Bio-Techne Corporation (TECH) Earnings Call Transcript & Summary

All right. Thank you, everyone, for joining today. It's my pleasure to be here with Jim Hippel, the CFO of Bio-Techne. Thanks for joining us today, Jim.

Yes. Thanks for having us. Appreciate it.

So before we get started, I just need to read a quick disclosure. Please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

So Jim, thank you very much for being here today. I think maybe just to start off, when investors look at the life science tools landscape today, I think Bio-Techne is really a name that stands out, both in terms of the growth and the margin profile and consequently, the more premium valuation multiple that you all trade at. And so with that in mind and maybe for investors that are newer to the story, what is the most important thing for them to understand about how Bio-Techne is positioned within the strategic landscape today?

Yes, sure. Thanks for the question, and I know there's been more than one thing, which is what makes it exciting for us. But for those who may not be as familiar, as a reminder, we -- our core of our business we knew for 40, 50 years is a world leader in reagents for all aspects of life science research for new therapeutics and diagnostics, namely proteins, antibodies and assays that are used to protect proteins using the antibodies that we make. Over the last decade or over a decade, we've invested heavily both organically and inorganically to scale up the business by investing in kind of new applications that can scale both in terms of dollar value on a per unit basis like instruments, for example, and/or move downstream and stick with the customer as they move out of research in the clinic and ultimately commercialization. And those areas of investment have been around the automation of protein and analytics. So we refer to as our ProteinSimple franchise, automating various manual lab processes. And again, the beauty of that also pulls in our reagents along with it. We've also invested heavily in spatial biology, which we are currently the world leader in the reagents that are used to detect RNA in a tissue sample. And with our more recent acquisition of Lunaphore, the COMET instrument automates the process of identifying RNA in a sample, but also proteins in a sample. So it's the world's only instrument that can same slide, same sample, identify both protein and RNA at the same time. And again, the beauty of that is it pulls in our RNA scope reagents but also pulls in our world-leading antibodies as well as a pull-through. And then last but not least, we've invested in cell therapy. So cell therapy, we believe the tip of the spear of next-generation treatments for namely cancer, but also diabetes and many other disease states. And we're very well positioned there, basically taking our core RUO proteins that were known for being the gold standard in quality and moving them into a GMP manufacturing setting that allows for being used in the process of growing cells for cell therapies. So those 3 particular growth areas we've invested heavily in weren't part of the business at all a decade ago. They were roughly 30% of our revenues before COVID, about 5 or 6 years ago, and now they're about 45% of our revenue with our core being 55%. And that increase clearly -- it's not because our core has shrank. Our core has grown very nicely throughout that period as well, but it gives you a sense for the large above-market growth that we get from those growth vectors. And the other thing I'll point out about our business that I think makes it somewhat unique, and also thought would be very profitable and sustainable is the very nature of the business being very highly recurring. So 90% of our business is recurring in nature in the form of consumables or to a lesser extent, services and about 10% of it or so is instruments. So hopefully, that gives you some sense of the makeup of our company and the growth vectors that we have and why we've been able to perform better than the market overall, both in good times as well as tough times. And we believe that will continue in the future.

Right. Thank you. Let's perhaps move just to a recap of your last quarter. What were some of the more positive surprises there or upside that you didn't expect? And what didn't play out the way that you expected?

Yes. So we ended up with 3% growth quarter in our most recent quarter, which is what we were forecasting coming out of Q3. So the overall result didn't surprise us. So there's always nuances on how you get to that number. And nothing majorly different. If I were to point out a couple, I'd say on the downside, our spatial didn't hit the mark we were hoping for that quarter. And it's largely due to our Lunaphore instrument COMET, those are our most expensive -- highest priced instruments. And we had 3 that were set to ship to the Middle East, and of course, the volumes that occurred there didn't allow that to happen. So that was a negative surprise, I'd say. On the positive side, we had actually 10% growth in China, which is the best growth we've had in China in probably 3 years, better than anyone else, I think is reported. But that being said, we often know that there was tariff pull-ins on our instruments, in particular, when there was concerns about the very high rate of tariffs early on in the quarter. When we back those placements out, it was probably flattish growth in China, which is still a massive improvement from where they've been in the past 2 years. So that was a pleasant surprise. And the last thing I'd say on the positive note was large pharma. So we had anticipated -- coming out of Q3 that large pharma would slow down a bit because we had a double-digit growth in pharma in our Q3. And with some of the early on noise that was occurring around tariffs and so forth, coming out of the March quarter, we thought that would cause pharma to slow down a bit. And it didn't. We had another double-digit growth quarter in pharma in Q4 as well. So that was also a bright spot. And before you ask the question, you probably get to it, as you may have heard in our guidance going forward, we're expecting pharma to soften up a bit. I mean not necessarily fall of a cliff or nothing, but the acceleration may slow down a little bit because of the revised kind of rhetoric that has occurred. It started in April, it died down specifically for pharmaceuticals. And then in July, it ratcheted up again with MSM pricing threats and tariffs and so forth. Now very recently, there's the EU deal. It seems like the bite there might be a little worse than the bar. We'll see. But nonetheless, we would expect our pharma customers to take the foot off the accelerator a little bit until the dust settles. So yes, about Q3, I gave a little bit more of our guidance, but that's how we saw it play out.

That's great. So there's been a lot of noise in the U.S. academic end market. How should investors think about Bio-Techne's overall exposure to U.S. academia and the NIH specifically? And what are you experiencing today? And what is your outlook for this next fiscal year?

So academic is a very strategic important end customer for us because that's where a lot of the early discovery part starts. And then move the translation when you get into biotech and then clinical when you get in a pharma, right? So it's an important strategic place to play if you want to follow the customer and follow the technology or the workflow. That being said, total academic for us globally is a little over 20% of our revenue. But for U.S. specific, it's a little more than half of that, maybe 11% or 12% of our revenue. And within that, on an aggregate basis, it's estimated that roughly 30% or 33% of all academic funding for research and development is NIH sourced. So when you do the math, it becomes even a smaller percentage in terms of call it, NIH exposure. But that's assuming that, that pro rata, the NIH money comes our way, we've held up very well considering the funding constraints that have been put on academic for year-to-date, our consumables have actually been flat in North America academic. So that tells us the strength of our portfolio. But also suggests that every day reagents aren't as impacted by the NIH funding as other areas like instruments, for example. We saw, though, a notable -- because we were mid-single digit and approaching high single digit -- or approaching double-digit growth in January, believe it or not in the U.S. academic. And then in February, when all the noise started around first indirect cuts and then NIH freezes and then NIH budget cuts in the future, we saw a pretty significant step down in our run rates and definitely in our instruments to where we went from almost double digit to flattish growth in our reagents as an example. And it's pretty much remained there ever since. So it hasn't gotten any worse. Our belief is, in talking to our academic customers, just in the tone, they are behaving as if the worst case is going to happen. We've heard stories around kind of voluntarily cutting their own internal spend by 15%, 20% across the board in anticipation of what may come. And all indications right now is it won't be as bad as the worst-case scenarios have been played out to be. And so we believe we are seeing the worst of it now. And the only -- and it won't probably get any worse in terms of the trajectory. The only question is, when does it start to get better? And I think they've been a shell shocked a bit that customer base has been by all the rhetoric, and it will take some confirmation that things aren't going to be so bad before we start to see that improve, right? That's how we're thinking about epidemic.

Got it. You mentioned China, you got a strong quarter in China. How are you thinking about that geography going forward? And does it feel like that environment is improving?

It does. So we talked about the 10% growth, which, of course, was [indiscernible] part of that growth was because of components, but even backing that out, at flat growth, much better performance than where it's been for the past 2 years in China. And I think even more importantly, in our most recent visits to China and not just China, but the rest of Asia, namely Korea and Japan, the reality is so does China often so does the rest of Asia. And the tone of the conversations with customers, whether they're academic or biotech or hospitals has changed quite differently from where it was in the past 2 years. The past 2 years when we met with customers, it was about how bad will next year be? The conversation this glass go around in the spring was how good is it going to be? And so it's a psychological difference but it's important. And I think we saw that start to materialize here already in fourth quarter with at least some stable growth. And all indications are that we'll see a gradual ramp-up in growth in China for the remainder of our fiscal year. And it won't be a V-shape, but it is gradual. And we do believe, and I think we're the only ones that China will get back to double-digit growth. And I think 10 years from now, our industry will be looking back and saying, yes, China is the fastest-growing region yet again for another decade. So at the end of the day, they're focused on the importance of health care, their population set and where they sit respective to the Western world in terms of development and catch-up is still quite significant. And it's a mega trend that will be with us for a while.

Got it. And you touched on this a little bit earlier, but biopharma has also been a resilient end market in recent quarters. Can you maybe just take that a step deeper and peel back the performance of large pharma versus biotech? And what's behind the demand within each of those segments? And how do you see what's really driving the performance?

Okay. So biopharma, if you combine the 2, it's roughly 50% of our revenue, and the large pharma is 30%. So about the smaller biotech is 20%. So starting with the larger pharma. We just talked about, we had 2 great quarters in a row, pharma being double-digit growth. Were the leaders within that and from a product perspective, yes, I mean, our biologics platform, Maurice has been a stellar growth year in pharma the past several quarters, which is consistent with what we're hearing from other companies who have heavier -- have more of the portfolio geared towards biologics and bioprocessing so that's a very good sign for the industry. But honestly the -- in pharma, we saw nice recovery across our entire portfolio, including our reagents, which is what gave us confidence that pharma was kind of back to normal because for us, normal growth in pharma, our expectation is double-digit growth given our product positioning. So again, very, very good and very resilient pharma. Biotech, a little different story. It's probably the most variable and the most uncertain. If I were to look at the 3 key end markets going forward, it's the one we have probably the most uncertainty about. And it's largely because you just look at the numbers of -- behind funding, funding for a new biotech -- or new biotech funding is down over 35% year-to-date. And it's at the lowest level it's been since 2016. And now how tight is that correlation of funding to spending from a timing perspective, it's very difficult to tell because 2024 was a very good year for funding and our thesis going into fiscal year '25 was that, that biotech would lead us out of -- lead us into recovery. And it did improve. It did get better. It got to low single-digit growth, but it didn't leave pharma actually led the recovery. So that -- all that extra funding we got in 2024 didn't necessarily materialize itself in spending. And yet with the very tough funding environment, it's been in the past 6 months, biotech continues to be low single-digit growth for us. So the big question is for biotech is given this kind of air pocket of funding that we have because it has gotten better the past 2 months, which is great. So hopefully that continues. But given this air pocket of funding, does that translate into any air pocket in the future, meaning does biotech get a little worse before it gets better? That's kind of the big wildcard we have right now.

Got it. Maybe, let's shift gears to your cell therapy business. So GMP proteins are a large part of that and have been growing pretty rapidly. What's behind that demand? And how should investors think about your competitive positioning in cell therapy more generally?

So like I said before, I mean cell therapy is really the next-generation therapies for treating chronic diseases that can never be not just treated but cured. That's an important distinction. That's what's so exciting about it. And there's literally a couple of thousand clinical trials involving cell and gene therapy. And we are the gold standard being in the business for 40, 50 years of producing proteins. We're one of the first, if not the first company to actually make proteins available off the shelf for customers. And we're known by far for our quality, shame on us if we don't have a GMP offering, it's basically that stamp of approval of quality. And that's why about 6 years ago, we invested heavily in organically in factories to GMP factories to be able to follow our customer along that journey as discovery into the clinic in cell therapy space. And from a competitive position perspective, there's really only 2 other major players, both being private companies who got into this earlier, and we're a bit of a step ahead initially. But where we're winning is, first of all, our reputation of quality follows with us. That also our -- the faith our customers have with us with regards to being able to produce the products they need. We've built up a large amount of capacity, where in a very short lead time, they can get whatever GMP protein they need, and that's not true with all of our competitors. But the other dynamic to it all is there's actually 2 main strain -- I call it, 2 main strains of cell therapy. There's your CAR T version of cell therapy, which is where our 2 biggest competitors play. And then there's the regen medicine side of cell therapy. And we're actually the #1 player on the regen side and it makes up over half of our cell therapy GMP revenue. And why we're positioned so strongly there is because the proteins needed to grow cells for regen med. There's a lot more of them that are needed than there is in CAR-T and they're a lot more complex to make. And in some cases, we're the only ones who even know how to make them. So we are in an extremely strong position in that area of regen med. And although from a clinical trial perspective in terms of numbers that are in clinical trials and so forth they're a bit behind CAR-T, the actual market potential for regen med is actually even bigger than CAR-T. So we're very excited about that. And if you think about how -- we've gone from essentially no GMP proteins 5 or 6 years ago to a roughly $60 million run rate today, which is a really, really big move for a protein business. I mean it probably took us 20 years to get that much RUO protein business in the early days. And why is that? It's because, well, of course, we've gone from 0 customers to over 550. So that's one of the reasons. But I talk about scaling with the customer, and that's what this is all about, because as these customers go from early day discovery and then moving to pre-IND and an IND, they're using more and more of the product and then ultimately get into clinical trials, the usage rates go up exponentially. So yes, that growth has come from adding more customers, but even more of that growth has come from growing with those customers. And the best is yet to come because when they get into late-stage clinicals like a few of our customers are, it completely dwarfs what's being bought at a discovery level or even a pre-IND level. And then when they go commercial, it truly lights out. And we're seeing that as a preview with our investment in Wilson Wolf, which we will fully own in 2 years or less. And they make a G-Rex bioreactor, which is really the next generation for cell therapies. It's a tool that will truly allow for the scalability of these therapies to be available to all patients at a much more reasonable cost. And this bioreactor, guess what, it's filled up with our reagents and our GMP proteins. But they've been at it longer than we have. They have over 800 customers. They're about 45% of all CAR-T trials today. And they are the 9 CAR-T therapies that have been approved, they are in 5 of them. So we've been able to watch them progress through this evolution of phases of clinical trials and now in the commercialization. And it's really exciting to see how the business can ramp. And now that AF5 and commercial, they're going to be off the races for the next several years, which is why we can't wait to own them 100%.

Great. Maybe shifting gears to core reagents. I mean you talked a little bit about it, but any other color on how this business has been performing? And there's also been some consolidation here over the last few years. How should investors think about how that's changed the competitive dynamic, if at all?

Yes. I don't think it's changed a competitive dynamic. I mean, we've always had -- it's always -- particularly around antibodies, antibodies is a very big market, very broad, very diversified, very nichey. And it's always been full of a ton of competitors and it's always been that way and still is. So it really hasn't changed. And proteins, we are the market leader in RUO proteins. And there are 1 or 2 other larger players and a couple of what we call [ankle biters], and that's always been the case and still remains. So it's healthy competition. I'd say our core reagents have been around for 40, 50 years. So it's a more mature piece of our market -- of our portfolio, which is why we call it -- one of the reasons we call it core. And tend to grow with the market overall. Obviously, we shoot for above-market growth rates, whether that's 1% or 2%, that's what we always aim for. But generally speaking, it's going to be the most impacted by fluctuations in the overall market growth rate. So never was intended to be what's going to lead us to double-digit growth, but it is an enabler for a double-digit growth. And that's a key distinction because these different growth vectors or growth pillars that I talked about in some way, shape or form, all use our reagents in their workflows. And they may not use a lot of the reagents, but the reagents make their workflows work better and increases the selling proposition and the value add of those workflows.

Got it. So in the Protein Sciences portfolio in particular in instrumentation, ProteinSimple has held up very well in the current environment.

Yes.

Can you just walk us through the primary platforms here and what's been driving that growth?

So in ProteinSimple, we have 3 main instrument platforms. We have -- I mentioned already -- the Maurice platform, which is our kind of our pure play into true production or late-stage clinicals. It's a QA/QC tool, used for protein purity and biologics. And as you've been hearing, you've probably been hearing from our peer companies and so forth who have a heavier play in those downstream activities, bioprocessing is coming back, and we've seen it in spades in our Maurice platform, which is great. The second platform we have, maybe the platform is Simple Western, which is in a very simplistic -- excuse the pun, but simplistic description is an automated version of Western blot. And Western blot is one of the most common workflows and a lab to identify a protein sample. And the only way to do it is manually, it's messy, takes 3 days. And this is a box that does it in 3 hours, very clean, very simple with much more accuracy. And we're still probably less than 20% penetrated from a market share perspective. And in the meantime, over the last 5, 6 years, the market has continued actually to grow because we continue to increase the sensitivity and the applications that the sensitivity can be used for, and our customers are actually coming to us with new ways to use the instrument that we hadn't dreamed of. And then, of course, we learn that and we market it to other customers. So all of that has helped drive its growth. And then during this downturn we've had since post COVID, the whole idea of these automated instruments has been to increase productivity in the lab. And that thesis is definitely paying out because -- playing out because our consumables, and we know exactly what the usage is because they run on cartridges that only we produce. And our cartridge consumables on these platforms have been growing every quarter throughout the entire kind of last 2.5 years of COVID headwind. And not only that, but in most cases, most quarters growing double digits, enough to have the overall ProteinSimple franchise be a positive growth contributor even though -- new instrument placements have been down. So what that confirms for us is that they are truly, in fact productivity tools as they're meant to be and -- our customers are using the hell out of them when budgets are tight. And the third platform is our Simple Plex platform, and that's an automated ELISA. So as I mentioned assays before, when I say assays, we're really talking about ELISA assays, which use antibodies to detect the protein in a sample. It's a gold standard core research tool, but it's very manual. And so our Simple Plex allows for automated format so that you can do many more samples at a time in like less than an hour as opposed to an afternoon, so to speak to do just one. So yet another productivity tool, very, very precise. So it has potential clinical applications, which we actually have customers trying to use our Simple Plex, not trying, but they're using our Simple Plex instrument in their clinical trials for their next-generation diagnostic. So again, that has been driving the growth of that platform. And all 3 of them are, like I said, under 20%, some as low as 5% in terms of market penetration. And it's collectively a $300 million business today and with double-digit growth for the far foreseeable future. So we expect it to be a large contributor to our growth going forward.

Right. And in the spatial biology business, how should investors think about how you're positioned, where you participate and kind of the relative level of competition in that market?

Yes. So spatial is still old and new. I mean IHC, you could argue, mmunohistochemistry is kind of from spatial. But call it the next-generation IHC, that's how I like to simplistically refer to it. And it's a combination of looking at not only the proteins in a tissue sample, but also looking at it between at the RNA that express the protein. It gives the researchers, the pathologists in a clinical setting a lot more useful information. And our RNA scope reagents that we've had now for 7, 8 years has become kind of a world-class gold standard for the probes that are needed to very specifically identify the targets you're looking for. And the key area of spatial that, that's been used for is more translational research. So if you kind of think of the evolution of research, it starts with high-level discovery, screening, you get to select targets that you really have interest in to perhaps become a therapeutic or a diagnostic that becomes translational and you need a lot more specificity, a lot more accuracy, a lot higher quality tools to make sure you get it right. And then from there, you move into the clinic and then commercial. So our RNA scope is targeted towards that translational space, and we do extremely well in that space, and it's important because it's still early days in spatial. And if you are the leading player in translational, you have the best opportunity to go continue the downstream in the clinic and ultimately commercial. And in fact, 10% of our RNAscope revenue today is actually commercialized on tests that we partner with [Leica] on. So it's just the start of, we think, a big wave. And now with our new COMET instrument. We purchased from a company called Lunaphore about 1.5 years ago, we now have a tool to automate it because the one drawback that we always heard about our reagents is that it was still a very manual process to use them. And so now we have a tool that is the best tool in the market. It's the fastest, the easiest to use. And when I say fastest, the closest competitor takes roughly a week to run or sample or samples and ours is overnight and multiplex, of course, capabilities and the only instrument that can identify both RNA and proteins in the same sample on the same slide on the same screen, which gives the pathologists very, very clear information that they're looking for. And then last but not least for us, very high pull-through on this instrument, not only on the chips that are used to run the instrument that pulls through our RNAscope reagents and pulls through our antibodies from our core.

Got it. You recently announced the divestiture of the Exosome Diagnostics business. Can you walk us through the rationale and how you came to that decision? And why now is the right time for that?

Well, I'll start with now is why now is the right time. So Kim Kelderman, a relatively new CEO, started this a year, 1.5 years ago. And one of his first actions was to -- actually, I call professionalize our Corp Dev team, and I'll explain why that ties into this. And what I mean by that is that we actually have -- we've hired some people who've done this for a career as opposed to a locational job internally. And I'll tell you what Kim -- his first -- he wasn't to go out and find M&A targets, although eventually, that's what they're doing. But it was instead to look internally and say, I want a full scrubbing of all of our product lines, all of our end markets, our view of our market -- potential market sizes, and I want to know what I'm working with so that we have to make some changes, we can right out of the gate. And I'll tell you, it was an hell of interrogation. I felt like we were being purchased for the last -- for the first 6 months. So they did their job and they did it well. And the great news out of all that is, it's a confirmatory of everything we've been saying for the better part of the decade in terms of our strategy and our positioning. However, Exosome was an exception to that. And it's not too farfetched to understand why. At the end of the day, it wasn't about the Exosome technology. The exosome technology is still wholeheartedly we believe in. And it wasn't about the exo prostate test. The test is a great test, and it truly is a value-add test to urologists and to patients. It was more about the model. That's a CLIA-based model. There's nothing else in our company that's CLIA based. We sell to CLIA-based companies, but we're not a CLIA-based, we're not a CLIA company. And so it was outside of our expertise, it was outside of our model. We didn't have a road map to be able to leverage that and scale it. It was a one test kind of model. And therefore, not only strategically -- it became more obvious that it wasn't there. But financially, the road to profitability, especially the profitability that we set for our standard was so far out in the horizon. It just didn't make sense to continue for us to find more resources into that. So we're very happy with how it ended up. What was most important to us was that we could find a home for it where our patients and doctors could still get what we think is a world-class test and I think with MDxHealth, that will be the case, MDxHealth, I think we'll do very well with it because they actually -- they are a CLIA-based model. They have other tests in urology, they can scale that with, commercial teams, et cetera. So we're very happy with how that ended up. And then for us, internally, we're happy that we can now redirect those resources into the other growth vectors I talked about that are much closer to our core capabilities.

Got it. On the revenue outlook you provided for kind of low single-digit growth. How should investors think about some of the potential upside opportunities within that and kind of the overall level of conservatism in the guide?

Yes. And the guide was -- it was -- I guess you could say it was a guide, but it was more to give some illustration of how we're operating the business in this kind of uncertainty. Because at the end of the day, you got to manage a cost base, you got to manage your rate of investment, you've got to manage what kind of productivity actions you got to take to hold margins, and we're always committed to holding margins regardless of how bad end markets might be. And looking at all the pros and cons, we saw a good base case was low single digit, a bit victim of our own success in the early first half of the year with very tough comps. By the way, no one else in our industry has the kind of comps that we have. But there also are a lot of green shoots that this -- unlike the, I call it, the COVID hangover, which has taken 2, 2.5 years unwind, that was a structural issue, where for 2.5 years of COVID halo, money was flushing into our customer space, investment was to fight COVID, for vaccines, et cetera. And all that extra money was then being repiled back in R&D for other areas. And then when kind of COVID went away, the pendulum had to swing back. And that was a structural change that had to occur. And it took 2.5 years to build. It took 2.5 years to unwind. What we're seeing now, I don't think is structural. It's politics. It's somewhat, it's noise. It's barks and bites. But at the end of the day, it's not -- we don't believe it's structural. We also don't believe it's even close enough to be anything that will negate the mega trends of an aging population, an aging population that wants to live healthier and the innovation that is occurring in our space. So it's -- I think we're very optimistic on the future, even, I call it, relatively near term, I depend on your point of view near term next week or next quarter, for us, near term, we mean maybe next year, right, and beyond. We're very excited about the potential. And we do believe that this administrative induced noise that we're facing in our key end markets ultimately will settle down. And when it does, it won't be earth shattering. And just like we saw last year, and as a reminder, why we have such conviction about this is, a year ago, we also were the lucky ones ahead to give guidance for halfway into the next year. And we put out a road map of what a recovery could look like. Because we thought that most of the headwinds, most of the COVID induced headwinds were behind us. And the policy headwinds at the time were around pharma and around IRA. And pharma is using 2024 as a year to kind of rebalance their portfolio for what they believe would be the impacts of IRA. And we believe that, that would be all behind us by the end of 2024, and we start to see a recovery in 2025. We did. It didn't play out exactly like we thought because pharma actually covered a lot faster than we thought. But that shows you how quickly once the dust settles, how quickly it does come back. And we do believe that will happen again. But I can't predict, and I don't think anyone in this room can and it's why we're not doing that is, when does that dust settle, right? But there are indications that it's sooner than later. An academic at least have Congress at least in a more reasonable NIH budget frame as opposed to what the administration was. The EU trade deal, some of the details coming out are indicating that the tariffs won't be what was threatened earlier stage and MFM pricing also might be limited to certain areas like generics, for example. Again, all this still needs to be confirmed. So the dust hasn't completely settled, but there's at least some indications that the dust will sell sooner than later. But in the meantime, it's still dusty out.

All right. Well, thank you so much, Jim. We really appreciate you taking time to be with us today.

Yes. Thanks. Thanks for having. Appreciate it.

Thank you.