ThermoGenesis Holdings, Inc.
Q4 2012 Earnings Call Transcript

Published: 20 Sep 2012

[Operator:]

This is the chorus call operator. Welcome to the ThermoGenesis fiscal year 2012 fourth quarter results conference call and webcast. Before we begin the call, we remind you that the statements made during this conference call that are not historical facts and are forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in these statements including but not limited to certain delays beyond the company’s control with respect to market acceptance of new technologies and products, delays in testing and evaluation of products, initiating and successful completion of clinical evaluations and trials for new claims on existing products, regulatory approvals where required, capital resources required to fully execute business plans and other risks detailed from time-to-time in the company’s filings with the SEC. As a reminder, all participants will be in listen-only mode. There will be an opportunity to ask questions at the end of today’s presentation. (Operator Instructions) For your information, this conference is being recorded. I would now like to turn the call over to Matthew Plavan, Chief Executive Officer. Please proceed Mr. Plavan.

[Matthew Plavan:]

Thank you, operator. Good afternoon everyone and thank you for joining me today. As you have seen from our recent announcements the past several months have been quite productive for ThermoGenesis adding several key milestone accomplishments to those realized since our fiscal 2011 year-end call. We have accomplished much of what we set out to do in building the company for long-term sustained growth. Taking stock of these advances let me summarize the highlights as follows

[Operator:]

We will now begin the question-and-answer session. (Operator Instructions) And our first question is from Jeffrey Cohen of Ladenburg Thalmann.

[Jeffrey Cohen:]

Are you going to be adding a CFO this year?

[Matthew Plavan:]

I believe I will, yes.

[Jeffrey Cohen:]

So on the guidance side, you are saying [upward] revenue of fiscal 2013 over 2012 and higher gross margins for the same time period those are the only two metrics?

[Matthew Plavan:]

Correct. Yes.

[Jeffrey Cohen:]

Got it and could you talk a little bit about your agreement with Arthrex and just repeat I missed a portion of it. So you are expecting a 510-K in Q2, can you tell us a little bit about the sales cycles as far as who or what size the sales force in what area or Arthrex is going to be selling the Res-Q system?

[Matthew Plavan:]

Sure, two questions. So we are seeking 510-K approval for two versions private label version of the Res-Q, one is for PRP and one is for bone marrow that will be exclusive to Arthrex and expectation is that those approvals will come towards the end of the year and they will launch the product soon thereafter, they have a sales force of over thousand persons in various geographies throughout the world and they will be funneling this product through that sales force. The volumes that they are projecting are multiples of the volumes we do today and so there are minimums in the contract and I would say that 10,000 and above is a pretty good place to start with respect to those minimums and what their estimates for volume are once they are up and running. The launch they have already started their internal campaign so that they educated their marketing and sales folks about the product and of course the launch, once they got approval and the products is available. I explained at that time but there is also a big portion of the [AOS] which occurs in March every year and so that’s kind of their Super Bowl. I expect them to launch prior to that but we would also expect a big kick when they get to the [AOS] meeting.

[Jeffrey Cohen:]

Okay, that’s March 2013 you are referring to?

[Matthew Plavan:]

Correct. That’s when, that’s one of the biggest shows they have.

[Jeffrey Cohen:]

Right. Do you have an estimate as far as PRP versus BMC on what the expectations are of share between the two?

[Matthew Plavan:]

I think it will be weighted towards PRP, maybe 60-40 in the beginning and probably continuing on through the term of the contract, close to half and half or 60-40, one way or the other. They don’t expect one to dominate the other.

[Jeffrey Cohen:]

Okay, and are those both under the same 510-K?

[Matthew Plavan:]

No, they will be separate.

[Jeffrey Cohen:]

Separate? And they have been filed already?

[Matthew Plavan:]

Yes.

[Jeffrey Cohen:]

Okay, recently I am assuming.

[Matthew Plavan:]

Yes.

[Jeffrey Cohen:]

Okay and one more. I am not trying to lead you to water but so trailing 12 months revenues about [$19 million]. You were talking about the two business add ons over 24 month period one potentially producing 7ish million, and one potentially producing $4 million to $6 million?

[Matthew Plavan:]

What I was referring to is when we look out at the cord blood market and the business that we believe is available with regard to the size of the banks and the volumes that they are generating; I would say that there is about $10 million in addressable available revenue on the processing side and we have scoped out the banks that comprise that $10 million. We have targeted competitively and we have targeted some competitive opportunities and then some conversion to automation opportunities when we add those up and look at what we think we are going to do over the next 24 months. We could see garnering $5 million to $7 million out of that $10 million opportunity. The other number I have mentioned was as we sign new deals that are likely Arthrex deal, if we are successful in signing two to three of those based on the size of those deals individually, we could be adding another $4 million to $6 million to the top line by doing that. That’s what I was referring to.

[Jeffrey Cohen:]

Okay, I got it I should look at the [cumulative] number as a revenue number 24 months out?

[Matthew Plavan:]

What I would see is by the time 24 months transpires, we should have closed that level of business moving into ‘13 at least for those two parts of the business.

[Operator:]

(Operator Instructions) Showing no further questions, I would like to turn the conference back over to Mr. Plavan for any closing remarks.

[Matthew Plavan:]

Thank you everyone for calling in and listening today and we look forward to reporting to you our progress going forward, and I look forward to seeing you when we are out visiting with investors on the street. Take care.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.