Message from the President After recording revenue of $1.3 million in 2003 during the Company's first full year of commercial sales, I am pleased to report substantive progress toward commercializing RAMP as one of the world's leading immunoassay platforms that provides full lab quality information in minutes. After proving the performance of RAMP through independent validation by scientific opinion leaders, and by proactively raising awareness with key audiences in target markets, there's now broad market acceptance that RAMP represents a new paradigm in diagnostic testing, with untold potential commercial applications across a broad spectrum of diagnostic segments. The global POC market alone generated revenues worth $3.3 billion in 2002 and is expected to reach $5.5 billion in 2009.
We now enjoy increasing market recognition that RAMP offers compelling performance advantages over competitive POC technologies in several established and growing markets. There is mounting confidence that the System is also capable of creating entirely new market opportunities by transforming conventional testing methodologies and transitioning diagnostics from the lab in applications not previously possible. Several leading international biotechnology and life science companies have proactively contacted the Company about specific new product development opportunities in multi-million dollar markets, ranging from water quality, food safety, infectious diseases and veterinary applications
With a proven platform and an established core competency in rapid product development, the Company's success can be measured by the rapid growth in revenue from product sales, the quantity and caliber of independent validation of RAMP's market leading performance in multiple product lines, and outstanding business and new product development opportunities.
Since launching our first commercial product, the Company and its distribution partners have sold 185 systems and generated revenue from eight commercially available RAMP tests in three distinct market segments. Our growth oriented business development formula ofentifying strategic market opportunities, completing feasibility and securing credible third party validation to leverage marketing and distribution agreements has the Company extremely well positioned to maintain strong growth.
Q1 2004 The Company recorded Q1 2004 revenue of more than $800,000, including revenue from product sales of $640,000 compared to $330,000 during Q4 2003, our previous best quarter. From January through March, the Company sold almost 60 systems and 14,000 cartridges. Importantly, as West Nile sales are ramping up during the summer season and the cardiac sales materially grow during the second half of the year, the Company expects this tremendous growth in sales to continue. Our goal is to achieve 50 percent compound quarter by quarter growth through the remainder of the year. Further, the Company received proceeds of more than $630,000 from the exercise of options and warrants during the first quarter.
Biodefense Line The Company has exceeded the 100 System threshold in biodefense sales, and is receiving a high number of repeat orders of high margin tests from existing clients. In the past few months RAMP Systems have been sold to multiple customers in each of the following jurisdictions: California, Florida, Virginia, Illinois, Nevada, West Virginia, Pennsylvania, Minnesota, Kentucky, Massachusetts,aho, New Jersey, Alabama as well as Canada, Japan, Korea, the United Arab Emirates and others. Recent customers include the US Marine Corp., the Presidential Security Detail in Korea, UCLA, Health Canada, the City of Philadelphia, and various public health and first response agencies in the US. The States of West Virginia,aho, and Massachusetts have purchased RAMP Systems for each of the numerous Regional Response Teams throughout their States.
By way of an update, I had the privilege of accepting an invitation to return to the UN Headquarters in New York late last year with Whalley Fong, our Product Team Lead, to train additional teams of biological weapons inspectors. In a formal debrief on their experiences with RAMP in field use in Iraq, I witnessed the UN's overwhelmingly positive experiences and immense appreciation of the value and performance of RAMP as a vital tool in searching for biological weapons. The Company also recently sold units to the Japanese Military for use as part of the multinational forces in Iraq. Response was also recently selected, with an endorsement from the Canadian Department of Defense, to be part of the NATO National Armaments Directors' conference at NATO Headquarters in Brussels in early May. The Armaments Directors meets in plenary session twice a year under the Chairmanship of the NATO Secretary General. This meeting brings together the senior officials with responsibility for defense acquisition in NATO member nations.
I am pleased to report there has been considerable progress on the development collaboration with General Dynamics to combine our state-of-the-art technologies to produce an unprecedented biological agent detection andentification capability. I am confident this program will create new and significant market opportunities for our RAMP technology as a complementary extension to the 4WARN System within the military and homeland security markets, enabling military and homeland security organizations to better defend against bioterrorism.
The Company continues to broadly publicize the results from a comprehensive and definitive evaluation performed by the US Military's leading biological research facility confirming RAMP's unprecedented performance in biological detection. Research conducted at the Edgewood Chemical Biological Center, part of the US Army's Aberdeen Proving Ground and the Nation's premier chemical and biological defense research and development organization, demonstrates the Company's RAMP Anthrax Test consistently produces accurate results with sufficient sensitivity to detect even trace amounts of non-visible anthrax (1000 - 2000 spores). According to the lead research scientist who intends to publish her research, "RAMP appears to have overcome many of the performance limitations characteristic of other rapid biological tests."
Environmental Infectious Disease Product Line I am especially encouraged at the progress the Company has made in commercializing its environmental test for West Nile Virus, with 40 systems already sold in preparation for the upcoming summer season. Our US distributor, ADAPCO Inc., the largest distributor of mosquito control products in the United States, forecasts 2004 RAMP West Nile Virus (WNV) sales of more than 100 systems. According to recently published results from an evaluation performed by the US Centers for Disease Control and Prevention (CDC), the RAMP WNV Test is more than 100 times as sensitive as any other commercially available rapid environmental WNV test. In fact, RAMP demonstrated more than 75% sensitivity compared to PCR-based lab analyzer which is sufficient to become the new industry standard. The main author of this evaluation, Dr. Roger Nasci, is one of the CDC's leading experts with respect to West Nile Virus and is the incoming President of the American Mosquito Control Association, the key industry group in this market sector. Furthermore, WNV is proving aneal beachhead as we explore opportunities to commercialize additional mosquito-related products including Western Equine Encephalitis, Saint Louis Encephalitis, Eastern Equine Encephalitis, Malaria and Dengue Fever to expand our environmental infectious disease tests into a $10 million per year revenue stream.
RAMP Cardiac Product Line In early December, the Company filed a submission with the US FDA for market clearance of two additional cardiac marker tests prior to launching our lead medical application for the early detection of heart attack internationally mid 2004. Based on the performance of RAMP's high sensitivity troponin I and CK-MB tests during multi-center US clinical trials, we anticipate a regulatory decision in the near future.
The clinical trial results have positively impacted on-going discussions with several potential marketing partners including a top 10 diagnostics company pursuing the marketing rights for the US and Europe. In preparation for finalizing our international marketing strategy for a mid year launch, the Company has distributors in China, Korea, Croatia, and Turkey.
The US market alone for POC cardiac marker tests in 2004 is estimated to be between US$100 - $160 million, and the world cardiac rapid assay market is expected to achieve an average annual growth rate of 20 - 25 percent for the near future. Each year in the United States, approximately eight million Americans are admitted to emergency rooms for severe chest pain associated with suspected AMI. Only approximately 10 percent of those hospitalized are subsequently determined to have suffered a heart attack. The majority is eventually diagnosed with strained muscles, bruises or heartburn. The total cost of unnecessary admissions and misdiagnosis is over US$4 billion. Misdiagnosed heart attack cases also account for nearly 25 percent of malpractice claims against emergency room physicians.
Corporate Finance After filing a 20-F Registration Statement, the Company became a reporting issuer with the US SEC earlier this month and is preparing for a quote on NASDAQ's OTCBB, as a stepping stone to a US-listing.
Having just returned from a series of meetings in Boston and New York, facilitated by the Trout Group and attended by our newest board member, Mr. Stan Yakatan, I am pleased at the level of interest the Company is garnering from important members of these investment communities. Based on recent performance based milestones, several groups have expressed interest in sponsorship and investment banking relations.
In closing, independent validation supporting RAMP's market leading performance across all markets is positively impacting sales and unequivocally demonstrates profound advantages over competing POC technologies, and many lab analyzers in specific applications. Having combined the sensitivity of a clinical lab with the speed and simplicity of a dipstick test, Response is enjoying considerable attention and success leveraging its competencies in strategic business development, rapid product commercialization, low cost Cartridge manufacturing, and effective sales and marketing to create a highly profitable company.
Bill Radvak President and CEO April 19, 2004
Response Biomedical develops and manufactures rapid on-site RAMP tests for medical and environmental applications providing reliable information in minutes, anywhere, everytime. The RAMP System consists of a portable fluorescent Reader and single-use, disposable Test Cartridges. RAMP tests are commercially available for the early detection of heart attack, rapid environmental detection of West Nile Virus, and biodefense applications including the on-site detection of anthrax, smallpox, monkeypox, ricin and botulinum toxin.
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