Geoff,

You asked, "Zties -- Do you know whether the company provides free product to potential large scale customers for testing purposes?  Or would they have to pay for it?"

The last time I asked that question, the answer was, "some of both".  The concept being that there was a desire on the part of BioAgra to establish a strong body of data ccompiled from test results across several industries (poultry, pork, dairy, etc.).  The program was set up in such a way that if a "potential large customer" would agree to share their data with BioAgra, the Agrastim would be provided in exchange for permission to use that data (without the potential customer's name attached) for marketing and other purposes.  I understood that many companies were doing this and that data is being compiled from a lot of sources. 

On the other hand, those who are unwilling to share their trial data, participate in "cost sharing" of the product for trials.  This means that the purchase it at a reduced rate, usually 50% of the regular cost.

It is my understanding that every one of the top 30 poultry integrators in the US, have been targeted by BioAgra's sales force with this program, and that approximately 50% are participating in one way or another.

You said, "we unfortunately don't seem to have learned much from our experience in trying to sell NCS to semiconductor manufacturers.  If we didn't know what kind of a process BioAgra's customers would use to arrive at a decision (i.e., that they would want to conduct their own tests) it would seem as though somebody could have asked them a long time ago...."

Your comment is very understandable, given where we are today, and hindsight makes this quite clear.  I see it this way, after having addressed this very issue with both management and sales personnel.

The poultry industry (which was our first target) is highly competative and secretive (not unlike the electronics industry).  Margins are based on a penny or two per broiler.  Savings of two cents per broiler can result in seven digit projected weekly revenue increases for the largest integrators. 

Because of the intense competition and secretiveness of these large integrators, they don't even tell you what it would take to sell them a product and have them start using it in production.  It has not been as simple as "asking". 

It seems that a large integrator will test the product in a small pen and look at the results.  They will then try a different pen and compare data.  Then they will try it on a whole barn, collect the data and then go through a new cycle at the same barn without using Agrastim.  They are looking for every possible factor that might contribute to the test results.  We are, again, looking at pennies, or even fractions of pennies per bird in improved feed conversion or decreased mortality.  These are all based on averages. So, unlike the electronics inductry, we are using millions of living animals for testing, and "failure" of the tests would be very costly to the integrators, and could have a significant effect on one month's revenue if the results were poor.  Therefore, scaling up is done slowly and incrementally.

Should we have known this in advance?  I'm not sure there has been anything exactly like this presented to the industry for a long time (since subtherapeutic antibiotics) and I'm not sure the large integrators had a protocol established, or would have shared it with a "salesman" even if they did.

We have had to "learn the hard way".

You said, "I really don't want to be pessimistic, but it's only a little more than two months until the end of the year -- which was the point at which Paul predicted the entire production capacity would be spoken for.

I don't think it has to do with pessimism.  I think Paul's projection was based on what he knew (or didn't know) at the time the shareholder letter was written.  Based on what is known now, MY expectations are that we will need another 3-4 months into 2008 for full production capacity to be realized. 

Certainly, your distinction between "if and when" is an important one, and is truly an accurate distinction that reflects our individual approaches.  I am optimistic, based on current interest, testing and results, that it is only a matter of time before "if" becomes "when".  Your use of "if" depicts the current status quite accurately.  My use of "when" is based on what I know, and a degree of optimicm that keeps me long in this investment.

 Best regards,

 -z