We refer to your letter dated 21 February 2005 regarding the recent change in the price of the Company's securities and increase in the volume of trading.
Our responses to the questions raised are as follows:
1. Gradipore has made two important announcements to the market within the last three week period. The first of these on 6 February 2003, covered the results of our work in separating and concentrating infectious prion material. This attracted considerable media and industry attention both in Australia and overseas. The second announcement on 13 February detailed an agreement with Advantek Biologics of Hong Kong for use of Gradiflow technology to improve biosafety in certain blood fractionation applications.
These announcements have caused a significant increase in interest in Gradipore's activities and have resulted in a substantial increase in the Company's share price over the past three weeks.
In the Company's opinion, these two announcements provide the underlying reason for the recent change in the price of the Company's securities and increase in the volume of trading.
Gradipore is aware of reports emerging last week indicating that the US Food and Drug Administration is seeking advice on whether the agency should consider labelling claims for the clearance of Transmissible Spongiform Encephalopathy (TSE) agents in plasma derivatives, based upon specific demonstration of TSE removal during manufacturing. This has direct relevance to Gradipore's work in removing and concentrating infectious prion material - seen to be the cause of TSE - which the Company announced on 6 February. We understand that the FDA's proposed draft labelling would include a statement to the effect that the manufacturer's manufacturing process provided substantial clearance of TSE agents.
Gradipore is also aware of the Company being upgraded to a "long term buy" by an Australian stock broking firm during the last week.
There are two other items of information which have not been announced, which if known, could be an explanation for recent trading.
* Gradipore is in the process of finalising its financial results for the half year ended 31 December which are required to be reported to the ASX by 14 March, 2003. In relation to these results, the Company flagged in an announcement made on 22 January, 2003 that revenue in the first half was somewhat behind budget targets and that initiatives were being taken to reduce expenditure accordingly.
* Gradipore is also close to announcing a new agreement with a customer in its Commercial Separations business unit to undertake certain development work using Gradiflow technology.
2. Gradipore is unable to make an any announcement immediately regarding either its first half results or the expected new agreement.
In respect of Gradipore's results, final figures still need to be reviewed and approved by the Board prior to any release. The Board is expected to meet within the next week to consider the results.
In respect of the expected new agreement, final approvals from Gradipore's customer still need to be received before any announcement can be made. The Company considers that at this point, this agreement falls within the exceptions to continuous disclosure outlined in 3.1A of the Listing Rules. These approvals are expected to be received within the next week.
3. The Company intends to record an operating loss before abnormal items and income tax for the half year ended 31 December 2002 that will vary positively from the previous half year within the range of 20-25%.
While an improved result will be reported, as indicated in our announcement of 22 January 2003, revenues in the six months to December fell short of internal targets, in part, due to the late release of new products. As a consequence, initiatives were taken in January, 2003 to reduce expenditure accordingly.
4. The Company does not intend to record a material abnormal or extraordinary profit/loss for the half year ended 31 December 2002.
5. The Company has no other explanation for the price change and increase in volume.
6. We confirm that the Company is in compliance with the listing rules and, in particular, listing rule 3.1.
If you require any further information, please do not hesitate to contact me.
