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Gen-Probe Posts 6 Percent Revenue Growth for Q1

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Amid reports that the firm has put itself up for sale, Gen-Probe reported after the close of the market Thursday that its first quarter revenues and product sales both rose 6 percent year over year.

The San Diego-based molecular diagnostics firm reported total revenues of $143 million for the three-month period ended March 31, compared to $135.4 million for the first quarter of 2010. Its product sales were $138.1 million versus $130.6 million for the comparable period of 2010.

Gen-Probe beat Wall Street's consensus estimate for revenues of $141.3 million.

A 15 percent increase in clinical diagnostics sales offset a 6 percent decline in the firm's blood screening business and a 25 percent drop in research products and services. Clinical diagnostics sales were $88.3 million, up from $76.9 million; blood screening revenues fell to $46.7 million from $49.6 million; and research products and services were $3.1 million versus $4.1 million for Q1 2010.

Growth for the clinical diagnostics business was driven by sales of products from GTI Diagnostics, a company Gen-Probe acquired in late 2010 that is focused on the transplant, blood banking, and specialty coagulation markets. Growth also came from the Prodesse influzena franchise and the Aptima Combo 2 assay for detecting Chlamydia and gonorrhea, the firm said.

As was the case for the fourth quarter of 2010, Gen-Probe said that the decline in blood screening revenues was due to lower sales of instruments to Novartis, its blood-screening marketing partner.

"We are pleased with the early progress we are making with our new product opportunities, specifically our Panther system and Aptima trichomonas assay," Gen-Probe President and CEO Carl Hull said during a conference call following the release of the results. "We believe that good commercial execution combined with the anticipated US regulatory approvals of our human papillomavirus and PCA3 assays will continue our momentum in the coming months."

The Trichomonas vaginalis assay was cleared by the US Food and Drug Administration last week and runs on the Tigris system.

Hull said that despite a "somewhat sluggish" European market, the firm is on target to meets its sales goals there for the new Panther system. "Customer feedback on the system has been highly positive," said Hull.

He said that the firm's regulatory plans for the system in the US are "proceeding as planned," and it intends to file a 510(K) application with the FDA this quarter. Analysts expect the system to receive FDA clearance in the fourth quarter of this year.

Gen-Probe reported net income of $23.3 million, or $.48 per share, compared to $24.2 million, or $.48 per share, for Q1 2010. On a non-GAAP basis, its EPS was $.54, beating the consensus estimate of $.52.

The firm's R&D spending declined 2 percent to $29 million from $29.7 million, and its SG&A expenses increased 18 percent to $34.7 million from $29.4 million. It said that the bump in SG&A spending was due to the addition of GTI and costs associated with the company's patent infringement litigation against Becton Dickinson.

Gen-Probe finished the quarter with $93.6 million in cash and cash equivalents, and $177.9 million in marketable securities.

The company expects to report full-year 2011 revenues of between $570 million and $595 million, with GAAP EPS of between $2.06 and $2.20, or between $2.28 and $2.40 on a non-GAAP basis.

Earlier on Thursday, Bloomberg reported that the firm has hired Morgan Stanley to seek a buyer. Among the possible bidders listed in the article are Novartis, Thermo-Fisher Scientific, Danaher, and Life Technologies.

"We never comment on marketplace rumors and speculation such as this," Hull said on the call, "and we're going to stick to that 'no comment' policy."

In early Friday trade on the Nasdaq, shares of Gen-Probe increased 2 percent to $81.43.

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