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JP Morgan Healthcare Conference 2021, Day 1: Qiagen, Invitae, Agilent, Sema4, More

NEW YORK – The 39th Annual JP Morgan Healthcare Conference is being held virtually this week due to the ongoing coronavirus pandemic. The first day was very busy for firms operating in the diagnostics and genomic tools markets, and our coverage of those presentations can be found here.

Below are brief reports on individual presentations webcast by the companies or through the JP Morgan conference portal on Day 2.


Qiagen

Qiagen CEO Thierry Bernard said that Qiagen emerged from a tumultuous 2019 and a subsequent failed acquisition bid last year by Thermo Fisher Scientific as a "stronger and more focused company" whose recent success has been buoyed by product sales related to the COVID-19 pandemic — the company launched more than 10 new products in 2020 related to SARS-CoV-2 sample prep, diagnostic testing, or research.

Bernard said the company is on track to meet its previously issued earnings guidance. "Of course, the COVID-19 pandemic represented a tailwind for our results, but [I see it as] a fantastic accelerator for investment and business[es] that were already factored into our projection," he said.

For example, Qiagen placed more than 3,300 new instruments across its business segments in 2020, primarily its NeuMoDx, QiaStat-Dx, and QiaSymphony lab automation platforms. In fact, the company's legacy QiaSymphony platform, which will slowly be replaced by the NeuMoDx system for certain testing applications, achieved a "much higher" number of placements in 2020 than the usual 200 or so per year, Bernard said.

In addition, Qiagen doesn't see the COVID-19 tailwind ending anytime soon, even with vaccine rollouts. Bernard noted as a comparison the influenza vaccine, which has been widely distributed on an annual basis for many years, yet in the US, there will still likely be around 30 million flu-related PCR test administered in 2021.

Nevertheless, the company sees itself as prepared for life after COVID-19 and plans to invest about 60 percent of 2021 R&D spending in what it sees as its five key growth areas: sample technologies, QIAcuity Digital PCR, QIAstat-Dx syndromic infectious disease testing, NeuMoDx high-throughput infectious disease testing, and QuantiFeron latent tuberculosis testing.

In turn, it expects sustainable double-digit sales growth for four of the five areas in 2021, with only sample technologies growing in the single digits due to an expected decrease in manual RNA sample prep kit sales.

The current baby in this portfolio, the QIAcuity digital PCR system, was launched in October and more than 200 platforms have been ordered since that time, Bernard said. In the near term, the system will mostly be used for research purposes and possibly applied markets (such as wastewater testing), but longer term, Qiagen expects to pursue in vitro diagnostic applications for it starting with oncology.

Meanwhile, the only business area that had a somewhat lackluster 2020 was QuantiFeron-TB, primarily because the COVID-19 pandemic slowed down TB testing rates, especially in mass testing situations like colleges and universities as well as immigration control. But Bernard said he is confident this business will return to strong growth, with projected 2021 revenues of more than $230 million compared to $180 million to $190 million in 2020.

In addition, Bernard said, as the "clear market leader" for latent TB testing, Qiagen welcomes the competition from new market entrant PerkinElmer, which this week announced its intent to acquire Oxford Immunotec — Qiagen's main latent TB testing competitor — for $591 million.

New competitors "will help us increase the awareness around the usage of latent TB [testing] — they will make the pie bigger," Bernard said. In addition, he noted, Qiagen has not being complacent in its market position.

Specifically, he cited Qiagen's ongoing partnership with DiaSorin to automate QuantiFeron testing, a workflow that has received both US Food and Drug Administration clearance and CE marking. In addition, Qiagen continues to collaborate with Australian firm Ellume for a handheld reader for QuantiFeron designed for use in resource-poor, high-burden markets.

"We have made it extremely difficult [for competitors] to penetrate the market," Bernard said.


Invitae

Invitae CEO Sean George said that although the last month and a half has been one of the strongest for the molecular diagnostics company, more recently, counties the firm operates in have instituted restrictive measures due to the growing number of COVID-19 infections. "We have a production facility in Southern California, and frankly, the last couple of weeks were a bit of a mess down there," George said.

Ahead of its presentation at the conference, Invitae said that it expects its 2020 revenues to increase by 28 percent from the prior year to $278 million, but the company's $450 million revenue projection for 2021 fell well below the consensus Wall Street expectation of $513.7 million.

Despite the promising momentum, "we're acutely aware there is a fair amount of uncertainty left," George said, adding that it is "hard to say how that's going to play out this year." Despite the conservative short-term outlook, over the next two to three years, Invitae will be able to achieve 50 percent to 60 percent revenue growth, he predicted.

Jason Myers, Invitae's president of oncology, said that following completion of the ArcherDx acquisition, Invitae reached one of its milestones in November by submitting a premarket approval application for the Stratafide next-generation sequencing test for personalizing cancer treatments. The company is seeking the US Food and Drug Administration's approval for the tissue- and blood-based test kit as a class II device with de novo claims and as a class III device with companion diagnostic claims. The FDA will likely take between 90 and 180 days to review the test as a class II device, though it may take longer, between 180 and 270 days, to review the higher-risk CDx claims, some of which are linked to drugs with breakthrough therapy status.

Invitae has discussed the proposed indications for Stratafide with the Centers for Medicare & Medicaid Services, and Myers said that if the FDA approves the test's CDx claims, it will be eligible for national Medicare coverage. He noted that the specific price point at which the test will be reimbursed still needs to be ironed out with payors.

Meanwhile, the company's Personalized Cancer Monitoring test for measuring minimal residual disease (MRD) will be integrated within Invitae's "core production engine," making it a resource not just for pharmaceutical companies developing immunotherapies but "customers of all sorts," Myers said. Although the MRD space is becoming highly competitive, with Guardant Health and Grail both announcing plans to advance tests this week, George isn't bothered about Invitae's ability to compete.

"We've been in a pretty rough and tumble environment" in the hereditary cancer genetic testing space, where there are numerous competitors, he reflected. "We've been competing in a sharp-elbowed space for a while." With 44 million new cancer diagnoses annually, George expects competition to increase in the near term. However, the competitors will fall away over the longer term, he said, as customers look for a one-stop solution that can serve cancer patients' testing needs throughout their disease trajectory, which he added is what Invitae is trying to build.

On Wednesday, a day after its JPM presentation, Invitae said that it is collaborating with Pacific Biosciences to develop a production-scale, high-throughput, whole-genome sequencing platform for clinical use.


Agilent Technologies

Agilent President and CEO Mike McMullen said that as part of the firm's "build and buy" strategy, it will focus on three major avenues of growth: transformation of the analytical lab, increase of market share in its core cancer diagnostics and genomics business, and expansion in new high-growth markets.

To transform the analytical lab, McMullen pointed out that Agilent "is driven to help customers not only with the science …  but also [with] the economics of the lab." He explained that the offering will require an integrated, digitally-enabled lab that is powered by a digital ecosystem, intelligent instruments, smart alerts, data analytics, and associated workflows to help customers' specific interests.

"With our industry-leading instrument position, coupled with our services-scaled capability and workflow focus … [you'll have] great results in terms of shared gains in the core analytical lab market," McMullen added.

In the cancer diagnostics and genomics market, Agilent aims to expand its automation platforms and leverage its position in immunohistochemistry-based companion diagnostics. In addition, the Santa Clara, California-based firm hopes to provide workflows on the sample prep side while ensuring it can enable clinical research and diagnostic testing on the data analytics front.

To expand into new high-growth markets, Agilent will execute three core strategies aimed at biopharma: providing analytical tools and workflows, serving as a leading supplier in providing GMP-grade oligonucleotides for RNA-based therapeutics, and offering integrated cell analysis solutions.

McMullen highlighted that Agilent's biopharma business has brought in $600 million in revenue and expects double-digit growth moving forward.

As part of the growing demand for nucleic acid-based therapeutics, McMullen said that Agilent now has over 20 different pharma partners and over 60 programs between its Boulder and Frederick, Colorado-based GMP nucleic acid production facilities. Agilent said in December that it will make a further $150 million expansion to the Frederick facility, which the firm believes will prime it for further capacity scaling and double digital growth in the biopharma end market.

Agilent also sees opportunities to further leverage its technology to support COVID-19 research and testing, and for the development of therapies and vaccines. While only about 2 percent of Agilent's 2020 revenues came from COVID-19 activities, McMullen said that the firm will look into developing ELISA-based serology tests for antibody responses, as well as RT-qPCR and wastewater monitoring tests for direct viral detection.

Agilent expects "at least high single-digit" core growth in Q1 2021 revenues, which McMullen noted represents twice the core growth rate that the firm expected in its earnings call and guidance in November. He emphasized that the firm saw broad-based growth among all markets using its brands except the academic market, where growth was slower.

On Agilent's plans for mergers and acquisitions in 2021 and beyond, McMullen said the firm will focus on the private segment of the cell analysis marketplace, which "keeps us out of public bidding wars against larger [players] in our space."

In terms of its long-term outlook, Agilent expects 5 to 7 percent growth over the next three to five years.


Berkeley Lights

Berkeley Lights is updating one of its antibody discovery workflows to increase throughput from 25,000 cells to 100,000 cells.

The firm's Opto Plasma B Discovery 4.0 workflow, coming in the first half of 2021, will accelerate therapeutic antibody discovery against difficult targets by doing everything from B-cell repertoire profiling to functional molecule re-expression "all in less than a week," Berkeley Lights CEO Eric Hobbs said at the conference.

A new chip the firm is developing can capture 20,000 cells at a time, and the workflow adds cell-based assays to explore antibody function in addition to bead-based binding assays available in the previous iteration.

The workflow also goes a step further than its predecessor, handling sequencing and re-expression of the final antibodies. "People have used in-house means to recover the functional molecule, but now we're enabling that entire workflow," Berkeley Lights VP of Antibody Discovery John Proctor said in an interview. A new off-platform portion of the workflow re-expresses sequences in either CHO or HEK cells. "It really shaves a lot of time off the workflow," he said, noting that re-expression could take a week or more, and the cost for doing it with Berkeley Lights' kit is less than $100 per sequence.

Hobbs also revealed that in Q4 2020, the company completed the alpha prototype for its cell therapy manufacturing system, a new platform that will automate the development of patient-derived cell therapies. "It will be a multi-year activity to get all the certifications needed" for that platform, Hobbs said.

In a presentation, he referenced work with customers including Samsung Biologics, Thermo Fisher Scientific, Genovac, and Catalent. The firm has also struck deals with some of the biggest names in pharma including Pfizer, Amgen, Novartis, and Bayer.

Based in Emeryville, California, Berkeley Lights went public last year in an upsized $178.2 million offering. The firm offers several platforms for handling cells with optical technology and assaying them including the Beacon and Lightning instruments.

During the Q&A portion of the session, Hobbs fielded questions about its business, noting that its unique offering of workflow subscriptions has "opened a lot of doors for us," and that conversations that started around subscriptions have even led to platform purchases. More customers are subscribing, but he declined to say how many, adding that the firm may disclose more on that topic when it releases its Q4 2020 results in February.

Up to 50 percent of platform placements are now going to contract research organizations and contract development and manufacturing organizations, Hobbs noted.

He also announced that later this year, the company plans to announce workflows developed in collaboration with synthetic biology firm Ginkgo Bioworks.


Sema4

Sema4 CEO Eric Schadt revealed in his conference presentation on Tuesday that the firm generated revenue of approximately $190 million in 2020. He said the firm expects revenues to grow at a compound annual growth rate of 38 percent through 2023, when it projects revenues of $504 million.

Sema4's women's health solutions, which includes carrier screening and noninvasive prenatal screening, has reached a run rate of approximately 206,000 tests per year, translating to approximately $200 million in revenues, and is projected to grow 28 percent year over year.

The Stamford, Connecticut-based company projects its oncology solutions business to grow 240 percent year over year, Schadt said, but did not disclose revenues or test volumes.

"Today a lot of revenues are generated around genomic testing," Schadt said, "but increasingly they'll be generated through secondary insights," including novel disease models that can inform clinical care, reduce cost, and improve outcomes, as well as tools and technologies that improve clinical trial efficiency and accelerate drug discovery.

Revenue from partnerships accounted for 4 percent of total revenues in 2020, but Sema4 projects that to grow to 30 percent by 2023.

Schadt also noted that Sema4, a Mount Sinai Medical System spinout combining genomic testing with other clinical data analysis, has partnered with GlaxoSmithKline to generate predictive analytical insights into the diagnosis and progression of cancer patients. Under that alliance, Sema4 is performing whole-exome and whole-transcriptome profiling of hundreds of breast and ovarian cancer samples provided by GSK and generating "molecular-level data that can be combined with existing real-world data and imaging data to provide a comprehensive view of data associated with certain cancer types," according to Schadt.


GenMark Diagnostics

GenMark Diagnostics became cash flow positive for the first time in 2020 and based on preliminary estimates believes its revenues grew around 94 percent year over year, Scott Mendel, the firm's president and CEO, said during a conference presentation on Tuesday.

The Carlsbad, California-based company also "allocated resources and money to expand its consumables capacity," he said, noting that in response to demand for coronavirus testing, the firm "exited 2020 with the ability to produce 75 percent more consumables than at the end of 2019."

GenMark invested more than $20 million in a facility that can house up to six test manufacturing lines, Mendel noted. At the end of 2020, it validated the first of two additional lines and expects to validate the second during this quarter. Its capacity is expected to reach about 200,000 tests per month exiting the second quarter.

"We've also begun planning for a third manufacturing line in this facility, which we expect to complete in the second half of 2021, increasing our capacity to about 250,000 consumables per month as we exit the year," Mendel said.

In 2020, the company placed an additional 265 ePlex analyzers, taking its global installed base to 792 instruments. More than 95 percent were linked to multiyear contracts for both ePlex Respiratory Pathogen Panel 2 and blood culture identification panels, and involved customer commitments to specific test volumes, "creating an enduring and recurring revenue stream for the company," Mendel said.

About 90 percent of its instrument placements in the fourth quarter were capital equipment sales, while the rest were reagent rental sales, he added.


Waters

Waters President and CEO Udit Batra addressed the company's poor performance in recent years, noting that a review of its operations had determined that weak execution and a misaligned product portfolio and performance management system were key to its slowed momentum.

Batra, who took over for former CEO Christopher O'Connell last September, acknowledged that the company has lost market share in recent years, "largely driven by the weakness in execution across our portfolio," and added that it has seen lower attachment rates for recurring revenue streams like services and consumables as well as less exposure than its competitors to fast-growing contract organizations in areas like research and pharma.

He added that Waters' instrument portfolio has not been well aligned with fast-growing market segments, noting that the company's lack of products in molecular diagnostics and bioproduction have hurt it relative to its peers during the COVID-19 pandemic.

Batra also said that the company's internal performance reviews did not appear to be well correlated with its overall performance, noting that while growth rates declined from 2017 to the present, more than 95 percent of employees have received reviews grading them as meeting or exceeding expectations.

He said the company was now looking to regain momentum via a variety of initiatives including driving replacement of hardware, "especially in liquid chromatography and mass spec," and increasing attachment levels across its recurring revenues businesses. It is also working to expand its sales contact with contract research, manufacturing, and testing organizations and build its e-commerce capabilities.

Batra said that a number of the company's recent instrument launches have failed to meet internal sales expectations. He cited the BioAccord mass spec platform, which is aimed at the biopharma market, and said Waters has shifted to a more targeted sales approach and deeper customer collaborations in an effort to drive sales of the system. He said Q4 2020 saw the largest number of BioAccord systems sold since the product's launch.

Regarding the impact of the COVID-19 pandemic on the company's business, Batra said the firm saw trends improve through Q3 and into Q4 with service activity returning to 2019 levels in most geographies, with the exception of the US.

 

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