Joe Diaz - Lytham Partners LLC Ronan O'Caoimh - CEO Kevin Tansley - CFO Rory Nealon - COO Jim Walsh - CSO & Business Development Director.

Per Ostlund - Craig-Hallum Capital Larry Solow - CJS Securities Ross Taylor - Somerset Capital Jim Sidoti - Sidoti & Co Chris Lewis - ROTH Capital Partners.

Good day and welcome to the Trinity Biotech Second Quarter 2014 Financial Results Conference Call. All participants will be in listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Joe Diaz of Lytham Partners. Please go ahead, sir..

Thank you, Denise, and thank all of you for joining us to review the financial results of Trinity Biotech for the second quarter of fiscal year 2014, which ended June 30, 2014.

With us on the call representing the company today are Ronan O'Caoimh, Chief Executive Officer; Rory Nealon, Chief Operating Officer; Kevin Tansley, Chief Financial Officer; and Dr. Jim Walsh, Chief Scientific Officer and Business Development Director. At the conclusion of today's prepared remarks, we will open the call for Q&A session.

Before we begin with prepared remarks, we submit for the record the following statement. Statements made by the management team of Trinity Biotech during the course of this conference call that are not historical facts are considered to be forward-looking statements subject to risks and uncertainties.

The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, will, and other similar statements of expectation identify forward-looking statements.

Investors are cautioned that such forward-looking statements involve risks and uncertainties including, but not limited to, the results of research and development efforts, the effect of regulation by the United States Food and Drug Administration and other agencies, the impact of competitive products, product development, commercialization and technological difficulties and other risks detailed in the company's periodic reports filed with the Securities and Exchange Commission.

Forward-looking statements reflect management's analysis only as of today. The company undertakes no obligation to publicly release the results of any revision to these forward-looking statements. With that said, let me turn the call over to Kevin Tansley, Chief Financial Officer, for a review of the financial results.

After Kevin's remarks, we will hear from Dr. Jim Walsh on product development issues and Ronan O'Caoimh will wrap the prepared remarks with his perspectives on the quarter.

Kevin?.

Thanks very much for that, Joe. And as he said there, I will take you through the financial results for Quarter Two 2014.

Starting with the revenue performance, total revenues for the quarter were $26 million as compared to $21.3 million in quarter two 2013 and thus represents an increase of 22% of which Ron will provide more detail later on in the call. This quarter's gross margin is 48.1% compared to the 49% we reported in quarter two last year.

The reduction in gross margin from this level is partly due to the impact of higher level of placement of Premier instruments which at 106 is significantly higher than the 80c placements we achieved in quarter two last year.

We're also seeing the impact of running two additional facilities in the UK associated with the blood bank screening acquisition, and I'll return to this a little later in the call.

Moving on to our indirect costs, our warranty expenses in the quarter increased from $0.9 million to $1.2 million, and similarly our SG&A expenses increased from $5.5 million to $6.4 million compared to comparative quarter last year.

These increases were largely due to the impact of the Immco and blood bank screening acquisitions, both of which occurred in the second half of 2013 and hence would not have been included in the comparative numbers.

Another reason that prior to launch of our new cardiac products that company started to put in place a sales and marketing function dedicated to the launch and support of these products. As was mentioned in last quarter's call, these costs are not just been offset by the associated revenues which will come in future quarters.

Moving on to operating profit. This quarter's operating profit was $4.6 million, an increase of almost 25% compared to the equivalent quarter last year. This equates to an operating margin of approximately 18%.

This quarter interest income was more or less offset by interest expenses in the P&L compared to a net financial income of $440,000 in the equivalent period last year. This mainly reflects the reduced level of funds following last year's acquisitions and, to a lesser extent, a fall in deposit interest rates which are now available in the markets.

Our tax charge for the quarter was $276,000 which is an effective rate of 6% and continues to be very attractive. One of the main contributors has been the availability of significant R&D tax credits in both Ireland and to a lesser extent Canada.

Moving on to profit after tax and EPS, the net results of all I've spoken thus far is that our profit for the quarter has increased by 13% from the $3.8 million to $4.3 million. Meanwhile, EPS increased from $0.177 to $0.19 per ADR over the same period.

Finally, earnings before interest, tax, depreciation, amortization and share option expense for the quarter amounted to $6 million, and this compares to $5.1 million in the equivalent quarter last year, which is an increase of close to 18%. I'd just like to now take a minute to recap on this quarter's overall profitability.

From a comparison point of view, I think the best number to consider is operating profit, which I'll remind you increased from $3.7 million to $4.6 million this quarter. Within this number, we are seeing a number of factors at play. From an acquisition point of view, Immco has been profitable from day one, and this continues to be very much the case.

Meanwhile, this has been partly offset by the impact of the blood banking acquisition. As was flagged at the time of the acquisition, this was not expected to be profitable from the outset until such time as the two facilities in UK were closed down.

Production at these facilities has now ceased, and we'll be vacating the premises which are locations in Cambridge and Newmarket in the UK at the end of this month. Consequently, we will see the benefit of lower costs partly in quarter three and then fully in quarter four.

Also, from a cost perspective, as I mentioned earlier, we're continuing to see an increase in sales and marketing costs associated with Meritas. However, notwithstanding these factors, I will reiterate that we did grow operating profit by 25%, which I believe to be a very good result.

We'll now move on to talk about the significant balance sheet movements since the end of March, 2014. Property, plant and equipment increased by over $900,000. And this was made up of additions of $1.5 million as offset by a depreciation charge of $600,000. During the same period, our intangible assets increased by just under $4 million.

This was mainly due to additions of $4.6 million partly offset by amortization charges of approximately $600,000. Moving on to inventories, you will see that this has increased by about $2.2 million this quarter.

As well as normal fluctuations, we continue to increase the level of Premier inventories in conjunction with increased production levels and the need to support an ever increasing installed base. We've also built up some inventories to cater for the peak Lyme disease season, which typically occurs in quarter three in the U.S.

Meanwhile, trade and other receivables have increased by $3 million to $27.2 million. Of this increase, $2 million relates to trade receivables, which increased due to higher sales this quarter, together with a moderate deterioration in cash collection.

The remaining $1 million increase relates mainly to down payments for plant and equipment, which we will take delivery of later this year. This equipment is mainly associated with the scale-up required for Meritas.

Finally, in relation to working capital, our trade and other payables increased this quarter by about $400,000 to $16.1 million, partially reversing the decrease which we saw in quarter one. Finally, I will discuss our cash flows for the quarter.

Operating cash flows before working capital movements increased by $1 million from $4.9 million to $5.9 million. However, this was partly offset by the working capital movements I discussed earlier. Total net capital expenditure in the quarter decreased to $4.1 million versus $5 million in quarter two 2013.

The net result of this is that the net cash outflows for the quarter were approximately $1.9 million resulting in a cash balance at the end of the quarter of $15.2 million. I'll now hand over to Jim, who will take you through the latest developments with regards to cardiac..

firstly, a normal population study to determine the upper reference level or 99 percentile of a normal population. For this study we have agreed with the FDA to recruit a minimum of 700 healthy volunteers. This study is currently running at three U.S. sites.

The clinical study is progressing well and as of last Friday we had collected whole blood and plasma samples from 413 healthy voluntaries. So as you can see, we are now more than half-way through this data collection. I would expect to complete this data collection on the normals in the next couple of months or thereabouts.

Secondly, and the longest and by far the most challenging is the chest pain study in the intended use population. A number of months back we agreed with the FDA to carry out this trial at six sites across the United States with a view to recruiting a minimum of 1,500 patients presenting in the ER with symptoms suggestive of ACS.

To-date, we have recruited 275 chest pain patients. Unfortunately, for a number of reasons it has taken longer than expected to gain momentum on our chest pain recruitment.

However, we are now running at a recruitment rate of approximately 40 patients per week and in order to further accelerate recruitment we're also bringing online an extra four clinical trial sites bringing the total number of sites to 10.

This should result in the number of chest pain patients increasing to somewhere between 80 to 100 patients per week, which all going well should see data collection complete in about four months from now or thereabouts.

In addition to this, we have a call scheduled with the FDA for August 11th to discuss a proposal to decrease the number of chest pain patients required from 1,500 to 1,000. This call with the FDA is in response to a meeting that a group of senior U.S. cardiologists held with the FDA early in the summer.

The cardiologist suggested to the FDA that the level of clinical data required by the FDA is particularly onerous particularly on point-of-care products. In summary, they suggested that a cohort of just 1,000 chest pain patients should be sufficient to prove the performance of a Troponin POC product.

On the suggestion of the cardiologists we wrote to the FDA asking for guidance on the reduced patient numbers, thus resulting in the call scheduled for August 11 next. Should the FDA agree with such a revised number of 1,000 patients this would obviously have a very positive effect on our data collection timelines.

So, in summary, after a slow start, data collection for our Troponin study is gaining momentum. In addition the extra trial sites would undoubtedly accelerate data collection and should the FDA be persuaded to reduce the patient numbers from 1,500 to 1,000 the effect will be quite positive indeed.

I'd now like to move on to discuss results published this week at AACC meeting in Chicago on an independent evaluation carried out by Dr. Fred Apple when he evaluated the diagnostic accuracy of our cardiac Troponin product. This study was carried out on 319 patients presenting with symptoms suggestive of ACS at Hennepin County emergency department.

Both plasma and whole blood samples were taken and tested on presentation that is what we call time zero and then again at six hours. The results of this study were adjudicated using the Third Universal Definition of MI. And please note that this protocol exactly mirrors the format of our U.S. FDA trials.

So the results obtained here should be indicative of what we can expect from our main U.S. FDA trials.

I'm delighted to report that the results obtained demonstrate exceptional performance with a whole blood sensitivity and specificity at time zero equal to 75% and 93.6% respectively, rising to a sensitivity of 87.5% and specificity of 94.7% at six hours. Now just to put those numbers into context. In the study again published by Dr.

Apple in the Journal of Clinical Biochemistry in April, 2013, he tested the diagnostic performance of a number of Troponin products including the Abbott i-STAT product on a similar patient population.

In that study, the Abbott i-STAT product demonstrated sensitivity time zero of just 32% rising to 68% at six hours compared to Trinity sensitivity of 75% at time zero and 87.5% at six hours.

Even the fourth generation Abbott Architect central lab system from data published in its own instruction for use demonstrates time zero sensitivity of 60% and 78.5% at 6 to 12 hours compared to our 75% and 87.5%.

When one considers that the i-STAT product is probably the market leader right now in point-of-care testing it is quite easy to understand the extent of the opportunity that lies ahead for the Meritas product once the product is FDA approved. The results of this study lead Dr.

Apple to conclude that the Meritas Troponin product will be diagnostically useful in both ruling in and indeed ruling out MI in the emergency room setting. Furthermore, this data represents slightly more than 20% of the total data set required for our main U.S. trials, i.e., 319 patients out of 1,500 patients.

It, therefore, provides considerable comfort that our product stands an excellent chance of meeting the now very stringent FDA performance thresholds and obtaining FDA approval in due course. Moving on to Meritas BNP, product development on our BNP product is complete.

CE marking trials have been underway for the past six to eight weeks and are nearing completion and I'm happy to say the product looks really good. There are three main segments to the BNP clinical protocol and these segments apply both European approval and indeed U.S. FDA trial approval.

Firstly, there is an analytical performance trial which measures such things as limit of detection, limit of quantification precision, interfering substances, et cetera. This section of the trial is complete and exhibits the necessary performance characteristics.

The second section of the trial involves measuring BNP levels of a reference group of healthy individuals. This reference group must be gender matched and must be categorized by age, i.e., a grouping from less than 45-year-olds, 45 to 54-year-olds, 55 to 64-year-olds, 65 to 74-year-olds and greater than 75-year-olds.

The performance of the product within each of these age groupings must be measured and published. To-date, we have measured the BNP levels in 1,352 European and U.S. healthy subjects collectively, of which 776 were female and 576 were male. This portion of the trial is now complete and the results are very satisfactory.

The final section of the BNP trial is to measure BNP levels in actual heart failure patients. Again, these patients must be gender matched and also must be categorized in accordance with the New York Heart Association heart failure scale, which categorizes patients into a scale of one to four depending on the severity of the heart failure condition.

To-date, we have tested just over 600 heart failure patients. To complete our trial, we would like to augment this sample set with a further 20 to 30 Grade IV heart failure patients. These samples are currently being collected and the data set should be completed within two to three weeks leading to CE marking of the product before the end of August.

We envisage that the clinical data set described above will be suitable for submission for both CE approval as well as FDA approval. Here, like Troponin, a reasonably quantity of bank samples should be acceptable. A pre-IDE meeting has been sought with the FDA to determine what extra data they may require to be generated for a full FDA submission.

And depending on the FDA's response submission for BMP application to the FDA is expected before year-end. Finally, development of our third product in our cardiac marker panel, D-dimer, is now well underway. D-dimer, as you know, is a marker for DVT and PE. We have made the necessary selection of antibodies and controls and chip design.

The product is now demonstrating exceptional performance in the clinically relevant range. I should be in a better position to provide a definitive time line for availability of the product within the next six to eight weeks, but suffice to say right now the product's looking very well. And with that, I'll hand over to Ronan..

Thanks, Jim. I'm going to review revenues for the quarter and the substantive developments before opening the call to question-and-answer session. Our revenues for the quarter were $26 million, up from $21.3 million in the corresponding quarter, which is an increase of 22%.

Our HIV sales for the quarter were at $4.6 million, a marginal increase on prior year sales. U.S. HIV sales were up to 3% and public health spend by individual states continues to be very depressed. And we see this reflected in the results of our competitors also.

However, our hospital HIV sales continue to improve due largely to the fact that we are now selling the HIV 1 2 product following FDA approval for our HIV-2 Claim at the end of last year, but also Q2 for taking HIV-2 license at that time. Our African HIV revenues are down 2%, but the fundamentals of our business in Africa continue to strengthen.

We are the confirmed test of choice in virtually all African countries and continue to receive a premium price for our premium product throughout the continent. Our chemical laboratory revenues increased from $16.7 million to $21.4 million in the quarter, which is an increase of 28%.

However, when the impact of the both the Immco and blood banking acquisitions are excluded, our underlying organic growth for this year quarter compared with the corresponding quarter of last year is 5.2%. Our diabetes business grew 10%. Our infectious disease business grew 4%, while Fitzgerald decreased by 6%.

The diabetes business performed strongly with 106 Premier instruments placed during this quarter, giving us 207 placements in the first half of the year. This means that we're in line to achieve our target of 460 placements for the year as a whole.

All markets performed strongly, USA, Europe, and China, but Brazil merits special mention as 27 instruments were sold during the quarter by our direct sales force, following the sale of 21 instruments in quarter one, which was their first quarter in operation following approval in January of this year.

As you know, we've been developing a companion product for our Premier boronate affinity instrument over the past three years and at a cost of $2 million. The boronate affinity products solely measures Hemoglobin A1c, which is the test of choice for monitoring diabetes patients.

Our new Premier Resolution instrument which we've just completed is designed to detect and identify hemoglobin variant using ion exchange technology. Normal hemoglobin types include hemoglobin A, hemoglobin A2, and hemoglobin F. The most common abnormal hemoglobin variants include hemoglobin S, C, T, and E.

Another more recognizable variant you may have heard of is sickle cell anemia as an example. Currently, we have a $7 million business in the hemoglobin variant identification market through our old high throughput Ultra instrument platform. This presence is primarily in the high throughout megalabs in the United States, for example, Quest and LabCorp.

In due course, we will transition this business onto our new Premier Resolution instrument which we just completed, and we'll also target the low throughput market which the Premier Resolution instrument will enable us to do and that's something that we haven't hitherto been in a position to do.

The market for hemoglobin variants can be divided into the neonatal and adult screening markets. Legislation is changing on a country-by-country basis and is directing that all newborns screened for hemoglobin variants.

Example of such markets includes the likes of the USA and Brazil and the trend is spreading thereby increasing the target market for Trinity Biotech. In addition, the market is significantly less competitive than the A1c testing market as there is only one competitor in the market.

Both the Premier boronate affinity and the Premier Resolution instrument that we just completed are in essence the same hardware technology and we will obviously achieve economies of scale now that both products are in the market.

Where the instruments differ is in the consumables which are run on them and the software which runs the instruments and interprets the results.

During the quarter, we formally launched the new Premier Resolution instrument, the first demos took place in April, were successful and the first instrument has been shipped to a customer in the UK in conjunction with our partner Menarini.

We are currently starting to roll out the instrument to other markets in the Menarini network, and in due course will firmly launch the instrument in the USA, in Brazil and beyond. And then, in terms of numbers, in terms of worldwide market size, we estimate that the neonatal variant is worth $60 million and adult variant market is $30 million.

Our current variant sales on our Ultra instruments are $7 million, but with the new instrument, we now have both the reagent and the instrument to take on our single competitor in a series way and increase our market share significantly.

Moving on then to the performance of our infectious disease business during the quarter, it grew by only 4% compared with the prior quarter. In fact, the business performed well, but very weak Lyme Western Blot sales as a result of the particularly severe winter, which killed most lyme ticks was a big drag on revenues.

As the summer is progressing lyme incidence is increasing towards normal levels, and we anticipate strong quarter three revenues. The balance of our infectious disease business both in the United States and in China performed strongly.

Moving on to Immco, which we acquired at the end of July of last year, we are particularly pleased with its performance. The U.S. has virtually no reagent sales, but has monstrous sales potential.

Given that over the past three years the management have reconfigured and standardized the entire product range and have gained FDA approvals on the full Immunofluorescence and ELISA range of products. Now our sales force are placing the product range onto our existing installed instrument base with significant success.

Moving on to the Immuno reference laboratory, which is based in Buffalo, and as previously mentioned, we have recently launched a new Sjögren's test, which is a dry eye test. This is being marketed through a company called Nicox, a public company, which is a specialty ophthalmic company, who have invested heavily in marketing the test.

Following a trial launch in four states in the United States in January, which went really well with revenues way ahead of expectation, Nicox launched nationally last month. And we are now confident that this partnership will yield significant meaningful revenues in the immediate future.

Meanwhile in Europe, the partnership with Menarini, which, remember, is separate from the partnership with them on Premier and diabetes is going very well with strong revenue growth. In summary, we are confident of exceeding 20% growth on the Immco business this year.

So, if I could now at this point hand over to the operator for a question-and-answer session..

Thank you. We will now begin the question-and-answer session. (Operator Instructions). And our first question will come from Per Ostlund of Craig-Hallum Capital. Please go ahead..

Thanks. Good afternoon everybody and thanks for taking the questions. You touched on actually kind of a lot of the stuff, but just maybe to get a little bit of extra color, starting with the cardiac business. Can you assess Dr.

Apple's data, the study from his data versus the European trials? And then kind of second to that, this maybe intuitive, but humor me, if you will. I think some of the big spread in your numbers versus competitive products is really at that zero hour number for sensitivity.

Can you kind of talk through the practical applicability to the ER doctor and the importance of that number specifically?.

Sure. First of all, the data produced in our CE trial versus the Apple trial. The Apple trial looks at least at this stage substantially better than the data we produced for -- in the European trial. We had a time zero sensitivity, I believe.

I don't have the packages in front of me actually -- actually I do as it turns out -- with the sensitivity in time zero in the CE trial of 60%, okay, i.e., we detected 60% of patients coming in on presentation. That has jumped quite dramatically to 75% in the Apple trial.

But then its active -- with the -- at the six-hour time point, in the European trial we had jumped to just under 89% and in the Apple trial, again, we are at 88% -- 87.5, or call it 88%, so it levels about that point, okay? But the good news is, I suppose, a high sensitivity assays has the ability to rule out patients, okay? And in a test as a sensitivity at time zero at 75% it's very important -- either maybe definitive diagnosis made in that patient, because don't forget the new methodology for determining whether you have a MI or not is a rise or a fall in troponin over period of time.

So they have to wait for that extra period of time to need true troponin results over a period of time. But to have a sensitivity of 75% to time zero is actually quite good and as a great help to the cardiology in ruling out patients. However, as I say, don't make a definitive diagnosis until they get the second time point..

Okay, that makes perfect sense. You talked about this a little bit as well. But looking at the prospect of bringing on additional trial sites in the U.S., it sounds like probably the key driver there was really a function of trying to speed the recruitment.

But is there any benefit to expanding the patient cohort geographically at all? Is there anything there? And how much of additional sites, frankly, are sites coming to you saying that they want to be part of the trial?.

Well, first of all, the FDA would have been -- the FDA is asking to have just geographically diverse sites, okay. And they were very happy with the -- we initially talked about five, and then we took it up to six. So they were very happy with that, okay.

It makes it better for them -- it makes it better for us quite frankly to have more sites, even though it makes the trial more difficult because as you add more sites, you add more complexity, you add more opportunity for things to go wrong, okay.

So it's a much more -- with the more sites you bring on, it's a much more stringent test of your product's performance. And quite frankly, the real reason we bring -- everything to equal, I'd much prefer to have stayed at five or six sites. It's much more controllable and much more manageable. But unfortunately, it's the nature of our trial.

We're asking an ER nurse to take a sample from the patient at time zero, at six hours, at nine hours and 12 to 24 hours, okay. That's a very, very difficult specimen to take because you have to be -- you essentially have to manage that patient over a 24-hour period.

And a lot of the hospitals, even though they have second shift and third shift cover, they actually don't have the right sort of people, okay. So you tend to think, if you were to look at the actual numbers of people coming into the ER and the number of chest pains, you'll be led to believe that the trial could be done very, very quickly.

But actually when you go through the actual logistics of it, their recruitment times are quite limited. So what has actually happened is we started off this trial a number of months ago and disappointedly getting sort of four and five patients being recruited per week.

In ERs whereas many, many, many and multiples of that turning up, it's taken us that length of time to get the logistics sorted out..

I mean, I think, just in layman terms, just so that people understand, the practical difficulty we have here is that when an individual is lying on a hospital's accident and emergency bench trolley worrying basically about dying, thinking they just had a heart attack, irrespective of how charming the nurse is and indeed how persuasive she is, that individual may be feel disinclined to actually sign on to a trial even if for the greater good of humanity.

And that is the difficulty. What you have basically is that the vast majority way into the 90% -- the high 90% of people tell us to bugger off when we approach them. That is the practical difficulty we have..

That makes sense. Very artfully stated. I like that. Okay, that's helpful. Maybe just turning to the diabetes side here really quick and you sized the market for us on the resolution side which was actually my first question on that.

But will the instrument the resolution instruments and I don't know how many you might have kind of factored in to your thought process here for the second half of the year, but all those go toward the 460 target and then you also did talk about they do have a different consumable profile.

Can you get anymore specific on that?.

In terms of the 460 instruments we will -- obviously we've just launched the instrument at this stage and there will be a sort of the additional to 460 that we're doing at present and doing with the basic Premier everyone to call at that Premier 9210..

Okay. It's Rory here. I will give you the point to make is that this gets rolled out on a market-by-market basis. So it doesn't happen simultaneously across Europe and Menarini. There's obviously training is involved. We started in the U.K. That training centers for the U.K.

The training got on this week for the jurisdictions and when we get rolled out on piece meal basis. So I wouldn't expect humongous numbers in the second half of this year. Obviously, it’s a more so 2015 product, okay..

Okay.

And then on the consumable side?.

Well, it's Ronan here. Bear in mind, that we have $7 million business already here so if you have a quest in that portfolio really, really high throughput instruments. So we -- our Ultras would be doing huge volumes in there.

So I mean we will replace the Ultra with the Premier but it wouldn't give rise to any additional business into that for security in the future. So there will be a lot of that kind of things replacement of existing instruments.

We've just won a couple of contracts in that both Rio and Sao Paulo as well for neonatal worth I think about $750,000; those instruments will go in there. But I think typically the instruments was actually probably be higher volumes and much higher value of reagent throughput than the sort of the typical Premier that would be in a glucose lab.

I think it can have a very material effect in the business, but in terms of instrument placements they wouldn't be that staggering..

Our next question will come from Larry Solow of CJS Securities. Please go ahead..

Hi, good morning and good afternoon. Just a couple of follow-ups on sort of Premier where you left off.

On the targeted 460 placements in 2014, what percent or approximately what percent of the market are you getting in terms of worldwide placements for A1c machines in 2014?.

Larry, our estimate is that there are 2,000 instruments placed annually in the world..

Got it..

That will be 23% of the all the worldwide placements. And I suppose we aspire to hitting 600 -- hope -- maybe not quite in 2015, but I think we've got a shot at getting very close to 600 instruments in '15.

And of course that will give us a 30% worldwide market placement share and would obviously after a six-year period give us a 30% of the world market. So that's what we're working towards..

So that's sort of you target sort of plateauing around plus or minus 30% share going forward or within a couple of years.

And what's the current utilization or run rate, average price or total reagent sales on these machines, and how long is it taking sort of to ramp up?.

We -- I mean, obviously, we're adding apples and oranges here because, for example, in China, we're going through distributors and in Europe we're going through distributors. In the USA, we're going direct. And in Brazil, we're going direct. But on average, we're thinking that our instruments would do about $11,000 per annum of reagent..

Got you.

And, generally, that takes what a couple -- two, three months or six or longer on average? I realize maybe China is a lot longer, but from time of sale to time it gets to that point?.

Yes. Again, we're adding apples and oranges. In the USA, it would be a month because we're doing it directly. And in China, we think it's about seven months because our distributor in many -- apart from Shanghai, Guangzhou and Beijing, he is using sub-distributors. So there is another cog in the wheel.

So probably seven months there because he also takes a while for the product to ship there. And in Brazil, three months probably. So, I think, on average, four to five months..

Got you. And then on the --.

Menarinis then take the into central lab in Florence and then distribute them to the individual countries. And that adds a couple of months on to it as well..

Got you. In terms of Fiomi or Meritas, do you -- in terms of the group of cardiologists you referenced one to the FDA, is that sort of the same for the -- perhaps, the guidelines are too stringent and maybe reduced to 1,000 patients. Can we assume this is a same group that was instrumental in setting up the guidelines and, perhaps, Dr.

Apple was a part of that or maybe excluding him because he is doing this trial?.

You can absolutely assume that. Yes. I don't think there is any secret. The group of physician that went were Dr. Apple, Dr. Hu and Dr. Hollander..

Right..

And they are seeing it firsthand and they're coming out from a very practical standpoint. They just need a good point-of-care test in the ER..

Right..

And they want it fast, okay. They just think that the hurdle is a bit too high and is probably unnecessary. Whether the FDA agreed with that, I have no idea, but I'm going to find out on the 11 of August as to whether they have bought into that particular theory..

Right..

Even if they don't, the difference is probably six weeks..

Right. Exactly..

1 to 10 sites are going exactly..

To best of knowledge and I realize there's not 100% transparency with our competitors, but obviously you gays have no -- the Abbotts and Roches of the world have noted their tests are insufficient, and you just sat them down but are they -- is there -- are they working on a better test, what we sort of know publicly in terms of that?.

Now, quite frankly, we publicly wait on the one thing really. But one thing I do know is, the sites that we're running our clinical trials in the United States are the sites that other cardiac products would be running if they were going to do it. And we don't see any dossiers or folders or other product from the competitors in there right now, okay.

So as well as, intuitively we believe there's not that much happening, but we don't know that for a fact..

Right. And obviously there could be research behind the scenes that wouldn't know. But if they were actually running trials already or had run trials that would have to be public essentially.

Is that fair to say?.

Well, I don't know. No, it actually doesn't have to public. I don't know even -- it's nothing mandatory that is public for this type of product. Like, for instance, we're not -- Trinity Biotech is not on any FDA clinical trial website saying we're doing clinical trials.

And we checked into it, it is not necessary to do that, so it was not necessary for us, I guess, not necessary Alere, okay. But we would have to believe that our competitors must be working on some sort of a Plan B, they just can't be waiting for us to take the market away from them..

Right, right. Okay. Just a couple of housekeeping questions. You mentioned the drop in lyme disease year-over-year.

Do you happen to have an approximate for what it was this year versus last in landed test cells?.

Well, it's down about -- just this quarter very last quarter it's down $300,000. So, just in the below $2 million barrier..

Got it..

I'm hoping we'll have a $3 million quarter to next quarter, it seems to be picking up..

And the contributions from Immco, it looks like between Immco and Lab 21 we're a little under $4 million.

Can you tell me what is Immco still sort of pace to reach close to the $50 million for the full year?.

Yes. We think we'll get there. It's obviously -- and loaded towards the end of the year but we think we will wait. A number I said I think are comfortable with 20% with it. Yes..

The next question will come from Ross Taylor of Somerset Capital. Please go ahead..

Thank you, gentlemen. It's been a very interesting informative call. A couple of quick questions. One, I heard you comment that US Premier sales were actually good and I think that's a bit of change of pace from the past where I think we've been a little disappointed with the pace of sales in the US.

Am I correct in that?.

Yes, as we stated before, the US opportunity isn't as big loss as else where because -- the other countries, because US has uniquely been using immunoassays. What I mean by that is that you can the Abbott Architect and the other four big iron instruments by the biggest companies, those are Johnson and Johnson, Roche.

They have an A1C test and it's utilized in the USA. So that makes the scale of the size of the market less than people would expect. And so I think that we are going end up, it's going to 70, maybe 80, possibly maximum 90 instruments per year market for us into the future, all right. And we are on course to do 70 this year.

It's -- and I will make this point that US instrument is probably worth equivalent of three elsewhere because you are selling direct and because the pricing is much more attractive..

Okay..

Yes, we had a good quarter this quarter. Some times we -- for example this quarter, I think we want to protect our contract with the buying group to put seven instruments in. So you can have timing differences as well..

Okay.

On Fiomi, when we look at the situation, you talked about the point-of-care market being rough $650 million, does that include lab tests that are actually talking to people in the space that there a lot of hospitals where the clients just don't trust the tests enough that they actually use lab tests as part of their triaging process and although it takes a fair amount of time.

Are you picking that up in the number when you get the $650 million mark?.

Ronan here. No, I mean, our estimates, our best estimate is that the Troponin market, point-of-care market is 350 and BNP is 300. That's where the 650 is. Now just going back to Troponin, so with 350 of point-of-care Troponin and we believe that there is another $900 million of laboratory Troponin, making it a total of $1.25 billion.

Now just to pick up on that, I mean there are really no circumstances in which one should waiting a hour and half for a Troponin result and, therefore, if the quantity of the point-of-care test was good enough, there ought to be a migration basically from the laboratory into the point-of-care of that $900 million.

And in doing so the $900 million will become a number probably three times greater because the unit price for test is so much higher. So there's two opportunity for us here, one is to compete with the existing participants being primarily Alere and Abbott in the United States.

And then the second opportunity is to basically to encourage people to convert from the laboratory test to a point-of-care test, so to ease into that -- to ease into $900 million..

Yeah, which obviously makes the market -- the potential for the product substantially greater than a lot of people on the street have been talking about..

Yes, I think it will. I mean -- but at the same time, to convert users from laboratory model to a point-of-care model is -- it takes quite a bit of effort. I mean persuasion and there's a missionary element to it. I mean the low-hanging fruit is clearly the existing point-of-care business..

And once you get this -- when the FDA has approved and we're looking forward, obviously, this is a platform not just two tests or three tests at this point..

Two, Ross. Absolutely..

Can you talk a bit about that and how the platform rolls out?.

Well, you're absolutely right. The platform is a quantitative point-of-care platform, okay. So quite frankly almost any tests you want to put on that can run as immunoassay can be put on this particular test, okay. We'd be looking at product grouping, okay. So, if you think that this platform will be in ER, okay.

So, they obviously like to put some assays sort that fizz in the ER. So sort of assays we're looking at are obviously we have our three parity add products which will quite frankly keep us busy for the next little while, okay.

But then adding onto that, well, either or not there is a very nice market for pregnancy testing in ER and you might wonder why pregnancy testing.

But there seem some rules that if you have a lady come in with trauma into the ER before they can do any sort of imagining or any sort of x-rays, they need to determine that lady is pregnant and of course, the standard urine pregnancy will do some work in that environment. So a pregnancy test would be a very valuable test to put on the platform.

Then you have tests for the likes of kidney damage markers and liver damage markers that would again be suitable to the ER; that would be nice. And then if you were to go into the sort of intensive care wards, there could be another panel of assays that could be problem there, like for instance, test for sepsis or various other assays.

So, yes, the platform is just added to platform and we have plans once we have our head above water from the cardiac development to start putting assays on there as quickly as we possibly can..

So, when I look at this as a layman, it seems to me that with Troponin -- if when the FDA approves Troponin and all the science it should be approved, that it actually creates for you guys a chance to be a significant player in the testing market -- point-of-care testing market in the ER as well as other parts of the hospital, which is a ground-breaking or changing situation for this company, is it not?.

Yeah, absolutely. I mean, I think, what is evolving now is a situation where we become a significant player in critical care. The big players there have been probably Radiometer and Warfarin, and also Abbott with the i-STAT, and that's basically where we're going with and we're expanding panel of products..

And I can't let you go without asking you about syphilis.

I know at this point, I guess that we still are waiting for get go with the FDA, but can you give us a bit of an update there?.

Did you say for syphilis area, all right. Yes. So, just to remind people, we have -- we are the only company with a rapid syphilis test approved by the FDA at the moment.

But the reality is that that's a very little value, but has a clear waiver, because the only environment in which are rapid syphilis test is used largely is in the public health lab, outside the hospital. The hospitals just tend to use the traditional method, the laboratory method.

So the public health opportunities for syphilis, we estimate to be very significant. I'll remind you that public health HIV market in the United States is $40 million to $50 million and there is no large carriers and why syphilis wouldn't be a very significant amount of that number.

So the only thing that is separating us from actually entering that market is the fact -- in a meaningful way, is the fact we don't have a clear waiver, which is basically an approval for a non- phlebotomous and nurses to be able to actually run the test.

And the FDA are really, really slow to give these clear waiver, and we have worked progressively over the past three years trying to get that clear waiver, so far without success.

But we have -- we've kind of worked diligently at it, and we are at the stage now where we've submitted what I would regard as January, the final, final, final data to the FDA. It's obviously inconceivable, in my opinion, in our opinion here, they could ask any further questions. And I think we've got a good shot at getting an approval from them.

And I know the CDC would like the product to be approved because it's clearly in the common interest that people with syphilis ought to know that they have it, I also mentioned for such obvious reason. And it's an excellent test, and so I think we've got a great shot. But I characterize it as a 50/50 shot.

And in terms of what the product could do if we were to get the approval, I think we could be in double digit millions within 18 months..

Double digit.

So you would see this is being basically a AIDS plus type product market size?.

Well, yes, I think its -- I mean, I think it would be very substantial market and I'd also just point out that our sales reps -- we have specialty sales reps selling into public health labs, because they are already selling the HIV products. This is a obvious logical companion product for us. I think everybody can understand that.

The reality is that the incidence of syphilis is so much higher than HIV it would actually serve a very, very useful purpose. And so, anyways, we will the wait the FDA decision. I think it should be forthcoming one way or the other over the next, say, four months..

Okay. And I have say, actually this is the first healthcare company I have dealt with which is located outside the U.S., which is not the master tax subversion question, but I will leave that to someone else. Thanks..

All right. Our next question will come from. Please go ahead..

On multiple calls you've indicated that the Troponin tests, the market for that is really the U.S., that there isn't a big market in Europe for that, because they are not doing point-of-care there.

But how about for BNP? Will that have a market in Europe as well?.

It will. Jim, the difficulty we face there is that BNP market in Europe is mostly a doctor's office market, which is a different route to market that is more difficult to achieve. So I think the real way we will setup BNP tests in Europe is as a companion to Troponin.

And so what we are doing is, we are working very hard and trying to get the opinion leaders to run evaluations in each of the individual European countries. And I think successful evaluation there should result in European sales in those individual countries and then BNP will be the companion to us.

I mean, it's quite a difficult thing for us with our current menu to, for example, face Alere in the doctor's office around Europe. That's quite -- that is a difficult thing to achieve..

All right. So the key is to get that first FDA approval and its kind of off to the races on that one..

Yes. I mean, I'd put it in other way. I mean, our focus in Europe is on the ER, not on the doctor's office. And for ER our calling card is really Troponin and then BNP is very important companion product. But our calling card is most definitely troponin..

Right, right. But if you get it adopted in the U.S.

that might give you some ammunition to help convert some of the Europe ERs to the point of care?.

Yes. Well, to put it in another way, we have a wonderful Troponin test, better than everybody else, but our BNP is more or less same as everybody else's. That's the real key point..

Okay, all right.

And then just a detail on the revenue break out, it seems like there's about $3.5 million from the two acquisitions you did in the last year, is that right?.

Little bit higher than that but of that order, yes, that's right..

All right.

And then was that more Immco than Lab21 or can you break that down even further?.

Absolutely, obviously Immco by as far is the biggest share of that. So you are talking about sort of 75% to 80% but being Immco. Immco was over $3 million..

Okay.

And do you expect the Lab21 business to accelerate now that you have the production facilities consolidated or we see profitability to improve that already soon?.

Yes. I mean we have been running double factories for the past couple of months you can imagine what batches being sent here and that all the cost of close down but that should be -- that should be completed at the end of July -- at the end of August, we're just really there.

That's really -- they're not coming back -- they just got an holiday, nobody coming back on Friday. So it's just closed..

And the final question will come from Chris Lewis of ROTH Capital Partners. Please go ahead..

First, on Troponin, so let's assume FDA submission by the end of this year, can you walk us through the process thereafter and I guess the associated timing expectations post-submission through a potential FDA approval?.

Well, Chris, at that stage, once the product submitted our job is done normally, okay. So normally what would happen if this is a regular 510k you would expect that it could be theoretically it would be expected to be turned over in 90 days, okay. I don't believe in 90 days what will happen with this Troponin test, okay.

It's a longer review because, again, this is not a normal 510k as you know very well various actual predicate and if you're equivalent of predicate well, then, you get a tick in the box and they say you're approved. Our predicate here in this case is what three cardiologists actually say what's the true result.

So I'd suggest like -- I'd think what will happen is we'll submit the FDA. They'll take their 90-day window and we'll come back with some questions for clarifications et cetera, et cetera, et cetera. I'd be surprised if they don't. You get probably -- you get about a 30 -- normally it varies.

I mean, you got maybe 30 days to answer that set of questions. If you can't, hopefully they're not going to ask you to generate any great amounts of data that takes a lot of time to do that. Hopefully, just clarification and maybe statistics et cetera.

You resubmit again within that 30 days and at the end of another 90 days to cogitate over those answers and I'd have thought its probably so early in the -- I'd be amazed if it was shorten for -- and it shouldn't be longer than six..

Okay.

If all goes according to plan, I guess by the first half, end of the first half of next year is kind of the expectation for approval?.

That's a good guess. I'd have said yes..

Okay. And then just turning to the clinical lab business, I think you mentioned ex-acquisitions, underlying organic growth was around that 5% range.

How should we think about that business underlying organic segment of the clinical lab business going forward? And I guess just what are your kind of high level takeaways of how that business segment is tracking relative to your expectation so far this year?.

Well, I mean, we got 4% on infectious disease which is very disappointing and I explained though that the drag there was a very big component of that business and is lyme Western Blot and basically they were few ticks biting in quarter two.

I think so, I think what you're going to probably see is, bear in mind that Immco will become part of -- becomes part of the infectious disease business. And so, I don't know for how much long we kind of separate it and talk about it separately. So that will actually serve to enhance the growth of the infectious disease business.

So in an essence, what you have is you have the Premier business, the glucose business, the diabetes business growing start of the, you know, it should beat particularly now with the second instrument out, it should be doing double-digit growth.

I think the infectious disease business which is being doing kind of 6%, 7% can get lifted to beyond 10% by Immco and also aided as well by the blood banking. So I think at that point in time we aspire to basically have the entire business at double-digit growth and that's kind of excluding whole cardiac opportunity.

With a bit of drag obviously with Fitzgerald which is kind of more left just whole around just around $11 million a year of revenues for a number of years now, we find it very difficult to grow it. I would so in its defense that's extremely profitable business. Its EBITDA number is so impressive.

So it contributes very well to profit, but it just had -- it just retards if you look at our organic growth rate.

Does that answer your question Chris?.

Yes, that's great. And then turning to the point-of-care segment that's hovered around the 4.5 4.6 level through the first half of this year. Maybe talk about the impact first from what you're seeing with the HIV-2 claim in the U.S.

and the benefits you've seen from that so far in the field, and bigger picture what type of growth trajectory should we expect for that business going forward?.

I mean, there is two elements to that business. One is hospitals is kind of a finger prick business where a nurse get a shot by needle, they will automatically run a HIV test. So every U.S .hospital carries those tests. And we were gravely disadvantaged by the lack of HIV-2 claim, HIV-2 license. And we were beginning to suffer very badly.

Now the taking of the license and the granting of patent by the FDA has changed that around. Now we are winning new hospitals all of the time, because in realty, we were actually losing because of the lack of lack of license. So that's now a positive trajectory and we will do very well. What is a drag on our U.S.

HIV business is the fact that the -- is that the individual states are spending less money on their public health programs. And I think if you looked at our main competitor in this area and their results that I think they were nearly down 20%. And so that basically has been a real problem.

And so there are two competing things are happening, lesser public health spend and an increase in hospital share resulting in sort of almost the same kind of the level flat business. But we're hoping -- we believe that the public have spend will improve.

We do believe that while that will happen at which point I think we're going to see reasonable growth in that market. Bear in mind, this is only a $6 million segment of our business and it's not that significant..

Understood. And then just one more for me on the cash balance that’s come down a little bit here at the past few quarters, there's some moving parts it sound like this quarter.

But I just -- I guess going forward given the increased spend on clinical activities and the commercialization resources for cardiac Troponin and BNP eventually, how should we think about the company's current cash balance versus utilization and needs going forward? Thanks..

Well, just to mention one thing is that, of course, we have a proximal input beginning to have an impact now. And we also have had a drag from Lab21, which ceases as of this weekend and that becomes profitable. In addition to that, there obviously is a very big spend with $3.5 million spend on the cardiac trial, the Troponin trial.

But that will -- a lot of that has been spent very quickly. So I think that's at which point we should revert it to positive cash flows overall. So I don't see that as being a problem. I think we have plenty of adequate cash..

All right. And, wow, I think, this is a record for us in terms of length of call. I'll just say thank you to everybody and thanks for your support and your interest. And we'll talk to you next quarter. And then enjoy the rest of summer. Bye-bye..

Ladies and gentlemen, this concludes our conference. We thank you for attending today's presentation. You may now disconnect your lines..