Precipio Inc (PRPO) 2011 Q2 法說會逐字稿

Good day, everyone, and welcome to the Transgenomic Second Quarter 2011 Results Conference Call. (Operator Instructions) Please note, this conference is being recorded. It is now my pleasure to turn the conference over to Mr. Brett Frevert. Please go ahead.

Thanks, Mark. This is Brett Frevert, CFO of Transgenomic. Thanks, everyone, for participating today. Joining me are Craig Tuttle, President and CEO, and Chad Richards, our Chief Commercial Officer.

Today we reported financial results for the second quarter of 2011. If you have not received this news release or would like to be added to the distribution list, please call Donna Christian in our Investor Relations Department at 402-452-5416.

I would like to extend a welcome to anyone who may be listening on the webcast. I hope you have had a chance to look over the press release.

Before we start to review the results, I need to take just a couple of minutes to get some administrative matters out of the way. This conference call will be archived and accessible by both the phone and the Internet. Please refer to the press release, or you may go to our website, transgenomic.com, for further details.

We are here to discuss our second quarter 2011 financial results and recent developments for Transgenomic. Our comments today will contain forward-looking statements. Forward-looking statements are any statements made that are not historical facts. These forward-looking statements are based on the current expectations of Transgenomic's management team, and there can be no assurance that such expectations will come to fruition.

Because forward-looking statements involve risks and uncertainties, Transgenomic's actual results could differ materially from management's current expectations. Please refer to the press release, our 10-Q, and other periodic SEC filings for information about factors that could cause different outcomes.

The information presented today is time-sensitive and is accurate only at this time. If any portion of this presentation is rebroadcast, retransmitted or redistributed at a later date, Transgenomic will not be reviewing or updating this material. Thanks for your patience.

Now I'll briefly review the financial results for the three and six months ending June 30, 2011. We reported net sales for the quarter of $7.7 million, which is an increase of 50%, or $2.6 million compared to last year.

Sales in the Lab Services segment were up 292% to $4.9 million, which is due primarily to our FAMILION acquisition and a strong $1 million quarter in our Pharma Research lab. The Lab Services business includes both our Molecular Clinical Reference Lab, CLIA, and our Pharmacogenomics Research Lab, our Pharma Lab. Our Reference Lab sales for the quarter were up 315% to $3.9 million. This is where the FAMILION results are included.

Pharma sales were up $690,000 to $1 million. The increase was driven by a large project for an ongoing client, one of the major pharma companies, who selected us to perform tests on a large number of clinical trial samples.

Within the Instrument segment, we break the sales into two parts -- Bioinstruments and Bioconsumables. Bioinstruments includes actual technical instruments themselves and the service contracts. That decreased 41% to $1.3 million. We sold fewer instruments in the second quarter of '11 compared to the second quarter of '10. Several of the sales we anticipated for the second quarter will likely close here in the third quarter. Bioconsumable sales for the quarter were down $155,000 compared to last year to $1.5 million.

Total Company gross profit for the second quarter was up to $4.6 million, or 59% of net sales, compared to $2.5 million, or 49% a year ago. The Labs had second quarter gross profit of $3 million, a 63% margin, compared to $418,000, or 34% margin a year ago. In the Instrument business, the gross margin decreased from 54% to 53% for the second quarter.

We reported a net loss available for common stockholders for the second quarter of $6.3 million or $0.13 a share, compared to a net loss of $1.1 million, or $0.02 a share for 2010. This includes two significant items. We had a large noncash charge of $800,000 in stock option expense related to an all-employee grant of stock options during the second quarter. And we also had a $4.5 million expense related to the FAMILION acquisition, namely, $300,000 amortization of the intangibles, and another $4.2 million related to the preferred stock, which we discussed last quarter. This continues to be an interesting situation, and the accounting rules require us to mark-to-market the fair value components of the Class A convertible preferred stock and the warrants. The fair value is, of course, driven heavily by the price of the common stock into which they can be converted.

So, as our stock price increases, which it did nicely during the quarter, the accounting rules deem us to have an expense, even though we will never pay cash for this liability. In fact, to exercise the warrants, the investor would pay Transgenomic another $3 million. So, it is an interesting, frustrating situation, but those are the accounting rules.

Now, from an operating basis, we continue to be very frugal, closely managing the expenses. Our SG&A did increase from $3.0 million to $5.6 million, but, again, this included the nearly $800,000 of stock option expense and $300,000 of amortization expense, and the rest of the increase is due to the FAMILION acquisition.

We continue to generate positive cash flow from operations for the second quarter in a row, and you'll see in the press release that our modified EBITDA showed a significant improvement from 2010.

Net sales for the six months ended June 30 increased by $4.6 million, or 44% for the same period last year. These results included the FAMILION acquisition in the Lab segment. During the six months ended June 30, net sales from Lab Services increased by $6.1 million compared to the same six-month period last year. The Reference Lab increase is a result of the revenue of $5.1 million related to FAMILION.

Net sales from the Pharma Lab increased by over $630,000 for these first six months due, again, primarily to a major project from a premier client.

Net sales on our Instrument business were down 19%, or $1.5 million for the six months compared to last year. Net sales for Bioinstruments were down 31%. The net sales of Consumables were down slightly, 3% for the six months.

Our gross margin increase from 51% for the six months ended to 58% this year. Lab Services margin increased from 36% to 56%, and we do show a loss from operations of $2.4 million for six months ended June 30, compared to $1.4 million for June 30 last year.

At June 30, 2011, we had working capital of $4.1 million including cash and cash equivalents of $2.6 million. And, again, we are generating positive cash flow from operations.

For more details, please refer to the MD&A and the 10-Q we will file tomorrow. This concludes my financial update. I'll now turn it to Craig for comments on the business before we open it up for questions.

Thanks, Brett. Good afternoon, everyone, and thank you for joining this call. I'm quite pleased to note the incremental overall growth in our revenue this second quarter of 2011 over the same quarter in 2010, as well as the growth over first quarter 2011. As Brett just outlined, our Lab Services business reached an all-time high both due to our recent FAMILION business acquisition and true organic growth in our Pharma Services Lab business.

In addition, our Neurology Reference Lab business sustained very positive growth in the quarter with our Combined Lab Services business reaching total revenue of $4.9 million, which Brett just mentioned.

In addition to continuing to grow our business overall, we also continued to manage our costs effectively. In spite of the loss reported due to the large increase in our share price during the quarter, we had significant improvement year-over-year on a modified EBITDA basis.

Margins in the business grew in the second quarter compared to a year ago as we leveraged the combined lab businesses for more efficiency and with higher sample volume.

Our Instrument business suffered a shortfall compared to plan due to several instrument orders that we had anticipated in the quarter. Two of those system orders missed the quarter end by a week, and a third was just closed this week. If we achieved these system sales as anticipated, we would have achieved our full revenue plan for the quarter. More importantly, these sales, although delayed, have been completed and should help us in the third quarter.

One other difference from our plan is discussed in last quarter's earnings call was a large increase in our Pharma Lab business. We did have project orders that totaled $1.5 million in projected revenue; however, some of the delays in critical reagents from our key suppliers reduced the testing that we completed. Those reagents have been received now and those studies will be completed in the current quarter. Furthermore, interest in our Ice COLD-PCR technology remains very high and we continue to receive pharma projects which will allow us to achieve continued higher revenue in this service business throughout the year compared to our historical revenue levels.

And we are completing two contracts for over $5 million in project revenues for clinical trials that will begin later this year or early in 2012.

Turning to our key growth initiatives, particularly further commercialization of our Ice COLD-PCR technology, we have completed development of an Ice COLD-PCR assay kit for KRAS gene mutations, and this kit will be begin beta site testing later this month. Following those studies, we will launch this kit in the US, Europe and in Asia.

In addition to our trial site collaborators, we have begun conversations with several academic centers for Ice COLD-PCR studies in several cancers, as well as discussing kit use with other reference labs. We believe that the extremely high sensitivity that Ice COLD-PCR achieves will result in continued application development in several cancers for blood-based mutation assessment. Ice COLD-PCR also should allow for constant monitoring of patient response to treatment from just a blood analysis rather than imaging or re-biopsying patients' tumors. You can imagine how difficult it is to re-biopsy lung tumors, as well as how dangerous and costly compared to simply performing a blood test. Plus, the same test would indicate whether a tumor had recurred and with the same or different resistance pattern.

In addition to our KRAS Ice COLD-PCR assay kit, we already have efforts ongoing for assay kits for BRAF and PIK3CA. These are also important oncology mutation assays that determine if a patient's tumor is resistant to the newest inhibitors. Following clinical testing and launch of these assays, we will focus on our next assay targets in this expanding product line with a goal of completing gene mutation panels for several tumor types.

We have also moved forward with beta site testing of our BRAF and PIK3CA SURVEYOR scan assays. Our expectation is to launch these assays combined with an instrument system in Europe before the end of the year.

In summary, we are pleased with the constant progress we are making in our Lab Services business. We are encouraged by the instrument sales we have achieved this quarter and those anticipated across the remainder of the third quarter, and increasing interest in our industry-leading mutation detection technologies.

I would now like to begin answering your questions, but before I open up the call to those of you waiting to ask questions, I wanted to remind you of a new feature which we have added to our website in the Investor Relations tab. We have a textbox link there where you can submit questions for this earning call. Like the questions that are asked live, I'm happy to address these questions in this call. And although there was a large number of questions, I'll only refer to just a few of them for time's sake.

The first question I received was, "What is our plan regarding returning to a major exchange such as the AMXC or NASDAQ?" The answer to that is I believe this is a very timely question. I can comment here that our interest remains very keen to return to a major exchange as quickly as possible. To that end, I did visit the New York Stock Exchange AMXC general manager back in June, when our stock was the $1.80 range. Now to achieve listing on the AMXC requires a share price of $2 a share, and for NASDAQ listing requires $5 a share. I also visited at NASDAQ during that trip.

So, our belief is that we will continue to experience share appreciation as we continue our growth efforts and implementing our plan, and thus could list on the AMXC, or we will list on the AMXC as soon as we qualify.

Another question was, "How large are the market opportunities for each component of our current businesses?" And I'll try and address that briefly. For one area, the mutation kit business, we believe that worldwide this accounts for current potential market of roughly $100 million. It is currently made up of clinical trial support in clinical testing of cancer patient tumors. We believe it will also increase as more and more cancers are linked to drugs, which these assays can determine resistance patterns in.

The eventual market for Ice COLD-PCR has several components that go across these applications. One component is the opportunity for clinical trial support in our Pharmacogenomics business. We believe this will become a significant component of our ongoing Pharma Service business. We hope that it reaches a potential of several million dollars a quarter.

Another growth area could be when one or several of these assays become companion diagnostics that are linked closely with a drug treatment selection. Achieving this could take some or even a large part of the project that is at least a component of that $100 million market. Ice COLD-PCR will permit this testing in blood rather than just the patient's tumor. So, it is much easier to do and could shift these kit sales and testing from just drug selection in the patient tumor to even deeper screening applications for finding underlying disease, as well as screening for recurrence, and recurrence with new resistance patterns. And both of these are home-run opportunities with very large market potentials.

I have several other questions in our queue, but I'd like to break right now and take any questions that you have during our call. If time permits, I will try to answer some of the other questions that I have received, or answer them at subsequent calls. So, at this time, Chad, Brett and I would like to take any questions that you have.

(Operator Instructions) We will go first to the site of Chrystyna Bedrij.

Hi Craig. Hi, everyone. Thanks so much for taking my question, and obviously congrats on a nice quarter. Both your sales and your gross margins up. Very nice. Anyway, I actually have three questions. So, I note that you reported about $15 million so far for the six months of this year, and I was wondering if you're still comfortable with the $34 million range guidance for calendar 2011, and maybe what you're confidence in sustaining or even accelerating the quarter-to-quarter momentum across the various business segments? That's the first question.

Okay, that's a good question. We have -- unfortunately, we aren't giving guidance. We gave a range for what we thought we would achieve sales in the year. First of all, Q1 was within our plan expectations; Q2 was three instrument systems from our plan. We anticipate continued growth across our business, but right now to speculate if we'll hit $32 million or $35 million, we're still waiting to see how the current budget impact at NIH plays out, and certainly the market tumult and what happens there.

What is encouraging compared to the last two years in the instrument area, where we had a shortfall compared to our internal plan, with it in the past, if we had an instrument show up as a tender, for example, and we would try and sell that instrument, we would be selected for purchase but then the funding would evaporate. And so it wasn't that the sale was just delayed, it was lost and wouldn't resurrect for potentially 12 to 24 months.

So, we are not seeing that now, and the good news is a lot of our sales are not tied like some of the other major instrument manufacturers, which have already downgraded their guidance based on the budgetary constraints and panic that is occurring from the current congressional budgeting process.

So, we are not as susceptible to that because we're selling direct to clinical end users. So, we think that is going to be solid and along the lines of our current plan. We do see pharmacogenomics picking up. We see some large trials coming in in the short term and longer term, for sure. And we still see continued interest in Ice COLD-PCR.

Again, some of it is just going to be based on timing in terms of how successful that opportunity becomes. We know that there is a long path to validating the technology across several cancers and across several assay targets. And once one or several assay targets are completed and in valuations and being published and adopted, there will be others to include.

So, we are working very hard internally to identify the appropriate panel and panel targets, and working with our pharma partners, quite frankly, to find what the next assays they would like developed so that we can be first up when it comes to a companion diagnostic decision.

So, all told, I'd say we are comfortable with the quarter. We would have loved to have had those three instruments come in on time and you would see $8.5 million quarter. So, I guess that's the answer. Not sure.

That's encouraging. I guess what would help maybe, if you could just -- maybe you can just provide what you think over the long term or short term provide the most earnings power for key bio, in terms of growth drivers and EPS?

I think the biggest opportunity remains in the Lab Services business, in the short term. However, from that we are using our Lab Service business particularly in the Pharma side, to leverage products that we will capture in the Instrument business but that are kit-based assays. And I think for sure that is where the biggest opportunity lies both in the short and long term.

So, I mentioned $100 million as the total market that we see right now for the key cancer pathway gene mutation testing, both for clinical trials as well as in the broad market, mostly for colon cancer and mostly just for KRAS. But it is clear that BRAF mutations and melanoma are integral to selecting some new treatments, that KRAS and PIK3CA and BRAF and other mutations, EGFr mutations and certainly p53 mutations in lung cancer, and head and neck cancer, and a variety of other cancers are also looming opportunities.

So, it is really a matter of how quickly we can get corporate collaborations, academic collaborations and proof of the utility of our technique.

One other area, quite frankly, that we are looking at now is the emergence of second-generation sequencing in oncology. And, quite frankly, as we look at the data that comes from second-gen sequencing, we are glad to say that Ice COLD-PCR is more sensitive. Not only is it more sensitive, it is much more specific.

So, in fact, when large screens of cancer specimens are done, there is a lot of noise in second-gen data, and quite frankly right now the only way to use a sensitive technique to even understand what the mutations are and to confirm them, and that's COLD-PCR. So, we see a double-pronged sword or approach, market approach for Ice COLD-PCR in applications like that, as well as just as a direct kit.

And one more thing that we're doing with Ice COLD-PCR, when we have a good panel of assays done is to make sure that those assays can be multiplexed at one time. And we've got work going on in that area as well so that for end users they will be able to very efficiently and inexpensively perform these larger screens at direct comparison to competitive techniques, like allele-specific assays, where you have to run an individual reaction for every potential site that a mutation can occur. And in deference, our technology will find all the mutations and do it much more efficiently, more cost effectively, and more sensitively.

So, right now, we will be the game in town to be able to find these mutations in blood. Again, the timing on that might be a little hard to predict, but we are pursuing grants. We just got a great score on an STTR grant that we are sure will be funded by the end of the year in pancreatic cancer. And certainly we have others in, and the data around Ice COLD-PCR continues to mature and expand.

Congratulations on that grant. This is a sidebar question, not one of my questions. Just in terms of Ice-COLD versus regular COLD, and if Ice-COLD, your Ice-COLD PCR is number one, by how big of a margin are we talking about?

When you're talking about Ice COLD versus just straight COLD-PCR, there are several variants to it, and Ice COLD is a technique that obviously was discovered at Dana-Farber, but we have really perfected here, and so there is a lot of internal knowledge.

What we're finding is that Ice COLD-PCR is certainly more sensitive than just straight COLD-PCR. And so in some applications we're a thousand-fold more sensitive than Sanger sequencing. More importantly, we run on straight Sanger sequencing equipment. So, ultimately we think that is going to be a huge key for any laboratory in the world today that has Sanger sequencing equipment, and I have to say that is most of them. They will be able to, with our kits, achieve this level of sensitivity that surpasses second-gen sequencing.

So, we still think that that long term is a huge opportunity that Ice COLD-PCR presents even well beyond what COLD-PCR can achieve. So, I hate to dwell too deep into the technical nuances of one versus the other, but in our hands, Ice COLD-PCR is working tremendously well And our license with the Dana-Farber is heavily focused on us preparing kits that we sell commercially, but also, of course, those applications that we sell in our lab as LDKs or as research testing for support clinical trials. So, that is the sidebar question.

Yes, thank you. I just wanted to also just relate it to the visibility on either in announcements or in actual revenue potential.

Well, there will be, again, all this I have to say is in process. We are certainly focused on establishing clinical validation collaborations and academic with other companies. And as these studies are completed, our plan certainly is to prepare or support publications that will further discuss the results and the value of those results against those applications.

So, you'll see much more press about it, you'll see -- more importantly, you'll see the publications, and that's what our end users look to. They don't care about press releases, they look for the actual data that is published in scientific journals. And that's what gets care pathways or treatment pathways to change.

That's great. I appreciate that answer, and I guess one final. In terms of, you mentioned a couple of milestone events coming up, and I don't know if you can just repeat those, or in the second half you mentioned KRAS kit, the Ice COLD and the BRAF, PIK. I'm just trying to figure out some other catalysts for the second half, new product launches.

I did mention that we'll launch the SURVEYOR Scan kit line with an instrument system in Europe. The other thing that we have going on right now is the nuclear mitome test, which is a 400-gene screen and the nuclear genes link to mitochondrial function. And, again, the CPT stack-up on that assay is $17,000.

In the next month or so we'll start reporting our first results. It is a very complex analysis to do and we'll see how insurers, private parties, etc., or private payers will adopt that technique. It is very useful information clinically in understanding the underlying disease that the physicians have to deal with in trying to work their way through a diagnosis on these poor children that are afflicted with mitochondrial disorders. But we have 30 of these assays already in-house and there is some really good excitement in the marketplace within the mitochondrial physicians as to our assay. So, we see that as a good targeted growth opportunity.

And then clearly, Ice COLD-PCR, as those assays are developed and we get more clinical trial work surrounding those, as well as get the KRAS as the first kit out, then there is certainly, I think, expanding interest in that. I can't talk about all the negotiations or discussions we are holding on that, but it is -- it just increases and it's time in market, time in the technology, etc., that leads to that.

So, I think all three of those are things that you'll see from us on an ongoing basis. We signed an agreement to sell a complement to our HANABI system, a spreader that goes along with the HANABIs. And we've also launched a smaller version of the HANABI that is half again the throughput, and so many more institutions can afford that. At least one of the instruments that we just sold was that new version, so it's nice to see that adoption of that new product as well.

Thank you. Thanks so much.

Sure, absolutely.

(Operator Instructions) We will go next to the site of Mark Merrill. Please go ahead.

Hi, Craig, Brad and Chad. Thanks so much for taking my questions.

Hi, Mark.

I just have one quick question about revenue growth and profitability in the Laboratory Service business. You've done a great job building that business so far relative to the Instrument business, and I'm just wondering, as you continue to attract new pharmaceutical partners with your COLD-PCR and other new ultrasensitive technologies, when do you expect the Pharmacogenomic Services Division to contribute to overall profitability? And specifically, the Pharmacogenomic Service business has been operating just below break-even at a gross profit level, and at what level of revenue do you expect the division to start to generate consistent gross profits for the overall corporation?

Mark, I'll address that by turning -- you obviously don't have it available yet, but you've got some of the previous ones, specifically, at the gross margin level. When we had $1 million quarter, it's huge for them. Specific break-even and a fully-loaded break-even we probably don't want to give full visibility to, but if we continue to run at the $750,000 or $1 million or $1.25 million quarters, it will be very profitable all the way down.

Okay, thanks so much. That's very helpful.

Just to add to that, Mark. We have spoken about it before, but we have had to do a lot of work in the market to show our pharma clients and before they are clients, pharma disbelievers, that our very sensitive technologies are accurate. And so with Sanger sequencing having a cutoff of 10% to 20%, let's say 20% mutant to wild type, within a tumor there is a mutation in there below that, it's been impossible to even -- we can find it, but then confirm it.

So, now in our laboratory here, if we do a quick SURVEYOR scan to show that there is a mutation and then confirm it with Ice COLD-PCR, we now have a vehicle that is comparable in its testing methodology to Sanger sequencing that customers will understand and accept or adopt. And so we think that that is just going to continue to expand.

Again, the pharma business is very lumpy and we'll get a project in and then -- or we'll sign a contract and then wait for specimens. And we're in that wait and hold for a couple of projects right now. But we also have other projects in, so the interest in our technologies is expanding. And, again, every time we've talked to a potential client about Ice COLD-PCR and our ability to test in blood, they become very interested quickly.

And now that is -- so, since we've been introducing and then discussing this at not only cancer meetings but, more broadly, we're getting an audience outside of just pharma clients to ask us about licensing or the technology, or having us produce kits for their use. But it is clear in the -- I was just going to add, it's clear in clinical trials that to have the ability to test in blood rather than having to biopsy a patient and store the tissue is going to be a key advantage. So, we'd like to capture as much of that as we can.

Okay, great.

And we will go next to the site of Brian [Markics]. Please go ahead.

Hi, Craig. Thanks for taking the question. On the FAMILION business, do you expect to see sequential growth through the end of the year? And is that, with the current suite of products that are in FAMILION right now, is that a $13 million business as it stands now, do you think?

This is Chad Richards. I'll take that question. If you look at the net revenues through the second quarter, we were about $10.5 million net in that business. Our volumes do continue to grow. We've seen a pickup in volume from Q2 to Q3, so we do anticipate that we will continue to see some growth there, as well as we are looking to some potential new product launches in the latter half of the year that we will announce later on as we get closer to the time frame that we put those out there. So, the short answer to your question, yes, we do anticipate seeing some incremental growth in that business line.

And I'll add that some of the biomarkers that we acquired along with the FAMILION business acquisition are now closer to market. So, we'll be launching products based on those. And there will always be an uptake phase in the market, but we clearly believe there is upside potential for those. So, it's great to have those resources or assets that we can commercialize. So, the deal is a little deeper.

Yes. Do you expect the new products to launch during the current year?

Yes.

Okay. All right.

Not only that, remember that we launched a Marfan test just three months ago. We launched that in the first quarter. In addition, in the month of May some new guidelines came out about hypertrophic cardiomyopathy testing that we've started to present to cardiologists that has been very favorably received supporting the use of some of our testing by the Heart Rhythm Society. So, there is a lot of very positive things happening in the cardiac space around our FAMILION test line.

Okay, thank you.

Absolutely.

(Operator Instructions) And we will go next to the site of Bruce Galloway. Please go ahead.

Hey, guys, congratulations. You got a lot of irons in the fire. These new mutation kits that you're marketing, BRAF, PIK3CA and CE-INVESTED, I mean, what do you need to validate this? How much is it going to cost? Is it your dime or are you joint venturing it? And when do you expect to see revenues from this, if it is commercialized?

Hey, Bruce, it's Craig. So, that's a great question. The list of -- on one hand, the list of panels that are essential for diagnosing and then determining which drugs the cancer patient will respond to, that list is growing, and it seems to grow almost daily. But right now what we know firmly is that, for example, in colon cancer, 40% of the patients have KRAS mutations that cause resistance; another 10% are BRAF -- I'm sorry, are NRAS mutations. PIK3CA is responsible for about 6%, and so on. So, you need to test all of those, quite frankly, to find what a patient would be resistant to. However, in the current market they only test KRAS.

So, our work will be to utilize the studies that are already published and, as well, new studies that we are trying to get going now or shortly that will show that you do need -- and that it makes a good medical economic analysis, supportive analysis before patients are treated with these drugs because they won't respond to them.

So, I can't tell you the immediate time frame. That is going to take a while to emerge, but certainly in the next year or so we expect these panels to be utilized significantly more than they are. And, quite frankly, that's why we're still looking at bringing in licensing rights, like we did with PIK3CA and p10. We have that exclusively for use in determining whether to treat with a specific drug type.

But right now we have five assays in development, five completed in Ice COLD-PCR that we are offering to pharmas, and we think the list is around a dozen that we'll have through the next year that we can be -- that we will have commercialized. And then from that it's continuing to work with our pharma partners to find out which assays they like.

So, the answer to your other question, which was how do we pay for that, the news to date, which is pretty favorable, is that we are getting some funding to do the development of these assays from pharma partners. Not in every case.

The other thing that is nice for us is that once we develop an assay for our lab, it's basically the same assay that we put in a kit. So, there is no difference. So, we can develop the clinical data that supports the use and utility of that assay by offering it through our Pharma lab, but then offering it at our CLIA lab, and we can still sell the kit. So, again, that's our plan for most of the Ice COLD kits.

Are you at liberty to talk about any of these pharma partners? I know in the last conference call you had mentioned Merck, and I had heard from time to time that you're doing quite a bit of work with Amgen.

No. Actually, Merck -- let me start again. To be accurate and professional against the confidentialities we hold, OSI and Merck have indicated strongly and allowed us with firm support to demonstrate the clinical data that we developed using Ice COLD-PCR on their clinical specimens. And then also with work that we did with another company that we're working with called ScreenCell for circulating tumor cells. And that data was shown at both the American Association of Cancer Research, the AACR meeting, which is the world's top cancer research meeting, and then the ASCO meeting, which is more of the clinical oncology meeting. In both cases we showed data -- or shows that data, Ice COLD-PCR from studies from Merck and OSI.

Other companies we are speaking to about Ice COLD-PCR say they will let us announce them because it is a proprietary technology. That's with some of them. Some of the others just don't care and we can't say who we're working for. They are all -- fortunately, they are all very big and we're actually very rewarded that we have studies with these large companies. And so what we expect to have come out of those, of course, is hopefully sooner than later, but clearly ongoing discussions for those assays using our technology that will become companion diagnostics and required for their drug selection.

It sounds very exciting. Congratulations.

Thanks, Bruce. It was a good quarter. We were a week late on a couple of instruments or we would have reported a better quarter.

And it appears we have no more questions in queue at this time.

All right. Thanks, Mark. Well, let me -- I have a little bit of time, so I'm going to go back to my list of questions here. One of them is a follow-up to what Bruce just mentioned. It asked, "In the future, do you see an opportunity for us to partner with a major pharmaceutical company to accelerate our product portfolio?" And the answer is absolutely yes, we have those studies ongoing right now and we have some discussions going on that will we think lead to some companion diagnostic opportunities. As they get completed and we can commercialize them, we hope that they are fairy significant in size.

There is one more question that I wanted -- I noted in an earlier call that we continue to seek out new technologies and new laboratory tests, and so I wanted to cover that explicitly here. Obviously, we have had a successful result from the acquisition we believe of the FAMILION business on both value and power of integrating it and consolidating our CLIA Laboratory, our Reference Laboratory business such that we have basically higher earning power from that laboratory.

We expect to continue looking for opportunities like that, but we also work very hard on finding technologies that we can license, like Ice COLD-PCR, that had platform technology, but at the same time we'll still look for new tests and, like our license for PIK3CA and p10, where we got a worldwide exclusive to that, and we want to continue looking for those and to try and help with building panels and products that are unique to us.

And that said, I will bring up the issue that I mentioned briefly last time. Cancer is a very complex disease, so we are looking right now at what other technologies beyond what we do for pharmas already, and we do other testings than just mutation profiling, to put together to make for more powerful supportive data and more powerful decision-making capability.

So, with that, I'd like to thank you all for participating on the call and look forward to speaking to you next quarter. I hope it's another great call and quarter. Thanks again.

This concludes today's conference. We thank you for your participation and hope that you have a nice day.