Quidel Corporation's CEO Presents At The JPMorgan Healthcare Conference (Transcript)

Quidel Corporation ( QDEL)

JPMorgan Healthcare Conference

January 11, 2012 11:00 AM ET


Doug Bryant - CEO


Analyst, JPMorgan

Good morning. We’re going to go ahead and get started. Welcome to day three of the JPMorgan Healthcare Conference. I’d like to remind you all that please silence your cell phones. I am very happy to have this morning Quidel’s CEO, Doug Bryant. The breakout here will be in the Olympic Room.

Doug Bryant

Thanks, Kevin [ph]. Good morning, everyone. We will be making some forward-looking statements. Our company is one with a fairly rich and long history. We actually commercialized our first in vitro diagnostic product in 1984, became known as a company that manufactured pregnancy tests and that was the basis for our business for some time.

We introduced one of the early strep tests as well the following year and then a few years later. We became one of the early developers and manufactures of the flu A/B test. We’ve done a number of things over the years to improve the productivity of manufacturing and you see and up there for 2007. By 2007, we had almost fully automated all of our manufacturing processes and in fact today direct labor is only about 4% of cost of goods sold.

So, highly automated, highly reproducible products that we manufacture these rapid point-of-care tests in Santiago. We do about 50 million tests per year, that’s growing and I’ll talk more about that in a little bit.

I came on board in January/February in 2009. I actually took this job March 1st. Later that year, we entered into a development agreement with a company called BioHelix to develop a handheld molecular device and I’ll talk a little bit more about where we are at with that products in the next slide or two.

In 2010, the very beginning of 2010, actually at this conference at that time we announced that we had acquired Diagnostic Hybrids, a maker of cellular-based assays that they develop and manufacture in Athens, Ohio.

In 2010, we also announced a collaborative agreement with the Northwestern Engineering School and collaboration also with a Northwestern Global Health Foundation, the purpose of which is to develop a fully integrated molecular platform that would be inexpensive enough to place in Africa to do HIV viral load testing. So, I’ll talk a bit more later about where we are at with that project.

And then in 2011, 2011 was actually a very good year for us. I’ll talk about some of the details again later, but we did launch Sofia, our next generation lateral flow technology. We’ve actually shipped a number of countries including this one, customers in those countries. And then, we actually received at the very end of the year FDA clearance for our first two molecular assays.

Today about two-thirds of our business is the rapid point-of-care business, still the remaining third is made up of the DHI business in combination with some life science research products that we manufacture in Santa Clara. Flu is a big product for us still although doing the math for 2012 assuming a neural [ph] flu season, flu should account for about 27%, 28% of our sales.

Because of the products that we manufacture, those that fit the highly complex lab as well as those that fit in the doctor’s office, we have a number of points upon which we call. If you look at the lateral flow technology, that’s the rapid point-of-care technology, that actually is applicable in almost every segment in healthcare at least in terms of diagnostics.

And you see there DFA/cell that’s the DHI business. Those products are mainly pointed at the very large hospital reference lab. There are about 1000 clinical virology labs in the United States obviously as a percentage number of hospitals that’s quite small. And then you see where our market products shift, as well as our molecular products.

Our company has a number of competencies. Foremost we are an immune assay development and manufacturing company. I described the extent to which we are automated, but we are known for highly reliable products in that space. We have a global distribution network here in the U.S. We use in addition to direct selling efforts we use some of the larger well-known distribution partners ex-U.S. depending on the country.

We similarly have a good distribution network. We certainly have demonstrated recently that we now have to get things 510 ( K) cleared by the FDA and I will admit that of course most of those things are in the categories where we know something about it. So, that really has not necessarily been that difficult. And I would say for the most part we’ve been able to hit our timelines based on those approvals.

We have brand strength in flu of course, strep. We manufacture about 15 million strep tests per year, pretty big volume test for us and similar volumes of pregnancy tests. Well known in the space for herpes, which is terrific at a cocktail party. Our people know a lot about it. And then we are also well-known in the Graves’ disease space. We had a number of issues over the history of the business.

We actually had tried to take onboard a different technology that would replace our existing business and unfortunately it didn’t work real well, so we had to do a bit of a restart and when I came on onboard in early 2009, we actually didn’t have a product in the pipeline. So, we had to bring on onboard a number of people including R&D talent, business development folks, et cetera.

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