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Gen-Probe Tallies Record Revenues in Q4 2011 as Aptima Tests, Blood Screening Thrive

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By Ben Butkus

Gen-Probe this week reported record revenues of $158.2 million in the fourth quarter of 2011, driven primarily by sales of clinical diagnostics and blood screening products.

The positive performance was primarily fueled by domestic and international growth of its Aptima Combo 2 assay for chlamydia and gonorrhea; and by increased shipments of assays and Tigris instruments to blood-screening partner Novartis, the company said.

In addition, company executives said that sales of Gen-Probe's recently launched Aptima Trichomonas and HPV assays have been ramping up and are expected to help drive additional growth at the company in 2012.

Further, Gen-Probe said this week that its Progensa PCA3 prostate cancer assay has received US Food and Drug Administration clearance; and that its next-generation Panther testing platform with real-time transcription-mediated amplification ability is likely to be approved in the first half of this year, allowing the company to introduce viral load assays on the system by 2014.

Gen-Probe CEO Carl Hull and other Gen-Probe executives recapped the company's fourth-quarter and full-year 2011 financial results, and discussed the company's roadmap for growth, in a conference call this week.

Hull noted during the call that Gen-Probe's clinical diagnostics revenues "continued their solid growth in the quarter, led by the Aptima women’s health portfolio; while sales of blood screening products increased significantly as supply chain shipments rebounded."

More importantly, Hull said, the company enters 2012 "with excellent momentum" driven by three recent product launches – the Panther system in Europe, and the Trichomonas and HPV assays in the US.

Hull said that Gen-Probe's recent and expected future product sales are driven by "one unique, differentiating capability that plays a role in almost all our past successes and future plans … and that’s our ability to deliver automation to our laboratory customers."

For example, he noted that blood banks worldwide "continue to value the automation and process controls of the Tigris system," which led to "significant sales of instruments to [commercial partner] Novartis in the fourth quarter."

"The automation of Tigris is also driving continued growth in sales and market share for the Aptima Combo 2 assay more than a decade after we launched the product for STD testing," Hull said. "At the same time, Tigris automation is enabling adoption of two new products, our Aptima Trichomonas assay and our Aptima HPV test, as we begin to see the early benefits of adding menu to a large installed base of instruments."

Hull added that in 2012, Gen-Probe's "razor/razor blade business model [will] really begin to pay off in clinical diagnostics."

Underscoring this point, Hull said that because Gen-Probe places most of its diagnostic systems on a reagent rental basis, the company generates the bulk of its revenues from "assay pull-through."

The high level of throughput of the Tigris system, he noted, "helps it shine in this regard. The average annual revenue stream on a diagnostics Tigris placement is now about $575,000 a year, a number you won’t find anywhere else in the molecular diagnostics industry. Importantly, this level of pull-through still leaves us with plenty of capacity to add our Trichomonas and HPV tests to the daily menu," Hull said.

Gen-Probe said that more than 80 customers in the US, or about 40 percent of its Tigris accounts, have adopted or are evaluating the Trichomonas assay roughly nine months after launch. In addition, Trichomonas sales increased sequentially in each quarter of 2011 and added nearly a point to total product sales in the fourth quarter, the company said.

"We have similar high hopes for our Aptima HPV assay, although our launch is at a much earlier stage since FDA approval was just granted in the fourth quarter," Hull said.

Down the road, Gen-Probe expects this same pull-through effect on its Panther system, which is currently available in Europe but is awaiting FDA approval in the US.

"The automation of Panther – which enhances what we have accomplished with Tigris but at a significantly lower cost – is making good inroads in Europe," Hull said. "This motivates us to add new capabilities and assays that will drive overall company growth in the medium term."

These new projects include developing viral load assays using real-time TMA for the current Panther system, and adding real-time PCR chemistry for the next-generation Panther instrument, initiatives that Michael Watts, Gen-Probe's vice president of investor relations and corporate communication, detailed in an interview with PCR Insider last month (PCR Insider, 1/19/2012).

"Both these efforts will be key R&D programs in 2012, adding expense in the short term but also the promise of sustainable organic growth for years to come," Hull said this week.

Regarding Panther's FDA timeline, Hull noted that the company filed for approval last May, and as such "our best guess for clearance continues to be sometime in the first half of 2012. This would be well within normal bounds for a complex instrument 510(k)."

He also said that development of viral load assays for Panther is "proceeding well," and that the real-time TMA tests "will be our largest assay development program over the next couple of years, utilizing many of the dollars that were allocated to HPV. Our viral load assays remain early in development, but we continue to expect our first international product introductions around 2014."

This week, following the company's conference call, Gen-Probe announced that it had received FDA approval for another of its products, the Progensa PCA3 (for prostate cancer gene 3) assay.

The company said it is the first urine-based molecular test to help determine the need for repeat prostate biopsies in men who have had a previous negative biopsy. The test is available for sale in the US, Canada, and the European Union.

Gen-Probe acquired exclusive worldwide diagnostic rights to the PCA3 gene from DiagnoCure in November 2003. The test currently runs on Gen-Probe's Direct Tube Sampling system but is expected to be offered on the Panther automated platform in the future, the company said.

Q4 and FY2011 Results

For the three months ended Dec. 31, 2011, Gen-Probe posted revenues of $158.2 million, up 16 percent from $136.7 million a year ago and just short of analyst estimates calling for $158.6 million.

Product revenues totaled $155.2 million, up 18 percent from $131.1 million a year ago, with blood screening products increasing to $62.1 million from $47.6 million in the fourth quarter of 2010.

Clinical diagnostics rose 13 percent to $90.6 million from $80.1 million a year ago, while research products and services revenues dropped 29 percent to $2.4 million from $3.4 million, the company said.

Collaborative research revenues in the quarter dropped 62 percent year over year to $1.4 million from $3.7 million, primarily from an expected decrease in funding from Novartis associated with Panther's development.

For the quarter, Gen-Probe posted a profit of $19.9 million, or $.42 per share, compared to a profit of $27.2 million, or $.56 per share, in the year-ago period.

Gen-Probe finished 2011 with $305.8 million in cash, cash equivalents, and marketable securities.

The company provided guidance of $630 million to $655 million in revenues for full-year 2012. It said that it expected organic revenue growth to be in the low double-digit range based on the various new product launches discussed during the call.


Have topics you'd like to see covered in PCR Insider? Contact the editor at bbutkus [at] genomeweb [.] com.

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