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Bio-Techne FY Q2 Revenues Rise 6 Percent, Miss Analysts' Estimate

NEW YORK – Bio-Techne said Tuesday that its fiscal 2020 second quarter revenues rose 6 percent year over year, due in part to strong growth in its Diagnostics and Genomics businesses.

For the three months ended Dec. 31, 2019, the firm posted $184.9 million in revenues, up from $174.5 million a year ago but below analysts' average estimate of $191.2 million.

In Q2, the firm's Diagnostics and Genomics revenues were $43.8 million, up 11 percent year over year from $39.3 million. Bio-Techne's Protein Sciences revenues were $141.5 million, up 4 percent from $135.5 million in the prior-year quarter.

Highlights during the quarter included participating in a joint venture focused on providing scalable manufacturing technologies and processes to develop and commercialize new cell and gene therapies.

"Q2 was a solid quarter of 6 percent organic growth, especially considering some one-time headwinds we had over last year," Chuck Kummeth, president and CEO of Bio-Techne, said in a statement. "Our core retail reagents remained strong with double-digit growth in most product categories, while our Genomics' ACD business continued growing at over 20 percent in Q2."

He added that China continued its trend of greater than 20 percent growth but Europe "was soft year over year, especially with instrument sales."

The company also said that applicable Medicare beneficiaries have been covered for its ExoDx Prostate Test since Dec. 1, 2019.

With a favorable Medicare decision behind it, Bio-Techne is focusing on getting the attention of additional payors, Kummeth said during a conference call to discuss the firm's financial results. Before considering reimbursement of the Exosome Dx EPI prostate test, large private payors want to see results of a clinical utility study published in a peer-reviewed journal. Exosome Diagnostics had performed such a study before Bio-Techne purchased the company in mid-2018 for up to $575 million, Kummeth noted.

Bio-Techne has submitted the study to a peer-reviewed journal, and it should be published before the end of this fiscal year, Kummeth said.

Further, the company is preparing a premarket approval (PMA) filing for the Exosome Dx EPI prostate test that it anticipates submitting to the US Food and Drug Administration. The FDA had granted Breakthrough Device designation for the test in June. 

"It is difficult to predict the exact timing of a potential FDA approval, but achievement of this status will deepen our competitive moat and allow us to have a higher priority for reimbursement from private payors," Kummeth said.

The firm expects prostate test revenues from Medicare in this current quarter to be potentially "as high as $1 million," he said.

In a research note Tuesday, SVB Leerink analyst Puneet Souda said the firm's Exosome Dx EPI prostate test "could provide a significant boost" to Bio-Techne's revenues in the second half of fiscal 2020 "as collection rates improve and more physicians adopt the test."

He said the investment bank conservatively estimates about $15 million in revenue from the test in FY 2020. That should help drive overall organic growth of Diagnostics and Genomics business to 11 percent for the year, Souda said.

Kummeth said that the firm is recruiting patients and starting studies on bladder and kidney rejection urine tests that it may be able to launch in two years or less. "We are working on partnership ideas to get going on the plasma side" for both lung and breast cancer indications, he added.

Bio-Techne's R&D expenses rose 4 percent year over year to $16.4 million from $15.8 million in Q2 2019, and its SG&A expenses rose 7 percent to $68.0 million from $63.6 million in the prior-year quarter. 

The Minneapolis-based company also reported other income of $113.3 million for the recently completed quarter compared to an expense of $11.8 million in fiscal Q2 2019.

Bio-Techne posted Q2 net income of $119.6 million, or $3.02 per share, compared to $17.6 million, or $.45 per share, a year ago. The firm's EPS growth was partly due to a gain of about $121 million from an investment in Mountain View, California-based ChemoCentryx, which develops orally administered small molecule therapeutics that target chemokine receptors and related chemo-attractants, it said.

Adjusted EPS for fiscal Q2 2020 was $1.08, missing analysts' average estimate of $1.13.

At the end of Q2, the firm had $110.3 million in cash and cash equivalents and $133.7 million in short-term available-for-sale investments. Bio-Techne paid down $103 million of its debt during the quarter.

Bio-Techne on Tuesday announced a dividend of $.32 per share for FY Q2, payable Feb. 28 to shareholders of record on Feb. 14.

In morning trading on the Nasdaq, Bio-Techne's shares rose slightly to $208.43.