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Bacterin International Holdings, Inc. (NYSEMKT:BONE)

Q2 2012 Results Earnings Call

August 9, 2012 4:30 PM ET

Executives

John Gandolfo – Chief Financial Officer

Guy Cook – Founder and CEO

Analysts

Matt O'Brien – William Blair

Nathan Cali – Noble Financial

Anthony Vendetti – Maxim Group

Bruce Jackson – Northland Capital Markets

Greg Garner – Singular Research

John Gandolfo

Good afternoon. And thank you for participating in today’s conference call to discuss Bacterin’s Second Quarter Financial Results for the period ended June 30, 2012. My name is John Gandolfo. I’m the Chief Financial Officer of Becterin and with me today is Guy Cook, our Chief Executive Officer and Founder. Following Guy’s remarks as well as my own, we will open up the call for your questions.

Before the conclusion of today’s call, I’ll provide the necessary precautions regarding forward-looking statements made by management during this call. I would like remind everyone that the replay of this call will be available for one month starting later this evening. A webcast replay will also be available via the link provided in today’s press release, as well as at the Investor section of our website at www.bacterin.com.

Now, I would like to turn the call over to our Chief Executive Officer, Guy Cook.

Guy Cook

Thank you, John. Good afternoon, everyone. Thank you for joining us today to discuss our second quarter 2012 results. We issued a press release this afternoon announcing our earnings results.

Revenue for the quarter was $8.2 million, compared to $7.8 million in the previous quarter, an increase of 9%, compared to $7.5 million in the second quarter of 2011. Excluding the $1.2 million stocking order sale included in our second quarter 2012 revenue figure, second quarter 2012 revenues increased 30% over second quarter 2011.

Revenue for the first half of 2012 achieved 45% of our annual guidance. We have substantially increased our available inventory and marketing costs, as well as increase in our processing capabilities, which we expect to have a positive impact on revenue in third quarter of 2012 and from thereon.

Inventory increased 42% by the end of quarter from $9.4 million at the end of 2011 to $13.3 million. As of June 30, 2012, we have approximately $1.3 million of inventory at costs on consignment hospital account, which translates to approximately $7.1 million of inventory at retail value.

Inventory is now readily available through our sales force and by end of the second quarter we had 768 active facilities. We are optimizing our processing facility to meet the demand for our products, including hMatrix, which we believe will be positively impacted on our new reimbursement cost.

Largely the 72% remain solid, including the guidance range of 70% to 75%. At June 30, 2012, we had approximately $1.2 million in cash and net account receivables of approximately $6.6 million.

Before we go much further, I’d like to turn the call over to our CFO, John, who will set us the summary of the quarter and year’s financial results, when he is finish, I’ll return to give a more detail operational update and a look ahead. John?

John Gandolfo

Thanks, Guy. Now turning to our results in the second quarter of 2012, as Guy mentioned, revenue for the quarter $8.2 million, compared to $7.8 million in the previous quarter, and an increase of 9% compared to $7.5 million in the second quarter of 2011.

Second quarter 2011 sales included a stocking order sale of distributor of approximately $1.2 million and excluding this sale, quarterly revenues increased approximately 30% over the prior year.

The year-over-year increase was largely the result of increase sales generated from the company’s direct sales force and independent distributors compared to the second quarter of 2011.

Gross profit margin for the quarter was 72%, as compared to 76% in the previous quarter and 77% in the year ago quarter, reflecting the addition of the second production shift in 2012, as well as increased allocation of G&A expenses due to increase production.

Operating expenses for the quarter totaled $6.2 million, as compared to $7.2 million in the previous quarter and $6.1 million in the second quarter of 2011.

Operating loss for the quarter was $347,000, compared to $1.3 million in the previous quarter and $280,000 in the second quarter of 2011.

Net income was approximately $731,000, or $0.02 per basic share for the quarter and this compares to a net loss of $1.1 million, or $0.03 per basic share in the previous quarter, the net loss in the second quarter of 2011 of approximately $405,000, or a penny per share.

EBITDA for the quarter totaled a positive $8,000, and this compared to an EBITDA loss of approximately $540,000 for the previous quarter and EBITDA of $35,000 in the second quarter of 2011.

Please see definition and important discussion about our use of the EBITDA and non-GAAP term in today’s earnings release which is now available in the Investor section of our website.

Now turning to the balance sheet, cash and cash equivalents and net accounts receivable was $7.8 million at June 30th, this compared to a total of $7.8 million at December 31, 2011.

We also have future access to approximately $3 million on non-dilutive revolving AUR credit facility, which closed in April of this year. The formula for drawing this fund is based upon 80% of our eligible accounts receivable balance.

This completes my summary report on our results. For a more detail and complete analysis of our results for the second quarter 2012, I’d like to direct everyone to our Form 10-K which was filed with the SEC in March 2012, as well as the company’s Form 10-Q which will be filed later this week and which will be available on www.sec.gov, as well as via our website. And I’ll be happy to answer any questions you may have during the Q&A session.

Now, I’d like to turn the call over to Guy Cook, our President and CEO. Guy?

Guy Cook

Thank you, John. We recently won our third GPO contract, a three-year agreement with Novation, leading health care supply chain expertise and contracting company to provide OsteoSponge, OsteoSelect DBM Putty, OsteoWrap, OsteoLock, BacFast, hMatrix, Sports Medicine Allografts, and traditional allografts to the GPO’s nationwide network of hospitals and medical practices.

We also entered the fourth national GPO contract with Premier Healthcare Alliance, one of the nation's largest group purchasing organizations, serving over 2,600 hospitals and more than 84,000 other healthcare sites that represent over $43 billion in annual purchasing power.

Both Novation and Premier become affected July 1, 2012, and we are beginning to see significant inbound interest in our products from these GPO affiliates, as well as maturing interest in our MedAssets and ROi relationship. We continue to hire aggressively to meet the need of new clients through extended GPO presence.

The company has added 18 new sales representatives and one additional regional Vice President of Sales. In the first half of 2012, the total of 76 employees dedicated to the sales functions. This includes sales reps, customer service reps, regional VP, Executive VP and the national Sales Manager.

Our direct sales force, which incrementally increased by 13 direct reps in 2012, continue to drive the balance and our revenues in favorable way, approximately one-third of our revenues are derived from direct sales, one-third are derived from independent distributors and one-third those who hired were in the direct representative works in culmination with the local distributor to help drive adoption.

We expect to hire approximately 10 direct representatives before the end of the year and expect to hire another 40 additional representatives in 2013, a 20 of those in January and 20 of those in July of 2013.

We’ve improved our hiring, sales training and promotion reviewing office to accelerate efficiency across the sales infrastructure and expect the maturing sales force to add significantly to revenues in 2012 and ’13. We have drastically reduced the turnover of company this year and continue to invest heavily in our sales managers and representatives training knowledge.

Coming out of back order sales, adjusting that from lower marketing and stocking orders and shifting towards additional markets for hMatrix to pursue, that means we obviously we have stronger second half of 2012, and create firm foundation for continues growth in 2013.

We secured an account receivable of new credit facility with Midcap Financial and Silicon Valley Bank for up to $5 million through January 1, 2015, based upon a predetermined formula for borrowings up to 80% of Bacterin's eligible accounts receivable, as defined in the credit and security agreement. With additional working capital provided by this AUR revolver we terminated the Lincoln Park Capital equity line.

We also have confidently overcome our short-term production issues, as we continued to sign up new accounts, continue to build our patented product line and building these new accounts in meaningful recurring sales, should begin to bear fruit in the second half of this year. We continue to have excellent growth results from our products, with over 120,000 implants today and no adverse events. I’d like to get an update on our products and expected revenue breakdown.

OsteoSponge, our flagship product, in April, a peer review article in Orthopedic Research and Reviews determined OsteoSponge exhibits ideal properties for bone regeneration, similar to those of autograft of patient's own bone with a distinct advantage over autograft, in that there is no risk of complications at the harvest site or donor pain postoperatively, as well as getting up to timely procedure…

We expect OsteoSponge to account for 35% sales in 2012 and 51% sales in 2013. For OsteoSelect DBM Putty, recent studies conducted at the Hospital for Special Surgery have shown putty proved equivalent to autologous bone graft in the posterolateral intertransverse rabbit model.

The data has been used to gain addition of the patients for OsteoSelect DBM Putty for cranial/maxillofacial, CMF, spine and expected to help to continue to drive sales in the remainder of 2012 and ’13.

Based on the positive results, our data was submitted to the Eastern Orthopedic Association where it received the Best Paper award. This also means that they voluntarily accepted for certain patients at American Academy of Orthopedic Surgeons in 2013. We expect the Hospital for Special Surgery to independently cover the result as well.

We expect OsteoSelect DBM Putty to be 18% to 20% of revenues both in ’12 and ’13. hMatrix with the ease of the implementation as vascularization range, it was getting the attention and permissions in the treatment of breast reconstruction, diabetic foot ulcers and hernia repair.

We made improvements to restructure the product size of hMatrix, which is already beginning to yield higher sales and we expect it will continue to do so over the next two quarters.

Following that, we expect to get a boost and uptick in diabetic foot ulcer implications with the expected issuance of the necessary Q code, which we received in May and becoming effective January 1, 2013. We expect hMatrix to be approximately 5% to 10% of total revenues both in 2012 and ’13.

For OsteoSponge SC, we are pleased to report the company has begun a 75 patient registry. We have received IRB approval in five of six sites and the first patient was enrolled in July.

We have treated more than 250 patients with OsteoSponge SC product and we continue to see excellent clinical results. We were expecting three more independently published papers regarding the OsteoSponge SC product in the near future.

The paper; Reconstruction of Complex Osteochondral Lesions of the Talus with Cylindrical Sponge Allograft and Particulate Juvenile Cartilage Graft, Provisional Results with a Short-Term Follow Up, has been accepted by Foot & Ankle Specialist.

Our marketing team continues to produce stage studies including long-term now up to two years follow-up, from some of the earliest treated patients. We believe this represents a massive opportunity for Bacterin shareholders, as more independent and clinical results become available. We expect OsteoSponge SC to account for 2% to 4% of revenues in 2012 and 2013.

For our soft tissues Sports Med products, we’ve began an aggressive campaign to drive revenues. We have improved training across our sales infrastructure. We do start eliminating slow moving products, improve the marketing materials, created the ability to allow for same day return of product if needed in micro distribution centers and finally, increased international distribution for this product.

We believe the changes we have made will help drive revenues in this product category, which has traditionally been a larger portion of our slow moving inventory. We expect sales to be 7% of 2012 revenues and 5% of 2013 revenues.

Across all product lines, we remained pro active in innovating and addressing our surgeon needs and request. The company added six additional products in terms to address Foot and Ankle, Sports Med, and Breast Reconstruction markets. We believe this new additions will add substantially to the uptake in each of our product platforms.

We are also aggressively defending and building our intellectual property. The company’s filed five new patents in the first half of 2012 and continues to pursue five patent applications protecting its core products, specifically in the patent; Elastomeric Article Having a Broad Spectrum Antimicrobial Agent and Method of Making, which is a composition of matter patent, was made pursued in the U.S. and 11 additional countries. This secures our IP relationship with our development partner RyMed Medical for needleless connectors.

As far our annual guidance, we continue to expect the stronger second half of 2012 and reiterate revenue of $35 million to $40 million for the year. We’ve added a second production shift and have began expanding the number of clean rooms as we develop high demand products till ’12 and ’13. We’ve been optimizing processing for high demand products and continued ramping up our number of incoming donors.

We believe we have a sufficient number of donors from our procurement partners, with interest and support with $100 million of annual revenue for our Biologics platform. We continue to believe the extension of processing capacities that we want to do to the largest addressable markets, the new relationship with our GPO partners, the demand from our current clients and acquisition of medium and larger accounts.

We believe that our first half constraints were short-term issue, which we have resolved in the future and long-term opportunity for Bacterin products and multi-billion dollar addressable markets remains very strong.

And I think we are ready to open the call for your questions. Patricia?

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions) And our first question comes from the line of Matt O'Brien with William Blair. Please go ahead.

Matt O'Brien – William Blair

Good afternoon. Thank you for taking the questions. Guy, I was just hoping now that we are pretty much off a backlog with -- from a manufacturing perspective. If you could give us a sense for the growth that you’ve seen in some of your accounts that are bit older, maybe 12 months or more, or amongst your sales reps that have been around for a while, just in terms of the growth that they are seeing in their accounts, some of the more mature reps versus some of the younger reps?

Guy Cook

Yeah. I think, probably first thing is we are being pretty successful with the new reps as well. I think we did a analysis of reps that were hired in the beginning of the year and they are averaging after six months in employment around 25,000 a month. So they are giving up break-even fairly quickly. The more mature reps continue to grow, continue to expand. We certainly have some stars in that category. But it generally just continues to mature again.

As we have a lot of accounts that are evaluating the product, it can be long sales cycle or if a surgeon wants to see efficacy, 90 days out post off and then they want to expand to more aggressive indication.

But in general across the Board, we are happy with where the, both the new reps and existing reps. Our turnover is drastically lower than it has been in the past and so we are more confident that general maturing -- other sales force will help continue drive the topline.

Matt O'Brien – William Blair

Okay. And then last quarter you had a full list of new accounts that came on Board. I’m assuming that during that 30 to 60-day, excuse me, 60 to 90-day trailing period at this point. Can you give us any kind update on how things were going with some of those accounts?

And then is your expectation that they will materially ramp their utilization potentially Q4 and then into ’13, you could see a bigger spike in utilization?

Guy Cook

Yeah. We think so. Often its surgeons specific as to what those uptake rates might be. But we have been successful in gaining some larger accounts and we would expect to see the same sort of sales uptake as we do in the rest of the country.

Matt O'Brien – William Blair

Okay. And then, John, just, so I’m clear on this I think you said you had $3 million left on the credit facility. You’ve about $2 million in cash. It’s about $4.2 million in available cash to fund operations. Is that correct?

John Gandolfo

Yeah. It is. Yeah. That’s correct.

Matt O'Brien – William Blair

Can you give us …

John Gandolfo

Plus the -- plus the accounts receivable.

Matt O'Brien – William Blair

Sure. But can you also give us the cash burn rate in the quarter?

John Gandolfo

Yeah. Well, the operating burn for the quarter, give me one second if you want. I got it, yeah. It’s about $200,000, Matt, okay.

Matt O'Brien – William Blair

Okay. Given that there are more reps now on board, should we expect it to increase slightly towards the back half of the year or even though revenues are improving or how should we think about that metric?

John Gandolfo

No. I think that if we are successful in achieving the guidance that we have, on, which we believe will be. We should be EBITDA positive in the third quarter, as well as the fourth quarter. And by the time you get to the fourth quarter with the lag between the sales and the cash coming in from the AUR, we do not expect the burn to be increasing at all.

Matt O'Brien – William Blair

Okay. And then just one more if I may? Guy, you mentioned this, HSS study that’s ongoing, that obviously seems pretty intriguing and important for you guys. Do you have any sense for when that data may be published by the hospital?

Guy Cook

We don’t know at this time, but we will be presenting at academy. So we think we’ll have a nice following from that. I would like to point out that it’s not the study that is unique. It’s the results that were unique that made the Best Paper.

Matt O'Brien – William Blair

Understood. Thank you very much.

Guy Cook

Thanks, Matt.

Operator

Thank you. And our next question comes from the line of Nathan Cali with Noble Financial. Please go ahead.

Nathan Cali – Noble Financial

Hey, guys. Thanks for taking the questions. Just one quick question on, did you have any stocking orders in the quarter, I don’t know if I heard it correctly or not?

Guy Cook

No stocking orders in the quarter. What we refer to is that the second quarter of 2011 had a stocking order for $1.2 million. But we made decision at the end of the year not to move forward with those stocking orders. So there have been none so far in 2012.

Nathan Cali – Noble Financial

Okay. And then just real quick. You said you added 13 reps in 2012, how many did you add in the second quarter?

Guy Cook

Incrementally, there were nine added in the second quarter, four in the first quarter.

Nathan Cali – Noble Financial

Okay. And then, so you increase inventory I know there is sort of a process to do such and get the product out the door. Are you still seeing demand as expected previously as far as your tissue sales?

Guy Cook

Yeah. We are seeing -- across the board, we are seeing high demand for the products. Orders are still coming out -- some back order issues in Q2 and so as we continue to build. And I would say the GPO relationship is starting to improve now. We are seeing significant inbound interest around the country. So, I would say that’s going to be a pretty major driver demand as well.

Nathan Cali – Noble Financial

Okay. Thanks a lot for taking the questions, guys.

Guy Cook

Thank you, Michael.

Operator

Thank you. And our next question comes from the line of Anthony Vendetti with the Maxim Group. Please go ahead.

Anthony Vendetti – Maxim Group

Thanks. Yeah. Can you talk a little bit more about the OsteoSponge SC trial when you -- I know you just started enrolling patients in that. How long you think that will take to conclude and then although I know it’s difficult to predict, FDA approval just a timeframe what you expecting there for both that product and then the antimicrobial product.

Guy Cook

Well, the OsteoSponge SC is externally being sold. The study is meant to show efficacy. So the registry is accepting approximately two to three patients per site, per month, so we would expect it to be full -- hopefully towards the end of the year. We will give you update in November’s quarter. And then we will starting to see data come out of that registry approximately six months to nine months after that.

So we think we will be able to give some data in the second quarter, early third quarter of next year. The antimicrobial coating technology as we are still compelling our response, we did have to go back and do some additional animal studies to address the FDA questions. They are compelling now. We do expect to put that machine back looking to third quarter and we’ll wait for the response based on innovative expenses made.

Anthony Vendetti – Maxim Group

Okay. And I know you are selling the OsteoSponge SC right now. But are you hoping to get additional FDA clearances or is it just showing the efficacy not necessary to get another clearance for it?

Guy Cook

Based on those studies, we will hope to try and expand marketing plans, so that they might be able to sell it. But at this point, we think the efficacy that will be stated by four, five of the world’s [capable] leaders in that space would be the greater driver to adoption.

Anthony Vendetti – Maxim Group

Okay. Thanks a lot. I’ll hop back in queue.

Operator

Thank you. And our next question comes from the line of Bruce Jackson with Northland Capital Markets. Please go ahead.

Bruce Jackson – Northland Capital Markets

Hi. Thanks for taking my questions. Can you hear me, okay?

Guy Cook

Yeah.

John Gandolfo

Yeah.

Bruce Jackson – Northland Capital Markets

Okay. Great. First on inventory, I think you gave some of these numbers, but can you break that up between finished goods and working process and raw material?

John Gandolfo

Yeah. Sure. So, the overall increase in inventory rose about $3.9 million from the end of the year. Of that amount roughly a $1 million associated with raw materials, a $1 million is associated with finished goods and the balance so closed to $2 million is work in process.

Bruce Jackson – Northland Capital Markets

Okay. And then you said you cannot be embarking upon an expansion in the third quarter to the manufacturing facility. Can that be done without disrupting the production the…

Guy Cook

Yeah. It’s operating you know what, we still expect the planned clear room expansion to be put into place into September, October window but fully utilized, fully functional probably January of next year.

Bruce Jackson – Northland Capital Markets

Okay. And then in terms of the same-store sales, I think somebody asked this earlier but do you have like the same-store sale increase with the accounts that you had in place last year they are using more of the product per count?

Guy Cook

No. I don’t think we captured. We’re putting the new financial system this year so both available last year. I know overall as I mentioned if you take out the second quarter stocking order, we went from about $6.2 million up to $8.2 million between the periods of $6.3 million to $8.2 million.

I don’t believe we haven’t had information available on an account-by-account basis. Probably going forward as we stock compelling 2012 to 2013 that will be available of the new system. But unfortunately, we don’t have that data.

Bruce Jackson – Northland Capital Markets

Okay. I mean anecdotally do you have customers where they went through the trailing process and maybe a only have few physicians were using the product and now they have got more of the doctors using the product?

John Gandolfo

Sure. I think we are going back quite a bit, but we tend to migrate on our champion surgeon getting us access in the hospital using the product originally then we start to migrate towards other surgeons within that same facility. We see that generally across the country. It’s a normal sales pattern for us.

Bruce Jackson – Northland Capital Markets

Okay. Then last question on the medical devices and coatings business, when do you think we might see some list in that particular business?

John Gandolfo

And keep in mind, we do have products already improved. We’ve taken to the FDA that are currently generating revenue and royalty income. I would say that we would expect more revenues from that product category in second half of '12 into 2013. So we are not completely reliant upon the FDA approval to the antimicrobial coated orthopedic devices that receive income in that category. But I think we begin to start doing some of the older studies now, potential efficacy and hopefully I got products up and running on the market probably nine days after approval from the FDA.

Bruce Jackson – Northland Capital Markets

Okay. Great. Thank you very much.

Guy Cook

Thanks, Chris.

Operator

(Operator Instructions) And our next question comes from the line of Greg Garner with Singular Research. Please go ahead.

Greg Garner – Singular Research

Thank you for taking my question. Just have a EBITDA past the quarter but on the expansion plans here for the September, October timeframe target, but they naturally function until January just because for hiring people in the fourth quarter to bring more to devour volume into. I'm just wondering what’s the delaying factor there?

Guy Cook

I was saying is delay is demand relevant sales that we feel pretty comfortable with our production rates right now. We are keeping up demand. We’ve got group higher levels and so demand does spike up. We would be able to respond to that or increase our throughput but just a general operational challenges, new hirings are getting in people expansion of more people being in the (inaudible) but …

John Gandolfo

From an incoming dollar perspective, we feel quite comfortable that we can put up, probably we put to need to (inaudible). The only reason for really the delay at this point we would see would be demand. We don’t want to put up too much inventory until the demand is there.

Greg Garner – Singular Research

But the inventory increase right now I guess is anticipation of the normal 60 to 90 day test period after initial surgeon want to see the results and how that marketing function moves from those Premier solution to the others?

Guy Cook

Yeah. Also some examples, things that we were budgeting for is that one when the Premier account was activated, GPO account was activated and just in the state of Indiana alone, 45 hospitals were activated in pricing. So we -- some operational channels will cover that from a sales perspective to go out and meet those materials managers and get product on the shelf and getting things to the system.

Like we said, we believe that it makes sense to prepare for this operationally, if that large demand does start to happen.

Greg Garner – Singular Research

And can you tell me about the GPO versus sign the contract, I mean, sign up a hospital because at GPO, you have access there to a number of hospitals but you still need to go in and I guess, get the hospital approval and the surgeon approval. So couple of levels after that. So I guess it makes me wonder is the GPO -- how beneficial is that. Is the GPO essentially your distribution channel so you just need to have their approval initially but the real sales effort goes into the hospital approval and the surgeons. Is that right?

Guy Cook

Yeah. Actually, it’s both right now. It’s almost been a cumulative chain. We got to convince the hospital virtually and then to get the surgeon to use your product. Now, obviously, the GPO contracts have moved beyond kind of the traditional earning licenses that we’ve been part of them in the past. They are actually driving customer’s outlet and that’s providing names. So a lot of interest from those organizations is now inbound, but I was trying to push it the other way.

Greg Garner – Singular Research

Okay. And regarding the Osteo SC, does the studies that have been done -- are you hearing some surgeons and again they want to see the results of this before they would try it or is this just the product that they are far or less willing to try until they see some more white paper data.

Guy Cook

Yeah. It’s always early adopters and the management of the industry and I can tell you that at least one surgeon has described it as miracle but we’ve had fantastic results. And we would expect as we have more definitive clinical data available. You are going to get more on the mainstream adopters but from a very healthy standpoint, male surgeons are pessimistic and want to try it in a few cases and see the results first. But and we think, again the coding power, a few senior leaders we have devoted to this product will have help drive that adoption throughout that entire area.

Greg Garner – Singular Research

Okay. Just couple of housekeeping items, with the marketing expense down, is this relative to product sales, tissue sales, how we should look at it on a sustainable basis going forward?

John Gandolfo

Well, I think that the -- as a percentage of revenues, the decrease is associated with two key ventures that we’ve been able to reduce the commission rates compared to last year with our distributors primarily. In addition, with some of the changes that we’ve made in the sales administration area, the amount of salaries on the sales management side has been reduced as well.

So those are the key competitors to the decrease on a percentage. It’s always been a stated objective for the year to get the sales and marketing expense as a percentage of revenues slightly below 50% for the year. I still think that that’s an attainable goal based upon what we’re doing there whereas what we see over the next two quarters.

So I think that we expect the absolute dollars of sales and marketing expense to increase over the second half of the year but as a percentage of revenues remain in that range of somewhere between 48% and 50% of revenues.

Greg Garner – Singular Research

Okay. All right. Thanks. I appreciate the color on that. And I missed out that one comment you mentioned, Guy, about the OsteoSponge percentage of revenue is expected in 2012. I believe you said 51 for 2013 but it didn’t cash for 2012 number. Could you…

Guy Cook

2012 was 55%.

Greg Garner – Singular Research

55.

Guy Cook

2015 is 51%.

Greg Garner – Singular Research

Okay. Great. Thank you.

Operator

Thank you. (Operator Instructions) And management, there are no questions in the queue at this time. Please continue.

Guy Cook

Okay. At this time, this concludes our question-and-answer session. I’d like to thank Patricia. I want to thank each and all of you for joining us this evening. I especially want to thank you for you insight for questions and comments.

As we advance through 2012, our right priority will continue to be delivering the best quality medical products for our clients and sustaining Bacterin’s position as a provider of choice in the areas that we serve.

I hope you all continue to be interested in Bacterin as we continue to make progress and I look forward to speaking with you again in the near future. Thank you very much.

John Gandolfo

Before we end today’s presentation, I would like to take a moment to read the company’s Safe Harbor statement that provides important cautions regarding forward-looking statements. During this call, the management and representatives of Bactrim International may have made comments that may deem to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to significant risks and uncertainties. Forward-looking statements include information concerning the company’s future thoughts, operations, finance and products, research, testing, employment levels, market analysis, implementation, business strategy and expansion plans.

As you can see the forward-looking statements, we should understand that such statements are not guarantees of performance or results. They involve risk and uncertainties and assumptions that could cause actual results to differ materially from the anticipated results contained in the forward-looking statement, including the company’s ability to accomplish its goals and strategies, operational and clinical effectiveness of this products, the ability of the company’s sales force to achieve its expected results, FDA approval on its products and general economic conditions.

Additional information concerning these and other factors that may cause actual results to differ materially from those anticipated forward-looking statements that’s contained in the risk factor section of the company’s annual report on Form 10-K.

In closing, I would like to remind everyone that this call will be available for replay for one month starting this afternoon and approximately two hours after the completion of this call. Please refer to today’s press release for dial-in replay instructions. Webcast replay will also be available in the investor section of the company’s website at www.bactrin.com.

Thank you, ladies and gentlemen for joining us today for our presentation. This concludes today’s call. You may now disconnect.

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