JP Morgan Healthcare Conference, Day 2: Qiagen, LabCorp, Abbott, and More

Qiagen 

Qiagen CEO Thierry Bernard said that Qiagen emerged from a tumultuous 2019 and a subsequent failed acquisition bid last year by Thermo Fisher Scientific as a "stronger and more focused company" whose recent success has been buoyed by product sales related to the COVID-19 pandemic — the company launched more than 10 new products in 2020 related to SARS-CoV-2 sample prep, diagnostic testing, or research. 

Bernard said the company is on track to meet its previously issued earnings guidance. "Of course, the COVID-19 pandemic represented a tailwind for our results, but [I see it as] a fantastic accelerator for investment and business[es] that were already factored into our projection," he said. 

For example, Qiagen placed more than 3,300 new instruments across its business segments in 2020, primarily its NeuMoDx, QiaStat-Dx, and QiaSymphony lab automation platforms. In fact, the company's legacy QiaSymphony platform, which will slowly be replaced by the NeuMoDx system for certain testing applications, achieved a "much higher" number of placements in 2020 than the usual 200 or so per year, Bernard said. 

In addition, Qiagen doesn't see the COVID-19 tailwind ending anytime soon, even with vaccine rollouts. Bernard noted as a comparison the influenza vaccine, which has been widely distributed on an annual basis for many years, yet in the US, there will still likely be around 30 million flu-related PCR test administered in 2021. 

Nevertheless, the company sees itself as prepared for life after COVID-19 and plans to invest about 60 percent of 2021 R&D spending in what it sees as its five key growth areas: sample technologies, QIAcuity Digital PCR, QIAstat-Dx syndromic infectious disease testing, NeuMoDx high-throughput infectious disease testing, and QuantiFeron latent tuberculosis testing. 

In turn, it expects sustainable double-digit sales growth for four of the five areas in 2021, with only sample technologies growing in the single digits due to an expected decrease in manual RNA sample prep kit sales. 

The current baby in this portfolio, the QIAcuity digital PCR system, was launched in October and more than 200 platforms have been ordered since that time, Bernard said. In the near term, the system will mostly be used for research purposes and possibly applied markets (such as wastewater testing), but longer term, Qiagen expects to pursue in vitro diagnostic applications for it starting with oncology. 

Meanwhile, the only business area that had a somewhat lackluster 2020 was QuantiFeron-TB, primarily because the COVID-19 pandemic slowed down TB testing rates, especially in mass testing situations like colleges and universities as well as immigration control. But Bernard said he is confident this business will return to strong growth, with projected 2021 revenues of more than $230 million compared to $180 million to $190 million in 2020. 

In addition, Bernard said, as the "clear market leader" for latent TB testing, Qiagen welcomes the competition from new market entrant PerkinElmer, which this week announced its intent to acquire Oxford Immunotec — Qiagen's main latent TB testing competitor — for $591 million. 

New competitors "will help us increase the awareness around the usage of latent TB [testing] — they will make the pie bigger," Bernard said. In addition, he noted, Qiagen has not being complacent in its market position. 

Specifically, he cited Qiagen's ongoing partnership with DiaSorin to automate QuantiFeron testing, a workflow that has received both US Food and Drug Administration clearance and CE marking. In addition, Qiagen continues to collaborate with Australian firm Ellume for a handheld reader for QuantiFeron designed for use in resource-poor, high-burden markets.  

"We have made it extremely difficult [for competitors] to penetrate the market," Bernard said. 

LabCorp 

Building testing capacity as quickly as possible has been one of Laboratory Corporation of America's primary objectives throughout the coronavirus pandemic, Adam Schechter, the firm's chairman, president, and CEO, said at the conference on Tuesday. 

"That's what has enabled us to now be able to perform 275,000 tests per day, and we still have a one- to two-day turnaround time," which has been consistent since August, he said. 

Because of a relatively fast time to result, LabCorp has for the most part been able to avoid having to prioritize categories of patients for COVID-19 testing, Schechter said, adding that overall, the firm leveraged science and innovation in 2020 "to make a significant difference" during the pandemic. 

He said that in addition to enabling at-home sample collection and providing PCR and antibody testing, the Burlington, North Carolina-based company was among the first to validate the use of simple nasal swabs instead of more complex nasopharyngeal swabs for taking samples for coronavirus testing. The firm also invented a heating process to extract DNA that reduced the on-site turnaround time for PCR testing to 30 minutes from four hours, he noted. 

Looking ahead, LabCorp is working with the US Centers for Disease Control and Prevention to sequence SARS-CoV-2 and better understand how the coronavirus mutates over time, and the firm is leveraging its Covance drug development business for participation in "almost all the vaccine trials" and "many of the therapeutic trials" for COVID-19, Schechter said. 

Even with the rollout of vaccines, he added, there will continue to be a need for coronavirus-related testing. A percentage of the population is going to continue to be at risk of acquiring the virus, and as a result, patients presenting to physicians with COVID-like symptoms next year will probably still need to get PCR testing for SARS-CoV-2, he said. Additionally, tests that measure neutralizing antibodies or T cells may be needed to track the progress of patients who have been vaccinated. 

Schechter also noted that during the second quarter of 2021, volumes for traditional non-COVID-related testing could start to come back to pre-pandemic levels. 

Additionally, about 250 Walgreens retail sites that enable the ordering of LabCorp tests by a healthcare provider are either open or close to being open. About 100 sites were added in 2020, most during the last quarter, and "as we go through this year and next year, we'll be getting much, much closer to where we anticipate being somewhere around 600 sites or so," Schechter said. 

Abbott 

Abbott CEO Robert Ford emphasized the company's focus on rapid, point-of-care assays and reiterated the strong performance of the firm's diagnostics business throughout the COVID-19 pandemic. 

Ford said the company knew early on in the pandemic that it couldn't rely solely on laboratory-based systems for COVID-19 testing, and in April began developing its lateral flow tests for the virus to launch in Q3 to meet the need for "fast, affordable mass-scale testing." Abbott developed two lateral flow antigen tests – the BinaxNow for the US market and the Panbio for the international market – and focused on increasing capacity. Ford said Abbott built two manufacturing sites for the BinaxNow test in the US, spent $700 million to increase capacity, and now has a "several hundred million test capacity" per quarter. 

He added that the firm expects high demand for the tests even after the vaccine rollout due to the belief that COVID-19 will transition to being a seasonal virus with seasonal demand spikes for testing. 

The capacity build was an "acceleration of our point-of-care strategy," to which the Alere acquisition in 2017 also contributed. The acquisition, Ford said, was not just to build the point-of-care portfolio but to create a "whole new testing channel" to decentralize and democratize lab testing. "The pandemic brought a lot of visibility and awareness to rapid, point-of-care testing," he said, and Abbott has used the pandemic to "seed the market" to build the new testing channel and expand its distribution to physicians' offices, pharmacies, airports, and other locations. 

Separately from the conference, Abbott said on Tuesday it has completed the 150 million purchase order of BinaxNow tests from the US government, adding that the test will now be available commercially.   

Beyond COVID-19, Abbott is working on rapid assays for strep, respiratory syncytial virus, and sexually transmitted diseases, and Ford said the company "is building a more sustainable testing platform than just COVID." It is also investing in rapid assays, including the traumatic brain injury test that received 510(k) clearance from the US Food and Drug Administration this week. The launch of its new Alinity m instrument was augmented by COVID-19 and has led to a placement rate four times higher than it planned for, Ford said. 

"We've taken advantage of the strength of our COVID testing portfolio and looked at all the opportunities that those revenue streams, those profit streams, have afforded us to reinvest even further across our portfolio," Ford said. "That's what we're going to be doing this year, is not only strengthening and accelerating what we currently had in the portfolio but looking now at bringing new products in place." He added that Abbott is working to invest and build its pipeline beyond the next two years of launches. 

On the potential for M&A, Ford said the firm is "actively monitoring" across all of its businesses but said any acquisition must be a good fit strategically, either augmenting an existing part of the portfolio or providing a new area of entrance, and must align with the company's growth orientation. He said any acquisition would more likely be a tuck-in. 

Invitae 

Invitae CEO Sean George said that although the last month and a half has been one of the strongest for the molecular diagnostics company, more recently, counties the firm operates in have instituted restrictive measures due to the growing number of COVID-19 infections. "We have a production facility in Southern California, and frankly, the last couple of weeks were a bit of a mess down there," George said. 

Ahead of its presentation at the conference, Invitae said that it expects its 2020 revenues to increase by 28 percent from the prior year to $278 million, but the company's $450 million revenue projection for 2021 fell well below the consensus Wall Street expectation of $513.7 million. 

Despite the promising momentum, "we're acutely aware there is a fair amount of uncertainty left," George said, adding that it is "hard to say how that's going to play out this year." Despite the conservative short-term outlook, over the next two to three years, Invitae will be able to achieve 50 percent to 60 percent revenue growth, he predicted. 

Jason Myers, Invitae's president of oncology, said that following completion of the ArcherDX acquisition, Invitae reached one of its milestones in November by submitting a premarket approval application for the Stratafide next-generation sequencing test for personalizing cancer treatments. The company is seeking the US Food and Drug Administration's approval for the tissue- and blood-based test kit as a class II device with de novo claims and as a class III device with companion diagnostic claims. The FDA will likely take between 90 and 180 days to review the test as a class II device, though it may take longer, between 180 and 270 days, to review the higher-risk CDx claims, some of which are linked to drugs with breakthrough therapy status. 

Invitae has discussed the proposed indications for Stratafide with the Centers for Medicare & Medicaid Services, and Myers said that if the FDA approves the test's CDx claims, it will be eligible for national Medicare coverage. He noted that the specific price point at which the test will be reimbursed still needs to be ironed out with payors. 

Meanwhile, the company's Personalized Cancer Monitoring test for measuring minimal residual disease (MRD) will be integrated within Invitae's "core production engine," making it a resource not just for pharmaceutical companies developing immunotherapies but "customers of all sorts," Myers said. Although the MRD space is becoming highly competitive, with Guardant Health and Grail both announcing plans to advance tests this week, George isn't bothered about Invitae's ability to compete.

"We've been in a pretty rough and tumble environment" in the hereditary cancer genetic testing space, where there are numerous competitors, he reflected. "We've been competing in a sharp-elbowed space for a while." With 44 million new cancer diagnoses annually, George expects competition to increase in the near term. However, the competitors will fall away over the longer term, he said, as customers look for a one-stop solution that can serve cancer patients' testing needs throughout their disease trajectory, which he added is what Invitae is trying to build. 

On Wednesday, a day after its JPM presentation, Invitae said that it is collaborating with Pacific Biosciences to develop a production-scale, high-throughput, whole-genome sequencing platform for clinical use.

OraSure 

In his conference presentation, OraSure CEO Stephen Tang reviewed previous projections for the Bethlehem, Pennsylvania-based firm to enter the COVID-19 diagnostic space. 

The firm positioned itself as a potential early entrant in the at-home testing space early in the pandemic, but by the close of the year it had not yet launched a test. 

It is seeking Emergency Use Authorization from the US Food and Drug Administration for two assays at the moment: an antibody test that uses the firm's flagship sample type, oral fluid, and a visually-read antigen test, which Tang called "a lab on a swab," that uses a lower nasal swab. The former will be a lab-based ELISA test that, if cleared, will be the only non-blood-based antibody test. The latter is expected to be granted EUA for clinician-use first but will ultimately be an at-home self-test. Both tests have been developed with funding from the Biomedical Advanced Research and Development Authority. 

OraSure expects to submit the prescription-use test to the FDA in Q1, and the fully at-home test in Q3. 

Although it lags behind competitors in COVID-19 diagnostics, OraSure had $27 million in revenues through Q3 from its DNA Genotek subsidiary’s EUA oral fluid collection devices, which are being used in conjunction with other manufacturers' or labs' SARS-CoV-2 saliva tests. Tang reported seven large customers for the product. 

He said there will likely be high demand, even as the virus shifts "from pandemic to endemic phase" in the US, but OraSure is also positioning itself as a potential leader in COVID-19 testing in low- and middle-income countries. Tang said he expects testing demands to remain high in the US even after the vaccine becomes more widely available. There are projections that vaccination in LMICs won't ramp up until 2025, he said, so testing will likely be needed even until 2030. 

Tang said that a bright spot in the pandemic has been the integration of its microbiome assessment businesses, Diversigen and CoreBiome, which has proceeded on track. 

The firm is ramping its production lines for its sample collection devices and assays, as well as continuing to manufacture its HIV tests, which saw a 17 percent year-over-year increase ex-US despite the pandemic, Tang said. Population sequencing projects using the firm's sample collection devices are expected to resume soon, and ancestry testing and dog pedigree testing using the firm's devices have also been surprisingly resilient as people tried to occupy their extra time at home, he noted. 

OraSure currently has $264 million in cash on its balance sheet and no debt. It is looking for acquisition opportunities in adjacent spaces, but also open to considering a transformative merger, Tang said. 

Sema4 

Sema4 CEO Eric Schadt revealed in his conference presentation on Tuesday that the firm generated revenue of approximately $190 million in 2020. He said the firm expects revenues to grow at a compound annual growth rate of 38 percent through 2023, when it projects revenues of $504 million. 

Sema4's women's health solutions, which includes carrier screening and noninvasive prenatal screening, has reached a run rate of approximately 206,000 tests per year, translating to approximately $200 million in revenues, and is projected to grow 28 percent year over year. 

The Stamford, Connecticut-based company projects its oncology solutions business to grow 240 percent year over year, Schadt said, but did not disclose revenues or test volumes. 

"Today a lot of revenues are generated around genomic testing," Schadt said, "but increasingly they'll be generated through secondary insights," including novel disease models that can inform clinical care, reduce cost, and improve outcomes, as well as tools and technologies that improve clinical trial efficiency and accelerate drug discovery.  

Revenue from partnerships accounted for 4 percent of total revenues in 2020, but Sema4 projects that to grow to 30 percent by 2023. 

Schadt also noted that Sema4, a Mount Sinai Medical System spinout combining genomic testing with other clinical data analysis, has partnered with GlaxoSmithKline to generate predictive analytical insights into the diagnosis and progression of cancer patients. Under that alliance, Sema4 is performing whole-exome and whole-transcriptome profiling of hundreds of breast and ovarian cancer samples provided by GSK and generating "molecular-level data that can be combined with existing real-world data and imaging data to provide a comprehensive view of data associated with certain cancer types," according to Schadt. 

Agilent Technologies 

Agilent President and CEO Mike McMullen said that as part of the firm's "build and buy" strategy, it will focus on three major avenues of growth: transformation of the analytical lab, increase of market share in its core cancer diagnostics and genomics business, and expansion in new high-growth markets. 

To transform the analytical lab, McMullen pointed out that Agilent "is driven to help customers not only with the science …  but also [with] the economics of the lab." He explained that the offering will require an integrated, digitally enabled lab that is powered by a digital ecosystem, intelligent instruments, smart alerts, data analytics, and associated workflows to help customers' specific interests. 

"With our industry-leading instrument position, coupled with our services-scaled capability and workflow focus … [you'll have] great results in terms of shared gains in the core analytical lab market," McMullen added. 

In the cancer diagnostics and genomics market, Agilent aims to expand its automation platforms and leverage its position in immunohistochemistry-based companion diagnostics. In addition, the Santa Clara, California-based firm hopes to provide workflows on the sample prep side while ensuring it can enable clinical research and diagnostic testing on the data analytics front. 

To expand into new high-growth markets, Agilent will execute three core strategies aimed at biopharma: providing analytical tools and workflows, serving as a leading supplier in providing GMP-grade oligonucleotides for RNA-based therapeutics, and offering integrated cell analysis solutions. 

McMullen highlighted that Agilent's biopharma business has brought in $600 million in revenue and expects double-digit growth moving forward. 

As part of the growing demand for nucleic acid-based therapeutics, McMullen said that Agilent now has over 20 different pharma partners and over 60 programs between its Boulder and Frederick, Colorado-based GMP nucleic acid production facilities. Agilent said in December that it will make a further $150 million expansion to the Frederick facility, which the firm believes will prime it for further capacity scaling and double digital growth in the biopharma end market. 

Agilent also sees opportunities to further leverage its technology to support COVID-19 research and testing, and for the development of therapies and vaccines. While only about 2 percent of Agilent's 2020 revenues came from COVID-19 activities, McMullen said that the firm will look into developing ELISA-based serology tests for antibody responses, as well as RT-qPCR and wastewater monitoring tests for direct viral detection. 

Agilent expects "at least high single-digit" core growth in Q1 2021 revenues, which McMullen noted represents twice the core growth rate that the firm expected in its earnings call and guidance in November. He emphasized that the firm saw broad-based growth among all markets using its brands except the academic market, where growth was slower. 

On Agilent's plans for mergers and acquisitions in 2021 and beyond, McMullen said the firm will focus on the private segment of the cell analysis marketplace, which "keeps us out of public bidding wars against larger [players] in our space." 

In terms of its long-term outlook, Agilent expects 5 to 7 percent growth over the next three to five years. 

GenMark Diagnostics 

GenMark Diagnostics became cash flow positive for the first time in 2020 and based on preliminary estimates believes its revenues grew around 94 percent year over year, Scott Mendel, the firm's president and CEO, said during a conference presentation on Tuesday. 

The Carlsbad, California-based company also "allocated resources and money to expand its consumables capacity," he said, noting that in response to demand for coronavirus testing, the firm "exited 2020 with the ability to produce 75 percent more consumables than at the end of 2019." 

GenMark invested more than $20 million in a facility that can house up to six test manufacturing lines, Mendel noted. At the end of 2020, it validated the first of two additional lines and expects to validate the second during this quarter. Its capacity is expected to reach about 200,000 tests per month exiting the second quarter. 

"We've also begun planning for a third manufacturing line in this facility, which we expect to complete in the second half of 2021, increasing our capacity to about 250,000 consumables per month as we exit the year," Mendel said. 

In 2020, the company placed an additional 265 ePlex analyzers, taking its global installed base to 792 instruments. More than 95 percent were linked to multiyear contracts for both ePlex Respiratory Pathogen Panel 2 and blood culture identification panels, and involved customer commitments to specific test volumes, "creating an enduring and recurring revenue stream for the company," Mendel said. 

About 90 percent of its instrument placements in the fourth quarter were capital equipment sales, while the rest were reagent rental sales, he added.