Mauna Kea Technologies SA (ALMKT) Earnings Call Transcript & Summary

Greetings, and welcome to the Mauna Kea Full Year Results 2019 and First Quarter Sales Results 2020 Conference Call. [Operator Instructions] Please note that this conference call is being recorded, and that the recording will be available on the company's website for replay shortly. It is now my pleasure to introduce your host, Mr. Rob Gershon, CEO of Mauna Kea Technologies. Please go ahead.

Thank you, Fareed, and welcome everyone to Mauna Kea Technologies Full Year 2019 Financial Results and First Quarter 2020 Sales Results Conference Call. I am joined on the call today by Christophe Lamboeuf, our Chief Financial Officer. Let me start with a brief agenda for what we will cover during our prepared remarks. I will start with a brief summary of our sales performance and review of our key operating highlights for the full year 2019 period. I will then provide a brief summary of our sales performance for the first quarter of 2020. After these opening remarks, Christophe will provide you with a detailed review of our full year 2019 financial results and balance sheet condition as of December 31, 2019. I will then provide an update on our progress with the formal evaluation process to identify new clinical indications for commercial focus, which was one of our 3 strategic priorities in 2019. I will then outline our strategic priorities for 2020 and share our current thoughts on the COVID-19 crisis. Including our recent efforts to enhance our balance sheet and reduce our operating expenses as a result of the COVID-19 pandemic. Then we will open the call to your questions. As previously reported, our total sales for the full year 2019 period increased 10% year-over-year to EUR 7.4 million. Sales to clinical customers represented 96% of the total company sales in 2019, increasing 27% year-over-year. As discussed throughout 2019, this is a direct result of our strategic focus to dedicate our commercial resources to the clinical market. Total sales growth in 2019 was driven by sales of consumables, which increased 47% year-over-year, offsetting declines in both system sales and service revenue of 14% and 20%, respectively, compared to the full year 2018 period. The increase in sales of consumables reflect strong execution towards our primary strategic priority for 2019, driving sales of consumables, which represents utilization-driven growth across our installed base of Cellvizio systems. We believe the 47% increase in consumables sales in 2019 is the clearest evidence of Cellvizio customers appreciating the utility of our technology and represents a strong foundation of growth for the company in the future. Consumables sales in the -- to U.S. customers increased 41% year-over-year in 2019 and represented our largest driver of consumables growth by geography this year. We also performed well against our second strategic priority for 2019, driving revenue outside the U.S., but doing so in a targeted fashion in an effort to maximize the resources we invest in certain international markets. International sales increased 26% in 2019 led by a very strong demand in the Asia Pacific region and solid growth trends in EMEA and Rest of the World regions. Asia Pacific sales increased 60% year-over-year in 2019 fueled by a strong and growing relationship with [ Yohi ], our distribution partner in China. EMEA and Rest of World sales decreased 9% year-over-year in 2019. But again, this performance does not reflect the solid growth we experienced in the clinical market, which posted 20% growth year-over-year, but was offset by a 66% decrease in sales to preclinical customers compared to last year. While we are pleased with delivering strong performance relative to the first 2 strategic priorities in 2019, our operational execution enhanced the company's ability to drive growth in the years to come. During our first half 2019 conference call in October, we discussed our year-to-date operational progress in several areas, including, but not limited to: one, expanding our leadership team; two, new product development; three, reimbursement; and four, expanding our portfolio of clinical validation. In our press release this afternoon, we also highlighted our progress in recent months. In the interest of brevity today, I will call your attention to some of the most important milestones from 2019 given their impact on our growth objectives going forward. First, the importance of the 510(k) clearance and market introduction of our Cellvizio AQ-Flex 19 Confocal Miniprobes in early 2019 cannot be understated -- overstated. We have talked about this innovative technology throughout the year, specifically the unique ability to use it through existing bronchoscopes, transbronchial needles and other bronchoscopic accessories. Simply stated, we continue to believe the AQ-Flex may represent one of the most important clearances for the company's growth opportunity in the years to come. Second, in January of 2020, we announced the 510(k) clearance for the Cellvizio 100 Series and all associated Confocal Miniprobes for the indication of visualization of blood flow when used in conjunction with a fluorescent dye, fluorescein, as a drug-device combination. This was our 17th 510(k) clearance for the Cellvizio platform and one that we believe could be meaningful to our future growth as we evaluate the potential for clinical use of Cellvizio with highly specific molecular imaging markers. I'll discuss this potential growth area later on in the call. Third, last month, in March, we announced 510(k) clearance and CE marking of our next-generation Cellvizio platform. This marked the 18th 510(k) clearance of the Cellvizio platform. This next-generation platform was designed to facilitate and better integrate endomicroscopy within procedure suites as well as within third-party platforms. And the hardware and software was designed to easily facilitate future developments, including integration of artificial intelligence capabilities for assisted image interpretation. This next platform will be launched commercially on a limited basis in the second half of 2020. And with its modular and flexible design as well as being AI and molecular imaging-ready, we expect this new system to host our future innovations, indications and support partnership developments. So in summary, we are pleased with our performance in 2019. We executed against our first 2 primary strategic priorities, which resulted in strong sales growth in both the U.S. and in select international markets. We also made significant operating progress, which we believe enhances our ability to drive growth in the years to come. Turning to a review of our sales results for the first quarter of 2020, which we announced in our press release this afternoon. Total sales for the first quarter of 2020 period were EUR 1.5 million, down 14% year-over-year. Total clinical sales for the first quarter of 2020 decreased EUR 0.1 million or 7% year-over-year to EUR 1.5 million compared to EUR 1.6 million in the prior year period. The decrease in total clinical sales was driven by a 50% decrease in clinical sales in the EMEA and Rest of World region and a 14% decrease in clinical sales in the Asia Pacific region, partially offset by a 20% increase in clinical sales in the U.S. Sales to clinical customers represented 100% of total company sales in Q1 of 2020 compared to 92% of sales last year. The year-over-year decrease in preclinical sales in the first quarter of 2020 was a direct result of our strategic focus on clinical sales opportunities compared to our strategy in recent years, which included targeted preclinical customers as well. First quarter 2020 sales performance by product category was driven primarily by a 27% decrease in consumables sales and, to a lesser extent, a 1% decrease in system sales in the period. The year-over-year decrease in total consumables sales in the first quarter of 2020 was due to lower procedure-related demand for Cellvizio probes as a direct result of the COVID-19 pandemic. First quarter 2020 total sales performance benefited from a stronger-than-expected demand for Cellvizio systems in both the U.S. and APAC during the period. With that, let me turn the call over to Christophe, for a detailed review of our 2019 financial results. Christophe?

Thanks, Rob. Given the detailed disclosure of our full year revenue performance in our press release this afternoon and as previously disclosed in our fourth quarter and full year 2019 sales press release on January 29, 2019, my commentary today will focus on our financial results for the full year 2019 period, beginning with gross profit. Gross profit for the full year 2019 period increased EUR 0.5 million or 10% year-over-year to EUR 5.2 million compared to $4.7 million last year. Gross margin for the full year 2019 period was 69.6% compared to 69.6% in the full year 2018 period. Total operating expenses for the full year 2019 period increased EUR 1.4 million or 8% year-over-year to EUR 19.3 million compared to EUR 17.8 million for the full year 2019 period. The increase in total operating expenses was primarily driven by an increase in administration expenses of EUR 2.2 million or 57% year-over-year to EUR 6.2 million driven by investments made in the second half of 2018 to strengthen the management team and an increase in share-based payment of EUR 0.8 million or 588% year-over-year to EUR 1 million driven by the allocation of free shares and stock options in 2018. The increase in total operating expenses for the full year 2019 period was partially offset by lower research and development expenses due to the capitalization of EUR 0.8 million of expenses and lower sales and marketing expenses, which decreased, respectively, EUR 0.5 million and EUR 0.1 million -- EUR 1.5 million and EUR 0.1 million compared to the full year 2018 period. Operating loss for the full year 2019 period was EUR 13 million compared to an operating loss of EUR 12 million for the full year 2018 period. The increase in operating loss was driven by the EUR 0.5 million increase in gross profit offset by the EUR 1.4 million increase in operating expenses compared to the prior year period. Net loss for the full year 2019 period was EUR 15.3 million compared to a net loss of EUR 12.8 million for the full year 2018 period. The increase in net loss was primarily driven by the increase in operating loss compared to the prior year period as well as an increase in interest expenses, net, driven primarily by nonrecurring financial costs of EUR 1.7 million associated to the earlier repayment of the IPF Partners bond financing. Turning to a review of the balance sheet. As of December 31, 2019, the company had a cash balance of EUR 10 million and long-term debt obligations of EUR 15.5 million compared to EUR 8.6 million of cash and EUR 6.5 million of long-term debt obligation as of December 31, 2018. The change in cash during full year 2019 period was driven by EUR 10.3 million of cash used in operating activities and EUR 1.4 million of cash used in investing activities, offset by EUR 13 million of cash from financing activities. Cash from financing activities for the full year 2019 period was driven by proceeds from the first tranche of EUR 11.5 million under a financing agreement concluded on June 20, 2019, with the European Investment Bank and a strategic equity investment of EUR 7.5 billion by Johnson & Johnson Innovation, JJDC, on December 16, 2019, partially offset by redemption of all nondilutive bond financing with IPS Partners for a total amount of EUR 10.7 million on June 28, 2019. With that, I'll turn the call back to Rob. Rob?

Thanks, Christophe. Turning to an update on our progress with the formal evaluation process to identify new clinical indications for commercial focus, which was one of our 3 strategic priorities in 2019. As discussed on our last call, we are currently undertaking a formal process to evaluate new clinical indications to identify the company's next commercial focus area. To the extent that this process is successful, we believe it will result in us uncovering the next application for commercial focus that will serve as the future growth engine of the company. In March of 2019, we identified interventional pulmonology as the first potential new clinical application that we put through this process. As a reminder, the primary goal of our formal process is to evaluate the commercial opportunity interventional pulmonology presents in terms of market potential, clinical value, product feasibility and overall strategic value for our company. As we have moved through each stage of this formal process, we have been increasingly encouraged by the potential opportunity in the interventional pulmonology market given the very large incidence rate of lung cancer, the highest mortality rate among all cancer types, and the fact that we have a unique solution to help improve the current lung biopsy paradigm. The development of Cellvizio's needle-based probe allows the physician to penetrate and visualize inside the lung nodule in real time and in vivo. We also believe that the AQ-Flex could provide diagnostic yield and reduce the need for unnecessary invasive procedures for diagnosing or staging lung cancer. We continue to believe one of the most compelling aspects of the interventional pulmonology opportunity for Mauna Kea is that Cellvizio, when used in combination with robotic and advanced navigation platforms, has the promise of improved targeting in situ tissue characterization and increased diagnostic yield. To that end, in December, we announced a collaboration with the Lung Cancer Initiative at Johnson & Johnson, which is working to develop new diagnostic and therapeutic approaches for this disease with significant unmet need. This is an exciting collaboration for Mauna Kea. We have been working hard in recent months and will be providing an update on the progress of our collaboration with J&J's LCI team in the near future. While we are proud of the progress we have made with the formal evaluation of interventional pulmonology in 2019, and we are understandably excited to collaborate with J&J's LCI team on potential application for our technology in the endoluminal robotics space, we thought it would be helpful to highlight some of the other potential new clinical applications that we have started the process of evaluating this year. Each of these represent interesting potential new clinical applications for Cellvizio that may be considered for commercial focus, but it's important to remember that each of these processes are ongoing. So today's commentary should be viewed as a preview, with the expectation that we will provide updates as things progress in 2020. Interestingly, one of the new clinical applications we are previewing today is within interventional pulmonology or, more specifically, the large potential market opportunity outside of our collaboration with J&J's LCI, which is manual bronchoscopy. Building upon the recent published studies on the use of Cellvizio during manual bronchoscopy for peripheral lung nodules, we continue to work with interventional pulmonology KOLs in the U.S. and Europe who are evaluating the potential contribution Cellvizio can make to increase diagnostic yield. It is important to understand that while the endoluminal application of robotic and navigation assisted technologies is incredibly compelling, it remains in the early days of adoption. The substantial majority of procedures today are done with manual bronchoscopy. And we are evaluating how our current Cellvizio technologies may improve outcomes in this space or how we may focus our R&D efforts to create innovative new solutions by enhancing our current technologies. One final comment as it relates to the manual bronchoscopy opportunity. We believe there may be an application for Cellvizio to help those patients suffering from acute respiratory disease syndrome, or ARDS. These patients are typically on respirators in the ICU, and determining the level of fibrosis in the lungs is integral to determining the treatment path. Biopsy is the standard method of determining the level of fibrosis, but for many of these patients -- many of these patients are too sick for a biopsy. Clinicians are further challenged by the fact that steroids are a viable option for treatment of the fibrosis but only for some patients and can cause serious complications, including death, in others. Cellvizio has been used to characterize low- and high-grade fibrosis without the need to biopsy, which could lead to critical changes in patient management and treatment going forward. In fact, there was a poster presentation on this topic at ERS last fall based upon clinical work completed by a team from the Department of Pulmonology at Amsterdam University Medical Center. We are in the early days in our evaluation of this specific opportunity but one that appears to be very compelling. We have also identified an interesting potential new clinical application within GI in the area of irritable bowel syndrome, or IBS, with a specific focus on food allergies. This is a large market as food allergy, or intolerance, affects 11% of the global population. There is a real clinical problem to address as there are no reliable biomarkers available, and the current diagnostic methods are unreliable, which means that many patients continue to suffer without clear treatment. We are beginning a KOL pilot program in Germany as we believe Cellvizio enables real-time observation of mucosal response to food antigens, which may provide certainty compared to the current testing methodologies which are lacking. Finally, as I mentioned earlier in my prepared remarks, our most recent clearance for Cellvizio 100 Series and all associated Confocal Miniprobes for the indication of visualization of blood flow when used in conjunction with the fluorescent dye, fluorescein, as a drug-device combination gives us access to a new, rapidly developing field of medicine. Pharmaceutical and other companies are creating molecules that attach to targeted cancer cells. Currently, near-infrared cameras are used to excite and visualize these molecules. We have a near-infrared version of Cellvizio that has been able to similarly excite and visualize certain molecules. This is an important area of development for us. Two areas of clinical interest are being explored: fluorescent-guided surgery, so tissue characterization to eliminate false positives; and evaluating patient response to drug treatment at the cellular level. So more to come here in 2020 but an exciting potential opportunity nonetheless. Before we open the call for questions, I want to briefly review our 3 strategic priorities for 2020 to remind investors where our organization is focused on driving execution and results. Importantly, while our 3 strategic priorities in 2020 are similar to the ones we highlighted in 2019, I could assure you we have enhanced our approach to each of these priorities and expect continued results again this year. First, we are intently focused on driving utilization-based consumables sales in our active installed base in the U.S. GI market. Our sales leadership team executed a comprehensive overhaul of our commercial targeting and growth strategy in the U.S. GI market during 2019. The result of this effort was a new, enhanced and more targeted commercial plan to optimize our growth in this market going forward. The key tenet of this commercial strategy remains unchanged: to drive strong utilization-based demand for consumables in the U.S. GI market. However, we have focused this effort on supporting and growing the installed base of devoted users and KOLs that most appreciate the benefits Cellvizio offers to GI clinicians. As of the end of 2019, we have an installed base of approximately 80 active Cellvizio systems in the U.S. And this installed base of active systems drove consumable demand of more than EUR 2.8 million during 2019. This demand represented the strongest driver of consumables growth for the company in 2019, and we expect the demand from our active user base in the U.S. to represent the largest portion of total company consumables sales again in 2020. Importantly, our commercial leadership team developed a new, more targeted strategy for driving future adoption of Cellvizio in the U.S. GI market. For many years, this company has talked about our U.S. GI market as roughly 15,000 GI physicians across a range of GI specialties and that these 15,000 physicians practice at more than 3,400 facilities. Our learnings over the last year clearly demonstrated that there are a select group within this 15,000 that represent ideal targets for Cellvizio. Specifically, we've identified roughly 1,500 GI physicians that do a high volume of upper GI biopsies, EGDs, each year, and a significant portion of these upper GI biopsies are done on Medicare patients where Cellvizio has very strong reimbursement. This targeted group of potential Cellvizio users practice at roughly 1,000 facilities and represent an estimated $220 million of annual recurring revenue opportunity for Mauna Kea in the U.S. as we penetrate this group of potential new users. We believe our enhanced U.S. commercial strategy will result in us increasing the number of active Cellvizio systems in the U.S. in 2020. The team is also armed with a more comprehensive offering of methods to adopt Cellvizio going forward. Specifically, in addition to the purchase option and our pay-per-use program, we have launched a new capital lease program in 2020. With respect to our second strategic priority in 2020, our commercial effort outside of the U.S., we will continue to be very targeted, specifically in the clinical market in an effort to maximize our resources. We will continue to focus on targeting clinical customers in certain OUS markets where we have established KOL support and a strong distribution relationship where we can pursue growth at an attractive potential return on invested capital. Our third strategic priority is to continue our formal evaluation process for identifying a new clinical indication for Mauna Kea's next commercial focus area. We are encouraged by the work we have done thus far in interventional pulmonology, and we are also continuing to take other new potential indications through the formal evaluation process, and we look forward to updating investors as things develop this year. Finally, I want to share a few thoughts on the unprecedented global crisis that everyone is dealing with over the first few months of 2020. As indicated in our press release in late March and reiterated this afternoon, our near-term outlook has been challenged by the global crisis caused by COVID-19 during the first quarter of 2020. Across our entire business worldwide, our teams are fully prepared to conduct all business-related engagements virtually and are embracing new and creative ways to continue to engage and support our customers in order to help achieve strong clinical outcomes. We have seen a slowdown in procedure trends as a result of the growing number of health authorities either recommending or enforcing procedure deferrals. We saw a significant impact on our business in China early in the first quarter as a result of the government mandate calling for no endoscopic procedures. Our clinical sales in our EMEA and Rest of World regions experienced a significant slowdown in procedure-related demand, which impacted our consumables sales during the quarter. After a solid start to the quarter in the U.S., consumable demand slowed materially as the pandemic worsened throughout the month of March. Understandably, demand for new systems has also been impacted by the pandemic, similar to what other capital equipment manufacturers have experienced in recent weeks as the U.S. health care system has turned most of its focus and nearly all available resources to treating COVID-19-infected patients. We expect these trends to have a more significant impact on our second quarter financial results. Given the rapidly evolving dynamics in our primary commercial markets around the world, we are unable to predict when Cellvizio procedures and system adoption trends will improve. Meanwhile, we have implemented a series of significant cost-cutting actions designed to reduce operating expenses and maximize our capital resources to support the company's growth initiatives. In recent weeks, we pursued opportunities to enhance our balance sheet by negotiating a drawdown of the second tranche of our loan agreement with the European Investment Bank for EUR 6 million and secured a loan for $0.7 million or EUR 0.64 million from the Paycheck Protection Program authorized under the U.S. CARES Act. Together, these actions should provide sufficient liquidity to manage the business for the next 12 months. We are navigating the unprecedented changes in our target markets responsibly, and we are focused on ensuring that the organization is well positioned to drive growth post COVID-19 when normal caseloads resume in the U.S., APAC and EMEA and Rest of World regions. With that, Philippe, we will now open the call for questions.

[Operator Instructions] We have a question from Mr. Kieron Banerjee from goetzpartners securities.

Just quickly, I've got 3 questions for you today. Could you, firstly, if possible, provide a time frame towards the IP, interventional pulmonology, market entry and when you think that may be? And will the COVID impact sort of delay that maybe even into 2021, possibly? And secondly, with regards to COVID and the impact on the business, are you able to provide any more clarity on the slowdown and reduction in procedure numbers? So I think we've seen a third, yes, sales reduction year-on-year in Q1. Is this expected to be significantly worse in Q2? And then also, finally, with regards to the third tranche of the EIB loan, is there any limit on the time frame between the most recent tranche and your ability to draw on the next tranche?

Sure. Okay. Thanks for your thoughtful questions. I'll take them one step at a time. With respect to -- or one question at a time, excuse me. With respect to the time frame on interventional pulmonology, so we continue to make progress on all fronts, as indicated in our prepared remarks, including our progress with the J&J collaboration. At this time, we can't expand upon the collaboration with J&J, but we will provide an update. With respect to COVID-19, it has slightly slowed our progress, but we don't expect it to stop our progress during 2020. So it is not anything that we expect to further delay IP into 2021. So while we expected to be slightly further ahead now, COVID-19 certainly disrupted some of the progress, but the progress does continue, and we do expect to provide an update on progress in 2020. In terms of more clarity on the procedure numbers, what I'll do is I'll share some thoughts on the procedure numbers with respect to the different regions that we operate. So what we saw in Q1, in APAC, we saw consumable trends were weak throughout the quarter, but we did receive -- as things started to open up in China toward the end of the quarter, we did receive an order from our distribution partner that helped offset the weakness in the lack of consumables since things were shut down. In the EMEA and Rest of World, the consumables sales were down through -- they were down 13% quarter-to-date, so I'm referring to this quarter, of course, through February. And the total consumables sales were down 73% for the quarter. So we did see March being the very biggest impact. In the U.S., we had a different experience where we actually saw an uptick in consumables in the beginning of the quarter through the end of February. And then it was up some 6% through the end of February. And then by the end of the quarter, it was down 2% as a result of the pronounced slowdown in March. So with respect to the third tranche, I certainly invite Christophe to add any additional color. But there are certain conditions that need to be met before we draw down the third tranche, and it's not necessarily completely time-based. But I don't know, Christophe, if there's anything else that we could say about the third tranche.

No, that's about right. There is no timing associated to this, but there are some milestones to be met, as Rob said, and the conditions are not met at the moment. So we don't have any clear visibility on this.

We have a next question from Martial Descoutures from ODDO BHF.

So 2 quick questions, if I may. I would like to have your thoughts on the second wave of the COVID-19. We are seeing second wave come through in Asia. And I suppose, reasonably, that we will see them across in Europe and the U.S. for the end of this year. So if I can have your thoughts of that impact and maybe overall -- your overall business. And in function of your answer, could you come back on your management of your costs? You underlined that you have financial visibility for the next 12 months. So what are your assumptions on the normal comeback of the business, including your new cash guidance?

Yes. Okay. Thank you for your questions. This is certainly a time of great uncertainty for everyone around the world. And it's very difficult to comment on a second wave of COVID-19 and its potential impact on the business. It's just so uncertain and such a dynamic environment. It's very, very difficult for us to speculate on what the impact is. With -- so with respect to managing our costs and the assumptions that we're making, there are certainly some absolute controllable costs within OpEx that we have focused on, and these are the typical costs that you would expect. It's marketing and sales related, it's R&D and some of the clinical studies that we're doing. So we do have the ability to control those costs and manage them. And what we are assuming in terms of a recovery period, again, it's such an uncertain time and so dynamic, and recovery is happening at a different pace across the world that it's hard to predict, but our working assumption is that the recovery period will certainly go right into Q4. So we're not assuming a recovery occurs before -- or the recovery period occurs before the beginning of Q4. So we will continue, of course, to monitor everything, as we all are doing, on a daily basis and make any necessary adjustments to our assumptions and our tactics to continue to preserve cash and execute against our strategies as the COVID-19 pandemic allows us to.

[Operator Instructions] We have a question from [ Ivan Lesay from Letelli Compagnie ].

Sorry, I was late on the call. Could you give us a little bit of flavor of where you're standing with JJDC? Reading the, let's say, the release today, I would like to make sure, is the deal closed or not yet, first of all?

Sure. So yes. So we announced on December 16, 2019, the closure of the deal with JJDC, in which we invested. Yes, so that occurred.

Okay. So your cash is EUR 7.5 million.

That is correct.

Okay. Right. Because the tense, which is used in the press release, was not clear: will subscribe. It has subscribed, actually. Okay. So could you give us a little bit of flavor what it is leading to looking down the road? I mean are you -- have you, let's say, a business relationship with them or not yet? What are the possible partnerships that you can have with J&J in the long term? Could you give a little bit of flavor to that respect?

Yes. Sure. So in addition to the strategic investment, we also entered into a collaboration with the Lung Cancer Initiative. And the activity level remains high. But per the agreement that we have, we're bound by not revealing our progress until certain milestones are met. So I unfortunately cannot elaborate except to say as progress continues and certain milestones are met in the relationship, we will be providing updates accordingly. But until then, we're really bound by the confidentiality of our agreement.

Okay. So does that mean that if those milestones are met, you have additional revenues or it will be affecting the share capital?

Yes. I just want to clarify -- that's a great question, I'm glad you asked that. I just want to clarify, when I use the term milestone, I really am referring to progress milestone, so not necessarily financial or sales and so forth. But there's not much more that I could really comment on, on this relationship at this time, except to say that it is certainly quite active.

Without disclosing things you can't disclose, does that mean that you've got, let's say, engineers from Mauna Kea working with engineers from J&J? Or am I completely wrong to that respect? Is that the wrong assumption?

It's -- our respective teams are working together. So it's -- I can't really expand upon where in the organization. But our respective teams are working together specifically with the Lung Cancer Initiative.

Right. And again, without making any assumption, is that something where you're expecting things to be, let's say, developing in 2020 or because of the, let's say, COVID-19 and plus the fact it takes time to make those teams work together, we should be looking down 2021?

Yes. We'll provide an update. As I mentioned earlier, certainly, COVID-19 has slowed the pace of certain activities, although other activities continue despite COVID-19, and we'll provide an update during 2020, but there's no announcement to make beyond that.

We have no other questions.

Okay. All right. Well, as we close, I just want to thank everyone for participating in today's call. And please stay safe, stay healthy as we all navigate these very unprecedented times. Thank you very much.

Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.