From the Third Quarter Report of 2002. Full report should be on www.sedar.com
---Dick
TO OUR SHAREHOLDERS During the third quarter of 2002, we remained focused on advancing priority development programs to broaden the RAMP ® product portfolio for both clinical and environmental applications, while also building support for anthrax test sales in our effort to achieve positive operating cash flow during the second quarter of next year. Not surprisingly, the controversial recommendation by the White House Office of Science and Technology Policy (OSTP) against the use of rapid anthrax field tests of July 19, 2002 negatively impacted sales of all commercially available biological detection systems during the summer and into the fall. In addition, funding delays in the flow of federal grant money to emergency responders also contributed to prolonged RAMP Anthrax Test sales cycles. Since RAMP was never properly evaluated by the US Centers for Disease Control and Prevention (CDC) in the FBI-commissioned study of commercially available biowarfare systems, the Company s strategic response was immediate, sustained and absolutely necessary. With compelling evidence to demonstrate the CDC s evaluation was inherently flawed and incomplete, we entered into direct correspondence with the OSTP, requesting the organization re-assess its position in light of new independent research showing RAMP is not subject to the fundamental limitations of competing technologies. At the same time, we broadly shared the particulars of our communications with leading decision makers and influencers in industry, government and the news media which exhibited keen interest. In parallel, we continued to pursue independent scientific evaluation by leading researchers to unequivocally prove the inherent strength of the RAMP System, with considerable success. In late July, we announced the results of testing conducted by Intertox, Inc. an independent Seattle-based public and occupational health firm, showing the Company s RAMP Anthrax Test demonstrated a reliable detection level of less than 1,600 spores and no false positive readings. Weeks later, we announced independent test results conducted by DRDC, Suffield, part of Defence R&D Canada, an agency of the Canadian Department of National Defence demonstrating the RAMP Anthrax Test had a reliable detection level of less than 4,000 spores. DRDC, Suffield is widely regarded by industry experts to be the leading facility of its kind in North America, and based on the perceived strength of our technology, we have been invited to explore opportunities to collaborate with US government participation in developing additional biowarfare tests on the RAMP platform. With independent validation of RAMP s world-leading performance, the Company attracted high interest from potential partners and subsequently announced in early September a series of regional, national and international marketing agreements with industry-leading partners to accelerate market adoption of the RAMP Anthrax Test. Following the Company s public release of independent RAMP Anthrax Test results and public challenge to other manufacturers to do likewise, it is readily apparent that no other on-site system can compete on sensitivity or specificity. As a result, we anticipate receiving orders this year that will be significant from a revenue perspective through 2003, and more importantly, will send a strong signal to potential purchasers in the US that the RAMP System has been validated by leading influencers. Although we are disappointed that the OSTP has not yet re-evaluated its recommendation, based on initial sales forecasts from our 10 new distribution partners, we remain confident that RAMP Anthrax Test sales will scale-up as originally forecast. We have long recognized that although government has an opportunity to accelerate market acceptance of innovative technology solutions to improve biowarfare protection, the market is beginning to determine and adopt world-class systems to address large unmet needs as evidenced by a dramatic increase in the number of inquiries for product information and our expanding pipeline of potential orders. We have also recently announced market-ready RAMP tests for ricin and botulinum toxin, with additional priority biowarfare tests in development. In terms of developments on clinical applications of RAMP, during the summer we initiated independent pre-clinical testing of RAMP tests for troponin I and CK-MB, two additional cardiac marker tests used in the early detection of heart attack, at the University of Maryland Medical Center. As recently announced, the additional RAMP tests demonstrated excellent agreement with the DADE RxL predicate device, a state-of-the-art lab-based analyzer, and showed marked improvement over Biosite Inc. s Triage Cardiac Panel, the current market-leading point-of-care diagnostic system for the rapid on-site detection of cardiac markers. Based on the strength of these findings, we have accelerated commercialization timelines and expect to market all three RAMP cardiac tests internationally with a partner before the end of the year. We have also selected clinical trial sites and submitted testing protocols to the US FDA, in preparation for entering the US market next year. As you may recall, International Reagents Corp. (IRC) of Japan conducted an evaluation of the RAMP System and the results exceeded IRC s expectations. Unfortunately, Sysmex Corp. acquired the company and directed IRC to remain focused on its core business in lab-based analyzers. Although somewhat disappointing, the decision was not related to RAMP s performance or the considerable point-of-care market opportunity in Japan. Further, we are in discussions with several potential Japanese partners and are confident that progress in the Japanese cardiac market will be made in a timely fashion. In light of continued depressed equity markets and the requirement to bridge short-term capital needs ahead of anticipated sales, we secured a US$500,000 revolving demand credit facility in late July to be used for working capital purposes including research and development, sales and marketing, administration, and production of RAMP Systems. Subsequent to the end of the quarter, we announced an additional US$665,000 revolving demand credit facility with a Canadian chartered bank. Furthermore, we anticipate significant cash inflows from a variety of sources including partnering arrangements, research and development funding, and biowarfare test sales in the near-term. On behalf of the entire management team and staff, I would like to acknowledge your continued support particularly given the current market downturn, as we strive to become the worldwide leader in the on-site immunoassay market. William J. Radvak President and Chief Executive Officer August 28, 2002 |
