WEBVTT - Zoetis CEO Talks Bird Flu Vaccine

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Let's switch gears here and talk about bird flu because

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<v Speaker 2>Zoettas has been granted a conditional license from the USDA

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<v Speaker 2>for its avian flu vaccine. Since February twenty twenty two,

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<v Speaker 2>more than one hundred and fifty million birds have been

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<v Speaker 2>affected in the US, causing egg prices to surge to

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<v Speaker 2>all time highs. Joining us now is the CEO of Zoettis,

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<v Speaker 2>Kristen pak Christen, It's great to see you in studio.

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<v Speaker 1>First of all, Oh, it's very nice to be back

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<v Speaker 1>in studio with you all.

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<v Speaker 2>So let's talk about your vaccine. When might we expect

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<v Speaker 2>to see it roll out and how quickly would you

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<v Speaker 2>expect that to actually show up in the price of eggs?

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<v Speaker 1>Sure, I mean what I want to start with is

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<v Speaker 1>just really that my heart goes out to all these

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<v Speaker 1>you know, producers, you know, both for boilers and egg layers.

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<v Speaker 1>You know, they've been on the front lines at this

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<v Speaker 1>crisis for a while now, and they've been doing everything

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<v Speaker 1>they can, through biosecurity and many other strategies to try

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<v Speaker 1>to control this, and Zoettas has been standing by and

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<v Speaker 1>supporting them. As we think about bio security as well

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<v Speaker 1>as diagnostics you know on farm with them align with

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<v Speaker 1>our purpose. So we were thrilled to get the conditional

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<v Speaker 1>license of our AI the product for poultry specifically, And

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<v Speaker 1>just to be clear, this is a conditional license that

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<v Speaker 1>is up to regulatory authorities in partnership with producers to

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<v Speaker 1>decide how and when to use, So the sole decision

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<v Speaker 1>on the use of the vaccine is up to the

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<v Speaker 1>US authorities.

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<v Speaker 2>Interesting, and I'm curious, you know what this means for

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<v Speaker 2>your business because, as we've spoken about before, you're more

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<v Speaker 2>heavily weighted to pets towards animals that we have in

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<v Speaker 2>our houses versus livestock. So with that in mind, I mean,

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<v Speaker 2>depending on the uptake, what could this mean for zoetas you.

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<v Speaker 1>Know for starters. But I think this is a great

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<v Speaker 1>example is what you and I spoke about at JP

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<v Speaker 1>Morgan just a few weeks ago, which is the strength

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<v Speaker 1>of our innovation pipeline across species. Well, we're expecting, you know,

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<v Speaker 1>a major approval every year for the next few years,

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<v Speaker 1>many of which will really be blockbusters in important categories

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<v Speaker 1>and animal health such as chronic kidney disease, on cology, cardiology,

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<v Speaker 1>you know, and antibiotic alternatives for life stuck, et cetera.

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<v Speaker 1>So we're really excited about that pipeline. We think this

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<v Speaker 1>is a great demonstration of that.

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<v Speaker 3>I don't want to get too far away from the

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<v Speaker 3>AV and flu. We spoke with the NEC director Kevin

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<v Speaker 3>Hassett about what's happened recently.

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<v Speaker 1>Listen to what he had to say.

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<v Speaker 4>What are we going to do about the fact that

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<v Speaker 4>Joe Biden last year killed one hundred and thirty million

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<v Speaker 4>chickens and that's why egg prices are so high? You know,

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<v Speaker 4>were putting together a plan to manage the AV and

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<v Speaker 4>flu in a much wiser way.

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<v Speaker 3>So he says, they were putting together a plan to

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<v Speaker 3>manage the AV and flu in a much wiser way.

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<v Speaker 3>Obviously a vaccine would be great for those animals who

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<v Speaker 3>haven't gotten it yet. But you also make drax in, right,

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<v Speaker 3>which is a drug that I'm not a doctor or

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<v Speaker 3>a vet, but somehow helps cows and swines with respiratory illnesses.

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<v Speaker 3>Are there other ways to deal with this problem or

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<v Speaker 3>do you really have to, you know, nip it in

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<v Speaker 3>the bud.

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<v Speaker 1>Sure, there's many ways to deal with this problem, and

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<v Speaker 1>I think you know, what Zoetis is focused on is

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<v Speaker 1>supporting our customers with a whole set of tools in

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<v Speaker 1>order to do this. What else talking about before is

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<v Speaker 1>really partnering with our producers to first start around biosecurity,

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<v Speaker 1>which they're focusing, you know, very intently on. But it

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<v Speaker 1>is a challenge when a lot of the new spread

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<v Speaker 1>you're seeing is spread by wild birds, and so you

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<v Speaker 1>can't really stop the wild birds from flying over your farm,

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<v Speaker 1>and that is really what is spreading some of the

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<v Speaker 1>new We can also focus on better diagnostics to better

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<v Speaker 1>understand that. There's lots of different tools in the toolbox,

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<v Speaker 1>you know. Obviously the vaccine is one additional one and

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<v Speaker 1>it's aligned with our purpose at Zoeti is to nurture

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<v Speaker 1>the world in humankind by advancing care for animals. And

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<v Speaker 1>that's a one health focus, which is I think what

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<v Speaker 1>the White House and the Congress and the USDA has

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<v Speaker 1>been really focused on.

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<v Speaker 5>And not to put the cart before the horror said

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<v Speaker 5>to speak. But you know, when you think about the

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<v Speaker 5>expansion of the vaccine, I recognize that you still need

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<v Speaker 5>regulatory approval, But what about other animals? Do you see

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<v Speaker 5>yourself making one for cattle?

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<v Speaker 1>You know, We've really stepped in in multiple crises over

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<v Speaker 1>the years. So we were helping the USDA with a

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<v Speaker 1>vaccine that they used in their stockpile bon in twenty sixteen.

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<v Speaker 1>As you think about the COVID crisis, we made vaccines

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<v Speaker 1>that were used throughout wildlife and in zoos and things

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<v Speaker 1>like that. So we will continue to partner with the

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<v Speaker 1>USDA to meet whatever their needs are.

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<v Speaker 2>I want to broaden out a little bit because you

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<v Speaker 2>mentioned your pipeline that you have coming up. There's a

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<v Speaker 2>lot of excitement over renal disease. For example, you think

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<v Speaker 2>about cats. You know, kidney diseases are really fatal to cats.

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<v Speaker 2>And like you said, I mean, you have big blockbusters

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<v Speaker 2>expected for the next couple of years. But then you

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<v Speaker 2>take a look at the stock price over a five

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<v Speaker 2>year basis, you're up about thirteen percent on a total

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<v Speaker 2>return basis. That compares to about fifty two percent for

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<v Speaker 2>your peer group. So with that in mind, what do

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<v Speaker 2>you think that shareholders are missing here about the story?

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<v Speaker 1>Yeah, we were thrilled to deliver double digit top and

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<v Speaker 1>bottom line performance for twenty twenty four and to give

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<v Speaker 1>an operational guide for this year. At the top line,

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<v Speaker 1>it's six to eight percent for organic operating growth. You know,

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<v Speaker 1>I think there was a little bit of a disconnect

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<v Speaker 1>with regards to foreign exchange for US, which was two

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<v Speaker 1>hundred and fifty million on the top line for US

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<v Speaker 1>in twenty twenty five fifty million on the bottom line,

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<v Speaker 1>as well as a divestiture for US of medicated feed

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<v Speaker 1>additives which is round three hundred and fifty five million

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<v Speaker 1>that need to be taken out. So we're working through

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<v Speaker 1>some of that, which we don't really believe was embedded

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<v Speaker 1>in the consensus as we saw last week. But we're

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<v Speaker 1>really confident that we've got multiple drivers of sustainable growth

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<v Speaker 1>in what is just a phenomenal industry and animal help

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<v Speaker 1>which has been incredibly resilient and durable.

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<v Speaker 3>What does the product makes look like if I look

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<v Speaker 3>over you know, just a list of your medicines. I

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<v Speaker 3>see obviously, dealing with parasites is first and foremost. Then

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<v Speaker 3>you've got like itchy skin problems, right, and then joint

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<v Speaker 3>issues like arthritis. Are those the three biggest categories?

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<v Speaker 1>Yeah, we've got multi billion dollar franchises and the biggest categories.

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<v Speaker 1>We've been driving double digit growth again, you know, in

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<v Speaker 1>categories such as paras and dermatology. They've been around for

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<v Speaker 1>more than a decade. So all these are billion dollar

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<v Speaker 1>franchises for US, the largest being parasiticides. You've got dermatology

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<v Speaker 1>where we've been in that market for over eleven years,

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<v Speaker 1>still last year driving seventeen percent growth. And then in

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<v Speaker 1>oa pain where we're really excited about the recent launch

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<v Speaker 1>in the US of Librella of cilensia, which has been

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<v Speaker 1>on the market in international for many years, and adding

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<v Speaker 1>to that over the coming years in renal, oncology, cardiology

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<v Speaker 1>excepta But.

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<v Speaker 3>By the way, do you produce all this stuff here?

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<v Speaker 3>Do you have overseas labs? I mean, the strong dollar

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<v Speaker 3>is that really an issue for you?

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<v Speaker 1>So the good news is we have a global network,

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<v Speaker 1>global supply chain. Our largest manufacturing sites are actually in

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<v Speaker 1>the United States. We also have some significant sites in Europe,

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<v Speaker 1>but the US is our primary manufacturing place for the

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<v Speaker 1>for Everyso so the dollar first, right, Well, the dollar

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<v Speaker 1>does well to that.

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<v Speaker 5>In fact, you're a CEO of a company, you want

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<v Speaker 5>to focus on your products, you want to focus on

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<v Speaker 5>your competition, you want to focus on getting new things

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<v Speaker 5>out there. How much do you have to think about

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<v Speaker 5>the strong dollar? Dynamic, particularly with all the tariff threats

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<v Speaker 5>out there, the riot higher in the dollar.

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<v Speaker 1>Look, our focus is living our purpose and meeting our

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<v Speaker 1>customer needs every day. We certainly are not experts in

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<v Speaker 1>foreign exchange, so our goal is to deliver for our

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<v Speaker 1>customers the products and solutions that they need. Obviously, we've

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<v Speaker 1>got teams who manage scenarios as you think about, you know,

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<v Speaker 1>for tariffs obviously, but we don't really make and day

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<v Speaker 1>to day foreign exchange are. We focus on living our purpose, all.

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<v Speaker 2>Right, Christin, that's a good place to leave it. Great

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<v Speaker 2>to speak to you today in studio. That is the

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<v Speaker 2>WEETA CEO Kristen Peck joining on the news that Zetas

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<v Speaker 2>has been granted a conditional license for its avian flu

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<v Speaker 2>vaccine from the USDA