sixth of the $2 million was recognized as revenue in the fourth quarter and five-sixth of the $2 million was recognized as revenue in the twelve-month period ended December 31, 2015.

Now, let's talk a little bit more about Forfivo. Sales of Forfivo continue to grow in the fourth quarter, and the revenue generated is being reinvested back into strengthening our organization. Net sales of Forfivo increased 24% in Q4 versus Q3 2015. The increase from Q2 to Q3 was 16%. Net sales for the fourth quarter reached $3 million, or $5.4 million gross, an increase of 82% over the same period last year. For the past 12 months of 2015, net sales total $9.3 million or $17.4 million gross, an increase of 102% compared to the 12-month period in 2014.

Prescriptions increased by 42% in the fourth quarter compared to the fourth quarter in 2014, an increase 8% compared to the third quarter of 2015. We are pleased to see that the prescriber base has doubled in December 2014 and continues to grow monthly.

Operating costs and expenses were $3.71 million for the 12-month period of 2015, compared to $3.44 million for the corresponding period of 2014. IntelGenx recorded operating income of $1.4 million for the 12-month period ended 2015 compared to an operating loss of $1.8 million for the comparable period of 2014. The company also generated net comprehensive income of $800,000 or $0.01 on a basic and diluted per share basis for the 12-month period of 2015 compared to a net comprehensive loss of $2.2 million or minus $0.03 on a basic and diluted per share basis for the 12-month period of 2014.

Cash on hand as of December 31, 2015 was $2.87 million, representing a decrease of $1.53 million compared with a balance of $4.4 million as of December 31, 2014. The decrease in cash relates primarily to the investment made in our state of the art manufacturing facility.

I will turn the call back to Dr. Zerbe to close this out for the day.

Horst Zerbe

Thank you, Andre. We're most pleased as Andrew mentioned by the record 2015 results. Net sales of proprietary increased by 102% in 2015 compared to 2014 and are expected to continue to grow. Our new manufacturing facility is soon to be completed and will offer us many competitive advantages including a full service to our customers and an effective protection of our IP.

We strengthened our management team to accelerate the execution of our business plan. We implemented a product sorting strategy that is aimed at identifying and implementing high value product opportunities and last but not the least, we established a strategic partnerships with relevant partners in the pharmaceutical industry.

We do look forward to communicating and showing you first hand our progress at our upcoming AGM and grand opening which will take place on May 10, 2016. All of you are welcome to attend and see our new state-of-the-art facilities. Please let Edward Miller know if you will be attending. His contact info is on the internet website.

Before I turn the call over to questions, I'd like to thank everyone here at IntelGenx for their hard work this past year. We are very confident in IntelGenx's future and looking forward to continuing on this positive momentum into 2016. So thank you all for your attention and we are now prepared to answer any questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Greg Ison with Singular Research. Your line is now open.

Greg Ison

Thanks, and good morning everyone. First, could you tell us, share with us why there isn't an income statement included with the press release this morning? It's usually given with the earnings announcement.

Edward Miller

Greg that will be published on or before March 30. It is being finalized printed to yearend and will be available as soon as possible.

Greg Ison

Got it, got it. Okay. Regarding the revenue for the quarter, you recognized $1 million of milestones from Edgemont this quarter. I guess this is the last quarter for the license fee amortization that was probably $77,000, so am I correct in assuming that the remaining revenue was all attributed to Forfivo royalties? I guess that would be around 420,000, is that correct?

Horst Zerbe

Yes, most of the revenue was coming from both the milestones and most of these from Forfivo.

Greg Ison

Got it. On prescriptions, last quarter I asked about the prescription count and I think you only gave an estimate. Edgemont had the actual data at the time, were you able to come up with the final script count, do you have that available to give to us now and do you have that final script count for Q4 or is that something that will have to come later?

Horst Zerbe

I believe we do…

Edward Miller

If we put that in a presentation with the call, the script count was 12,161 for Q4 2015 and compared to Q3 11,289. It's on our presentation for this call.

Greg Ison

Okay, I don't see the presentation I guess because I just dialed in.

Horst Zerbe

It's included with the webcast.

Greg Ison

It's included with the webcast, I see. Understood, moving on, the ratio of net to gross sales this quarter seems to have improved a bit over prior quarters, could be around 5%. Would you comment on what drove that improvement?

Horst Zerbe

Obviously, we are working with our partner Edgemont Pharmaceuticals and obviously from quarter to quarter we are monitoring the net to gross and there was a slight improvement but at the end of the day, it's an operation that Edgemont is pursuing so what's important for us to have great communication with them and try to find strategy that will basically improve the net sales figures and by investing in different areas from gross to net so that we reduce the difference between those two figures. And, at the end of the day since our net sales is the important number for us we try to monitor it very closely with them.

Greg Ison

Got it, turning to the new facility and congratulations on completing that, the capital spending for the facility will have the Q4 number in the 10-K filing when that comes out. But could you tell us, share with us the estimate how much additional capital spending was going to be spent on the facility in Q1 or is it actually completed post 2015?

Horst Zerbe

What I can tell you, as obviously this information is not yet public, I can tell you that we have given guidance on total cost of the manufacturing facility in the past and we are pretty much on budget. And there are no surprises, what's remaining is mostly equipment's like briefly touched because the manufacturing facility itself is finished. Now we are still expecting few equipment in Q1 and Q2 of 2016 and that should complete the entire project. But in terms of dollar it's where we were basically on expected budget that we basically discussed on previous quarters.

Greg Ison

Got it, got it. Regarding the balance sheet, do you have a figure for the debt balance that's outstanding at the end of the quarter?

Horst Zerbe

The debt balance, it is, the total debt would be, in U.S. because the debt is in Canadian dollars so it's probably going to be in the area of $3 million to $3.5 million and by that time everything is paid for. But we are not there yet, because like I previously said we are still expecting some equipment to come in 2016.

Greg Ison

Okay. And regarding 2016 I realize, it's hard to give guidance but are there any specific milestones that you expect to recognize in 2016 that you could guide to that you think are locked in right now other than revenue besides the Forfivo royalties?

Horst Zerbe

I wouldn't like to comment on that. We don't, we are trying to stay away from guidance and obviously there is some potential milestone on the Forfivo and net sales, royalty are growing and we are definitely expecting our all team to conclude deals that could bring some milestone but at this point we are not giving any guidance on that front.

Greg Ison

Got it, if I could move on to support again. You have approval in Europe through the German authority so, where you at right now sounds like you and your partner Redhill are looking for a marketing partner and you said that you have signed on a third party to assist you in that process, is that, that's where it's at right now?

Horst Zerbe

Greg, this is a very dynamic situation at the moment and we are not in a position to provide any further details at this moment.

Greg Ison

Okay.

Edward Miller

I mean the firm that you are relating to, I mean RIZAPORT, about RIZAPORT just answered and it's the right answer but the firm that you are relating to is the firm we have got engaged for the dollar sales.

Greg Ison

Oh, I am sorry. Okay, my bad. Regarding the United States, marketing RIZAPORT, you are doing the submission batches but I guess if I can beat an old horse, you have your supplier that the FDA has problems with. They are proved in Europe and not in United States for this product, is there anything new with that original supplier? Any chance that the original supplier can slip in quickly and suddenly you get approved and therefore accelerate the acceptance of this product in the United States?

Horst Zerbe

The acceptance of the product in the United States is solely based on the new supplier. We have practically speaking, completely written off the old supplier. The old supplier currently is still relevant for Europe because the European approval was based on the original supplier and the compliance issues that that supplier faced were only brought forward by FDA. The European regulatory authority and other regulatory authorities have no issues with that current supplier, so for Europe that old supplier is still relevant but for U.S. we have written them off completely and with the manufacturing of the submission batches that I mentioned before and that's currently ongoing involves only material from that new and if I may say so clean supplier.

Greg Ison

Okay, got it. And regarding the two drugs returned to you by PAR, you owe them no obligation for the reimbursement of expenses. Are there any other financial terms and terms of them paying you money to walk away from this? Are there any revenue upsides from that?

Horst Zerbe

No, the term sheet is simple and straight forward, IntelGenx has been returned al rights and ownership to the products and there is no obligation whatsoever to reimburse any of the development costs that PAR has incurred for those two products.

Greg Ison

Okay, great, good luck with bringing those two products forward. I will let someone else go. Thank you very much for answering my questions.

Horst Zerbe

Welcome Greg.

Andre Godin

Thank you, Greg.

Operator

Your next question comes from the line of Swayampakula Ramakanth with H.C. Wainwright. Your line is no open.

Swayampakula Ramakanth

Thank you. Good morning. First, on Andre, how are you doing?

Andre Godin

We're doing good.

Swayampakula Ramakanth

So with regards to Edgemont and Forfivo, I know you're not giving any guidance, just at a high level, I know that develops some kind of a timing, how long Edgemont would have to commercialize Forfivo and also from what happened last year, obviously it was a great year, a great run for the drug. What are the kind of expectation in terms of how much more of the market can you cap going into the next topic of commercialization period?

Andre Godin

RK, in all honesty we're not in control of that. So if anything we would comment in that respect would be speculative. What we've notice, qualitatively speaking that is that Edgemont has really stepped up and further focused its marketing efforts. If you look at the growth over the preceding two and a half years now, there is steady growth and both IntelGenx and Edgemont are very confident that this sales growth will continue to occur at, that is again very speculative, the same growth rates as before. But again that is, it's more a qualitative statement that we can make. We can really not comment further because all that is mostly in the control of our marketing partner.

Swayampakula Ramakanth

Okay. On the two drugs that came back from Par. I just want one clarification for us, and that is, I thought last quarter when we were talking about the Par relationship, one project came back to you, and now you're saying two. I don't know if I have this wrong in my memory or is that correct. That's my first question and the second question is, I know you don't want to talk too much about what these particular drugs are and whatnot. But in terms of market opportunity what are your estimate the market opportunity is for these molecules? And if you have to go and find a new partner, all of these are depending on the market opportunities, you could tell us a little bit about what kind of partners you are looking for and where are you in that process?

Horst Zerbe

With respect to -- what's the first question again?

Andre Godin

Is it correct that the last quarter there was a return of Par of one project?

Horst Zerbe

Yes, let me comment on the first question. The acquisition of Par by Endo created redundancy with respect to one project and so it was immediately clear that Par had to discontinue that product. We announced that immediately on this event occurring and that's the so called second Par project. Now, with the third Par project, the situation is slightly more complex, and let me try to explain. The acquisition did not create a direct redundancy in Endo's portfolio. However it created an IP conflict in that Par which was planning to conduct P4 litigation against the brand product of this third program would have had to sue its own parent company. That obviously was a no, no and so the choice for Par was to not pursue for litigation but rather to contemplate paragraph three litigation.

The difference between those is the following. Under paragraph four, you will immediately either invalidate the existing Orange Book patent or sue for patent infringement. In the case of paragraph three, you will concede to the brand company that you will wait until expiry of the respective Orange Book patent. In our case, that would have meant that we would have had to wait until the year 2027, I believe, until the application would have been submitted. That was not acceptable, Par of course acknowledged that right away, and so the two parties agreed that Par would return this third product also to interject at the same terms and conditions as I described before. So in summary, we now have both products back will full rights and no financial obligation towards Par. And the return of this third product now allows our partner as soon as we have signed up a partner for this product to proceed with paragraph four litigation as soon as that's going to be instituted.

Swayampakula Ramakanth

Okay. And then do you want to comment on anything about what kind of products these are, or if you don't just disclose anything.

Horst Zerbe

RK, we can't. We were previously under a significant confidentiality obligation with Par. Now, technically, and after having executed a termination agreement we are not anymore. We would be free to discuss it. However these projects are generic opportunities. We are in without wanting to discuss that any further. We're in extremely advanced discussions with companies that are interested in these opportunities and the disclosure of the molecules would present a significant disadvantage to any partner and would I believe practically speaking kill any deal, so we still cannot disclose the molecules.

Swayampakula Ramakanth

Okay. And then on Tadalafil, where do you -- where are you in terms of identifying a partner? I think you have been talking about this for a while now, so I'm just trying to understand at what stage of deal development this is in?

Horst Zerbe

Yes, the immediate answer to your question is a very quick one. We have developed a partnership strategy and that we have put together a document that explains the development status and the advantages that our film product has compared to other products that might be out there in the market and we have engaged, I think it's fair to say, the leading marketing firm in and partnering firm in the U.S. to help us find a partner for this program. Now, we believe that we have a significant advantage with our film product over potential generic competitors. The reason for that is primarily the IP situation, we believe that we are better prepared with-- to be expected infringement allegations that will be issued as soon as we have submitted the product for review with the FDA. And we have done quite a bit to be prepared for these allegations. There are a number of orange book patents that protect the brand product on two of those we have clear non-infringement positions that are supported by non-infringement opinions by leading litigation firms.

There is another patent listed in the orange book that is more a used patent that discloses the use of a molecule or the treatment of erectile dysfunction. We have again in co-operation with and through a leading litigation firm in the U.S. put together a so called IPR, an Inter Partes review attempting to invalidate this patent and if we put our non-infringement position on those formulation patent listed in the orange book, if we put that together with the IPR that we have filed to fight this third patent which is relevant, we have overall favorable IP position compared to our -- to any generic competitors because they have much more severely to deal with those formulation patents that are listed in the orange book. I hope this gives you some insight into our marketing and promotional strategy for the product.

Swayampakula Ramakanth

Yes, thank you. One last question, this is like little bit of a higher strategy question. So now you are getting ready to have your own plant, obviously brought in more management strength into the firm, lots of projects, some of them return back to you or some of these that you have developed internally, so, what's the strategy for yourself or for the firm for the next two-three years because obviously your are being pulled in multiple directions, how to manage your resources such that you move IntelGenx forward?

Horst Zerbe

We are planning to, actually very actively involved in partnering a number of our pipeline projects. I cannot provide any specifics as to where we stand there, but part of our strategy clearly is we partner certain of our pipeline projects, those are clearly identified, other opportunities we plan to progress at our own risk for another while mostly to add value to these opportunities so as to eventually receive added terms in any subsequent partnering deals.

Swayampakula Ramakanth

Okay, thank you very much. Thanks for your time.

Horst Zerbe

You're welcome, thank you.

Operator

[Operator Instructions] Your next question comes from the line of Patrick Tully of Endeavor Asset Management. Your line is now open.

PatrickTully

Good morning gentlemen, couple of quick questions, give them one at a time. You talk, obviously Forfivo sales accelerated during the quarter. I know you had a price increase at some point last year, I believe, can you just talk how much is the sales increase roughly came from the price increase and how much came from increased prescription?

Horst Zerbe

I mean, we don't have those details from last month obviously, we get quarterly reports and we know it's a combination of all factors, increase in script and slight increase in pricing but to be honest, we don't have that detail, what those increase comes from script increase and what increase comes from price increase.

PatrickTully

Okay. Can you tell us how much the price increase was?

Horst Zerbe

No, we don't know.

PatrickTully

Okay. Secondly, I believe you may have said this hoarse but it was difficult to make out, did you say you were going to refile the second product drug that was turned back, that was expected to be turned back, since the acquisition of PAR by Endo, did you say you were file that product later this year with the FDA?

Horst Zerbe

That's the expectation.

PatrickTully

Did you put a date on that or quarter?

Horst Zerbe

No, we can't. It would be towards the end of the Q4.

PatrickTully

Okay. And finally can you give us a rough idea on the lifecycle management portion of the business? Can you give us any kind of range or rough idea, you know, how much of the margin your firm would garner in a relationship like that?

Horst Zerbe

Pat, that obviously varies from product to product. Typically our licensing deals are structured, for non-generic products, I should say and our lifecycle management would be a non-generic product. Typically those deals would be structured in such a way that there is a upfront payment of some sort that there are performance milestones and then there is a royalty on net sales. These deals, the royalties are typically between 10% and 20% often times for example in the Forfivo deal it's a sliding royalty depending on performance. And at the same time the performance milestones are also sliding with increase in sales we would receive increase in milestones. A rule of thumb is that these milestone payments typically 10% of the triggering of the target sales as a rule of thumb.

PatrickTully

Okay.

Horst Zerbe

Does that somehow answer your question?

PatrickTully

Yes, thank you.

Operator

There are no further questions at this time. I will now turn the call back over to the presenters.

Horst Zerbe

Well, all that remains to say is to thank the audience very much and our shareholders very much for their continued support and as Eddie mentioned before you're all invited and cordially welcome to our AGM and grand opening on May 10 here at our premises. Thank you very much.

Operator

This concludes today's conference call. You may now disconnect.

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