Thank you for standing by. Welcome to Schrodinger's conference call to review the Company's Third Quarter financial results. My name is Liz, and I will be your Operator for today's call. At this time, all participants are in listen-only mode.

So, if you require operator assistance during the call, After the presentation, there will be a question-and-answer session. To ask a question Please be advised this call is being recorded at the Company's request.

Now, I would like to introduce your host for today's conference call, Jaren Madden, Senior Vice President, Investor Relations and Corporate Communications. Please go ahead..

Welcome to today's call, during which we will provide an update on the Company and review our financial results for the third quarter of 2021. Earlier today, we issued a press release summarizing our financial results and progress across the Company, which is available on our website at www. schrodinger.com.

With me today are Ramy Farid, President and Chief Executive Officer, Joel Lebowitz, Executive Vice President and Chief Financial Officer, and Karen Akinsanya, Executive Vice President, Chief Biomedical Scientists, and Head of Discovery R&D. Following our prepared remarks, we'll open up the call for Q&A.

I'll remind you that during today's call, management will make statements related to our business that are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation statements related to our future financial performance, including our outlook for the full-year 2021, the potential advantages of our platform, our strategic plans to accelerate the growth of our software business and advance our collaborative and internal drug discovery programs, risks related to the COVID-19 pandemic, our expectations related to the use of our cash, cash equivalents, and marketable securities, as well as our future operating expenses.

These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies, and prospects, which are based on the information currently available to us and on assumptions we have made.

Actual results may differ materially from those described in our forward-looking statements and are subject to a variety of assumptions, uncertainties, risks, and factors that are beyond our control, including the demand for our software solutions, our ability to develop our computational platform further, our reliance upon our drug discovery collaborators and other risks detailed under the Risk Factors and Elsewhere in our most recent Securities and Exchange Commission filings and reports.

Except as required by law, we undertake no duty or obligation to update any forward-looking statements discussed on this call as a result of new information, future events, changes in expectations, or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today.

And with that, I'd like to turn the call over to Ramy..

Thanks, Jaren, and thank you, everyone, for joining us today. At Schrodinger, we have developed a computational platform that is transforming the way therapeutics and materials are discovered. We license our platform to biopharma and materials companies, as well as government and academic institutions around the world.

We also collaborate with companies to advance drug discovery programs by leveraging our broad expertise and the full potential of our computational platform.

We're seeing a shift in how our software customers and collaborators are incorporating digital chemistry in to their research, and we're excited about our leadership role in advancing a new discovery paradigm.

We're also applying our fully integrated computational approach at scale to rapidly advance a pipeline of internal drug discovery programs from target selection and in vivo testing through declaration of development candidates with plans to initiate our first clinical study next year.

Today, we reported 16% total revenue growth compared to the same period last year, and we ended the quarter with cash resources of $600 million. We're very pleased with the progress we have made so far this year. Our customer base continues to grow and we are on track to deliver double-digit revenue growth for the full year.

Our financial strength also enables us to continue to invest in our scientific platform to drive our software business, advance our internal pipeline, and add new talent to support our strategic initiatives.

We have over 20 active collaborative drug discovery programs, as well as additional programs in preclinical or clinical development for which we are still eligible for milestones, underscoring the impact and breadth of our platform.

As we have established collaborations with biotech and pharma companies over the years, we have found many different ways to structure agreements. Our flexibility provides us with the opportunity to work with innovative companies, gain access to expertise, and create opportunities for long-term growth.

Last month, we announced the collaboration with Orexia, a Centessa Company that is focused on the discovery of novel therapeutics targeting the Orexin 2 receptor, which is known to play a role in a broad spectrum of sleep disorders, including narcolepsy.

Under the agreement Orexia is responsible for pre -clinical research activities, selection of development candidates, clinical development, and commercialization. We will provide our expertise and access to our computational platform at an ultra large scale. We received an upfront software access payment.

We will also be eligible to receive pre -clinical development, regulatory, and sales-based milestones, as well as single-digit royalties on net sales. The Orexia collaboration is illustrative of a new approach to help support discovery efforts at biotech companies, where we apply our technology at scale on behalf of collaborators.

We are also very excited by the progress within our internal pipeline. We are on track to submit an IND to the FDA for our MALT1 inhibitor program in the first half of next year, and we're looking forward to presenting additional preclinical data from this program at ASH.

We also recently selected development candidates for our CDC7 inhibitor and added a new oncology target, our fifth internal program to our pipeline. We've recently opened up our new headquarters in New York City and it's gratifying to see colleagues together after more than 18 months of working remotely.

Other offices around the globe are open in accordance with local guidelines. Our sales team are also beginning to resume in-person visits as permitted by customers. In summary, we are very pleased with the progress we've made in the first 9 months of the year and we expect to finish the year with a strong fourth quarter.

I'll now turn the call over to Joel to review our third quarter financial results..

Thank you Ramy, and hello everyone. This morning I will discuss. Our financial results for the third quarter of 2021 and provide an update on our outlook for the year. We are excited by the progress we have made across all areas of the business this year.

Our software revenue expectation is on track, and today we are reaffirming our software guidance for the full-year in the range of $102 million to $110 million. We are also very excited about the progress of our drug discovery programs, and Karen will update you on that in a moment.

Turning to our results for the third quarter of 2021, we reported total revenue of $29.9 million, up 16% compared to the third quarter of 2020. Software revenue was $24.3 million compared to $22.9 million for the third quarter last year, and this was in line with our expectations.

The 6% growth observed in the quarter versus prior year reflects the continued addition of new customers and increased sales to existing customers.

Growth was partially offset by multiyear contracts executed in the third quarter of 2020, as well as our research project that contributed to revenue in the third quarter of 2020 and was completed earlier this year.

Drug discovery revenue was $5.6 million compared to $2.9 million in the third quarter of 2020, this included $4.4 million recognized from our collaboration with Bristol Myers Squibb. Gross profit was $11.1 million compared to $15.3 million in the third quarter last year.

Software gross margin was 73% this quarter, compared to 81% for the same period in the prior year. Software gross margin this quarter and for the first nine months of the year is in line with our guidance for the year and reflects our investments to support the deployment of large-scale platform adoption by our customers.

As revenue grows, we expect to achieve economies of scale on these investments over time. The third quarter gross margin was also impacted by the timing of Royalties. Operating expense was $45.8 million compared to $30.7 million in the third quarter of 2020.

This is in line with our full-year guidance and reflects our investment in R&D to advance our pipeline and our technology. The addition of staff to drive long-term software sales growth and G&A expenses to continue to build the infrastructure necessary to support the Company's growth as we scale globally.

Other expense was $300,000 in the third quarter of 2021, compared to other income of $18.7 million for the third quarter of 2020, which included a gain from our shares in Relay following their IPO last year.

We recorded a net loss for the quarter after adjusting for non-controlling interest of $35 million, compared to net income of $3.9 million for the same period last year. The variance is driven by planned investments to drive long-term growth, as well as the gain we recognized from our Relay shares in the third quarter of 2020.

We ended the third quarter with cash resources of $600 million compared to $617 million at the end of the second quarter of 2021. Through the first 9 months of this year, we have seen a reduction in cash balances of $43 million. Turning to a summary of our financial outlook for the full year.

I mentioned earlier that we are maintaining our expectation for software revenue in the range of $102 million to $110 million, which implies year-over-year growth of approximately 15% at the midpoint of our range.

Looking ahead at drug discovery revenue for the full year, the anticipated timing of milestones on several of our collaboration programs has changed, shifting revenue opportunity from 2021 into 2022. Revenue in the segment can be highly variable period-to-period as the decisions on program timelines are largely in the hands of our collaborators.

Accordingly, we are adjusting our full-year 2021 expectation for drug discovery revenue to a range of $22 million to $24 million, updated from our previous expectation of $22 million to $32 million. We anticipate this shift in revenue opportunity to be primarily spread throughout next year.

And I'd like to offer a little more color on our outlook on this segment.

We expect solid growth in 2022, and as we look out over a longer time horizon, we see the opportunity for an inflection in revenue for this segment starting in 2023 and beyond, which would be driven by decisions to partner any of our internal programs, as well as the continued progression of our collaborations.

We'll provide more on our 2022 outlook early next year in our fourth-quarter call. With this adjustment to our drug discovery revenue outlook, we expect total revenue in 2021 to range from $124 to $134 million, representing approximately 19% year-over-year growth at the midpoint of the range.

As we have previously stated, we anticipate that full-year operating expense growth will be higher than the 42% annual growth rate we saw in 2020, primarily driven by our commitment to fund R&D to advance our technology and our internal drug discovery pipeline, as well as the need to build the infrastructure to support our global operations as we scale.

We also anticipate that software gross margin will be lower than the 81% reported in 2020 to support large scale deployments of our software platform. We're very pleased with the progress we've made in the first 9 months of the year.

We continue to see momentum across the business with the addition of new customers, decisions by customers to increase adoption of our software platform, and progress across collaborative and internal programs. I will now turn it over to Karen for a review of drug discovery..

Thank you, Joe. Good afternoon, everyone. During the third quarter, we continued to make advances across our internal pipeline and portfolio of collaborative programs powered by full-scale deployment of our platform. The first of our internal programs is on track to begin clinical development next year.

Several collaborative programs have advanced in the clinic this year. We are excited about Morphic 's recent announcement about preparations to initiate Phase 2 studies, the MORF-057 in Q1 next year.

Our multi-target collaboration with Bristol Myers Squibb is our largest drug discovery partnership, and we are pleased with how the programs are progressing. We announced today that the companies have prioritized another precision oncology target that will replace the HIF-2alpha G323 e-mutant program.

We now have full rights to this program, but given that there is now an FDA approved HIF-2alpha inhibitor and data regarding the prevalence are still pending, we are focusing our resources on another promising target.

We also announced today that we have expanded our partnership with BMS in a new agreement to discover, develop, and commercialize bi-functional degraders for the same targets as our existing collaboration.

Rather than blocking the activity of a target bi-functional degraders, which have emerged as a promising modality, can eliminate proteins all together through the proteasomal degradation pathway.

Turning to our internal pipeline, in addition to our strong discovery research team, we are building a team of resident translational and clinical expert to support the advancement of our internal programs as we prepare for clinical development.

Last week, we reported that we will present new pre -clinical data from our lead program MALT1 at the ASH annual meeting. This will include, data showing strong binding affinity, potent inhibition of MALT1 enzymatic activity, and anti - proliferative effects with multiple MALT1 inhibitors in preclinical models of lymphoma.

Overall, we are very pleased with the characteristics of our compounds and we believe we have an opportunity to move a potential best-in-class MALT1 inhibitor into the clinic. Subject to completion of the pre -clinical data package. We are on track to submit the IND for our MALT1 development candidate to the FDA in the first half of next year.

We are also making great progress with our CDC7 program. We have selected a development candidate, making this the second program to enter IND enabling studies this year.

CDC7 is built to be a knight to cancer cells, proliferative capacity, and ability to bypass normal DNA damage responses targeting proteins that plan potent roles in DNA damage, replication, and replication stress is gaining momentum of therapeutic approach for cancer.

Our peak CDC7 inhibitors have strong anti-tumor activity in preclinical models of AML in combination with and other marketed agents. We believe the data we have generated to date provide compelling opportunities for further studies in the clinic, both in hematological malignancies and potentially in solid tumors.

Our third late-stage discovery program, WEE1, is also a DNA damage repair target. WEE1 is a tyrosine kinase regulator of G2M cell cycle checkpoint, which when inhibited, reduces cells liability by inducing apoptosis as cancer cells and has been shown in third-party studies to have clinical activity in solid tumors.

We have identified multiple highly selective we1 inhibitors with desirable drug-like properties that shows strong pharmacodynamic responses and anti-tumor activity. In pre -clinical models. We believe this profile may position our compounds as promising candidates for applications, both as monotherapy and in combination with other agents.

In October, we announced a strategic research collaboration with the University of Texas MD Anderson Cancer Center.

The goal of this collaboration is to accelerate and optimize the clinical development path for our we1 program through biomarker driven tumor type prioritization, patient stratification, and validation of biomarkers that predict response or assistance to inhibitor.

As our first 3 internal programs advance to the wards of clinic, we're adding new programs to our pipeline. When we select new programs, we look for targets that are structurally enabled and have established biological or clinical validation.

Additionally, we look for targets where our protein structure prediction and refinement capabilities give us an advantage, and where we believe we can solve a design challenge by applying our computational platform. In August we announced an undisclosed immunology program.

And today, we're announcing the addition of an undisclosed precision oncology program to our pipeline. We now have 5 wholly-owned programs and expect to initiate several more in 2022.

In summary, our diverse portfolio of collaborative programs continues to advance and activities are underway within our internal pipeline to enable R&D submissions and the start clinical trials next year. We are extremely pleased with the overall progress and believe we have multiple value-creating opportunities ahead of us.

I'll now turn the call back to Ramy..

Thanks, Karen. As we look back on our work this year, we are very pleased with the progress we have made across our business. Our technology is having a significant impact on our collaborative and internal drug discovery programs, as well as our material science programs.

Our software customers are increasingly recognizing the benefits of deploying our platform at scale. And we now have 5 internal programs, with 2 development candidates advancing toward the clinic. And we are growing our team of exceptional scientists and professionals to deliver on our mission of transforming drug discovery and materials design.

At this time, we'd be happy to take your questions.

Operator?.

Our first question comes from Michael Ryskin with Bank of America..

Hey, thanks for taking my question, guys. I want to follow-up on your comments in the prepared remarks regarding the drug discovery business and the updated view for 2021 versus 2022. It sounds like some projects got delayed or some milestones and some collaboration-based payments got delayed until next year.

And yet you that 2023 is going to be the inflection year.

So, I just want to clarify, if we move some of those revenues from this year to next, is there any reason why you're not expecting a pretty big uptick there, a big jump in drug discovery revenues next year? And I was just thinking in all of that on a multiyear basis, if you go back to 2019/2020, it seems like we've been waiting for some of those collaboration payments to step up.

Anything you can point to in sort of big picture why that's taken a little bit longer to play out?.

Sure. .

Thanks. You're right, in our prepared remarks, we did indeed indicate that we see the opportunity for solid growth next year in the drug discovery segment and book. And a real opportunity for inflection in 2023 and beyond. In terms of revenue.

That's driven primarily by the fact that we see very large milestone opportunities as we look out over a longer time horizon. I just I just. Refer to the BMS deal as a good example of this. So, we have the opportunity to earn $2.7 billion in milestones across 5 programs as they advance.

And $1.6 billion of that is achievable starting as early as late pre -clinical phases and on through development and regulatory phase. And so, when we say a real inflection, we're talking really about just very -- the possibility and the opportunity for some very large numbers.

We're not saying that we wouldn't have strong or solid growth next year relative to the base. But these numbers are still growing and that business is still very much in its early stages..

Okay. Great. I appreciate that. And then on the internal pipeline, Jaren, I know you touched on MALT1 and you indicated IND application in the first half of 2022. But could you touch a little bit on the -- on some of the other programs? I think in the past, you had indicated potential for up to 3 total IND -enabling -- or IND submission next year.

Could you give us an update on how those IND -enabling studies are going and what the updated view for applications next year is..

Thanks for the question, Mike. We actually announced today that we've selected a development candidate for CDC7. So, as you anticipate, that's in IND -enabling studies. And that puts us on track for keeping progress on that program towards completing that IND -enabling package next year. And as you know, the next step is IND submission.

And then for our third program, little bit far from next stage, WEE1 program, similarly, it's making great progress and we're on track. I think we're a little bit far out to talk about the exact number of IND submissions.

All I can say is that so far so good in terms of the nomination of DCs and moving things into that next stage, IND-enabling studies. We'll keep you updated..

Great. Thank. I appreciate that..

Our next question comes from Gary Nashman with BMO Capital Markets..

Sorry about that. Hi, good afternoon. So first on the software revenue, how much deeper can you go with existing customers? How much more growth can you get, generate from your existing customers? And then for new customers, do you expect that pace to accelerate or moderate in the next 1 to 2 years.

And then are you still very confident in the high 90s renewal rate across the board and how close to year-end from a -- do you get better visibility on that just in terms of those renewal rates?.

Yeah. That was all really good questions. First, with regard to the renewal rates, yes, we're very confident of being able to maintain our long historic, extremely high retention rate. We see no evidence whatsoever to suggest that it won't be in the very, very high 90s.

And so that kind of answers the other part of the question right, that there's a lot of visibility in that. But the more important question I think is the first one that you asked. What really is the opportunity and where are we now relative to where we see customers going.

So first of all, as we said in the prepared remarks, we really are seeing a real shift in the nature of the discussions that we're having with heads of research where there's clear interest in scaling up. And here's what's really neat about it. What we're able to do now is talk about what it took for us to advance our programs.

I think when you look at how rapidly our collaborative programs and our internal programs are progressing, how we're able to get to development candidates and just a couple of years with so few compounds being made. We're able to relay that information to our customers.

And it turns out, the answer is, and we talked a lot about this, is application of the technology in a much larger scale. Simply what that means is that customers require significantly more licenses than what they have access to now.

And we've -- it's a pretty simple calculation, we've determined that our software customers, if they were using our software at the same level that we're using it internally and collaborative programs.

The spend would be somewhere in the range per Company of from $30 million to $40 million and we're approximately in order of magnitude from that for the very largest customers, our largest customers. So that's where we see the opportunity.

And again, like I said, I think the nature of the discussions we're having with quite a number of these companies points towards that being a real opportunity in the coming years..

Okay. And then on the internal pipeline, I'm curious, what are the economics with the MD Anderson collaboration for the development of the WEE1 program.

And what will they do for you specifically? And could that potentially be expanded for the other oncology programs, whether it's the CDC7 and the MALT1 or the new target that you guys talked about? Thanks..

Yes, thanks for the questions. We have not revealed the economics. I think what we can say is that these are pretty back-ended on the basis of success, not just in identifying and progressing biomarkers and patient selection strategies, but also clinical advancement of our program.

In terms of the potential for broadening of that relationship, I will say we've had excellent interactions with a number of PIs at MD Anderson and a number of other academic institutions experts in their respective fields with regard to both the mechanisms and the tumor types that we're progressing towards.

I would say that what's attractive about MD Anderson is that they have the very largest collection of patient-derived tumor samples in the world. And obviously, that gives you a great opportunity to focus the clinical development plan for your assets. We'll continue talking to them about all of our mechanisms, but our real focus right now is on WEE1..

Okay, great. Thank you..

Thanks..

Our next question comes from Matt Hewitt with Craig-Hallum Capital Group..

Good afternoon. Thank you for taking the questions. Maybe the -- maybe the first one for me, I know that this year has always been very back-end loaded as far as software sales were concerned, and I'm just curious a month into the quarter, how things are progressing, how the discussions with customers are progressing, any color along those lines..

Sure, Matt, I'd like talk about that..

Go ahead. Go ahead, Joe..

Sorry, Ramy. I just wanted to comment on the software outlook. I think the thing that we want to refer -- want to draw to the third quarter is that the third quarter was always seen as a slower growth quarter because of some base year impacts where we had a handful of multiyear deals in third quarter of 2020.

At the same time, we saw growth from the two keys underpin, key growth drivers, namely the addition of new customers in the quarter, as well as customers continuing to increase adoption of our solutions. We see that momentum -- we've seen that momentum over many, many quarters now and we are confident in delivering in the fourth quarter.

We're on track to what we expected, and that's why we're reaffirming the guidance. I will say that the fourth quarter is a heavy-volume quarter, pretty much always, and that's why the numbers are big and it's back-end loaded..

Understood. And then -- and maybe tag onto that a little bit.

With the new customers that are coming in, and given your prepared remarks regarding customers and accelerating some of their adoption of the software in their development, are you seeing a change with new customers when they come in relative to customers, maybe a few years ago, where now they're coming in and maybe buying more upfront and so they're starting at a higher point and then growing from there..

Sure. We are seeing that. So, we're seeing in some cases new customers coming in at much higher levels. Obviously, there are new biotech companies coming online every quarter. I think that the proof points in our business are pretty -- in our software and our solutions are pretty widely understood and well known.

And so, we are seeing a lot of traction there and it's a pretty significant contribution to our growth rate. We're really excited to see that. And similarly, where we see new customers on the Materials Science side, we see the potential for the starting points there are to be higher as well..

That's great. Maybe if I could one last one here regarding the Materials Science side, as you are seeing more and more interest on that side of the business, are you adding more resources both on the sales and support side to address that growing market? Thank you..

Sure. Yes, we are Matt. We are investing in materials science. we're investing in the underlying technology which we've talked about through -- in multiple ways, 1 is the research project that we have with regard to battery technology. We're also investing in the sales and marketing support, both in the US and globally, pretty much around the world.

We see opportunity across different regions to start to expand not just the verticals that we're in today, but also into new verticals. So, we're investing in all of that..

Great. Thank you..

. Our next question comes from Gora Gabarachu with BMO Capital..

Hi guys, thanks for taking my question. Just one for me and then a follow-up right after.

In 2020 you recorded -- can you guys hear me, okay?.

Yes. Yes..

In 2020, you guys recorded you have 60% year-over-year growth of customers with ACV over a million bucks.

My first question is, at this point in the year, are you seeing similar growth in this specific cohort as we creep in to the end of the year, and how does that growth differ from the other ACV groups?.

Sure. It's -- we don't currently report on our quarterly progress towards those year-end figures, we will be reporting on that in early next year in our fourth quarter call. I can just tell you though that each quarter we're seeing the continued pattern where customers are increasing, making decisions to increase the adoption of our solutions.

And so, fourth quarter being a high-volume quarter with a lot of large customers, that number really rounds into shape at the end of the year. And we'll update you at that point..

Got it, got it. And then just a quick follow-up more on the drug discovery side. I know you guys mentioned ShouTi financing the $100 million. Just on that point, if you're able to disclose. If not, no worries. If you have any program updates for that collaboration.

I know the cardiopulmonary program was in Phase 1 and the metabolic was in IND -enabling studies. Just based on the financing, if there's anything worth mentioning if you're able, of course, would be great. Thanks..

Thanks for asking me. We're really pleased with the progress of those two programs and other programs of the Company, but we're not in the position at this time to disclose any additional information beyond what you just said, and that was correct what you said..

No problem. Thanks, guys. Appreciate the call..

Yeah..

Our next question comes from Michael Yee with Jefferies..

Hey, guys. Good afternoon.

Can you hear me, okay?.

Yeah, perfect..

Great. Thanks. I have a 2-part question. It's a tough question, but I think it's a fair question, and that is in regards to the wide guidance range that you still have for the full year.

Can you just talk a little bit about the lower end and the upper end of that given I think there's only like five weeks left in the quarter, literally that amount of business that can still close in just the last five weeks.

but certainly, consensus looks at that because consensus that high end of the guidance already, how that range could still be so far in play with just so many weeks left in the quarter. And the second part of the question is a little bit related.

In 2020, COVID had a big impact positive and you were closing huge deals in 2020, I wonder if the changes in COVID and the pandemic are impacting things in the timing and the cadence of contracts. As there is a lot going on these days, where people going back to work in batches.

So maybe just put those 2 together and maybe help us out with the guidance so close to the end of the year. Thank you..

Sure. I can talk about the first element of that and offer my thoughts. So, Mike, thanks for the question. So, I think what's important to keep in context here is that fourth quarter is truly a large volume quarter. Many, a large number of our very large contract renewals are in the fourth quarter.

We, of course, have ongoing discussions with these customers all year long talking about the benefits of ultra large deployment of our solutions. And we're making a lot of progress. So, we are on track for the full year.

However, the extent is that these customers make that decision in this time frame at particular sizes, will determine where we fall in that range.

And so, as you know, some of our contracts are getting pretty large and can swing the results, but we're really excited about the underlying momentum that we're seeing in this regard in addition to the continued addition of new customers.

And we think it really does bode well for not only delivering on what we're telling you in the fourth quarter, but also setting up setting us up well for 2022 and beyond. With regards -- Yeah. I'll offer mine and then if Ramy might have additional perspectives..

Sure..

But with regard to COVID, I would again point to the same thing, the same underlying momentum that we're seeing this year in -- there's no hesitation and or difficulty in adding new customers.

We're seeing that pattern continue this year and we're seeing customers make decisions to upsize their deployment of our solutions with pretty large contracts and pretty large commitments. And so, while we may have gotten a boost last year, and the growth rates therefore, are comparing against a very high growth rate year.

I think those -- the underlying trends and the momentum of the business are those key -- two key growth factors are continuing and really bode well as we go forward. Ramy, did you have any additional --.

No, you cut it very well..

Great..

Okay. Thank you..

Thanks, Mike..

I'm showing no further questions in queue at this time. This concludes today's conference call. Thank you for participating. You may now disconnect..