Chilbear,

Thanks for the link to the Zacks Report; as you may know, CGNH may have paid for this report with CGNH shares. This is not all bad as IMO CGNH established this relationship to provide the following information to us –

For CGNH Market Capitalization:

• CGNH may not need more than $3 million financing, although a capital raise 50% - 75% more than this is possible.
• Median valuation of peers in the professional POC IVD testing space is 13.6 x earnings.

For the Beads:

• Bead market is highly dynamic; quickly embrace next-generation technology.
• Samples of beads will be sent to Merck’s customers in mid-September to provide feedback. Assuming customer feedback is positive, Merck will immediately begin increasing production to commercial-sized lots and commence distribution to its customers shortly afterwards.
• Merck and CardioGenics will continue to work on refining the encapsulation process in an effort to commercialize several generations of the product and expand the target market for their beads.
• 90% Gross margins to CGNH on the beads
• Annual market for paramagnetic beads applicable to CGNH is $1 billion with 6% annual growth and Merck holds 15% - 25% share

For the POC Analyzer:

• Protocols for head to head trials are under review by IRBs; CGNH expects to commence testing under these trials during the third quarter 2010 and complete in 45 days.
• CGNH plan is to begin FDA trials using the Troponin I test in Q4 2010; complete within two months, a 510(k) filing and then launch by the middle of 2011.
• Manufacturing, distribution and marketing will be handled by CMO and partner
• Deal terms CGNH seeks will include milestone payments for marketing rights, $1 million in milestone payments upon submission of each test to the FDA and ~40% of Net Sales.
• CGNH gross margins >90%, including the cost of the analyzer.
• The cartridges have a 12-month shelf life at launch.

IMO the commercialization information provided by Zacks is not that useful, as Merck and the licensee for the POC Analyzer will make these decisions not CGNH. IMO highly unlikely that either Merck or the POC Partner will plan to "...gain entry into the market as a niche player offering next-generation technology at a significant discount to competitors products, most of which use legacy technology." Pricing and market research studies will be undertaken to determine how these products will be launched and marketed.

IMO Merck will seek to take advantage of the "Enormous opportunity to take meaningful share of the ~ $1B paramagnetic bead market; expect bead sales to ramp very quickly after launch."

IMO the POC Analyzer partner will execute a razor-razorblade strategy but whether that strategy "...will offer the QLCA machine to customers for free through a lease agreement where the customer agrees to purchase a predetermined amount of tests" is yet to be determined.

Zacks' report offers IMO confirmation of the excellent opportunity for investors in CGNH at these levels to make a significant return on their investment.

Ante