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Edited Transcript of BLCM earnings conference call or presentation 6-Nov-19 10:00pm GMT

Q3 2019 Bellicum Pharmaceuticals Inc Earnings Call

Houston Nov 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Bellicum Pharmaceuticals Inc earnings conference call or presentation Wednesday, November 6, 2019 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Aaron E. Foster

Bellicum Pharmaceuticals, Inc. - Head of Research & Senior VP

* Atabak Mokari

Bellicum Pharmaceuticals, Inc. - CFO

* Richard A. Fair

Bellicum Pharmaceuticals, Inc. - President, CEO & Director

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Conference Call Participants

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* Wangzhi Li

Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology

* Robert H. Uhl

Westwicke Partners, LLC - MD

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Presentation

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Operator [1]

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Greetings and welcome to the Bellicum Pharmaceuticals Third Quarter 2019 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Robert Uhl, Westwicke IR. Please go ahead, sir.

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Robert H. Uhl, Westwicke Partners, LLC - MD [2]

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Thank you, Jerry. Good afternoon, everyone, and thank you for joining us. With me today on the call is Rick Fair, Bellicum's President and Chief Executive Officer; and Atabak Mokari, Chief Financial Officer.

Later, during the Q&A session, Aaron Foster, Head of Research, will also be available. Earlier this afternoon, Bellicum released financial results for the third quarter ended September 30, 2019. If you have not received this release or if you would like to be added to the distribution list, you can do so on the Investor Relations page of the company's website. As a reminder, today's conference call will include forward-looking statements made under the Private Securities Litigation Reform Act of 1995, including statements regarding our research and development plans, clinical trials, plans regarding regulatory filings, review and approval of our product candidates, commercialization expectations and our financial outlook. These forward-looking statements involve a number of risks and uncertainties and reflect our opinions only as of the date of this call. We undertake no obligation to revise or publicly release the results of any revision of these forward-looking statements in light of new information or future events. Actual results may differ from those indicated by these forward-looking statements due to numerous factors, including those discussed in the Risk Factors section of our Form 10-Q for the quarter ended September 30, 2019, filed with the Securities and Exchange Commission.

And now I will turn the call over to Rick Fair, Bellicum's President and CEO.

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Richard A. Fair, Bellicum Pharmaceuticals, Inc. - President, CEO & Director [3]

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Thanks, Robert. Good afternoon, everyone. Thanks for joining us. On our call today, I'll provide an update regarding the progress we've made to focus the company exclusively on our GoCAR pipeline, which was the basis for our recent financing. I'll also provide an update on our efforts to identify partners for rivo-cel and our manufacturing facility. Let me begin by highlighting our GoCAR platform driven by our inducible MyD88 and CD40 activation switch, what we call, IMC. As a next-generation car platform, we believe IMC may improve upon current generation products in several ways. First, co-stimulatory molecules, MyD88 and CD40, enhance cell proliferation and persistence. Second, our preclinical research suggests IMC may modulate the tumor microenvironment by overriding common inhibitory pathways such as PD-1, PGE2 and TGF-beta. Third, we believe IMC may enhance host immune activity to complement GoCAR efficacy by inducing pro-inflammatory cytokine and chemokines. And finally, because IMC is driven by our switch technology, we can control the timing and frequency of cell activation through the infusion of our small molecule rimiducid. In our dual switch product candidates, we improved controllability further by incorporating our CaspaCIDe safety switch, which can be used to manage acute toxicities quickly. These control features may enable clinicians to better manage the benefit-risk profile of treatment.

With that background on the platform, I'll now provide an update on our GoCAR pipeline. Our first GoCAR-T product candidate, BPX-601 targets prostate stem cell antigen or PSCA. Our initial target indication is pancreatic cancer as PSCA is upregulated in cancer cells in approximately 50% of patients. At the ASCO Annual Meeting in June, we presented clinical trial data that showed further evidence that our GoCAR technology can boost expansion and persistence of T cells and production of pro-inflammatory cytokines in patients treated with just a single dose of rimiducid. There were no dose-limiting toxicities observed and adverse events associated with BPX-601 or rimiducid were generally mild to moderate. While the single dose schedule of rimiducid in this study was intended to evaluate safety and not optimized for efficacy, some clinical activity was observed. Of the 13 patients evaluable for efficacy, who received treatment with BPX-601 and a single dose of rimiducid, 8 patients or 62% achieved stable disease, including 3 with tumor shrinkage of up to 24%.

Based on these encouraging results, we advanced the trial to enroll the next patient cohort, Cohort 5C to evaluate repeat rimiducid dosing. As a reminder, IMC was designed to be activated on a regular basis. Our preclinical experience suggests that regular rimiducid dosing can reactivate and expand GoCAR-T cells over time without creating T cell exhaustion, maximizing the clinical efficacy potential. As we initiated Cohort 5C, we've experienced a delay in enrollment. There are 3 primary reasons for this. The first has to do with the eligible patient population. Prior to opening this cohort, we amended the protocol to recruit only second-line patients with pancreatic cancer. The intent here is to enroll a more homogeneous patient population in which to evaluate potential efficacy signal compared to the very late-line patients we enrolled in dose escalation. This means, we're now screening patients undergoing first-line treatment, whose median time to progression can be significantly longer, up to 7 months depending on first-line therapy.

We currently have patients in screening who've tested positive for PSCA but will not be eligible to enroll until they progress from their first-line therapy.

The second reason for delay has been some logistical challenges in opening new sites and processing tumor samples. We've worked through these issues as they've arisen and now have 3 sites actively screening patients and a fourth initiating now.

The third reason has been screen fail rate. We've had a modestly higher rate in this cohort of patients who are either PSCA negative or his tumor sample was inadequate to determine PSCA status. This is inconsistent with prior cohorts and is based on a small number of patients. We don't expect this to be a persistent enrollment problem. We've undertaken numerous measures to increase screening and enrollment, including addressing the logistical issues I mentioned and identifying and opening new sites.

That said, with the delay in enrollment, we now project interim results for this cohort in the second half of 2020. In the interim, we intend to present new translational data from Cohort 5B at a medical meeting early next year. These data are expected to provide new evidence on the proposed mechanisms of action of IMC activation in BPX-601, including cell expansion and persistence, cytokine production, tumor infiltration and modulation of the tumor microenvironment. Based on the data we've seen so far, we remain optimistic about BPX-601 as a product candidate and as a proof-of-concept for our GoCAR platform.

Now let's turn to BPX-603, Bellicum's first dual switch product candidate, which has been designed to target solid tumors that express HER2. We're excited about our dual switch platform given its potential for the combination of efficacy and safety benefits. We selected HER2 as a target for BPX-603 because it's a thoroughly validated target antigen for cancer therapy with clinical activity and reasonable safety observed in academic CAR-T trials targeting HER2. These previous HER2 CAR-T approaches have been limited by modest efficacy and off tumor on target toxicity. We believe our dual switch technology may be uniquely suited to improve upon these earlier efforts by driving greater efficacy through MC signaling and managing toxicity via our switch platform. Earlier this year, we submitted an IND application for BPX-603. The FDA has requested additional preclinical data to better characterize the potential risk of off tumor on target toxicity and potential mitigation strategies before clinical trial can be initiated. We are engaged in discussions with the FDA to align on a plan to address their request. We will update you further on our plans and estimated timelines once we align with the FDA.

Turning to our third GoCAR product candidate. We have revised our plans based on a combination of factors, emerging scientific findings, encouraging preclinical progress and the resources that we have available to commit to this asset. For those of you who follow us closely, I'm sure you've heard us talk about our third pipeline program, a heme CAR-T candidate that was advancing to IND. Based on our progress and research, we have greater conviction that our technology can provide unique benefits to allogeneic CAR-T and CAR-NK cells. We've decided to reallocate the resources dedicated to this third program to an allogeneic off-the-shelf CAR program. The theoretical benefits of allogeneic cell therapy are clear; potential for increased activity of immune cells from healthy donors instead of cancer patients, faster and more certain time to treatment, greater scalability, greater convenience and potentially lower costs, to name a few. There are also important limitations to overcome. Poor expansion and persistence of these cells may reduce response and durability. Allogeneic cells may cause GvHD, and genetically modifying these cells to prevent this may impair their function. They can also be difficult to manufacture at scale. The GoCAR platform is designed to address many of these limitations, driving cell expansion and persistence and enhancing host immune activity to potentially increase response and durability while providing control mechanisms to help manage toxicity. We're excited about the potential for an allogeneic GoCAR, and we'll update you on our plans for this new program on a future call. For those of you attending the SITC meeting later this week, we will be presenting a poster with some of our CAR-NK preclinical data. The data showed that MyD88/CD40 signaling improves innate NK cell cytotoxicity, which has the potential to improve efficacy against tumors expressing variable levels of target antigen.

Further, the data illustrates that MC signaling synergizes with Transgenic IL-15 production to improve CAR-NK cell in vivo proliferation and persistence, enhancing tumor control in multiple tumor models. As the poor proliferation and persistence have been limiting barriers to the development of effective NK cell therapies, we are encouraged about the impact MC signaling may have in this setting.

Now I'll provide an update on our partnership discussions first with rivo-cel. Concurrent with our positive data announcement in July, which included a thorough strategic assessment of the program, we came to the decision to identify a partner to further develop and commercialize this product candidate. While we continue to have discussions with potential strategic partners, it's unclear if an agreement will be reached. As a result, we've decided that it's in the best interest of Bellicum shareholders to pause our rivo-cel-related activities until a partner has been secured.

Turning to our manufacturing operations. As a reminder, we built our Houston manufacturing facility to support our early CAR-T programs, the rivo-cel Phase III clinical trial and early commercialization in the U.S. Given our decisions on rivo-cel, our facility is substantially underutilized with a significant fixed cost base. To preserve capital for our GoCAR programs, we are actively pursuing a partner for the facility with the goals of reducing operating costs while maintaining critical viral vector and cell therapy development capabilities and dedicated manufacturing capacity.

With that, I'd like to hand the call over to Atabak to review our financials.

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Atabak Mokari, Bellicum Pharmaceuticals, Inc. - CFO [4]

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Thanks, Rick. Bellicum reported a net loss of $32 million for the third quarter of 2019 and $83.5 million for the 9 months ended September 30, 2019, compared to a net loss of $23.8 million and $70.8 million for the comparable periods in 2018. The results included noncash share-based compensation charges of $1.6 million for the third quarter of 2019 and $3.7 million for the comparable period in 2018.

R&D expenses were $14.3 million and $51.0 million for the third quarter and 9 months ended September 30, 2019, respectively, compared to $16.4 million and $51.4 million during the comparable periods in 2018.

The reduction in expenses in the third quarter of 2019 resulted primarily from reduced expenses related to rivo-cel and reduced general R&D expenses partially offset by higher expenditures related to the GoCAR platform.

General and administrative expenses were $9.2 million and $24.3 million for the third quarter and 9 months ended September 30, 2019, respectively, compared to $7.0 million and $18.0 million during the comparable periods in 2018.

The higher expenses in the third quarter of 2019 relative to the comparable period in 2018 were primarily due to an accrual of severance costs arising from reductions in rivo-cel-related activities.

Now turning to the balance sheet. As of September 30, cash, restricted cash and investments totaled $106.9 million. In the third quarter, we had a cash burn from operations of approximately $19 million, which was a decrease from prior quarters given the steps we have taken to streamline the organization. In August, the company announced receipt of aggregate gross proceeds of $69.6 million including gross proceeds of $57.5 million from an underwritten public offering and a $12.1 million private placement option fee related to its private placement of up to $70 million in additional potential gross proceeds.

Based on current operating plans, Bellicum expects that current cash resources will be sufficient to meet operating requirements into 2021.

And now I'll hand the call back over to Rick.

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Richard A. Fair, Bellicum Pharmaceuticals, Inc. - President, CEO & Director [5]

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Thanks, Atabak. In closing, we've made significant progress this quarter in repositioning the organization to focus on our GoCAR platform. We remain very excited about the potential of our GoCAR pipeline and look forward to reporting progress on these programs as we head into 2020. I'll now open the call to questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Wangzhi Li, Ladenburg.

Ms. Li, are you there? I'm sorry, she doesn't seem to be answering. We have a question from Steve Seedhouse, Raymond James.

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Unidentified Analyst, [2]

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This is [Daniel Gataulin] on for Steve Seedhouse. I just have a couple here. First, with respect to BPX-603. So you have the request for additional information. Can you provide any sort of updated timeline for the program? And do you view this request as something that you can address fairly quickly? Or are you going to need to run any additional preclinical studies? Any color would be very useful here.

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Richard A. Fair, Bellicum Pharmaceuticals, Inc. - President, CEO & Director [3]

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Yes. Thanks for the question, [Daniel]. Unfortunately, we can't provide any additional color at this point. We're actively in discussion with the FDA, and I think it would be premature to comment. So we'll certainly provide additional guidance once we've completed those conversations and have an agreed plan.

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Unidentified Analyst, [4]

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All right. Great. And I have a follow-up question about the rivo-cel activity. So you mentioned that you will be putting these activities on hold until you find a partner. Can you provide a little bit more details on what that would translate to financially going forward? How should we be thinking about that?

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Richard A. Fair, Bellicum Pharmaceuticals, Inc. - President, CEO & Director [5]

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I'll let Atabak answer that.

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Atabak Mokari, Bellicum Pharmaceuticals, Inc. - CFO [6]

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Sure. So as you'll recall, our quarterly burn historic -- over the past 12 to 24 months has been in the -- is in the $20 million range, in the low to mid-$20 million per quarter. And following a number of activities, including pausing rivo-cel-related activities and other initiatives that we discussed, we expect that to be reduced pretty substantially closer to the mid-teens kind of range.

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Operator [7]

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(Operator Instructions) We now have a question from Wangzhi Li, Ladenburg.

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Wangzhi Li, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology [8]

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So first question is about the enrollments. You mentioned a number of reasons. But could you help me better understand the reason or the challenges to open the site? You mentioned some biopathy or just why this trial is more difficult to open more sites than other trials?

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Richard A. Fair, Bellicum Pharmaceuticals, Inc. - President, CEO & Director [9]

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Yes. Thanks for the request. I'd say, the logistics of the opening were some one-off things that probably are not chronic or consistent. As mentioned, all the sites are open, and 3 are actively screening. The logistics around tumor biopsy, our lab test currently requires tumor blocks. And what we've heard from one of our sites is it's difficult for them to procure tumor blocks from some of their referring physicians, that slides are easier. We're in the process of evaluating our diagnostic to ensure that it can work on a slide. So that's really the logistics issue around tumor samples. I'd say right now, the screening rates risk. We have 3 sites screening consistently. And a fourth one coming online now and are looking for 2 to 4 additional sites for the next phase of the study.

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Wangzhi Li, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology [10]

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Got it. At this moment, have any patients enrolled? Or it's still in the screening kind of process?

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Richard A. Fair, Bellicum Pharmaceuticals, Inc. - President, CEO & Director [11]

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We currently have no patients enrolled in this cohort, but we have, as mentioned, multiple patients who are PSCA positive but still on first-line therapy. And again, a very, I would say, brisk screening rate at the moment. So we expect to be able to enroll it shortly.

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Wangzhi Li, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology [12]

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Got it. And for the cohort, the 5B data in early 2020. What kind of payout should we expect? How many samples? I mean, it looks like you have biopsy data to present, right? In macro -- tumor marking environment.

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Richard A. Fair, Bellicum Pharmaceuticals, Inc. - President, CEO & Director [13]

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Correct? Yes. So we have biopsies. You'll recall that patient -- Cohort 5B had 5 patients. So you'll see, depending on the analysis, different numbers of patients that were -- all are a subset of those 5 patients. So certainly, preliminary data, but interesting and we look forward to sharing it.

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Wangzhi Li, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology [14]

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So every patient had a biopsy?

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Richard A. Fair, Bellicum Pharmaceuticals, Inc. - President, CEO & Director [15]

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I believe we have biopsies from all of the -- all 5 of those patients. Aaron, maybe you can comment on that?

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Aaron E. Foster, Bellicum Pharmaceuticals, Inc. - Head of Research & Senior VP [16]

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Yes, we do have biopsies. We've currently evaluated 3 out of the 5, looking for CAR infiltration and some other characteristics of the biopsy.

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Wangzhi Li, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology [17]

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Great. All right. And last question. I know you already mentioned that you cannot comment too much on BPX-603, I'm just curious because there's a multiple to GoCAR-T already tested in clinic and you supposedly have a off switch as safety -- additional safety -- safeguard, right? So can you help me understand what's the particular reason for FDA to have more extra concern? Is this regular more data? Or is there a particular reason for that?

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Richard A. Fair, Bellicum Pharmaceuticals, Inc. - President, CEO & Director [18]

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Yes, thanks for the question, Wangzhi, and it's a logical one. I would say, we designed our construct very carefully to try and increase the activity of HER2-directed CAR-T therapy. You'll recall that the academic experience, which has been driven largely by Baylor College of Medicine, and to a lesser extent, by a center in China, has seen activity, but not really clinically meaningful activity. And so we're looking to increase the potency. And we really did that through a couple of design features. We've used a higher affinity binder, a single-chain variable fragment than the Baylor construct. And of course, we've incorporated our IMC activation switch, which is the core technology of the company and is intended to drive expansion, persistence, modulation of the tumor microenvironment, greater activity.

I think it's really based on those 2 novel features of this construct that the FDA has asked questions about potential off tumor on target toxicity. We've certainly reinforced that we have the safety switch incorporated in the vector, so that should patients experience toxicity, there's a way to manage that. But I'll also remind that in our dual switch construct that the safety switch is a modified version of CaspaCIDe, which doesn't use rimiducid activated, but uses temsirolimus. And so we don't have -- while we have great preclinical data showing those 2 safety switches work identically, we don't yet have clinical data supporting the efficacy of the temsirolimus-driven safety switch. So I think those are probably the variables that the FDA is weighing in their thinking. And again, we're engaged in dialogue with them to work through those questions and make sure that we can answer them rigorously.

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Operator [19]

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There are no further questions in the queue at this time. I'd like to turn the floor back over to Rick Fair for closing comments.

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Richard A. Fair, Bellicum Pharmaceuticals, Inc. - President, CEO & Director [20]

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Thanks, Jerry. Thanks, everyone. I appreciate you participating today. As always, I'd like to thank our passionate team of Bellicians, our collaborators, our investigators for all their efforts, including -- and most importantly, I would say, our patients and families who've participated in our trials. They inspire our effort here each and every day. Thanks. Have a great evening.

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Operator [21]

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This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation, and have a nice evening.