The following is excerpted from the question-and-answer section of the transcript.

Question: Matt Palmer - Roth Capital Partners - Analyst: This is Matt Palmer in for Matt Dolan. Thanks for taking the questions.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Matt Palmer - Roth Capital Partners - Analyst: Good, thanks. So after a strong first half, the midpoint of your new guidance assumes the next two quarters average over $26 million per quarter. I was wondering, is that strength in the base business, or are you beginning to see more contributions from the new test launches and starting to include that in your guidance?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Matt Palmer - Roth Capital Partners - Analyst: Okay. And based on your early experience with both Clarient Insight Dx for Breast and EGFR, what type of market share can you capture over the next year? And what are your thoughts on reimbursement and the influence of these tests on gross margin?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Matt Palmer - Roth Capital Partners - Analyst: Okay, thank you. That's very helpful. And lastly, can you elaborate on the trends you're seeing among your existing biopharm clients and maybe add some color to your prepared comments on the role you envision for this segment in your business for the future?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Matt Palmer - Roth Capital Partners - Analyst: Okay, thank you. Congrats on a great quarter.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Scott Gleason - Stephens, Inc. - Analyst: Hey, Ronny and Ray. Thanks for taking my questions, guys.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Scott Gleason - Stephens, Inc. - Analyst: Okay. Ronny, could you maybe just give us a little bit more granularity from an actual revenue contribution basis, kind of what you guys saw with EGFR in the quarter? Because clearly, there's a lot of excitement coming out of the ASCO meeting with that test. And then you said you were in 6% of accounts now. Can you give us a guess for where that number might go as we get towards the end of this year and into 2010?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Scott Gleason - Stephens, Inc. - Analyst: Great. And then, Ronny, obviously, you guys had a sales reps to add in the first quarter of this year. Can you just talk, now you guys have a little experience with those folks, how they're ramping in terms of a contribution basis and if you would expect them to follow the traditional curve with what you guys have seen? And thanks for taking my questions, guys.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Debjit Chattopadhyay - Boenning and Scattergood - Analyst: Hey, good afternoon, gentlemen, and thank you for taking the questions.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Debjit Chattopadhyay - Boenning and Scattergood - Analyst: I'm very good, thank you. Well, let me put you on the spot here. Last year, July was probably one of your best months, and that was primarily because of KRAS. Given the launch of EGFR this year roughly in the same timeframe, is July holding up like you had anticipated?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Debjit Chattopadhyay - Boenning and Scattergood - Analyst: Back to the EGFR testing, I presume there's about 140,000 to 150,000 non-small-cell lung cancers cases every year. And how many of these patients are currently getting tested for EGFR, given that Tarceva and Iressa and potentially Zactima should be in the market?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Debjit Chattopadhyay - Boenning and Scattergood - Analyst: Moving on to the Insight Dx, I presume right now the factors are primarily for Medicare patients, and so at what point do you think Clarient will be ready to move into the private payers? Or do you have to submit to the FDA before, which means breaking ranks?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Debjit Chattopadhyay - Boenning and Scattergood - Analyst: And finally, asking a question, I mean, the CVA conversion, that was a one-time event, right, and you don't expect to see this anymore?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Debjit Chattopadhyay - Boenning and Scattergood - Analyst: And thank you so much.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Quentin Lai - Robert W. Baird - Analyst: Hi. Good afternoon, Congratulations on a very nice quarter.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Quentin Lai - Robert W. Baird - Analyst: Doing great. A question first on Insight. You said 80 accounts are starting and repeat tests. What's the early feedback so far in terms of the data usage? Is it that they're getting, and do you know whether they're running also any other recurrence tests along with your Insight?

Answer By: Mike Pellini - Clarient, Inc. - COO

Question: Quentin Lai - Robert W. Baird - Analyst: Thank you. And then with respect to EGRF and KRAS, the comparison of the two. I think, KRAS, you also saw some adoption from the academic centers. Are you seeing the same thing as you roll out your new tests?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Quentin Lai - Robert W. Baird - Analyst: And then finally, you mentioned about some of the other prereleases earlier in this earnings season. Yes, it could be, I guess, the steady volumes that you're seeing, kind of a little bit different in that you're looking at breast samples and people that have been diagnosed versus maybe more predictive work like a Myriad?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Quentin Lai - Robert W. Baird - Analyst: Thanks.

Question: Raymond Myers - Emerging Growth Equity - Analyst: Thank you and good evening.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: All right, doing well. Just a follow-up on what you were just saying, Ronny. As you call up your customers to find out how their business is going, is their business falling off, and has it recovered as quickly as yours? The point of my question is, is your business recovering because of new tests, or because the market in general is recovering?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: Okay, that's good to hear. It sounds like you'll do better than the average in the industry. How should we think about seasonality in the third quarter? Is the seasonality stronger, generally, in the third quarter than in the second quarter, notwithstanding what you're just saying about it coming back?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: So we should expect that seasonality would be improved here in the third quarter? August is not still soft?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: Right. That's a good indication. What caused the reduced gross margin in the second quarter?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Answer By: Mike Pellini - Clarient, Inc. - COO

Question: Raymond Myers - Emerging Growth Equity - Analyst: Well, one of those investments, I presume, was the ERP?

Answer By: Mike Pellini - Clarient, Inc. - COO

Question: Raymond Myers - Emerging Growth Equity - Analyst: So how can we think of the gross margin? Does it trough in the second quarter and then begin to gradually increase?

Answer By: Mike Pellini - Clarient, Inc. - COO

Question: Raymond Myers - Emerging Growth Equity - Analyst: Can you remind us what you forecasted, and then also, remind us what kind of gross margin long-term do you expect from these new molecular products?

Answer By: Mike Pellini - Clarient, Inc. - COO

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: All right. I like that long-term trend. The 14 new reps you say you hired in the first quarter, that sounds great. What is the total number of reps, including sales reps and sales managers, that you have at ending Q2 or now, whichever number you can give?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: So 36 and 8.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: So 36 sales, eight directors, and how many in marketing?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: Okay. I'm trying to square that with 57 in marketing and sales that I understood were in the first quarter. Maybe we can come back to that.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: Why don't I follow up with that later offline?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: Now, Ronny, we're never satisfied, even despite how well you're doing. How soon before Clarient can launch its next round of tests?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Answer By: Mike Pellini - Clarient, Inc. - COO

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: That's great. And then give us one final question, if I could. Ronny, give us some sense of what either run rate or revenue, what do you expect out of Insight Dx here in the fourth quarter?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Raymond Myers - Emerging Growth Equity - Analyst: That will be great. Thank you, guys.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Jon Hickman - MDB Capital Group - Analyst: Hello. Can you hear me?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Jon Hickman - MDB Capital Group - Analyst: I'm good. Nice quarter. Would you comment on your comment from last quarter when you said, "Now that we have all this cash on the balance sheet, we think that we're in a target-rich environment for other markers"?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Jon Hickman - MDB Capital Group - Analyst: So how about following up on that?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Jon Hickman - MDB Capital Group - Analyst: So just one more question, kind of a follow-up on that. Did you guys have any heads-up on the fact that you got this lung test out pretty quickly? Did you know that those papers were coming? Did you have a--?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Answer By: Ray Land - Clarient, Inc. - CFO

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Jon Hickman - MDB Capital Group - Analyst: Okay. One last thing. Do you want to make any comments on your ongoing relationship with Safeguard?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Jon Hickman - MDB Capital Group - Analyst: Okay, thanks.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Shankar Vasu - Alphabet Partners - Analyst: Well, thank you for taking my question. Let me ask in this best accounts area, when you compete with (inaudible) accounts, what's the published papers you think the doctors are asking for before they believe the prognostic value derived from these tests are? Acceptable and predictable of (inaudible)?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Shankar Vasu - Alphabet Partners - Analyst: And if I could follow up with a question. In the current era of change in health care delivery, what are you hearing about comparative efficacy being utilized by the payers to decide what tests to use and so forth and so on, and ration the number of tests that can be used?

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Shankar Vasu - Alphabet Partners - Analyst: Thank you. Thank you.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Debjit Chattopadhyay - Boenning and Scattergood - Analyst: Hey, Ronny, I was just wondering, when you were talking about the run rates of the EGFR test, that $4 million you saw on an annualized basis and comparing it to the KRAS, were you thinking in terms of the dollar value or the volume of tests? Because EGFR is being reimbursed at almost 3.5 times KRAS.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Question: Debjit Chattopadhyay - Boenning and Scattergood - Analyst: Okay. Thank you so much.

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO

Answer By: Ron Andrews - Clarient, Inc. - Vice Chairman, CEO