Ladies and gentlemen, thank you for standing by. Welcome to the Quidel Corporation Third Quarter 2011 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, instructions will be given for the question-and-answer session. (Operator instructions) I would now like to turn the call over to Mr. John Radak, Chief Financial Officer. Please go ahead.

Thank you. This is John Radak. 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 September 30, 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 Hooven Argetta 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 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, 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, October 25, 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 the financial results for the quarter and Doug will describe the status of our new products as well as our more recent commercial developments. We will then open the call for your questions. For the third quarter of 2011, total revenues were $33.1 million compared to $28.2 million in the third quarter of 2010, an increase of 17%. The infectious disease product lines comprised the majority of the revenue increase driven by the timing of orders for influenza sales and growth in Strep A and RSV. Inventories at distribution have not materially changed from the second quarter. This would suggest that Q3 revenues are reflective of end-user demand. International sales as a category grew by 41% in…

Thank you, John. The third quarter was an especially productive time for our company, particularly with respect to significant advances that we made with our product development efforts. I will update you on the status of those product and some of the milestones that we achieved and talk about where we are in terms of commercialization of those products. As a reminder we are executing on three major development programs, Sofia, the brand name of our next generation immunoassay platform. Bobcat our automated DFA analyzer and our molecular program. And again our molecular program consists of three product platforms. AmpliVIEW, the brand name for our non-instrumented handheld molecular assays for hospital acquired infections. Real time PCR assay kits for use on number of widely used thermocyclers that exist today in many molecular diagnostic labs throughout the world. And project Wildcat, the low cost fully integrated molecular platform that we are co-developing with Northwestern University and the Northwestern University Global Health Foundation. Let's start with Sofia, our next generation rapid point of care immunoassay instrument. This is the analyzer that combines a unique fluorescent chemistry with advanced lateral flow technology as well as other features to ensure a reliable, objective, rapid and highly accurate diagnostic result. In the third quarter we received the CE Mark for our Sofia Fluorescent Immunoassay Analyzer, as well as the Sofia Influenza A+B Fluorescent Immunoassay, the first in a series of new assays for infectious disease and other disorders. And just recently we shipped our first Sofia analyzers and flu kits to a small number of seeding sites in Europe. During the quarter we also submitted 510(k) packages to the U.S. FDA seeking regulatory clearance to market both the Sofia analyzer and the influenza assay here in the United States. In addition we continued with trials…

Thank you, Doug, for the kind words and for the privilege I have had to contribute to Quidel’s success. During my tenure I have made a lot of friends across the organization, I will look back fondly on the friendships I have created as well as our accomplishments as a team. While I would miss the people I leave Quidel confident that it is strong financially and well positioned for the future.

Thanks, John. Transitioning into the CFO role is Randy Steward who has more than 35 year of experience in accounting and finance. Randy served as Chief Financial Officer for Navilyst, a medical device company based in Massachusetts. Previously, Randy was Chief Operating Officer for SeQual Technologies here in San Diego. And prior to that he served as Executive Vice President and Chief Financial Officer at Spectrum Brands where he was a key member of the management team that took the company from $380 million to $2.5 billion in revenue. Randy, would you like to add anything else?

Yes, good afternoon, everyone. I just wanted to say that I am very excited to be a part of the Quidel organization. It is a great opportunity and I look forward to working with Doug and the rest of the management team to help Quidel maximize its potential and further its strategic objectives.

Thanks, Randy. That concludes our formal comments for today. Operator, we are now ready to open the call for questions.

(Operator Instructions) Our first question comes from Steven Crowley with Craig-Hallum. Go ahead.

You gave us a lot there because you have a lot going on. Maybe just to delve deeper in a couple of areas. In your rapid handheld molecular platform, it seems like you are making progress submission, gathering data and submitting here in the U.S. Your international strategy for that product looks like what at this point?

Our international strategy generally is to focus first on a couple of key markets to build infrastructure there. And for the most part see what needs to be done in order to go direct in those markets. If we end up with a distribution partner for those products we will figure it out along the way. And so far we have actually begun the process of hiring folks in Europe and hope to have the organization necessary to launch these products in Q1 2012.

And then in terms of the Open Box strategy. You have one distribution partner outside the U.S. announced. Their efforts with the products, it seems like those are underway now. Is your plan to kind of test drive through one partnership and then explore other opportunities or are you doing things in parallel fashion?

Well, generally Steve we would not normally comment on our distribution relationships and in this particular Life wanted to make that announcement and so they did. And then I would also say that generally I would prefer not to comment on the details of any of those distribution relationships and certainly not on the terms. What I can say is that the performance data on the assays that Life has chosen to represent for their ABI 7500 customers is very very good. These assays are very competitive and I would expect that Life will do quite well. And I would also add that clearly interest in our real time PCR assays goes well beyond their interest in our flu and metapneumol assays. And then finally I would add that obviously we are in discussions with other folks depending on the geographic location, other folks who would also have equal interest in representing our kits on their platforms.

Great. And then just a couple of more quick ones and I will hop back in the queue. In terms of the cost you incurred to write-off components for a product under development. Does that represent you going a different direction with the product or is that just normal, relatively normal stuff that happens along the path to getting something right?

No, this is not unusual or typical, it has to do with the mould that is obsolete. It manufactures the plastic part. So this is not normal or typical and we would not expect to see this going forward.

Okay. But it doesn’t sound like its indication that one of your projects has hit a instrumental road block?

No, this has nothing to do with anything that we currently have funded in development.

Great. And then just one question for John, and John maybe with the front end. Obviously we wish you well. Thanks for your help over the last several years and maybe we will ask you about this Alere royalty arrangement that you have constructed here. If I understand you correctly, you have given us some guidance for the back half of fiscal 2011 and since we know what you just booked in, in Q3 you have given us some guidance for Q4. But how should we think about how this drains off at least in 2012 so we are not out in left field.

So for the full year, for 2012, we will recognize roughly $8 million of expense over the course of the year.

Okay. And with your disclosures in this press release you have given us a pretty good mechanism to sort through that and look at the kind of true performance of the company and its margin structure.

Yeah.

Great. Well, thanks so much for doing that. We wish you well.

Our next question comes from the line of Ashim Anand with Natixis. Go ahead.

Thanks for taking my question guys, congrats on a good quarter. I was wondering if you can bread down the 2.686 charge you have to the cogs, the adjustment you have to the cogs. I know you gave it but so that we can kind of model it accordingly?

Yeah, so probably 2.5 of it roughly is related to the Alere transaction.

Okay. And rest is stock-based compensation?

That’s right, stock-based compensation.

Okay. And if you could provide us with out of U.S. revenues this quarter?

About $4.5 million.

And DHI, how much DHI did totally?

Little more than $9 million.

Doug, as you know you guys have become a bona fide molecular diagnostic company and actually have a product in Europe. If you can kind of generally comment on how is the environment there in terms of adoption of molecular products there and how that is comparing to U.S. considering the present macroeconomic circumstances?

Our analysis shows that the market there is as robust as it is in the U.S. And in fact I would say in some countries molecular tests are more common in cell based assays. So for some companies, you could compare as well, it appears as though the sales of their molecular products in Europe are as high as they are in the United States. So we see a market that is equally interesting.

Like would it be fair to say in fact at this point in time it might even be easier or better market, considering what's going on here?

I am not sure easier or better. It’s certainly an attractive market and in most cases there many of the institutions who manage the labs have molecular diagnostic capability and so the opportunity to convert some of the laboratory developed test and the kits certainly exists just as it does here. If you are referring to the regulatory differences, yeah, there is going to be a delay. Obviously it’s a little quicker to get CE Mark than it is to get FDA clearance. That’s for sure.

Okay. And finally you didn’t mention the BioHelix collaboration you have. It’s little bit on the backburner in terms of may be Northwestern collaboration is taken a step ahead or it’s just -- it doesn’t mean anything.

No, I think you might be misunderstanding Ashim. The product name now is AmpliVIEW. These are the assays that we have co-developed with BioHelix.

Okay.

So the relationship is still terrific. We work extremely well with those folks. And in fact interestingly enough they just announced that they had their own assay for HSV approved. This was an assay that pre-dated our relationship actually and (inaudible) and the folks at BioHelix I think should be congratulated. As I understand that they submitted the assay in July, so the turnaround with the FDA is encouraging and perhaps helpful to us at least in terms of knowing that that was the case there as we move forward with the assays that we have co-developed with them. So to review, there are two AmpliVIEW assays that are in the process of being readied for clinical trial. We are manufacturing clinical lots for both of those assays as we speak.

Our next question comes from the line of Zarak Khurshid with Wedbush. Go ahead.

So with respect to the early adapters of the Open Box molecular products or product, what are the features that the platform or the test that are driving adoption currently?

Well, I think that early adoption would be a pretty aggressive description. We have just recently shipped product to one partner in Europe. And we do know that they have been seeding a small number of sites. What I would say though that the fact that these assays take far fewer steps and that the enzyme and the primers have all been (inaudible), so that the shipping requirements are significantly less arduous. We are shipping the product at two to eight and we understand that in most cases these assays are shipped at either minus 20 or minus 80. And I would just say they are faster, better in terms of performance and I think we can be very competitive from a cost perspective. So faster, better, less expensive is pretty interesting I think to some customers.

And then I was wondering if you could talk about the drivers of the strengthening your food business during the quarter. Has anything changed with respect to the selling strategy? What are the promotional activities these days in Q3 versus Q4 and if you have any thoughts on the channel in front of the flu season that would be interesting as well. Thank you.

Sure. The promotional programs that we are running are very typical of what we have done in years past and in recent quarters and in fact I would say that for each of the major our distributors our programs are pretty much the same as our major competition. So the real driver to our Q3 flu revenue is more likely tied to the fact that our inventories as distribution are quite low. So any flu activity that was out there in the marketplace resulted in orders. And right now we see that IOI as a percentage of outpatient visits is pretty low at about 1%, but that’s pretty typical. If you look at last year at this time the proportion of outpatient visits for IOI was well below the 2.4% CDC says is indicative of a flu epidemic. And the same is true this year, in other words the flu season does not normally begin in October. It didn’t last year and it certainly didn’t this year. So there is nothing unusually going on in Q3 and there’s certainly nothing unusual so far as we move into Q4. And then I would finally say, we get a question from time to time about what happened Australia and is that indicative. And this may sound redundant because I have said it before but the R value for the correlation of flu in the southern hemisphere versus the northern hemisphere is very low. In other words there is little value in knowing what happened in Australia or anywhere else for that matter in the southern hemisphere. Correlation between Europe and the United States on the other hand is very high. So if you told me that we started to see flu in Germany or France, that would be obviously good to know and we would take that in a consideration with our manufacturing strategy. But I would say what we are planning for Q4 and then into Q1 2012 is what we would characterize at least so far as pretty normal. Pretty normal season.

Great. Just wanted to echo Steve’s comments, it was a pleasure working with you John and you will be missed. Thanks.

Our next question comes from the line of Brian Weinstein with William Blair. Go ahead.

It’s actually Pete in for Brian. So I had a question for you on Sofia. Can you give me any ideas as far as how late approval of the flu assay would be able to take place for it to make a difference for this flu season. Is it already too late or is there still time?

You are referring obviously to U.S. clearance?

Right. Right.

If we were to receive FDA clearance anytime soon it would be highly likely that we would ship product within days of that approval. And how important that would be is difficult to say. Obviously there will be time to take an order, there will be time to ship an order and there will be, in some cases there will time necessary to do a quick validation of the product in the customer’s hands. So I would say given the fact that flu season typically gets ramped up in January and in February, that we still do have a better time. But obviously any week or month that goes by here, that would be difficult.

Our next question comes from the line of Jeff Frelick with Canaccord. Go ahead.

John, can you give us a sense what drove the strong international growth in the quarter?

It was mostly, probably timing of orders from Japan for flu products.

Okay. And then Doug, could you comment on the inventory as you exited the third quarter with respect to flu, Strep and HCG?

Sure. Flu in Q3 2010 versus Q3 2011 were down about half of that flu inventory at distribution. And what that means is anything from now and of the end of the quarter in terms of flu activity will more than likely result in an order from our distributors. Strep, the flu inventory at the end of this quarter is actually up about 5% of what we sell on a typical quarter which is still not up by very much when you consider that Strep volumes have been increasing in the last couple of quarters for us. And then for HCG, we are pretty much flat and have been over the last five quarters.

Okay. And then with respect to the Sofia flu test, can you just may be touch on how you are going to market it, position it, once you receive approval.

Are you referring to Europe or the U.S.?

U.S.

Assuming we do get approval in time to launch for this season, we intend to take a look at using our own internal organization to validate what our customers algorithms are and to understand how we might fit into that. We are having conversations with our major distributors about what we might do and how we might use their resources. But none of that actually has been decided and we won't make the call until after we have FDA clearance.

Okay. And then just last question with respect to the BioHelix, AmpliVIEW. The pivotal trial should be starting I believe soon. Just timing when does that start, when do you think it’s completed?

I think I made a comment in the script itself but we intend to start the trials for the two assays in Q4. And we certainly would expect to be finished and to have that package submitted to the U.S. FDA in Q1.

Our next question comes from the line of Brad Hoover with Sidoti & Company. Go ahead. Brad Hoover - Sidoti & Company: Good afternoon. Did you say, John -- accounts receivable is up I guess $6.5 million from the second quarter, did you say what led to that and in the increase in DSOs in the quarter?

It was mostly timing of when we got orders. As we were finishing Q3 we began to get a lot of flu orders and Strep orders so it’s really just how the business fell in the quarter. Brad Hoover - Sidoti & Company: Okay. And then on the human metapneumovirus that you recently go the CE approval. Could you, Doug or John, just discuss kind of what the market size is in Europe and I guess what their current testing protocol has been for the last few years and kind of expectations you are having for that assay?

It’s actually an evolving market and I would characterize it as quite small. And it’s growing rapidly in the larger centers. But it’s not widely ordered individually by physicians. We believe that combining the assay with our RSV may actually stimulate more demand for the product and that’s what we intend to do. So the symptoms actually mimic those of respiratory syncytial virus. So we think it’s an important addition to the portfolio. But on its own is not a significantly ordered product. Brad Hoover - Sidoti & Company: Okay. And then on Thyretain, has there been any change as far as conversations or progress made with discussions with reference labs, and as far as may be getting there sales reps to talk about and push Thyretain.

We continue to have conversations with our large commercial partners, the big reference labs. This business is still growing in the teens and I expect that with or without the reference lab involvement that the trajectory is not likely to change dramatically until more papers, more third party peer reviewed articles are published. Which is typical for diagnostic assay growth stories. TSI is clearly better at diagnosing and monitoring grades, and there are number of studies that will be published in the next several months and then throughout 2012. So while I think it would be very useful to have our big partners using their very large sales forces to talk about the product, we really need to put some papers in the hands of the sales people in order to make that happen. So I think the timing element is more the availability of those third party articles that describe why the physician should be using TSI. Brad Hoover - Sidoti & Company: Okay. And it sounds like that the growth rate, like the mid-teens growth rate from last quarter held up this quarter against, that was encouraging. And then just last and I missed the infectious disease revenue, John that you gave in the beginning of the call?

It was $22.2 million.

(Operator Instructions) Our next question comes from the line of Tycho Peterson with JPMorgan. Go ahead.

Hi, good evening. It’s (Even Loadson) for Tycho. I had a couple of questions. I guess first you had mentioned that Bobcat trials in New Zealand and in Hong Kong during or rather the beta users. For those users can you talk about their consumable usage per system and how that might translate to a fully commercial system? And then secondly if that impacted the way that you are planning the U.S. clinical trial, if at all? Thank you.

The beta trail was conducted in order to demonstrate that the algorithms that we have in interpreting those slide were correct. And so we did comparison with cell culture and with PCR, and it was those data that led us to believe that the product is ready to go, ready to go to trial. So in this case it’s a beta trial but it wouldn’t be a marketing trial. In other words it wasn’t the customer running routine samples in buying our products. Having said that what our market research has shown, is that the typical customer that would be doing virology will run something around $25,000 to $30,000 worth of respiratory, these multiplexed panels per year. And that’s what we are -- if you are trying to model what’s a Bobcat worth, we believe it’s somewhere in that $25,000 to $30,000 reagent trail per year on average.

Great. Thank you. And then I guess also. Could you talk about some of the factors that led to the Alere revenue buy down and buy out and if that has anything to do with availability of M&A targets. i.e. priorities for competing uses of cash?

No, I don’t think that this is a matter of whether we had certain M&A target in mind. This was more a matter of making sure that going forward that we understood what our costs were and I think that the deal itself is a good deal for them. And certainly is a good deal for us relative to the ROI on the investment relative to our cost to the capital. So I don’t think it alters what we are looking at in terms of smaller tuck-in opportunities.

Our next question comes from the line of Steven Crowley with Craig-Hallum. Go ahead.

Yes, guys. Just a quick follow up or two. In terms of your view of the kind of strategic and tactical utility of the Strep, Sofia assay. Has that evolved or changed at all, Doug?

I can't really comment in too much detail, Steve, on what we are seeing in our clinical data. That would not really be appropriate. I can just tell you that at least at this stage the product is performing as we had expected. And what we have said previously is that assays that perform at greater than 95% sensitivity are really valuable. And we think as long as we can hit that particular target that, that would be quite useful for us in terms of, a, securing our presence in the marketplace as it is today. And, b, potentially increasing our share and then, c, at minimum solidifying our price.

And just one more. In terms of RSV, I know we are still talking about small numbers there. But the product seems to be up smartly even before you are able to do some of the combo assay stuff. What's behind that, have you had some success with awareness or in featuring it with some of your other products?

RSV continues to grow, it’s actually just an evolving category. There are more kits being tested for RSV and we are a reasonable participant in that space. We have spent some time on the physician’s side through our distribution partners, that’s for sure. But we are also seeing an increase in volume at the hospital level too. So I think the growth in the marketplace may be due more to simply physicians ordering the test.

Ladies and gentlemen, that is all the time that we have for today. Please proceed with your presentation or any closing remarks Mr. Bryant.

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

Ladies and gentlemen, we thank for your participation and ask that you please disconnect your lines. Good bye.