Gen-Probe's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Gen-Probe Incorporated ( GPRO)

Q4 2011 Earnings Call

February 13, 2012 4:30 p.m. ET

Executives

Michael Watts – VP, IR and Corporate Communications

Carl Hull - Chairman and CEO

Herm Rosenman - SVP, Finance and CFO

R. William Bowen - SVP, General Counsel and Secretary

Eric Tardif - SVP, Corporate Development and Marketing

Kevin Herde - VP, Finance, and Corporate Controller

Analysts

Dave Clair - Piper Jaffray

Jon Groberg – Macquarie Capital

Bill Bonello – RBC Capital Markets

Vijay Kumar - Deutsche Bank

Dan Leonard – Leerink Swann

Jon Wood – Jefferies & Company

Ashim Anand – Natixis Bleichroeder

Quintin Lai - Robert W. Baird

Isaac Ro – Goldman Sachs

Tycho Peterson – JPMorgan

Presentation

Operator

Welcome and thank you for standing by. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session. (Operator Instructions) Today’s conference is being recorded. If you have any objections, you may disconnect at this time.

I will now introduce to your host for today’s conference Mr. Mike Watts, Vice President of Investor Relations. Sir, you may begin.

Michael Watts

Thank you, Sherry and good afternoon everyone. I am pleased to welcome you to this conference call to discuss our fourth quarter 2011 business results. A press release announcing our results was issued today just after 4 p.m. Eastern Time and is posted on our website at www.gen-probe.com.

After our prepared remarks today, we’ll take your questions for the balance of an hour, then post our script on our website for your convenience and reference.

Before we begin, let me review our safe harbor policy. Forward-looking guidance – financial or otherwise – is only provided on conference calls or in our press releases. Any statements about our expectations, beliefs, plans, objectives, assumptions, or future events or performance are forward-looking statements. For example, statements concerning 2012 financial guidance, financial condition, regulatory approvals and timelines, the development and commercialization of new products, future results of operations, growth opportunities, plans and objectives of management, market trends, and future economic conditions are all forward-looking statements.

Forward-looking statements are not guarantees of performance. They involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied. Factors that might cause such differences include, but are not limited to, those discussed in our SEC filings, including our most recent Form 10-K, and all subsequent periodic reports. Copies of these reports are available on our website, at www.sec.gov and upon request. Gen-Probe assumes no obligation and expressly disclaims any duty to update any forward-looking statements to reflect events or circumstances occurring after this call or to reflect the occurrence of unanticipated events.

In addition, our presentation today includes information presented on a non-GAAP basis. We believe these non-GAAP financial measures provide meaningful supplemental information regarding the company’s performance by excluding certain expenses and other items that may not be indicative of core business results. We refer you to the press release we issued this afternoon, which is available on our website, for a reconciliation of the differences between the non-GAAP presentations and the most directly comparable GAAP measures.

Now I’d like to turn the call over to Carl Hull, Gen-Probe’s Chairman and CEO.

Carl Hull

Thank you Mike, and good afternoon everyone. I’m pleased to report that Gen-Probe finished 2011 strongly. In the fourth quarter, revenues were in line with our expectations, and earnings per share came in a little better than we had forecast.

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.

Just as important, we enter 2012 with excellent momentum. We have three important new product launches – PANTHER in Europe, and Trichomonas and HPV in the U.S. – that are off to good starts around the world, with two more expected soon, pending FDA approval.

In my remarks today, I’ll discuss our revenue results for the fourth quarter, and spend a few minutes on our near-term growth drivers. Herm will then discuss fourth quarter expenses and our 2012 guidance. In that context, he will highlight future investment priorities that we believe will drive sustainable organic growth for the next several years.

You’ll notice a consistent theme in our remarks today, a focus on 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, blood banks around the world continue to value the automation and process controls of the TIGRIS system, which led to significant sales of instruments to 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. 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. 2012 will be a year in which our razor-razor blade business model really begins to pay off in clinical diagnostics.

Finally, the automation of PANTHER – which enhances what we have accomplished with TIGRIS, but at a significantly lower cost – is making good inroads in Europe. 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. 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.

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