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Qiagen Moves Ahead After Thwarted Thermo Fisher Buyout With NeuMoDx as Key Growth Driver

NEW YORK – With the scuttled Thermo Fisher Scientific acquisition in its rearview mirror, Qiagen is ready to continue life as an independent company, with recently acquired in vitro diagnostics developer NeuMoDx serving as a key pillar of future growth.

While Qiagen's diverse portfolio of sample technologies and molecular testing products has enabled it to maintain short-term growth during the COVID-19 pandemic, the company believes it has the pieces in place for growth beyond SARS-CoV-2 testing tailwinds, CEO Thierry Bernard said in a recent interview.

"Qiagen has a fantastic asset in that we are focused on molecular technologies, and the pandemic crisis has proven two things to me: the relevance and value of [diagnostic] testing in the healthcare value chain; and … really more important for Qiagen, the relevance of molecular testing because of its speed and sensitivity," Bernard said.

To recap: Qiagen's 2019, particularly the latter half, was difficult as long-time CEO Peer Schatz left the firm (with Bernard assuming the interim CEO role) around the same time that the company discontinued its next-generation sequencing instrument, translating into disappointing second-half 2019 revenues due to pullback of a Chinese joint venture and multiple companion diagnostic development deals that hinged on the sequencer's commercialization.

Smelling blood in the water, potential suitors emerged with Thermo Fisher at the top of the list. Rumors swirled about Thermo Fisher's interest in Qiagen, which came to a head in early March when it said that it planned to acquire Qiagen for $11.5 billion, or about €39 ($43.35) per share of Qiagen's stock, representing a premium of about 23 percent to the stock price at that time.

Almost perfectly in parallel, the COVID-19 pandemic emerged, and Qiagen was well positioned to capitalize on it given its sample processing business, particularly the RNA extraction kits so heavily in demand in the early days of the pandemic, as well as its intrinsic molecular diagnostic development capabilities.

In fact, Qiagen was cited in multiple media reports as having problems keeping up with demand for its RNA extraction kits, an issue it has since resolved. In the meantime, Qiagen also pivoted to develop and market molecular diagnostic tests for SARS-CoV-2 as part of a respiratory pathogen panel on its existing QiaStat-Dx syndromic testing platform, a panel that quickly received both CE marking and US Food and Drug Administration Emergency Use Authorization.

Sales of QiaStat-Dx instruments and test cartridges, coupled with sample technologies and molecular diagnostic reagents for third-party developers of PCR-based SARS-CoV-2 tests, resulted in Qiagen's first quarter and second quarter 2020 revenues greatly exceeding expectations. This in turn prompted Thermo Fisher to up its bid, but it wasn't enough as the deal fell through in August with only about 47 percent of shares tendered by current shareholders, well short of the required two-thirds required to consummate the deal.

During all this, Bernard was also named permanent CEO and managing director. Now, he says, the company is ready to move on.

"We had very good rationales for the business combination with Thermo, and at the same time we have extremely good arguments and assets to strive as a fully independent company," Bernard said. "What is clear is that Qiagen is not looking for any strategic partnership of any kind. We strive to remain independent."

The first major business move that Qiagen made after the Thermo saga was finalizing its acquisition of NeuMoDx in September for $248 million, a move that has been almost two years in the making. Qiagen and Ann Arbor, Michigan-based NeuMoDx originally signed their strategic partnership and merger agreement in September 2018 with Qiagen taking an approximately 20 percent stake in the firm and agreeing to distribute its high-throughput NeuMoDx 288 and mid-throughput NeuMoDx 96 sample-to-answer molecular diagnostic platforms in Europe and other ex-US markets.

The deal also stipulated that Qiagen would have the right to acquire all remaining shares subject primarily to NeuMoDx meeting certain milestones, particularly building out a comprehensive infectious disease testing menu and obtaining regulatory approvals for those tests.

"And when we said comprehensive infectious diseases, our take was that to start being competitive in that central laboratory, mid- to high-throughput PCR market, you need to have at least … a dozen assays, such as the blood-borne viruses, HIV [and hepatitis B and C viruses], and some of the sexually transmitted diseases, and that's where we basically focused with the NeuMoDx team."

NeuMoDx achieved its goals "relatively well," Bernard said, having obtained CE marking for 11 assays including HBV and HCV; cytomegalovirus and Epstein-Barr virus; a combined Trichomonas vaginalis/Mycoplasma genitalium test; HIV viral load; and, most recently, human papillomavirus. NeuMoDx also this year received CE marking and FDA EUA for its own SARS-CoV-2 test.

Bernard noted that Qiagen in the last year or so asked NeuMoDx to finish and launch as many tests as possible in Europe, "and therefore they took some delays for [premarket] and 510k approvals in the US. So now they are working on [this], but most of it will be done by Qiagen in the coming one to three years."

It is no secret that Qiagen is positioning the NeuMoDx systems as a replacement for its QiaSymphony RGQ for infectious disease testing. While the latter has been a key growth driver for Qiagen for many years, it remains a modular system comprising the QiaSymphony sample prep platform and the Rotor-Gene Q thermal cycler, and that, Bernard noted, does not jibe with the undeniable market trend of "fully integrated, sample-in, result-out solutions."

In a crowded market for such platforms, Qiagen is betting it has a winner in terms of user-friendliness, throughput, and test turnaround time, all enabled by patented extraction technologies, microfluidics, and silicon-based thermal cycling. The NeuMoDx 288 can process up to 340 samples per eight-hour shift with an individual test turnaround time of 40 to 80 minutes, while the NeuMoDx 96 can process up to 150 samples in an eight-hour shift with a similar test turnaround time. The systems also have the ability to process both laboratory-developed tests and IVD kits.

One recent adopter of the NeuMoDx 288 platform is the virology laboratory at Hôpital Bichat-Claude Bernard in Paris, which began using the system in March as part of its effort to more quickly and easily diagnose SARS-CoV-2 infections, according to Gilles Collin, an engineer in biology at the hospital who is heavily involved in the implementation of new viral diagnostic methods there.

Collin said that the lab currently uses the NeuMoDx system routinely for COVID-19 testing – about 700 to 800 tests per day – and noted that it enables the lab to report test results within 24 hours.

"This choice was made in order to respond to the epidemic emergency, [with] Qiagen guaranteeing us a short delivery time, and a rapid implementation of the test," Collin said. "It was easy for us to quickly train the technicians, because its use is simple and the interface is very ergonomic. Another positive point is the storage of reagents at room temperature."

The lab also currently uses the QiaSymphony RGQ platform for other tests, but Collin said that in the future it plans to replace it with the NeuMoDx system for CMV and EBV viral load testing, and possibly HPV testing.

Bernard said that Qiagen's immediate priorities for NeuMoDx are to continue to invest in its manufacturing capacity in Michigan given the "significant" demand Qiagen is seeing for the platforms; and, given the current market environment, to commercialize a "short-plex" respiratory pathogen panel including SARS-CoV-2, influenza A/B, and respiratory syncytial virus. He said the company expects at least CE marking for this assay by the end of October. Qiagen also hopes to achieve a claim extension for saliva testing for both the CE-marked and FDA Emergency Use Authorized SARS-CoV-2 assay.

After that, Qiagen will continue to work toward FDA clearances for STD and blood-borne virus assays on the NeuMoDx systems before looking at more esoteric testing applications to help differentiate the platforms from those of competitors. Qiagen will also consider how to rebrand the system with its trademark "Qia" prefix in the coming weeks.

Bernard said that NeuMoDx fits into Qiagen's portfolio as one of five "key growth pillars" for the future, the others being sample processing technologies, where the QiaSymphony sample prep module will remain an integral product for third-party lab-developed testing in infectious diseases and oncology; digital PCR, a platform for which Qiagen plans to launch in the fourth quarter; QuantiFeron latent tuberculosis and, eventually, Lyme disease testing; and the aforementioned QiaStat-Dx syndromic infectious disease testing business.

Of these, NeuMoDx has the greatest synergy with QiaStat-Dx, the platform for which Qiagen has already achieved CE marking and FDA EUA for a larger respiratory pathogen panel that includes SARS-CoV-2.

"What you can have as a perfect combination is the short-plex respiratory [panel] on NeuMoDx with those four pathogens, Flu A/B, RSV, and [SARS-CoV-2], and you can reflex that to a larger respiratory panel with QiaStat-Dx," Bernard said. "Anytime we can do that… for instance we are currently thinking about GI [pathogen] testing on NeuMoDx. You could have an interesting bundle of GI monoplex on NeuMoDx, and GI multiplex on QiaStat. But those are two different markets – rather than an overlap, I see it as a fantastic combination."

That is not to say that Qiagen is neglecting other parts of its business, such as next-generation sequencing chemistry; companion diagnostic development; or forensics and human identification. These are seen as stable and reliable contributors to top-line growth, Bernard said, and even if they have leveled off in recent months due to the COVID-19 pandemic, Qiagen expects that they will recover as soon as next year.

"Our analysis, it may be debatable, is that the COVID impact will go beyond 2020, probably at least until the first half of 2021, that a vaccine will come, but global availability … will really start around summer of 2021," Bernard said. "In the second half of 2021, you will see COVID-19 testing needs going slightly down, but they will never completely disappear. In this scenario, we start to see at the end of Q2 2021, the products that are facing headwinds because of COVID … are starting progressively to recover. Basically, we believe that 2020 is a blank year for those products, and the positive growth will start again in 2021."

Between these legacy product lines, and "with what we are currently launching, Qiagen has a lot to chew on in the coming two years," Bernard said.