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Bio-Techne's Q2 Revenues Up 13 Percent

NEW YORK (GenomeWeb) – Bio-Techne said today that its fiscal 2019 second quarter revenues rose 13 percent year over year.

For the three months ended Dec. 31, 2018, the firm said revenues rose to $174.5 million from $154.2 million, beating the analysts' average estimate of $170.2 million.

In Q2, the firm's Diagnostics and Genomics revenues were $39.3 million, up 6 percent year over year from $37.1 million. Bio-Techne's Protein Sciences revenues were $135.5 million, up 16 percent from $117.1 million in the prior-year quarter.

Its Protein Sciences segment delivered 14 percent organic growth and had broad double-digit growth in most consumable and instrument product categories. The business supplies specialized proteins such as cytokines and growth factors, immunoassays, antibodies, reagents, and protein analysis platforms to biotech buyers.

The firm said that in the second quarter its overall growth benefited from commercial execution in all major regions, but especially China, which had more than 30 percent year-over-year organic growth.

The firm noted that the National Comprehensive Cancer Network (NCCN) included its Exosome Diagnostics EPI assay in the clinical practice guidelines in oncology for prostate cancer early detection. Bio-Techne acquired the assay as part of its buy of Exosome Diagnostics for up to $575 million last August.

The new NCCN guidelines "are critical in our efforts to broaden insurance coverage, including Medicare coverage, which we are pursuing with professional rigor," the firm's President and CEO Charles Kummeth said on a conference call to discuss its financial performance. "Inclusion in the guidelines will also broaden patient access to the EPI test by affirming its value in men [who are] evaluating whether to proceed with a prostate biopsy. Men over 50 with an inconclusive [prostate specific antigen] level between two and 10 now have another course of diagnosis before yielding to a painful and risky prostate biopsy."

Even prior to its inclusion in the NCCN guidelines and without Medicare reimbursement approval, the test had been rapidly gaining acceptance among urologists throughout the US, he noted. More than 4,000 tests were performed in Q2 and more than 1,100 physicians have requested about 12,000 kits for future use on their patients, double the amount requested in the first quarter of the company's fiscal year 2019.

Bio-Techne's CFO James Hippel said on the conference call that a delay in including the Exosome Dx test in NCCN guidelines and follow-on Medicare reimbursement increased the impact of dilution to its earnings over what the firm had anticipated at the beginning of the fiscal year. The performance of its core businesses mitigated most of the dilution, and the firm expects that trend to continue for the remainder of the year.

However, Leerink analyst Puneet Souda said in a research note on Monday that a payor specialist he interviewed sees a number of steps ahead of Bio-Techne in its pursuit of reimbursement by payors. First, NCCN must finalize its guideline document and remove a description of EPI as investigational in the current version to match a newly updated algorithm, Souda wrote. The specialist told Souda that Bio-Techne is unlikely to pursue discussion with National Government Services Medicare Administrative Contractors or commercial payors until this is completed.

Bio-Techne's net income in Q2 was $17.6 million, or $.45 per share, compared to $48.8 million, or $1.29 per share, in the prior year. Its EPS for the recently completed quarter had a one-time benefit from changes to tax legislation of $.02 compared to a prior-year benefit of $.94.

The firm reported adjusted earnings per share of $1.06, beating the analysts' average estimate of $.98.

Bio-Techne's R&D expenses rose 14 percent to $15.8 million from $13.9 million in Q2 2018, and its SG&A expenses inched down to $63.6 million from $63.8 million in the prior-year quarter. 

At the end of Q2, the firm had $85.9 million in cash and cash equivalents and $70.6 million in short-term available-for-sale investments. 

In early morning trading on the Nasdaq, Bio-Techne's shares were up more than 6 percent at $190.