QDEL

Quidel Corporation (QDEL)

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Quidel Corporation (QDEL)

2013 Analyst and Investor Day Conference

March 07, 2013, 09:30 am ET

Executives

Doug Bryant - President & CEO

Tim Stenzel - Chief Scientific Officer

Judi Tilghman - VP, Technology Assessment

Tammi Ranalli - Senior Director, MDx Business Unit

Larry Mimms - VP, R&D

Randy Steward - CFO

Analysts

Presentation

Operator

Good morning ladies and gentlemen. Welcome to the 2013 Quidel Analyst and Investor Day. Please take your seats, our program is about to begin. Please welcome Quidel President and CEO, Doug Bryant.

Doug Bryant

Good morning. Welcome everybody. Thanks for joining us on a snowy day here in Boston. I am sure there’s people still trying to get in, but we will go ahead and get started. I do want to remind everyone that we will be making in each of our presentations forward-looking statements.

Here is our agenda for the day. Most of you have heard me describe our strategy and talk about our progress in achieving milestones from time-to-time. Therefore my update this morning will be brief, so that you can hear directly from the leaders in our organization who are executing the key elements of our plan.

First, Dr. Tim Stenzel, will talk about our development plans broadly and then I will speak specifically about our PCR assay development program. And the next, Dr. Judi Tilghman will update our analysts and investors on where we are with respect to the development of Savanna and our HIV viral load assay. She will be followed by [Dr. Tammi Ranalli], who will tell you why we are so excited about our newest molecular product, AmpliVue C. difficile which we launched in January.

And finally, no update for our analysts and investors would be complete without a discussion on our financial position and Randy Steward, our Chief Financial Officer has volunteered to do that for us. And then following the last presentation by Randy, we will take Q&A and at that time we will conclude the webcast and then after that for those of you who are interested, Dr. Larry Mimms will do, who is also going to discuss Sofia will do a demonstration of our wireless application.

Many of you have seen this slide before. This describes our history since 2009 and lists a handful of milestones. Specifically, in 2009, we entered into a collaborative agreement with BioHelix to develop AmpliVue. In 2010 we completed the acquisition of DHI which gave us a number of assets as well as the capability to development molecular products. We also entered into an agreement with Northwestern to develop the instrument that we are now calling Savanna.

In 2011, a couple of key milestones, one, we had FDA clearance for both Sofia and our first assay flu A and B and then we also received FDA clearance for our first two molecular assays which were a PCR based flu assay and a PCR based Metapneumovirus assay. In 2012, we then received CLIA Waiver for Sofia and the flu assay and about the middle of June, we started effectively our launch, which resulted in six months placements of somewhere north of 3,000 instruments worldwide. And then finally, in December 20th or 21st, I can’t recall specifically, but we received FDA clearance for our first AmpliVue assay for C Difficile and as I mentioned before, we began to launch here just a couple of months ago.

And then finally I listed 2013, the FDA clearances we’re anticipating some, any moment in time, over the next several weeks, obviously, I am unable to tell you what those are at this stage, but we expect a number of assays which I will detail here in just a second.

Our strategic intent has two elements. The first of which is to build a broader based diagnostic company that delivers revenue and margin more consistently. We will develop technologies and products that give us access to market segments that are significantly larger and I would add less volatile.

The second element is that we will create and commercialize products that are differentiated in at least one of these four attributes. We strongly believe that in order to enter the marketplace and gain share, you have to have at least one of these elements if not all and in the case of both Sofia and the molecular programs, we believe we have at least one attribute and more.

Those attributes are either improved accuracy, lower cost, faster time to result or easier to use and just orient the audience to the chart. The full circle that means that we believe that we have a significant advantage. The half circle means that, I believe we are equivalent, and the empty circle means that we don't necessarily think we have an advantage and I can explain.

For example, with Sofia, on faster time to result our current asset, legacy product there is five minute assay and so is the Sofia, so there is no dramatic improvement expected in terms of time to result. And in terms of lower cost, we certainly are not going to be pricing our products lower with Sofia.

In terms of the equivalent circles, we believe that many molecular assays have pretty good performance and it’s very difficult to distinguish our self based on that category, our sensitivity or specificity alone. And AmpliVue, we know that we’re dramatically less than one of the competitors out there, but for most of the competitors we are not significantly low at the stage.

In 2011, actually in April 2011, here in Boston, we said that we had four vehicles for potential growth. We said we had four shots on going and that we were going to explore each of those equally and we have done that. But actually they haven’t all emerged; the two that have emerged are Sofia, which we now believe is significantly more of an asset to us and our molecular program both of which have taken off pretty significantly.

In 2011, we have said that these opportunities, thus far represented an incremental revenue opportunity of about $100 in 2015. We said that Sofia would have sales net of cannibalization of somewhere around $30 million and at that time you may recall that I said that our cannibalization rate would be about 50%. We said that Bobcat would represent a $30 million opportunity and then molecular would be 25 and the combination of our core business, our legacy business and Thyretain will represent an incremental $15 million.

Today, we are still confident that $100 is achievable, but now driven mainly by the strength of Sofia and our molecular program. So today we now believe that we will place somewhere around 10,000 Sofia Analyzers that each of those will do between $10,000 and $12,000 per year and that the cannibalization rate will be about 35%. Actually, launched to-date the cannibalization rates are better than that and today in the hospital segment 78% of replacements are new business for us and then the physician office segment 69% of replacements are new. We continue to believe that molecular represents about $25 million opportunity and we shall see shortly how well we do with AmpliVue C. Difficile is going well so far, I hope to revise that forecasting here in the next few months and obviously I would like to revise that forecast upward.

We now believe without spending a lot of resource on Thyretain that we had overcalled that however and we think that of the 10 million in core and Thyretain incremental opportunity about half of that is Thyretain. And I think everybody is aware that after the second attempt with the clinical trial of Bobcat we are still not there yet here in the United States. We still plan on launching ex-US, but we have now not forecasted anything in our strategic plan for Bobcat at this time.

In 2013, we are focused really just on two things; we are focused on molecular and we are focused on Sofia. Frankly speaking, these two things are a lot and there's a lot of execution that needs to happen. If you look at a two-by-two table and divide it by higher volume and lower volume customers, you can see precisely what we are working on and these are the things that we are working on today and only these things for the most part.

Read the rest of this transcript for free on seekingalpha.com