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Qiagen Looks to Convert Pandemic Sales Surge Into Long-Term Growth


NEW YORK – A little more than two years ago, Qiagen was in disarray, but it has gradually turned its business around, benefiting initially from sales of products related to COVID testing that the company has begun parlaying into long-term growth.

And although Qiagen has mostly put the pandemic in the rearview mirror, it remains vigilant about another surge and is prepared to ramp up COVID-related product manufacturing should the need arise.

The fourth quarter of 2019 was, to say the least, tumultuous for the molecular biology tools and diagnostics firm.

In the wake of scrapping its next-generation sequencing platform development and parting ways with long-time CEO Peer Schatz in October 2019, the company's market cap had sunk to $6.75 billion from $9.2 billion just three months prior.

A month later, rumors of a buyout by Thermo Fisher Scientific, or really any potential suitor, briefly inflated Qiagen's market cap to around $9.6 billion, but by the end of 2019, it had settled back to around $7.7 billion, which carried into 2020.

Three months later, in March 2020, those rumors came to fruition when Thermo Fisher announced its intention to acquire Qiagen for $11.5 billion. But in the meantime, the COVID-19 epidemic became a pandemic, setting Qiagen on a different course.

Under the leadership of then-interim CEO Thierry Bernard, Qiagen sprang into action, using its global expertise in sample prep and assay technologies and its recently acquired infectious disease testing platforms to market some of the earliest COVID-19 diagnostic tests.

Bernard was appointed permanent CEO in late March 2020, and by the summer of that year, Qiagen's market cap had recovered to $10 billion as COVID-19 testing product sales skyrocketed, and hasn't wavered since. In the summer of 2020 Thermo Fisher upped its bid for the company, but by August, the deal had fallen through. Qiagen's market cap now sits around $11 billion.

Similar stories played out across the molecular biology research tools and diagnostics markets — Thermo Fisher itself grew from a $112 billion market cap in March 2020 to a peak of almost $262 billion at the end of 2021 (its current estimated market cap is about $231 billion). But few companies were as well-suited to tackle the pandemic from multiple angles as Qiagen, and fewer still experienced such a 180-degree turnaround from profound uncertainty to a clear path for immediate and future growth.

According to Bernard, those growth prospects were already in place before COVID-19 blew up, even after the discontinuation of its sequencing technology. The pandemic undoubtedly accelerated Qiagen's takeoff, especially in four out of its five so-called "pillars of growth": sample prep, NeuMoDx high-throughput molecular infectious disease testing, QiaStat-Dx syndromic molecular infectious disease testing, and digital PCR. The fifth pillar, QuantiFeron testing for latent tuberculosis, was negatively affected by the pandemic but has recovered in recent quarters and remains a crucial growth driver for Qiagen.

Bernard said the company began making plans early to convert the COVID-driven growth in those product portfolios into something more sustainable. It's starting to pay off: Though Qiagen's COVID-related revenues fell 9 percent (at constant exchange rates) year over year in the fourth quarter of 2021, its non-COVID-related business increased 8 percent in the quarter, and 24 percent for the full year, with growth across all product groups.

"Qiagen was on the market with relevant solutions way before COVID, and I hope that we will continue to provide relevant solutions way beyond COVID," Bernard said. "But there is no doubt that immediately starting in February 2020, we had to focus on tremendously ramping up, especially our RNA sample tech, because as long as there were no official assays [for COVID-19] registered, we knew that we would need to do this, and that's what we did."

Bernard said that Qiagen's RNA sample tech manufacturing volume increased in 2020 by a factor of about 50, as the firm opened a new manufacturing line in its Germantown, Maryland, location to bolster existing manufacturing in Germany. He said Qiagen also made a significant investment in its Beverly, Massachusetts, facility to keep up with demand.

In addition, by September 2020, the company had released a next-generation sample prep product called QiaPrep&Amp Viral RNA UM for use by research labs studying SARS-CoV-2 or for sample prep upstream of laboratory-developed SARS-CoV-2 diagnostic tests. The kit features a two-minute, liquid-based sample prep step that can be combined with an RT-qPCR reaction mix for subsequent real-time PCR on any thermal cycler using any SARS-CoV-2 assay. The entire workflow takes less than an hour, and the upshot is that laboratories can process as many as 2,600 samples in an eight-hour shift per thermal cycler, Qiagen said.

Bernard said the kit was an immediate success and was widely employed in countries like Israel, which at the peak of testing used it to run some 35,000 tests a day, and Austria, which was running close to 80,000 tests daily using the product. It is currently used as part of COVID testing workflows in more than 40 countries, Qiagen said.

The kit was also evaluated by Dutch researchers in a multi-center study published in February 2021 in the Journal of Clinical Virology. In that study, the researchers found almost complete concordance between tests run with QiaPrep&Amp and routine diagnostic methods. They also noted the relatively low (8 µL) input of clinical sample needed and the kit's amenability to automation, concluding that it "can be considered a valuable addition to the diagnostic laboratory, either as back-up when extraction reagents or plastics are poorly delivered or, when automated, to further increase the diagnostic capacity."

In April 2021, Qiagen received CE IVD marking for a full PCR-based COVID-19 diagnostic test incorporating Prep&Amp, and has submitted the assay to the US Food and Drug Administration for Emergency Use Authorization. That review is still pending, but Qiagen is not stopping there — Bernard noted that Prep&Amp is a prime example of how a technology developed by Qiagen specifically for COVID-19 is expected to find use in several other applications.

"We're already starting to invest in applications such as microbiome [and] soil analysis … and liquid biopsy … and it's not over. We have other projects in mind for this," he said. These new applications will also complement Qiagen's suite of sample prep instrument platforms, including the QiaCube Connect, EZ2 Connect, and legacy product QiaSymphony, which is scheduled for an upgrade in 2023.

NeuMoDx and QiaStat-Dx

Another product line that received a shot in the arm from the pandemic was the NeuMoDx high-throughput molecular testing platform for infectious disease diagnostics. Qiagen had purchased a minority stake in Ann Arbor, Michigan-based NeuMoDx Molecular in 2018, then bought the company outright in September 2020 for $248 million.

NeuMoDx had made good progress developing a CE-marked test menu for the platform, but was behind schedule in terms of FDA-approved assays. As such, the majority of the approximately 225 currently installed NeuMoDx units worldwide are in Europe.

"It's fair to say that NeuMoDx in the US was born with COVID," Bernard said, noting that when Qiagen fully acquired NeuMoDx it was manufacturing around 1 million cartridges per year, which Qiagen ramped up over the following year to more than 10 million cartridges.

The platform currently has 15 CE-IVD assays and four FDA-approved assays, and menu expansion in the US remains a priority for Qiagen, with a goal of having 15 total assays (including COVID) for the platform available in the US, with either 510(k) or premarket approval (PMA), by the end of 2024, Bernard said. Current priority assays are for sexually transmitted diseases and blood-borne viruses.

"At the same time, never forget that the US remains the kingdom of laboratory-developed tests, and this is still the only platform where you can run randomly, at the same time, LDTs or fully standardized assays," Bernard noted. "So not having the full menu yet available, it's obviously a challenge in the US, but it's not saying that we cannot sell it, because we are going after the LDT market with NeuMoDx at the moment."

Meanwhile, QiaStat-Dx, Qiagen's syndromic molecular testing platform, already had some market traction before COVID-19, with the company scoring CE marking and FDA clearance for a respiratory pathogen panel on the system in 2018 and 2019, respectively. And when the pandemic hit, Qiagen was able to quickly add a SARS-CoV-2 target to the panel and gained European and US emergency approval for the updated panel by the end of March 2020.

This did drive placements of the platform, but more importantly may have created much-needed awareness about the importance of syndromic testing because of its ability to quickly determine whether someone presenting with COVID-like symptoms actually has COVID or another respiratory infection. This was not as crucial at the beginning of the pandemic, where dedicated rapid COVID tests were most important, but is becoming more relevant now as the world adjusts to living with COVID.

According to Bernard, COVID has fueled the debate between infectious disease testing using "short-plexed" panels — those with just a few relevant targets like influenza A/B, respiratory syncytial virus, and SARS-CoV-2 — and highly multiplexed panels, or "large-plexed" panels, like Qiagen's full respiratory panel, which contains more than 20 targets (but can be reduced to a short-plexed panel).

"I think the jury is still out," Bernard said. "Some customers say 'why should I limit my number of answers if I can have a 20-pathogens-or-more answer?'" But other customers, he noted, think such a relatively expensive panel is overkill, especially in times of peak infection rates. "[This] might mean using a more targeted test first, then potentially reflexing to a larger panel," Bernard said. "As far as we are concerned, we have both."

Qiagen is also getting ready to launch a next-generation version of QiaStat-Dx called QiaStat-Dx Rise. Like the current platform, the new version will be cartridge-based, with no sample prep needed prior to testing, and will have the ability to provide Ct values from the real-time PCR analysis.

The main differentiator of the new platform will be enhanced automation — "it's going to be the only system of that size with fully automated loading and unloading of cartridges, which is obviously a convenience for lab technicians," Bernard said. It will feature random-access capacity to hold up to 18 different tests for processing, enabling up to 56 tests in an eight-hour shift and 160 tests per day with eight analytical modules.

The timeline for the launch of QiaStat-Dx Rise is the second quarter of this year in Europe, with an FDA submission planned before the end of the year.

Digital PCR

Qiagen's digital PCR platform, QiAcuity, is a newer addition to the company's product portfolio, and it also received a pandemic boost as the technology found a sweet spot application in wastewater testing for SARS-CoV-2 surveillance.

Launched in late 2020, QiAcuity uses nanoplate technology to disperse a sample over thousands of partitions and simultaneously read the reactions in each partition. Qiagen touts the platform's turnaround time, with a sample preparation and analysis time of two hours; its automation; and its flexibility, with three available versions — a one-, four-, and eight-plate configuration. With the ability to simultaneously detect up to five target sequences, the eight-plate configuration can process up to 1,248 samples in one day, Qiagen said.

In January 2021, Qiagen launched a dedicated RT-PCR kit for wastewater testing on QiAcuity, and soon thereafter won a federal contract in the US to provide public health laboratories around the country with the platform for wastewater testing. Earlier this year, Qiagen announced that it had completed that contract, having shipped more than 35 QiAcuity systems to those labs. According to the company, more than 70 percent of all US states now have at least one public health or privately owned laboratory using the system for wastewater surveillance. In addition, Bernard said the company has approached the CDC with a proposal to partner to expand the types of infectious diseases that can be detected in wastewater using digital PCR.

But here, too, Qiagen is not only relying on COVID for future growth. "Wastewater … is currently less than 10 percent of the installed base we have created for QiAcuity in roughly 12 months, so we have proven it to be relevant, but we are not going to depend on that," Bernard said.

Illustrating that point, in the company's Q4 and full-year 2021 earnings call last month, Bernard disclosed digital PCR collaborations with Actome in the area of protein analysis and with Atila BioSystems for protein quantification and noninvasive prenatal testing (NIPT). 

The collaboration with Actome is intended to expand the platform's applications beyond genomics into proteomics, enabling the quantification of proteins and the analysis of protein-protein and protein-gene interactions.

"Actome, we believe, is a significant test … because we are clearly a DNA/RNA company," Bernard said. "This is also a nice step to become a protein company, and this is why I love this agreement. I think we should see an Actome test on the market by 2024."

The Atila agreement, on the other hand, is much more exploratory at the moment, Bernard said, noting that digital PCR has the potential to eventually rival sequencing as an NIPT tool.

"I always believed that PCR and even more now digital PCR could be more relevant [for NIPT]," Bernard said. "So we are testing the water. NGS is so predominant in NIPT, that if we feel it's a lost cause, I would probably not really insist too much on that. But there is room for better price efficiency, even though the cost of NGS has come down; and not every lab is equipped with NGS."

In addition, Bernard said the company is looking to become more competitive with digital PCR in the biopharma market, specifically for companion diagnostic testing. He noted that the company plans to have more news around this later in the year, but said that "pharma's requests to come up with companion diagnostic solutions using digital PCR came much sooner than expected."

As such, Qiagen has already begun talking with two pharma companies about digital PCR-based companion diagnostics.

"We are probably going to become the only company to offer a CDx solution with PCR, [with] NGS through our partnership with Illumina, and now digital PCR," Bernard said. "We definitely want to bring it through regulatory [approval] by 2024. And we are already invested in R&D, primarily a software investment, but it's a heavy investment, and we want to focus on oncology."

Keeping an eye on COVID

Like many companies that entered the COVID diagnostic space, adjusting to the waxing and waning of test demand has been challenging for Qiagen. Bernard said that early on, Qiagen had put a plan in place to begin relying on contractors to be ready to ramp up COVID test production if needed while not continuously pumping a lot of capital into the effort.

"There was no way that we would load Qiagen with the financial burden of fixed costs that would not be sustainable post COVID," Bernard said. "As early as January 2021 … we said there is obviously a post-COVID, and we need to prepare for that. And that's what we did."

Bernard has repeated the mantra of "we are COVID-relevant but not COVID-dependent" in the company's last several earnings calls, and he noted that the company is no longer making any assumptions about COVID-driven growth.

"Everybody had a strong Q4 on COVID … but if you look at the test demand from early February until now, it has started to go down," he said. At the end of January, he noted, there were about 2 million PCR tests per day being shipped in the US by all industry players, a number that had dropped to about 800,000 at the beginning of March.

He said Qiagen will maintain an "appropriate level" of contractors, and that the firm has also formed an internal preparedness task force — from life science [research] to molecular diagnostic manufacturing and bioinformatics — that will continue to analyze how the company might be able to scale up more quickly if and when the next COVID testing wave hits.

He also implored public health authorities to do the same.

"Many governments in the world have been thinking for years about, for example, stockpiling vaccines, and I repeat in my regular calls to … [various government authorities] … to think about this for diagnostics, as well," Bernard said. "It's not fair to ask diagnostic companies to ramp up [capital expenditures] to that level … then say 'guys, sorry, if [testing] goes down, that's on you.' We can manage that, but it's a call for open discussions with authorities about what we can do in diagnostics to make sure that we can always maintain a level of available quantities quickly, for public health."