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Qiagen Q1 Revenues Grow 12 Percent

NEW YORK (GenomeWeb News) – Qiagen reported after the close of the market on Wednesday that revenues for the first quarter rose 12 percent year over year driven by double-digit growth in all regions and led by the Molecular Diagnostics and Applied Testing customer classes.

The company also announced organization changes with the creation of two new business areas and changes in leadership.

For the first quarter, revenues rose to $296.4 million, up from $264.3 million, beating consensus analyst estimates of $285.1 million. At constant exchange rates, revenues grew 13 percent year over year. The purchase of Cellestis and Ipsogen last summer provided 7 percentage points to the growth, while currency exchange brought revenues down by 1 percent.

By product categories, consumables and related revenues increased 14 percent year over year at constant exchange rates with double-digit growth in both Molecular Diagnostics and Applied Testing and mid-single digits growth in Academia and Pharma.

Instrument sales rose 5 percent at constant exchange rates, Qiagen said, adding that the slower growth reflected a transition begun in early 2011 to a greater proportion of reagent rental agreements for the QIAsymphony RGQ automation system where revenues are recognized over a multiyear period.

It added that lower instrument sales in Molecular Diagnostics and Academia were "more than offset" by higher sales in Applied Testing and Pharma.

By customer classes, Molecular Diagnostics grew by 21 percent year over year at constant exchange rates and saw double-digit growth in consumables, but single-digit shrinkage in instrument sales. Demand for companion diagnostics and higher milestone payments associated with co-development projects with pharma compared to the first quarter helped sustain rapid growth in Personalized Healthcare, Qiagen said.

HPV tests sales were stable globally, it added, while the QuantiFeron-TB Gold test for latent tuberculosis detection, which Qiagen acquired through its purchase of Cellestis, "provided dynamic growth contributions."

Ipsogen's blood cancer testing portfolio, meanwhile, added "significant growth impulses."

Qiagen CEO Peer Schatz said in a conference call today that HPV sales during the first quarter were flat and is not expected to be a growth driver for the remainder of the year, but will serve as a "solid foundation for our expansion into molecular diagnostics into the growth-driver areas that include personalized healthcare and profiling."

As an increasing number of competitors enter the HPV testing space, Qiagen is "expanding the market," and signing new contracts, Schatz said.

He also said that the company expects growth in the QuantiFeron-TB Gold test of greater than 20 percent at constant exchange rates. Calling it an underappreciated business, the test posted about $55 million in sales on a pro forma basis in 2011, and Schatz said the opportunity for the test in the developed world is about $1 billion with about 50 million tests performed each year. In the US aout 15 million tests are performed.

Qiagen, he said is building its sales and marketing team to address all segments of the TB space.

Applied Testing grew 23 percent at constant exchange rates. Consumables and instruments both grew in the double digits, with demand in the Americas and Europe for human identification and forensics.

Pharma saw 10 percent growth at constant exchange rates as instruments sales increased in the double digits, and the GeneGlobe portfolio of molecular pathway analysis products saw strong demand, Qiagen said.

Lastly, Academia grew 3 percent at constant exchange rates and benefitted from single-digit growth in consumables, offsetting lower instrument sales.

On the academic end market, Qiagen believes that funding to academia in the US in 2012 will be stable, though 2013 remains a question mark due to the possibility of sequestration, which could result in cuts of about 8 percent to the National Institutes of Health.

Academic growth in Europe is stable, he added, and Qiagen has reallocated some of its portfolio and its marketing initiatives into areas of clinical research that are driving overall growth in the academic end market.

Net income for the quarter was $54.8 million, or $.23 per share on an adjusted basis, compared to $49.5 million, or $.21 per share, a year ago. Wall Street had a consensus estimate of $.20.

The firm said it is "well on track" to meet its goal of more than 750 QIAsymphony placements cumulatively, and expects to add more than 200 new systems in 2012.

Last week, the US Food and Drug Administration provided 510(k) clearance for Qiagen's Rotor-Gene Q MDx real-time PCR thermocycler and artus Infl A/B RG RT-PCR kit for Influenza A/B for the platform. The company said today that is working toward regulatory approval "for all components that comprise" the platform.

Qiagen added that it is progressing in discussions with FDA on two PMA submissions for its therascreen KRAS assay as companion diagnostics for two metastatic colorectal cancer drugs.

It also is preparing regulatory submissions this year for a number of other tests, including a submission for its therascreen EGFR assay as a companion diagnostic for use with Boehringer Ingelheim's investigational medicine Tomtovok (afatinib) in patients for non-small cell lung cancer.

The company is also planning to submit applications for two tests involving cytomegalovirus — one for the QuantiFeron-CMV test and another for the DNA-based artus molecular diagnostic test.

In November, Qiagen announced a restructuring effort that will reduce its workforce by 8 to 10 percent. Today, it said that moves to eliminate organizational layers, overlapping structures, and areas of duplication were completed early this year and resulted in a 10 percent reduction in the workforce.

The company has a goal of generating about $50 million of pre-tax savings in 2012. A restructuring charge of about $11 million was taken in the first quarter, and additional restructuring charges may be taken during the rest of the year, Qiagen said.

Qiagen today also announced organizational changes that include the creation of two new business areas, Molecular Diagnostics and Life Sciences, which will become operational on July 1.

The changes, Schatz said on the conference call, are intended to capture new opportunities and better address customer needs.

"It will help to better prioritize and align our R&D and commercial activities all with the goal of driving innovation and growth at a faster pace," he said.

New executive committee member Helge Lubenow has been appointed senior vice president of the Molecular Diagnostics Business area. Lubenow has been with Qiagen since 1997 and currently is VP of molecular diagnostics marketing.

Dietrich Hauffe, also a new executive committee member, has been appointed senior VP of the Life Sciences Business area. He is currently VP of life sciences marketing.

Joachim Schorr, managing director and senior VP of global research and development, is leaving Qiagen, but will provide consulting services for the firm, the company said. He will depart during the second quarter.

For the second quarter, Qiagen is providing guidance of net sales growth of between 10 percent and 11 percent at constant exchange rates, and adjusted EPS of $.24.

The company maintained guidance for full-year 2012 of between 6 percent and 8 percent sales growth at constant exchange rates. Adjusted EPS estimates remain at $1.03 to $1.05.

In late-morning trading today on the Nasdaq, shares of Qiagen were up 1 percent at 16.55.

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