Welcome to the Quidel Corporation fourth quarter and full-year 2009 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 like to turn the call over to Mr. John Radak. Please go ahead.

Thank you and good afternoon. 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, Doug Bryant. This afternoon Quidel released financial results for its fourth quarter and full-year 2009. If you have not received this news release, or if you would like to be added to our company's distribution list, please call Joe O'Shea [ph] at Porter Novelli Life Sciences at 619-849-5381. 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 recent press release announcing the agreement to acquire Diagnostic Hybrids, the company’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, February 11, 2010. 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 begin by reporting the financial results for the quarter and full year and provide insights on our business drivers and perspective on the impact of Influenza A (H1N1) on the business in 2009. Then Doug will discuss our execution strategy going forward. We will then open the call to your questions. During our last quarterly financial conference call on October, Doug and I said that we expected to see meaningful revenue growth from the dramatic increase in influenza-like-illness and increased adoption of our QuickVue influenza products. Test-use in both the international and domestic markets continue to…

Thank you, John. Soon after my arrival at Quidel nearly one year ago, I laid out three key priorities that we would be focused on to drive our longer-term growth. First, getting better control over the channel to the customer; second, revitalizing our product development efforts to deliver two to three new products per year; and third, developing and executing on a molecular diagnostic strategy. During my comments today, I will report on our progress on each of these initiatives to include how DHI fits into the diagnostic continuum and into our goals for 2010. Let me begin, however, with a couple of brief comments on our results for 2009. Early in the year, we were challenged by a very mild flu season and an overall decline in doctor visits due to the weak economy. Predictions for influenza incidents quickly changed in April with the worldwide outbreak of the 2009 influenza A (H1N1) virus, resulting in physicians and hospitals worldwide using rapid test to help diagnose the flood of patients who presented with influenza-like-illness. We believe this pandemic has accelerated the penetration and the overall growth of the influenza testing market, a market in which we are a leader in terms of price, share and brand. The dramatic increase in Flu sales has been important to us both for earnings and cash generation. We are very pleased with how the business responded to the variety of challenges that we faced and our financial performance reflects our successful execution. Strong financial results allowed us to fund some of our long-term growth initiatives sooner, as John mentioned. I will turn now to the key priorities that I laid out a year ago. First, we discontinued the practice of providing distribution partners incentives simply to buy large quantities of tests, and we implemented…

: Scott Gleason – Stephens: Hi John and Doug, thanks for taking our questions. Doug, is there any way to categorize when you look at this year how many new physician customers and hospital customer you guys had relative to 2008? I guess, is there any way to think about what the stickiness of those folks will likely be when we start looking at 2010?

First, we do conduct outgoing calls to confirm that customers that were customers previously remain so. We are beginning to count the number of customers that are new to the testing. It is difficult to say, though, what the stickiness is because we need to get through the next flu season, and as I suggested, we haven’t seen a lot of flu quite yet. So, one thing I can tell you is that when we looked across hundreds of customers so far that the inventories at the end user level, in other words, the number of boxes they have on their shelves are quite low. So when the flu season does start up, we should see them ordering product, and then at that time I think we will be able to get an accurate count on how many new customers actually stick. Scott Gleason – Stephens: Great, thanks. Then John, just a quick question; when we look at the Diagnostic Hybrids deal, can you give us an estimation of maybe what the amortization expense is going to be associated with deal on a quarterly basis?

We will be able to do that on the first quarter earnings call, Scott. We are still on the process of completing the purchase price allocation study. So I will defer that to the first quarter call. Scott Gleason – Stephens: Okay, great. Thanks for taking my questions.

Your next question comes from the line Ashim Anand from Natixis. Please proceed. Ashim Anand – Natixis: Congrats on a good quarter guys.

Thanks, Ashim. Ashim Anand – Natixis: I wanted to know more about the BioHelix HDA deal in terms of just the strategy, when do you think the products could be – they are like now in one year or two years? And more importantly about IP especially in terms Qiagen for example, it is also using this technology for couple of their platforms. So, is there any component to paying royalties to somebody in that regard, or anything of that sort?

: Ashim Anand – Natixis: That’s all, guys. Thank you.

Sure.

Your next question comes from the line of Brian Weinstein from William Blair. Please proceed. Brian Weinstein – William Blair: Hi, good afternoon.

Hi, Brian.

Hi, Brian. Brian Weinstein – William Blair: Hi. So just to make sure that I heard your comment right, you said that the inventory at the end user level was – I don’t know the exact term that you used, but it was relatively low; last quarter, I think you said it was about three weeks. Would you say it is about the same at the end user level and then also what do you think it is at the distributor level at this point?

Well, first, last time I recall we said that there were three weeks, but it was at the distributor level. Brian Weinstein – William Blair: Okay.

I will just clarify in case I didn’t hit it precisely. We have called several hundred customers. We have also called several hundred non-customers, in other words customers belong to our competitors, in order to try to get an idea of how much is on the shelves. I couldn’t tell you how many weeks inventory, but it is not very much. Brian Weinstein – William Blair: So, that is at the customer level and then at the distributor level, any idea?

It is about the same as it was at the end of the third quarter, assuming that you are in a flu season. Brian Weinstein – William Blair: Sure, of course. Okay. And then, question kind of a historical tidbit maybe, but how many flu seasons have actually started this late, and when they have started this late, how severe do they tend to be?

Well, last year, Brian, started this late. Actually, it was later than this if you recall, and it was quite mild. For the 2007/2008 season, it was also quite late and all the sales occurred within a six-week to eight-week period, and it was also after this period. So, those are the facts. And as you know 2007/2008 prior to this season was our largest flu season in the last 12, I think. Brian Weinstein – William Blair: Okay. All right, I will jump back in the queue. Thanks.

Thank you.

Your next question comes from Brian Jeep from Sidoti & Company. Please proceed.

Hi, Brian. Brian Jeep – Sidoti & Company: Good afternoon, gentlemen.

Hi, Brian. Brian Jeep – Sidoti & Company: On the DHI, I missed the operating income number that you guys gave. Can you give us that again?

Think it was $9.3 million. Brian Jeep – Sidoti & Company: You are planning to launch after 2010 two to three new products a year. Does that include product launches for DHI?

No it doesn’t. So, obviously the number would be significantly higher. Brian Jeep – Sidoti & Company: Okay. So, it would be fair to assume then that the 17% they were spending in R&D previously would continue.

At least in the near term, the projects that they had started we will continue. So I don’t know what the percentage is John that we were aiming at longer term. I think what we suggest is that certainly within 2011 or so we might be as a total company around the 15% mark. Brian Jeep – Sidoti & Company: Okay. Initially, I know you plan to run DHI as a separate company, if I understand that correctly or separate entity. Any plans to completely integrate it at some point or do you think that’s the way it will remain.

Well, it is wholly-owned sub, but we will integrate a number of functions across the board. For example, there could be shipping and distribution that could be consolidated. There could be some manufacturing that also could be moved from here up there. There are number of things that we will integrate as one. So I don’t think a separate company is a good description. Brian Jeep – Sidoti & Company: No, sorry. I just miss spoke. Thank you. That’s all my questions. I appreciate it.

Your next question comes from the line of Ross Taylor from CL King. Please proceed. Ross Taylor – CL King: Hi. I just had a couple of questions, I guess, primarily related to financials and modeling. But DHI, of the $9.3 million in operating income this year, can you quantify at all how much of that might have come from the strong flu demand during the year?

What we did say is the sales should be in the $5 million to $7 million range that were attributable to pandemic flu; and then the fall through there with –.

(inaudible) 56% gross margin. Ross Taylor – CL King: Okay. All right, that makes sense. Last question, with regards to taking up the R&D as a percent of sales to around 15% or so over the next two years, is there any offset to that as a percent of revenues elsewhere in your income statement so that that won’t pressure the operating margin?

Yes, we would expect to continue to see the ability to leverage the G&A structure because we won't grow that as fast as sales.

And we should also be able to leverage sales and marketing. Ross Taylor – CL King: Okay. All right, that helps. Thanks very much.

Your next question comes from the line of Jeff Frelick from ThinkEquity. Please proceed. Jeff Frelick – ThinkEquity: Yes, good afternoon Doug and John. First question, did you guys pick up any large volume accounts in the quarter, like an IDN or large hospital? And then the second question is do you plan on any price increases for the 2010 year?

It would be difficult to say that we did not pick up larger customers. Certainly we did pick up some larger customers; but would they material, no. And what was the second part of the question, Jeff? Jeff Frelick – ThinkEquity: Any planned price increases for the year ‘10?

They are minor. But yes, minor price increases. Jeff Frelick – ThinkEquity: Across the board?

Yes. Jeff Frelick – ThinkEquity: Okay. Thanks.

Your next question comes from Zarak Khurshid from Wedbush Securities. Please proceed.

Hi, Zarak. Zarak Khurshid – Wedbush Securities: Hi, guys, good afternoon. Thanks for taking the questions.

Hi, Zarak. Zarak Khurshid – Wedbush Securities: Hi, John. So any new data on the current underlying organic growth in flu market and in your market share?

It’s very difficult to determine what our share is. I will give you a little bit of detail. We first got a report from a third party suggesting we had gained a significant share and we actually didn’t believe it. Since then that same party has come back and made a correction to the report and I think it’s more in line. What’s difficult to know is how much gets shift from one quarter to another, and I will give you an example. In 2008, in one month, we were showing according to a third party that we had 85% market share, while we knew that wasn’t the case, although our marketing people would have thought, I suppose; but what happens is that when you are tracking product that’s strictly shipped from our building to a distributor’s warehouse, it doesn’t really accurately reflect what’s going on in the market. So we need to see the product flow from us to the distributors to end users and then we need to monitor the inventory that’s at that level in order to determine that. So, all that to say that until we get through this flu season, it’s going to be very difficult to know exactly what our share is. I will tell you that after surveying hundreds of our major customers, we only lost a small number and of those that belonged to our competitors, we actually gained more. So at the end of the day, I actually think that share has not changed dramatically one way or another. Zarak Khurshid – Wedbush Securities: What is the major threat from the competitors? Are they competing on with more aggressive promotional activities or anything else on the product front that could change the game?

There is nothing that we see right now on the product front. I will tell you that we continue to be our distribution partners’ premium priced product. We sort of hold that position for them. But since our distribution partners actually represent particularly everybody’s product, they sort of sell the premium priced product to those customers who choose to have that brand and that product. If they find customers who are not willing to pay that price they sell those products. So that’s why share doesn’t move a whole lot one way or another rather than temporarily in and out, given an end user promotion of sorts. Zarak Khurshid – Wedbush Securities: Understood, thanks.

Sure.

(Operator instructions) Your next question comes from Steven Crowley from Craig-Hallum Capital Group. Please proceed. Steven Crowley – Craig-Hallum Capital Group: Good afternoon gentlemen and congrats on a great fourth quarter performance.

Thanks, Steve.

Thanks, Steve. Steven Crowley – Craig-Hallum Capital Group: Couple of questions, on DHI, first of all, can you talk towards a little bit about the potential synergies on the sales and marketing side between the two product lines and also on the supply side?

Sure. On the customer synergies, DHI in North America has about 700 customers, and I would say the relationship that they have with those customers is very good. Of those, about half or 350 use their respiratory products. And of those 350, very few of them happen to be customers of ours. So we see an interesting opportunity for our two organizations to approach those customers to see what we can do, at least to evaluate the effectiveness of our products in the hands of those virology and microbiology customers that belong to DHI now. On the supply side, I assume you are talking about from an R&D perspective, Steve? Steven Crowley – Craig-Hallum Capital Group: Well, also in terms of the ability for them to supply you with some antibodies for current or future tests. Is there that kind of synergistic opportunity?

There is, but I wouldn’t model that quite yet, because that’s a longer term project where as we would make product improvements or develop new assays we would certainly use their new monoclonals. But you can imagine that if we were simply to look at the monoclonal they had to put it into our kits we would create a different product and we’d have to go through the whole clinical and regulatory process. So I don’t see any short-term gain from that synergy, longer term, of course. Steven Crowley – Craig-Hallum Capital Group: And the other aspect of sales and marketing, as it may relate to DHI, I think you referenced that they haven’t had a tremendous amount of international presence in the past. Can you quickly change that and how much do you change it?

I wouldn’t characterize it, Steve, as quickly but we certainly can look at opportunities for their products internationally. We’ve already been to Japan and had initial discussions there. We are exploring what we can do jointly in China. We recently just hired an individual who will head our commercial operations ex-US. And they are exploring what we can do in those countries in Asia as well as what we can do in Europe and in South America. So the short answer, Steve, is yes, there will be opportunities to sell their products ex-US that may have taken them longer to get to. Steven Crowley – Craig-Hallum Capital Group: Then the second topic, I am intrigued by your comments about an uptick in the first-gen FIT test. Maybe you can talk a little bit about what might be happening with that product? And then, did that serve as a pretty effective springboard to your second-gen launch, and tell us whatever you can please about what you got up your sleeve there.

The uptick that we referenced is really quite small and it’s reflective simply of the fact that more and more physicians are moving from guaiac to FIT, so that’s what I would say with respect to the current product. With regard to the second generation product, because we haven’t launched we really can’t make any claims or tell you whole lot about the performance of the product. I will simply say that we think it’s an interesting opportunity for us and we certainly would envision resourcing the launch appropriately to see if we can maximize that opportunity. Steven Crowley – Craig-Hallum Capital Group: Great. Thanks for taking my questions.

You are welcome, Steve.

:

Well, this concludes the call for today. John and I want to thank you again for your time this afternoon and for your continued support. Take care, everybody. Bye-bye.