Millennium Pharmaceuticals, Inc. Q4 2007 Earnings Call Transcript

Millennium Pharmaceuticals Inc. (MLNM) Merrill Lynch Global Pharmaceutical, Biotech and Medtech February 7, 2008 8:00 AM ET


Unidentified Company Representative

Deborah Dunsire - President and CEO

Marsha Fanucci - Sr. VP and CFO

Nancy Simonian - Chief Medical Officer


Unidentified Company Representative

Global Pharmaceutical Biotech Medtech conference. Tom, a biotech analyst. And before you leave, I think you can fill out the serve that’s in front of you, just there. The first company today is Millennium Pharmaceuticals based in Boston. And we are delighted to have the CEO, Deborah Dunsire; CFO, Marsha Fanucci here. They announced earnings this morning for the first quarter so they walk through that and then some very exciting development. Deborah?

Deborah Dunsire - President and Chief Executive Officer

Thanks, Tom and good morning. It’s early, this New York morning and the first thing to say is that we will be making forward-looking statements during the presentation and actual results can differ from that and for a variety of different reasons that you are all familiar with. You will also hear us refer to non-GAAP, net operating income through the presentation. This is a better… we believe a better reflection of the operations of the business and you can look for reconciliations of GAAP on our investor website.

Today, we are going to have a quick overview of where Millennium is at and look at our 2007 financial results and then take your questions. Millennium is in its 15th year as a biotechnology company, so founded 15 years ago. It’s a VC startup based on genomics technology platform at the time the Human Genome was really being uncovered. It was first based in R&D partnerships discovering targets and partnering with big Pharma for past demand and took on significant investment. Today, 15 years later, we are the top 10 biotech company by market cap, fully integrated from discovery through commercialization with a market leading product in VELCADE as the market leader in relapsed myeloma, with a number of global partnerships and for the first time reporting GAAP profitable growth.

On our 2007 goals, Millennium has over delivered on each goal. Worldwide VELCADE sales, together with our partner Johnson & Johnson surpassed $765 million. VELCADE growth has been outstanding across the countries of the world. It’s launched in over 85 countries now. VELCADE was also granted priority review by the FDA for the new indication of frontline multiple myeloma. As you know, our VISTA trial was stopped early and we submitted the supplemental NDA in December, and our partners Johnson & Johnson concurrently submitted to the EMEA.

So, let’s think about the strategic growth drivers for Millennium going forward. First and foremost, we continued to maximize the VELCADE opportunity and see very strong prospects for VELCADE’s growth in 2008 and beyond. We have an innovative pipeline, behind that which we are bringing forward and accelerating towards the market. And as we become a profitable biotechnology company, we aim to deliver sustainable earnings growth over time.

Let’s look at our VELCADE opportunities ahead of us. In 2007, we saw strong growth of VELCADE and in the relapsed to re-factory setting with a 20% growth over 2006. We strengthened our market leadership position in a relapsed myeloma setting and that was really driven by the increasing use of VELCADE in combination therapy and in re-treatment. When VELCADE has been used successfully for a myeloma patient even in the relapsed settings when their disease has relapses again, VELCADE can be used to retreat very successfully.

We also increased the length of therapy with most patients who respond getting on average just about six cycles and that’s something that you’ve probably been aware that we’ve been focused on over the last 18 months or so. So, we’ve been quite successful in educating physicians about the appropriate length of therapy for patients in the relapse setting.

We also gained approval for VELCADE in a new indication, mantle cell lymphoma, the first of our lymphoma indications. And that approval was achieved in December of 2006. So, the launch of mantle cell throughout 2007 also contributed to the strong growth of VELCADE.

The next key inflection point for VELCADE growth is ahead of us as we approach the frontline at myeloma population. About 50% of all myeloma patients are those newly diagnosed patients and we look forward to being able to bring the power of VELCADE to really changing their disease prospects.

We believe that VELCADE will be part of a standard of care regiment that will treat the broad population of frontline myeloma patients both in the non-transplant and the transplant eligible settings. And it will be the foundation of the standard of care regiment that will deliver the highest option or the highest possibility for cure for these frontline myeloma patients.

When we think about a newly diagnosed cancer that is the only opportunity we have with any cancer patient at all, to strive for a potential cure. So, our goal in that setting is really to eliminate the disease. And that’s why with that focus on overall survival and potential for cure, we really focus on eliminating the disease in that setting. And that’s why a complete remission rate is very important as a predictor of the overall outcome for the patient.

It’s a very strong surrogate for overall survival and was recommended by a panel of experts as a regulatory endpoint because of its ability to predict overall survival. The evidence was based on eight large randomized prospective trials and six retrospective analyses. And a group of experts got together to consider this data and evaluate which endpoints were predictive for overall survival and recommended the complete remission rate being utilized as a surrogate, obviously overall survival being the ultimate goal of therapy. This is published in the journal, Leukemia, in 2007 I believe.

Now, when we look at our program for our frontline myeloma patients, first of all, we think about how patients are treated and they’re either eligible for a bone-marrow transplant which has been the treatment that has the highest stability to put patients into complete remission and offer long-term survival. But unfortunately the majority of patients are indeed elderly and not eligible for bone-marrow transplant.

So, our VISTA trial address that particular population, an older and generally sicker myeloma population. And we looked at VELCADE in combination with an older regiment that’s being used actually for approximately 60-years Melphalan and Prednisone. And what you see is when VELCADE is added to Melphalan and Prednisone; you see an extraordinary increase in the complete remission rates. And these rapid responses are very durable. Patients in complete remission had a duration of a remission about two years.

We saw a greater than 50% reduction in the risk of progressions in these elderly patients of the median age of 71 years. And the therapy in this population was very well tolerated. And indeed we saw born out in our own trial the prediction that CR would result in advancement in overall survival. And you see in 16 months even before the median overall survival is actually reached, a significant difference in survival for the patient who has received VELCADE with Melphalan and Prednisone. Overall, survival at two years is 83% for patients who received VELCADE with Melphalan and Prednisone.

At the American Society of Hematology in December, two other Phase III trials were presented. These were from cooperative groups in Europe and they looked at the other population of myeloma patients, those who are eligible for bone-marrow transplants. And in this setting, the induction therapy to reduce the bulk of the disease is used before the bone-marrow transplant. And you see when VELCADE is added to the induction regiment, one sees a very significant increase in both the complete and very good partial remission rates both before, but then represented in this slide, continued after the bone-marrow transplant.

This is the first time that it’s been seen that an induction regiment can actually increase the complete remission rates after bone-marrow transplantation. So, again, we see a very significant benefit for VELCADE in these transplant eligible frontline patients.

So, we expected in 2008, the approval in the frontline setting will skew the growth of VELCADE and have given guidance that VELCADE growth will be between 20% and 30% in 2008. The producer date for approval is June 20, this year.

The next inflection point for VELCADE subsequent to the frontline myeloma indication is our progression into the lymphoma space as I said we had the first approval in mantle cell lymphoma in the beginning of 2007 and we have a trial, Phase III trial running in relapsed and non-Hodgkin's zone with a follicular and marginal zone type of lymphoma, which is a very big patient population. In fact when we consider myeloma there’s about 55,000 patients in the U.S. in the relapsed and lymphoma setting. We see about at least 65,000 patients. So, this is an even bigger opportunity ahead of us in relapsed and follicular and marginal zone lymphoma.

The Phase III trial is over 75% accrued and this trial looks at VELCADE in combination with rituximab, versus rituximab alone in these relapsed patents and is based on a strong clinical rational from the Phase II data that supports the benefit of VELCADE added to rituximab. So, we look forward to strong future growth from VELCADE in that indication. As I said, we have ten molecules progressing through development and behind VELCADE and seven of these have been derived from Millennium's own discovery operations. The next molecule entering Phase III towards the very end of 2008, will be our Alpha4Beta7 integrin inhibitor, which is targeted towards inflammatory bowel disease.

I find this is a very exciting opportunity, it's an antibody and it specifically targets the key cells that are homed to the GI tract. But for the first time we could see the immune modulator that is organ specific and addressing a disease in the GI tract without causing any known depression throughout the body and I think that’s a tremendous goal of therapy. To be able to target the immuno suppression to where you need it and not have the incidents on the rest of the body where you don’t need it. Now this is the large marketplace we tapping this towards the moderate to severe ulcerative colitis at Crohn's disease patients. And in Phase II proof of concept trials in both of these indications we did see a significant induction of remission in these Phase II proof of concept trials in both ulcerative colitis and Crohn’s disease.

We have… those proof of concept trials which were done with an earlier cell line, which we didn’t believe would be commercially scalable. So, we had progressed to make a new cell line and we now have Phase III clinical supplies and commercial production scales of that antibody in progress, which is a significant achievement and we have fully accrued the bridging trials to show compatibility between the antibodies derived from the NS-0 and from the CHO cell line. So, we're on track to start the clinical program in ulcerative colitis and Crohn’s disease towards the end of 2008, expecting final data in 2011 and launch in 2012. This will be a big program as you know in these indications we do require a big safety data base of above… and we’ll accrue about 1,500 patients.

Millennium has focused its discovery operations in oncology an area of significant expertise and within that Millennium has been the leader in an area called protein homeostasis and of course all cells rely on proteins to get the work of life done and VELCADE of course is the first of the agents that target protein homeostasis as a method of treating cancer. We also brought forward a new target 4924, the Nedd8-activating enzyme inhibitor, which inhibits a segment of the protein homeostasis specifically targeted to growth and survival pathways in cancer cells. And this IND has been approved for going into clinical trials. So, we’ll be starting the human clinical trials in the first quarter of this year.

We've also been working on second generation proteasome inhibitors with the idea that we could broaden the utility of proteasome inhibition and also look at ways of treating different cancers than VELCADE can treat and also in different formulations and we've brought forward our MLN2238, which is the proteasome inhibitor, which has the potential to be delivered both orally and IV and has activity in VELCADE refractory models that also appears to be superior to VELCADE in small molecule VELCADE has already worked. So, we're very excited about this and we’ll be putting this through its paces in preclinical development this year.

We just announced a partnership with Harvard Medical School in this area to further explore the influence of the protein homeostasis on cancer and be able to derive more therapeutics from this work. Our goal going forward as I said is to deliver sustainable earnings growth. We are looking to invest in the gross drivers for our Company. But at the same time through continuing to employ vigorous portfolio management and driving cost efficiencies and productivity insure that we will deliver the bottom line growth for this company as we going forward. We will look to engage in select strategic relationships. Either partnerships to maximize the global values of some of our products or in licensing and acquisitions to continue to grow the revenue prospects of the Company into the future.

I am now going to hand over to Marsha Fanucci, our Chief Financial officer to take you through the financials.

Marsha Fanucci - Senior Vice President and Chief Financial Officer

Thank you very much, Deborah. I would like to begin with one chart that I think… we believe sums up the profile of the Company and a couple of the key messages that we would like for you to take away today as you listen to the full year financials for the organization and this chart shows the five year performance of the Company on non-GAAP net income growth. I think that what you can see is the evolution of Millennium into an extremely different organization, financially than it was just five short years ago.

I think the other really critical message is that we have done this on a consistent basis and there is a momentum and a trend here that has been very, very acutely balanced with the investment profile and I think you have to go back to what Deborah has discussed earlier this morning about the achievements that we have accomplished in the face of this type of financial performance to recognize that our story is all about continuously delivering increased performance, but while at the same time investing for the long-term profile of the Company with a very robust pipeline and with the appropriate commercial investments in VELCADE. So, as we said and look at that table we were just discussing earlier this morning, Deborah and I that makes us very proud to be able to look at that performance and very confident in the Company’s future going forward. So, with that let me say just a few words this morning about our press release, about our full year results.

You have heard about the revenue profile earlier in the year and finding a focus more on the bottom line result and that is on a non-GAAP operating income basis. We saw a 125% increase at the dollar level as well as at the earnings per share level and that very strong growth was driven by 20% increase in VELCADE’s sales. It was also driven by a 24% increase in our royalties which are comprised of INTEGRILIN and VELCADE the growth was driven by the VELCADE component of that royalty stream. Also because of that strong performance of VELCADE outside of the U.S. we did achieve ahead of schedule, a $40 million milestone that was attached to the $500 million revenue threshold for sales outside of the U.S. These increases were partially offset by investments that we chose to make largely in the brand to ensure its success and ultimate potential.

If we turn to the next slide, I think another proud accomplishment for us is that we did reach GAAP profitability in 2007 and this is the first year since we have become a fully integrated Company, that we have delivered on this threshold and so it is a real milestone in the Company’s history and something that once again was driven this year by the $40 million milestone by the… I’ll discuss in our guidance later is a goal that we anticipate delivering against next year as well.

The factors that I described in the operating performance on non-GAAP were the primary drivers of that growth, but in addition we did see a decrease in stock based compensation as well as a decrease in our restructuring charges that led to the GAAP profitability number.

From the balance sheet standpoint, we’re in a very strong position. We have over $890 million in cash and equivalent and that is offset by $250 million in convertible debt. I’d just like to point out to you that we ended 2006 in roughly the same place from a cash balance and we did repay nearly a $100 million in earlier debt during that time frame so I think you can see the strong operating performance of the company in 2007 as well from a cash flow stand point. As we look forward, cash flow from operations are, of course, expected to be positive.

Just turning to the financial guidance, earlier in the year we provided this guidance and I wanted to focus on just a few elements of it. There’s more detail in the press release in January that you can take a look at. We are expecting growth between 20% and 30 % for VELCADE in the U.S. and that would allow us to reach a level of $320 to $345 million. We are also anticipating a growth in the royalty revenue of a… to a $175 million to $185 million.

A couple of points about that royalty revenue line. Number one, it is comprised of both INTEGRILIN and VELCADE and the growth that you are going to see year-on-year is anticipated to come from VELCADE. For planning purposes and our thinking behind that guidance, we are anticipating that the INTEGRILIN royalty will decline slightly as it begins to move with the sales in 2008. Up until 2008, we did have a fixed royalty at $85.4 million, and so when you look at that royalty number, think about those two components, think about our very slight expectation of a decline in INTEGRILIN and the vast majority of the remainder is driven by VELCADE ex-U.S. sales.

Non-GAAP, operating expenses are D&A, SG&A are expected to be at approximately $450 million, the rough level in 2007, so roughly flat on the operating expenses non-GAAP, net income at $80 million to $95 million and GAAP net income at $10 million to $25 million.

So, a couple of other pieces of a little bit of detail around our financial guidance for 2008 to help you understand a little bit where we are headed there, and I wanted to say just a few words about the quarterly variability that we do tend to see in both revenues and expenses, focused primarily on the expenses where we do see quarter to quarter fluctuations and if you look back over the last few years, what we have tended to see is the second and the fourth quarter being a bit higher. And that tends to be related to a lot of key medical meetings as well as some of the timing of drug products and a number of our clinical trials, just the way we have structured those. So, if you look at the expense profile it may not exactly match that but I think that gives you some directional input about variability in the expense line.

Same thing with VELCADE growth, if you look over the last few years and I would encourage you to do that and look at the quarter-to-quarter changes on VELCADE, we really do focus very much on the annual change because timing of holidays, timing of the way weeks end, often lead to very modest changes in growth rates quarter-on-quarter for revenues. So, just look back over the last year and a half or so and I think you’ll get a good idea how that trend might unfold for the revenue side.

The other element of detail that I wanted to share with you is on the royalty side. Something that people have not appreciated up until now, I think is that the royalties for both INTEGRILIN and VELCADE are tiered royalties. And from an accounting standpoint, we reset the tiers at the beginning of the year and so you will see in the early quarters of the year the lower royalty rate and that escalates as we reach the new tier later in the year. And that has been the case for VELCADE over the last few years. INTEGRILIN was a fixed royalty until 2008 and so it was straight line accounted for in the prior years. But in 2008 it too will follow that same pattern of lower tiers in the early year and the higher tiers in the latter part of the year.

With respect to VELCADE, as I mentioned it is a tiered royalty and in 2007, we had not yet reached the top tier of the royalty structure. We don’t expect to see material milestones in 2008 and so as you look at the strategic alliance revenue line and think about 2008, with 2007 we did have that $40 million milestone that we saw in 2007 that’s not expected to be repeated in 2008. And as we look at 2008, we do expect the R&D and SG&A lines to have roughly the same relative distribution that they did in 2007 in terms of the percent of the total OpEx that you are seeing with each of those. So, approximately consistent with what you see in 2007. So, hopefully that will give you a little bit more insight into thinking through our guidance for 2008.

We do have a number of very exciting milestones and growth drivers coming up and one of those as Deborah mentioned is of course the sNDA approval for VELCADE. And we are anticipating achieving that in the first half of the year based on that scheduled date of June 20.

We also are going to be completing the enrollment in our Phase III NHL trial which is another major milestone for us because as we get beyond that frontline penetration the next two catalysts after that for VELCADE is the NHL population, one that’s significantly larger than the multiple myeloma population.

With Triple O2, we will just be just updating you on the results of the bridging studies that we’re doing. We’re unlikely to present those formally but we will give you an update on that. And I think the more important milestone is actually advancement into the Phase III trial, which we’re expecting in the latter part of the second half of the year.

And we’re also in the second half of the year going to be presenting some data from our Flt-3, PDGF, c-Kit, inhibitor 518 in glioblastoma In addition to presenting that data we will be initiating a Phase II trial in glioblastoma So, another interesting milestone to keep tuned into as you look at the progress of the pipeline in 2008.

So, in summary I’d just like to reinforce what we saw in that first table that I was showing you, the first chart that I was showing you and then we are accompanying with a considerable amount of financial momentum that we are very committed to delivering against our guidance and against our promises to you. And that we see a very exciting future in the investments that we’ve been making in VELCADE as well as in the pipeline and we encourage you to stay tuned. Thank you, very much.

Question and Answer

Unidentified Company Representative

We will take questions. Let me just start of the questions. Obviously there is a lot of excitement there regarding the complete response rate for VELCADE and uval [ph] filed a missing part of the review for frontline. Can you tell us about trends that you’re seeing so far in the first quarter with regards to VELCADE?

Dr. Deborah Dunshire M.D. - President & Chief Executive Officer

I think, one of the things that we said is that we believe that real uplift from the frontline will come with the full approval and promotion. And so, we’ve seen a lot of excitement within the physician community but because of the reimbursement mechanisms for IV agents, and we probably have seen some answers that deduced in the frontline setting. And we don’t see a huge uplift in that until full approval and full reimbursement coming.

Unidentified Company Representative

Question from the audience. Does Millennium see liable previews on inhibitors for [inaudible] direct to VELCADE’s market within 2009 to 2011?

Deborah Dunsire - President and Chief Executive Officer

I think VELCADE has established a very significant body of data both in its efficacy and safety. It’s a well established agent with approvals in the relapsed setting and in frontline setting and I think any agent that comes in for the settings produces a inhibitor or not has to demonstrate itself that it delivers that level of efficacy with the safety record and before it can displace a very well established and well utilized therapy. We have certainly seen VELCADE be very well tolerated in our list of trials, even in elderly patients. Patients were well able to tolerate the drug and the number of cycles was significantly longer in the front-line setting and the answer and we delivered extraordinary efficacy so the VELCADE profile is extremely strong and will only be challenged by agents that can deliver a better profile.

Unidentified Analyst

Just a quick question. Can you update on the status of your CCR2 monochrono and next steps or trends in that regard?

Deborah Dunsire - President and Chief Executive Officer

Question comes up really. All right, let’s see if it is a light. This CCR2 and antibody we have said that we had a positive and proof of concept that will, proof of a biomarker in the CRP in point in the atherosclerosis trial but that isn’t an area of strategic focus for Millennium so that’s something that we are looking to partner outside.

Unidentified Analyst

Common seed earmarked?

Deborah Dunsire - President and Chief Executive Officer

Yes. I think we also saw the MS data come out earlier in the year and while there is clear evidence of clinical activity in MS once again because we are really following a fairly ruthless portfolio management process. We decided that we would not pursue that on our own because of the data weren’t at the level that we had set to merit going forward. However there has been investigator interest in pursuing in that indication and we are looking now for a partner across the multiple indications for 1202 and since we really just started that process, a couple of months ago we are just in the discussion phase.

Unidentified Analyst

There was a question from the audience. You are working on a sub-Q version, excuse me, VELCADE. Will the sub-Q version be administrated at home or at the doctor’s office?

Unidentified Company Representative

Right now, the program that we are putting in place utilizes the current VELCADE’s final market form so we would anticipate because that has to be mixed and drawn up in a ratio to body surface area, that it will be given by a health care professional in a… most likely in a physician’s office. Ultimately we could look with the proof of efficacy of the sub-Q formulation at the patient delivering it at home, but we believe we would have to come up with a different packaging for that and that isn’t available to us at this time.

Unidentified Analyst

There are other question on the MLN0002. A, would you consider partnering it when might you do that? And I believe it was developed internally, so maybe you could walk through the IP rights and any work using that might pay if it’s one development vehicle?

Nancy Simonian - Chief Medical Officer

MLN0002 is a ethical based certain ingredient antibody and came to us when we acquired Leukocyte, actually. So, that’s where that came from. Would you like to comment on…?

Unidentified Company Representative

That partnering? So we do believe that we will require a partner to optimize the H to H [ph] value of that asset and I think what we have said is that we would like to choose the best partner and so while we are engaged in discussions and we are taking discussions, we are going to be very selective about that partner but ultimately the intention is to have a partnership outside of the U.S. With respect to the royalty question, it looks pretty typical for an antibody, nothing unusual about it. There are some royalty stacks that would make it convert to many other antibodies, but nothing that makes it extraordinary because it was a Leukocyte product and so that IP is part of the acquisition.

Unidentified Analyst

I just had a quick follow up on the CCR2, then given it’s not a strategic area of interest are you stopping any further internal work or is there still a process forward to continue some element of development on the actual piece?

Deborah Dunsire - President and Chief Executive Officer

Right now it’s reinforcing what Marsha said, we have made some very rigorous portfolio decisions and we are not continuing further work internally on that asset and obviously we think it’s a… it’s a non-Q demonstrates a very strong basic profile, very well tolerated. So, we believe that in the right hands this has some important potential and there are also other biologic activities that might suggest activity and other indications from verodoma [ph], but given the almost embarrassing riches within the portfolio, we do have some excellent choices and so we have chosen not to go forward.

Marsha Fanucci - Senior Vice President and Chief Financial Officer

All right. I think we have already made the investments in the commercial scale up of that antibody and so we do have a lot of those investments behind us already. So, we think it does represent an attractive partnering situation from a commercial production standpoint

Unidentified Analyst

You obviously have a lot going on from a clinical draw point of view and you do seem to have a lot of cash on your balance sheet. But I’m just kind of wondering what you were thinking about going forward from the point of view of financing needs, if any?

Marsha Fanucci - Senior Vice President and Chief Financial Officer

Well as I mentioned, we have nearly $900 million in cash, and we do anticipate it being part of the cash flow from operations positive and therefore it would require some sort of a catalyst for us to consider additional financing at this point. Type of product acquisitions and company acquisitions that we’ve entertained up until this point really have not been that kind of catalyst. So, I think it would be something out of the ordinary that would lead us to that decision.

Unidentified Company Representative

Marsha, I’ll need… Well, the next question is coming up, a quick question on the royalties, they’re growing nicely. Could you give us an insight to whether the VELCADE sales are growing more in Europe as opposed to outside of Europe?

Marsha Fanucci - Senior Vice President and Chief Financial Officer

Great. Well, I think people sometimes forget that when you have 85 countries that Europe does, it actually tends to be a small fraction of that total, just in the math itself but in the growth a lot of the growth is coming outside of Western Europe although those are still very robust markets. But with new countries coming online each month, a month you’re seeing some of that come from the rest of the world markets as well. So, the product is still growing across the world.

Unidentified Company Representative

I just have one more question. I know you’ve done some expense rationalization for the last couple of years. With $250 million of SG&A, R & D, still seems like a lot of infrastructure, is there more to do there?

Marsha Fanucci - Senior Vice President and Chief Financial Officer

That’s an area that we remain very focused on and I think as we look at that we believe that we are at the, kind of the right base case in terms of the expenses. But we are still looking for the efficiencies, I don’t mean to minimize this by saying around the edges, but that is where we’re focused right now. We have reduced our campus to two facilities, two buildings; at one point in time I think we had twelve to fifteen buildings around the globe really. So, we’ve consolidated the campus to what we believe is the optimal footprint and we have minimized our fixed cost and the variable costs are largely related to our commercial investments and our clinical trial investments going forward so we remain very focused on delivering at the bottom line and at the same time investing for the long-term health of the company in that portfolio.

And so I think, that’s the tradeoff we constantly go through. We do go through and we are going to be continuing that in 2008, many operating efficiency activities in 2007, we focused on a review of our IT investment for example, we engaged an outside party to help us really push on it and think hard about all the ways that we could take some costs out of there and in 2008 we're moving forward with that implementation. But that’s not going to dramatically change the profile, what it's going to do is allow us to reallocate some of those G&A dollars to more commercial and portfolio value drivers. So, I think we're at a kind of a base case that we believe will allow us to deliver attractive returns to the shareholder. Deborah did you have anything to add?

Deborah Dunsire - President and Chief Executive Officer

No. I think the other thing that we've done is focus on variablizing the cost savings incentive in our discovery, outsourcing various of the technologies that have become commodities, so that we can better calibrate the expenses in line with the development of our revenue.

Unidentified Company Representative

Okay. We're out of time. Deborah, Marsha. Thank you very much for coming.

Deborah Dunsire - President and Chief Executive Officer


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