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BD Diagnostics Division Sees 5 Percent Growth in FY Q1, but MDx Not Yet a Major Driver

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Becton Dickinson said this week that its Diagnostics division logged 5 percent year-over-year revenue growth in its fiscal first quarter, which helped drive 4 percent overall growth at the company.

In the BD Diagnostics segment, worldwide revenues for the quarter ended Dec. 31 were $652 million, an increase of 5 percent over the prior-year period, or 6.1 percent on a foreign currency-neutral basis, the company said. Diagnostics revenues in the US rose 2.9 percent to $320.5 million from $311.6 million in the year-ago period, while international Diagnostics revenues spiked to $331.4 million from $309.1 million in the year-ago period, a 7.2 percent increase including currency effects and a 9.4 percent uptick on a currency-neutral basis.

Molecular diagnostic product sales were not a significant driver of the uptick in Diagnostic revenues. Rather, quarterly growth in the division was driven primarily by international expansion, a favorable comparison to the prior year for its clinical specimen and preparation products, and an early flu season, which drove sales of its Veritor immunoassay flu diagnostic.

However, during a conference call recapping the company's earnings, Tom Polen, president of BD Diagnostics, said that molecular diagnostics growth was flat to slightly positive in fiscal Q1, driven primarily by testing for sexually transmitted diseases.

Polen noted that the molecular diagnostics segment includes the company's first-generation GeneOhm assays for hospital-acquired infections; its STD testing products, including assays for Trichomonas, chlamydia/gonorrhea, and herpes simplex viruses I & II on the Viper XTR system; and various assays for its next-generation BD Max molecular testing system.

Polen also said that BD Diagnostics' women's health product portfolio, which currently consists primarily of cytology products, declined in the "low single digits" in fiscal Q1 "driven by negative US growth, which was partially offset by continued strong double-digit growth internationally … a trend that we've reported for the last several quarters."

BD Max is a six-color, fully automated, benchtop system that performs cell lysis, nucleic acid extraction, and PCR set-up, amplification, and detection. It can accommodate both pre-developed commercial assays and laboratory-developed tests. In May 2011 BD introduced the open version of the platform, and has since disclosed several assay-development partners.

"On the Max platform, we currently have over 15 assays in our pipeline in the areas of healthcare-associated infections, STDs, women's health, enteric and respiratory infections, and cancer," Vincent Forlenza, chairman and CEO of BD, said during the conference call this week. "We've built up a nice pipeline of orders and expect sales to ramp up in the latter part of our fiscal year."

Further expanding on this, Forlenza noted that Diagnostics had "a very good quarter for [preanalytical systems], the specimen collection business," and that "the impact of Max is really going to be felt more in the second half of the year because those are reagent rentals and we have to get customers up and going, and we're just really now starting to ship against a sizable pipeline."

In a presentation accompanying its conference call, BD provided an update of the BD Max pipeline. The next assay on the platform will be a test for Clostridium difficile, with an anticipated US launch in the company's fiscal Q2. BD also said that it expects to launch a Staph SR and enteric bacteria assay in the European Union in fiscal Q4 and in the US in fiscal Q2 2014; and tests for GC/CT and GC/CT/Trichomonas worldwide in fiscal Q2 2014.

"The pipeline continues to progress as we've communicated previously," Polen said. "Of course, we do remain very focused on menu expansion, and our third IVD assay in the US, C. diff, remains under [US Food and Drug Administration] review, and we're still expecting a launch on that later this quarter."

Polen highlighted the forthcoming C. diff assay, noting that testing for the pathogen "continues to remain an overall attractive market."

"It's growing [in] strong double digits as a market overall and remains relatively still underconverted from [enzyme immunoassay] to molecular," Polen said. "Still under 25 percent of the market [has] converted to molecular, and so we see that having a positive growth outlook going forward."

BD Diagnostics is also gearing up to launch the next-generation version of its Viper XTR platform, which currently runs assays based on its isothermal strand displacement amplification method and is geared toward labs running high-throughput screening assays, primarily in the area of women's health.

The new version, called Viper LT, is set to launch ex-US later this year, and will feature both PCR and SDA capabilities and will run a HPV screening and typing test that BD believes will contend with established molecular assays from the likes of Qiagen, Roche, Abbott, and Hologic's Gen-Probe.

The Viper LT launch "does remain on track," Polen noted, adding that the company has already installed the first instruments ex-US as part of a clinical trial for the HPV test.

"That clinical trial is actually enrolling patients, running samples right now, preparing for the launch of HPV ex-US," he said. "So we do recognize that, with that launch of our HPV [test] at the end of the year, combined with the launch of our Totalys front-end automation system … we will be in a very strong position, we believe, going into FY '14 around the women's health portfolio."

Company executives previously disclosed that the Totalys automation system is being designed to automate sample processing from the company's SurePath sample vials and manage chain of custody across its suite of molecular and cytology systems. The platform is also intended to complement the Viper LT and HPV genotyping assay.

BD reported total revenues of $1.90 billion for fiscal Q1, compared to $1.83 billion in the year-ago period. The company reported net income of $625.4 million, or $3.13 per share, compared to a profit of $263.0 million, or $1.21 per share, for Q1 2012.

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