Ladies and gentlemen, thank you for standing by. Welcome to the Quidel Corporation’s Second Quarter 2008 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’d now like to turn the call over to Mr. John Radak. Please go ahead.

Good afternoon, everyone. 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, Caren Mason. Earlier this afternoon, Quidel released financial results for the second quarter and six months ended June 30, 2008. If you have not received this news release, or if you would like to be added to the company’s distribution list, please call Shirley Chow with Porter Novelli Life Sciences at 212-601-8308. 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 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 July 23, 2008. Quidel undertakes no obligation to revise or update any statements to reflect events or circumstances after the day of this conference call. I will start today’s call with a review of the second quarter financial report. Then Caren will provide further comments on our strategic business initiatives and developments. Turning to the financial results for the second quarter of 2008, we are pleased with the very strong performance of the business during the period, as we posted another quarter of margin expansion and double-digit revenue growth. Total revenues were 21.9 million, an 18% increase over the same quarter a year ago. Our international business performed exceptionally well with revenue growth of 78% over the prior year’s quarter. Influenza sales accounted for a little more than half of the dollar increase in international revenues with the remainder coming from Strep…

Thank you, John. We are pleased to be reporting the results of another quarter of significant organic growth and continued progress in several aspects of our business. As John reported, one of the primary drivers of our increase in total revenues was international sales. We are pleased with the performance we have seen thus far from our international partner, bioMerieux. The bioMerieux sales representatives increased their sales presence in the international market by more than tenfold, and we believe a mutually beneficial alliance and formation of a powerful global brand provides tremendous validation of the QuickVue product line. bioMerieux sales and marketing organizations are working feverishly to complete the roll out of marketing materials and training for its sales professionals in 150 countries. In addition, we secured infectious disease sales on countries gearing up for the Southern Hemisphere flu season as well as those adopting flu testing for the first time. Our revenues were also favorably impacted by strategic sales initiative programs covering a majority of our product portfolio with certain of our key domestic distributors. During the second quarter of 2008, the revenue increase related to these programs was primarily driven by our non-seasonal products as we secured an increase in initial upfront stocking orders and purchase commitments for these products. Accordingly, domestic distributor inventory levels for these non-seasonal products is currently tracking in the higher range. Our focus with our distributor partners is to gain end-user unit share in a number of non-seasonal products in coming quarters, as well as to set the stage for Influenza and RSV market expansion and the share gain. Since we last spoke during our April conference call, the domestic flu season has started late, but had a dramatic peak in activity ending very quickly. We reflected with satisfaction on our ability to…

(Operator Instructions). Our first question comes from the line of Zarak Khurshid from Caris & Company. Please proceed, sir. Zarak Khurshid - Caris & Company: Thanks. Hi, Caren and John; impressive results there.

Thank you. Zarak Khurshid - Caris & Company: Can you guys hear me, okay? I apologize for being on a cell phone.

Yes. Zarak Khurshid - Caris & Company: So just wanted to firstly touch on the strength in the pregnancy business. Just curious, what is really the driver there? What’s particularly interesting in light of the sales that were pulled forward back in the fourth quarter and should we be expecting that business to correct at some point in the near future?

I think your question is a good one, Zarak. The focus for us on pregnancy has been instilled with more vigor as a result of two pieces of information in terms of our market position. First of all, we know that in acute care we have done an excellent job of securing new business and we’re working with our acute care distributors to focus on the opportunity to even expand more in that space. In the POL, we’ve been challenged by some private label activity as well as some price pressures. And so, our focus with our distributors both in POL and in acute care is to really begin to push more aggressively to build back more unit share in the category. Our distributors have agreed to do that with us and our strategic sales initiative got underway in Q2. With regard to Q4 and the leveling of inventory over time, our expectation is that our distributors have moved through that and will be moving through the inventory they acquired in the previous quarter in the quarters to come. Zarak Khurshid - Caris & Company: Okay, great. And then, just quickly if you could talk about the strength – International strength relating to bioMerieux, is it more of a function of kind of initial stocking or – I guess, what is the demand, the real kind of end-user demand component to that strength, and should we kind of see that sort of, I guess, level off entering – as we enter the flu and cold season, and maybe pick up in the – at the end of the year?

I think that’s a – I think that’s a good explanation. In bioMerieux (inaudible) fulfilling order that previous distributors had pre-sold. So I think the opportunity for us in going forward with them is definitely very significant and we’ll be watching with you over time. We have – we’re working very well with them. So our expectation is over the next couple of quarters that we’ll start to see what we can then track on quarterly demand. We’re gearing up for the respiratory season ahead of us. We’re seeing some revenue definitely being generated in the Southern Hemisphere. So, we’re excited and enthusiastic, which you can probably tell from our prepared remarks as well as my comments. But I’m not – I can’t predict exactly what the actual levels will be quarter-by-quarter until we get some traction behind us. Zarak Khurshid - Caris & Company: Sure, thanks. And then, quickly, how would you characterize domestically the levels of flu product in the channel today, and I’ll jump back in the queue? Thanks.

Thanks, Zarak. As we indicated in our remarks, we believe that the inventory levels are at an appropriate level as we go into the season. Next question?

Our next question comes from the line of Jeff Frelick with Lazard. Please proceed.

Hi, Caren. Can you tell me what the geographic revenue growth was for U.S. and OUS?

Yes.

The U.S. growth was 8% in the quarter and the international growth was 78%.

Okay. Thanks, John. And then in a normal Southern Hemisphere flu season, when do you typically see re-order rates occur?

The season has really just kicked off and then in June there were some incidence. In July – in the middle of July, we’re seeing definitely increased incidences I’ve referred to. We should start to see over the next two to three weeks the peak, is my guess, and we’ll probably be finished by September, so you would expect re-orders in the next two to three weeks.

Okay. And then, I had trouble hearing your comment on Zarak’s question, but did you say you’ve instituted strategic pricing with pregnancy with some select distributors in the U.S.?

Actually, we’ve offered distributors strategic selling partnerships that go in multiple quarters over a number of our product categories. And those are underway. You saw most of the result of that as we kicked off in Q2 with some non-seasonal product initiatives.

Okay. But it will run?

It keeps running. Yes.

In across several product categories?

Yes, it does.

Okay. All right. Thank you very much. I’ll jump back in queue.

Thanks, Jeff.

Our next question comes from the line of Scott Gleason with Stephens. Please proceed.

Hey, Caren and John, thanks for taking my question.

Sure. You’re welcome.

Just to start off, you guys have seen some really good expense control and especially on the R&D line, we’ve seen total R&D expenditure go down for the last five quarters. John, can you give us a little sense of what we should think of there going forward, is 29 – 2.9 million a good run rate for the second half of the year?

No. We – at the end of 2007, we terminated development effort on our Layered Thin Film technology, and that freed up a large amount of R&D dollars in our Santa Clara facility that we are in the process of rebuilding and replacing down here in San Diego, so the 2.9 is a, really a, probably a low point in our R&D spend and we would expect that will ramp-up over the following couple of quarters.

Okay, thanks. Then on the pricing front, it looks like CMS this year is going to implement a 4.5% CPI adjustment. Do you guys have a sense that you’ll be able to carry any of that on in terms of pricing increases when you start looking at next year’s pricing?

I think we have to be careful there because all of the costs associated with distribution, fuel, et cetera. So I – we’re going to maximize our premium brand position and work with distribution appropriately to be able to raise prices wherever appropriate. We expect that that would be most likely be in our infectious disease categories. We continue to prove the value of those products as superior in the marketplace. So, I think, we’ll be judicious in that, conditions are challenging for everyone, but at the same time we’ll also take opportunity wherever we feel it is appropriate.

Okay, thanks.

Especially for...

And then probably just on the second generation fecal occult blood test, you guys mentioned that would be pushed back a few quarters. Can you maybe give a little more definitive date as far as when we could expect a market launch or I guess a more definitive timeline?

Well we’re in the midst right now of engineering in a number of changes that we believe are strengthening the products even more so. So, we’re definitely into 2009 before we start our clinicals. We believe, though, that we will still obviously see an introduction in 2009, hopefully earlier than later. By that I mean probably around mid-year. The opportunity here for us is that this is a major game changer. I would call our new test more of a medical device than our current format. And as a result of that, there are a lot of opportunities for enhancements that we’re going to take advantage of. We feel that with the recent information that we got clinically on our generation-one web-based product that that product will do just fine as we move ahead in our efforts to get more business in that product category. So, we’re going to do the right thing on gen-two and get it out there, so that it meets all the criteria that our mAb and our key users in test sites have indicated.

And then, Caren, have you guys got a sense from the FDA whether your current clear waiver will be able to stand for the second generation product or if you have to resubmit?

It’s automatic.

Okay. So, you’ll be able to carry over the existing clear waiver?

Yes.

Okay, thanks. That’s all I have. Thanks a lot.

You’re welcome.

Our next question comes from the line of Matt Hewitt with Craig-Hallum Capital Group. Please proceed.

Congratulations on the first quarter. A couple of questions. First off, can you break out as far as what were international sales as a percentage of the mix? We know what they were as far as up year-over-year, but can you break that out as – to the current quarter?

16%.

I’m sorry. Could you repeat that?

Wait a minute. 16%, yes.

16%, excellent. Also, the bioMerieux, we’ve heard that things are ramping well there. Initially, you had spoken that was more of – more than just a sales and marketing partnership. Can you tell us anything regarding the development side, and if and when there will be a product ready for that piece?

Our joint development agreement with bioMerieux is progressing well. We have identified the pipeline of products that we’ll be working on together. And as soon as we get the thumbs up from them to publicize that and we complete the agreement, we will do so.

All right. And I guess the last question, in the press release you talked about strategic sales initiatives launched with several domestic distributors. Could you provide a little bit more color there?

Yeah. Just at a high level, our interest as we have developed partnerships with distributors overtime was to be able to get to a point where we could work on committed volumes over longer periods of time rather than incentivize with targeting. So that gives us the opportunity now through our premium brand position to get that done. So the strategic sales initiative gives us, as a manufacturer partner and with our sales lead partners, the opportunity to really be able to better predict quarters as they move – as we move ahead throughout the year. So, we went on a multi-quarter program for committed volumes and we’re confident and happy about Phase I of this process.

Excellent. Thank you.

You’re welcome.

Our next question comes from the line of Keay Nakae with Collins Stewart. Please proceed.

Good afternoon folks.

Good afternoon.

Caren, can you update us on what you think your market share in the influenza market is coming out of the last season?

Okay. We are going to defer market share discussions until after the end of the Q2 period when we get those results. We don’t have them yet. We usually get them about eight weeks, which is too late for this call. And so, we would like to be able to give analysis not only of U.S., but global position, so bear with us and we’ll get with you in the next quarter.

Okay. As far as the upcoming season, can you give us a sense for what kind of success you’re having with GPO Broadlane?

I think we’re really pleased with our success thus far with Broadlane. We have converted a number of hospitals. As you may be aware in these committed purchasing agreements, there is usually one – there is usually two categories or vendors selected for each product. And what we are doing with our health systems team on the acute care side is very aggressively going after getting as much of that business as possible. So we’re pleased with the progress so far.

Okay. With respect to some of the line items on the income statement, John, with respect to G&A, we did have a sequential decline there, that that number – how should we think about that going forward for the rest of the year, the 3.1 that you did in Q2?

Yes, the Q2 number was abnormally low and benefited by a lot lower stock compensation expense, which will rebound in Q3 and then also lower management incentive bonus accruals in the quarter as we time those expenses with – when we earn the profits.

Okay. So something closer to what you did in Q1 is maybe more appropriate?

Yes.

Okay, very good. And then finally, Caren, going back to an earlier question you were asked about bioMerieux and the initial stocking. I know you answered it but I could not hear what you said, so --

Okay. I apologize for that. The initial stocking with bioMerieux, we’re really enthusiastic about our ability to get them the product and get them marketing the product at ECCMID in Europe as well as through all of their distribution outlets and through all of their direct representation as well. So, our hope is that we’ll know better to guide you after we get two to three quarters under our belt and have our first infectious disease season under way. Right now, everything that we’re seeing is really encouraging. So, we’re happy with their initial order. We’re happy with some of the order flow through into end users, and we’ll be able to better identify in the next couple of quarters what our actual run rate on it will look like.

And was the stocking across all product lines?

Yes.

Okay, all right. Well, very good. We’ll look for those numbers going forward.

Okay, great.

We have a follow-up question from the line of Zarak Khurshid from Caris & Company. Please proceed. Zarak Khurshid - Caris & Company: Thanks for taking the follow-up question. You guys have had great success levering the improvements with the web automated manufacturing process. Just curious, also on the cost side, have you locked in some of the input prices? And how are kind of the price of plastics and reagents potentially affecting that cost of goods and the potential continued improvement on the gross margins going forward? Thank you.

Yes. The proportion of our costs that are represented by plastics is really very small. So we don’t expect that that will be a significant impact to us going forward. And then, with respect to other reagents and so forth, we’re not seeing a tremendous amount of cost price pressure there yet. Zarak Khurshid - Caris & Company: Thank you.

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

John and I thank you again for your time this afternoon and for your continued support. We look forward to updating you on our progress again when we report the third quarter results. Thanks and take care, everyone.

Bye-bye.

Ladies and gentlemen, that concludes your conference call for today. We thank you for you participation and ask that you please disconnect your lines. Have a great day.