Quidel Corporation (QDEL)

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Quidel (QDEL)

Q3 2012 Results Earnings Call

October 23, 2012 5:00 PM ET


Randy Steward - CFO

Doug Bryant - President and CEO


Mark Massaro - Canaccord Genuity

Steven Crowley - Craig-Hallum

Dave Clair - Piper Jaffray

Kevin Milota - JPMorgan Chase

Matt - William Blair & Company

Shaun Rodriguez - Cowen

Nicholas Jansen - Raymond James & Associates

Steven Crowley - Craig-Hallum



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

I’d now 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, 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 October 23, 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 September 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 third 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 turn the call over to Doug for his comments.

Doug Bryant

Thank you, Randy. Total revenues for the third quarter at $33 million were in line with last year’s three quarter revenue of $33.1 million. Influenza like illness activity was also consistent with last year’s third quarter as was test demand during the quarter.

Inventory levels at distribution were low throughout the three quarter and remain so today. Our sales force continued to actively promote Sofia with the success that we would have expected given one product, Sofia influenza A+B.

Progress on our product development pipeline continued as expected. On the whole I’d say we accomplish what we said we would for the quarter and I’d like to now update you on where we are with our near-term plans.

Let’s start with Sofia, our automated Fluorescent Immunoassay analyzer. Throughout the quarter, we continue efforts to commercialize Sofia, efforts that were enhanced by our larger U.S. sales organization.

Although, the prevalence of ILI was low in the quarter, customers are clearly interested in Sofia and we continue to believe that Sofia will be successful in the longer term and that our longer term goals for the platform will be met.

One key to Sofia’s longer term success is of course, menu development. We’ve received CE Mark for our Sofia RSV product in the third quarter. As we have previously stated, we expect to launch RSV Strep A and hCG early in 2013 pending FDA clearance.

In addition, we expect CE Mark for Sofia Legionella in the near term as well. Another near term initiative is AmpliVue, our handheld disposable molecular platform that combines isothermal amplification with traditional lateral flow detection.

We launched the AmpliVue C. difficile product in Europe in September as scheduled and while molecular testing for C. difficile is not as evolved in Europe and Asia as it is here in the U.S., we are seeing interest in the format.

Given the quality of the data from our U.S. clinical trial, we hope to be in market in the U.S. within the next few months.

The Quidel molecular real-time PCR assay program is on schedule as well. We continue to make good progress on the development of these assays and are on track to achieve our internal goal by developing a suite of 20 molecular PCR assay targets that can be run on currently available thermal cycling equipment, like the ABI 7500 Fast DX and Life Technologies’ QuantStudio DX, as well as on our Wildcat platform when it launches in the developed world in 2015.

We've said before that we would have the cartridge design for Wildcat locked down by year-end and that this was the critical path item for launch in Africa in 2014 and we are still on target.

With regard to project Bobcat, our automated multiplex DFA analyzer, we are awaiting the next respiratory disease season to restart U.S. clinical trials and are anticipating that the next season will be in Q1 2013.

Finally, as we stated during the previous earnings call, we have entered into an agreement with Life Technologies with the development of molecular assays for Life’s new QuantStudio DX platform.

We initially estimated that under this agreement, the benefit ensuring the development activities would be recorded as contract revenue in the statement of operations.

After further review, it has been determined that the reimbursement of development cost should be recorded as a reduction to research and development expenses. So instead of our revenue number benefiting from the incremental $1.3 million as initially planned, our R&D expenses were reduced by $1.3 million.

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