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Friday, July 11, 2003 3:44:40 PM
I recognize this is a day late, but I had further to travel than some and got in late last night. Because of that, some of this will be a repeat, and some is a little different than some of the accounts I have read on the RB Board. Those that were there, please respond to anything that differs with your recollection of events:
Tony called the meeting to order and announced the results of the vote. 420 million yes, 9 million no, didn't catch the total on the abstentions.
Tony led a tour of the DNAP facility including the labs and introductions to key employees including Phil Brooks, Dr. Ponnuswamy, Dr. Kondragunta, Zack Gaskin, Matt Thomas, Carrie, etc.
Tony made a brief presentation of the company status, discussed the increased authorization and touched on the rights plan. He also invited questions or comments from the investors. Highlights are as follows:
Equipment:
- Nanogen equipment was brought in specifically for Ovanome samples. Because Ovanome addresses a limited market, it is not very cost effective to run the samples on the Orchid UHT. The Nanognen equipment is better suited to run the small sample volumes expected for the Ovanome classifier. Unfortunately, it turns out that while the chip based analysis provided by the Nanogen would be an advantage, reagent costs are much higher than expected. Nanogen has been asked to address this, but it is possible that the Nanogen equipment will not even be there in the future due to cost of processing.
- The Orchid UHT can process up to 125,000 genotypes per day. More than adequate for immediate processing needs. The bottleneck is in Buccal sample preparation. That is a manual process, is time consuming, and limits overall throughput of the lab. Large companies that have looked at DNAP for larger scale projects find that to be a hindrance. DNAP would like to address that problem through automation, but that will require capital to purchase the equipment.
- DNAP has possession of the UHT and expects to retain possession. GMED is not in a position to dispute ownership since they are essentially in breach of their genotyping agreement, and given their financial status are probably not inclined to spend resources in a legal battle that they would likely lose.
Projects and Products:
- CBS exposure resulted in approximately 400 orders on Monday. This compares to 450 orders in the first two months of 2003. At the new price of $158.00, 14-16 sales per day would completely cover employee payroll. Obviously, orders will trail off, but they are curious to see where the new base will be given the lower price. The company is experimenting with the price of the test to attempt to determine its value to recreational customers. They anticipate rolling some of the revenues back into marketing to increase sales volume.
DNAWitness 2.0 tests are priced at $2000 each. The company has three current customers, and the first of the samples arrived the morning of the meeting. One DNAWitness test per day provides nearly the equivalent of the 14-16 AncestryByDNA tests, and would be sufficient in and of itself to fund the annual payroll. Tremendous interest was generated in the booth at the AAFS Conference. DNAP personnel were in the booth approximately an hour after the exhibits closed each day due to the number of people interested in speaking with them about the test.
- Ancestry 3.0 would take about a year to develop, but will require between $750K to $1 million to fund the research. DNAP would like to solicit a partner willing to fund it's development in exchange for a share of downstream revenues.
- Ovanome is about a year from market, and DNAP anticipates marketing through a partner. I asked if Statnome was similarly a year out, and the response surprised me. Tony indicated that Statnome would be marketed sooner and the marketing would be handled by DNAP. Obviously, the company is anticipating a much larger market for the Statin classifers which would make it cost effective to run the samples on the UHT.
- NYU study is ongoing. NYU Review Board took nearly a year to approve the work, and DNAP will be required to fund a portion of the project. That work will not complete until later this year assuming DNAP has the capital to fund their committment.
TBF Escrowed Shares:
- Two years remain on TBF's option on the 19 million plus escrowed shares, but the one year restriction on the shares was due to expire within 3 days of the meeting. Obviously, TBF would not be executing their option to purchase at $0.05 given the current share price. If the share price does increase sufficiently, TBF would be in position to purchase the shares, but the company would realize approximately $1 million in capital if TBF purchased the shares.
Continued
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