Earnings Call: Q1 2018

May 8, 2018

Good afternoon. This is the CorSo conference operator. Welcome and thank you for joining the DiaSorin First Quarter 2018 Results Conference Call. After the presentation, there will be an opportunity to ask questions. At I would like to turn the conference over to Mr. Carlo Rosa, CEO of DiaSorin. Please go ahead, sir. Thank you, operator. Ladies and gentlemen, good afternoon, and welcome to our quarter 1 2018 conference call. As usual, I will give you some top level comments on revenues and geographies and main events and programs for the company, and then I will turn the microphone to our CFO, Mr. Pedro, who will take you through the financials. Let me start as a general comment saying that this has been a good quarter for the company. Certainly, as since we are exposed in different geographies to currency, there has been a very strong impact due to exchange rate and mainly against the U. S. Dollar and the Chinese currency. So I will make all my comments on revenues based on constant exchange rate. So a constant exchange rate of the company in Q1 grew by 11%, which is in line with company expectation. And I would like then to divide my comments as usual in our immunoassay franchise, and then I'll talk about the molecular diagnostic products. As far as the immunoassay, assay, we had very strong growth in CLIA X Vitamin D revenues and the set of products grew worldwide by almost 14%. And as usual, growth has been led by product mix, launch of some of new products, which happened in the previous years and success in certain geographies, mainly Europe and Asia Pacific. As far as vitamin D is concerned, as said, our company expectation with vitamin D is that this franchise should decline between 1% 5% per year. Last year, it was a little bit better this year in quarter 1. The vitamin D is down by 2.6% at constant exchange rate. Certainly, this is a combination of steel growth in certain geographies for vitamin D and decline in other geographies like the U. S. Where the company is particularly exposed with this product and we certainly do suffer from increased competition and the price now of vitamin D is really becoming a commodity price. But overall, I think is well balanced and again minus 2.6% is on the low end of the decline that companies are expecting. As far as the different geographies, I would start from Europe. And when it comes to Europe, which today, thanks to the acquisition of the Siemens franchise for the laser business, it does represent roughly 50% of our business, notwithstanding the fact that the different countries in Europe are declining as a consequence markets are declining as a consequence of consolidation in price and certainly price decline. For us, Europe overall is performing very well. If we do not account for the cement contribution, so we maintain the same perimeter as last year, the growth of our European business is between 6% 7%, which is extremely strong. And again, and this is actually happening in all the different all the main countries, including Italy, which continues after some difficult year in 2016, continues its recovery. So certainly for us, Italy is a very important geography. It does represent worldwide a little bit over 10% of our revenues. And so good contribution by this country certainly have the performance of Europe. When we discuss about Europe, I think it's very important then to discuss updates on the Siemens acquisition of the Eliza product line. I think that the business is developing as we have expected. The Eliza franchise per se is relatively flat year on year. However, we have initiated a conversion program for the European customers. Today, we have actively converted 18 accounts and the funnel for the next quarter include 60 accounts. And conversion is going well. On average, we get a strong solid contribution coming from additional business that we get to these accounts when we place our Liaison Excel systems to replace the ELISA. So the program is going as expected. The collaboration with Siemens and the business has been extremely good in the interest of the customers, which will continue to be seamless accounts for all the other products that CMS will offer. So, so far, so good. It has been very satisfactory. When it comes to now let's move to a different geography. Let's move to the U. S. In the U. S, as said, we need to distinguish between the vitamin D and the non vitamin D business. The non vitamin D business continues to show strong growth, close to 20% year on year, mainly driven by the infectious disease franchise and fundamentally a strategy in the U. S, which is the conversion between a still existing, but ELISA business to the Diasporin Infectious Disease Specialty Essence. Certainly, this program also does benefit from the fact that we have been very successful in locking up the 2 largest labs in the United States when it comes to the full infectious disease menu and that certainly helps in promoting our brand into the hospital market and smaller laboratories, which is what the company is going after this date. So overall, our U. S. Business grew 5% year on year, which we consider on target to what we expect to generate from this very rich, but very competitive market. Now if we move to South America, South America was flat, but was actually a combination of 2 different dynamics. Brazil continues to grow in a very healthy way, 7% year on year with a business that as we have discussed few times was actually moved to more private hospitals, private commercial labs and leaving to the side the public, which is extremely complicated. And that resulted in healthy growth, very good profitability and a DSO, which is fully under control. So we're very satisfied from our Canadian business. Conversely, and I believe this is mainly a problem of timing, we had a decline in the quarter of our export business. Export means all the other countries that we cover through distributor. But we expect by year end this portion of the business to become positive, so to turn into growth. And therefore, I see this in Q1 simply as a phasing effect also related to the fact that there are certain tenders of a certain size that we expect to get in the following quarters. Now let's move to Asia Pacific. Overall, Asia Pacific provided very good results, roughly 15% growth year on year. But is I think what we need to help the financial community to interpret is the result in China. In China, our company, the truth of the matter is that our reagent revenues, so the LIAISON revenues grew by almost 17%. Whereas in quarter 1, instrument sales declined by 25%. And this is the result of something that we have actually already discussed in quarter in quarter 4 last year, which is the fact that we expect in the 1st two quarters growth in revenues coming from reagent due to the fact that in certain segments where we have invested in the previous years, we continue to see growth mainly in our installed base in the Class 2. By the same token, we're redirecting our distribution network of the distributors away from the Class III to the Class II. That means that we need to enroll new distributor. And that is the reason why in quarter 1 and quarter 2, we expect to sell less instrument than last year and then to start again selling systems to distribution to the distributors in Q3, Q4 when all the new distributors are going to be lined up. So overall, flat China doesn't really mean flat China, it means strong double digit growth in reagents. And just momentarily a slowdown in the instrument sales. Now, I would like then to move last before we get to molecular to discuss QuantiFERON program. As you know, with Cajun, we have announced the finalizing validations of the lots of the manufacturing lots for the QuantiFERON product. And we expect the launch to happen on time in September and subsequently filing with the FDA for the U. S. Approval. We have already agreed upon with the FDA agency, the clinical study, which is necessary to be conducted and we are organizing clinical sites. So overall, the QuantiFERON program is doing well, and we expect to start the commercialize this product again starting from September of this year. Now let's briefly move to Molecular before turning the microphone to Pier Giorgio. As far as Molecular is concerned, from a strategic point of view, we have increased our commercial sales force in the U. S. By 50%. So we made an investment to enlarge the commercial reach of the company. All positions have been filled, territory have been reassigned. And we did that because we really believe that the opportunity provided by Molecular in the U. S. Is far behind what was done under the previous owner. By the same token, as other players in this industry, we have enjoyed a very good influentracism, even if influent for us does not have the same weight as it carries in other operators. Notwithstanding that, it certainly was a good season. Our molecular effort outside the U. S. Continues in placing, in organizing our commercial subsidiaries. We have hired now molecular specialists in all the different European countries and we have proceeded with commercialization. Overall, the franchise provided a 20% growth year on year with very satisfactory profitability. You have noticed that notwithstanding the addition of this technology, our EBITDA margins has certainly not been diluted and then tells you that these are very good business. And to the contrary of other companies I've seen where the molecular technology per se requires lots of investments. And at the beginning, it does not carry the same results as a more mature technology as immunoassay does. When in this particular case, with this franchise in this positioning, we are getting from the get go positive contribution to our margin. So extremely satisfied visavis the way the molecular effort is going. And by the same token, we are in sourcing manufacturing on certain component of this technology that previously was done by 3 ms or 3 ms suppliers and that will lead us to have a full control over this technology by the end of 2018. So now I am going to turn the microphone to Pier Giorgio. He's going to take you through the numbers and then we're going to open up the session for Giovanni. Thank you, Carlo. Good afternoon, everybody. In the next few minutes, I'm going to walk you through the financial performance of Tia Soren during the Q1 of 2018. Before we start, let me please remind you once again that we began reporting the Siemens Eraser business from Q4 2017. And so the perimeter of consolidation is different from the one of last year. Said that, as usual, I would like to start with what I believe are the main highlights of the period. The strengthening of the euro against all the currencies in which we operate has generated some notable FX headwinds during the Q1 of the year. In order to gauge the impact of these fluctuations on our financials, let me please remind you that for every $0.01 movement of the U. S. Dollar against the euro, the Australian revenues moved by about €2,000,000 on an yearly basis. Considering the USD trend in 2017 and where we are now, I think it is fair to say that we will likely experience some more FX headwinds also in Q2, even though at a lower extent than Q1, whereas the FX should materially decrease in Q3 and Q4. Moving to the second point, we closed the quarter with an increase in revenues at constant exchange rates of 11.2 percent or almost €18,000,000 with a solid contribution of the like for like business, which grew by about 6% to 7%. Quarter 1 EBITDA at €63,300,000 or 38.5 percent of revenues grew compared to last year at constant exchange rate by almost 9.5 percent with a ratio of revenues of 39%. This confirms the ability of Diasporin to deliver consistently strong EBITDA margins quarter after quarter. Lastly, the group generated about €28,000,000 of free cash flow in the period and closed March 18 with a positive net position of almost €170,000,000 thus reaffirming a strong cash generation and a very, very healthy balance sheet. Let's now go through the main items of the P and L. Q1 revenues at €164,500,000 by 4.4 percent or EUR 7,000,000 compared to last year. As we said, constant exchange rate of the growth is 11.2%, including the contribution of the Siemensaliza franchise. Gross profit at €111,200,000 grew by 3 €3,300,000 compared to last year, closing the Q1 with a ratio of revenues of 67.6%. The difference with 2017, which closed at 68.5 percent of revenues, is mainly driven by the contribution of the Siemensalizer business, which is expected and as discussed in the previous calls is dilutive at gross margin level, but not again, not at EBITDA level, which is exactly the opposite. It's accretive at EBITDA level. And by some price pressure on clear me too products and mainly vitamin D as just discussed by Carlo. Total operating expenses at €58,500,000 or 35.5 percent of revenues have increased by 4.4% compared to last year. Please remember that about €3,600,000 of Q1 OpEx has been driven by the depreciation of the intangible assets, mainly know how and customer lease coming from the Siemens, Eliza and the Focus business acquisitions. Net of these elements, Q1 OpEx ratio on revenues at constant exchange rate would have been 32.9% against 33.5% of 2017. I think it is also useful to remember that Q1 2017 was particularly soft in terms of OpEx, as discussed during last year call, since some expenses slipped in 2017 from Q1 to the following quarters. Q1 other operating expenses at €2,000,000 are substantially in line with last year. As said that during 2017 course, the quarter has been affected by some expenses related to a reduction in the U. S. Considering the future introduction of certain products into that market. Beside the impact of the Irish side of that feature has not been particularly material and is in line with our expectation, which is €2,000,000 for the whole 2018. As a result of what just described, Q1 2018 EBIT at €50,700,000 or 30.9 percent of revenues has increased compared to 2017 by 1.5 percent or almost €1,000,000 The growth at constant exchange rate is positive for about 10%. The tax rate at 23% is 9 percentage points better than 2017, which closed at 32% and is in line with what we anticipated and discussed during Q4 2017 call. This variance is mainly driven by the positive impact of the Italian Patent Box and the U. S. Tax reform. These are effective starting from 2018. Net result at €38,300,000 or 23.3 percent of revenues is higher than previous year by €5,500,000 or 16.7%. The growth at constant exchange rate would have been just short of 30%. Lastly, quarter 1 EBITDA at €63,300,000 is better than last year by about €1,000,000 or 1.3%. The variance at constant exchange rate is positive from 9.3%. Q1 2018 EBITDA ratio on revenues is 38.5% at current exchange rate and 39% at constant exchange rate, thus confirming the strong profitability recorded in the last quarters and in line with the guidance. Moreover, when comparing Q1 2018 with Q1 2017, I believe it is useful to remind, as I just said, that last year we did particularly good also because of some favorable phasing in OpEx, which moved during the following quarters. During Q1 2017 call, I quantified this positive effect at about €2,000,000 Let me now move to the net financial position and the straight cash flow. We closed the period with a net financial position just short of €170,000,000 and about €193,000,000 in cash. The group generated almost €28,000,000 free cash flow in the 1st 3 months of the year. The difference vis a vis last year is mainly driven by 2 elements. On one side, Q1 2017, which closed at €44,000,000 was a kind of outlier and by far the best quarter of 2017. On the other side, Q1 2018 has been affected by some unfavorable phasing in working capital, particularly driven by the collection of some accounts receivable, which were due at the end of March and slipped to April. Let me please remind you that the positive cash impact of the Patent Box and the U. S. Tax reform will start to kick in from Q2 2018. Lastly, in view of the group's operating performance, the management confirms the 2018 guidance for both revenues and EBITDA, with a growth at constant exchange rate of around 11% 13%, respectively. Now let me please turn the line to the operator to open the Q and A session. Thank you. Excuse me. This is the COSCO conference operator. We will now begin the question and answer session. The first question is from Maja Pataki of Kepler Cheuvreux. Please go ahead. Yes. Good afternoon, gentlemen. Thanks for taking my questions. I have actually a couple of clarifications because the line was really bad and then a couple of questions with regards to your results. First of all, can I just quickly confirm, did you say that the conversion of the Eliza franchise that you've already converted 18 accounts or 80 and that 60 or 16 are remaining? I couldn't get that. The second one relates to the organic growth for the group in Q1. Did I get it correctly that you said it's somewhere between 6% 7%? Then if we look at the number for Q1 growth. I guess that Q1 should have been a really strong quarter for you given the flu season, but probably it was negatively impacted by China and that this was kind of moderating everything. Can you tell us how well your visibility is on instrument sales for China in H2? And then my last question will be, and I'm sorry for all the questions, Can you please decompose again your full year guidance? How is the how are the line growth or the 11% local currency growth that you're guiding for? How is it breaking up between organic and Siemens impact? Thank you very much. Okay, Maja. I will take the first three questions and then Leonardo will take the last one. Yes, conversion from Siemens, Eliza, we said 18 down, 60 are the ones that were already the offer is in front of the customer, and then we expect to convert in the next quarters. Let me remind you that the original plan accounted for an overall number of 300 accounts that will have to be converted from ELISA to Liaison is a combination of Liaison XL and Liaison XS. And these should happen within 3 years. So I think that we are well on plan vis a vis conversion. As far as the growth in Europe, yes, the growth in Europe without Siemens is between 6% 7%, which we consider solid growth in this geography considering that most of the markets are flat, if not declining. Now flu season, yes, you're right, we did benefit from flu season. But as I said before, our franchise, molecular franchise, the one that was actually acquired by from Quest was not so heavily skewed toward flu. So flu does not represent the majority of these revenues. This, as you can imagine, was more central laboratory business, was heavily driven by the fact that Quest was a customer and certainly flu is not tested within the Quest facilities, it's more decentralized. So yes, we did benefit from flu, I agree with you. But by the same token, the growth that you see is an organic growth throughout the different products that were either there or they've been developed and launched under the Diasporin ownership. Now last, the number of systems that you said, look, on average, as a combination of Liaison and Liaison XL, China was representing for us between 150 to 200 systems per year that we will selling or placing in the country. Again, that's the range, 150 to 200. I expect that since we are missing some of the opportunities as previous years in this quarter and probably in quarter 2, I believe that we may end year end around 120, 150 systems. But again, this is just a guesstimate I can give you, we'll confirm later on. Once we will have better visibility on the new network of distributors that we are lining up, again, as we have discussed a few times, to transition between 70% of the business today, which is in the hands of which is in Class III hospitals into more Class II? Yes. I will take the one that you have on the guidance. Hello, Maher. This is Francisco speaking. We never gave a breakdown of the guidance, 11% between like for like and the Siemens lighter contribution, but to give you some numbers. So we are expecting, as Caravo said, the vitamin D to go down around 3% to 5%. Clear XD to grow between 2 12% 14%, which means that the overall Clear franchise plus 8% 9% -ish percent year on year. Eliza is a different story because you have the contribution of the Siemens business again. And for the Molecular Reagents, what we expect is between 15% 20%. And that will made up together with instruments and other the 11 percent guidance that we gave and we are reaffirming in this quarter. Okay. Thank you very much for all the answers. Much appreciated. Just to double check, did you say also that organic growth for the group as a total was 6% to 7% in the quarter? Okay. And I'm just trying to understand, I understand that you don't want to give us a clear breakdown of organic or and acquisition impact of the 11%. What I'm trying to understand is whether we're actually seeing some sort of acceleration of your underlying organic growth based on all the acquisitions we've done in the past? That's what I'm trying to understand. Is there an acceleration from the 6% to 7% that DiaSorin was reporting? Or is that also the number that would be that's what the base business is growing? Look, Maher, I think that in this environment 6%, 7% of the basic business, the base business is a decent, if not top growth in the immunoassay of an immunoassay franchise, which today is starting to become significant in size even compared to some of the much, much larger competitors. I think, to be honest with you, that this company, through all these acquisition that we did, conversion, access to new customers, has a good chance to maintain this growth. And this is notwithstanding the fact, let me remind you that around 15%, 16% of our overall business is vitamin D, and that's declining. So you also need to look at the 6%, 7% as a combination of a chunk of your business declining and the CLIA XD actually growing, as I said, around 14%. I strongly believe that there is these, let me say, dynamics can be positively affected by a successful collaboration with QIAGEN and QuantiFERON because as you know from the QIAGEN numbers, QuantiFERON is a significant sizable opportunity and the franchise per se is growing by 20%. And so this is my mid term view about this immunoassay business. But I consider 6%, 7% as a combination of positive and negative elements like vitamin D, a good solid growth even for the foreseeable future. Thank you very much for that. The next question is from Peter Welford of Jefferies. Please go ahead. Hi. Yes, thanks for taking my questions. Firstly, just wondering if you could just remind us the FX impact on EBITDA. I think you alluded to the impact on the revenue line. I wonder if you could just give us the EBITDA impact again. And then just on the phasing of costs. In Q1, clearly, a lot of the costs were perhaps lighter than we envisage. I appreciate some of this was phasing. But just on the sales and marketing, now that you've, I guess, got the sort of transition that you're doing in Europe underway, you've also obviously got some of the changes that are going on in China, the Siemens acquisition now has been embedded down. Can you give us a sort of idea on where you see the sales and marketing trending in the future? And what areas you perhaps could look to put more investment in future? And then just on the revenue line, I just wanted to come back to the flu testing. I appreciate it's not a significant impact on the positive. I guess, could you talk about with the positive and negative side? I guess, if you're not seeing any benefit from flu as far as you don't think you're necessarily exposed to the flu testing part, did conversely, do you think there was any adverse impact from potentially missed appointments and missed things due to the flu season that was relatively severe this year? Thank you. Okay. I will let then P. G. Take the ForEx later. But let me just comment on sales and marketing costs, which I think is your question, and then the molecular. When it comes to sales and marketing, look, we do have today, just to give you a rough number, for the Siemens acquisition and to take ownership of that business, we had in plan to hire around 30 people, mainly in Germany and Austria and Switzerland. So those geographies that really had the bulk of the business. And 2 thirds of the hires are already done and are in they are in the current cost structure. When it comes to the U. S. Molecular team, we have hired all the reps that we needed, and we have the marketing people that we need. So on that side as well, the current running rate you see that the sales and marketing cost is actually there. So what you read in Q1 on a cost baseline, I think is fairly representative. However, I have to say that this is a very competitive market, as you know, and especially in certain geographies like the U. S, Germany, where today there is full employment. So the level of attrition that this business has is becoming certainly more important than previous years. So yes, we do we have hired what we needed in sales and marketing. By the same token, we have a level of vacancies in certain position or other areas of the company, which is still heavy in quarter 1, okay? So certainly, we will continue to hire and replace. It will be mainly replacement, but the attrition level is becoming very, very relevant, again, especially U. S. And Germany. Yes, there was On the Forex side. Yes, yes, yes. The impact of the Forex and Exchange on EBITDA, it's about €5,000,000 €5,000,000 is the negative impact of FX on our EBITDA line. So usually, I said as a rule of thumb, I said €1.01 2,000,000 in terms of sales. Again, all of the number is more or less EUR 1,000,000 worth of EBITDA. That's great. Thank you. The next question is from Luigi Deberlis of Equitasim. Please go ahead. Yes, good afternoon. Two quick questions for me. The first one, could you quantify the contribution in CLIA ex vitamin D business of Siemens acquisition in Q1, if any? And the expected contribution for the full year in this division? And second question, just a clarification on the free cash flow. Do you confirm the target to achieve a higher free cash flow in 2018 compared to 2017 despite the Q1? Thank you. Hello, Luigi. I will just start with the free cash flow. Yes, I do confirm that the free cash flow, the estimate, even though it's not part of the former guidance, though, I do confirm that my projection for the free cash flow of 2018 is going to be higher, materially higher than 2017. If I well remember, in 2017, we closed with €113,000,000 of free cash flow. I 13,000,000 of free cash flow. I believe that we will make in 2018 around €150,000,000 of free cash flow. And I'm expecting a stronger Q2, a very strong Q2 also because we will not pay taxes in Italy basically because of the fat in box tax regime that we just got. Regarding the contribution of Siemens conversion to clear business, I believe Carlo gave enough information telling you guys the number of customers that we switched and we're going to switch. You know the revenue per customer that we usually make, so you should be able to work out your math. Thank you. The next question is from Scott Bardo of Berenberg. Please go ahead. Yes, thank you very much for taking my questions. Yes, first question please. I wonder if there's been a lot of talk about QuantiFERON TB, and I can understand why this is something you're excited about. But can you give us a feeling actually for the commercial sensitivity of this product for diasaurin? Does this have the potential to be as big as vitamin D for you or just some sort of sense as to the magnitude of this opportunity? Following on from that question, it seems that there has been some quite fruitful collaborations from DiaSorin, both the QIAGEN and the Roche collaboration and others. But it's my understanding that all of those collaborators have approached courage have approached a diaspora rather than the other way around. So I just wonder, has there been any learnings or any change in structure such that you can better target those opportunities for the future? Perhaps you can talk a little bit about that. And lastly, I think this is the Q1 that you have under the full implementation of PAMA in the U. S. Doesn't appear to have affected your group organic growth this quarter, but North America was a little bit soft and you're talking about price pressure in vitamin D. So can we just have some feeling actually as to how the reality of PAMA is impacting or not your business? Thank you. Yes, Scott. Okay. I'll let's go 1 by 1. Let me start from the last one, Pama. As I think I mentioned a few times before, I think that when it comes to the Diasporin business and the way and the products that we sell in the U. S, I think that PAMA, I don't expect honestly PAMA to be a significant contributor to the development of our revenues in the U. S. I think that vitamin D, which is the one most exposed to PAMA, if you think about it, it is one that will single out in terms of number of tests running reimbursed in the U. S. Is the one that actually got a very nice used to have a well, that's a very nice reimbursement $42 I remind you that will become 30 some within the next 4 years. The truth of the matter is that, that single assay, assay, the value of that assay was actually significantly decreased and I would say destroyed not by PAMA, but by our own industry because it was not properly valued by our competitors. And therefore, competition more than PAMA did what it did to vitamin D pricing. So long story short to say, vitamin D is already at rock bottom and continuing to decline in a manageable way, but certainly continues to decline. You said soft quarter for vitamin D, if I understood correctly, I say minus 2.6% is exactly where we expect this overall franchise to be. Actually, it's on the positive side, because we said expectation is to decline more on the 5%. So PAMA doesn't really worry me for the time being. It worries me more what sometimes some of the large competitors can do to ourselves when it comes to destroying value for specialty assets. The second question was, if I can translate it, you look pretty and people come and talk to you, can you go and talk to other people? And yes, we could. But by the same token, as you understand, we have lots of things to do and many, many programs that we are managing today. And I think that to keep the size of this organization reasonable, cost under control, we have a lot, a lot of strategic partnership that we are managing today. Let me remind you that we have the Siemens conversions, which was actually just concluded in October last year. We have the QuantiFERON and strategic relationship with QIAGEN, which I will comment about. We do have the alliance with Beckman in preparing ourselves for the launch of a full menu of hepatitis A, B, C and HIV in the United States, which implies for diasporin the establishment of a brand new manufacturing site in England, which we just completed. And we are filing the first six products to the FDA in by July of this year. So not to mention Roche, not to mention then the regular course of business. So all said and done, we look pretty, and I'm very thankful that people come and talk to us. For the time being, I think we have enough to do strategically with the current programs. Last but not least is the QuantiFERON. Look, it's very difficult for me to tell you if the QuantiFERON will be the next vitamin D for diasporin. I can just comment to the fact that QIAGEN did a phenomenal job in taking this neglected assay because all of us have been tested with the skin test Mantoux for decades and turning it into a phenomenal franchise. And QIAGEN continues to do, I think, a phenomenal job in promoting the conversion of these assay from skin to blood. And I think that certainly, and we discussed this and I know Per as did comment this a few times, certainly through that to move to the next step of usage, because of this very successful franchise, they had to move away from manual tubes and ELISA into full automation. So to make a long story short, we have we collectively with Cajun see this as a tremendous opportunity. We see this QuantiFERON technology as a technology that could develop certainly into technology use for more than just one product. And I have to say and have to report that the relationship between the two companies has been fantastic on this. We had many collaboration with very large companies, but on this specific one, I think that it's going very well. And as said, we are launching on time and we are filing on time in the U. S. And this can only happen if things with Caixin goes well. So stay tuned. You're going to see the results of this. We have but certainly, we do have great expectations from this franchise. All right. Thank you very much for the extensive answer. Perhaps one follow-up. If I understand correctly, you're coming close to the European launch of Liaison Excess, I think, targeted for the end of this year and then into North America in 2019. When will you likely communicate to the capital markets your commercialization strategy for Liaison Excess in North America? Will you require a distributor, a partner or will you invest greenfield to maximize the opportunity? What can we expect with respect to the North American launch infrastructure? Thank you. Scott, look, to me, this is more agenda. Let me say, I would like to open up this question differently, if you don't mind. I believe that today the capital market was exposed to a plan which ends in 2019. And it was very clear that all the good stories, good story meaning prospective strategic elements of growth, do happen after 2019. You mentioned the Liaison Exact. We need to add to this certainly the QuantiFERON, we need to add the launch of hepatitis in the U. S. So it's very clear to me that what we owe to the market is as soon as possible and a plan which now covers a period of time behind 2019, which will depict all these terms for the strategy of the company, which and this we expect to do early next year, okay? We are debating when, but certainly between Q1 and Q2, we're going to come back to the market explaining how do we see this. Just to make a remark on distribution, today we have we are working with a very large consulting firm in order to map in the U. S. The strategy, because in my opinion, the strategy in the U. S. Is not only the launch of the excess when it comes to this market, but actually a portfolio of products that can really be grouped together and go to this new growing segment in the U. S, which is a combination of molecular, which we have immunoassay, which we have, but we feel also that we should also package other products that would really make this offering extremely interesting for this business. So we are working with this consultant to understand what the package should be. And I expect that when we will have the full disclosure of the following 3 years, we will clearly tell you, indicate to the market what the strategy is and which product we want to line up to distribute to the segment. Just quick clarification, Carlos, sorry. Did you say that in H1 2019, we're likely to get some sort of midterm plan update or extension on your existing time frame? Sorry, just to clarify that point. Yes. The clarification is that, yes, by half of first half of twenty nineteen, it is our intention to go back to the market with vision providing a vision of the following 3 years. Perfect. Thanks very much indeed. Mr. Rosa, there are no more questions registered at this time. Thank you, operator. Take care.