As a service to those that are not in a position to receive a copy...The following is a proofed copy of the Conference Call conducted 11/05/97...I take no responsibility for content or errors in the following posting/postings of the Conference Call. For a paper copy contact Olga at Lippert/Heilshorn & Assoc. 800 Third Ave. , Suite 1701, New York, NY 10022.............................................
TRINITY BIOTECH, #251187
November 5, 1997, 8:00 a.m., EDT
LIPPERT/HEILSHORN & ASSOCIATES
Moderator. Olga Flemming, operator
Good morning, ladies and gentlemen and welcome to the
Trinity Biotech third quarter conference call. At this time, all
participants are in a listen-only mode. Later, we will conduct a
question and answer session and instructions will follow at that time.
If anyone should require assistance during the call, please press the
star followed by the zero on your touchtone phone. As a reminder,
ladies and gentlemen, this conference is being recorded.
I would now like to introduce your host for today's conference, Ms. Olga
Flemming of Lippert Heilshorn. Please go ahead, ma'am.
0. Flemming Good morning. Firstly I'd like to thank everyone for
joining us today on Trinity Biotech's third quarter conference call. If
you have not received your copy of the release which was issued last
week, you can give me a call at 212-838-3777 and I'd be happy to forward
one along to you.
Joining us on the call today is Ronan O'Conan, Chairman and CEO,
Jonathan O'Connell, Chief Financial officer and Brendon Farrell, President.
Before we begin, I'd like to read the Safe Harbor statement, which is under
the Private Securities Litigation Reform Act of 1995.
The statements made on this conference call which are not historical
facts contain forward looking statements that involve risks and
uncertainties including, but not limited to the results of research and
development efforts, the effective regulation by the U.S. Food and Drug
Administration and other agencies, the impact of competitor products,
product development, commercialization and technological difficulties
and other risks detailed in the company's Securities and Exchange
Commission filings.
once again, thank you for joining us and I'd like to turn the call over
now to Ronan. Ronan?
R. O'Conan Thank you, Olga and good afternoon from Dublin. Firstly,
I'd just like to welcome Olga Flemming from Lippert Heilshorn and as our
new Investor Relations Analyst and Trinity decided to retain Lippert and
Heilshorn and to make a change from our existing investor relations firm
in an effort to primarily really, to attract you as institutional
investors to the company and to try and move the share price forward.
And in making that move, I think we were advised by many of you who are
listening today so we have acted on your advice. I think some of you
may think somewhat belatedly but, anyway, we're very happy to introduce
Olga and Lippert and Heilshorn and look forward to moving things...
moving the share price forward with their help. As part of that
Brendon Farrell and Jonathan O'Connell will be conducting some meetings
in New York next week, as we're being introduced to some U.S.
institutions.
Just to talk with you about today's conference call, it's a pleasure
again to have the opportunity to bring you up to date with where the
company is and we're not going to be making any announcements over this
telephone conference call. The proper format for that obviously would
be through the normal press release. What we do want to do is bring you
up to date with where we are and to make you aware of the f act that the
company is in good shape and good hands. I will, firstly, talk about
the strategic direction of the company and after that, then Jonathan
O'Connell will review the third quarter for you. Then, lastly, Brendon
Farrell, who's in New York, in upstate New York in Jamestown right now,
will talk to you, will give a business overview, a review of the Clark Labs
and Centocor acquisitions, a review of the Unigold position and then
we'll talk to you briefly about our marketing alliances with Warner
Lambert, Bayer, Carter Wallace and SmithKline Beecham.
So if I could start, then, with... And just a brief word about our
strategic direction. Really, what has prompted us to this is, as part
of Lippert and Heilshorn's initial look at the market, they felt that
among many of our investors and broker community, there was a certain
confusion as to what exactly our strategic direction was and so it is - in
response to that
that I'm just making these points.
Trinity's primary focus is to concentrate on the over-the-counter and
the Point-of-care markets and diagnostics. These markets are developing and
growing at a rate of 30 percent per annum at this time. We see huge growth
here and we think that we
are uniquely in a Position to take advantage of these growing markets
due to our Patented and unique enabling technology, being the Unigold
technology and at the moment, our technology is a yes/no technology and
as we go forward we are looking for various Platforms that will bring us in
to the quantitative area.
Our secondary focus is to supply a comprehensive range Of enzyme
immunoassay Plate tests to the existing market and at this time we have
over 80 such products. And we feel that, while this is our secondary
focus and not our primary one, it's an important one and it would
be foolhardy of us to
ignore the 90 percent of the current diagnostics market which is in this
area, at a current rate of $17 billion per annum, but with only a growth
rate of 5 percent.
So that's the strategic direction of Trinity. We see ourselves growing
aggressively over the next number of years. We see ourselves growing
our revenues and our profitability at aggressive rates and we see
ourselves as a high growth rate company and we hope to achieve that
growth rate through a mixture of organic growth, through the flow of
products from our own research and development programs and by way of
acquisition.
To talk about, firstly, the organic growth and we now have a $20 million
sales base, over 80 products and distributors in virtually every country
of the world. And we feel with this range of products and given the
integration of these basically two acquisitions with the Trinity
products, that we can organically grow that base at an aggressive
level. And it isn't, [unintelligible] to the second area where our
growth will come from, is that we have at this time 30 people in
research and development, mostly in Ireland, but also some in the
States. We have various research and development programs with various
universities around the world and coming out of all of that, we have had
and will continue to have a range of products which we can marry into
our distributor range, from which we expect to have growth. And,
lastly, we expect to have growth through acquisition and we feel we've
already demonstrated our ability to make such acquisitions and to make
them work. Just to mention something that can be very important to you, is the
issue of dilution. We intend making whatever acquisitions we do in a
very dilution sensitive manner. We are now a cash flow positive company
and we'll be progressively more so as time passes. So we can fund
acquisitions by way of cash flows, by way of bank borrowings, but to date
we haven't had bank borrowings, but now with our profits coming through
that can happen and also by way the issue of loan notes and
lastly, by either the payment of cash or through the issue of shares.
But we hope to do that, but we'll be extremely sensitive to the extent
to which we do that.
So that is a brief outline of our strategic direction and I'd now like
to hand you over to Jonathan O'Connell, who will talk about the third quarter.
J. O'Connell Thank you, Ronan. I think you'll see from the record third
quarter results the fruits of the strategic direction the company is
following. For the third quarter, ended September 30, 1997,
revenues increased over 160 percent from $1.9 million last year to over
$5 million and this is the first ever $5 million, quarter the company
has made and that profits also have increased fairly significantly in
that period. Last year, we made a small net profit of just $16,000
in the third quarter 96. This year it was $350,000 another indication of
the strength of
acquisitions coming through there and our own ability to integrate those
into the company.
So for the nine months the company had revenues of $12.2 million
compared to $4.8 million in the previous nine month period and the
profit was $820,000 compared to a loss of just $12,000 in the previous
period. And
the significant rise in revenues and profits reflect the increased
product sales of the Trinity's proprietary test, Rapid Test, but also
obviously the inclusions of revenues from Trinity's new subsidiaries,
Clark Laboratories, which was acquired at the beginning of this year and
Centocor U.K., which was acquired from the first of Jul, this year.
On that, Trinity's revenues have grown significantly to about seven...
over seven and three quarter million dollars, from $4.8 last year. And
Clark and Centocor both contributed quite well to the revenues this
year and Clark is in excess of $3.5 million to date and Centocor in the
last quarter, the first quarter for which Centocor has recorded
revenues in the Trinity group, was just over three quarters of a million
dollars so I think you can see Trinity's underlying business is growing
significantly, but also the acquisitions are contributing to Trinity's
increase in revenues. All that means, really, is that the company's now...
has an annualized
revenue rate of about $20 million and growing. This compares with $7
million for the whole of 1996 revenues. So I think the strategy of
diversifying our product line to address all market segments of the
diagnostic market has proved to be very fruitful to us. And to that
end, we continue to introduce new products to the market.
During the last quarter, we introduced two enzyme immunoassays, Rotavirus and
Mycoplasm, which were both FDA approved and will be distributed through
Trinity's strategic partner in the United States, Carter-Wallace. And
Trinity now, with its acquisition, has a very extensive distributor
network, with over 65 distributors in countries all over the world and
this breadth of distributors enables Trinity to introduce new products
into the marketplace at a much more rapid pace than we have until
recently. I think these factors will drive revenue growth in the
future. As Ronan mentioned, our impressive distribution network
that we having garnered together in the past year and our new product
introductions
from the research and development programs that we are undertaking which
I believe Brendon will talk about later, will drive profit forward, as
will maybe potential future acquisitions which will be both revenue and
earnings enhancing.
And with that, I'd like to hand over to Brendon Farrell.
Thank you, Jonathan. Good morning, everybody, from
Jamestown, New York. I'd like to start by talking about the two
acquisitions which we made in 1997, the first of these being Clark Labs
here in Jamestown, which was completed in February of 1997. And just to
remind you, again, what we acquired was a 24,000 square foot ISO and FDA
approved facility, which employs more than 70 people and which
specializes in the development and manufacture of microliter plate
enzyme immunoassay products. These products are used for the diagnosis of
a broad range of both infectious and autoimmune diseases and examples of
these products would be tests for childhood illnesses, like measles and
mumps and then also tests for sexually
transmitted diseases, like chlamydia and herpes. These products, of
which there are more than 60 manufactured here, are used in hospital and
reference laboratories. In other words, they're used in the mainstream
diagnostics market which Ronan referred to -- anywhere where a high
volume of testing is done. And all of these products, I stress, are FDA
approved. Now, in the United States we distribute the Clark products
through our partner, the Wampole division of Carter-Wallace and in
international
markets we go through a network of national distributors as you've just
heard from both Ronan and Jonathan.
The integration of Clark Labs has gone very smoothly and efficiently and
today Clark is an integral part of the Trinity group and contributes
significant revenues and profits to the group. Moving on to the second
acquisition we did in 1997, which was that of Centocor U.K. We were
attracted to this business because of their high quality line of more
than 20 microliter EIA products, which are complementary to the Clark
range. And, again, all of these products are FDA approved and, indeed,
two of them -- syphilis and cytomegalovirus -- are approved by the FDA
at a higher level. They're approved for use in blood bank screening of
blood donations. So it's an exciting product line and they also have a new
product which is in clinical trial right now, which is a Shagov test and
this is a disease which is
prevalent in Central and South America, but which lately has been
increasingly seen in Southern states of the United States, such as
Florida, California and Texas. The integration of the Centocor U.K.
business is going extremely well and over the past three months, we've met
with all of the Centocor
distributors throughout the world and we're currently working with them
to put in place our marketing programs for 1998. And revenues from that
business in 1996 were $3.2 million. We feel that we can grow that
number significantly in the next year and we will see that reflected
also in our bottom line next year.
Now, hand in hand with that acquisition of Centocor, we did a separate
agreement whereby we licensed a number of cancer markers from Centocor,
which we will adapt to microliter plate format and that research and
development work has already commenced here. So, in summary, we are
extremely pleased with our 1997 acquisitions and we know that they'll
both make significant top,and bottom line contributions to our business
in 1998 and beyond.
Now, secondly, I'd like to talk about our Unigold program and Unigold is
our unique enabling platform technology. There are three Unigold products
currently on the market. This is Unigold HCG, the pregnancy test, Unigold
HIV and Unigold Hep B. And the Unigold HCG is selling in the U.S.
professional markets and also internationally in the OTC and professional
markets. Unigold HIV, talking about international markets, we received
approvals and we have commenced sales in a number of countries
internationally, specifically in South Africa, Malaysia, Saudi Arabia,
Egypt and Guatemala. And the
process of gaining regulatory approval is continuing in many other
countries, including here in the United States where we're currently in
discussion with the FDA regarding our filing and, indeed, the specifics of
the further clinical trials which we conduct prior to obtaining approval.
Now, I need to stress at this point that this is a PNA filing with the
FDA, which is a higher level than most diagnostic test approvals through
the FDA and as a consequence it takes longer, but the process we're
going through right now is normal and while it is frustrating to all of
us and time consuming, it is the normal process and we have to see it
through. With regard to our Unigold Hepatitis B product, actually, in
international markets, has paralleled the launch of our HIV product
and, in fact, received approvals and is selling in the same countries as
HIV, namely that group of countries ... South Africa, Malaysia, Egypt,
Saudi Arabia and Guatemala.
Now moving on to the Unigold research and development program, we're
very pleased to announce the appointment of Dr. Allen Pranovof to the
position of Vice President of Research and Development in Trinity.
Allen joins us from Quidel, in San Diego, where he has spent more than
10 years and was responsible for the development of the Quidel Strep A
chlamydia and H pylori rapid products. Indeed, during his time there,
he developed a total of more than 30 FDA approved rapid tests. Allen
joined us on the lst of October and has spent his first month reviewing
our Unigold programs. He has reported to management that he's very
satisfied with what he's seen and that he's confirmed that our R&D are
progressing very well. So we're very excited that Trinity could attract
a scientist of Dr. Pranovof's stature and we look forward to him making
a significant contribution to the company.
And, finally, from my point of view, I'd just briefly like to deal with
the four strategic alliances. Firstly, with the Carter-Wallace
relationship. As previously mentioned, the Wampole division of
Carter-Wallace here in the United States distributes the Clark and Centocor
products in the U.S. market. Our relationship with Wampole is excellent; in
fact, it's more a partnership than a strategic alliance and I'm glad to say
that they're growing sales month by month and we're very, very satisfied
with their progress.
Our second relationship is with Warner Lambert and this is for sales of HCG
in the U.S. OTC marketplace. Sales through Warner Lambert in 1997 are very
strong. They're planning a major advertising campaign as we enter 1998, so
we're looking forward to even
further growth next year and, again, this is an excellent relationship.
The third relationship is with SmithKline Beecham and this is
specifically for rapid HIV tests and when I mentioned that the Unigold
HIV has been launched in Egypt and in South Africa, this is actually
through SmithKline Beecham, who are starting the launch of Unigold HIV
under their own label, right throughout Africa. So again, that's a
relationship we're very pleased with.
And, finally, with Bayer Diagnostics, who are responsible for marketing
our HIV products throughout certain countries in Asia. We've had a slow
start with Bayer, but through the efforts of our regional director in
Kuala Lumpur, John Macy, I'm glad to say that things are now moving
along satisfactorily and we are looking forward to increased market
penetration in that area.
So that brings me to the end of my summary and I'll hand you back to
Ronan in Dublin. |
