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Bio-Techne Dx, Spatial Biology Biz Soars Despite Protein Science Segment Headwinds

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NEW YORK – Bio-Techne's recently renamed Diagnostics and Spatial Biology segment saw significant growth in the firm's fiscal first quarter and paved the way for the company's overall revenue growth, executives said Wednesday.

On a call to discuss the firm’s financial results, Bio-Techne CEO Kim Kelderman called its molecular diagnostics and spatial biology businesses “growth pillars” for the company. Previously named Diagnostics and Genomics, the segment was recently renamed to reflect its "increasing leadership in the emerging spatial biology field," Kelderman said, and indicates the importance of spatial biology to the firm's overall growth, led by the Comet platform.

The firm is planning a broader rollout of Comet in its second fiscal quarter of 2025, Kelderman noted, and Bio-Techne has increased manufacturing capacity to meet growing demand for the instrument. The company has also launched its RNAscope assays for use on Comet and is continuing to launch a growing portfolio of antibodies validated for use on the instrument, which will "support a consumable stream that is expected to be the highest pull-through of any instrument under the Bio-Techne umbrella," he said.

Kelderman added that Comet has an average selling price of about $350,000 per instrument and that the firm feels that price point is "the right one at the moment."

He also highlighted the molecular diagnostics business as a standout that "continues to perform at a very high level," with nearly 40 percent growth in both the ExoDx Prostate test and the Asuragen kit business, while CFO Jim Hippel noted that the MDx business led growth for the Diagnostics and Spatial Biology segment.

The firm expects to launch its next exosome-based diagnostic test, an assay for ESR1 mutations in breast cancer, in the coming months and will commercialize it through Asuragen's existing laboratory channels. Bio-Techne has plans to launch other genetic tests in the fiscal year, Kelderman said, and the firm is "mainly focused on creating exosome-based tests that we can market ourselves through the Asuragen channel," rather than partnering with other companies.

Bio-Techne currently has a partnership with Thermo Fisher Scientific to develop an exosome-based test for kidney transplant rejection. That assay, Kelderman said, is "in Thermo's hands." 

In Kelderman's view, this Diagnostics and Spatial Biology segment growth is sustainable, as ExoDx Prostate still has "plenty of runway and market penetration" ahead of it. Asuragen's kit business also has "similar momentum," and the business has a strong research and development funnel, he said.

The Protein Sciences segment, however, has faced significant headwinds from China and biopharmaceutical end markets, although those headwinds have shown signs of abating. The segment is "where we have the most exposure to both China and biopharma end market headwinds" but is "positioned to see the most improvement as these markets continue to normalize," Kelderman said. There are "early indications of improvement in our biotech end markets" that are validated by the strength of the firm's cell and gene therapy business, he added.

Overall, sales in the biopharmaceutical end market increased in the mid-single-digit percent range as large pharmaceutical customers remained stable. The firm has seen improving order trends among biotechnology customers, and its academia sales increased in the low-single-digit percent range, Kelderman said.

China has been a source of difficulty for many firms in the life sciences industry over the past year due to the challenging funding environment, and that continued for Bio-Techne in the quarter, with revenue declines in the low-double-digit percent range. China makes up about 9 percent of Bio-Techne's overall global revenues and traditionally has had an even mix of instrument and consumable purchases, although that mix has shifted temporarily more toward consumables.

However, Kelderman noted that the firm saw "pockets of strength" in cell and gene therapy solutions and spatial biology in the country. Stimulus-related tender activity is expected to translate to instrument orders in the third quarter of the fiscal year, he added. Most activity has been centered around the company's automated western blot business and focused more on the academic setting. "That's where we would expect a slight tailwind and that could spark definitely a turnaround in the country, which we all have been waiting for," he said.

Hippel noted that the uptick in activity may be enough to flip China from negative growth rates to modestly positive growth rates in the third fiscal quarter.

The firm's ProteinSimple business saw revenue growth in the mid-single-digit percent range, with the challenging capital equipment environment more than offset by strong revenue growth in consumables and services, Kelderman said.

Hippel added that the company needs to see improved biotechnology funding materialize into biotech spending but noted that the firm has started to see the smaller biotechnology growth rate "not just stabilize but actually start to pick up a bit."

More broadly, Bio-Techne reported that its total first quarter revenues for fiscal year 2025 rose 5 percent year over year.

For the three months ended Sept. 30, the company reported revenues of $289.5 million compared to $276.9 million in Q1 2024, beating analysts' average estimate of $280.3 million. Revenues rose 4 percent on an organic basis.

Minneapolis-based Bio-Techne said its Q1 Diagnostics and Spatial Biology segment revenues rose 14 percent to $83.2 million from $72.8 million in the prior-year quarter. Organic revenue for the segment also rose 14 percent.

Its Q1 Protein Sciences segment revenues were essentially flat at $204.5 million compared to $204.7 million a year earlier. Organic growth for the segment was 1 percent.

Bio-Techne reported net income of $33.6 million, or $.21 per share, for the quarter compared to $51.0 million, or $.31 per share, in the prior-year quarter. The company reported adjusted EPS of $.42 per share, beating analysts' average estimate of $.38 per share.

Bio-Techne finished the quarter with $187.5 million in cash and cash equivalents.

Hippel said on the call that the firm's current momentum suggests revenue growth in the mid-single-digit percent range in the first half of its fiscal year and that Bio-Techne expects the Q2 top-line performance to look similar to Q1. The company also sees "potential for organic growth to gradually accelerate in the second half of our fiscal year," Hippel said, with large pharmaceutical customer orders being the "most significant wild card in this outlook."

While the firm does not generally provide segment-specific guidance, Hippel said that the company expects very gradual improvement within Protein Sciences as biotech funding continues to gain momentum. Bio-Techne also expects growth in the double-digit percent range to continue in the Diagnostics and Spatial Biology business, although it may not be as strong as it was in Q1.

Hippel added that M&A remains a top priority for capital allocation.

The company also announced on Wednesday that its board of directors has agreed to pay a dividend of $.08 per share, payable Nov. 22 to all common shareholders of record on Nov. 11.

In Wednesday afternoon trading on the Nasdaq, Bio-Techne shares were up 7 percent at $75.67.