Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Cory Kasimov with J.P. Morgan.
Mona Ashiya - J.P. Morgan
This is actually Mona for Cory. In your prepared remarks you mentioned that you expect sales of BioThrax to continue beyond 2011. I wondered if you could expand a bit on the basis for this confidence and how you think that might change the availability of an rPA vaccine.
Fuad El-Hibri
This is based on several discussions that I have had with representatives of BARDA and HHS where in they have stated that they continue to pursue a multi-product, multi-supplier strategy. And that BioThrax has several important attributes that continue to meet government requirements. With all the enhancements that we’re making to that product, we anticipate that the government will continue to purchase not only under this current contract, but beyond that. If you go back since we acquired the facility ten years ago from the state of Michigan, we have been basically under contract with either DOD or HHS for more than ten years.
Mona Ashiya - J.P. Morgan
Okay and sort of related to that, you mentioned that you have this dedicated manufacturing facility in Lansing that you have dedicated for the production of rPA. Given the delay there now, how do you handle that? At what point do you decide that you want to use this all for BioThrax.
Fuad El-Hibri
The facility isn’t sitting idle and we are actually conducting pre-award activity for rPA there. Obviously and if there are more than the expected delays with this rPA award, we would reevaluate whether we would continue with the pre-award activities or campaign back to BioThrax. So, certainly rest assured that we are very interested in keeping this very critical asset and fully utilized. But, currently in anticipation of the award we are conducting pre-award activity on rPA.
Mona Ashiya - J.P. Morgan
Okay and one more strategic question and it is something that we have touched on in the past, but you have spoken about targeting this bar of $20 million for profitability and I am wondering at what point you would feel comfortable targeting a higher profitability level? I realize it is a balance between investing in the commercial pipeline and letting it flow to the bottom, but how do you think about that for your business?
Fuad El-Hibri
That is a very good question. We are very excited about our [inaudible] and commercial pipeline of products and pipeline translates into future growth and other licensed products. There is a tension between investing more and money in the pipeline as it advances through the pipe and of course maintaining profitability. So, we try to balance that, at least for now, by maintaining profitability around the $20 million level. Now as more products advance into late stage clinical trials, that equation may change, but for now, our objective is to remain profitable.
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