Good day, ladies and gentlemen, and welcome to the Quidel first quarter 2008 conference call. My name is Cynthia, and I will be your operator for today's call. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to your host, Mr. John Radak, Chief Financial Officer. Please proceed.

Thank you, and good afternoon to everyone. Thank you for participating in today's call. Joining me today is our President and Chief Executive Officer, Caren Mason. Earlier this afternoon Quidel released financial results for its three months ended March 31, 2008. If you've not received this news release, or if you would like to be added to the Company's distribution list, please call, Rachel Lipsit at Porter Novelli Life Sciences, at 619-849-5378. Please note that this conference call will include forward-looking statements within the meaning of federal securities laws. It is possible that actual results and performance could differ materially from these stated expectations. For a discussion of risk factors, please review Quidel's Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q as filed with the SEC. Furthermore, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, today, April 23, 2008. Quidel undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. Turning to the financial results for the first quarter of 2008. We are very pleased with our business performance this quarter, as our margin expansion continued on double-digit revenue growth. Total revenues for the first quarter were $40.9 million, a 20% increase over the same quarter a year ago. We saw very strong growth in the U.S. market, where revenues increased 26% over Q1 of 2007. As expected, our international revenues declined 13%, largely as a result of continued pricing and reimbursement issues in the Japan flu market. Excluding Japan flu sales, our international business posted a 48% revenue growth over Q1 of 2007. For the first quarter of 2008, worldwide infectious disease revenues increased 34% to $32.2 million, compared to $24 million in the…

Thank you, John. We're pleased to be reporting the results of another strong quarter in progress in several aspects of our business. I'd like to begin, where we left off at our last quarterly conference call and that is we're discussing the domestic 2007/2008 flu season. As, there was about a 7-week delay in the start of the U.S. flu season, historically, we have seen flu incidence climb in late November, reach a peak around February and then wind down in April. This flu season was different, as we saw very little flu in November and December and we did not see a widespread flu outbreak nationwide until February. If you picture a bell-shaped curve representing the 2007/2008 flu season, the curve will have steeper faces, but the volume under the curve or the incidence of flu, will be consistent with past seasons. This means that we realized a portion of the traditionally fourth quarter revenue from sales of our QuickVue influenza test in the first quarter of this year. At Quidel, we were prepared for the severity of the flu season. As I mentioned on our last conference call, our flu incidence surveillance and the knowledge that the Southern Hemisphere reported emerging strains of influenza not included in the North American vaccine, indicated that the season could be particularly tough. We built a record number of flu tests to be certain that we could meet demand, and it paid off. While the competition was running short on flu tests due to high concentrated demand, we never went on backorder. Our distributors received calls from physicians whose current providers were not able to stock inventory quickly enough, and by capitalizing on our readiness and our market-leading position, we were able to fill those orders every single time. We fully met…

Thank you. (Operator Instructions) Your first question comes from the line of Jeff Frelick from Lazard. Please proceed.

Yes. Caren, can you give us a sense of maybe domestic strep growth in the quarter?

Okay. Domestically we have been talking about infectious disease as the category. But as we referred to in our opening comments, we had some softness in some of our products strep and pregnancy being a few of them. As a result of the fact, that in Q4 we had a very strong interest and a very strong push on our part, partially due as a result of the fact that flu was not materializing. So were definitely pushing ahead on our other product families. In Q1, having so much of the flu activity and RSV activity condensed into really four to six weeks of the quarter, really overwhelmed our organization and rightfully so to get all of the revenue we possibly could in influenza and RSV.

Okay. And then, I missed the comment or the part, I guess, on distributor inventory going into the next flu season. Could you repeat that?

Yes. Right now, it appears that we'll have normalized levels of inventory at our distributors with regard to upper respiratory products going into the coming season.

So kind of we normally expect I guess stocking in the third quarter, that should happen, or?

Yeah. We expect that we will repeat what we have come to expect in terms of the pattern of buying, of course, all of this is depending upon when flu hits. But in terms of preparation for flu in Q3 we begin very aggressively, starting to get physicians ready with having flu and RSV tests on the shelves. And then, we usually have in fourth quarter demand on distributors because, the season begins and then we begin to replenish in Q4.

Okay. So normal initial pattern should be?

Yes. We definitely feel will occur this year.

Okay. And then last question, you had mentioned in the last call that late last year you had some IBM contracts secured. Did those kick in, in the first quarter?

Yes they did.

Okay. Alright, thank you very much.

Thanks, Jeff.

Your next question comes from the line of Un Kwon-Casado from Pacific Growth Equities. Please proceed.

Hi, good afternoon.

Hi, Un.

Hi, Un.

Hi, there. I was just wondering with respect to the bioMerieux collaboration whereby they're going to be distributing the products in certain geographic areas. So I know the contract specifically specifies outside of the U.S., Japan and Scandinavia. Would you be able to give us a rough sense as to what percentage of your overall revenues that represents? And how you see this collaboration accelerate that revenue potential?

Yeah. At this point, when we look at international outside Japan and Scandinavia, we're looking somewhere in the 10% to 14% range total revenue going forward. And we hope, obviously, to expand on that with bioMerieux on a much more aggressive point. I think you may have heard though, John say that we had a very nice first quarter in revenue other than Japan outside the United States, with an increase of 48%. So I would say somewhere in the 10% to 14% range today, and we hope to grow that quite aggressively.

Okay, great. Thanks.

You're welcome.

And then, just secondly, on your iFOB test, so if you're in the midst of collecting samples at the moment. And you still need to go through the clinical work and then submit an FDA approval. Do you feel market launch for that test this year is slightly aggressive?

Well we always have to hesitate, when we talk about the aspects related to formal approvals from FDA. So we would like to believe we could get it done in the third or fourth quarter, but we're going to have to always hedge based on our experience most recently with CLIA. But it is our goal to move it as fast as we possibly can. We're very enthusiastic about our testing today. The industrial design and voice of customer work on the new platform and look of the test is quite satisfying. We're really positive about it. So the only hedging, as you bring up which is appropriate, is to be conservative about approval, as we really can't predict. But our goal would be by end of year.

Okay. And so, the approval process would be a standard 510(k) whereby you would just analytically validate it versus this -- your current iFOB test?

Well there's also a new platform associated with it. So there may be a little bit more complexity. But yes, it is a 510(k).

Okay, great. And then just lastly, would you have any updated market share data for the flu market?

We're going to be able to provide that in our second quarter call, first quarter data has not yet been released by our source.

Okay, fair enough.

Okay.

Thank you very much.

Thank you.

Your next question comes from the line of Zarak Khurshid from Caris & Company. Please proceed. Zarak Khurshid - Caris & Company: Yes, Zarak Khurshid at Caris & Company. Hi, Caren and John.

Hi, Zarak.

Hi, Zarak. Zarak Khurshid - Caris & Company: Looks like a good quarter. Thanks for taking my questions. A little bit confused about the weaker areas of the business. Should we expect that other product revenue, the $3.1 million, should we think of that as being stable for the remainder of the year, or should we expect it to trend back up?

I think you should expect the lumpiness that we've experienced in Q4 and Q1 to work itself out as we move into the year, all of course dependent upon what may occur with the flu season timing, which we learned last year. So our expectation is that we're going to have growth in all categories, it will lead into double-digit revenue growth for the year. And we should be getting rid of some of this lumpiness as we get into Q2 and Q3. Zarak Khurshid - Caris & Company: Okay, great. Then, it sounded like there were some nice contract wins in the quarter.

Yes. Zarak Khurshid - Caris & Company: Could you talk about, whether those were competitive wins, and maybe some of the kind of mechanics of how that worked through the Broadlane GPO?

Well, we have definitely accelerated through the hiring of some really strong talent and accelerated our efforts. And so we've been involved at the forefront of some of these larger GPOs who have really good, committed purchasing programs, so that we go for trying to win, if we can, a single or an exclusive deal, most of the time though, these are dual awards. But in the dual awards there are times where you can indicate a preference even in the bidding environment. So with Broadlane we have a very strong position to add a lot of new business associated with our wins in that organization. So in most categories though, there is a one competitor to these designations. Zarak Khurshid - Caris & Company: Okay. And then, did that one competitor say, have all of that business previously or was there somebody else that was pushed out as a result of your talent in the area?

Yeah, well we had some of the business already, and then there were other competitors who were pushed out. Zarak Khurshid - Caris & Company: Okay, interesting. And then just generally on kind of the competitive landscape, BD talked a little bit this morning about moving some product through China, some flu product specifically. Some of the other players have talked about pushing product through, Chinese manufacturing initiatives. Just could you kind of just give us some color on how you're seeing that sort of potentially change the marketplace? And are they trying to arm folks with lower-priced tests? And are you seeing them get any traction? And then what is allowing you to keep your business strong?

Well as you know, we talk about Quidel Value Build and our commitment to the quality of the product, and consistently proving our product as being superior in side-by-side analysis both analytically and clinically, that is what we enjoy today which gives us a premium in market share and in price. And what we are doing is focusing very aggressively to match our offerings to the markets that we are serving. And we believe today that, as evidenced by the 80% domestic growth in influenza in this year-over-year, that was a lot of new business associated with either new users, some competitive wins, acute-care wins, retail clinic wins, etc. So we are really building our volume of tests. We are working in manufacturing to lower costs. Our manufacturing overhead, we also work hard to increase and improve productivity and bring cost down. And finally, with our partners internationally, we will make assessments and continue to do so. If certain markets are going to require certain types of products that may be a little less in quality. In other words, if we have a kit that's got every tool involved and it's matched and FDA approved around the right swab, etc., we'll continue to do that. In some markets they're just marketing dip sticks. So I think it really, from our vantage point, as we move into international, we're definitely paying attention to what's going on out there, and our corporate development team is definitely meeting with individuals all over the globe for opportunities that might include other manufacturing areas or countries. Zarak Khurshid - Caris & Company: Sounds, good. And then lastly, with respect to the Roche and Aventis relationships, can you give us just an update on those, if we saw any impact in the quarter? And if not when should we expect something, and to what degree? Thank you.

Yes. Thanks, Zarak. We definitely had a very good experience with Roche. We do not have the final report yet from our test-and-treat partnership. But we feel very good about the interim results that we have received, and on the next call we'll give you more color around that and talk about what we'll be doing in the next season together. And then with regard to Aventis, yes absolutely, we were the single source for them for influenza. So I'm certain that we had some very good response and pleased about it.

Your next question comes from the line of Keay Nakae from Collins Stewart. Please proceed.

Yes. Good afternoon, folks.

Hi, Keay.

Hi, Keay.

Caren, how are you guys viewing the next flu season in Japan, the prospects there assuming they have a normal flu season?

Well, this year they had a pretty light flu season. If you look at the graph, they barely got up to a third of the high point of their normal slope of incidence. We have no way of knowing in the coming seasons what that's going to look like. But Japan, in terms of the continuing pressure on price, reimbursement and competition in the country, is getting to be a smaller and smaller piece of our business. So we continue and will continue to market in that environment. We would like to do better. So at this point I really can't talk specifically about what we expect in Japan, just that it's becoming less and less of a percentage of our total effort in influenza.

Okay. I might have missed this, but did you talk about timing for launching quantitative product for flu off of the MChip?

No, we didn't talk about MChip. We are finalizing our work right now. We had talked earlier about the fact that during the flu season our MChip was in use in a number of hot spots around the world. All that information is coming in, and in our next conference call we'll give a full update on our MChip molecular test for surveillance.

Is that something we can still expect before the end of the year as a product?

Yes.

Okay, very good. And then finally, with respect to your stock buyback, it looks by my calculations that you purchased stock at a higher price than you have before. Can you give us a sense of your bullishness is it predicated on any specific things? I think generally there's an understanding that you have a great flu franchise. It's been borne out by your sales this year, even though the timing was a little different. But in aggregate you had very good U.S. sales. But beyond that, is there anything else that you have, your distribution partnerships or other things that is a source of your bullishness on the purchase price of the stock?

Well, I mean, Keay, that we feel very good about a number of the assets that we have in this business when you go down the list of the QuickVue brand, our relationships and partnerships with our distributors, and as well as our ability to manufacture high-quality and reliable tests. And all of those assets are highly leveragable. So we feel very good about our ability to continue to leverage the business.

Yes, so we're obviously bullish on the Company, and our expectations around valuation is that we will continue to grow this company and that multiples will be in line with a higher share price.

Okay, very good. Thanks.

Thanks.

(Operator Instructions) Your next question comes from the line of Scott Gleason of Stephens. Please proceed.

Hey, Caren and John. Thanks for taking my question.

Hi, Scott.

Hi, Scott.

First off, I just want to ask you quickly, Quest Diagnostics was really pushing their immunochemical test on their call. And I guess they are working on a variation where they can actually do it in the office setting. On you guys are second generation products, do you guys have any plans to maybe make it a product that can be done in the office setting with the physician?

Now when you're saying, done with the office setting, are you talking about stool sampling or blood sampling?

Stool sampling, yeah.

Okay. And they might be I would expect, be referring to the fact that they would be able to run the test in the physician's office. I'm not sure what they're talking about with regard to the stool sample. But my best guess is that they still will have the patient most likely leave the office and return a sample. That tends to be the standard. Our tests are run, once the sample is received, in the office. Yes.

Okay. And then from a pricing standpoint, I know you guys raised prices at the beginning of this year. Caren, can you just talk and give some general commentary on what's your capacity as you look at the rest of the year and 2009 to continue to raise pricing?

Well, the whole focus for us is to provide the customer with phenomenal value. And as long as we can continue to differentiate and prove our products are clinically performing exceptionally well, are very easy to run, very fast, as long as we continue to push appropriately, with proof, the value of the clinical data as well as the payers willingness to understand the outcomes differential as a result of a high-quality test that works well the first time. We're going to be able to move pricing. So our goal is yes, to continue to increase pricing. There is opportunity, though, through the fact that we've been very aggressive and successfully so in moving price that there will be opportunities now and then where it will make sense for us to buy some more unit share. And we'll take advantage of those opportunities for committed volume from major buyers.

Okay. And then just one last question, if you look at the CDC reports for April, it looks like flu is still pretty seasonally strong, especially for this time of year. Can you guys just make some commentary real quick on kind of what you would expect the impact of that to be when we start looking at the second quarter?

I think we expect that the distributors will continue to lessen their inventory to normalized levels. You may see a little bit still from us. But I think the majority of the movement will be from the distributor finishing the season to the physicians.

Okay, great. Thanks a lot, Caren.

Thanks, Scott.

Your next question is Steven Crowley from Craig-Hallum. Please proceed.

Thanks for taking my questions this afternoon, and good afternoon.

Good afternoon, Steve. How are you?

All right. Now a couple of questions for you, on the international side of your equation, what were total international sales as a percentage of your mix, your dollar amount, whatever you're comfortable with?

They were total international sales were a little bit north of $4 million.

And I'm not able to really process that number the way I'd like on the slide. But just kind of eyeballing things coming into the call, it looked like your Japanese flu sales were significantly below the levels you had a year ago, maybe a third of where they were a year ago. Am I way out in left field on that or is that a reasonable area for me to think about it?

No, you're reasonable in the fact that the Japan flu inventory was still being moved through the channels, and then you combine that with a really light season in Japan there wasn't a lot of movement in Q1 in Japan. So outside Japan, we had some nice growth, but Japan itself there was very little going on. There was in Strep, but not in flu.

Okay, Japan in strep. Now, is your inventory position coming out of this season in Japan, because you shipped very little, in decent shape, or you still have your distributor lugging around more than you'd both like there?

Well, I think we still have our meeting. We meet with our Japanese distributor every year in May. So we need to take a kind of clean sheet of paper look at our entire partnership. So we'll be assessing the dates on the inventory that remains, looking at refreshing that inventory and looking at setting targets that are met appropriately for new business.

Okay. But it seems like you're still very much engaged with this particular distributor, and that's your plan for next year?

Well our goal, of course, is to continue on in Japan. Our goal is to have the best possible partner in Japan. And so we are looking at a number of options.

Okay. Well good enough. Now, in terms of the other international business, which obviously was robust, that's in the context of many of these distributors understanding they're going to be replaced by bioMerieux, correct?

Some of that went on, and then we also had some really outstanding tender business in influenza that got us some really nice growth. We expect that bioMerieux will be able to move into the appropriate partnerships in all the major countries that are using influenza testing and be very well positioned for next year.

And the process of working down current inventories, or inventories with current distributors, were you able to do a fair amount of that methodically in the first quarter?

Well there was a tremendous amount of buying, and then there was still some inventory of course from Q4, where there wasn't a lot of pull. But amazingly and excitingly, our distributors had some tremendous results in Q1. They are still moving inventory, as we said and our expectation is that as a percentage of our normal inventory in the channel going into a season we're going to be in good shape.

Okay, I'm trying to think about bioMerieux ramping up with initial stocking orders even over the short term here. What's the right way for us to think about that when you look at the trail-down of some international distributors and the stocking of bioMerieux? Is it going to look relatively normal to us, or is there a distortion we should factor into the equation here?

No, our goal is that we have a startup, as you can imagine. So we're going to be a little cautious in our pronouncements about exactly how aggressive we're going to be together, at least in this first six months. But the really good news is their folks are all trained, the co-branding is done, and we're already shipping in under the co-brand to them our current portfolio of products. So they're very motivated. ECCMID, the European Congress, last week was a very good situation for us. And so my expectation is that we'll have a very good start, but you're always a little cautious about prediction when you really are integrating this new product in through a new channel.

And will the first test of this relationship and how it's going out of the chute be the Southern Hemisphere flu season?

If you want to talk about upper respiratory, sure, I would agree with you there, that in Australia and New Zealand, we started weeks ago in Australia and New Zealand with their teams, so that they could capitalize on a lot of the work that we've done there in the past. We have some very good key opinion partnerships, because we do a lot of clinical studies there. So, yes, they've already been keyed in, and we'll be watching very carefully and hoping for a really aggressive growth there.

And then in terms of the development side of the bioMerieux relationship, you mentioned your objective to target some of the higher volume opportunities. Can you give us any more color on the areas that are piquing your interest and when you might be able to share greater detail with us?

Sure. We're finalizing our co-development agreement, and after that's done, then, with their permission, we'll start to talk in specifics. But the areas we're looking at are upper respiratory infectious disease, sexually transmitted infectious disease and oncology. Those are some of the areas right now that we're very much emphasizing.

And then final question, in terms of your second generation fecal occult blood test, immuno fecal occult blood test, the new platform that you're utilizing here, I know you probably don't want to, for competitive reasons, give us too many specifics, but can you speak to some of the benefits, or tell us whatever you can at this point about what you're doing there, since it seems to be a significant piece of this puzzle?

Well, I'm really tempted, because I'm really excited about it, but there's trade marking of even the name of the test. It's very different. I guess, what I would say is that it's going to be incredibly easy to use and incredibly easy to run, and it's going to be more pleasant. Let's just stop there. But I can tell you that it's also going to have what we feel is some strong clinical validation related to colonoscopy, positive and negative patients in a number of demographics, with some really strong key opinion leaders' confidence behind it.

And it sounds like from that enthusiastic pre-commercial that it'll probably be a single sample test, also, in its recommended format?

Yes.

Okay great. One final tag end, because I think you guys have made some nice progress here, and you led us down that path. But I'm wondering what else you can tell us about the retail clinic segment of your customer base. I see your products well populated there, that's a trend that seems to be blossoming. How big a customer segment is that and what kind of growth are you experiencing there?

Well, we had tremendous growth, several multiples of growth there, as a result of the fact that retail clinics themselves are starting to get stronger, they're getting more patient acceptance. And it's probably going to be in the next two, three, four years that we really start to see what they can become. But the early indications from our work with our partner clinics is that they're doing a heck of a lot more in flu than they ever expected. There is the possibility that surveillance will be part of their services. And so there is really, I think, from that vantage point, if they become part of the surveillance network for the CDC that's going to be a great validation for retail clinics, as well. So overall we're overjoyed with our progress there. We're really excited about the future there. We also had some really interesting experience with college campuses this year, because kids were running to student health centers. It was a really concise four to six weeks of amazing demands in so many ways. I'm just so proud of this team at Quidel for having made really great strides in all these other categories like college campuses and retail. So we're feeling really good about it, and the growth is really strong. And at some point it may make sense to break that out, but not yet.

Okay, great. Thanks so much for taking my list of questions.

Thank you, Steve.

(Operator Instructions) Your final question comes from the line of Zarak Khurshid from Caris & Company. Please proceed. Zarak Khurshid - Caris & Company: My questions have been answered. Thank you.

There are no more questions in queue. I would now like to turn the call over to Ms. Caren Mason for closing remarks.

Thank you very much. John and I thank you all again for your time this afternoon and for your continued support. We look forward to updating you on our progress again when we report second quarter results. Take care, everyone.

Thank you. Bye, bye.

Thank you for your participation in today's conference. This concludes your presentation and you may now disconnect. Good day.