Good day, ladies and gentlemen, and welcome to the Q2 2015 Bioanalytical Systems, Inc., Earnings Conference Call. My name is [Tavan] and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to your host for today, Ms. Jacqueline Lemke, President and CEO. Please proceed.

Thank you, operator. Good morning and thank you all for joining us for BASi’s 2015 second quarter earnings conference call and webcast. The second quarter and first half fiscal year 2015 financial results indicate flat to slightly lower revenue growth versus the prior fiscal year. A 45% improvement in financing cost and 8.5% decrease in total liabilities and then $0.11 improvement in earnings per share on a GAAP basis. Overall, we are solid financially with the slightly lower revenues in the prior year. I had mentioned on the call last quarter that we did not anticipate any revenue growth in quarter two. However, all stakeholders should know that profitable growth is our goal and our unrelenting focus. I can assure you that we are making positive progress in our client out reach which is not yet evident in our reported results. We have intensified our efforts to actively recruit business by sharing our full line of capabilities with potential new clients at a record high rate by authoring and presenting scientific whitepapers with attendance and sponsorship at industry leading conventions and by pursuing repeat business with our extensive satisfied long-term client base. BASi is constantly improving our operational efficiencies which differentiate our company from other CROs based upon innovation, client-focus and an exemplary record of regulatory excellence. Our mission over the past 40-years and today is to support the large and mid-tier pharmaceutical companies, the emerging biotechnology companies and the academic research organization in their quest to bring safe effective orphan life saving drug to the markets. With each study and instrument sale we focused on our client needs and consistently deliver innovation, quality and regulatory excellence. As we carry our message of high quality data, analysis and instruments to the market and deliver our studies and products on time and in full we are creating value for both our clients and our stakeholders. This value will be reflected in long-term revenue growth over time, expanded margins and higher cash flow. I will now turn the call over to Jeff Potrzebowski, our Vice President of Finance and CFO, who will provide more details on our performance for the quarter followed by my closing comments.

Thanks, Jackie, and good morning, everyone. Thank you for joining us on today’s conference call. Before we begin the discussion again I would like to remind you that the statements we make during today’s conference call about our future expectations, our plans and prospects for the company, they constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Our actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in the company’s filings with the Securities and Exchange Commission. The statements made on this call are made only as of the date of this call and the company assumes no obligation to update these statements. In addition, we will discuss certain non-GAAP financial measures on this call which should be considered a supplement to and not a substitute for financial measures prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of these non-GAAP measures to the comparable GAAP measure is included in the press release and conference call presentation. Now to the results. Revenues for the second quarter amounted to $5,726,000 about a 3% decline compared to the second quarter one-year ago. Increases in our Bioanalytical and Preclinical businesses were more than offset by lower revenue reported by our product segment and other laboratory services. For the first half, sales revenue amounted to $11,571,000 compared to $12,132,000 about a 4.5% decline year-over-year. We saw revenue gains in our preclinical business for the first half, but these were more than offset by revenue declines in the product segment and decreases in Bioanalytical and other lab services for the six months. Net income for the second quarter of fiscal 2015 amounted to $150,000, but after accounting for the change…

Thanks, Jeff. We will continue to focus on positioning BASi as the preferred partner for outsource drug discovery in early stage development, products and services. Stressing outreach to clients, pursuing strategic alliances and promoting cross selling opportunities are just a few examples of the actions we are taking to build sustainable growth over the long-term. Although we report our business in two segments, we present our portfolio of business to our client as a unified product and service offering, which can support them throughout the drug research process. We are intensifying our focus on our commercial efforts adding more experienced scientists and business development people, sharpening our process and sales targeting and increasing the involvement of our scientific and business unit leaders in our client development. I believe that the many changes we have made and the initiatives we are implementing today enhance our ability to accelerate sales, earnings and free cash flow growth over the longer-term. I remain solidly convinced that the changes we are undertaking are required to position BASi for long-term success. As we look forward to the rest of the year we are determined to improve on our execution. We will continue to look for ways to make BASi a stronger company. In closing, I would like to thank our employees for their continued focus and commitment to our strategy. As we strive to be the partner of choice for our clients and as always our shareholders for their support. Operator, we are ready for the first question.

[Operator Instructions] Your first question comes from the line of Lenny Dunn representing Freedom Investors. Please proceed.

Good morning. Quarter came in as expected because we didn't have very high expectations because you repeatedly stated that the second half of the year is when we are going to start seeing the results, is that still your opinion?

Yes.

Okay, and clearly we have all this leverage the company is now physically very sound and could even survive at the current revenue rate and eventually pay off all the debt, but there is no growth. So we need that top line growth because it all falls to the bottom line.

Exactly.

Is your overhead covered? Now I understand that there is a relatively long lead time in getting contracts and even with the Culex sales, but we've had that now this is middle of May so we should start seeing the results. Are you currently in the quarry that we’re in starting to see results or the efforts were made earlier this year?

Yes. We are only seeing results and the results all the indicators are getting better based upon or it’s getting our capabilities out there and going out and taking to new clients as well as clients we’ve been serving through years that we might have the same volume with. So the trick is when that get reflects because I know everybody want to see it. There is a long lead time on commitments, getting commitments either in the capital cycle on the instrument side or for the study side. And then there is also this issue of study delays. So we want to be very keen in our ability to schedule so that we can be ready if there is a study delay to have another project right behind it to work on. So yes, we are seeing good signs, we have a lot of efforts across the company to recruit more business for getting more contact with new clients for getting good feedback from existing clients.

Okay, and so we are seeing some results already in the first six weeks of this quarter?

Yes.

Okay and again you know just the balance sheet has become very strong, you have clearly in a couple of years we will know anybody. Anything and the last payment in England is due in June, I understand it doesn’t affect reported earnings because it’s ready but written off, but it will certainly enhances cash flow. Will you even though the interest rates are pretty favorable as our cash flow improves both with the rental income will be receiving and the not having to pay sent checks to England will you then pay in advance a little on our commitment on the debt?

Actually we are looking at projected cash flows to help us fund continued investment in the business.

Okay.

So we’re going to look for strategic option can we collaborate, can we get some synergistic products can we have - create some synergistic services through partnering with companies strategic options.

And to your point Lenny you’d mentioned what the company – where the company had been, and where it has come out of. And during that period, there was some underinvestment within the company in order to manage that period. Now that we’re out of that period and as you indicated the balance sheet looking much better the thought would be to wisely pick and choose our opportunities to invest and as Jackie said it, we might be in a complementary way with the collaboration and so forth but that’s kind of what we’re looking at as opposed to going after the debt level right now.

Okay and I don’t have a problem with it, I am just asking and again I want to reiterate because we’ve long-term investors and continue to be of that the time for some top line results is now because we’ve waited all this time and our expectation is that the second half of the year will start to bear fruit. So I hope I'm being reasonable with their expectation.

I think you are, I think that we can talk or we want about what we’re doing but you need to see the progress and that’s where you are going see it. And we are working on that.

Okay, then we’re on the same page because talking to talk is one thing walking to walk is another.

That’s right.

Okay thank you very much and thank you for the hard work you put in.

Thanks Lenny.

Your next question comes from the line of Ethan Star, Private Investor. Please proceed.

Good morning.

Good morning.

I am wondering with the rent money from Cook Biotech be treated as revenue.

No we’ll not – we’re not in – that’s not considered a standard part of our business line in terms of being in the real estate business. So the proper presentation for us is an offset to cost.

Fixed cost.

Okay, that’s great. But either way it is a nice source of cash.

Yes it is.

No cash is cash is [indiscernible].

And one thing I don't think that Jeff had mentioned that was part of our considerations with the lease negotiations is the decreasing utility cost, because Cook will take that on so that’s several 100,000 year too.

Oh really several 100,000 for utilities.

Yes for that part of the building. Yes.

Yes, I mean if you keep - we haven’t gone to that level of detail in the disclosures but the amount of square footage that they are taking is significant piece and then we are putting our footprint in our manufacturing location in a much smaller footprint and we should see some savings as Jackie mentioned in the area of utilities and contribution on insurance and property taxes as well.

Cook Biotech is covering all that for their space?

Yes.

On an allocated basis, correct.

Okay, so when you say several hundred thousand dollars like $100,000, $200,000, $300,000 on utilities?

It’s an excess of $200,000 and also the real estate tax and…

Insurance.

Insurance, yes.

Wow, that’s a lot of money to save. Okay, I just echo the first callers request to see hopefully top line growth soon. I’m sure – go ahead.

I understand. We’re working on it.

Sure. I’m sure that nobody is more frustrated than people than you, but it would be nice.

Yes.

You mentioned some key indicators, what are the key indicators you look for when you see, might see hope I guess prior to seeing the top line growth?

Well, what we look at is the code activity. How many codes are we issuing, volume of codes for which businesses, what’s our code acceptance rate, what’s happening if our codes are declined, can we understand the competitive issues on the service side and also on the product side we track some of our codes, but we are also going to fix our website, it’s a little bit hard to order from our website. We are going to target a different and we already found we did this just recently with just a targeted advertisement that we can change the configuration of what we are trying to sell on the instrument side, because really the underlying goal for us is to get people to convert from manual sampling to automated sampling. We know we have the best system out there, we know it works great, our clients love it. But some people might be hesitant to convert and we’ve been trying to sell them. I say the catalog, but I think I hate myself. But we’ve been trying to selling the top of the line, huge configuration, great configuration for a bigger company, but lot of the smaller companies say I don’t want to take that bit of a leap. So we are changing and offering more configurations so they can buy a bench top or a single station or something that we get them to see what the technology can do for them. So there are quite few indicators that we look at to see where is our pipeline and how we are going to get there.

Okay, so how is quarter two been over the last three months say for the services side?

We have set a goal for the year which was aggressive versus last year and we are already outpacing that goal and really good.

Wonderful. Okay, great. I look forward to the third quarter. Thank you.

Thanks.

Your next question comes from the line of Raymond Young representing Dolphin Asset Management. Please proceed.

Hi, good morning. Question for Jackie. Can you offer some commentary in terms of your ability to win contracts business away from large CRO's such as Covance or Quintiles? Thank you.

We have been able to do that and our approach is what we do is a more customized client focused ability. So in some cases we continue to have a larger companies like [indiscernible]. We continue to have a larger companies because we have worked on the particular assay that they have. Since then they may have converted to a bigger company like Covance, but they have to use us for the things we have experienced. But how do we win the business away? It’s really a one study at a time showing the clients that we can give them the turnaround time, the scientific focus somebody is picking up the phone. What we do as we adjust to what the clients needs are and we feel that some of the bigger companies may have more of a simplified turn and burn approach like they will do the easy stuff, but they don’t do the hard stuff. So that’s kind of how we compete and we really do compete by being able to drop some working and committing to delivering on turnaround time.

Okay.

Is that help.

Yes.

Okay.

Have the competitive environment intensified during the last 6 months to 12 months with these large competitors?

Yes, I know I haven’t seen it. I think sometime they forget about us because we are smaller and what we need to do is get more to our clients I mean we are aware that the competitions there, but a lot of our clients with Biotech with rising the smaller invented companies I am right there are more scientist on the CRO side, on the new Biotech side then they are in the larger Pharma. We feel that our biggest issue and goal is to get the knowledge out there that were here. Once we get to them we can win their business. So I’m not as worried as the Covance, CMPI et cetera and more concerned with clients know about our segment. If you just say if I know about you know what it come to you and there the ones that we want to get to before they make that decision. It’s a very fragmented market on the customer side.

Right, okay. And lastly, can you comment I guess on the biosimilar business, have that revenue opportunity opened up a bit more and where do you see that going forward?

I think the opportunities there I think the market has a whole doesn’t have a way to consistently answer the questions about how the biosimilar regulatory chain will be handled. So if you look most of the bigger companies to our advertising and launching and talking about biosimilars, but I think it’s a huge market just everybody is proceeding with caution and trying to figure out how to get there. So I do think that we have the capability to do the biosimilar, but we have not grown that as quickly as we would like, but I think it’s because everybody is proceeding with caution.

Okay, thank you.

You’re welcome. End of Q&A

There are no further questions in queue.

Okay. Well thank you everyone. Thank you for joining us this morning and I look forward to speaking with you on our third quarter earnings conference call in August.