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Acquisitions Help Drive Gen-Probe's Q1 Revenues Up 17 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Gen-Probe reported after the close of the market Thursday that its first-quarter 2010 revenues climbed 17 percent, helped by last year's acquisitions of Tepnel Life Sciences and Prodesse.

The San Diego-based molecular diagnostics firm reported total revenues of $135.4 million for the three months ended March 31, compared to $116.2 million for the first quarter of 2009. It beat analysts' consensus estimate of $133 million.

Its product sales were up 16 percent to $130.6 million from $112.5 million, and its collaborative research revenues were $3.3 million, compared to $1.7 million in the prior year period, an increase of 94 percent due primarily to increased funding from Novartis related to development of Gen-Probe's fully-automated Panther instrument for the blood screening market. Its royalty and license revenues fell 20 percent to $1.6 million from $2 million.

Gen-Probe's clinical diagnostics sales increased 29 percent to $76.9 million from $59.6 million, while its blood screening sales declined 6 percent to $49.6 million from $52.9 million. The blood screening business recognized $8.2 million in non-recurring revenue in the prior year's first quarter, and the decline this year was expected.

The firm said that its clinical diagnostics sales growth in the first quarter of 2010 was driven by transplant diagnostics and influenza products, which were not part of its operations in the prior year period, and by its Aptima Combo 2 assay for detecting Chlamydia and gonorrhea.

Gen-Probe's net income for the quarter was $24.2 million, or $.48 per share, down from $25.7 million, or $.49 per share. The decline was the result of increased R&D and SG&A spending, as well as a $2.2 million charge for acquisition-related amortization expenses. However, Gen-Probe beat analysts' expectations of $.44 per share.

Its R&D spending increased 19 percent to $29.7 million from $25 million, which Gen-Probe said was due to expenses associated with its development programs for Panther and tests for HPV, PCA3, and trichomonas, as well as the addition of Tepnel's and Prodesse's R&D activities.

Gen-Probe's SG&A spending jumped 27 percent to $29.5 million from $23.3 million, as the firm undertook a European sales force expansion and increased market-development efforts. In addition, the firm took on Tepnel's cost structure and costs associated with the company's patent infringement litigation against Becton Dickinson.

As of the end of the quarter, Gen-Probe had $534.3 million of cash, cash equivalents, and marketable securities.

Gen-Probe increased the low end of its revenue guidance by $5 million following the results. It now expects full-year 2010 revenues of between $545 million and $565 million. It also increased its EPS expectations to a range of between $1.99 and $2.12.

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