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Quidel MDx Pipeline Moving Forward as Planned

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Quidel this week provided an update on its burgeoning molecular diagnostics pipeline, noting that it hopes to be able to gain US regulatory approval in the next few months for its CE-marked non-instrumented, isothermal amplification-based AmpliVue assay for Clostridium difficile.

In addition, Quidel officials noted that the company is "on track" to develop a suite of some 20 real-time assays for use on existing commercial thermal cyclers – as well as eventually on its own fully integrated molecular diagnostics platform, which it hopes to launch in the developing world in 2014 and in the US in 2015.

Quidel President and CEO Doug Bryant discussed these initiatives and other company matters in a conference call recapping the company's third-quarter earnings.

San Diego-based Quidel reported revenues of $33 million for the three months ended Sept. 30, down from $33.1 million in Q3 2011 and short of the average analyst estimate of $35.9 million. The company noted that its infectious disease revenues slid 2 percent, primarily due to a slow flu season dampening sales of its immuno-based flu diagnostic products.

The company has been moving to diversify its product offerings, particularly in the molecular diagnostics space, and in the past nine months has made progress in this area, achieving clearance from the US Food and Drug Administration for its Molecular Influenza A+B assay for use on Cepheid's SmartCycler and Life Technologies' ABI 7500 Fast Dx (PCR Insider, 3/22/2012); and launching its AmpliVue C. diff assay in Europe in the third quarter.

The company has yet to disclose specific revenues from these products, but Bryant this week provided investors with a little more detail on their uptake and the products behind them in the pipeline.

"A near-term initiative is AmpliVue, our handheld disposable molecular platform that combines isothermal amplification with traditional lateral flow detection," Bryant said. "We launched the AmpliVue C. difficile product in Europe in September as scheduled and while molecular testing for C. difficile is not as evolved in Europe and Asia as it is here in the US, we are seeing interest in the format."

"Given the quality of the data from our US clinical trial, we hope to be in market in the US within the next few months," he added.

Pressed by analysts during the Q&A session to provide even more detail on the uptake of AmpliVue C. diff in Europe, Bryant remarked that thus far the company has only met with distributors and is now making sales calls. As such, "I can’t really speak at this early stage, essentially one month into the launch as to what they’re seeing at the end-user level," Bryant said.

"I do know that most of the market there is … using the standard [glutamate dehydrogenase antigen] and then [enzyme immunosorbent assay] testing algorithm and that the transition to molecular has not evolved as it is here today," he added. "There is an opportunity I think that is probably equivalent to the opportunity in the US, but over some period of time. And unlike here in the US we’re probably not behind in terms of approaching the market [in Europe]."

Quidel is also developing a suite of real-time PCR-based molecular testing kits for infectious diseases for use on existing commercial thermal cyclers. In addition to the aforementioned flu assay for the Cepheid and Life Tech platforms, Quidel in the third quarter disclosed an agreement with Life Tech to develop molecular assays for Life's new QuantStudio Dx system (PCR Insider, 7/26/2012).

Bryant noted that the company is "on schedule" to develop these assays, and that it hopes to eventually be able to offer a suite of 20 such tests, though it did not provide a steadfast commercialization timeline.

"I would say that our success there so far has been somewhat limited but recognizing that our menu is also quite small," Bryant said. "We’d like to have a bit more critical mass … [so] we can sell a bundle of PCR assays on those Life thermal cyclers, in particular, but others as well. And I think we’ll have a bit of a bundle to promote in 2013 and we look forward to seeing how well we can do. But I will caveat that by saying that that so far with the limited menu, our success has been somewhat … soft."

Once Quidel has developed this suite of real-time PCR assays, it hopes to eventually be able to run them on its own molecular testing platform, called Wildcat, which it is developing in collaboration with the Northwestern University Global Health Foundation.

"We are in the process of locking down our cartridge design for the Wildcat platform and that’s pretty important for us in understanding what our costs are likely to be at launch," Bryant said. "We’ve said that we expect that to be locked down by year-end and we’re still pretty much on schedule with that. Following that, I think that the development should go fairly straightforward and that we’re still pretty confident that it will be in market in Africa in 2014 with an HIV viral load assay, and that we will be in market in the developed world with the menu approaching, if not exceeding, 20 assay targets in 2015."

Bookkeeping Notes

Bryant and Quidel CFO Randy Steward also provided an update on financial details surrounding the company's aforementioned agreement with Life Tech. Specifically, they noted that although the company originally estimated that development activities under the agreement would be recorded as contract revenue, the company now has decided to record reimbursement of development costs as a reduction in R&D spending.

As such, Quidel reduced its R&D spending in the quarter by $1.3 million to reflect this benefit.

"The master agreement was executed in July of this year and we have executed on several project plans with Life Technologies," Steward said. "The $1.3 million is representative of the portion of the actual cost incurred as a percentage of total cost expected to be incurred for all current project plans. Going forward, the agreement anticipates continued reimbursement of a certain portion of the product development cost associated with mutually agreed upon project plans and timelines for each molecular assay."

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