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Quidel Q1 Revenues Rise 130 Percent on Acquisition, Influenza Sales

NEW YORK (GenomeWeb) – Quidel reported after the close of the market on Tuesday that its first quarter revenues rose 130 percent year over year, primarily driven by incremental revenues from an acquired cardiac immunoassay business and sales of influenza immunoassay products.

For the three months ended March 31, revenues rose to $169.1 million from $73.7 million in Q1 2017, and beating the average analysts' estimate of $150.9 million.

Cardiac immunoassay revenues — which included revenues from the Triage, Triage Toxicology, and BNP products Quidel acquired from Alere in October 2017 — were $68.4 million in Q1.

Rapid immunoassay product revenues — including sales from the firm's QuickVue, Sofia, and Eye Health products — rose 40 percent year over year to $80.7 million from $57.5 million. That increase was primarily due to growth in Sofia revenues, which soared 131 percent, while QuickVue sales declined 34 percent from the prior-year quarter.

Molecular diagnostic solutions revenues rose 65 percent to $5.1 million from $3.1 million in the prior-year quarter, led by 178 percent revenue growth from Solana, Quidel's instrumented molecular diagnostics system. Meanwhile, specialized diagnostic solutions revenues — which include sales from virology, DHI cell culture tests, specialty and other tests — grew 14 percent year over year to $14.9 million from $13.0 million, due to growth in both virology and specialty products.

"Cardiac immunoassay revenues in the quarter confirmed our belief in the underlying market's demand for Triage products," Quidel President and CEO Douglas Bryant said in a statement. He noted that the company has "made steady progress" in integrating the Triage and Beckman BNP businesses, adding, "Organically, we also grew the rapid immunoassay business in the quarter by capitalizing on a very strong influenza season and driving Sofia 2 and Solana instrument placements."

On a conference call with analysts following the release of the earnings, Bryant said that Q1 revenues from both Quidel's legacy products and the acquired Triage and BNP businesses were ahead of what the firm had anticipated.

In Q1, the firm's installed base of Sofia instruments increased to more than 31,000 analyzers. Sofia 2, a small bench top analyzer that uses advanced fluorescence detection with an ultraviolet LED energy source, was "an absolute hit" in the quarter, Bryant said. He also noted that the firm is adding a sixth automated manufacturing line with the capacity to fabricate up to 30 million additional Sofia test cartridges per year in anticipation of continued long-term growth in demand for rapid influenza testing.

The firm recently launched a Lyme assay for Sofia 2 and received CE marking for both Legionella and Streptococcus pneumoniae assays for use on Sofia 2, Bryant said. Work on obtaining a CLIA-waiver for Sofia 2 whole-blood Lyme is ongoing and the firm hopes to launch it this summer in the US, he added, noting that a Sofia 2 vitamin D CLIA-waived assay is in development, and the firm is making progress with Sofia Strep 98 and Sofia RVP among several others in the pipeline.

Bryant also said that the Quidel R&D team developing its Savanna platform —  a sample-to-answer system that can run both real-time PCR and isothermal helicase-dependent amplification assays — achieved a significant milestone in the first quarter by locking down the design of the multiplex cartridge for use in the point-of-care molecular segment.

The firm said that in the first quarter, it reintroduced its CLIA-waived QuickVue Influenza A+B test, which now meets the US Food and Drug Administration's class II rapid immunoassay detection test requirements.

Quidel's Q1 net income grew to $34.0 million, or $.86 per share, from $14.3 million, or $.42 per share, in Q1 2017. On an adjusted basis, the company posted earnings of $1.29 per share, beating the average Wall Street estimate for earnings of $1.01 per share.

The firm's Q1 R&D expenses rose 59 percent to $12.6 million from $7.9 million year over year. Its SG&A expenses grew 84 percent to $39.1 million from $21.3 million in the prior-year period.  

Quidel finished the first quarter with $101.8 million in cash and cash equivalents.

Bryant said on the conference call that he recognized that there is an interest in the ongoing dispute with Danaher's Beckman Coulter business. Beckman has filed a legal request to affirm its right to sell a natriuretic peptide assay directly to its customers that is currently sold exclusively by Quidel.

Quidel filed an objection to the claim in February, but the court dismissed it on Friday. Bryant said that he expected the outcome, adding, "The most important outcome from Friday's hearing in our view was that a trial date has been set for August 30th, 2019," and the firm is "highly confident" in its legal position.

In a research note on Wednesday, Canaccord Genuity analyst Mark Massaro said that he believes Quidel management is "recharged and executing extremely well across a wide gamut of initiatives, and we think this will continue." He noted that the firm is the "largest remaining human medical standalone point-of-care testing company," a capability that over time could draw an acquisition bid from a larger company.

JP Morgan analyst Tycho Peterson said in a note on Tuesday that he acknowledges the "strong quarter with broad-based strength" and is "encouraged by early traction at Triage/BNP."

However, he added, "the lack of clear attribution behind the surprising Triage/BNP strength and unchanged guidance for the cardiac portfolio leaves Triage revenue reacceleration still a 'show me' story in our view."

In early morning trading on the Nasdaq, Quidel's shares were up nearly 10 percent to $59.99.