QLT SEPARATELY ANNOUNCES SHARE REPURCHASE PROGRAM VANCOUVER, Oct.
27 /PRNewswire-FirstCall/ -- QLT Inc. (NASDAQ: QLTI; TSX: QLT)
("QLT" or the "Company") today reported financial results for the
third quarter ended September 30, 2009. Unless specified otherwise,
all amounts are in U.S. dollars and in accordance with U.S. GAAP.
"Our recently announced accomplishments mark a significant turning
point for the Company, as we have fulfilled our vision of becoming
a company focused solely in the ocular therapeutic area and will
soon have a commercial presence in the U.S.," said Bob Butchofsky,
President and Chief Executive Officer of QLT. "We are looking
forward to advancing the punctal plug drug delivery platform and
expect to report additional data in the first quarter next year."
2009 THIRD QUARTER FINANCIAL RESULTS Financial Reporting For the
third quarter and nine months ended September 30, 2009, QLT is
reporting the results of our divested QLT USA business as one line
item called Income from Discontinued Operations on our statements
of operations. This item captures in one line the net results of
the entire QLT USA operation through September 30, 2009. Worldwide
Product Sales Worldwide Visudyne(R) sales for the third quarter
were $23.5 million, a decrease of 31.1% from sales in the third
quarter of 2008. Sales in the U.S. were $6.2 million, down 32.5%
from the prior-year third quarter, while sales outside the U.S.
were $17.3 million, down 30.5% from the prior year. Worldwide
Eligard(R) sales in the third quarter were $65.0 million, an
increase of 18.8% over the third quarter of 2008. U.S. sales of
$18.8 million were up 11.4% from last year, while sales outside the
U.S. increased 22.1% to $46.1 million. All revenue items related to
the Eligard product are included in the Income from Discontinued
Operations line on the statements of operations. QLT Revenues
Revenue is now comprised solely of revenue from Visudyne. For the
third quarter, revenue of $8.8 million was down 19.2% from the
third quarter of 2008 due primarily to the decrease in end-user
Visudyne sales. QLT's share of profit from Visudyne sales was 28.9%
in the quarter, up from 22.6% in the third quarter of 2008. QLT
Expenses For the third quarter of 2009, Research and Development
(R&D) expense was $7.4 million, up from $6.9 million in the
same period of 2008 primarily due to increased spending on the
punctal plug program. Selling, General and Administrative
(SG&A) expense was $4.5 million, up slightly from $4.4 million
last year. Operating Income/Loss Operating loss for the third
quarter was $6.0 million, compared to operating income of $17.0
million in the prior-year third quarter. Last year's income
included a $21.3 million gain from the sale of our corporate
headquarters and surrounding land. Excluding that gain, the
operating loss increased from last year due to the drop in Visudyne
sales. Earnings Per Share (EPS)/Loss Per Share EPS of $0.16 in the
third quarter compared to EPS of $1.97 in the prior-year quarter.
The decline occurred because the 2008 third quarter results
included a $134 million gain from the sale of Aczone(R) and
Atrigel(R) (within discontinued operations) and the $21.3 million
gain from the sale of our headquarters and land. In the third
quarter, non-GAAP loss per share was $0.08, significantly lower
than GAAP EPS primarily because the income from discontinued
operations and a non-cash foreign exchange gain related to an
intercompany loan were eliminated. A full reconciliation of GAAP to
non-GAAP EPS for the third quarter and nine months is provided in
Exhibits 1 and 2. Cash and Short-Term Investments The Company's
consolidated cash and cash equivalents balance at September 30,
2009 was $194.0 million, up from $134.9 million at the end of the
second quarter primarily due to collection of income tax refunds
during the quarter. The cash and cash equivalents balance at
September 30, 2009 did not include $20.0 million ($16.5 million net
of transaction fees) that was paid to us on October 1, 2009 as the
first installment of our sale of QLT USA. 2009 Guidance Update - As
previously announced, under the terms of our sale of QLT USA, we
expect to be paid up to an additional $200 million in quarterly
payments equal to 80% of the royalties paid to QLT USA under the
Sanofi and Medigene agreements. As a result of this transaction: -
In the fourth quarter we expect to record a gain of over $100
million within income from discontinued operations related to the
accounting gain on the sale, which represents the excess of the
estimated present value of all consideration expected to be
received under the deal compared to the net book value of the net
assets that were sold. - We will have an asset on the balance sheet
called Contingent Consideration, which represents the estimated
present value of the expected remaining payments due from the $200
million of quarterly payments mentioned above. - Cash collected
each quarter will not be recorded as revenue, rather it will draw
down the Contingent Consideration asset on the balance sheet. In
the fourth quarter we expect to collect Contingent Consideration of
approximately $8.4 million. - Each period we will have to assess
the fair value of the Contingent Consideration and any changes will
flow through the P&L as gains or losses within Other Income and
Expense. - Guidance for Eligard sales was increased in our last
earnings update to $240-255 million. Given that we will no longer
be reporting any revenue from Eligard sales on our statements of
operations, we are discontinuing our guidance for end-user Eligard
sales. However, Eligard sales through the nine months ended
September 30, 2009 of $191.1 million were in line with the previous
guidance. - Guidance for R&D expense is $30-33 million and for
SG&A expense is $18-21 million, unchanged from previous
guidance, although we do expect that both line items will be near
the bottom end of the guidance ranges. - Guidance for adjusted
EBITDA (defined as operating income plus stock compensation and
depreciation expense and adjusted for other one-time and non-cash
items) was increased in our last earnings call to $15-20 million.
As above, given that we will no longer be reporting revenue from
Eligard, we are discontinuing guidance for adjusted EBITDA.
However, through the nine months ended September 30, 2009 adjusted
EBITDA (including EBITDA associated with our discontinued
operations) was $18.3 million. - The amendment to the Visudyne
agreement does not take effect until January 1, 2010, and therefore
there is not expected to be any material impact to our 2009
operating results. Beginning in 2010, QLT's revenue from Visudyne
will comprise: (i) end-user net sales of Visudyne in the U.S., (ii)
royalties in the amount of 20% of net sales of Visudyne outside of
the U.S., (iii) product revenue from selling unlabelled Visudyne
product to Novartis for its sale of the product outside of the
U.S., and (iv) reimbursement from Novartis for the existing third
party royalties we currently pay to University of British Columbia
and Massachusetts General Hospital for sales of Visudyne outside
the U.S. (no reimbursement will be received for the ongoing damages
paid to MEEI in the amount of 3.01% of Visudyne sales). In 2010, we
will provide guidance on adjusted EBITDA plus the quarterly
payments due for the sale of QLT USA (calculated as 80% of the
Eligard royalty payments referenced above), because we believe this
to be a more reflective measure of our cash-flow for the next
several years. RECENT COMPANY ANNOUNCEMENTS - Announced the receipt
of an income tax refund of Cdn$45.3 million from the Canada Revenue
Agency. The income tax refund resulted primarily from a request to
carryback losses the Company incurred in 2007 in connection with
the judgment of the United States District Court for the District
of Massachusetts in favor of Massachusetts Eye and Ear Infirmary. -
Announced the sale of all of the shares of QLT's wholly-owned U.S.
subsidiary, QLT USA, Inc. ("QLT USA"), to TOLMAR Holding, Inc.
("TOLMAR") for up to an aggregate US$230 million pursuant to a
Stock Purchase Agreement dated October 1, 2009. QLT USA's principal
operating asset is the Eligard line of products for the treatment
of prostate cancer. The Eligard line of products is currently
manufactured by TOLMAR, Inc., a wholly-owned subsidiary of TOLMAR.
- Announced that QLT has restructured its agreement with Novartis
Pharma AG to simplify the relationship, under which, effective
January 1, 2010, it will, among other things, receive exclusive
U.S. rights to the Visudyne patents to sell and market Visudyne in
the U.S. About QLT QLT Inc. is a global biopharmaceutical company
dedicated to the discovery, development and commercialization of
innovative ocular therapies. We utilize two unique technology
platforms, photodynamic therapy (used in the Visudyne product) and
punctal plugs which are currently under development for future
product opportunities. For more information, visit our web site at
http://www.qltinc.com/. A full explanation of how QLT determines
and recognizes revenue resulting from Visudyne sales is contained
in the financial statements contained in the periodic reports on
Forms 10-Q and 10-K, under the heading "Significant Accounting
Policies - Revenue Recognition." Visudyne sales are product sales
by Novartis under its agreement with QLT. QLT Inc.-Financial
Highlights CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------- (In thousands of
United Three months ended Nine months ended States dollars, except
September 30, September 30, per share information) 2009 2008 2009
2008
-------------------------------------------------------------------------
(Unaudited) Revenues Net product revenue $ 8,785 $ 10,868 $ 31,296
$ 36,462
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Costs and expenses Cost of sales(1) 2,202 2,989 12,693 10,663
Research and development 7,375 6,887 20,486 23,049 Selling, general
and administrative 4,500 4,422 12,484 15,519 Depreciation 370 464
1,061 2,566 Litigation 316 - 650 864 Gain on sale of long-lived
assets - (21,289) - (21,289) Restructuring 3 349 (144) 9,439
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14,766 (6,178) 47,230 40,811
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Operating (loss) income (5,981) 17,046 (15,934) (4,349) Investment
and other income (expense) Net foreign exchange gains (losses)
7,517 (296) 14,292 (58) Interest income 1,853 1,853 3,818 5,789
Interest expense - (2,743) (1,848) (8,811) Other (9) 26 16 288
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9,361 (1,160) 16,278 (2,792)
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Income (loss) from continuing operations before income taxes 3,380
15,886 344 (7,141) Provision for income taxes (1,144) (3,749) (472)
(144)
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Income (loss) from continuing operations 2,236 12,137 (128) (7,285)
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Income from discontinued operations, net of income taxes 6,685
134,789 18,980 136,302
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Net income $ 8,921 $ 146,926 $ 18,852 $ 129,017
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Basic net income per common share Continuing operations $ 0.04 $
0.16 $ (0.00) $ (0.10) Discontinued operations 0.12 1.81 0.33 1.83
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Net income $ 0.16 $ 1.97 $ 0.33 $ 1.73 Diluted net income per
common share Continuing operations $ 0.04 $ 0.16 $ (0.00) $ (0.10)
Discontinued operations 0.12 1.81 0.33 1.83
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Net income $ 0.16 $ 1.97 $ 0.33 $ 1.73 Weighted average number of
common shares outstanding (in thousands) Basic 54,624 74,620 56,844
74,620 Diluted 54,765 74,620 56,844 74,620
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(1) Includes amount accrued on Visudyne sales pursuant to judgment
rendered in the MEEI litigation. QLT Inc. CONDENSED CONSOLIDATED
BALANCE SHEETS ------------------------------------- (In accordance
with United States generally accepted accounting principles)
September 30, December 31, (In thousands of United States dollars)
2009 2008
-------------------------------------------------------------------------
(Unaudited) ASSETS Current assets Cash and cash equivalents $
194,039 $ 165,395 Restricted cash - 124,578 Accounts receivable
8,209 11,151 Income taxes receivable 407 41,801 Inventories 3,922
3,163 Current portion of deferred income tax assets 1,279 403
Mortgage receivable 11,221 - Assets held for sale 58,543 72,763
Other 7,240 10,474
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284,860 429,728
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Property, plant and equipment 2,345 3,113 Deferred income tax
assets 6,772 5,139 Goodwill 23,145 23,145 Mortgage receivable -
9,834 Long-term inventories and other assets 18,304 20,799
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$ 335,426 $ 491,758
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LIABILITIES Current liabilities Accounts payable $ 4,676 $ 4,865
Accrued restructuring charge 123 314 Accrued liabilities 4,097
129,473 Liabilities held for sale 7,316 8,906 Deferred revenue
4,306 4,204
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20,518 147,762 Uncertain tax position liabilities 1,447 766
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21,965 148,528
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SHAREHOLDERS' EQUITY Common shares 514,056 702,221 Additional
paid-in capital 269,035 123,367 Accumulated deficit (560,712)
(579,564) Accumulated other comprehensive income 91,082 97,206
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313,461 343,230
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$ 335,426 $ 491,758
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As at September 30, 2009, there were 54,630,692 issued and
outstanding common shares and 5,908,273 outstanding stock options.
QLT Inc. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
---------------------------------------------- 2009 Third Quarter
Reconciliation of GAAP Earnings to Adjusted Non-GAAP Earnings
Exhibit 1
-------------------------------------------------------------------------
Three months Three months ended ended (In millions of United
September 30, September 30, States dollars, except 2009 2009 per
share information) GAAP Adjustments Non-GAAP(1)
-------------------------------------------------------------------------
(Unaudited) Revenues Net product revenue $ 8.8 $ - $ 8.8
-------------------------------------------------------------------------
Cost and expenses Cost of sales (2.2) 0.0 (a) (2.2) Research and
development (7.4) 0.2 (a) (7.2) Selling, general and administrative
(4.5) 0.9 (a)(b) (3.6) Depreciation (0.4) - (0.4) Litigation (0.3)
0.3 (c) - Restructuring (0.0) 0.0 (d) -
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(14.8) 1.4 (13.3)
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Operating loss (6.0) 1.4 (4.6) Investment and other income
(expense) Net foreign exchange gains (losses) 7.5 (8.0) (e) (0.5)
Interest income 1.9 (1.6) (f) 0.2 Other (0.0) - (0.0)
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9.4 (9.7) (0.3)
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Income(loss) from continuing operations before income taxes 3.4
(8.3) (4.9) Provision for income taxes (1.1) 1.6 (g) 0.5
-------------------------------------------------------------------------
Income (loss) from continuing operations 2.2 (6.7) (4.4)
-------------------------------------------------------------------------
Income from discontinued operations, net of income taxes 6.7 (6.7)
(h) -
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Net income (loss) $ 8.9 $ (13.3) $ (4.4)
-------------------------------------------------------------------------
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Basic net income (loss) per common share: Continuing operations $
0.04 $ (0.08) Discontinued operations 0.12 0.00
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Net income (loss) $ 0.16 $ (0.08) Diluted net income (loss) per
common share: Continuing operations $ 0.04 $ (0.08) Discontinued
operations 0.12 0.00
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Net income (loss) $ 0.16 $ (0.08) Weighted average number of common
shares outstanding (in millions): Basic 54.6 54.6 Diluted 54.8 54.8
Adjustments: ----------- (a) Remove stock-based compensation. (b)
Remove capital tax. (c) Remove litigation expense. (d) Remove
restructuring expense. (e) Remove foreign exchange gains related to
intercompany debt. (f) Remove interest income related to income tax
refunds. (g) Remove income tax impact of the above adjustments. (h)
Remove income from discontinued operations, net of income tax. (1)
The adjusted non-GAAP financial measures have no standardized
meaning under GAAP and are not comparable between companies.
Management believes that the adjusted non-GAAP financial measures
are useful for the purpose of financial analysis. Management uses
these measures internally to evaluate the Company's operating
performance before items that are considered by management to be
outside of the Company's core operating results. QLT Inc. CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
---------------------------------------------- 2009 Third Quarter
Reconciliation of GAAP Earnings to Adjusted Non-GAAP Earnings
Exhibit 2
-------------------------------------------------------------------------
Nine months Nine months ended ended (In millions of United
September 30, September 30, States dollars, except 2009 2009 per
share information) GAAP Adjustments Non-GAAP(1)
-------------------------------------------------------------------------
(Unaudited) Revenues Net product revenue $ 31.3 $ - $ 31.3
-------------------------------------------------------------------------
Cost and expenses Cost of sales (12.7) 4.7 (a)(b) (8.0) Research
and development (20.5) 0.7 (b) (19.8) Selling, general and
administrative (12.5) 1.4 (b)(c) (11.0) Depreciation (1.1) - (1.1)
Litigation (0.7) 0.7 (d) - Restructuring 0.1 (0.1) (e) -
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(47.2) 7.3 (39.9)
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Operating loss (15.9) 7.3 (8.6) Investment and other income
(expense) Net foreign exchange gains (losses) 14.3 (16.0) (f) (1.7)
Interest income 3.8 (2.7) (g) 1.1 Interest expense (1.8) - (1.8)
Other 0.0 - 0.0
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16.3 (18.7) (2.4)
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Income (loss) from continuing operations before income taxes 0.3
(11.3) (11.0) Provision for income taxes (0.5) 2.0 (h) 1.5
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Loss from continuing operations (0.1) (9.3) (9.5)
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Income from discontinued operations, net of income taxes 19.0
(19.0) (i) -
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Net income (loss) $ 18.9 $ (28.4) $ (9.5)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic net income (loss) per common share: Continuing operations $
(0.00) $ (0.17) Discontinued operations 0.33 0.00
-----------------------------------------------------------------------
Net income (loss) $ 0.33 $ (0.17) Diluted net income (loss) per
common share: Continuing operations $ (0.00) $ (0.17) Discontinued
operations 0.33 0.00
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Net income (loss) $ 0.33 $ (0.17) Weighted average number of common
shares outstanding (in millions): Basic 56.8 56.8 Diluted 56.8 56.8
Adjustments: ----------- (a) Remove inventory write-down. (b)
Remove stock-based compensation. (c) Remove capital tax. (d) Remove
litigation expense. (e) Remove restructuring credit. (f) Remove
foreign exchange gains related to intercompany debt. (g) Remove
interest income related to income tax refunds. (h) Remove income
tax impact of the above adjustments. (i) Remove income from
discontinued operations, net of income tax. (1) The adjusted
non-GAAP financial measures have no standardized meaning under GAAP
and are not comparable between companies. Management believes that
the adjusted non-GAAP financial measures are useful for the purpose
of financial analysis. Management uses these measures internally to
evaluate the Company's operating performance before items that are
considered by management to be outside of the Company's core
operating results. Conference call information QLT Inc. will hold
an investor conference call to discuss third quarter 2009 results
on Tuesday, October 28, 2009 at 8:30 a.m. ET (5:30 a.m. PT). The
call will be broadcast live via the Internet at
http://www.qltinc.com/. To participate on the call, please dial
1-800-319-4610 (North America) or 604-638-5340 (International)
before 8:30 a.m. ET. A replay of the call will be available via the
Internet and also via telephone at 1-800-319-6413 (North America)
or 604-638-9010 (International), access code 7157, followed by the
number sign. QLT Plug Delivery, Inc. is a wholly-owned subsidiary
of QLT Inc. Eligard is a registered trademark of Sanofi-aventis.
Visudyne is a registered trademark of Novartis AG. QLT Inc. is
listed on The NASDAQ Stock Market under the trading symbol "QLTI"
and on The Toronto Stock Exchange under the trading symbol "QLT."
Certain statements in this press release constitute "forward
looking statements" of QLT within the meaning of the Private
Securities Litigation Reform Act of 1995 and constitute "forward
looking information" within the meaning of applicable Canadian
securities laws. Forward looking statements include, but are not
limited to: our expectations stated in our guidance for 2009
R&D expense and SG&A expense; our expectations for the
accounting treatment of the sale of QLT USA; our expectations for
fourth quarter contingent consideration from the sale of QLT USA;
our expectations relating to receiving quarterly contingent
consideration on the sale of QLT USA up to $200 million; our
expectation that the amended Visudyne agreement will not have a
material impact on our 2009 operating results; our statements
concerning advancing our punctal plug platform and timing to report
data; and statements which contain language such as: "assuming,"
"prospects," "future," "projects," "believes," "expects" and
"outlook." Forward-looking statements are predictions only which
involve known and unknown risks, uncertainties and other factors
that may cause actual results to be materially different from those
expressed in such statements. Many such risks, uncertainties and
other factors are taken into account as part of our assumptions
underlying these forward-looking statements and include, among
others, the following: the Company's future operating results are
uncertain and likely to fluctuate; the risk that future sales of
Visudyne and Eligard may be less than expected; the uncertainties
related to the transition of Novartis' responsibilities in the U.S.
to QLT and costs associated therewith; risks and uncertainties
associated with the tax treatment of a transaction by Canada
Revenue Agency; uncertainties relating to the timing and results of
Visudyne combination therapy; the timing, expense and uncertainty
associated with clinical trials and the regulatory approval process
for products; uncertainties regarding the impact of competitive
products and pricing; risks and uncertainties associated with the
safety and effectiveness of products; risks and uncertainties
related to the scope, validity, and enforceability of intellectual
property rights related to our products and technology and the
impact of patents and other intellectual property of third parties;
general economic conditions and other factors described in detail
in QLT's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q
and other filings with the U.S. Securities and Exchange Commission
and Canadian securities regulatory authorities. Forward looking
statements are based on the current expectations of QLT and QLT
does not assume any obligation to update such information to
reflect later events or developments except as required by law.
DATASOURCE: QLT Inc. CONTACT: QLT Inc. Media Contact: Vancouver,
Canada, Karen Peterson, Telephone: (604) 707-7000, or
1-800-663-5486; The Trout Group Investor Relations Contact: New
York, USA, Christine Yang, Telephone: (646) 378-2929; or Marcy
Nanus, Telephone: (646) 378-2927
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