Question-and-Answer Session
Operator
(Operator Instructions) and our first question comes from Greg Bolan from Wachovia Capital
Greg Bolan - Wachovia Capital
Thanks. Joe can you touch on the late discovery market; obviously far sort of durations in GLP and seems to have been historically considered in-house co-work, but can you talk about how large you believe this market maybe relative to GLP talks?
Joe Herring
Greg, the market is not that much smaller than GLP toxicology, but as you pointed out, this has largely been an in-house capability, because it requires incredibly fast turn around and active dialogue. For example a compound maybe sent to the facility in the morning and with out any GLP bureaucracy, they want to know the results; what was the activity; was there receptor binding or whatever. So it requires very close dialogues.
What we are learning in the Greenfield campus, which is 25 miles away from where the scientific decision makers are, is that geography is somewhat important, but it’s maybe not as important as thought in the past.
We also see that there’s tremendous opportunity for integrating late discovery service or discovery services in general because it’s very solid with inclined organizations. So, it’s slower to move to the outsourcing model, but we are learning an awful lot and we’re excited, because again the market opportunity is similar to the total GLP market.
Greg Bolan - Wachovia Capital
That’s helpful and then, I know you briefly touch on this, but can you talk a little bit more about what gives you confident that a bottoming of demand is underway in early development? Are you seeing demand return from some of the smaller biopharma clients or perhaps, your belief stems from conversations with the fleet of large pharma or maybe both; if you could just touch on that a little bit more it would be wonderful?
Joe Herring
We are not counting on emerging biotech. What we are seeing is that in total orders have picked up. We don’t want to overcall at this point, but we continue to see some sequential improvement. We know that our five largest clients need to meet their contractual commitments, know that, see it and said they’re going to get it, so that gives us ramp in the backside.
I also had a very interesting conversation with a client executive this week. They have been looking at the biotech industry and saying ?Gee, the Wal-Mart fields are going to be on (Inaudible)? and so they looked at the therapeutic focus of their company and with an exhausted evaluation and determine if there were 86 companies that had molecules that would be for helping their company grow, it turns out only seven of those 86 needed money at all, the other ones had no interest in their money and the seven that needed money, they had good molecules in early development, but we’re burning their money up on a week Late-Stage molecules.
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