This article has been updated from a previous version to include comments made by Qiagen executives during its earnings call.
NEW YORK (GenomeWeb) – Qiagen reported after the close of the market Monday that its third quarter revenues grew 7 percent year over year on both a reported basis and at constant exchange rates (CER).
For the three months ended Sept. 30, Qiagen reported revenues of $364.0 million, up from $338.7 million a year ago and just beating the average analyst estimate of $363.3 million.
Qiagen noted that about 6 percent of revenue growth was organic, with about one percentage point of growth attributable to the company's Jan. 2017 acquisition of OmicSoft.
By product category, consumables were responsible for about 88 percent of total sales, rising 8 percent at CER to an adjusted figure of $322.0 million. Instrument sales, which made up 12 percent of Qiagen's total sales, grew 2 percent at CER to $43.0 million.
By customer class, molecular diagnostics accounted for nearly half of all sales and grew 9 percent at CER to $180.0 million, led by growth of the company's QuantiFeron-TB testing franchise and consumables for the QiaSymphony laboratory automation system, with contributions from companion diagnostic pharmaceutical collaborations.
During a conference call recapping the company's Q3 earnings, Qiagen CEO Peer Schatz said that Qiagen estimates that latent tuberculosis testing is "a billion-dollar addressable market with promising opportunities for the QuantiFeron TB test." He noted that Q3 sales of the test continued to trend above a 25 percent annual growth target the company set for the year.
"We reached an important milestone in the third quarter with the launch of QuantiFeron-TB Gold Plus, the fourth generation version of the test, in the US," Schatz said. "Our US introduction of QuantiFeron-TB Gold Plus started after the test gained US FDA approval in June of this year, and follows adoption in more than 75 countries across Europe, the Middle East, Africa, Asia, and Latin America."
Meanwhile, Schatz noted that "QiaSymphony is a remarkable success story. New placements were strong again during the third quarter, and we are set to soon achieve the 2000th cumulative placement, which we have set as a target for the end of this year. The system is adding value with an expanding menu of test content and also for front-end use for any downstream molecular testing, in particular for NGS workflows."
Finally, in the area of companion diagnostic development, Schatz said that Qiagen has surpassed the milestone of 25 master collaboration agreements with pharmaceutical companies, and launched a record 15 new CDx projects with existing partners so far this year, "each bearing potential for advanced tools in clinical patient stratification."
"We announced a ground-breaking agreement with Bristol-Myers Squibb in June ... to develop the first [next-generation sequencing]-based companion diagnostic solutions for use with IO [immune-oncology] therapies, and in the meantime we have significantly expanded our footprint in this area," Schatz said. "During the third quarter we were able to add a further NGS-based collaboration … with an undisclosed pharmaceutical company that builds on the BMS collaboration and our IO platform."
In other business areas, applied testing grew 15 percent at CER to $36.0 million thanks to solid gains in the human identification/forensics portfolio; pharmaceutical sales grew 5 percent at CER to adjusted sales of $69.0 million; and academia grew 2 percent at CER to $80.0 million.
Qiagen's Q3 net income rose to $48.5 million, or $.21 per share, from $34.8 million, or $.15 per share. On an adjusted basis, the company reported EPS of $.32 for the quarter, in line with Wall Street estimates.
In a statement, Qiagen CFO Roland Sackers noted that the company is making "significant progress on initiatives to support the improvements in sales and profitability."
Related to this Sackers said Qiagen has launched a new project in China to increase investments in high-growth areas and streamline its portfolio. "We will be putting more resources toward areas such as the QuantiFeron-TB test, the new Maqgen joint venture with Maccura for the GeneReader NGS System, and the life sciences portfolio," Sackers said. "At the same time, we have also decided to discontinue some non-core diagnostic PCR tests, and are in the process of divesting the distribution of our China HPV franchise to a third-party aggregator/distributor to improve our competitive position through a more tailored product offering and better adapt to local market needs."
Qiagen's R&D expenses in Q3 rose 7 percent to $38.4 million from $36.0 million in the year-ago period. The company's SG&A expenses rose 1 percent to $128.5 million from $126.8 million in the same quarter last year.
Qiagen ended the quarter with $671.8 million in cash and cash equivalents and $303.2 million in short-term investments.
Qiagen said that for full-year 2017, it expects adjusted net sales to grow approximately 7 percent at CER. This excludes 2016 and 2017 revenues related to its decision to streamline its China portfolio, and is based on five to six percentage points of organic sales and about one to two percentage points from its June 2016 acquisition of Exiqon and January 2017 acquisition of OmicSoft. The company reaffirmed its full-year guidance for adjusted EPS of $1.25 to $1.27 per share at CER. Analysts are expecting EPS of $1.18 for the year.
For the fourth quarter, Qiagen expects adjusted net sales to rise about 5 percent to 6 percent at CER year over year. The company is also expecting adjusted EPS of $.41 to $.42 for the quarter. Analysts are expecting EPS of $.42 for Q4.