Quidel's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Quidel Corp. (QDEL)

Q1 2012 Earnings Call

April 25, 2012 17:00 am ET

Executives

Doug Bryant – President & Chief Executive Officer

Randy Steward – Chief Financial Officer

Ruben Argueta – Investor Relations Manager

Analysts

Jeff Frelick – Canaccord Genuity

Steven Crowley – Craig-Hallum Capital Group

Zarak Khurshid – Wedbush

[Ramish Dunpanseti] – JP Morgan

Brian Weinstein – William Blair

Ross Talyor – CL King

Scott Gleason – Stephens Inc.

Nicholas Jansen – Raymond James & Associates

Presentation

Operator

Good day ladies and gentlemen and thank you for standing by. Welcome to the Quidel Corporation Q1 2012 Earnings Conference Call. (Operator instructions.) I would now like to turn the call over to Mr. Randy Steward, Quidel’s Chief Financial Officer. Please go ahead, sir.

Randy Steward

Thank you, Operator. Good afternoon, everyone, and thank you for joining today’s call. With me today is our President and Chief Executive Officer Doug Bryant; and Ruben Argueta, Investor Relations Manager.

Please note that this conference call will include forward-looking statements within the meaning of federal securities laws. It is possible that actual results and performance could differ materially from these stated expectations. For a discussion of risk factors, please review Quidel’s annual report on Form 10(k), registration statements and subsequent quarterly reports on Form 10(q) as filed with the SEC.

Furthermore this conference call contains time sensitive information that is accurate only as of the date of the live broadcast today, April 25, 2012. Quidel undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call except as required by law.

As you’ve seen we’ve released a short while ago our financial results for the three months ended March 31, 2012. If you have not received our news release or if you would like to be added to the company’s distribution list, please call Ruben at 858-646-8023.

For today’s call, Doug will give you some color on Q1 and discuss a variety of developments in our exciting pipeline of products for new and expanded markets and geographies. I will then briefly discuss our financial results and we’ll then open the call for your questions. I’ll now hand the call over to Doug for his comments.

Doug Bryant

Thanks, Randy. As you’ve seen from our release total revenues in Q1 were $38 million compared to $59.6 million in Q1 2011, and equivalent to the $38 million of revenue that we achieved in Q4 2011. While disappointing these results aren’t surprising given the infectious disease category represented the majority of the decline. Sales in this category declined 45% versus Q1 last year due to the unseasonably mild winter and flu and respiratory disease season. As disclosed previously there was a low ILI incidence through the first two months and activity failed to cross the 2.4% national baseline.

While we have some reason to believe that there was an uptrend toward the end of the season we don’t have complete data on that at this time. Despite the lack of a meaningful flu season, however, the quarter was notable for several significant accomplishments which are important to our strategic transformation into a broader-based diagnostic company and our efforts to reduce the kind of volatility that we saw in Q1. The two developments we are currently most excited about and which we believe are particularly important to our future are the commercialization of our revolutionary Sofia product and the remarkable advances we’re making on the molecular diagnostics technology front.

I’d like to update you on both. Sofia, as many of you know, is our next generation fluorescent immunoassay analyzer system and one of the cornerstones of our business. Our Sofia Analyzer and our Sofia Influenza A+B fluorescent immunoassay are now CE marked, 510-k cleared and CLIA waived. Although there have been some challenges around selling flu assays and analyzers to a limited audience in a weak flu season we’re seeing strong interest from customers and others in the scientific community who like the ease of use, connectivity aspects and enhanced assay sensitivity that the Sofia system provides.

I’m pleased that just last week we received a CLIA waiver from the FDA for our Sofia fluorescent analyzer and our Sofia Influenza A+B assay for the detection of Flu A and B and nasal swab, and nasopharyngeal swab specimens from patients of all ages. Both of these simple-to-use tests employ Quidel-patented technology to yield an automated objective and a highly reliable result for aiding in the diagnosis of flu within minutes of obtaining the swab specimen from the patient. This is a significant milestone because the CLIA waiver designation allows us to penetrate more broadly the influenza diagnostic market, gaining access to the large physician office lab segment in addition to the hospitals, medical centers and smaller clinics that we already serve. This physician office lab segment accounts for the largest part of the approximately $270 million market for the rapid point of care tests that we manufacture currently.

With the waiver we can now sell the Sofia test system to CLIA-waived physician office labs, emergency departments and other CLIA-waived facilities. What’s more, the newer claims eliminate the age limitation and extend the read time of the test, making the product even more flexible and accessible to patients and healthcare professionals alike. Our CLIA waiver allows for both walk-away and read now modes. Walk-away of course means that a test cartridge containing a patient specimen can be inserted into the instrument and the operator can walk away. In a read now mode, an operator can ink date multiple tests at a time and at any time within fifteen to thirty minutes, the operator can return and read results one right after the other in a read now mode that cycles every 45 seconds.

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