Welcome to the Quidel Corporation First Quarter 2011 Earnings Conference Call. At this time, all participants are in listen-only mode. Later instructions will be given for the question-and-answer session. (Operator instructions) I'd now like to turn the call over to Mr. John Radak. Please go ahead.

This is John Radak, Chief Financial Officer at Quidel. Thank you for participating in today's call. Joining me today is our President and Chief Executive Officer, Doug Bryant. Today Quidel released financial results for its three months ended March 31st, 2011. If you have not received this news release, or if you would like to be added to the company's distribution list, please call Ruben Argueta at Quidel Corporation at 858-646-8023. Please note that this conference call will include forward looking statements within the meaning of federal securities laws. It's possible that actual results and performance could differ materially from these stated expectations. For a discussion of risk factors, please see Quidel's annual report on Form 10-K, registration statements 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 April 28, 2011. Quidel undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call except as required by law. For today's call, I will report on the financial results for the quarter. Doug will talk about the impact of the influenza season and our progress with Thyretain in the quarter and our three projects in development. We will then open the call to your questions. Total global revenues for the first quarter were $59.6 million compared to $28.4 million in the first quarter of 2010, an increase of 110%. This increase in revenues in the first quarter reflects the benefit of an influenza and respiratory disease season, while no such season occurred in 2010. The following comments on revenues by product category will be compared to the prior year as if DHI was acquired on January 1, 2010.…

Thank you, John. The first quarter of 2011 was significant because it was in fact a respiratory season. Throughout the quarter, our commercial organization focused on maximizing revenues of our on-market products, most notably flu, Thyretain and our other respiratory disease products. The quarter was also important because we continued to make progress on the development of our three key projects; our florescent immunoassay analyzer; our cellular based analyzer, Bobcat and our molecular program. I will speak to these development projects shortly. With regard to influenza, we benefited from a return of the cold and flu season in the first quarter. We characterize flu season as occurring at the lighter end of the normal range in terms of severity with ILI peaking at 4.9% and then quickly falling toward the end of the quarter. As a result, we generated nearly $60 million in total revenues and are exiting the quarter with low inventory, both internally and with our distribution partners. We expect very little flu over the next two quarters with some flu sales in December depending on the timing of the next flu season. With regard to Thyretain, we continue to do the things that are necessary to create awareness of TSI and Grave's disease. In addition to personal selling, we have established the speaker’s bureau and have conducted a number of symposia for physicians. Six papers have now been published on Thyretain and another coupled are due to be published shortly. It's difficult to establish precise cause and effect, but in March we did see a stair step increase in the number of tests run in the month, which was distributed evenly across all our reference lab customers. Next I’d like to review our progress with new product development, beginning with the florescent immunoassay analyzer, our automated next-generation…

Thank you. (Operator Instructions) And your first question comes from the line of Steven Crowley of Craig Hallum Capital Group. Steven Crowley – Craig Hallum Capital Group: Good afternoon, gentlemen, and congratulations on the strong overall performance in Q1.

Thanks Steve.

Thanks Steve. Steven Crowley – Craig Hallum Capital Group: Couple of questions on -- actually one question first on the flu business. I am wondering if you could update or at least give us some color on your sense for the number of sites that were performing flu tests in Q1 maybe versus historical norms.

Sure. In terms of the number of customers, I can only really speak to our own data, Steve. The number of physician sites ordering QuickVue Influenza in Q1 was about 8,000 for again physician sites. And that's about 100% more than in 2010 during the same period, so it's doubling number of sites. The number of actual users is likely to be higher of course as the 2010 season was actually non-existent. And we know that physician's may have – still had inventory that took them through this recent season. So it's at least a doubling of the number of physicians. And I think we could have predicted some of that. In terms of hospital customers, the number is up as well from about 800 to about 1,600 hospitals. Steven Crowley – Craig Hallum Capital Group: And do you think the majority of that is because of greater acceptance of your test or market share gains?

I think it's greater acceptance. We saw a significant growth in 2009 due to the pandemic and it appears that many of those may have stock and we’re now probably at the same level that we saw prior to the pandemic, if not just barely more than that. Steven Crowley – Craig Hallum Capital Group: Okay. In terms of a couple of questions on the fluorescence immunoassay platform, and the improved performance, you talked about in the analyst day like an order of magnitude better sensitivity potentially out of that platform. I'm wondering in the qualitative domain that you typically operate with lateral flow, whether that improvement in performance really just allows you to put some distance between you and your competitors in the historical domain of lateral flow or whether that kind of performance actually could move you into the domain of some other technologies that are used for qualitative tests. And I guess as a related question, I'll stop there, about what will it take for you – for the system to be able to do the quantitative testing that you have alluded to?

The improved performance I think as I said earlier will solidify our position in the marketplace and I would characterize that again as a solid base. And as I said, I think the ability to do quantitation dramatically increases our market opportunity. So the question I think that you are asking is, will that, will it be required in order to deliver quantitative essay capability. I can say simply that without changing anything on the instrument itself, we have demonstrated already feasibility with one of the higher volume quantitative assays ordered by physicians. And in the assay before optimization looks very good so far, and we've demonstrated that across a dynamic range of about 2.5 logs, we can generate results with less than 10% CVs. And we are showing an analytical sensitivity in about the 50 picogram range. So far looks very good, at least one in a row, one assay, the first assay that we looked at looks very good. So I think in short we've demonstrated internally at least that we can develop quantitative assays on this analyzer without changing any of the parameters. Steven Crowley – Craig Hallum Capital Group: Okay. And it doesn't sound like there is some huge technological hurdle that stare you in the face. I mean, there might be some optimization and some tweaks, but there is not a big hurdle with chemistry or instrument?

With one assays, so far, Steve. Steven Crowley – Craig Hallum Capital Group: Okay. All right. That's real help. While, I'll hop back in the queue. Thanks so much.

Your next question comes from the line of Brian Weinstein with William Blair & Company. Pete – William Blair & Company: Hi guys, this is actually Pete [ph] for Brian today.

Hey, Pedan. Pete – William Blair & Company: Hey. My questions first on the flu season, so it doesn't seem like you guys quite the hit $50 to $60 million that you've said a normal season typically is. I was wondering if you could characterize what you will consider then to be a normal season?

Well, as we try to suggest -- we view this to be on the lighter side of normal. If you did the math on what we said previously, you would have arrived at a conclusion that we should do on a normal season around $30 million -- north of $30 million in flu test sales. We don't normally break out flu separately, as you know but for this discussion, I will. In Q1, we had sales of $25 million, which was almost entirely U.S. So that's why we would characterize it on the lighter side. And I would say that anticipating your next question as if it was lighter, how do you know about market share? Yesterday our main competitor on the space reported flu sales of $19.5 million in flu test sales for the quarter, but the difference between the two company sales is not really that meaningful in terms of share, as I tried to explain before. I would guess that we probably had less inventory at year-end with our distribution partners than they did. And in fact, if you were to total their sales for Q4 2010 and this quarter and do the same for ours, the sales would be nearly the same. Pete – William Blair & Company: Okay.

And if we were to look at sales to physicians in hospitals, I would guess that neither of us gained nor lost significant share during the season. Pete – William Blair & Company: And then – sorry and then going to the debt pay down, what was the rationale behind this and does this make an acquisition most likely in the near term?

No. We felt that -- as I said at the Analyst Day, we would keep between $50 and $60 million of cash on the balance sheet and to the extent that we generate cash from operations, we would use that to pay down debt. Pete – William Blair & Company: Great. Thanks guys.

You're welcome Pete.

The next question comes from the line of Zarak Khurshid of Wedbush Securities. Zarak Khurshid – Wedbush Securities: Hi, Doug and John. Thanks for taking the question guys. Congrats on a nice quarter and…

Thanks Zarak. Zarak Khurshid – Wedbush Securities: Sure. So, given that this is the first meaningful kind of non-epidemic flu quarter since you changed to the less promotional selling strategy, I was just wondering if you could kind of just -- in general just reflect on that process and if there are any challenges with that approach now with the kind of normalized flu business?

Yeah. No, I think with the approach of the way that we deal with this distribution and stocking them, we don't think it had any impact at all on the business. Zarak Khurshid – Wedbush Securities: Okay. And then just on the pricing front, how should one be thinking about annual sort of raises to the pricing and pricing competition in general?

Well, as I described a couple of minutes ago, the shares seem quite stable, both companies tend to do same thing in the market in terms of promotional programs. And I would say -- you could say that we were, therefore, equally effective or perhaps equally ineffective, but price does not seem to be one of the drivers in the market at this time. Zarak Khurshid – Wedbush Securities: Okay. Thanks. I’ll hop back in the queue.

Your next question comes from the line of Jeff Frelick of Canaccord. Jeff Frelick – Canaccord: Thanks. Hey Doug, could you -- I know you touched on the inventory for flu exiting the quarter. How about for strep and pregnancy, how is distributor inventory looking?

They are looking very low. Jeff Frelick – Canaccord: Okay.

They continue to manage those at a very low level. Jeff Frelick – Canaccord: And then in the quarter with respect to contracts with hospitals or in way of delivering networks, any update there with picking up any new contracts in the quarter?

Nothing significant that would be -- and certainly nothing material. We obviously have a health systems group who make contact and try to persuade, but we don't have anything that would be significant enough to report. Jeff Frelick – Canaccord: Okay. And last question, you had mentioned that you did see a little bit of step-up in March with respect to Thyretain, did that kind of carry over into April?

We won't know yet based on the ways that we actually build our large reference lab customers, they report back to us at the end of the month on what was used and then we invoice them. Jeff Frelick – Canaccord: Okay. Great. Thanks guys.

We did see about 17% step-up over the previous month and again that’s one data point. Jeff Frelick – Canaccord: Okay. Thank you.

You’re welcome.

Your next question comes from the line of Steven Crowley of Craig-Hallum Capital Group. Steven Crowley – Craig-Hallum Capital Group: Yes, guys. Just a couple of follow-ups and I was going to ask about the extent of the step-up. Doug, did you just say that the business in March was up 17% sequentially, so from February?

That’s right. Steven Crowley – Craig-Hallum Capital Group: Okay. That is encouraging. There were some discussions that sounded pretty intriguing at the Analyst Day about some guideline changes in terms of treating hyperthyroidism and how that might create some therapeutic drug monitoring applications for Thyretain. When is that schedule to happen? That's still in front of us that didn't happen already, did it?

No, that's still in front of us. And we look forward to reading those recommendations when they come out. I do think I probably should comment on the game plan overall for Thyretain. As you know, Steve, we've got a number of assets to the program we have a physician office sales force that continues to make calls on internal medicine, OB/GYN and endocrinology practices. One other activity is organizing local physician education programs and inviting physicians to attend and those programs are a bit like the program that you saw at analyst -- during the analyst day. Through April 15th though we've conducted now 10 of these regional physician education symposia, which have been attended by about 200 physicians and we have 19 more programs scheduled through mid June. And in March, for example, we conducted programs in Virginia, California, Texas, Illinois and Massachusetts. At the moment, our speaker's bureau consisted nine internal medicine, OB/GYN and endocrinologist key opinion leaders. You saw two of those speaking at Analyst Day and each of which -- each of whom use our product and recommend earlier use of Thyretain. So and we also have, as I mentioned the health systems guys who continue to talk with health plan administrators using our economic benefit model. And then, recently we launched a webinar that's called Thyroid Graves' Disease; Diagnostic and Therapeutic Challenges, which also highlights the challenges of timely accurate diagnosis and subsequent clinical management of hyperthyroidism. So, all those things I would say individually is difficult to determine their impact, but in total we think that we’re seeing for the first time at least a minor step up in volume and we’ll continue to watch that and see how it goes. Steven Crowley – Craig-Hallum Capital Group: Great, now one another question. In terms of the BioHelix consumable molecular diagnostics platform, it's a very slick form factor that you were able to show us at the Analyst Day. In terms of your marketing plan, are there some papers and data that will be coming out hopefully in front of or coincident with FDA approval of that product that you feel is critical to the launch or the capabilities and form factor seem to be pretty slick on its own, but what's the marketing plan -- introduction plan around that product?

Any launch in our space requires publishing papers that demonstrate the clinical performance of the assay or the instrument and that was obviously big part of the game plan -- plan of the marketing plan, Steve. So, yes, we have data that we would -- in collaboration with investigators like to publish and that will be forthcoming. Steven Crowley – Craig-Hallum Capital Group: Okay. And on the FIA, fluorescent immunoassay platform, you mentioned that you completed the clinical trial on the first assay. So, I assume that will be off to regulatory in the relative near future?

There are number of experiments that we continue to run internally that are the normal course of putting a package together for FDA submissions and we are still working on those. Following that, we would send the data package off to the FDA for 510(k) clearance. And I hate to speak specifically about a timeframe there. I’d just say it's in the reasonable near future. Steven Crowley – Craig-Hallum Capital Group: Right. Okay. Thanks a lot for taking my questions.

You're welcome Steve.

(Operator Instructions) You have a follow-up from the line of Zarak Khurshid of Wedbush. Zarak Khurshid – Wedbush Securities: Hi. Thanks for taking the follow-up. So, with the recent 510(k) approval for Sapient's flu cartridge, your own molecular efforts there and the couple of others in the field, what's your sense for what's happening for molecular food testing today and what is the trend in that space?

Okay, good. Until I review the clinical performance data, which would be in the 510(k) for the (inaudible) assay, I can't really comment on how well I could expect a product like that to do. What I can say is that because of the number of different flu isolates and sequences that clinical sensitivity is an important criterion for molecular assay customers. Accordingly, one of the design specifications for Quidel's PCR based assay is that we achieved greater than 95% sensitive when compared with an FDA cleared PCR assay. Our market research shows that if we cannot achieve greater than 95% clinical sensitivity then we should not launch. And preliminarily though, Zarak I can tell you that we intend to launch. Secondly, I would just say, of course, relative to rapid diagnostic tests and culture, any molecular assay will be sensitive enough, but time to result and cost are still big hurdles. We view molecular, including our own assays, to be an important additional assay in the diagnostic continuum and so far this has been true. I've just shared a few minutes ago the fact that not only has the number of testing sites for rapid point of care diagnostic testing not declined, but it's actually increased. So, we've seen very little cannibalization from rapids to molecular or DSA for that matter. So, we view molecular testing to be important but I think it would be additional to what you see out there today. Zarak Khurshid – Wedbush Securities: In addition -- it seems like there is a lot more talk about multiplexed tasks and panels for upper respiratory disease and other areas. How do you think about multiplexed types of tests as potential competition or threat to your franchise long-term?

We like the concept of multiplexing and running the smaller plexes seems to be what customers are asking us to develop. I would say though that in some cases, we test out those concepts with customers who tell us that they don't necessarily want to have that particular combination, because it's not the way it's ordered. So, I think on our end, I think our strength will be the ability to react quickly to when customers say they want certain assays paired together, but also to launch them either individually or in pairs or in small multiplexed panels depending on what the customer wants. There are customers who do like the larger plexes and certainly there are couple of companies out there that do have those panels and they have use in the utility I do think for surveillance and those assays are very interesting to small set of customers, but overall general clinical practice, physicians tend not to order very large panels. So, we’ll see how it goes. We remain, I think flexible on our end to whichever way the customer base wants to go. Zarak Khurshid – Wedbush Securities: Okay. Thanks, Doug.

Your next question comes from the line of Ashim Anand from Natixis. Ashim Anand – Natixis: Thanks for taking my questions. And I’m sorry if you are already asked this. I was switching between calls. Have you guys broken out Thyretain sales this quarter?

I'm sorry. Could you repeat the question? Ashim Anand – Natixis: The Thyretain sales.

We did not break it out, but it was roughly about the same as last quarter of about $1.5 million. Ashim Anand – Natixis: Okay. Wonderful. And also if you can give us a feel of how was the inventory for influenza product at the end of second quarter?

It’s about… Ashim Anand – Natixis: Distributor inventory.

First of all, Ashim, means at the end of first quarter, I’m sure. At the end of first quarter… Ashim Anand – Natixis: First quarter, yeah. Sorry.

The inventory was actually quite well. Do you want to give a number, John?

It was in the neighborhood of 300,000 testing channels. Ashim Anand – Natixis: Thanks a lot, guys.

You’re welcome.

That is all the time we have today. Please proceed with your presentation for any closing remarks.

This concludes the call for today. John and I thank you again for your time this afternoon and for your continued support. Take care, everyone.