Thank you for standing by, and welcome to the Mayne Pharma FY 2022 results conference call and webcast. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the ask a question box. I would now like to hand the conference over to Mr. Scott Richards, CEO of Mayne Pharma. Please go ahead.
Thank you and good morning, everybody. Thanks for joining us today to discuss Mayne Pharma's full year results for fiscal 2022. Joining me on the call is Peter Paltoglou, our CFO. Today, I will provide an update on our business strategy and an overview of the recent transaction we announced to sell Metrics Contract Services to Catalent. Peter will then provide details on the financial results, after which we will open up the call for questions. Turning now to slide four. Just over two weeks ago, we announced the acceptance of an offer for Catalent to acquire Metrics for a purchase price of $475 million or AUD 679 million. The board believes this represents compelling value for Mayne Pharma shareholders, at approximately 5x revenue and 16x EBITDA on a fiscal 2022 pro forma basis.
As part of the sale, we have agreed to terms of a five-year supply agreement with Catalent to ensure continuity of supply for certain Mayne Pharma products manufactured at the Greenville site. Completion is subject to customary closing conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Act. Last week, both parties filed their notifications to the FTC and the waiting period is 30 days. We expect the transaction to be completed well before the end of the calendar year. We are advanced in planning for the separation of the business, and our intention is to get a standalone site as soon as possible to ensure a smooth transition for employees and the ongoing Mayne Pharma business. We expect transitional service agreements between Mayne Pharma and Catalent will continue for around 12 months. Moving to slide five and the strategic rationale for the deal.
Of course, our balance sheet will be significantly strengthened as a result of this transaction. Our business will be more focused and less complex, and we will also have unlocked significant value for our shareholders that will be realized through pending capital management initiatives. Importantly, we expect to be able to fully support our organic growth plans for NEXTSTELLIS as this product enters its critical second year of commercial life and as the impact of the pandemic resides. Of course, support Mayne Pharma's broader growth strategy in women's health and dermatology while continuing to innovate around our US go-to-market commercialization approach. Moving to slide six and the capital management matters. The net proceeds from the sale will be used to repay the syndicated debt facility, which has AUD 342 million outstanding at the thirtieth of June two thousand and twenty-two. Sorry, that's Australian.
The outstanding debt amount has not changed since the 31st of December 2021, other than for movements in FX. After allowing for reinvestment needs, we intend to return the net proceeds of the sale to shareholders in the most efficient way. This could include a capital return, a special dividend, both franked and unfranked, and an on-market share buyback. The capital return is subject to the ATO confirming any such payment is not treated as a dividend for income tax purposes. We expect circa AUD 100 million could be returned through tax-effective mechanisms such as a capital return or a franked dividend. The final quantum and timing will be communicated in the coming months, and we will be seeking shareholder approval at the 2022 AGM for some of these activities.
Moving to slide eight, which outlines the future strategic focus of Mayne Pharma, which will center upon building our women's health and dermatology franchises in the U.S. and supporting our growth strategy for our international business. In women's health, we see NEXTSTELLIS as the beachhead for creating a leadership position in this market. We plan to broaden our women's health portfolio, adding complementary products that are synergistic at a therapeutic level and that leverages our established commercial infrastructure. In dermatology, we have one of the leading offerings in the United States, with more than 20 marketed products across all significant dermatology disease states. We also have a unique go-to-market approach that has attracted high quality partners, and we plan to continue to extend our offering in dermatology while also developing the efficiency and effectiveness of our unique commercialization approach.
To that end, for some time, we have been talking about our strategy to actively participate in the disintermediation of the US pharma value chain and develop a superior proposition for patients and their physicians. We are calling this end-to-end market solutions, which is focused on delivering better value, less friction, and improved convenience and price transparency to patients. We are poised to start delivering tangible outcomes around this broad initiative in fiscal 2023, building on what we have already done and achieved in dermatology. Moving to slide nine. This shows that more than 80% of our reported gross profit is in more durable and predictable businesses. Where we have a strategic basis to compete effectively. Excluding retail generics, the group reported revenue growth of 28% on the prior corresponding period, highlighting the strong growth we are seeing across these other businesses.
In terms of retail generics, as we've been saying for several years now, we do not anticipate a fundamental improvement in competitive pressure going forward based on the leading-edge behavior of buying groups. Moving to Slide 10 and NEXTSTELLIS. Across our first launch year, we achieved underlying demand of almost 70,000 cycles. Our exit rate in Q4 of fiscal 2022 was 35,000 cycles, up 69% on Q3. We estimate approximately 15,000 women are using NEXTSTELLIS based on leading-edge cycle data, which is tracking at around 3,800 cycles per week. NEXTSTELLIS has also been the fastest-growing branded contraceptive in 2022 in the U.S. based on total prescriptions dispensed. In Q4, we achieved the goals we set as a trigger to launch our direct-to-consumer campaign.
With HCP awareness above 75%, more than 3,000 writers of NEXTSTELLIS, and commercial insurance coverage above 70%. Today, we have over 4,700 writers of NEXTSTELLIS, which is approximately 50% of our target audience. Each week, we are adding about 100 new writers and over 1,000 return writers. Productivity per writer is also improving, with our top decile writers averaging 19 cycles per quarter versus 16 cycles per quarter back in May. Gaining new writers and improving the productivity of each writer will have a compounding impact on the number of prescriptions dispensed. In terms of insurance coverage, which is a key ingredient to ensure women can access the product at an affordable price, NEXTSTELLIS has 70% formulary access for commercial patients, of which 55% is unrestricted as reported by MMIT.
This puts us on par with most other branded contraceptives. Slide 11 shows the growth of NEXTSTELLIS writers over fiscal 2022. Pleasingly, 85% of HCPs who wrote NEXTSTELLIS in the first half have returned in the second half. Slide 12 shows the weekly and monthly performance of NEXTSTELLIS across several metrics, including new prescriptions, refill prescriptions, total prescriptions, and cycles. The product has shown consistent growth through most of last year. In July, performance flattened and reflects two less trading days, as well as the summer holidays and the overall market being suppressed. We also had quite a bit of sales force disruption through this period as we realigned some territories to optimize reach and frequency. Pleasingly, in August, we are back to double-digit growth on a four-week by four-week rolling basis. Moving to slide 13.
In June 2022, we commenced our DTC or direct-to-consumer campaign, which is key for any branded contraceptive launch. Patients play an active role in choosing their contraceptive method, and we know 80% of the time that a consumer makes a brand request to a physician, they receive that requested prescription. The DTC campaign is across targeted digital and social media channels such as Facebook and Instagram, as well as the key points within a woman's healthcare journey, such as a point of care. The campaign is designed to drive consumer awareness and differentiation of the product and brand requests. The key messages are around the first new birth control pill with a different kind of estrogen. Estetrol (E4) is a native selective estrogen made from a plant source, and women taking NEXTSTELLIS will have a predictable cycle that closely matches their natural cycle.
We don't expect to see any material impact in performance metrics from the DTC campaign until later this calendar year, as it takes time for this to flow through, given patients need to see their HCP and then receive NEXTSTELLIS samples to trial the product. What we can say at this early stage is that we have reached 5.6 million women with advertising that are in our target audience. Also, nextstellis.com monthly users have increased 200% to 37,000 since the campaign commenced in June. Moving to slide 14. In late July, we announced a strategic collaboration with GoodRx, which is a U.S. consumer-focused digital healthcare platform, which has market-leading reach with six million monthly active consumer users and over 800,000 HCPs using their platform for their patients, including a significant number of obstetricians and gynecologists.
The collaboration with GoodRx is about delivering an enhanced direct-to-consumer campaign to drive increased awareness and accelerate growth of the product. As part of the collaboration, we have launched GoodRx Women's Health Hub, which offers patients education, telehealth options, treatment, and savings. Moving to slide 15. We continue to keep a close watch on the Affordable Care Act, or more commonly known as Obamacare. In July, three government agencies, Labor, Treasury, and Health and Human Services, together released further guidance around contraceptive coverage and access, and reminded PBMs and insurers that if they don't comply with the law, they will face enforcement action to ensure patients receive coverage with no cost-sharing.
When considered against the backdrop of the threats of women's reproductive rights in America, we're hopeful that stronger enforcement will lead to better access, reduce out-of-pocket costs, and therefore lower abandonment rates for NEXTSTELLIS. Moving to slide 16. Our dermatology business has delivered a very strong result this year. This business is a mix of brands and off-patent medicines, which we market to an extensive network of physicians and independent specialty pharmacies. Our go-to-market approach is unique and is focused on providing greater convenience and price transparency for patients, reduced administration for the physician, and greater throughput for the dispensing pharmacy. In fiscal 2022, we launched 12 new dermatology products. These products have added new earning streams and further diversification to our portfolio.
Over the last two years, we have grown our dermatology portfolio from nine products to more than 20, with revenue increasing from $51 million to $84 million, and direct contribution earnings more than doubling from $14 million to $34 million. The recent launches of generic Oracea, generic Epiduo Forte, and generic Aczone have all had a significant contribution to the result. We have also achieved this top-line growth while materially reducing our operating expenses over the last two years, which is a testament to the efficiency of our commercial model and our ability to leverage our infrastructure beyond what a traditional approach could deliver. Slides 17 and 18 cover our international business, which has demonstrated a solid track record of double-digit growth. This business includes a growing CDMO platform, which is based in Salisbury, South Australia, offering clients formulation development and manufacturing services.
This facility is the largest Australian-owned, full-service solid dose manufacturing plant, producing TGA and FDA-registered products. Over the last five years, CDMO revenues have grown 15% on a compound annual basis. The outlook for international was positive, with a solid pipeline of near-term launches, which will support further growth. The recent approval of NEXTSTELLIS in Australia and Kapanol in Switzerland for opioid substitution therapy are two products expected to drive revenue growth. Moving to slide 19, which highlights the current challenges within the U.S. pharma market. External forces continue to challenge the traditional pharma model, creating significant market inefficiencies. Consumers and prescribers are being marginalized due to rising costs, reduced access, less choice, declining quality of insurance coverage, and greater administration for the processing of claims for patients.
Slide 20 outlines our vision of an end-to-end differentiated platform that helps patients receive the treatments they need with a trusted physician that is seamless, transparent, and cost-effective. Mayne Pharma today has a differentiated business model compared to most other U.S. pharma companies, with both brand and generic platforms, extensive drug sourcing and commercialization capability, access to 13,000 HCPs through our dermatology and women's health platforms, a unique go-to-market model in dermatology, and an agile and innovative leadership team. The next step for our business is a strategic collaboration with an online partner to further optimize our go-to-market approach to accelerate our vision to offer a complete end-to-end solution providing prescription products directly to consumers. With that, I'll now hand over to Peter Paltoglou, who's gonna go into further details about the result.
Thanks, Scott. I will take a few minutes to provide a brief overview of our financial results for the year. Moving to slide 22. At the top line, reported revenues were AUD 425 million, up 6%, or AUD 24 million, versus the prior period. Pleasingly, second half 2022 revenues were up AUD 32 million or 16% as compared with the first half of the fiscal year. The sales increase versus PCP was mostly in dermatology. However, international Metrics and branded products all contributed to the revenue growth. Reported gross profit was AUD 171 million, down 6%, and the gross margin of 40% was down from 45% in the PCP. The lower margin reflects the underperformance of the retail generics business due to the discontinuation of a number of unprofitable retail generic products.
This highlights the ongoing competition and pricing pressure we continue to face in this market. Reported EBITDA was AUD 87 million, but includes a number of one-off adjustments which have been removed from underlying earnings. Underlying EBITDA was AUD 45.7 million, down 28% on FY 2021. Removing the impact of our launch investment in NEXTSTELLIS from the results, underlying EBITDA was AUD 90 million, up 24% on PCP, demonstrating the growth we are seeing in other parts of the business. FX has had limited impact on our results this period, so we haven't called it out in the materials presented to you today.
At the bottom line, we reported a net loss of AUD 284 million, which has been impacted by AUD 170 million of non-cash impairments of certain generic intangible assets, Lexette foam, and SUBA-Itraconazole for the treatment of BCCNS. On an underlying basis and excluding the impact of NEXTSTELLIS, we would have generated circa AUD 17 million of profit before tax. Slide 23 of the presentation outlines the underlying adjustments to EBITDA. The most significant item is the non-cash credit of AUD 81.6 million arising from a decrease in the fair value of earn-out liabilities. AUD 71 million of this relates to NEXTSTELLIS and the reassessment of when sales milestones would be payable across the balance of the license term.
With the slower sales trajectory compared to our original business case, we have seen some of the earn-out payments move into later periods or drop off from the schedule, which reduces the value of the liability on a net present value basis. There was also a meaningful reassessment of Lexette liabilities in the amount of AUD eight million, reflecting the supply chain disruptions with that product. Other adjustments include AUD 20 million of costs related to the discontinuance of certain non-viable generic products, AUD five million of restructuring costs, and AUD 10 million of transaction costs related to the sale of Metrics. In terms of our segment performance, the branded product segment, which includes Nextstellis, Tolsura, and Soltamox, reported revenue of AUD 11 million, and the direct contribution was a loss of AUD 47 million, reflecting those investments made in the commercial launch of Nextstellis.
NEXTSTELLIS sales were $4.2 million, and operating expenses were $35 million. Second half FY 2022 NEXTSTELLIS revenues grew 200% on the first half, reflecting the strong growth we have seen in underlying demand. Tolsura and Soltamox revenues were up 20%, but importantly, the company restructured the go-to-market model in May to reduce the cost base, which has led to positive direct contribution across the last two months of FY 2022. Portfolio products, which includes our dermatology and retail generic products, had mixed performance. The dermatology portfolio performed strongly, as Scott has previously highlighted, at both the revenue and direct contribution line. Retail generics revenue, however, was down 27% on PCP, impacted by ongoing pricing pressure and further competition on key products.
We aggressively rationalized this portfolio and discontinued 15 unprofitable products this year, which has led to stock write-downs and returns on these products. The international segment delivered a very strong performance, with revenue up 27% to AUD 54 million and direct contribution up over 166% to AUD eight million. International saw double-digit growth across all business lines, with Australian products up 14% to AUD 20 million, benefiting from the launch of Solaraze to treat actinic keratosis and a PBS price increase on erythromycin. CDMO and international product revenues grew 36% to AUD 35 million and benefited from new formulation development contracts and growing sales of Kapanol, Kadian in Canada and Switzerland. Metrics delivered another solid year, with sales up 11% on PCP to AUD 91 million, driven by new formulation development revenues and commercial manufacturing revenues.
At the direct contribution line, the business reported earnings of AUD 42 million, up 14% on PCP. Moving to expenses. R&D expenses were down AUD seven million. The company continues to streamline its R&D activities and move to a virtual partnership-based risk-sharing model. Corporate expenses were flat, notwithstanding some currency headwinds and rising costs due to inflationary pressures. Total finance expenses were flat at AUD 32 million, although this includes a number of non-cash items, including the discount unwind on earn-out liabilities. Cash interest costs on the syndicated and receivables facilities reduced by AUD one million due to a mix of utilization and pricing benefits across the year. The average cost of funds declined from 3.7% in the PCP to 2.8% in FY 2022. Slide 30 outlines our current capital structure and debt covenants.
As noted earlier, we expect to repay our syndicated debt facility following completion of the Metrics sale, so I won't go into detail on this. We note that given this repayment pathway, these facilities have been designated as current in the accounts at 30 June. One further point to note is the receivables financing facility is expected to remain in place. This is an efficient source of funding aligned with our receivables pool maintained across the US commercial business. We would expect the facility to reduce in scale as Metrics's customer receipts are removed from this facility. Moving to cash flow. Operating cash flow was negative due to reduced earnings impacted by the investments we are making in Nextstellis and an increase in working capital to support the dermatology new product launches.
Adjusting for working capital and favorable tax impacts in the prior period, operating cash flow was AUD 17 million versus AUD 62 million in the PCP. The key investing cash flow items were AUD 10 million of CapEx spent on our two manufacturing facilities, AUD 22 million of earn-out payments, and AUD five million inflow from the sale of the vacant block of land in Salisbury. In terms of cash, our position ended at AUD 97 million at the end of the period, consistent with the PCP, and gross debt was up AUD 67 million to AUD 414 million. Looking forward, the company will maintain a conservatively structured balance sheet and is focused on rightsizing its operations in line with its go-forward strategy. With that, I will now hand back to Scott.
Thanks, Pete. Moving to outlook, to finish off the call. The company expects fiscal 2023 to be a transitional year, focused on resetting the business for future growth. In FY 2023, underlying earnings will exclude Metrics and associated transaction items. Metrics will be treated as a discontinued operation in the statutory accounts. Following completion of the sale of Metrics, we will restructure the organization to right size and become more streamlined and agile in line with our go-forward strategy. We'll also maintain a conservative balance sheet and pursue shareholder accretive business development opportunities, driving improved profitability and cash flow. Our key focus is to turn NEXTSTELLIS into a profitable product and make it one of the most successful oral contraceptive brands to have launched in the U.S. in recent times.
Fiscal 2023 is expected to be an investment year, but we expect sales momentum to accelerate following the DTC campaign. We are targeting underlying demand of more than 350,000 cycles in fiscal 2023. We will also look to expand our women's health and dermatology portfolios to leverage our established commercial infrastructure, aggressively pursue and begin monetizing our end-to-end patient-centric business model, and continue to pursue a market-leading position with our Australian CDMO business. With that, I'll now hand back to the operator, and we are open for questions.
Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the ask a question box. Your first question today comes from Melissa Benson with Wilsons,p lease go ahead.
Good morning, everyone. Thanks for taking my questions. The first question I just wondered about the NEXTSTELLIS guidance that you've included in the report today of 350,000 cycles. Can you firstly just confirm again how you're calculating those cycles? Then if we should just correctly infer that that's kind of five times the sales that you've achieved this year, and just to, I guess, a reminder again on, I guess, the total addressable market and where you still look to guide peak sales to.
Yeah. Thanks. It's Scott here. Cycles are derived from IQVIA data. We know exactly how many cycles are written per prescription. It's a blend of writing of one-month scripts and three-month scripts.
Mm-hmm.
We average around 1.75 cycles per script. That's how we derive cycles, and that's obviously a one-month supply for a woman. In terms of the 350,000 cycles versus the cycles in 2022, yes, it's broadly, you know, you could characterize it broadly the way you did. Of course, we need to think about inventory patterns and other things like that and trade buying patterns. You know, right now our trade versus demand is quite normalized, you know, which is good. That wasn't the position through most of fiscal 2022, because we obviously had a pipeline fill going into the start of the campaign, and then we were obviously hit with COVID and some other issues.
We've been burning through inventory, but it's good to see now that we have equilibrium between inventory holdings and demand.
That's helpful. Thanks. Just one second, one from me on the dermatology segment performance. Obviously there's very strong momentum there. One thing I wanted to know was around the OpEx costs that you've outlined on slide 16. That looks to be kind of flat to down. How should we think about kind of the efficiencies and leverage in that business and I guess the cost base moving forward for that particular segment?
Yeah, look, I think the cost base is gonna stay pretty stable. You know, what we've done is we've obviously increased the range of our portfolio significantly, and between pharmacy promotion and physician promotion, you know, we've found a way, and that's what's innovative about what we're doing, to market a portfolio of dermatology products. The broader our portfolio, the more we can market to, you know, a Mayne Pharma one-stop shop type approach across obviously a vast array of dermatological disease states. We think we can continue to expand the portfolio and do that in a very efficient, leverageable way.
Great. Thanks so much.
Once again, if you wish to ask a question, please press star one on your telephone. There are no more questions on the phone line. I will now hand over to Lisa Pendlebury, Mayne Pharma's Investor Relations Manager, who will ask the questions that have been received via webcast.
Thank you. The first question is from Kong Simocus, and he's asking about the current number of users of NEXTSTELLIS and how many users would you require to break even?
Yeah. Thanks for the question. We don't really look at it in terms of users. We look at it in terms of scripts written and cycles dispensed. You know, I did mention that we have around 15,000 women that have used NEXTSTELLIS. But at any point in time, we don't know exactly how many women are on NEXTSTELLIS. It gets back to the data set of scripts and cycles.
The next question comes from Gretel Janu. Do you believe NEXTSTELLIS peak sales could exceed $200 million, and the timeline to achieve this?
Yeah. Well, clearly, the trajectory of NEXTSTELLIS has been somewhat, while, you know, we're pleased with it's been somewhat, you know, it's somewhat dampened, as everybody knows who's been following the story versus our original expectations. That's mainly because of two things, COVID and all of the impacts there, which I don't need to go into, together with all brands, frankly, in the U.S. struggling with coverage in their first year or so of launch. Now with DTC about to kicking off and with the enhanced DTC package with, you know, partnership with GoodRx, with all the things we've learned and with the pandemic, obviously, almost in the rearview mirror, we expect this product growth gonna accelerate.
In terms of peak sales, we will have to wait and see, but certainly the company still thinks this will be a very strong product, and we're not pulling back from what we've said previously about peak sales. Clearly, those peak sales will likely be later than originally predicted. I would say one other thing, you know, I mentioned on the call, some of the enforcement actions that are potentially pending with the Affordable Care Act. You know, I think we need to watch that carefully, and that could be very impactful for a product like NEXTSTELLIS in terms of both reducing abandonment rate, which is still quite high for a brand like this, and improving our gross to net performance because of no patient cost-sharing.
Thanks, Scott. The next two questions come from John Hester. The first one's again around, actually both of them around NEXTSTELLIS. What is the realized price per cycle for NEXTSTELLIS? The second one's around the abandonment rate and where that is, and can it go lower?
You know, in terms of the specific realizable price, John, I don't think we can. You know, I mean, that's a very sensitive number. But, you know, I think if you look at the gross to net profile of the product and our published wholesaler acquisition cost of $195, our WAC price, you know, you can see that it is a sub-$100 net revenue per cycle price point. Sorry Lisa, what was the second part of the question?
About the abandonment rate for NEXTSTELLIS and, you know, where it is at the moment and can it go lower?
Yeah. Yeah, no, it can go lower. We've seen abandonment come down as coverage has gone up, as you would naturally expect, you know, and we can only really track it on the covered side of the business. You know, we've seen it drop on the covered side of the business. These are scripts that are covered versus uncovered scripts. We've seen abandonment drop from, you know, in the first couple of quarters in the 40%-50% area for covered patients down into the low 20s%, and we expect it to continue to drop a little bit. What we see across the class, for products that are more mature than us, you know, what we see is around 15%-20% abandonment, which is still too high.
We think we can certainly get into that peer set, if you like, and not be disadvantaged versus our peer set in the coming year. I would say again that some of the changes that we see happening with enforcement of Obamacare could well improve that metric materially further.
Thanks. The next question is from Gretel Janu, from Credit Suisse. What is the market opportunity for generic NuvaRing?
Yeah. Thanks, Gretel. The total market for NuvaRing, which is the brand plus generics, continues to be a very significant market, nearly 6 million rings a year. We think coming in in the order-of-entry position we have, we should be able to generate, you know, or you know, get to a 7%-10% share in this market, something like that. You know, this could be a high single-digit to low double-digit revenue item for us at peak. It's also a product that ultimately could be very useful for us in this intermediation approach, particularly once we expand that beyond dermatology into women's health.
Great. The final question that I have on the webcast is from Stuart Lawson, and it's around capital management. What is the company's go-forward strategy, and does the company see itself paying an annual dividend?
Peter?
Scott, you want me to take that one?
Yeah.
Look, I'll leave the strategy piece.
Yeah.
I can certainly sort of talk around the capital management agenda for the company. I mean, clearly, we've signaled in the results released today that as a consequence of the proposed sale of MCS to Catalent, there will be some active capital management coming up in the period ahead, which we will, you know, provide more specific details to shareholders in due course. As it pertains to being, you know, an annual dividend-paying company, I think I'll just make the observation that the company remains in investment mode, as Scott and I have spoken to across the call so far to date. You know, we're probably a step away from being in that stable harvest phase of companies that, you know, more typically, you know, are providing that steady annual dividend back to shareholders.
While we remain in this investment phase of our life cycle, you know, it's unlikely that we're gonna become a dividend-paying entity on an annual basis. That's how I'd respond to Stuart's question.
Great. Well, there's no further questions on the webcast. I'll now hand back to Scott for closing remarks.
Thanks, Lisa. I'd like to thank everybody for joining, and I look forward to your continued support and to talk to some of you obviously, over the next few days. Thank you very much and have a nice day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.