Exact Sciences Corp (EXAS) 2005 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the 2005 Fourth Quarter EXACT Sciences Corporation Earnings Conference Call.

My name is Minutia and I will be your coordinator for today. [OPERATOR INSTRUCTIONS] I would now like to turn the presentation over to [inaudible] for today’s call, Mr. Jeffrey Luber, General Counsel.

Sir, you may proceed.

Good morning, everyone.

Before I turn the call over to Don Hardison, EXACT Sciences President and CEO, I want to remind you that certain matters we will discuss today other than his source of information consists of forward-looking statements made pursuant to the Safe Harbor Provisions and the Private Securities Litigation Reform Act of 1995, relating to, among other things, our expectations concerning the Company’s and LabCorp’s compliance with FDA requirements and commercial and regulatory strategies with respect to PreGen-Plus and Effipure, the Company’s available cash over time and the performance of the Company’s technologies and the ability to transition these technologies from the laboratory to the commercial setting.

Words such as expects, intends, believes, and similar expressions identify forward-looking statements.

Listeners are cautioned that forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements.

These statements are subject to a variety of risks and uncertainties, many of which are beyond our control which could cause actual results to differ materially from those contemplated in these forward-looking statements.

Any forward-looking statements we make should be considered in light of, among others, the risks and uncertainties contained in our periodic report that is filed with the Securities and Exchange Commission, including but not limited to our Annual Report on Form 10-K for the year-ended December 31, 2004 and subsequent Forms 10-Q.

We incorporate here in the discussion of those factors.

Existing and prospective investors are cautioned not to place undue reliance in these forward-looking statements, which speak only as of today.

We undertake no obligation update or revise the information provided in this call, whether it’s the result of new information, future events or circumstances or otherwise.

I will now turn the call over to Don Hardison.

Thanks, Jeff, and thank you for joining us on our call today.

After my remarks I’ll ask Harry Wilcox, our CFO, to provide an update on the financials.

We continue to have 4 main objectives.

The first is guidelines inclusion.

The second is to make significant progress on moving our newest technology from the lab to the commercial setting for colorectal cancer detection.

Another important research goal for us is to optimize a version of our technology that allows for meaningful pickup of significant adenomas or pre-cancers.

And finally, since commercial launch of PreGen-Plus we in LabCorp have wanted to establish quarter-to-quarter accession growth.

I will briefly address all of the above before I talk about what we are working on for 2006.

Let’s start with guidelines.

As you know, getting into guidelines is very important for broad market acceptance of fecal DNA testing screening for colon cancer.

Since the inception of our company, we and others have performed numerous studies of fecal DNA testing across literally hundreds of cancer samples and a variety of clinical settings.

We have generated a significant body of clinical data from these studies and have had a tremendous amount of this research published in highly respected peer-review journals.

We believe this body of data, including data on patient preferences for fecal DNA screening and cost effectiveness data, speaks volumes about the reliability of fecal DNA testing and about its relevance as part of the screening methods that merit endorsement by the American Cancer Society and the major gastroenterology societies and ultimately the primary care medical society.

We have taken this step to compile all of the evidence supporting fecal DNA testing into a white paper that will be delivered to the guidelines writers.

We firmly believe that this document makes the objective and compelling case for inclusion into the screening guidelines.

The guidelines writers will receive these materials from us will serve as a compliment to the ongoing work we have been doing at EXACT towards guidelines inclusion.

In the meantime, we continue to update the [fault] leaders in the field who will most likely be involved with such a meeting or influential to those who might be involved with the meeting.

We have been asked a number of times in the past few days about how the FDA issue might impact on guidelines.

I do not believe satisfying a regulatory hurdle should work to limit our inclusion into guidelines.

In fact, working with the FDA, in my view, should give guidelines writers even greater confidence in the long term viability, safety and effectiveness of fecal DNA testing.

Most of us can come up with a list of great products that had to first complete regulatory filings with FDA prior to broad marketing acceptance.

We don’t know yet if this will be the prescribed path of our technology but we do believe that there is great value in FDA approval.

Now I want to talk about the improved technology for cancer detection and adenoma detection.

Nearly two-thirds of all cancers are caught in the latter stages of development when the cure rates are very low and the costs escalate dramatically, to say nothing of the suffering of the patient and their loved ones.

Our company yet was founded on the mantra of early detection.

We know that we have a technology that can make early detection possible.

For example, our New England Journal of Medicine study from 2003 reported nearly 60% detection among the earliest stage cancers, T and M ones and twos.

We have also consistently communicated over the years that by working with DNA as an analyte that it was just a matter of time before we improved the sensitivity for cancer detection with the addition of new markers, new chemistries and through improved methods for preserving DNA and by purifying increasing volumes of DNA from the patient sample.

I am pleased to say that we are certainly on track to get an improved version of the technology on the market.

As we noted in our press release on January 10, we have developed the technology that had sensitivities and specificities in the [AD’s] and stool.

We have previously discussed our improved cancer detection in tissue.

Our scientific team accelerated our path to a better assay and did a great job working with our outside investigator to get the stool portion of this research study completed so that we could get an abstract into Digestive Disease Week meeting, which is the largest gastroenterology meeting and will be held in May in Los Angeles.

I believe that the relatively short period of time that this has taken us to significantly improve our technology is impressive and speaks both to the power of our technology and the talented scientific team at EXACT Sciences.

It strikes me that if we had a pharmaceutical or biotech product that could cure 80% of all colon cancers that would likely attract tremendous positive attention.

Diagnostics don’t, as you know, have the same market sizzle as therapeutics even though their impact on human health can be, in my view, even more dramatic.

A fecal DNA test, for example, with sensitivities in the 80s holds the promise of catching essentially 8 of every 10 colon cancers at their earliest, most curable stages and sending those people on for treatment and cure.

I know of no drug that can boast this kind of impact on cancer.

Our next frontier, as we mentioned, is pre-cancer or adenomas.

With regard to adenomas we have presented the results of a research study where we achieved 94% sensitivity in tissue for adenoma detection in a large number of samples.

This is by far the highest detection rate of adenomas we’ve seen.

This work leads us to believe that over time we will be able to develop a non-invasive fecal DNA assay that will not only have an excellent sensitivity for colorectal cancer but one that will also pick up pre-cancer at a meaningful level.

This impressive research data on our progress toward an even better assay is in addition to the abstract scientific papers and presentations that we had in 2005 detailing our progress in the areas of DNA preservation, the positive effects of Effipure and our work with new markers and chemistries.

Now I want to talk about accession growth.

We still believe that fecal DNA testing will not show significant sales rampant until after all the conditions for sale are in place.

This would include guideline inclusion, positive pay or policy decisions including Medicare and an even more focused sales and marketing effort resource to take advantage of positive guidelines and pay our decisions.

That being said, the fourth quarter of 2005 saw the most units accession since the launch of the test 2 ½ years ago.

We had 1347 units up 41% over prior quarter and up 30% over the same quarter prior year.

It was our 3rd consecutive quarter of positive growth.

It’s obviously hard to get too excited when the absolute numbers are small, but in my view, it’s also wrong to ignore the lessons underlying this trend.

In my view, each unit represents the promise that non-invasive screening holds for the nearly 80 million people who are eligible for colorectal cancer screening.

Remember that more than half of these people, 40 million or more, have never been screened for colon cancer by any methods.

Again, I hesitate to assign too much weight to trending information at this point but I also think it’s wrong to ignore what several thousand people chose to do in 2005 when faced with a variety of screening options.

They chose PreGen-Plus.

We believe this positive trend is the result of a number of actions taken in 2005.

These include the PreGen Care’s compliance program that LabCorp rolled out across the country in the 4th quarter.

The price reduction may have also been helpful with some physicians but it is most likely to have the most influence with the guideline authorities and payers including self-insured employers.

Our sales and marketing team also retrained as LabCorp sales organization and simplified the sales messaging.

We believe that this had a positive impact and we have been especially pleased with the emphasis that LabCorp’s management has continued to place on PreGen-Plus.

So in summary, 2005 was a year in which we did not get everything we set out to do accomplished but we are really proud of our progress on the fronts that I just detailed.

So what does 2006 hold for us?

First of all, we will have the usual challenges.

They have already started as we detailed in our special conference call on Thursday of last week.

On that call, we discussed the letter that LabCorp recently received from the FDA discussing the regulatory status of PreGen-Plus and specifically raising questions concerning Effipure.

LabCorp has requested a meeting with the agency to discuss the letter and to arrive at a solution.

We and LabCorp plan to cooperate fully with the FDA.

We look at this situation as an opportunity for clarity as we march toward bigger and better things and as a long-term positive for non-invasive DNA based colon cancer screening.

We have said as far back as the year 2000 that our intention was to ultimately seek FDA labeling as we believe that approval would only enhance our ability to widely distribute the assay.

As of today, the regulatory issues are not clear and we will work with LabCorp and the FDA to bring clarity to the situation.

We are now on that path and we will obviously keep you informed as we learn more.

Getting this behind us has to be our first priority.

Other than working to bring this regulatory challenge to a positive conclusion, we also continue to use all reasonable methods available to us to have a guideline’s meeting convened as soon as possible.

Understanding that this is not ultimately under our control, we will work with all the important influences to try and make this happen.

At the same time we will continue to update all those influences on our progress.

In the meantime, we continue to have additional data scheduled to either appear in peer review journals or to be accepted for publication in the next few months.

A couple of examples, last Monday, Dr. Sapna Syngal had the results of a large prospective study that was conducted in several prestigious Boston area hospitals published in Cancer, the Journal of the American Cancer Society that used a prototype to equal DNA technology.

Dr. Syngal and her collaborators concluded that fecal DNA testing might play a role in monitoring disease recurrence in patients who have had lesions removed and/or treated.

That could be an important new market for us in the future.

Also, our Dr. Barry Berger in collaboration with LabCorp scientists and Dr. Paul Schroy of Boston University were notified that their manuscript detailing the very positive results using a commercial version of PreGen-Plus had been accepted in a peer review publication, most likely to appear in the 2nd quarter of this year.

This paper includes the results of 2 surveys previously presented at the American College of Gastroenterology meeting this past November showing that fecal DNA testing provides an acceptable non-invasive alternative for colorectal cancer screening.

The paper reiterates that 52% of the patients that have used the assay thus far have never been screened before.

It also reports that 90% of the patients found the collection process to be either easy or very easy and a similar number would do the test again if ordered by their physician.

Finally, for those patients that had a positive PreGen-Plus and were followed through colonoscopy, the positive rate was approximately what one would expect to see in an average-risk screening population with an assay with sensitivity in the 60’s.

All of the above are important to us as we move forward into 2006.

But as we look at how we can build shareholder value, getting the next version of the technology ready for commercialization has to be a top objective.

I do not have a definitive time-line for you today, but we are working with LabCorp to develop a plan to transfer the necessary technology to LabCorp so that they can develop the next generation of the product.

We will obviously continue to update you on the progress toward that objective.

We believe that 2006 is a year that we can make significant progress in establishing fecal DNA, fecal-based DNA testing, as a go-to option for colon cancer screening.

We will certainly not finish that task in 2006, but we plan to take important steps towards that objective and we look forward to updating you on our progress throughout the year.

Now I would like to turn the call over to Harry Wilcox, our CFO.

Thanks Don.

For Q4 and the 12 months ended December 31, 2005 the company generated a net loss of 2.7 million and 14.5 million respectively compared to a net loss of 4.6 million and 18.5 million for the comparable periods last year.

This translates into a loss of $0.10 per share for the current quarter, compared to a loss of $0.17 per share for the same quarter last year.

The loss for the year was $0.55 compared to a loss of $0.73 last year.

The decline in the net loss for the quarter and the year reflects operating expenses attributable to lower spending in research, marketing and administrative costs.

These reductions reflect an across-the-board effort to focus spending on technology improvement and the pursuit of guidelines.

Our task in marketable securities balance at the end of the year was $34.1 million.

Our expectation is that at our current level of operations, this cash will last through the end of 2007.

This projection assumes no revenue in milestone payments from LabCorp.

As Don has mentioned, LabCorp has recently received correspondence from the FDA regarding PreGen-Plus and LabCorp has requested a meeting with the FDA.

At this time, we do not know what, if any, impact the outcome of this meeting will have on our cash spending.

Before the meeting with the FDA occurs, it is not possible to predict any changes to our operations or cash flow that will be necessary in the future.

We have some flexibility to adjust our spending levels depending on the outcome of the meeting, but substantial cash outlays relating to regulatory requirements could shorten the 2007 projection I mentioned previously.

This concludes our formal comments.

I would like to now open the call to questions.

Thank you, sir. [OPERATOR INSTRUCTIONS] And your first question will come from the line of Wilson Jaeggli of Southwell Partners.

Please proceed.

A couple of things on this.

I know it is very unclear on the FDA and what they may ultimately require here, but if you look forward here, could you talk, talk to the point of the possible cost of a 510K approval process and the possible timing of getting one done.

We're not in a position yet to discuss the cost of it, nor the timing.

What we would rather do is wait until there's a meeting with the FDA where we can decide what the best path is and what path there seeking before we go forward with any timing.

Now what we have done is we have forwarded papers out that were written Steve an article written by Steve Gutman who heads up that area of the FDA that at least defines in broad terms historically what has happened as far as the timing of different regulatory paths and we'll be glad to send you that article if you have not already gotten it if you will just.

You offered that on the last conference call and I neglected to follow up, I’ll do that with you this time.

Just send it to Hwilcox@EXACTSciences.com and Harry will get you a copy of it.

That least lays out some the historical timing of the different regulatory paths.

We're just not ready to talk about cost.

Okay I understand.

When has an actual -- there was a request for a meeting set up with the FDA has that actually been a meeting time established or meeting days established yet?

No it has not there's a request in to the FDA and hopefully we'll have an answer very soon.

Okay well let's hope we do.

You mentioned something here in a testing of -- or the results of one of your tests in which I just want to, I want to get clear on exactly what you said.

You mentioned that after running one of your tests and then doing a colonoscopy to verify the results of your test it looked like you came up -- I think you said 60%, what resulted could you go over that again and explain that please?

Yes, what we saw was that we - - LabCorp and us took a number of the positive PreGen-Plus results, got permission to talk to the physician to find out what happened when those patients went and got a colonoscopy, and then tried to correlate the number of positive colonoscopies to what you would expect to see for tests in an average-risk population with a test that has sensitivities that we believe to be somewhere in the 60’s which is what we think the tests done with current, on the market, might be.

That is what this study refers to that is going to be published some time in the 2nd quarter.

And that tended to confirm that sensitivity that runs in the 60s?

It looks, that is our, that is our conclusion to it and that is what we project, yes.

Right, okay.

Now, as we said on the call this morning, we are very excited about this opportunity to improve sensitivity and made the announcement on January 10th about our work in that area.

Exactly, the 80%?

Yes.

Right.

Okay, thank you very much.

Thank you.

And the next question comes from the line of Victor Gezunterman  of Thomas Weisel.

Please proceed.

We saw some strong sequential up-tick in test runs during the quarter.

I was wondering if you could give us an idea of how much of that up-tick was due to new customers or how much of it was due to higher order rates in the quarter.

I was also wondering if you could give us an update on the current number of peers and what has been growing.

Well there is, we believe there is a little over 300 payers who have been billed and paid so far Victor, so that number continues to grow and I think, you have to talk to LabCorp about this, but their experience seems to be when they bill one of their contracted payers they tend to get paid.

As far as the ramp that we have seen so far, how many were new customers, I do not have a precise number in front of me.

What I, what I can tell you is that it seems that the majority of those accessions now are starting to come through this PreGen -- PreGen Cares program, which probably indicates that quite a few of these patients are -- and doctors -- are new to us.

But I do not have a precise number right now.

What we are pleased with is this compliance program that we have piloted, that LabCorp has adopted seems to be paying dividends for the accession number.

Okay.

And I know you are not sure at this point but, maybe you could give us an approximate timeline for the development of the Next Generation test, the 80% associated test.

Well again, we are not, I do not want to give you a precise timing on it because I am not sure.

A lot of that is really what kind of data and what kind of tech transfer LabCorp wants to go through in order for them to offer tests like this.

I think our joint goals is to try to get this thing on the market as quickly as possible and we also need to also deal with this FDA issue too.

So, I would be reluctant to give you a timing other than to say that we certainly have a sense of urgency as I do believe LabCorp does.

But it’s a fair question to ask them too.

It may be a stupid question, but would -- would the new test be for Effipure as well?

Great question.

We have actually used Effipure on it but we also used another technology that Tony Shuber and his team have developed that may take the place of Effipure.

So we have a couple of ways to do it and we are not -- our preference probably would be to use this newer technology that we have worked on, that Tony has worked on a bit, that actually the results have been very impressive.

Is this new technology, can it also potentially be used with the older version test as well, or…?

Yes.

The answer is yes.

Would that allow you to avoid the FDA debacle?

That I do not know.

I think we want to talk to the FDA about what we are working on and make sure they are clear on what we are trying to do before I speculate on what their reaction might be.

All right.

Thank you.

And your next question comes from the line of Larry Litton of Second Line Capital.

Please proceed.

A couple clarifications, so the 80% sensitivity test is kind of not the test that goes in front of the guidelines board.

How problematic is that?

They see it coming but does, are they’re really reviewing the 60% test?

No, what happens Larry is that what, what you present to the guidelines people is fecal-based DNA testing period.

They are not looking to specific versions of the test.

So for instance in the guidelines today our number of fecal occult blood tests of varying types of technology.

So what we have submitted, what we will submit to anybody working on the guidelines idea of fecal DNA testing.

The fact that we have said repeatedly to them that DNA, because we are working with DNA we can continue to improve the assay and actually has been impressive to a number of those folks that we have talked to.

So the idea that there is a better test coming in the future, I think only strengthens our case for being in guidelines.

But still it is very relevant as to the quality of the test today to put it in the guidelines today I would think.

If it is a 20% sensitivity they would say it is very interesting, but come back when you are better.

Right, but what we could say is that the tests that even the prototype technology that was in a multi-finished study was 4 times better in that study than something that is already in guidelines with fecal occult blood testing [inaudible].

Okay, and how do you, okay I hear what you are saying and price does that come into their thinking in guidelines?

I do not think it should, but I think it would be naive to say that it doesn’t.

So what we have done -- see two things have happened, as you probably know, LabCorp has lowered the price of testing significantly, midyear, last year.

And we have also updated the cost effectiveness models that have been previously run which already showed this test to be very cost effective.

It’s even more cost effective now.

And then one final piece of the puzzle is that with the introduction of Evastin and Erbatux to treat late stage colon cancer, which are therapies that seem to have an impact, but are very, very expensive.

It actually makes our cost-effectiveness argument even stronger with these guidelines people, we believe.

Okay, and on the existing test and on the new tests, what are the current figures on false positives?

Well on the test that is on the market today, I think the false positive rate of 5 or 6%, somewhere in that neighborhood.

And all we’ve said about the new tests is that the false positive disposability will be in the 80s, so it has a false positive rate in the teens.

What we believe is that from the experts that we have talked to, the bigger -- the thing they are looking for is high sensitivity, because ultimately they would like to see more people go get colonoscopies.

With a high sensitive test you have a chance to get more people into -- we believe into the screening population.

And the fact that some people get a colonoscopy that turns out to be negative may not be the happiest day for a payer, but for the medical community, that is what they want to have happen anyway, that is people getting colonoscopies.

Okay.

You mentioned that the FDA process has been tossed around since the year 2000.

Granted, hindsight is 20/20, but why did the company not pursue the FDA approval a year ago, two years ago, 6 months ago?

That is a great question.

We, there are three reasons.

First of all, we -- our opinion was because this was a home-brew assay and they did not have to go through the FDA approval process.

We also, we actually talked to the FDA two or three years ago about this.

The second reason was, the assay, as it’s presently run, is a very complex assay that we would not figure out quite how to kit that assay.

It is not, it does not lend itself.

And the third reason was, we always felt like that we could continue to improve the assay fairly significantly and as this new data, we alluded to a few minutes ago, that we talked about on the 10th of January we’ve proven that to be the case.

So it was basically those three reasons.

It was a home brew we bought.

It was very complex, didn’t know how to kit it.

And the third thing was that we wanted to continue to improve the assay knowing that one day we would get it to a level that was sufficient for the market, sufficient for the thought leaders, sufficient for the patient population.

We would then kit that test.

So the second was not kitable, kitable means it would be a very complicated application?

Why --- ?

If you want, I can give you more detail off-line, but it’s a lot of moving parts in the way the test has to be run today and it doesn’t lend itself to sit on an instrument that’s presently available.

So I can give you more color off-line.

Okay, last question.

You talked about future tests of pre-cancerous adenomas, are you talking about detecting things that a colonoscopy would not see at all?

I mean it’s possible.

We actually think we’re probably detecting some things now that colonoscopies can’t see.

I’ll give you one quick story then I’ll come back and finish the answer.

We had a situation recently with a physician who had a patient referred to him who had a positive PreGen-Plus test.

When this doctor started doing the colonoscopy the first time through he did not see any kind of lesion of any kind but he knew because it was a PreGen-Plus test that probably was something there and went back in again while the patient was still sedated and found a lesion of some kind the second time through.

So, I think the power of our test is that not only may pick up some things before you’re even able to visibly see them with colonoscopy, it will actually make the colonoscopist more, even more careful about what they’re doing as they do the colonoscopy.

Does that make sense?

It surely does and you said you were going to come back to the question about future tests and really detecting things that --

Yes.

I don’t know, I mean what we don’t want to do -- we’ll always because we’re picking up DNA changes, pick up things that you may not be able to find on colonoscopy.

So, to what extent that happens I don’t know right now.

Okay, thank you.

[OPERATOR INSTRUCTIONS] Your next question comes from [James Wright] of JLT Management.

Please proceed.

Yes, you’ve indicated that in the published paper by the FDA that the timing of the 510K on average has been about 3 months so we don’t know yet exactly what the FDA’s scenario’s going to be but assuming we were to make a filing with the FDA, let’s say, within a month and if it were to take the normal 3 months time, being -- I assume that that can go on concurrently with waiting for the approval in the guidelines, which we’ve said we hope to have by mid-year.

So, isn’t it quite possible that if guideline acceptance were to be, say in sometime in June, that by that time the FDA process would have run its course and assuming everything is normal, should have gotten approval by the FDA by that time?

Well, I think it’s really a continuum.

We’re going to find out.

I can’t -- I mean what you said could happen but it would be -- I think it would be wrong for me to even speculate because we just not had that meeting with the FDA.

What we want to do is everything we can to keep the present test on the market through and work out some objective with the FDA to meet whatever needs they have.

But I just can’t tell you what that’s going to be until there’s a meeting.

Right, and I mean on that score I guess there is a pre-approval process on the other hand this is not something that goes into the body so, from my point of view, it would seem ridiculous for the FDA to pull this from the market, which would cause people possibly who could be detected for cancer not to have that situation and it wouldn’t be helping the public.

This is not a drug that goes into your body, so, is there any sense that in the past of anything like this?

I know that if there’s been a case like this but that they would leave it on the market, pending their approval?

Well, I think there’s been cases where things have been on the market pending approval but I would just hate to speculate on this because I just shouldn’t do that.

Right.

Once we’re in the guidelines, could you give us a general sense of the $15 million milestone payments, which of course we haven’t included.

In order to get the full amount, is it a fair assumption that that means we should be in the American Cancer Society and the GI Consortium Guidelines and I’m assuming there’s some payment from Medicare, but once we got to that stage, is it a fair assumption that the full 15 million would come into us?

Well, we’ve never been specific about exactly what the milestone payments were for but they certainly revolve around things such as guideline inclusion and major payer acceptance.

So, let’s just leave it at that and say that if we do all the things that we need to do on those points that we have a chance to get an additional $15 million.

Okay, and also so far as the payer acceptance.

I know we discussed on other conference calls before the importance of being in guidelines because of the way companies rate the payers and so forth.

If we were to be included, let’s say in major guidelines sort of by mid-year, is there any just general scenario that we would look to based on other roll-outs that have taken place as to when payers would begin putting us on their lists?

That’s a great question, too.

Again, I would be -- I don’t think I want to speculate on it.

We’ve looked at other companies who have gone through this process and the thing that I do know is there’s nothing easy around getting payers to do these kind of things.

What we do know is that if you’re in guidelines and you have also become a HEATUS score, it certainly enhances your possibility of making something positive happen.

What we’re trying to do know is in anticipation of getting into guidelines is making sure we have meetings scheduled with some of the major payers and self-insured employers who told us to come back when we had those things in place so we could have those kind of discussions.

But as far as speculating on the rate of adoption after that, I can’t do that.

Okay.

As far as the ramp up goes in terms of additional business if we were to get initially, let’s say in one of the major guidelines, from work that I’ve done I understand, particularly with the internet these days, the doctors very, very quickly learn of these occurrences rather than taking longer times as they might have in the past and, obviously there are probably a number of doctors who’ve used this test but may be being conservative, want to see this in the guideline before they really roll it out to their patients in a more significant rate.

Obviously, having the payers is important, too, but do you perceive that -- best guess, that there certainly will be a pick-up once we get in the guidelines even before we’re in the individual society guidelines?

Well, I think there will be.

I wouldn’t expect the day after some announcement like that was made that you would see a dramatic upswing but what we have talked to LabCorp about is their history of tests that have gotten into guidelines and there certainly was accelerated ramp after that fact happened.

Again, it’s not the next day but it’s certainly within 2 or 3 months that follows that.

Right, because even a somewhat significant ramp up would obviously add a lot to our bottom line.

Also, the last question, the guidance for cash use, assuming we don’t have to lay out a lot of additional money for the 510K, would you say we have enough towards the end of 2007 without including any additional milestone payments, which hopefully we will get, but does that include a ramp up in marketing expense after we would be included in guidelines and if so, what sort of initial ramp up in marketing would we see?

More publication in journals, obviously more face-to-face meetings with doctors, but could you just give us a sense of whether that includes ramp up from marketing and if so, what method it might be.

Again, this is Barry.

I think that to be clear the projections that we’ve given on cash flow are, assuming operations at the current level of, -- so in 2005 we spent about $5.6 million on sales and marketing.

Until we see exactly what the impact is of being in guidelines we really can’t give you much guidance on what the sales and marketing spin would be after that.

I think we’d looked to do some small experiments and see what the results were of being in guidelines before we make any kind of projections with regards to sales and marketing.

Okay, thanks.

And your next question is a follow-up from Larry Litton.

Don, have you learned anything new since the last call that you can share with us and specifically any sense about how bad the FDA devise backlog is and I guess there’s been some disarray as a result of some guidance disclosures that maybe have resulted in this letter to us in terms of the FDA revisiting the devise issue more aggressively now.

Larry, I don’t have any other information other than what we’ve talked about on the call on Thursday.

So, when we know something that we feel like we should be talking about we will certainly get that information out.

And no sense as to how overloaded or not the FDA devise group is?

No, I don’t have any sense of that, no.

Thank you.

Gentlemen, you have further questions at this time.

Thanks a lot for joining us.

Ladies and gentlemen, thank you for your participation in today’s conference.

This concludes your presentation.

You may now disconnect and have a wonderful day.