SAN DIEGO, April 28 /PRNewswire-FirstCall/ -- Gen-Probe Incorporated (Nasdaq: GPRO) today reported strong financial results for the first quarter of 2008 and raised its full-year guidance for earnings per share (EPS) and total revenues.
"Gen-Probe posted excellent financial results in the first quarter of 2008, as new records in both clinical diagnostics and blood screening enabled us to exceed $100 million in quarterly product sales for the first time," said Henry L. Nordhoff, the Company's chairman and chief executive officer. "We also established new all-time highs for total revenue and net income, and made important progress in our PROCLEIX(R) ULTRIO(R), human papillomavirus (HPV) and prostate cancer development programs."
In the first quarter of 2008, product sales were $101.5 million, compared to $87.2 million in the prior year period, an increase of 16%. Total revenues for the first quarter of 2008 were $122.6 million, compared to $101.1 million in the prior year period, an increase of 21%. Net income was $31.9 million ($0.58 per share) in the first quarter of 2008, compared to $21.5 million ($0.40 per share) in the prior year period, an increase of 48% (45% per share). In this press release, all per share amounts are calculated on a fully diluted basis, and all results are presented on a US GAAP basis.
As expected, Gen-Probe's total revenues and net income in the first quarter of 2008 benefited from $16.4 million of royalty and license revenue received from Bayer, representing the third and final payment due in connection with the 2006 settlement of the companies' patent infringement litigation.
Detailed Results
Gen-Probe's clinical diagnostics sales in the first quarter of 2008 benefited from continued growth of the APTIMA Combo 2(R) assay, an amplified nucleic acid test (NAT) for simultaneously detecting Chlamydia trachomatis (CT) and Neisseria gonorrhoeae (GC). Sales of this assay increased based on market share gains on both the Company's semi-automated instrument platform and on the high-throughput, fully automated TIGRIS(R) system. Revenue from the PACE(R) product line, the Company's non-amplified tests for the same microorganisms, declined in the first quarter compared to the prior year period, in line with Gen-Probe's expectations.
In blood screening, product sales in the first quarter of 2008 benefited from continued international expansion of the PROCLEIX ULTRIO assay, from higher pricing associated with U.S. commercial sales of the PROCLEIX WNV (West Nile virus) assay on the TIGRIS system, from the timing of product shipments, and from increased sales of TIGRIS instruments to Chiron. The Company's blood screening products are marketed worldwide by Chiron, a business unit of Novartis Vaccines and Diagnostics.
Collaborative research revenues for the first quarter of 2008 were $2.5 million, compared to $2.4 million in the prior year period, an increase of 4% that resulted primarily from two factors: increased reimbursement from Novartis of shared development expenses in the companies' blood screening collaboration; and increased reimbursement from 3M related to the companies' collaboration to develop rapid tests for healthcare-associated infections. These increases were partially offset by a reduction in funds received from the U.S. Department of Defense for prostate cancer research.
Royalty and license revenues for the first quarter of 2008 were $18.6 million, compared to $11.5 million in the prior year period. As previously discussed, this increase resulted primarily from $16.4 million of revenue from Bayer, which represents the third and final payment due in connection with the 2006 settlement of the companies' patent infringement litigation. In the prior year period, royalty and license revenues included $10.3 million from Bayer.
Gross margin on product sales in the first quarter of 2008 was 67.8%, compared to 66.5% in the prior year period. This improvement resulted primarily from increased sales of the APTIMA Combo 2 assay and from commercial pricing of the PROCLEIX WNV assay on the TIGRIS system in the United States. These benefits were partially offset by increased instrument sales, as described above.
Research and development (R&D) expenses in the first quarter of 2008 were $23.1 million, compared to $20.3 million in the prior year period, an increase of 14%. This increase resulted primarily from costs associated with key development programs such as the post-marketing studies of the PROCLEIX ULTRIO assay in the United States, the investigational APTIMA(R) human papillomavirus (HPV) assay, and Gen-Probe's fully automated instrument system for low- and mid-volume labs, known as PANTHER.
Marketing and sales expenses in the first quarter of 2008 were $11.9 million, compared to $9.5 million in the prior year period, an increase of 25% that resulted primarily from European market development efforts related to the Company's APTIMA HPV and PROGENSATM PCA3 assays.
General and administrative (G&A) expenses in the first quarter of 2008 were $11.9 million, compared to $11.3 million in the prior year period, an increase of 5% that resulted primarily from higher legal costs.
Gen-Probe continues to have a strong balance sheet. As of March 31, 2008, the Company had $487.6 million of cash, cash equivalents and short-term investments, and no debt. In the first quarter of 2008, Gen-Probe generated net cash of $67.5 million from its operating activities, more than double net income of $31.9 million.
Updated 2008 Financial Guidance
"We believe our strong operating performance in the first quarter has us off to a good start in 2008, and we are therefore raising our full-year revenue and EPS guidance," said Herm Rosenman, the Company's senior vice president of finance and chief financial officer.
Webcast Conference Call
A live webcast of Gen-Probe's first quarter 2008 conference call for investors can be accessed at http://www.gen-probe.com beginning at 4:30 p.m. Eastern Time today. The webcast will be archived for at least 90 days. A telephone replay of the call also will be available for approximately 24 hours. The replay number is (866) 421-6934 for domestic callers and (203) 369-0825 for international callers.
About Gen-Probe
Gen-Probe Incorporated is a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective nucleic acid tests (NATs) that are used primarily to diagnose human diseases and screen donated human blood. Gen-Probe has approximately 25 years of NAT expertise, and received the 2004 National Medal of Technology, America's highest honor for technological innovation, for developing NAT assays for blood screening. Gen-Probe is headquartered in San Diego and employs approximately 1,000 people. For more information, go to http://www.gen-probe.com.
Trademarks
APTIMA, APTIMA COMBO 2, PACE, PROGENSA and TIGRIS are trademarks of Gen-Probe Incorporated. ULTRIO and PROCLEIX are trademarks of Chiron, a business unit of Novartis Vaccines and Diagnostics. All other trademarks are the property of their owners.
Caution Regarding Forward-Looking Statements
Any statements in this press release about our expectations, beliefs, plans, objectives, assumptions or future events or performance, including those under the heading "Updated 2008 Financial Guidance," are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as believe, will, expect, anticipate, estimate, intend, plan and would. For example, statements concerning Gen-Probe's financial condition, possible or expected results of operations, regulatory approvals, future milestone payments, growth opportunities, and plans and objectives of management are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from those expressed or implied. Some of these risks, uncertainties and assumptions include but are not limited to: (i) the risk that we may not achieve our expected 2008 growth, revenue, earnings or other financial targets, (ii) the risk that we may not earn or receive milestone payments from our collaborators, including Novartis, (iii) the possibility that the market for the sale of our new products, such as our TIGRIS system, APTIMA Combo 2 assay, PROCLEIX ULTRIO assay and PROGENSA PCA3 assay, may not develop as expected, (iv) the enhancement of existing products and the development of new products, including products, if any, to be developed under our industrial collaborations, may not proceed as planned, (v) the risk that products including our PROCLEIX ULTRIO assay for blood screening may not be approved by regulatory authorities or commercially available in the time frame we anticipate, or at all, (vi) we may not be able to compete effectively, (vii) we may not be able to maintain our current corporate collaborations and enter into new corporate collaborations or customer contracts, (viii) we are dependent on Novartis, Siemens (as assignee of Bayer) and other third parties for the distribution of some of our products, (ix) we are dependent on a small number of customers, contract manufacturers and single source suppliers of raw materials, (x) changes in third-party reimbursement policies regarding our products could adversely affect sales of our products, (xi) changes in government regulation affecting our diagnostic products could harm our sales and increase our development costs, (xii) the risk that our intellectual property may be infringed by third parties or invalidated, and (xiii) our involvement in patent and other intellectual property and commercial litigation could be expensive and could divert management's attention. The foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking statements. For additional information about risks and uncertainties we face and a discussion of our financial statements and footnotes, see documents we file with the SEC, including our most recent annual report on Form 10-K and all subsequent periodic reports. We assume no obligation and expressly disclaim any duty to update forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of subsequent events.
SOURCE Gen-Probe Incorporated
