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Qiagen Q3 Revenues Rise 4 Percent

NEW YORK (GenomeWeb) – Qiagen reported after the close of the market on Wednesday that its third quarter sales increased 4 percent year over year.

For the three months ended Sept. 30, the company recorded $336.5 million in sales, up from $322.1 million in the year-ago quarter, but slightly short of the average Wall Street estimate of $337.2.

The firm said that the sales growth was driven by instrument sales, which were up 11 percent on at constant exchange rates, while consumables and related revenues grew 3 percent. The company also noted improved results in its molecular diagnostics, applied testing, and pharma customer classes, and said that excluding results from its US HPV test business, adjusted net sales were up 10 percent.

On the Qiagen's conference call following the release of the financial results, CEO Peer Schatz said that the US HPV business created about five percentage points of headwind during the third quarter.

Sales for the molecular diagnostics customer class grew 6 percent year over year in Q3 2014 as the Quantiferon-TB latent tuberculosis test saw strong growth in the US and Europe, "in line with a 20 percent … annual growth rate," Qiagen said. It added that the product is on track to surpass $100 million in sales for full-year 2014. The company is preparing to launch a fourth-generation version of the test with an improved clinical profile and optimized workflow, it said.

Meanwhile, within the molecular diagnostics class, profiling consumables sales increased 20 percent from a year ago as the QIAsymphony instrument installed based continued to grow. Qiagen said that placements remain on track to surpass 1,250 cumulatively by the end of the year.

Also within molecular diagnostics, Qiagen said that personalized healthcare sales were up in the double digits in the quarter on growing demand for companion diagnostic assays and higher revenues from pharma co-development projects. On Tuesday, it announced a companion diagnostic deal with Astellas Pharma for cancer and other diseases. Schatz noted that it is the eighth master collaboration agreement for companion diagnostics that Qiagen has forged.

He also said on the call that Qiagen recently completed a premarket approval submission to the US Food and Drug Administration for a companion diagnostic paired with a novel medicine, though he declined to provide any details, citing an agreement with its development partner.

Applied testing improved 7 percent from Q3 2013, Qiagen said, while the pharma customer class was up 4 percent year over year on higher instrument sales and single-digit growth in consumables and bioinformatics.

Academic sales were flat on a modest decline in instrument sales and "largely flat" consumables sales. Qiagen said that the funding environment in Europe and the US improved modestly in the third quarter, and that it anticipates continued improving funding conditions in the fourth quarter and in 2015, but below levels seen in previous years.

The company also said that development of its sample-to-insight workflow incorporating the GeneReader benchtop next-generation sequencer remains on target for a second-half 2015 launch.

On the Ebola front, Schatz said that Qiagen is working to provide testing components and automation solutions to international organizations and research institutions in Africa and elsewhere for detection of the virus. He noted that Qiagen products, in particular the QIAamp Viral RNA Mini Kit that can be automated on a QIAcube, are part of the US Department of Defense's protocol, which he said is the mostly widely used protocol for Ebola detection in western Africa.

Qiagen is seeing demand for its products for Ebola testing from countries that are sending healthcare workers to Africa, and further, the company and Altona Diagnostics have reached a deal to commercialize Ebola test kits based on Qiagen's technology. The test is already CE-marked, he said, and should be available as part of a full Qiagen solution "shortly." The company will provide regulatory milestone updates as they occur.

To date, however, the impact on revenues from its Ebola solutions has been modest, Schatz said, and has not had an influence on the company's 2014 guidance.

Qiagen posted a profit attributable to its owners of $34.7 million, or $.14 per share, compared to a profit of $40.7 million, or $.17 per share, a year ago. On an adjusted basis, EPS attributable to its owners was $.27, matching the consensus analysts' estimate.

The company's R&D expenses were up 21 percent year over year to $41.5 million from $34.3 million. Its SG&A costs decreased 8 percent to $122.1 million from $133.0 million.

In August, Qiagen launched a $100 million share repurchase program, and as of Oct. 27, about 1.39 million shares had been repurchased for about €24.7 million ($31.2 million).

The company said it had $484.2 million in cash and cash equivalents and $207.8 million in short-term investments as of Sept. 30.

"We're pleased with our performance in the first nine months of 2014, [and are] moving ahead on initiatives to accelerate innovation and growth while working through headwinds created by the US HPV franchise," Schatz said on the call.

For full-year 2014, Qiagen expects adjusted net sales to grow about 4 percent. Adjusted EPS is now estimated to be about $1.08. The company previously guided to a range of $1.07 to $1.09.

For Q4 2014, adjusted net sales are expected to rise 4 percent, and adjusted EPS is expected to be $.33. Qiagen said that based on current exchange rates, adjusted net sales and earnings for full-year 2014 are anticipated to be adversely impacted by currency effects.

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