Thank you very much, I’ll entertain questions.
(Moderator) First question we’ll take from Tom DeHooty with MTB, Investment Advisers. Please go ahead!
Q. Good morning! Hi, how are you? The clinical trials you mentioned, in China and Sub-Saharan Africa, I guess I was under the impression that you had already started the trials in China.
A. No, we have not. We have had some unexpected delays due to contract negotiations with our collaborating institutions in China. But we are, I think, all teed up now. People are leaving in fact this week to go there and deal with those clinical trials. Unfortunately there’s a national holiday going on in China as we speak as often seems to be the case, I think and we won’t probably get started until a week from now so that’s pretty much what’s going on Tom.
Q. Just to clarify a bit more. Given the nature of the problem there, why the delays, why?
A. You know it’s just business issues it has absolutely nothing to do with the science or with the products that we’re trying to introduce. It’s just trying to get people to agree to the study protocols, getting the necessary approvals from the IRB’s, and getting the financial matters settled. You know I wish that these things were easier to do and quicker to do but that’s just the reality of business.
Moderator) The next question we have is from Bill Querk with RBC Capital Markets. Go ahead.
Q. Yes, thanks and good morning. A couple questions for you. First off is, during the prepared comments you mentioned that the “intellectual property was largely finished for the U.S.” I was hoping you could expand on that comment. I don’t know if there’s I guess additional intellectual property that you’re looking for or?
A. Yes, let me explain why we said “largely finished.” First, the ability to make and sell lateral flow devices; it is finished. For the ability to make HIV tests, in other words, to use the HIV 2 antigens, to have contracts for the antigens that we are using in our tests, that is also finished. Now, as we go forward we’re going to be developing additional tests, as I said in the prepared remarks, for STD’s. Now, that process is just beginning. The strategy that I would like to use for that is, I would really like to do it as quickly as I can possibly do it which means that if there are companies out there with technology that we can acquire through either a license or an out right purchase, that we believe we can convert into our own platform and get to the market very quickly, I would prefer to go that route, rather than go through the development process. For the development process, a lot of the antigens that we most likely will be needing to develop tests like Chlamydia and something like Hepatitis C, we are going to need additional licenses for those particular analytes, those negotiations are underway. It’s going to be that sort of negotiations and acquisition of licenses is going to be an ongoing process for as long as we’re in business. It’s just the nature of the business.
Q. Alright, understood, and then secondly, with respect to plans to roll out an over-the-counter HIV product; I was hoping you could comment a little bit, I guess my understanding is that typically for HIV one of the restrictions from over-the-counter is that you need to have a counseling aspect there in the event there is a positive. I was hoping you could just comment on that?
A. That’s absolutely true. Let me just back up and say that in one of my previous lines I was very involved in the introduction of the products from Home Access and prior to that Johnson & Johnson for the over-the-counter sample collection kits that were licensed back in the late 90’s early 2000’s and I’m very much aware of what is required to bring that type of product to market. The first thing we have to do is to get approval to sell into the professional market and that’s why I have said we will go the IDE route and go ahead and get that before the Food and Drug Administration. In the United States it will be, if we are in fact the first, we will have to sort of blaze a trail for how this is to be done. Typically you have to provide both pre-test and post-test counseling. I’m not prepared to tell you exactly how we will deal with that but, just to tell you how we might deal with it; pre-test counseling; the precedent has been set that it can be in the form of a written message. So, we can include a booklet in the over-the-counter kit that gives all of the necessary pre-test counseling. Of course that would have to be approved by the Food and Drug Administration. Post-test counseling is again, a rather complicated situation, but you know we’ve got a lot of great technology now. One approach that we can take is to provide an eight hundred number that people can call and it will connect them to a call center. There are many of those types of call centers located all around the United States, in fact all around the world, that currently answer medical type questions. Another approach would be some sort of inter active internet program where people can log on and get their results after the appropriate code is entered; they will have their result; get a message if they want to do instant messaging with a counselor, that’s possible. There’s a lot of ways we can do that, and we’ll decide what is the most appropriate way after discussions with the FDA and other public health agencies that have a deep concern about this type of testing.
(Moderator) We have a follow-up question with Tom Dehooty with MTB, Investment Advisors, please go ahead!
Q. Can you give us some idea of the licensing arrangement with Ani in terms of what the royalty payment would be going forward? And similarly with the licensing arrangement you announced yesterday?
A. Tom, we’re not going to give out what the royalty rate is that we’re going to pay to either Ani or to Bio-Rad for - really, for competitive reasons. We were requested not to that by the people who granted the licenses and I think you can probably figure out why the really wouldn’t like to have that out there. I gave the, what we’re paying Ani in terms of an upfront payment. I will say that the royalty that we’re paying to Ani is a very reasonable royalty and it is a variable royalty based upon where we sell the test. We’ll pay a little higher royalty for tests sold in the United States, Japan, places like that where the market will bear a little bit higher price than we’ll pay in Sub-Saharan Africa where we are certain to be under certain pressures to sell at a cheaper price. That’s about all I can say right now and so, I hope that’s good enough to satisfy you.
Q. One other question relative to manufacturing. How soon will your manufacturing facilities actually be up and running?
A. Very soon. We are already preparing the space, or very soon will be. We’re getting bids as we speak and to answer your question I think conservatively mid 2005 would be a reasonable estimate of when we will have it installed, validated and ready to produce product.
Q. So, if you were to sell actual product into Sub-Saharan Africa you would be making that product out of Rockville?
A. Initially, no. As I said also in the presentation we are continuing with our current business strategy of making product in Thailand to sell into Sub-Saharan Africa, into markets where our ability to do business is not blocked by lateral flow patents.
Q. Ok so the Thai facility is ready to produce product?
A. The transfer technology process is still on going. It is our goal to have product from that facility by the end of this year.
(Moderator) We have a question from Brian Davidson with SF Capital Partners. Please go ahead sir!
Q. Hi Dr. George! I might have missed part of this; I apologize if it’s been addressed. The technology that you described today; the change in platform; how does that affect, if at all what your time line is in Thailand?
A. It has no affect on it at all.
Q. Does that mean that you’ll be; you’ll not be using a different platform in Thailand? Or you’re just going to sort of transition it?
A. We will continue to make our assays as they are currently configured, for manufacturing in the facility in Thailand. Those products we can continue to sell into those markets where patents are not blocking our ability to do business. This will continue as; we fully recognize the necessity for getting product into the market and we are committed to do that as rapidly as we can possibly accomplish it. We do not intend to let the Ani acquisition (as important as we believe it is) to in any way change our timelines for getting product into the market from the Thailand facility. We recognize we need to start a revenue stream and that is our number one priority in the Company.
Q. Just so I understand; you anticipate at some point in the future transferring to the Ani platform in Thailand?
A. I think that’s likely. I really don’t want to comment on that right now, but yah, logically I think that that would probably be a reasonable thing to anticipate.
Q. Just so I’m clear again, the comment you made on the prior question about 05 and mid 05 that was with respect to Rockville?
A. Yes.
Q. And with regard to China then, will that also incorporate the new platform?
A. It will not. Again, in China we intend to; we’re just too far down the road in China to make the switch to a new platform. We intend to press forward with all of the energy that we can muster to start the clinical trials in about a week; get it done this year; get the submission into the SFDA in China; get approval and start manufacturing our current format in China as quickly as we can possibly complete the regulatory process.
(Moderator) We have no more questions in the queue at this time Sir so I’ll turn the call back over to you.
Ok ladies and gentlemen, I really appreciate your joining us today. I apologize for the short notice of the Call, it was not intentional, we just had some pressures on us to do this as quickly as we can, but again, I really want to emphasize that this is really a landmark event for Calypte and we look forward to going ahead and focusing our business around the new Ani platform, something that I have wanted ever since I joined the Company, is a platform that is unique and our own platform that we have the freedom to operate anywhere in the world and now we have it. So, we look forward to reporting back to you in the future as we look forward with this and we feel like we’re on our way.
Thank you very much.
End.
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