Quidel's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Quidel Corporation (QDEL)

Q2 2012 Earnings Conference Call

July 25, 2012, 17:00 p.m. ET


Randy Steward - CFO

Doug Bryant - President and CEO

Ruben Argueta - Manager, IR


Steven Crowley - Craig-Hallum Capital

Scott Gleason - Stephens, Inc.

Nicholas Jansen - Raymond James

Brian Weinstein - William Blair

Jeff Frelick - Canaccord Genuity

Zarak Khurshid - Wedbush Securities

Ross Taylor with CL King



Welcome to the Quidel Corporation Second Quarter 2012 Earnings Conference Call. At this time all participants are in listen-only mode, later instructions will be given for the question-and-answer session. (Operator Instructions)

And now I’d like to turn the call over to Mr. Randy Steward, Quidel’s Chief Financial Officer. Please go ahead.

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, our Investor Relations Manager.

Please note that this conference call will include forward-looking statements within the meaning of Federal Securities Laws. It's possible that actual results and performance could differ materially from those 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 July 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.

Today Quidel released financial results for the three months ended June 30, 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 report on the highlights of the second quarter and provide updates on our product pipeline. I will then briefly discuss our financial results and we will open the call for your questions.

I’ll now hand the call over to Doug for his comments.

Doug Bryant

Thank you, Randy. Total revenues for the second quarter at $39.9 million were just slightly better than what we had expected and we have 12% improvement over revenues of $27.5 million in the second quarter of 2011. This was also a 24% improvement over revenues of $25 million in the second quarter of 2010.

While physician visits for influenza like illness and testing, for influenza in the first quarter of this year were much lower than normal. Respiratory illness and test demand in the second quarter were at levels that we would typical see this time of year.

Inventory levels at distribution were low as we exited the first quarter and remained that way as we entered the third quarter. Spending during the quarter was also as planned, and representative of our ongoing R&D investment and the increase in the size of our U.S. sales force. Overall we had a productive quarter.

Sales and operating margin were bit better than we had planned, Randy will walk you through these details shortly. And we made pretty good progress with the two initiatives that we are likely to drive sales within the next year or so. Let me walk you through where we are with growth.

Let’s start with Sofia, we did received clear waiver from the FDA in the second quarter for Sofia influenza A+B for nasal for swap specimens across all its ranges. And have now launched in both U.S. hospital and physician segment.

Our placement rate improved during the quarter which is encouraging given the low prevalence rate and customer interest in discussing flu this time of the year. Other assays for hCG strep and RSV are planned to follow shortly and we would expect by the first quarter of 2013 to have a menu of four tests in the United States and six tests in Europe with still others to follow throughout the year.

The other key near-term initiative is AmpliVue our handheld disposable molecular platform that combines isothermal amplification with traditional lateral flow detection. We received CE mark for our C. difficile product in March, completed U.S. clinical trials in the second quarter and have been building inventor for our European product launch in the fall. And then anticipated launch here in the U.S. before the end of the year. We expect assays for MRSA for blood culture confirmation, (inaudible) strep and is to follow shortly.

I’d like now to turn to the medium to longer term timeframe in terms of likely commercial impact. During the quarter we progress with the rest of our molecular program. We received CE mark for our direct specimen PCR assay for C. difficile in early and are conducting U.S. clinical trials now.

We completed U.S. clinical trials for our RSV and human Metapneumovirus assays. Our HSV and VZV assays remain a development in our on track inter clinical trial this half of 2012 with other PCR assays to follow shortly.

As I previously disclosed we are aiming to have a menu of 20 targets that can be run on our Wildcat platform when it launches in 2014, and at that this stage I remain confident that we can see that hurdle.

I should mention that we recently entered into a partnership with Life Technologies for the development and commercialization of real-time PCR assays on their new instrument system. Many of these assays will be portable to Wildcat as well. With respect to project Wildcat, specifically with development of the platform, we remain on track at this stage. Primary focus is ensuring that we keep our commitment to the Northwestern Global Health Foundation. That commitment is to develop and deliver an inexpensive fully integrated molecular platform that can reduce the cost of HIV viral load and TB testing in Africa in 2014. We believe that the key to achieving this goal is development of a low cost cartridge and that our proprietary (inaudible) extraction technology is the key to delivering on that promise.

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