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LMRA 2Q05 Conference Call Notes

For those LMRA fans on board, here are some notes from the 2Q05 LMRA conference call.
Most interesting to me was the mention of the order for optical interconnect materials from a major chip company. Now we're talking! Microvision owns something like 4.9M shares of LMRA. MVIS Blog is not responsible for transcription errors.

LMRA Conference Call Notes:

lmra bioscience business, met several milestones #1 relationship with ISB continues to proceed on promising path -- #1 mentioned were going to install newest proteomic processor, fluidic integration, key resource to making these systems work. important to activations and reactions that scientists are looking at. completed much of hardware and software integration. work that ISB has done shows that we do have a high-throughput, label free detection program. big advantage because when you label a protein or a DNA you affect its behavior.

also provided nano-capture array. result in qualification of that product. has become standard by which they run their samples at ISB. had such good results that they've submitted a paper for publication based on our reader and our chips. significant achievement to be recognized as standard they want to use moving forward, using LMRA reader and chips to write paper.

partnership with major american university re next generation nano-capture. negotiating final details of the relationship. scope of agreement has been increased. pursued broadening of scope, capability to provide proteomic array in a short period of time to the marketplace. really looking forward to introduction of these to the general marketplace. development orders from ISB, university wants to expand relationship.

Electro-optics, modulator order from Raytheon. shipments will be starting in the very near future. received an additional request for quotes for parts moving into the future, beginning of development of long term relationship with Raytheon. important recognition in military space. two government contracts for communication and phased array radar. DARPA contract delayed. Funding the program on a bridge basis, pushed until October. As confident as we are, we can't always control the events of the people we're dealing with. Looking forward to helping educate the new director, moving forward on material and device front.

Received first PO for optical interconnect space for integrated circuits and optical interconnects. Optical interconnect material has been sought after and PO validates that position of having waveguides capable of moving this information. Request for 20 GHZ applications. Opportunity to work at 95 GHZ. All huge numbers, all capabilities we have in our devices right now. Move into manufacturing and device area.

Custom designed antennas, working with one company at 3 different frequencies. Taken a little longer to get to some business milestones. Hope that qualifications, orders will lead to revenue anticipated in the fourth quarter. Added 4 people in the last quarter.

QA:

John: Raytheon release very impressive. Stock ran up after press release. Street is saying that without any news before Raytheon, before validation of interest in products, stock was worth this much. Now after release, market is still valuing company the same? PR firm doing enough to get the information out there?

Tom: Did roadshow about 5 weeks ago, talked to USA Today, Reuters, Bloomberg, others. 2 days after USA Today, quoted on Page 3 of USA Today. Have been out there, talking to the press, we are working hard, look at the information that we think will have an impact. Confused that Raytheon, ISB announcements not moving stock. ISB says LMRA product best product they have seen. Need to explain, educate. People don't understand what we're talking about. People look and say 'drug research takes 8-12 years'. Need to quantify that research institutes use hundreds of slides or corporations use tens of thousands of slides a week. How to get it in terms of how to get people to understand this? I've got philosophy that when we announce something it's meaningful. ISB has placed two orders on us and order for optical interconnect from chip company. Folks need to understand LMRA applications in large markets.

Paul: How you doing? Explain a little bit as far as the opportunity in bioscience and electro optics, what is the potential in those markets?

Tom: A lot of articles in electronic news -- bioscience, nature, science magazine. Give feel for bioassay market. Look at AFFX and their growth. Billion dollar markets. Look at modulators, e-o business started to take off in telecom in 99-00. Modulators $2B business. Making, delivering successful modulators for use in systems, and evaluation. Bioscience, arrays represent majority of revenue for 4 out of 5 bio analysis equipment companies. Arrays that have genome chips can sell for $8000 apiece. Wide range of market, total of markets in the billions of dollars. Couple of percent of market share can get us good results. Initial results from market leaders show that what we believe has the potential to solve their problems.

Paul: ISB blessing?

Tom: Using our chips as a standard. Highly respected institution looking for second generation part, will make two.

Paul: How many chips are used in general?

Tom: Every genomic company in the US. Establish a standard with two of the leading institutions, see advantage to LMRA's solution and go from there. Large market, 100s of 1000s of arrays per week. Thousands of readings in the time it takes to get 1-4 now.

Rudy: Hello, Tom how are you? Regarding relevant markets, see the technology that you introduce to us, institutions are excited. Quantify revenues in 2 years time?

Tom: Doing things strategically very important going forward. When we reach agreements, we anticipate we will be making agreements in the time frame that you asked about.

Rudy: Like to see evidence on the dollar side.

Tom: Dollars have to be on a ramp, dealing with significant companies. In the question phase with many companies. Ensure we have capabilities to meet demand. Additional manufacturing capabilities. Hope to meet manufacturing requirements. Anticipated ramp up for both arrays. No chicken without hatching the eggs. Chicken metaphor. Incubating things. Orders for modulators, optical interconnects, bioscience. As soon as orders meet qualifications, we will begin production ramp up. Big companies have to change an existing process they're working in. Learning curve, working on a daily basis to ensure we're meeting their needs and answering their questions.

Rudy: Status of negotitions satisfactory?

Tom: Extremely excited about the capability we have for potential future relationships with large companies we are negotitating with.

Lanny: ISB are they a production company?

Tom: Independent institution who's focus is to find a cure for cancer. Run by Leroy Hood, best individual in the world as far as genomics are concerned. They are a company and an institution, work with NSF, NIH look for applications of genomics to solve cancer, heart disease. NIH biggest customer, along with CCD down in Atlanta. Charter is to cure things. Market maker, leading things, gets people to believe this is the direction to go. Large influence. Paper they put out will be significant milestone.

Lanny: Bigger firms are looking to ISB as an example?

Tom: Each company has relationship with ISB to do evaluation of chips and equipment. Focus on drug development, let ISB focus on evaluation of chips and reader. Getting very positive responses.

Lanny: A lot of different companies in bioarray systems?

Tom: 5 companies cover 90% of market, each one has a different chip. That creates problems with people who want to compare data with one another. No common standard to read off of. Can't compare results off the same chip, label of protein affects the response.

Smith Barney, William: Comment of chip reader. Give us idea of price structure vs. competition?

Tom: Well, again this is me speaking based on my knowledge looking forward. Relative numbers not forecast of what is going to happen. Value based priced solution. Value based pricing should hopefully generate higher margins, higher profits and the ability to move into additional markets.

Closing Comments.

Tom: Thanks and look forward to talking with you next quarter.

Frank: Thanks for continuing the hard work on everybody's behalf. Keep up the good effort. Look forward to revenues being generated.

Tom: No one more motivated than me to make that happen.

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