Qiagen ($QGEN) reported adjusted net income of $53.7 million on sales of $317.4 million in the first quarter. Net sales rose 4.5% year-over-year, and net income was up 11.6% at constant exchange rates.
The molecular diagnostics unit accounts for nearly half of all sales and grew 1% on the back of mixed results from key products. Company officials are excited about the prospects of the QuantiFERON-TB tuberculosis test, which was recently approved and launched in China.
"[QuantiFERON-TB] has continued to grow above our 20% constant exchange rate target. Given that the overall market is still less than 10% penetrated, we are focusing on targeted market segments, particularly congregated living, such as the military and prisons. In the U.S., we continue to gain sales due to the ongoing shortages of materials required for the 120-year-old skin test," said CEO Peer Schatz during the earnings call.
But the market for HPV testing grew more competitive with the recent FDA approval of Roche's cobas HPV test as a primary screening method for cervical cancer. "U.S. sales of HPV testing products declined about 27% in the first quarter and represented about 9% of total sales, and this was in line with our full year expectations as we absorbed the impact of pricing pressure and the non-exclusive transition of a U.S. customer to a competitor test," Schatz said.
The pharma unit is responsible for 19% of sales and grew 8%. Qiagen has more than 20 projects with pharma companies in oncology and other therapeutic areas, Schatz said. The customers have been cautious about adopting next generation sequencing technology for clinical trials (as opposed to biomarker discovery), and as a tool for companion diagnostics due to cost issues, he said.
Instead Qiagen "has been hearing request for systems that allow so-called multi-analyte, multimodal testing and that can integrate together various technologies into low-cost tests and that needs to be performed only once to get the test results across all markers."
Finally, the 2013 acquisitions of CLC bio and Ingenuity Systems led to 8% sales growth in the applied testing unit and offset weak instrument sales in the academia unit, which also grew 8%, according to the earnings statement.
Cash and cash equivalents stood at $564.3 million at the end of the quarter and the company had net debt of $509 million, said CFO Roland Sackers.
Qiagen will surely be impacted by the consolidation in Big Pharma. "The pharma consolidations can have a benefit and a disadvantage. So the benefit is if you merge us into parties where you have master collaboration agreements, it's a big benefit. And we've been fortunate partly to see that and therefore, have a promising outlook also on some future pipeline expansions going forward," Schatz said.
- read the earnings release
- here's the Seeking Alpha transcript
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