Precipio Inc (PRPO) 2014 Q2 法說會逐字稿

Good day and welcome to the Transgenomic second-quarter 2014 financial results conference call. (Operator Instructions).

Also note, today's conference call will be recorded and will be accessible both by phone and Internet. Please refer to the press release about this conference call on the Company's website, Transgenomic.com, for further detail.

The Company has asked that I read the following statement. Management will make comments today that contain forward-looking statements. Forward-looking statements are any statements that are not -- that are made that are not historical facts. These forward-looking statements are based on current expectations of the management team and there could 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, the Company's 10-Q, 10-K, 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 call is rebroadcast, retransmitted, or redistributed at a later date, Transgenomic will not be reviewing nor updating this material.

I will now turn the call over to Transgenomic's President and Chief Executive Officer, Paul Kinnon. Please go ahead, sir.

Good afternoon, everybody, and thank you for joining us for today's conference call. I am joined today by our Chief Financial Officer, Mark Colonnese.

I will start by providing an overview of our continued progress in improving Transgenomic's commercial focus and clarifying our strategic direction. Then Mark will walk us through the operating results for the second quarter of 2014. We will then open the call for questions.

As noted when I came on board last year, creating a revitalized company would require a series of initiatives and actions over time. During the second quarter, we continued to make good progress in putting in place the key elements needed to make Transgenomic the dynamic, growing organization we believe it can be and will be in the future.

Mark will review the numbers for the quarter in some detail, but at the outset, I want to note that our overall revenues for the second quarter showed nearly double-digit percentage growth above revenues in the first quarter 2014, led by an encouraging bright spot, our patient testing business, which we view as a key growth area and which continues to show renewed strength.

We expect that this trend will continue, and we also project -- we're also projecting growth beginning this quarter for new projects in our biomarker identification business unit, which provides contract services for the pharmaceutical industry. Gains in this business slowed in the second quarter as a result of a delay in starting a relatively large project, and this project is now underway and additional new projects have started in the third quarter.

We have targeted the biomarker identification business as a growth area and expect activity to further accelerate with the introduction of our multiplexed ICE COLD-PCR technology, which offers pharmaceutical and biotechnology companies important advantages over current approaches.

Since our last call, we completed two significant agreements that are important to the business today and also illustrate key elements of our roadmap for creating shareholder value.

The first of our major licenses from Dana-Farber Cancer Research Institute for worldwide rights to commercialize multiplexed versions of our groundbreaking ICE COLD-PCR technology in all fields and all platforms, which makes possible the simultaneous detection of hundreds of DNA mutations of very high sensitivity from a single tissue or liquid sample, such as blood or plasma, including both mutations known to scientists and those that have not been previously detected or identified in patients.

The new license is exclusive to Transgenomic and it significantly expands and reinforces our existing relationship with the cancer leader, Dana-Farber.

Importantly, the new license provides us with a critical advantage, because multiplexed ICE COLD-PCR is far more enabling, are allowing multiple regions of DNA to be targeted in one assay, and improving the overall efficiency for cancer diagnostics, leading to the adoption of personalized cancer therapy as part of routine clinical practice in the future.

This reflects that the need for invasive and costly tissue biopsies obtained [Cuna] DNA has been a barrier to the implementation of personalized medicine. We estimate that the US healthcare system currently spends in excess of $1.5 billion on tissue biopsies for lung and colon cancer alone, with approximately 120,000 being carried out annually in North America at a typical cost of $10,000 or more per procedure.

Additionally, the fact that these mutations can often change during the course of treatment means that tissue biopsy collected in the early stage of the cancer doesn't provide the information needed to adjust therapy as the treatment proceeds. The ability to rapidly and easily -- a rapidly and easy method of detecting mutations in real time during the course of the therapy will allow oncologists to optimize therapy over time and improve patient outcomes.

We expect over time this new capability will greatly increase the number of liquid biopsies are performed compared to the number of tissue biopsies performed today. Mainly due to its potential transformational nature, there is a surge of interest in liquid biopsies and a number of companies are working on liquid biopsy technologies.

However, multiplexed ICE COLD-PCR has a significant advantage over potential competitors and historical methods that we believe makes it superior to competing approaches, while giving it the potential to revolutionize cancer screening, diagnosis, monitoring, and treatment selection.

Multiplexed ICE COLD-PCR targets and amplifies the specific region of the mutated DNA in tumors that is critical for cancer diagnosis, monitoring, and treatment, and it detects a mutated DNA at a very high sensitivity. Initial validation in studies show that it is 100- to 400-fold more sensitive than conventional approaches of current platforms.

Uniquely, multiplexed ICE COLD-PCR enables identification of all tumor mutations present, both those already known to cancer researchers, as well as unknown mutations not detected before. It does this by amplifying the key mutation regions of interest.

In addition, multiplexed ICE COLD-PCR is distinguished by its platform independence and relative simplicity of use. Multiplexed ICE COLD-PCR can analyze DNA from fine-needle aspirations, core biopsies, or direct from tumors, as well as, and importantly, from blood and urine and it can be used with widely accepted sequencing in PCR platforms.

A simple way of describing the difference between multiplexed ICE COLD-PCR and other DNA detection technologies is that multiplex ICE COLD-PCR is a broad approach that amplifies all known and unknown mutations, whereas other methods target only known mutations, thereby missing the unknown mutations that may be present in the tumor. We believe that this attribute, combined with the multiplexed ICE COLD-PCR superior sensitivity, bring breakthrough technology and enabling technology.

Our work with researchers at leading cancer centers, such as MD Anderson and Dana-Farber, is producing a growing body of data that confirms the performance of multiplexed ICE COLD-PCR technology. At this year's ASCO meeting in late May, many researchers, cancer specialists, potential co-partners, and potential strategic partners had visited our booth to view scientific posters that provided fair the validation of the key features of multiplexed ICE COLD-PCR.

The studies and the data highlighted the ability of multiplexed ICE COLD-PCR to detect relevant tumor mutations from blood or plasma with high sensitivity on different platforms. They confirmed that multiplexed ICE COLD-PCR can detect known and unknown mutations and it can be done repeatedly over time. And importantly, the studies confirmed that multiplex ICE COLD-PCR can achieve sensitivities of less than 0.01%, the level needed for accurate detection of tumor mutations from liquid samples such as plasma and blood.

We are actively pursuing a number of activities to develop, protect, and commercialize the multiplexed ICE COLD-PCR opportunity and technology. It holds significant promise for Transgenomic and its importance for the future of personalized medicine can't be understated.

As we have mentioned previously, we expect to see the first revenues for multiplexed ICE COLD-PCR projects in our biomarker identification business unit later this year, as our initial pharma and biotech partners launch early studies for low-level mutation detection in key cancer targets. While these will be pilot studies, they are important indicators of the early progress we're making with this exciting technology.

Following these initial commercial efforts, we expect to rapidly ramp up commercialization of multiplexed ICE COLD-PCR, with the aim of generating revenues by next year.

We are excited about the potential value that we believe multiplexed ICE COLD-PCR can bring to the Company and our shareholders, and we're also motivated in this effort by the tremendous impact it could have on cancer patients' treatment and monitoring in the future. The liquid biopsy market is now in its infancy, but the interest in and the demand for this technology suggests the potential for rapid and broad adoption of multiplexed ICE COLD-PCR across many customers and sectors within the huge and growing cancer market that is building, and we're working on capitalizing and monetizing this technology rapidly.

A second important element of the Company's revamped strategy is to focus resources on key growth areas for the firm. Just after the end of the second quarter, we announced an agreement to sell the rights of our SURVEYOR Nuclease technology and assess -- sorry -- and assets to Integrated DNA Technologies, or IDT, for a minimum of $4.25 million.

SURVEYOR mutation to technology kits provide researchers with a simple, robust, and versatile method for detection of mutations and polymorphisms in DNA from a variety of organisms. IDT made an upfront payment of $3.65 million and an additional payment of $0.06 million or more to Transgenomic during the first year of this agreement.

Importantly, as part of the agreement, IDT exclusively sublicensed rights for the clinical and diagnostic applications of SURVEYOR technology back to Transgenomic.

The sale of SURVEYOR Nuclease technology to IDT for the non-core research market allows us to focus more of our resources on commercialization efforts in our three core business units and on our clinical opportunities. The monetization of this asset will also provide resources for expedition of our developments and commercialization efforts for multiplexed ICE COLD-PCR.

During the quarter, our relationship with PDI for our CardioPredict test came to an end, for a variety of reasons outside of our control. The PDI effort was not able to gain significant traction and we both thought it would be best to move on.

We continue to believe in the importance and viability of the product and it has a good commercial potential. We are currently developing and commercializing a plan for relaunching CardioPredict and we will have more to say about this topic later in the year.

We continue to work closely on other partners, including PerkinElmer and Amgen, and these relationships are showing signs of progress. We plan to expand the strategic approach for partnering in areas that benefit the Company, be it along market, regional, or commercially driven parameters.

Other notable actions during the quarter include our uplisting to NASDAQ, which is important symbolically and also brings the Company enhanced visibility and liquidity. We also added another outstanding life science business leader to our Board this quarter, John Thompson, who played a key role at industry heavyweight Invitrogen Life Technologies and is the second high-caliber individual we have recruited in the past few months.

Overall, we're optimistic the Company's turnaround is well underway. Our three business units are starting to make significant progress on our drive to commercialization and monetize key assets is paying off.

In the coming months, we intend to share more information on our regulatory strategy and commercialization plans for key parts of the business, including our multiplexed ICE COLD-PCR technology that we believe has great transformational potential in the diagnosis and treatment of cancer.

With that, I will now hand the call over to Mark. Mark?

Thanks, Paul, and good afternoon, everyone.

We released our financial results about an hour ago, so I hope you have had a chance to review the numbers. I will start today with our analysis of the second-quarter results.

Net sales for the second quarter of 2014 were $6.8 million, compared with $7.3 million for the same period in 2013. The comparison is due to a decrease in the genetic assays and platforms segment as a result of fewer instrument sales and in the laboratory services segment resulted from lower sales of contracted laboratory services in our biomarker identification unit.

Instrument sales, as we all know by their nature, vary from quarter to quarter, while the lower sales of contract lab services in the second quarter were mainly due to a delay in one of our larger projects, which has since then resolved. We are confident that revenues from this project and other new projects will result in an increase in the biomarker identification business unit revenues in the third quarter.

In the quarter, we did see higher sales of patient tests, spurred by a number of new products that we launched late last year. This is the second consecutive quarter of increases in the patient testing business, a trend that we expect to continue.

Gross profit was $2.4 million, or 35% of net sales, compared with gross profit of $3 million, or 41% of net sales, for the same period in 2013. The decrease in gross profit was the result of the lower instrument sales and reduced contract laboratory revenues that I mentioned previously.

Operating expenses were $6.3 million in the second quarter of 2014, compared with $5.9 million in the prior-year quarter. The increase was primarily due to higher non-cash stock compensation costs totaling about $300,000, along with a higher bad debt provision that was higher by about $200,000 over the prior year.

Regarding the bad debt provision, let me take a moment here to address our Accounts Receivable and their growth over the past two quarters now. We began implementation of a new billing and collection system and had been working through the learning curve of the system, as well recently as its integration with our laboratory management system.

The replacement of our old systems was a necessity to improve the efficiency and automation of our processes, which were antiquated, and, as some of you will recall, had caused collection problems in the past for the Company.

Nevertheless, this has been in the planning for some time and was a necessary improvement that caused a disruption in our billing and collection activities this quarter. The implementation and integration activities are close to complete now and we are beginning to see progress in improving our collections. Encouragingly, our collections in July were almost double that of June. As such, we expect to catch up in our collections and improve our overall cash flow in second half of the year.

Getting back to the income statement review, in the other expense category in the second quarter of this year and last year we recorded $200,000 of non-cash income related to the warrant revaluation, so there is really no impact on year-to-year comparison.

In summary, the net loss in the second quarter was $3.9 million, or $0.57 per share, compared with a net loss of $2.9 million, or $0.41 per share, in the second quarter of 2013.

Modified EBITDA was a loss of $3.2 million in the second quarter of 2014, compared to a $2.2 million loss for the same period in 2013, and you can find a reconciliation of EBITDA to net income in our earnings release.

Turning to the six-month financial results, net sales for the first half of 2014 were $13 million, compared with $14.7 million for the same period in 2013, reflecting the 12% decrease in the genetic assays in platform segment as a result of fewer sales in 2014 compared to the prior year.

This shortfall was largely a first-quarter shortfall, as sequentially the second quarter sales were considerably higher than we saw in the first quarter this year.

Our sales declined in the laboratory services segment for the six months ended June 30, 2014, versus 2013, resulted from lower sales in the contract laboratory services that I mentioned earlier, which should rebound in the third quarter and from a higher-than-usual level of sales in the first quarter of 2013 that resulted from our working down a backlog that we had in our NuclearMitome test from their previous year.

Again, we did see higher sales in patient tests from both new products launched in late 2013 and an increase in our core laboratory services business.

Gross profit for the six months ended June 30, 2014, was $4.9 million, or 38% of sales, compared to gross profit of $6.2 million, or 42% of net sales, for the same period in 2013. The decrease of gross profit again was due to the lower contract laboratory revenues and fewer instrument sales that I mentioned earlier.

Operating expenses in the first half of 2014 were $12.4 million, a reduction from the $13 million that we incurred in the first half of 2013. We actually had lower bad debt provisions in the first half of 2014 as compared to 2013, and this, along with lower employment-related costs due to a mid-2013 reduction in our laboratory services sales force, were the main reasons for the lower expenses.

Income tax expense was approximately $0.5 million in the first half of 2014, compared to about $100,000 in the first half of 2013. As a reminder, during the first quarter 2014, the Company recorded about $0.5 million in income tax expense to establish a deferred tax liability related to the tax amortization of goodwill.

In summary, the net loss for the first six months of 2014 was $8.1 million, or $1.17 per share, compared with a net loss of $6.5 million, or $0.95 per share, for the same period in 2013.

Cash and cash equivalents were $1.2 million at the end of the quarter, compared with $1.6 million at the end of the prior year-end. Of course, after the quarter, we sold the rights to our SURVEYOR Nuclease technology for a minimum of $4.25 million, of which we received $3.65 million in July. The net proceeds received reinforced our financial position and were used initially to partially pay off our revolving credit line, which can be redrawn by the Company as needed, and will also be used for working capital purposes going forward.

At this point, I will turn the call back to Paul.

Thank you, Mark. At this point, Operator, we are ready to open the call to questions.

(Operator Instructions). Bill Bonello, Craig-Hallum Capital.

This is actually Per Ostlund in for Bill. Thanks for taking the questions. Just a couple or three from us here. You alluded to a lot of things on the call, so thank you for all the color. I just want to probe a little bit on a couple of other things more specifically.

Thinking in terms of milestones that we might look for for ICE COLD-PCR over the next, call it, six to 12 months or perhaps a little bit longer, I know you mentioned earlier the ASCO presentation in May, the biomarker ID pilot studies coming up in the second half. Are there other things that we might look for on that front in terms of validating the technology, whether it's additional academic data or collaborations or whatnot? Anything there would be very helpful. Thanks.

Appreciate the question. We're trying to work a way that we can actually share with you and others the clarity of what we need to do in terms of what the timeline is and what milestones could be around multiplexed ICE COLD-PCR. There will be a few presentations coming out and, as I think I mentioned, we are building a regulatory path and a commercial path.

To actually disclose some of that information, we think it is a bit premature. We think towards the middle or the end of the quarter, should I say, beginning next quarter we will be able to give a bit more clarity on it. Bottom line is that we are looking at revenues this year from our biomarker business, revenues then starting up to ramp up in 2015 with an aggressive plan to commercialize the technology.

As I say, it is a very, very active marketplace. We do believe the technology is enabling and we're trying to basically bring the product out rapidly and commercialize it in a way that will create as much value for the shareholders possibly, also while we show that we can capitalize on the liquid biopsy market by understanding who the key customers are, what the patient outcome needs to be, and working with the regulators to make sure it happens quickly and effectively.

So, I would say there isn't really a lot of specifics we can give you today, but in the next maybe two months, we will be able to share a little bit more. And Mark and I are working on some guidelines we can provide to the market a little bit more clearly to make -- help you understand what that could be.

Sure, that makes sense. How much of the laying out those breadcrumbs, if you will, are you hamstrung by the fact that some of your potential partners might want to look at the technology without tipping their hand?

Not particularly. I have worked for most of these companies. I know most of these companies. We do believe that the technology can be enabling to the oncology market as a whole in terms of the treatment, the monitoring, and the tracking of the patients during the course of the treatment.

So, a lot of these people are our customers already. They're our partners already, so I don't think that's going to be a challenge from our perspective, and, in fact, it might enable us even more. I think the strategy we are building in house and with the Board's guidance will actually be one that will enable us to take this forward very rapidly.

Okay, very good. You called out patient testing here as a growth driver again or growth item in the quarter, second quarter in a row, and I know from your comments that new product introduction is a big part of that. Just wondering how much, qualitatively or quantitatively, for that matter, Steve Miller's addition and his team might be playing a role in that, now that they have been on board for a few quarters.

I think 100%. Steve is a great addition to the Company and his team has revitalized the business.

Revenue is definitely tracking up, as we have said. Two good quarters is perfect. It shows the focus, the clarity of what you need to do to build the business and to focus on it, and that's coming -- that's driven dividends for us.

But then again, the other businesses, we had issues in them in Q2 that should have not happened, but they could happen. We think we are over them now, so we are looking forward to Q3, what that will bring, how we can move that forward in terms of a buoyant Q3, a buoyant Q4 to continue the growth of the business. But Steve's benefit and Steve's focus has definitely paid dividends in the patient testing.

Great. One more and I will let somebody else hop in. After the end of the quarter, as you mentioned, the SURVEYOR sale and license back, what -- I guess to the extent you can speak to it, do you see other opportunities in the portfolio to monetize an asset, whether it is outright sale or whether it is a situation like SURVEYOR where you still get the exclusive license back?

One of the things I said very first couple of months I was on board is there are a wealth of technologies inside the Company, inside the portfolio, that haven't been developed properly, haven't been commercialized properly, and we have the opportunity to commercialize and monetize.

The first one, the biggest one, was ICE COLD-PCR. We are taking that forward. We have expanded on it. We have added multiplex into it and that becomes ultra-important to the Company and very clearly focused because it's a massive opportunity that can transform the Company.

There are other gems inside the business that we can look at and identify. The key focus is get the revenue back on, get the business back on track, and identify where the big things are and capitalize on them, and that's what we are doing. Like any other company, we have Board meetings, strategically. We discussed things and we review things. So we are doing everything a good company should do on that front.

Okay, great. Thank you.

Adam Hutt, Leviticus Partners.

At the risk of repeating somebody else's question, I had to beg off for a second. But Mark, cash burn, can you address cash going forward, if and when we might expect another secondary, which, obviously, we all hope you can avoid?

As I mentioned, our cash position at the end of the quarter was about $1.2 million, and that does not include the benefit of the $3.7 million that we received from the sale of SURVEYOR or the additional payments. I think we have indicated that there is going to be another $600,000 of payments that will be made periodically over the next year, as a minimum, so that doesn't include those payments, either. So this cash that came in, obviously, is going to help fund our operations in the near term.

In addition, Adam, I think you may have heard that we did have some disruption in our collections as we put in a new software system, a new improved automated system that I think has probably been long overdue, but it has been long in the planning for the Company. And that has already -- I think we are largely done with that and we're starting to see improvements already in the month of July, and I think that will continue. So I think that will help as well.

We expect the work -- working down this backlog of receivables in the second half will help reduce our cash burn starting this quarter and through the rest of the half.

What are we talking about there? $1 million or $2 million?

I wouldn't put a specific number on it yet, but I think I would like to get a little more experience to see if this is -- how much we can grow the collections in the next few months before I estimate a number.

Okay, but look, you guys are still burning cash. Should we expect you to blow through $5 million again or -- before profitability?

No, I think if we achieve the sales that we expect to in the second half of the year, we've said that we expect these trends to continue. And we expect the sales to go up, the collections to improve, and with the cash that we have from SURVEYOR, we are moving along with the cash we have today.

Ultimately, if all these initiatives come through, you will need to raise, I would imagine, plenty of money, or do you think that's possible that you can -- this can all be self funding?

We don't have any plans to raise money as of today.

It sounds good. Thank you, guys. Keep up the good work.

(Operator Instructions). Mike Wallace, White Pine Capital.

Paul, could you guys give us some sense of what kind of business model you're thinking of wrapping around ICE COLD, just maybe in some -- at a 20,000-foot view so we can get some idea of what -- how this will progress here?

Sure, you can look at the ICE COLD technology and technologies out there for liquid biopsies. It varies from every aspect from running a CLIA laboratory for doing pharma testing and also for doing patient testing in house, a la foundation medicine, [Trobogy] and other companies, try to look at liquid biopsies and charging for them, through doing projects and companion diagnostics for pharma companies, like our partners Amgen and other guys, all the way through to licensing it to other companies, partnering with other companies, and also selling it direct to the clinical oncologists with the right regulations in Europe as a CIBD and in the US as a 510(k).

So all of those options are open to us, Mike. What we are doing is we're building a very robust commercialization plan and structure to capitalize on the key ones, the first ones, and the fastest ones to bring this to market in the most rapid, efficient way to generate significant revenue for the shareholders and ourselves.

And we do think it will be transformational in terms of the technology. We actually think as well that the solution that we're going to bring out from a commercialization point of view will be transformational as well.

So again, we are being a little bit close to the -- we are holding things close. We're not telling everyone everything, but we think we have got good news. We think we have got a good roadmap. We're refining the strategy and the milestones and the goals that we are after in the earlier run, I think that we're going to try and put out there in the next couple of months to show people what that is.

But we do think that all of those aspects are there that are available options to us and we are evaluating which one is the best one to go first, second, and third, but then actually to execute on them, generate the revenue, and then move on to the next one.

Does the strategy include leveraging the lab (multiple speakers)

Yes.

-- that we have, or are you thinking more selling more of a kit type structure and licensing it out that way or something (multiple speakers)

We plan on utilizing the assets that we have got, which is New Haven, Omaha, and our manufacturing facilities and such that we need to commercialize the products.

We will use all the avenues we have got, but we don't want to distract the teams from the focus they have got. For instance, Steve Miller's business focuses on cardiology and neurology today. I wouldn't expect them to sell an oncology test.

So, we have to look at, is that the right partner? Is it right to do that in house or should we partner with somebody else? We could run the test in house ourselves and then sell it through another partner or a strategic partner or license it to someone. So all of those things are up in discussion and we are evaluating those opportunities now as we speak.

My understanding is the tests can be run on any PCR platform. Is that right?

Yes.

The multiplexing now from Dana-Farber even opens up the market even broader to utilize all the multiplexing technology that is already out in the laboratory research space. Is that right?

The fact that we have now got the broad application from a point of view of multiplexing allows us to use the technology on any platform for any application for any sample, and multiplexing allows us to look at multiple regions simultaneously and identify the unknown and the known mutations.

Most technologies -- ordinarily, all of the technologies can't identify the unknown mutations because you can't target them with an allele specific primer, so that's compelling.

In terms of the platforms, pyrosequencing, Sanger, next gen, digital (multiple speakers), all of them can use our technology. It is a matter of how we target it and how we bring it to market now which are the key things.

Okay. So could you put together some sort of a kit or something that people could do a prep kit on a sample prior to the running it through their existing infrastructure and --

You could do. That's one of the options we're looking at.

Okay. But we have a lab. We got to figure out what to do with that, too, so I suppose you could do it either way. Run it on your stuff, your equipment, or send it to us and we can run it on our equipment?

Correct. All those options are there for us. What we are trying to do is optimize which ones are going to generate the most revenue for us, allow us to penetrate the market the quickest, and generate the largest value for shareholders and the technology.

Okay, and is there anything, if you did a kit or something out in the field, that would be difficult for them to adopt? Is there some procedures or something that are somewhat challenging that if they are not done exactly correct that the results don't come out as expected?

Not at present. We find it a fairly robust technology in house, and we're working on optimizing it and building it.

The kit issue becomes you got to go through the regulatory hurdles with the FDA and with Europe to make sure the kit complies with the regulations. Additionally, you've got to figure out how you can market it and who you market it with. So, we are working through all those things. The questions you ask are the right ones.

So we are working through all those parameters of is it a kit, is it a test, which test, where do we test it, who do we test it with, and also, then, how do we kit it and market it and productize it and generate revenue.

As we have said, this year we estimate that we will have revenues from our partners and pharma customers in doing tests in house, and we will talk about that, and then next year we will start to see real revenues come through, and additionally, we will roll it out -- as we roll it out, the announcements will come out, the partnerships, the information, and that will start to show the trend of where it is going, whether it's directly to another life science company, whether it's to a CLIA lab, whether it's to our own CLIA lab, or whether it's a kit, and all those options are in the mix and we are prioritizing which one is the right one to go for first.

And you think in the next two or three months, you will be able to outline a business plan for us on this?

I think Mark and I were talking about that. We have had the same question from other investors and shareholders, and we're trying to figure out how can do that. Again, we don't want to disclose too much information on some of the information, but we think we can probably put some outline together.

We probably will be able to do it around the next earnings call, but we have just got to work through that. Again, we don't want to -- as a Company, we don't want to overpromise and underdeliver. We want to overpromise, but we want to do it in a way that guarantees that the shareholders benefit, the value in the Company grows, and the organization grows.

But, again, the technology becomes adopted rapidly in the marketplace.

And there is also a competitive aspect of this that we don't want to tip your hand before it's the right time.

What scares you about that? What is it about tipping your hand that would -- what concerns you the most? Can you share some of that with us?

The life science market is very, very competitive, and ultra-aggressive.

The basic question you asked, Mark, at the beginning is how much cash have we got? Where are we from a cash point of view? It's an aggressive marketplace. We want to protect the Company. We want to protect the employees, and we want to take this technology and develop it as rapidly as we can, so we want to be given the chance to build a runway, make it successful, and make the Company successful.

So, to do that, we would rather keep the information within, and then when we bring it out, we have got all our ducks in a row. We've got the strategy ironed out. We have got the partners in place, and then it becomes very compelling and we are very successful. And that's what we are paid to do, make the Company successful and get you a good return on your investment.

Is it competitive from a pricing perspective or is it competitive from a discrediting perspective of the different technologies that are out there? Maybe it's a combination of both?

Not necessarily. I think what Mark is alluding to is that we are doing some groundbreaking science. The technology is groundbreaking. The product is groundbreaking and enabling.

We want to make sure as we bring it out that it is adopted as quickly as possible, as effectively as possible in whichever channel we use.

Additionally, we don't want to warn people who could be a pseudo-competitor or could be a competitor that we're going to do something. But again, as we bring it out, it will enable some of the competitors and it will not enable some other competitors.

So we want to try and work with the ones we need to work with, get the relationships going, do what we need to do, and then it comes out into the public information.

So it's a challenge. If we were a much bigger company with significant revenues and a [great] track record, we would probably be a lot more open, but we are trying to rebuild the Company, grow technology so that it is ready for prime time, and then, when it comes out in prime time, basically make a big statement and show people that this is really, really empowering.

Okay, thank you.

(Operator Instructions). Ladies and gentlemen, this will conclude our question-and-answer portion of the call. I would like to turn it back over to management now for additional closing remarks.

Thank you very much. I hope we conveyed to you a sense of the progress we are making in revitalizing Transgenomic, which is really -- which is already resulting in increased revenues and will, we believe, produce reduced losses as we advance towards our goal of achieving profitability.

We appreciate your concern, your interest, and your participation in the call, and we look forward to speaking to you in the future.

Thank you. Ladies and gentlemen, this does conclude the conference for today. We appreciate your participation and you may now disconnect. Have a great day.

Thank you.