SAN FRANCISCO (GenomeWeb) – The 34th Annual JP Morgan Healthcare Conference entered its second day here Tuesday with several life science research tools and diagnostic firms making presentations to investors and other attendees.
The following are capsules from the presentations and breakout sessions of Thermo Fisher Scientific, Qiagen, Danaher, Counsyl, Human Longevity, and Adaptive Biotechnologies. Updates on sequencing technology firms 10X Genomics and Pacific Biosciences can be found here.
Thermo Fisher Scientific
Marc Casper, president and CEO of Thermo Fisher Scientific, discussed the firm's rationale behind its decision to acquire Affymetrix for $1.3 billion and its fit within the company. In particular, he said Affymetrix's array products are a strong fit with the firm's Life Sciences Solutions business, which contains many of the assets Thermo Fisher gained through its 2014 acquisition of Life Technologies. He told investors that there is a meaningful role for Affy's microarrays to play in combination with the sequencing solutions already offered by the firm, and Affy's flow cytometry assets, which are offered by its eBioscience business, will add to the momentum Thermo Fisher has in that market.
Most importantly, Casper sees plenty of room for Affymetrix to grow revenues outside of the US, from which it currently derives 61 percent of its revenues. It will benefit greatly from Thermo Fisher's global reach, he said, adding that even Life Technologies, which was at a much greater scale at the time of its acquisition by Thermo Fisher, is "growing meaningfully faster" under Thermo Fisher's ownership due to its global presence and customer relationships internationally.
Though some investors are concerned about slow growth in the arrays industry in general, Casper said he expects Affymetrix as a whole to grow at a consistent level, even though the arrays business may grow at a slower clip than the rest of its offerings.
Casper also noted during his presentation that the $115 million in cost synergies targeted by the firm in its acquisition of Life Technologies is tracking at $130 million, while the revenue synergies are on target at $60 million.
He also noted that Thermo Fisher deployed around $700 million of its cash last year for M&A activity, and though the Affymetrix deal is valued at over a billion dollars and will be paid for through cash and short-term debt, Casper said it is "not a big transaction," and the firm has plenty of capital to deploy to shareholders either through stock buybacks or dividends.
Qiagen CEO Peer Schatz highlighted the five primary growth drivers for the firm: its QIAsymphony platform, personalized healthcare, its Quantiferon TB test, its bioinformatics portfolio, and its recently introduced GeneReader platform.
Though Qiagen on Monday reported that preliminary earnings for the fourth quarter and FY 2015 fell short of management's outlook and analyst expectations due to the timing of revenues from companion diagnostic collaborations and soft instrument sales, Schatz said that new QIAsymphony placements exceeded the firm's target. The QIAsymphony plays a key role in the firm's efforts in the liquid biopsy space, enabling automation of cell-free DNA detection. Schatz noted that Qiagen has five companion diagnostic deals thus far that use liquid biopsy, and said that he believes the company is processing more liquid biopsy samples than any other firm in the industry.
In total, Qiagen has 15 master companion diagnostic deals that it has announced, many of which have several development programs. Among its pharma partners are Eli Lilly, AstraZeneca, Novartis, and Bayer. The most recent of these deals, a pact with Array BioPharma to develop a CDx test for a drug in Phase III clinical trials for NRAS-mutant melanoma, was announced in advance of Schatz's presentation on Tuesday. He further noted that CDx revenues account for a little less than 10 percent of the firm's revenues, and Qiagen sells more than 12 CDx tests in Europe and has four FDA-approved companion diagnostics.
One of the key technologies for Qiagen going forward in the CDx field and beyond is its recently launched GeneReader, a so-called "sample-to-insight" sequencing-based workflow that Schatz said can cut down on problems with reproducibility that are common when putting together a workflow using instruments from several different vendors. The platform was launched in December, and though it's too early for the firm to provide the number of customers or units sold or ordered, Schatz said feedback on the GeneReader has been "phenomenal."
He said Qiagen will first focus on selling the GeneReader to the molecular oncology market, with future applications including infectious diseases and potentially custom panels. The firm has put together a sales team specifically focused on the molecular oncology market that will sell the GeneReader along with other Qiagen products, such as its TheraScreen assays. Schatz further noted that the firm is staying out of the current arguments over single-marker tests versus panels for oncology indications, and instead sees a place for both and intends to service the market based on customer needs.
From a financial perspective, even though the preliminary Q4 numbers were a disappointment, Schatz said he sees accelerating top- and bottom-line growth for the firm in FY 2016 and is targeting 6 percent growth at constant exchange rates. He said this growth will be fueled by CDx partnerships, the GeneReader, latent tuberculosis screening with Quantiferon, and the boost to National Institutes of Health funding.
Danaher CEO Thomas Joyce said the company saw a continued softness across a number of businesses throughout December, and experienced a "flattish" quarter. During his JP Morgan presentation, which was webcast, Joyce said he sees some continuing challenges in some of the emerging markets, but overall said that Danaher has good traction on margins and solid operational performance. This resulted in an EPS in line with expectations at the midpoint.
Joyce also gave investors an overview of what he expects for the company after it separates from the new diversified industrial growth company it's forming called Fortive. Once Fortive completely spins off in 2016, Danaher expects to post revenue of $16.5 billion, 60 percent or more of it recurring. In fact, Joyce said, recurring revenue is a "defining characteristic" of the Danaher portfolio. He added that many of Danaher's businesses are still in the early stages, so he sees significant investment opportunities in the company in 2016 for both organic and inorganic growth, and that Danaher has a "bias" toward M&A.
The CEO spent some time discussing the company's post-acquisition activities with Sciex, and its expectations for Pall. Sciex operated in a suboptimal virtual joint venture structure when Danaher acquired it, which posed a challenge for the company. But by replacing that structure with a customer-focused model, and using what Joyce called the Danaher Business System (DBS), the company was able to take Sciex's core growth from the low single digits five years ago to the mid- to high-single digits today.
The work Danaher has done with its Beckman Coulter business is another example of DBS at work, he added, and these two acquisitions have formed Danaher's thinking about how to proceed with its newest business, Pall.
Pall has nearly $3 billion in revenue, split almost equally between the life science business and the industrial business, though life science is the higher-growth platform, Joyce said.
Pall, which is known for its filtration and purification systems, has a particularly huge opportunity in biopharma — an opportunity Joyce called a "critical component in the growth of Pall today." As drug manufacturing shifts from chemically produced small molecules to biologics, it will need greater filtration. Further, he added, the business has 80 percent recurring revenue, and its development of single use technology has accounted for 20 percent growth of the business.
The Pall team has also embraced DBS, making Joyce "optimistic" for the business' future.
Counsyl is "poised for expansion into new markets," and is currently developing a liquid biopsy assay, CEO and Founder Ramji Srinivasan told investors today at his company's session.
The molecular diagnostics company, which offers carrier screening, noninvasive prenatal testing, and an inherited cancer screening test that all run on next-generation sequencing platforms, is looking to expand further into the reproductive health and oncology markets.
Srinivasan said that the firm's three products currently address markets that total about $7.8 billion, but expanding into the somatic cancer market will enable the company to tap into a $23 billion market.
The firm has seen its testing volume grow nine-fold between 2011 and 2015 and in total has tested more than 500,000 patients, Srinivasan said. Despite the volume growth, it has reduced average turnaround time to six days from 10.4 days in 2011.
In addition, Counsyl has contracted with insurance companies to get reimbursed for its tests and has over 150 million lives under contract. Around 79 percent of its insurance revenue is from payors with whom it has in-network status.
Aside from new tests, Srinivasan said that a number of the workflows, automation, and analysis that Counsyl has built as part of its sequencing platform are "monetizable outside our walls" to external research parties.
Human Longevity CEO J. Craig Venter said that the firm has so far sequenced more than 20,000 human genomes. To reach its goal of sequencing 1 million genomes by 2020, it is scaling to be able to sequence 100,00 genomes per year by the end of 2016. Included in its fleet of sequencers are 24 of Illumina's HiSeq X units and two Pacific Biosciences systems.
Researchers from the firm recently submitted a paper to a journal regarding the clinical analysis of 10,000 genomes, Venter said.
This week, the firm also launched cancer sequencing services, including both tumor and germline exome and whole-genome sequencing. In addition, Human Longevity plans to roll out immune repertoire sequencing and a liquid biopsy technology to analyze both circulating tumor cells and circulating tumor DNA. Going forward, Venter said one major oncology initiative will be the development of personalized cancer vaccines.
Venter said Human Longevity is also working toward developing models that can take genomic information and predict an individual's age, voice, and face. And finally, he said that the company is making progress on its Health Nucleus platform, which is a research-based platform that incorporates genomics with a comprehensive analysis of a person's health history, including whole-body medical imaging and other laboratory medical tests.
Immune sequencing firm Adaptive Biotechnologies has inked deals with two payors for its clinical assay, ClonoSeq, a noninvasive NGS-based test that predicts minimal residual disease in patients with blood cancers, and is developing its next product — a test for solid tumors, CEO Chad Robins said during a presentation.
ClonoSeq is now "one of the most validated oncology tests in history, by number of patients analyzed," Robins said.
Adaptive Biotechnologies launched ClonoSeq in 2013 and began selling a research-use only kit, ImmunoSeq, last year. Last year it also acquired immune sequencing firm Sequenta.
This year, Robins said, is "all about commercialization." The firm plans to launch TilSeq, which will analyze tumor infiltrating lymphocytes. It also plans to submit its ClonoSeq assay to the US Food and Drug Administration for clearance, and is working on inking more deals with insurance companies for ClonoSeq.
In addition, Robins said the company will expand internationally and is looking to strike deals with pharmaceutical companies, such as the one it made last week with Pfizer to combine Adaptive's immune sequencing technology with Pfizer's biomarker expertise to identify patients who may benefit from immunotherapy.
In 2015, Adaptive also established a therapeutics business and raised $195 million in a Series F financing round that it said it would use in part to advance that portion of its company. Robins said that the therapeutics portion of the company would continue to grow in 2016, and represents a huge market opportunity. The firm is currently seeking to hire someone to head that business unit.