Virgin Galactic Holdings Inc. Q1 2023 Earnings Call
[music].
Good afternoon, My name is Joe and I'll be your conference operator today at this time I would like to welcome everyone to Virgin Galactic <unk> first quarter 2023 earnings conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
You'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you'd like to withdraw your question. Please press star followed by the number two thank.
Thank you I'll now turn the call over to Erik <unk>, Vice President of Investor Relations.
Thank you and good afternoon, everyone welcome to Virgin Galactic <unk> first quarter 2023 earnings conference call on the call with me today are Michael Cole Glazer, Chief Executive Officer, and Doug Aron Chief Financial Officer.
Following prepared remarks from Michael and Doug We will open the call for questions.
Our press release and slide presentation that will accompany today's remarks are available on our Investor Relations website. Please see slide two of the presentation for our safe Harbor disclaimer.
During today's call we may make certain forward looking statements. These statements are based on current expectations and assumptions and as a result are subject to risks and uncertainties.
Many factors could cause actual events to differ materially from the forward looking statements made on this call.
For more information about these risks and uncertainties. Please refer to the risk factors in the company's SEC filings made from time to time.
You are cautioned not to put undue reliance on forward looking statements and the company specifically disclaims any obligation to update the forward looking statements that may be discussed during this call whether as a result of new information future events or otherwise.
On our economic model.
Following are prepared remarks will open the call to take your questions. So.
So, let's turn to slide for commercial space line operations.
Our team completed ground testing of our mother ship in February including fit checks, where we validated modifications to the upgraded launched pylon on Vms Steve.
We didn't conducted several validation flights with Vms Eve and both solo and made a configurations. These.
These flights validated enhancements that were made to increase his flight rate capability and overall service life.
Test points included functional checks for the new horizontal stabilizers upgraded avionics and mechanical systems.
On April 26, we successfully completed a glide flight of both Spaceport America, taking unity up to 47000 feet and releasing the vehicle to glide back to the runway.
That flight verified the performance of VSS unity in the glide phase, including the handling qualities in flight controls of the spaceship.
The ability to conduct these tests without the need for rocket power further highlights one of the many benefits of our distinctive flight system.
We're very pleased with the way both our ships performed and the flight provided the necessary data to clear the vehicles for our next mission unity twenty-five.
Unity twenty-five scheduled for late May will Mark a return to space with two pilots and for Virgin Galactic mission specialist, making a final assessment of the fault space flight in customer experience before opening commercial service later this quarter.
Our first commercial flight Galactic one is planned for late June and will be a scientific research flight with members of the Italian Air Force.
We plan to follow Galactic, one with both civilian astronaut and research customers flying on regular intervals thereafter.
Turning to slide five as we shared in February or commercial space line has two major areas of focus.
The first is flying our current ships Vms Eve and VSS unity on a recurring basis.
We are removing barriers to allow private citizens and scientific researchers unprecedented access to space.
The second focus is progressing the development of our future fleet, particularly the Delta class spaceships, which will be the key driver of revenue growth and profitability as we scale the business over the long term.
On our last call, we shared a high level overview of the production roadmap associated with this multiyear fleet development program.
With our manufacturing strategy and primary suppliers in place 2023 is focused on completing designs for the Delta spaceships.
Building the required tooling and beginning the parts fabrication for the ships.
As we move into 2024, we anticipate parts fabrication will continue in the assembly phase for the Delta class Spaceships will also begin using the sub assemblies from our suppliers.
We are working through the interior design production lay out and sit up phases of our manufacturing facility in Phoenix, Arizona to support the final assembly of the Delta.
This facility is expected to be operational in 2024.
We can continue to operate on a timeline that supports testing in 2025 in advance of the first Delta shift entering commercial service in 2026.
Doug is going to share some of the compelling economics behind the Delta program in his financial review.
Given the strong returns we see in the Delta class investing in this program is our top priority to drive future growth and profitability.
At the same time, we recognize the financial markets are more challenging today and this requires us to maintain optionality exercise cost disciplined and be strategic in how we deploy our capital.
As we said before we have flexibility around the sequencing of our various programs and that will be able to share. An example, as part of his remarks.
And with that Doug, let's turn the call over to you.
Thanks, Michael Good afternoon, everyone.
Turning to slide six and our financial results for the first quarter.
But generated revenue of $392000 driven by future astronaut membership fees.
Operating expenses or $164 million compared to $92 million in the prior year period.
The increase is primarily attributable to a $58 million increase in R&D costs tied to engineering work for our future fleet and the enhancement period on the current fleet.
SG&A increased $13 million, primarily driven by non-recurring legal and severance costs as well as investments in our supply chain and other support organizations as we scale the business.
We reported a gap net loss of $159 million compared to $93 million in the prior year period, primarily driven by higher R&D cough adjust.
Adjusted EBITDA was negative $140 million in the first quarter compared to negative $77 million in the prior year period.
Moving the slides seven free cash flow was negative $139 million in the first quarter compared to negative $68 million in the same period last year.
Our balance sheet remains strong with $874 million in cash cash equivalents and marketable securities.
During the quarter, we raised $32 million in gross proceeds through the issuance of 5.8 million shares is part of our at the market for ATM equity offering program.
We are committed to maintaining a strong balance sheet, while prudently investing in growth initiatives, where we see the highest returns.
To that end, we've often said that the delta class will be the driver of revenue growth and profitability for the company. So let's turn to slide eight and I'll share additional detail around our delta ships that illustrates the strong financial return that we anticipate these ships will bring to the company.
We expect very attractive margins from the operation of our succeed Delta class vehicles as.
As we begin to fly our recently ticketed astronauts, but the price of $450000 or more proceed we expect to generate at least $2.7 million in revenue for each space flight.
We have relatively low variable cost of approximately $400000 per space flight, including the rocket motor for the spaceship fuel for the mother ship and training and hospitality cost for the astronauts.
Following the non-recurring costs associated with the development of the first Delta ship, we anticipate the cost to produce an incremental delta ship will be in the range of $50 million to $60 million.
Assuming a useful life of at least 500 flights per ship, we would estimate the amortize costs of the spaceship to be approximately $100000 to $120000 per flight.
Extending that analysis following the non-recurring development costs associated with the first mother ship. If we were to include amortized cost of both the mother ship and the Delta spaceship to each passenger flight, we expect to see margins exceeding 75%.
Looking at this another way the payback period for each incremental Delta ship is expected to be approximately six months, assuming a weekly flight cadence.
With such attractive economics associated with the Delta class, we remain laser focused on the progression of the program.
This is why the production model, we are pursuing for our unique space flight system is so advantageous as it deliver strong cash flow through a significant return on investment as we scale the fleet.
As we drive our strategic programs forward. We're also managing our spending in the back half of the year to protect our strong balance sheet.
For the second quarter, we forecast free cash flow to be in the range of negative $130 million to negative $140 million.
In the third and fourth quarters, we anticipate that are free cash flow will improve and be in the range of negative $120 million to negative $130 million per quarter.
Clearly the current economic environment demands operational flexibility. We are fortunate to have effective levers that can be employed to manage cause one of these levers is adjusting the sequence of our various programs. As an example, given the strong performance of our mothership. Following the modification period Vms Eve now has the capability to carry the initial.
Will delta ships through the flight test programs.
This increased capacity with eve enables us to sequence. Our next generation mother ship to interest service later than originally planned but still in time for the ramp of the Delta fleet.
This is just one example of where we are leveraging our flexibility to manage spending more simultaneously executing on our future growth drivers.
We continue to monitor capital market conditions and are committed to maintaining a strong balance sheet in order to fulfill our business priorities, but that I'll hand, the call back to Michael for some closing comments.
Thanks, Doug.
The excitement continues to build and we're finally at the cusp of what will be a defining moment for our company commercial space line operations.
We're starting regular flights to space beginning this month, we are building a production system that will deliver delta ships with excellent economic returns and we are delivering a best in class astronaut experience.
We're being vigilant with our cost management, while at the same time, ensuring continued focus on our core programs, where multiple past available to us as we progressed forward to become a strong profitable and inspiring company at the vanguard of a new industry.
With that we'll turn to questions operator, we're ready to begin to Q&A portion of the call.
Absolutely we will now begin to Kunai session again, if you'd like to ask a question on today's call you can do so by dialing star one.
If you'd like to remove that question for any reason you can dial star too.
As a reminder, if you're using a speaker phone. Please remember to pick up your handset before asking your question.
The first question is from the line of Greg Conrad with Jeffries you May proceed.
Good evening.
Hi, Greg just to start.
I appreciate.
The additional information, but just in terms of the the forward looking free cash flow. You said you have a modest improvement in age too and you talked about that a little bit can you talk about where we see that whether it's R&D coming down is it revenue coming online you mentioned eve like wherever we see it in the financials.
And then kind of with that should we think about each one free cash flow usage is kind of the peak and maybe age to kind of run rate as we go into next year.
Hey, Thanks, Greg This is Doug.
So what we are seeing in terms of our spending is really in the R&D coming down. The first thing that's happening is we've completed the enhancement period.
The investment associated with that around even unity. So now they're moving in a commercial service. So we don't have to be spending so much on that and.
And then secondly, we talked about the sequencing of the program spending on.
On the future fleet. So we're focused on the the Delta program, which is first and foremost and then we have this opportunity to shift the timing the spending on the mother ship, the new mother ship into the future.
So those are some of the things that you see is kind of larger levers that are changing the R&D rather than a revenue impact as you asked about so we did give guidance to the second half of this year and while we're not giving guidance passed out I think it is reasonable to assume.
Whom that this is a an appropriate level of spending going forward and we may toggle that up or down as we see opportunities and always focused on the growth.
Engine to the company.
Adjusting our spending is appropriate there may be some lumps in there if something comes along like some tooling in a particular quarter, but I think that's a reasonable spend.
Spending level to assume for the foreseeable future. The key is we're gonna keep flexibility and we have levers that we can continue to exercise up or down as needed.
And then just on Delta you've made obviously a lot of announcements the past two quarters around the supply chain and production when you think about that 50% to 60 million.
Recurring part per doubt how much of that locked in and then what production expectation.
Within that $50 million to $60 million.
Sorry, Greg just for clarity how much is locked in and how much is production could you just clarify the question for me happy to answer yes. So.
<unk> have reached out to the supply chain what percentage of.
The cost of building that do you have 100% visibility into and then obviously, there's some fixed costs. So are you assuming I know you said you have capacity for six a year I mean does that assume you get to that sex is at three just thinking about fixed costs around production.
I think that's one sure yes.
Yeah. So.
We are quite a ways through the planning and estimating.
Process with our suppliers and and in the beginning it's time and materials and then it moves to a firm fixed price kind of basis.
We're moving through the the sculpting and scheduling and refining those estimates to the point, where we were able to give that out today with a range. We were comfortable with based on what we know today. So we it's not tied to any particular production level the.
The way to think about it right is there is the <unk> for the first one the development costs and then the first ship costs, we think about the the labor and the materials to produce each incremental one is the range. We gave you which was 50% to $60 million isn't.
In our mind, particularly sensitive to the volume.
Given the range, we we provided.
And just for clarity the.
Volume, we expect we're building the Phoenix facility to handle four to six ships on a yearly basis.
We will ramp up on the first year of that but.
But that that gives you a range of volume that we expect to produce in that facility that matches against these numbers.
Thank you.
Thanks, Greg.
Thank you. The next question is from the line of Michael the shock with Keybanc capital markets. You May proceed.
Hey, good afternoon, I wanted to start following up on.
Cash burn it appears we're at or near the the rate the peak rate given some of the guidance that you provided in the past you talked about the flexibility that you have and you gave the example here, but as I'm looking at the guidance for the next three quarters.
That assume that the investments that.
That you have planned are scheduled and going as we as we thought we'd progressed three months ago or have you made any have you incorporated any flexibility into that cash for your guidance.
The main thing that is in there that changed was the sequencing of the mother ship.
You think about the the phases of spending on each program. For example, the Delta class, There's an engineering phase and then some tooling investments and then you move into parts fabrication and bye.
Staging these in such a way that the the next mothership follows that peak spending.
The Delta class program and allows us to kind of lay around the the work on the mother ship and maintain roughly that level of spend as what we're modeling today. So.
So I would say and plus or minus right. There can be some bumps as I talked about it but fundamentally it's maintaining the same growth engine and those key deliverables that we have talked about before just stag.
Staggering the spending so they're not.
Laying on top of each other and creating a peak in 2024 as I indicated last time, this is allowing us to smooth that out.
By staging one after the other.
This is Mike I'll, just kick it with hey, what enabled us to do that now.
Excuse me.
So originally we plan to have eve.
Our mother ship that's in service, Yeah, just <unk>.
Flying unity to space and bring the next generation mother ship in time.
To fly the test flight program of the Delta, which would have the mothership showing up as early as 2025.
We're quite happy with how it came through the modification program and when you look at the capacity we have with Eve.
It can fly far more frequently than unity comply until we have enough capacity within our existing mother ship to carry us through the Delta class Test program. So that gave us the opportunity to then sequence. The next generation mothership, we don't need it for the flight test program, we do need it when we're ramping up.
The Delta class fleet and so what you're seeing here is are taken advantage of that opportunity and just kind of having a more consistent cash burn going through the next couple of years.
And then looking longer term on on some of the the Delta class testing are there any technological advancements are things you've learned over the past few years from the unity any testing that could potentially reduce the time and or the number of flights that you <unk>.
I need for Delta class testing or do you expect it to be a similar process.
Seen in the past.
It will definitely be a faster I'd say much faster test program than what you saw on unity, which happened over many many years.
So we expect to start that test program and twenty-five and conclude that test program and 26, so within a year or so and the main things that were changing you may have heard from us in the past where keeping the look the shape technically the outer mold line of the vehicle. The same we are changed.
Jean the composite system.
And moving with a high temp composite with that that gives us the ability to reduce weight and a variety of places changed the way we manage the thermal forces upon the ship.
We will make updates into our avionics packages things like that and generally take advantage of all the learning that we've had across the flight test program and across the development of imagine and all those things combined gives us confidence to design a ship that will be able to turn on a weekly basis, which is versus unity, which currently turns.
On a one month basis, so, but I think the flight test program itself.
Will be constrained within.
Roundly a year.
That's helpful. Thank you.
You're welcome Thanks Bye.
Thank you. The next question is from the line of Matt acres with Wells Fargo. You May proceed.
Hey, guys. Good afternoon. Thanks for the question I wanted to follow up on the $50 million to $60 million cost for the dealt with last year I think.
What we usually see on the commercial aircraft sided.
The first first aircraft and much more expensive than the second one as well.
A bit less and it sort of goes down deeply and then there's a learning curve. So so I guess are you expecting a similar learning curve on these and if so is that 50 $60 million like the cost of shipped to or is it like somewhere kind of further down the learning curve.
I don't think it will be too far down the learning curve and I think the range, we're giving us is generally.
A good one.
This isn't a from scratch design right. We have a flying ship that is fundamentally the same as what we're building here and so that advances our confidence.
And all things far more than you would see on kind of a clean sheet new ship that's being built.
So what.
What we are planning though.
[noise] is to have the tooling done so that's going to stay the same we feel confident that keeps the parts generally in the same piece as they are doing.
Our primary suppliers for Delta in Bell and carbon.
We'll be doing adding those parts up into major sub assemblies, they'll have a bit of up and down with that but those are sophisticated companies that should be able to dial that in fairly quickly and then we will final assemble these in Phoenix.
And we plan to open up the Phoenix facility a little early.
Actually get in there ourselves and I'll call. It rehearse if you will with before the actual sub assemblies arrive just so we start to dial and the processes will use so that we're a little bit quicker off the off the gate.
But I think there'll be a little bit of differences in the time that it takes us to assemble the.
The first couple that will be our flight test vehicles, but then as we start and we have time with those flight test vehicles, and then as we start to really move into the production side of that we do expect to be fairly well dialed in.
Okay that makes sense I guess is there a way to think about it sort of what percentage of the parks or the content.
Kind of common to the prior design or how much isn't it.
Well, we can probably come back with a little bit more specifics of that generally the.
The ship is very common right same out or mold line same feathering design.
Generally the same aerodynamic handling facility there what we are doing as I said, we're changing the composite materials, we're upgrading systems avionics systems mechanical systems.
So that the.
General ability to fly and maintain and turn the ships are there. So those are those are the the real changes that are going in I don't have all caught up part count there. What we are doing is when we changed the composite system. We do go back in and touch most parts with that especially carbon is getting.
Retouched, but we know what we want the function of the part to be we just have to go through the process with the new material system.
Okay. That's helpful. Thank you.
You're welcome thanks for that.
Thank you. The next question is from the line of Oliver turned from T. D. Cowan you May proceed.
Hi, Hello, all of us for all of our Chen Hi, How's it going thanks, so much for taking that question can you discuss some more of that construction progress with the death of classes manufacturing facility in Phoenix are there any other major milestones ahead that they are looking for two and sort of what's the timeline on that.
Sure.
I'll call it a rendering in our presentation there of that.
Facility.
Probably at our next call will bring some just in progress construction photos just to share as well, but the general timetable in this year.
Outside of the Phoenix facility is when tools are being built and parts are starting to be fabricated. So we're not using the Phoenix facility. This year.
We're doing the designs here in Orange County in partnership with Bell and carbon Bell and carbon our building tools and beginning to knock out the parts for those tools and 2024.
Hearts fabrication is continuing and put into sub assemblies with Berlin with carbon the.
The Phoenix facility will become operational for us and those sub assemblies and parts will begin to arrive in Phoenix that.
Will start us in 2024, so that's when you'll see that plan to actually up and operating and then 2025 will continue the assembly of the initial vehicle that we use in flight testing and it'll actually start testing that will come in I have come in take that vehicle up out of.
Phoenix will probably have a couple of flight test vehicle will pick up out of Phoenix and bring those two spaceport America, where they will go through their ground and flight testing and then.
Then that leads into 2026 or will conclude through the testing program and move into commercial service with the early ships.
Okay got it that's that's very helpful. Thank you and then just.
Just briefly on ticket sales do you plan to issue more tickets for sale and how have those ticket sales through your travel agent partner have those been trending thank you.
You are welcome Katie So we have generally held our sales process.
Just as you as you know we have a three.
Three plus year backlog already with the 800 or so that we have we.
We've seen minimal cancellations in that.
And we do expect to open sales backup after we start flying so you've heard of today talk about Galactic one will be the start of commercial service and then we will start with civilian astronauts and then on a recurring basis. So as we get a few flights under our belt and get momentum there. We will go ahead.
When we have a.
Queer eye towards the I'll call. It the length of time somebody would be on the manifest.
Then we'll go ahead and open sales back up but right now I would expect the virtuoso group as the group you are talking about I would expect that they will make their sales pushed following our galactic one black two flights. We're we're kind of in the market with momentum makes it a little easier on their side.
Thank you very much.
Thanks Katie.
Thank you. The next question is from the line of miles Walton with Wolf Research you May proceed.
Thanks, Good evening.
Hi, Thanks for the color.
On the economic.
Uhm slight basis I was curious.
You lay out some of the variable economics.
A couple of the items that weren't in here if you just touch on.
Insurance on a per flight bases maintenance.
The ground operations cause all three of those that kind of thing goes is variable maybe the maybe you were thinking the ground operations is more fixed but can you size those relative to the 400000, you have with them but.
Yeah, there's multiple pieces there this is Doug.
So the insurance actually we did include in that cost.
So that's in the 400 K.
Fairly small cost their relative to other components, but that's included.
In terms of the ground operations other fixed cost, but we are outlining for you is something similar to a contribution margin right for our.
After the variable cost so its contribution towards our fixed costs, such as the ground operations, which would be one of our larger cos running running the company and maintaining that flight cadence, we didn't lay that out for you yet in terms of what that cost would be for flight, that's something that as we get more Pratt.
This and we get more efficient and we scale will have better.
Visibility into but we have estimates, but that'll be what our team will be focused on is that efficiency and getting the economies of scale. There. So I think it's a little premature to put that out there, but it's something that will be focused on to make sure. We get the best economics, we can out of each line.
Doug what about maintenance I would think that's variable, but maybe maybe you think of it as more pickles.
Yeah, they put that in the fixed costs as well so.
I think if it has all the costs associated with our space.
So out there we have our.
Technical operations team and we have our space missions teams that support maintenance and the flight crew and all of these things which are fundamentally fixed.
Those are costs will be there if we have a flight on a day or not so.
We looked at it that way.
The important ones.
To manage as we go forward, but I did put those in the fixed bucket for this discussion.
Okay.
And then maybe maybe a high level one Michael <unk>.
Mandate around dual mandate for commercial human space flight I think still expires in October .
What sort of your expectation as to how that gets renewed if it doesn't get renewed what does it mean and you anticipate any any impact too sort of your operating plan over the next couple of years.
Are you talking to the learning period miles.
Yeah. The the domain did they have the boat.
<unk>, you as well as promote givens bitcoin.
Right just for clarity and not you're not talking are operating licenses here. So no.
Yeah.
Yeah. So I think that's why we've partnered with the FAA from the very foundation of this program.
All the way through having the FAA in our mission control at each step along the way.
So the.
Typically I would say shorthand that is for learning period, that's gone on with commercial space.
Is set to expire there's a lot of review with government with the FAA with industry.
We are part of those conversations.
Along the way from our standpoint.
Obviously, it's early and commercial space and of course.
Our other industry partners are continuing to learn however, wherever the FAA chooses to go and whether the government chooses to go with that.
We feel we will be continuing our operation just fine in those regards so we maintain an active voice Mike Moses our President is chair on the safety Committee for contact and I think those are really good dialogues that are going on I see it as an important part of evolving commercial space as an industry, but I.
Don't see it in the way one way or the other really to our business model and how will grow.
Okay, great. Thanks, so much.
Thanks miles.
Thank you again, if you'd like to ask a question on today's call you can do so by dialing star one.
The next question is from the line of Christine Lueck with Morgan Stanley You May proceed.
Hi, good evening guys.
Even christine.
Maybe I could start off with your need any I know a lot of questions have been <unk> for today and that might be my follow up question, but Ah immunity <unk> 24 cats.
Months on it's very encouraging to see you a complete these tests how about the data for nearly 24 compared to your expectations and do you anticipate to make any tweak between now and the unity twenty-five task later this month.
Thanks for the question Christine and we're all really proud and excited for unity and of course momentum is very high and continues to build in the company for these flights. So the glide flight was an important player for us, but I call. It a it was a <unk>.
Jim where we revalidate in the changes that had been made so we were expecting the flight to perform.
Just as we thought.
It did perform as we thought and so we made we it was a very successful flight from us for us validating the data, giving us the data to analyze that came through clean and so we've cleared ourselves to move forward and what's happening now.
Is we're only two and a half weeks away or so from the unity twenty-five flight.
At this point this is pretty much dialed in to the technical operations team moving through their procedures.
So nothing we are planning to.
Add at a level of materiality between here and there.
Great. That's really helpful color and then if you follow up questions in downtown so when you're talking about the recurring expected cost of 50 to 60 million at what <unk> do you anticipate you get to that 50 to 60 million dollar cost.
Is it you know after a full year production is it after a few minutes or are we talking about you know closer to 2031, you've had a few years of full production of Delta.
Thanks, Christine This is Doug yes, Michael touched on part of this earlier about the learning curve and we haven't made dramatic changes to things like the outer mold line and we're making some refinements, how we manufacture and such.
The ship, which helps us in terms of not starting with a clean sheet of paper. The other thing I Might've mentioned as we're leveraging really the latest.
Digital technologies to partner with our suppliers. So we are using all the same databases working through all of the practical side of manufacturing so that we streamline that process as much as possible and eliminate surprises. So again. These are things that help us go much faster than we have in the past so.
It shouldn't be too long into that.
The manufacturing cycle, where we expect to see those types of costs. So.
We'd be short short ways in I wouldn't put a specific number on it but we expect to be.
Much faster than before and hitting that learning curve benefits much earlier in the cycle. Then then you might otherwise expect.
Yes, well before 2030 right I think the first two the first two vehicles out which will be embedded in our flight test program I'm sure. We'll do learning on those and then as you shift into more of kind of a run rate effort.
That should be.
Much faster ramp up and learning.
That's really helpful and in terms of production with your conversations with suppliers and your partner's forgot to add that matures uhm. How are you expecting to manage cost overruns should they arise is there a component of the contract with a shared cost service sharing partnership.
With your suppliers.
Yes, there is a risk sharing built into the contracts. So it works both ways.
Things are running ahead that benefits them, if they are running behind.
Penalties for that so yes.
We're in it together with a risk sharing arrangement.
If I could speak one last one on Delta can you provide more color and then non-recurring engineering costs.
Annual dollar send that you anticipate for the program.
So we haven't quantified that.
In its entirety I think it's just best to think of it in terms of that cash flow that we've talked about you can see it in our R&D spend that's going to be a bulk of our R&D going forward and fitting inside that 125 million dollar envelope, but to date, we haven't put the total cost out there that's something.
You know that we're still working through with everybody, but we're comfortable at the spending envelope that we've given you.
Great. Thank you very much for.
Providing all the details that you gave today very helpful. Thank you.
Thanks, Christine have a good evening.
Thank you.
That concludes today's Q&A session with that we will also conclude today's conference call. Thank you for your participation. Please enjoy the rest of your day.