Neovasc's (NVCN) CEO Alexei Marko on Q4 2015 Results - Earnings Call Transcript

| About: Neovasc Inc. (NVCN)

Neovasc, Inc. (NASDAQ:NVCN)

Q4 2015 Earnings Conference Call

March 29, 2016 04:30 PM ET

Executives

Alexei Marko - President and Chief Executive Officer

Chris Clark - Chief Financial Officer

Analysts

Jason Mills - Canaccord Genuity

Jeffrey Cohen - Ladenburg Thalmann

John Gillings - JMP Securities

Puneet Souda - Leerink Partners

Operator

Good afternoon, ladies and gentlemen. Welcome to the Neovasc Fourth Quarter and Fiscal 2015 Results Conference Call. At this time all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]

I would like to remind everyone that today's discussions may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risk and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements.

For more information on Neovasc’s risks and uncertainties related to these forward-looking statements, please refer to the Company's Canadian and U.S. filings which are available on SEDAR and EDGAR.

Now I’d like to turn the call over to Alexei Marko, President and Chief Executive Officer of Neovasc. Please go ahead.

Alexei Marko

Thank you, Leone, and welcome everyone. With me this afternoon is Chris Clark, our CFO and we’ll begin our call with Chris providing a quick summary of the financials and operations. I will then review our Tiara and Reducer programs and then we’ll open it up for questions. Chris?

Chris Clark

Thank you, Alexei and good afternoon everybody. As most of you would have seen from our press release, we’ve elected to present our financial results in U.S. dollars from this point forward. We believe that this change will be beneficial to the readers of the financial statements and will allow better comparison with our peers in the Life Science sector.

Current and prior financial data contained in our press release, MD&A, AIF and in our financial statements have been recast to reflect the Company's results in U.S. dollars.

As we have previously discussed and consistent with the company’s strategy to focus our business towards development and commercialization of our proprietary products revenue declined year-over-year by 31% to $9.9 million. While we anticipate revenue from contract manufacturing will grow as existing customers increase their demand, we also expect that revenue from consulting services would decrease as customers’ development projects near the end of their lifecycle.

We expect that this will reduce the overall number of customers and leave us with a very solid base of larger, more stable companies. Overall gross margins for the year were 30%, also in line with our expectations. The reduced margin in comparison to last year is mainly due to a materials heavy market bringing a reduction in customers and lower throughput and due to a higher cost of goods sold, due to the implementation of a rigorous commercial stage quality systems acquired to meet the expectations of our more advanced customers.

Moving to Reducer, Alexei will provide an operational update on our European launch following my remarks. But as noted in our press release, we’re pleased to report revenues of over $0.5 million following our first quarter launch of the product in select European countries. We have seen sales growth in each quarter since launch and expect this trend to continue in 2016 and beyond.

Turning to expenses. Total expenses for the year were $38.1 million compared to $22.5 million for 2014. The increase in expenses is mainly attributed to increased selling expenses associated with European launch of Reducer, increased product development and clinical trial expenses to advance both the Tiara and Reducer and increased litigation expenses associated with our ongoing lawsuit with CardiAQ.

Operating and comprehensive losses for the year ended December 31, 2015 were $26.7 million and $35.1 million respectively or $0.41 basic and diluted loss per share as compared with a $0.33 loss per share in 2014.

Litigation expenses for the year represent a loss of $0.11 per share compared to a loss of $0.02 per share in 2014. Total litigation costs since the initial claims were filed in June 2014 are approximately $7.9 million and the Company may require an additional $7.5 million to cover litigation expenses up to and including the trial, scheduled for May 2016.

As stated previously, we’re confident in the strength and integrity of our intellectual property. And we’ll continue to vigorously defend our position in this matter.

Looking at our cash and cash usage. We started the year with $14.5 million in cash and investments and raised an additional $71 million through the exercise of options and the significant financing in the early part of the year.

During 2015, our net cash outflows were $23.6 million, and after exchange differences, we ended the year with $55 million in cash and cash equivalents.

Looking more closely at our cash outflows. Our net balance sheet outflow including the repayment of all long-term debt, capital expenditures new clean rooms and working capital adjustments was $1.5 million. And our operating expenditures were $22.1 million. Of those operating expenditures, 66% or $14.6 million were spent on development activities for Tiara and Reducer and 32% or $7.1 million was spent on litigation.

Aside from the litigation expenses, we remain satisfied that we are correctly allocating our cash resources towards the development of our key product lines and our expenditures on other activities are significantly offset by the ongoing contribution from our tissue business and Reducer revenue as well as other income.

We anticipate that our quarterly cash expenditure on operational activities will increase as we move further into our clinical studies for both products. And our forecast suggests we have cash on hand for the next 18 to 24 months. And our primary focus for those expenditures is to receive more for the Tiara, initiate our U.S. IDE trial for Reducer and continue to plan commercialization of Reducer in select global markets.

In closing, we have continued to grow our team and add key expertise in clinical and regulatory affairs and added support for our ongoing Tiara development and Reducer commercialization activities. We expect these additions will continue to pay dividends for our own products as well as those of our customers.

Now, I’ll hand the proceedings back to Alexei.

Alexei Marko

Thanks Chris. I’m going to start my comments by quickly updating you on the Reducer program. The launch in Europe continues to go according to plans. We are now selling product in multiple countries, the U.K., Italy, Switzerland, the Netherlands, the Nordics, Saudi Arabia and we recently began a partnership with the distributor in Germany, the largest European market.

We’ve been supporting the distributors in their launch efforts sending Neovasc physicians and clinical specialists the whole training seminars and proctoring initial cases being performed by new centers. Our distributors are pleased with physician feedback and reorder rates as momentum continues to build around the product and we see strong results in terms of patient outcomes.

Procedures are reported to be straight-forward and implants are typically completed in less than 20 minutes. We plan to gradually expand the launch through a network of distributors who will be closely supported by our own product specialists, doctors and as possible key opinion leaders.

We are working hard to continue to build awareness at the grasp reach [ph] level creating a critical mass of patient data which we will ultimately leverage into a broader launch of the product.

Before moving on to Tiara, we can say with confidence that we do envision a day when Reducer will be contributing in a significant way to our financial performance. We believe that this optimism is well warranted.

Results to date from both clinical studies and real-world use are showing that Reducer can have a huge impact for people suffering from refractory angina, a condition for which currently available drug and therapies are now working. These patients suffer from severe and continual chest pain which often dramatically limits their activities and results in a poor quality of life. We see Reducer is having a real impact on many patients being treated as part of this pilot launch, significantly reducing their angina pain and improving their quality of life.

Our experience in these real-world patients is consistent with the compelling results from COSIRA, our 102-patient randomized study which was published in the New England Journal of Medicine last spring.

With respect to our U.S. regulatory plans for Reducer, we are in the final stages of planning COSIRA II which will be our pivotal U.S. IDE trial. We have had our initial meetings with the FDA and our final IDE application will be submitted very shortly for their review. We are targeting late 2016 to initiate enrollments in COSIRA II and more details on this study may be available by the time of our next call.

Moving on to Tiara, as most of you know, Tiara has been designed to provide a simple, safe and effective treatment for patients who have severe mitral regurgitation and who are at higher risk for surgery. The Tiara valves implanted by a short transapical procedure to completely replace the disease needed valve.

To date we have treated 12 patients with the Tiara device and currently have multiple additional patients scheduled or being scheduled for implantation in our early visibility studies over the coming weeks at centers in the U.S., Canada and Europe. Full details of these additional patients and all clinical results to date will be presented at upcoming medical conferences such as Euro PCR in May.

We continue to be encouraged by the early results from Tiara implantations including our most recent implantation which was conducted in Europe last week. The development of transcatheter mitral valve treatments is still at infancy and we believe that the Tiara device continues to be at the forefront of this exciting field and has the potential to become a standard tool for treating this large population of high-risk surgical patients suffering from severe MR.

We are continuing to move our clinical program forward in a careful and methodical manner during its early feasibility stage. And we are proud to say that we now help patients out over two years with well-functioning Tiara valves and who continue to show significantly improved quality of life.

We continue to be confident in the long-term durability of our valves. We have seen no fractures in any patients and have encountered no other related issues in this regard.

During the first quarter of 2016, we received FDA approval to begin using the 40-millimeter Tiara size in our Tiara 1 study and we now have full approvals to begin screening 40-millimeter patients at four U.S. sites. We are hopeful that we will have required approvals shortly to begin using the 40-millimeter device to Tiara 1 patients in both Canada and Belgium.

We are continuing the development of our 45-millimeter device and implementing additional refinements based on results and feedback from our early clinical experience. We’re also in the process to designing our CE mark study and completing all required testing to facilitate CE mark study approval of the 35 and 40 millimeter sizes, with a goal of initiating enrollment later this year and we’ll provide further information on this over the coming quarters as our plans become more concrete.

In conclusion, we are continuing to drive the Tiara program forward and believe that Tiara continues to show excellent potential as a leading device for the transcatheter replacement of the mitral valve.

In closing, thank you again for attending our conference call. We have a very busy quarter ahead of us with regulatory and clinical leg work for both Tiara and Reducer. And we’ll be working closely with hospitals and physicians involved in Tiara early feasibility implantations.

As indicated previously, we will be presenting a full update of the clinical status of all Tiara patients as well as providing additional data on Reducer at upcoming medical conferences.

With that said, I’d like to turn the call back over to our moderator and open the floor to any questions that you have.

Question-and-Answer Session

Operator

[Operator Instructions]. Your first question comes from Jason Mills from Canaccord Genuity. Jason, please go ahead.

Jason Mills

Thank you, good morning Alexei and Chris. Can you hear me?

Chris Clark

Hi Jason.

Alexei Marko

Yes, we can hear you fine. Thanks Jason.

Jason Mills

All right, great, thanks. So, Alexei, perhaps you could give us your assessment of or expectations for Tiara implants this year. I’m sort of, understanding that the CE mark study may start late enough the year where you may not implant as many patients or any patients. Could you give us an assessment of what the 40-millimeter valves now available and foresights, when it will be available across all sites? And also maybe update us in terms of number of sites that you’re in and where you expect to end the year, sort of an update on Tiara expectation, sites and patients?

Alexei Marko

Sure, okay. Well, I’ll start with the 40-millimeter valve. So we are currently approved in four U.S. sites with both the FDA approval and the required ethics for the approval. So we have the ability to implant Tiara in four U.S. sites in both the 35 and the 40-millimeter size.

In Canada, we have three sites that are current approved for the 35-millimeter and we are waiting on approval from Health Canada for the 40-millimeter. We expect that really anytime, it’s taken longer than we anticipated to, get that through Health Canada but we expect to get that approval relatively shortly.

In Europe we’re still waiting on approval for the 40-millimeter device in one of our Tiara 1 sites, and where we already have 35-millimeter approval. And in addition we’re looking at a number of additional sites in Europe both for compassionate type approvals, potentially including in Tiara 1 and then of course we’re looking forward to the CE mark study. So, we’re looking to include those.

So, what we’re looking at now is somewhere in the range of 10 to 12 sites that are on plan, either in Tiara 1 or early feasibility studies. As we move forward through the year, I would expect to add perhaps another half a dozen sites to that as we move into the CE mark study. But again, our plans are really sort of still being flushed out for that.

In terms of patient numbers, and what we expect, I think Jason as you’ll know, it’s pretty hard to predict what’s coming in. We certainly do see a lot of patients on the horizon and are expecting to see our enrollment really start to kick up as we’re currently scheduling a number of patients and have patients that are already scheduled to be treated in future.

So, we expect to have a good bonus anticipation to present it at PCR and TVT, and sort of continue that through the quarters after that. And then of course once we get the CE mark study going, we’ll be adding additional sites. So it’s rather hard to forecast the exact numbers, but we certainly do see momentum swinging and a significant number of patients in the future.

Jason Mills

Well, that’s helpful Alexei. Talk a little bit if you can just as a follow-up to that about the screening processes at your existing sites. With the 40-millimeter valve now, I assume that there are certainly more patients that when screened are going to fit the criteria. And so, if you could give us an update on screening and what you’re seeing in terms of throughput in those screenings with the 40-millimeter now available in at least some of your sites, that would be helpful? And then I just had one more follow-up question after that.

Alexei Marko

Sure. So, obviously we think the 40-millimeter device is going to be a fairly heavily used size. So we’re certainly seeing a lot of patients come in that are eligible for the 40, and expect to be implanting a number of 40s over the coming weeks and months.

In terms of sites where we don’t have the 40 approved yet, because we do have it in the pipeline and we do expect approval imminently in these sites, it does make the screening process significantly perhaps easy is not quite the right word, but it allows us to screen patients for the 35, and where our patient is too large for the 35, we’re able to simply sort of put them aside and know that we can wrap background and hopefully get them with the 40 once we have the local approvals.

So, it is making a significant difference to our screening. And we do expect a fair number of 40s coming in over the coming months.

Jason Mills

Great. And then last question, just about the lawsuit, the case coming up to trial here in May. Walk us through some of that possible scenario now versus that you’ve gone through. I know you feel very confident about your position but could you walk us through some of the scenarios or possible scenarios that you’ve gone through in your analysis and just sort of give us a way of land on various scenarios once we get to that point in time?

Alexei Marko

Yes, I obviously, Jason I’d love to but unfortunately I can’t comment really beyond what we’ve always said publicly which is that we believe these claims are baseless. And I think as Chris said, we will vigorously defend our IP. So, our position is that these lawsuits really have no merit whatsoever. So that’s really the scenario that we stick behind. So I really can’t say anything beyond that or walk you through any alternative scenarios.

We do have a court date for the U.S. case that currently to start May 2. Court dates are always somewhat flexible, I guess they can be shifted based on court schedules. But we believe that date is relatively firm with the court. So we would expect to have resolution on that matter sometime in the second half of May we would hope assuming that that schedule remains the same.

Jason Mills

It makes sense. Thanks Alexei, I’ll get back in queue.

Alexei Marko

Thanks Jason.

Operator

Thank you. Your next question comes from Jeffrey Cohen from Ladenburg Thalmann. Jeffrey, please go ahead.

Jeffrey Cohen

Hi Alexei and Chris. How are you?

Alexei Marko

Good. Thank you Jeff, how are you?

Jeffrey Cohen

I’m doing fine. Could you talk a little bit about Reducer performance in Europe as far as number of distributors and number of stocks using at facilities as far as implants go? And could you talk about the manufacturing side of that as well?

Alexei Marko

Certainly, I’ll talk to sort of general overview. We have distributors in place in a number of European countries, U.K., the Netherlands, Switzerland, we just signed a distributor in Germany, we have a distributor now in Saudi Arabia, I know that’s not Europe but that’s sort of one of the outliers for us.

And we’re seeing it start to rollout quite nicely. If the performance is somewhat variable by country, certainly the country that we’ve seen the most traction and that’s far as Italy where we have several dozen centers now using the device. I was at a center recently I think that did four or five cases in a single week, so they’re seeing some very nice results and starting to use it as a regular tool in their toolkit for treating these refractory angina or frequent angina patients.

So, we’re seeing some very nice traction. But it is still obviously early days yet. And we do expect - we expect that momentum and traction to continue to build but it’s a case of continuing to support those centers and support the distributors. And we expect the number of folks will be presenting some of their data at forums such as PCR and more regional conferences. So, early days, but it’s significant amount of momentum to build - building behind the product.

From a manufacturing perspective, we’re currently having the device manufactured by a third party OEM manufacturer. And that we don’t have any plans to change that for the time being, we have a regional manufacturing cost, fairly healthy margin in the product. And we’ll continue with that for the foreseeable future.

Jeffrey Cohen

Okay. And could you talk about the backstage story probably on the 40-millimeter size. Could you talk about the percent of patients at the centers, the four centers with both 35 and 40 where you’re seeing general enrollment?

Alexei Marko

It’s interesting. I would, it is very variable by center. I think if we look at the overall patient population and the screening that we’ve done, we expect the 40 to sort of get roughly 50% of the population whereas the 35 will get roughly 20% of the population. But we see very regional differences. For example, one of the centers here in Canada really seems to have tremendous number of 35s and very few 40s and other centers really seem to have nothing but 40s and 45s and few patients in that size range.

So, we certainly think the 40 is going to wind up being the workhorse size based on our sort of global assessment. But it is - it does vary quite highly. And again, these assessments are made on relatively small samples of patients.

Jeffrey Cohen

Okay, got it. And one more if I may, could you talk about any other geographies outside of Saudi Arabia, outside of Europe and the U.S.?

Alexei Marko

We have nothing active yet but we are exploring a number of alternatives, a number of other non-European countries to move into. And we’ll be hopefully announcing on that over the coming quarters.

Jeffrey Cohen

Perfect. That’s it from me. Thanks very much.

Alexei Marko

Thanks Jeff.

Operator

Thank you. [Operator Instructions]. Your next question comes from John Gillings from JMP Securities. John, please go ahead.

John Gillings

Hi guys, can you hear okay?

Alexei Marko

Yes John.

John Gillings

Okay, great. So, first I want to just ask kind of a follow-up on Tiara. So, it looks like you had one implant since last quarter but can you maybe give us some more color on how the patient pipeline is shaping up now that you’ve got the 40-millimeter valve approved in the four hospitals in the U.S.?

Alexei Marko

Yes, we see the pipeline shaping up very nicely. And I think we’re going to have a number of implants over the coming, quite a number of implants over the coming months. So, we have a number of patients that are currently scheduled to be implanted over the next few weeks. And a number of other patients that are in the process of being finalized and scheduled.

So, I think it’s been, certainly has been quiet for a few months while we’ve gotten everything sort of lined up and gotten things moving. But I think we’re going to be quite active in terms of implants over the coming months certainly.

John Gillings

Okay, that’s helpful. And then, in terms of the screening process, last quarter you mentioned the one patient with the septal defect and that that was something you’d be able to screen for. Have you been screening people out for that or is that type of anatomy rare enough that you have it screened again?

Alexei Marko

We’re certainly, if it’s relatively rare but it’s certainly something that we’re being very cautious of now in screening patients out for. I don’t think it’s significantly cutting into the number of patients that we’re looking at or into the number of patients that we can enroll. But it is certainly something that we have screened patients [indiscernible].

John Gillings

Okay, that’s helpful. And then just one quick one on Reducer, so, now that you’ve got the distributor in Germany, does that change your plans for direct rep hiring? I know you’d been talking about hiring maybe as many as six direct reps for Germany over the next 12 months. Is that still the plan or things changed?

Alexei Marko

John, yes, things have changed. We will still be making a number of hires in Germany but that will be more to support the distributor. I think as we looked carefully at the German marketplace and saw how we could best penetrate that market we realized that going through distributor was going to be the best route.

That said, we think supporting the distributors, very closely as we have in other markets is going to be quite important. So we will be adding people largely as product specialists and as proctors to work directly with the distributor there and support the rollout.

John Gillings

Okay, that’s great. That’s all I’ve got today. Thanks guys.

Alexei Marko

Thanks John.

Operator

Thank you. Your next question comes from Danielle Antalffy from Leerink Partners. Danielle, please go ahead.

Puneet Souda

Hi guys, this is Puneet in for Danielle. Alexei so, just briefly on the as we go towards the CE mark trial, any thoughts on the design of the trial conversation with the regulators? And sort of how that’s evolving?

Alexei Marko

Yes, we do have thoughts but they’re very preliminary at this stage. And it would be not something that I’m willing to put out there formally yet. So we are having discussions, we are looking very closely at the testing requirements and making sure that we need those, those are fairly obvious because they largely come out of the ISO standards and guidance.

We have initial clinical trial designs in the works and we’ll be having discussions with the right leaders over the next little while. So, it’s something we’re very actively working on but nothing is efficiently concrete that we’re in a position to sort of give any guidance on it.

Puneet Souda

Sure, got it. And in terms of the FDA, I mean, given their experience with the TAVI, is their thinking looking similar to what you had expected or is it more evolved now given that experience as you try to - as you’re approaching them for the U.S. pivotal?

Alexei Marko

Sorry, yes, I was just going to clarify that you’re talking about the U.S. pivotal. I think that’s still evolving. Obviously there is a lot more experience now given all the history and understanding how we’re coming out of the growth of the TAVI market and TAVI approval. So I think it’s still very much evolving with the FDA. And we’ll be somewhat fluid over the coming years. So I think as we start working more closely with them and expect others are as well.

Puneet Souda

Okay, got it. That’s it from me. Thank you guys.

Alexei Marko

Thanks Puneet.

Operator

Thank you. We have a follow-up question from Jason Mills. Jason, please go ahead.

Jason Mills

Thanks Alexei for taking the follow-up. I was, just wanting to get your perspective more from a 20,000-foot view, about the progression of thought and discussions going on in the mitral space over the last handful of months. I’m sure you attended or quite involved in several of the trade shows in Europe this quarter and also last quarter.

And obviously, mitral replacement and mitral repair have got lot of attention. It seems like even more attention to the latter over the course of maybe the last six months. So, could you give us a sense just what you’re hearing, what you’re thinking about in terms of the evolution of transcatheter mitral interventions both replacement and repair? You hear a lot from clinicians that this is going to take a while. I think you guys have said that as well, maybe even longer for replacement than repair is what we’re hearing in terms of the evolutionary pathway.

Perhaps just give us a brief dissertation of what you’re thinking now and how your thought processes have changed over maybe the last year?

Alexei Marko

I’ll do my best Jason. I think that’s a topic that we could probably spend many hours on and probably only scratch the surface. I don’t think my overall thinking has changed. I think that mitral valve disease as we’ve always known is a very complex disease. And these patients can arrive let’s say the disease that we’re trying to treat is MR, they can arrive at moderate to severe MR via a wide range of different routes, everything from ventricular disease to disease at the valve itself to torn chordae to etcetera, etcetera.

And as we spend more and more time looking as we advance in our own clinical program looking at many, many different patients, CT scans and hearts and echoes, you really do get an understanding, our growing understanding of how variable the anatomy in these patients can be.

And so, what that, if anything that’s done is reinforced I think positions, and I have always had that would agree very much I think with the surgeons who have been treating this disease for many, many years that it will require a toolbox to do so, it’s not going to be a sort of a one-side that’s all or the same as what you see with heavy where you can standardize on one valve that you’re comfortable with and assume that’s going to treat the vast majority of patients.

I think mitral valve disease is going to necessitate or best be treated with a variety of different things. And I think there is going to be a good spot for repair. And I think there is going to be any number of different techniques that can be used for repair successfully. And I think there is going to be obviously a spot for transcatheter valve replacement. And there will be certain valves that are probably better for certain cases than others.

I think the one, again, what I think of it, I’ve always said is, the one concern that I would have about any mitral valve repair technique is as replacement becomes available and more commonly used there any repair that’s done as call it a first-line defense should not preclude the later replacement with another valve, with a full-valve replacement. So I think that’s going to be sort of one of the demands that is put on the new repair devices.

But I don’t think my thinking has really changed much. And I don’t think most people who have sort of been looking at this for a number of years would probably say that they’re in a similar situation. This is what we’ve always expected. Although I think it’s probably taking us a little longer than we thought. And then I think one other comment that you hear very frequently from panels and on the podium is that, a lot of this does come down to patient selection. Patient selection is very important.

So, determining, patients with very good anatomy and who you can get an anatomical success with whatever your repair, your replacement is, but it’s also sort of determining which patients will do well clinically following the treatment.

So, yes, it’s a complex disease, it’s going to require a variety of solutions and I think it’s going to, still going to take a fair bit of work. It’s not an easy problem to solve.

Jason Mills

That makes sense. I appreciate your perspective. Last question from me on the same lines, you hear also a lot about delivery and the transapical versus transseptal or other less invasive techniques. I know that transapical though, the life case at TCT seemed quite straight-forward, obviously for a very experienced surgeon at Neovasc, but still very straight-forward. Has your thinking changed at all on transapical versus transseptal or perhaps just give us your current perspective on that debate?

Alexei Marko

I’ve always been a big believer in transapical, I think it’s such a direct approach that it really is very well suited for the mitral valve, recognizing that it is certainly more invasive than transseptal or transformer approaches. So I quite like transapical and I think it certainly has a place.

I think right now the focus really is on getting the right devices in. And once we get the right devices in and refine to the point that we can consistently, repeatedly put them in and replace the valve without any complications and any issues, then I think probably there will be, the next stage will be, well, can we get them smaller and how can we refine the delivery system.

But I think right now the focus really is on getting the right devices and getting those refined. And again, when you see how quick and easy the access can be transapically, there is a lot to be said to that approach. That said obviously there is merit their approaches as well, not running them down. But I think transapical certainly deserves a seat at the table.

Jason Mills

Super. Thanks Alexei.

Alexei Marko

Thank you.

Operator

Thank you. There are no further questions at this time. Please proceed.

Alexei Marko

Thank you everybody. I appreciate your time and attention. And have a great afternoon.

Operator

Ladies and gentlemen, this concludes your conference call today. We thank you for your participating. And ask that you please disconnect your lines.

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