I attended the meeting yesterday, Not much to report however. There were about 100 people attending, the crowd was mixed, only a few retired people, mostly well dress professionals. The facility is in San Diego's high tech area, mostly clean industry. The Quidel offices and production area was packed with people and equipment. Some new construction, but not much space left. Some of the highlights that I picked up is Steven Frankel commented, he expects earnings to be flat in fiscal 98. He is still expecting 16 to 20 cents, however he said .20 is a reach and would represent 25% growth. . He also expects sells growth of 25% or more. Quidels board has out line 5 objectives for Quidel to achieve short term. They are forming new alliances, development of their GIII tech. and next generation platform, expanding international and distributor relationships, growing market share through waived status products. Quidel seems to be on track with all these objectives, however Mr. Frankel said he was disappointed, that they have not made any acquisitions of new products from other companies. He's very proud of the alliances with the major pharmaceuticals, Bayer, Glaxo, Procter & Gamble, Waylon.(?). As far as sales go, there were two problems, one was the manufacturing problem, the other was the strength of the dollar, Mr. Frankel said their Pregnancy and Ovulation products has become more expensive overseas because of the strength of the dollar and these are price sensitive products. During the question and answer period, most of the questions were directed to the Becton Dickson patent infringement. The attendants were clearly upset about this. Mr. Frankel did a good job fielding the questions. The most important point, ( I hope I get this right) was patents sometimes have a broader interruption then patent attorney s interrupts. Although Quidels attorneys, believed they weren't infringing. Quidel started with Becton patents, improved them, and received patents for the improvement, however not for the original patent. The Becton patents effects 80% of Quidels sales at this time.
This is my opinion, "Quidel couldn't take the chance on having a ruling against them." In a similar patent infringement suit, Harris verses Comark the jury decided on a injunction to includes a prohibition against the manufacture, production, advertising, promotion, display, distribution or sale of any product embodying COMARK patent. With this said I will continue.
I did ask to explain why the license fees and royalties income was down from last quarter and if the increase in license fee paid out were reported together. They said, that the beginning of some programs the fee paid is recorded when received and may not receive any other payments until certain milestones are achieved. The increase-licensing fee paid to Becton will reflect in cost of goods sold.
There were questions about new board member Andre' Bruin, qualifications and the lack of success of Somantogen, were he is Chairman, President and Chief Executive officer.
I hope this helps. IMO, Quidel is still a good investment, it might take a little longer, but they are on track. They do have the broadest product line of quick diagnostic test in a emerging market. I believe Mr. Frankel will continue to grow the company, increasing market awareness and with product acquisitions.
Ken |
