NEW YORK – Bio-Techne said Thursday that its fiscal 2023 second quarter revenues rose 1 percent year over year.
For the three months ended Dec. 31, the Minneapolis-based life sciences tools and diagnostics firm reported revenues of $271.6 million compared to $269.3 million a year ago, falling significantly short of analysts' average estimate of $288.8 million.
Bio-Techne's second quarter year-over-year organic growth was 4 percent with acquisitions contributing 1 percent to revenue growth, while foreign currency exchange had a 4 percent negative impact.
In Q2, the firm reported Diagnostics and Genomics revenues of $68.0 million, up 5 percent year over year from $64.5 million. Second quarter year-over-year organic growth for the segment was 7 percent with foreign exchange contributing a 2 percent negative impact.
Bio-Techne's Q2 Protein Sciences revenues lagged in comparison. The company reported $203.9 million in revenues for this sector, down 1 percent from $205.0 million in the prior-year quarter. Second quarter year-over-year organic growth for the segment was 2 percent.
Bio-Techne CEO and President Chuck Kummeth cited the firm's high growth rate in the prior-year period, a slowdown in biotech funding, and the COVID-19 situation in China as a drag on Q2 2023 performance, though he also noted positives.
"Within the quarter, we delivered much improved results in Europe. Also, our run-rate consumable business in the US and our Cell Therapy portfolio grew double-digits, indicating continued underlying strength in our end markets," Kummeth said in a statement.
He also highlighted the firm's success with its ExoDx Prostate test with the number of tests performed up 70 percent and revenues more than double what they were in Q2 2022.
"Our … diverse portfolio combined with the investments we have made in our people, our facilities, and our new product pipeline, position the company to execute on our strategic growth plan and deliver our long-term targets," he added.
Although genomics makes up the smaller portion of Bio-Techne's business, it continues to be a major growth driver for the company.
During a call with investors, Kummeth attributed the firm's dramatic increase in ExoDx prostate cancer testing to a combination of a strengthened marketing message to the urology community, an expanded commercial team, and the favorable impact of last year's Medicare Local Coverage Determination.
According to Kummeth, the new marketing push emphasizes that "ExoDx is a tool to identify not only the right patients for prostate biopsy, but also drive patient adherence to biopsy recommendations."
He added that Bio-Techne is seeing strong growth across multiple performance indicators that it tracks for ExoDx, including the number of ordering doctors, the average number of tests ordered per doctor, and the number of new doctors ordering. All set records in the quarter.
Kummeth said the company has hired a "veteran reimbursement executive" who it believes will be able to drive favorable coverage decisions within the private payer community. "With less than 20 percent penetration of urologists in the US who have used the test … and the potential to expand the usage of our test among current doctors by five times, we are positioned to continue the strong growth in this business for the remainder of fiscal 2023 and for the years beyond," he added.
In genetic carrier screening and oncology, Kummeth said sales of Bio-Techne's Asuragen branded tests also grew double-digits year over year. Last December, Asuragen announced a partnership with Oxford Nanopore Technologies to develop assays designed to deliver more accurate and reliable options for reproductive health and carrier screening.
Kummeth said the companies are combining Asuragen's long-range PCR and Oxford Nanopore's "any-read length" sequencing capabilities in a single workflow. The combined solution is "intended to help identify genetic sequence variants in both hard to decipher genes and conventional genes using a single sequencing system."
Bio-Techne's spatial biology business, which it calls ACD, grew more slowly than its two diagnostics arms, but still improved "mid-single digits" compared to Q2 2021.
Revenue from the company's provision of professional ACD assay services increased nearly 20 percent year over year, and Kummeth said this bodes well for future product sales, since, historically, assay services customers employing the platform for biomarker discovery "eventually transition into product customers."
Last month, the firm expanded its ACD portfolio with the launch of RNAscope Plus smRNA-RNA, which enables the simultaneous fluorescent detection of a small regulatory RNA and three target RNAs or RNA biomarkers in the same tissue section at single-cell and subcellular resolution. The assay is available for use on the Leica Bond Rx platform and as a manual assay.
"RNAscope Plus provides gene therapy researchers with a valuable new tool to quantify changes in gene expression and cellular function in response to the introduction of regulatory RNAs, which is essential for optimization efficiency and safety," Kummeth said, adding that the product was initially offered under the company's professional assay services, where it saw an "overwhelmingly positive customer response."
Bio-Techne's fiscal Q2 net income was $50 million, or $.31 per share, compared to $80.2 million, or $.49 per share, a year ago. The company noted that the prior-year EPS was favorably impacted by a non-recurring gain of approximately $28.4 million stemming from its investment in Mountain View, California-based ChemoCentryx.
The firm's adjusted EPS was flat year over year at $.47, with unfavorable foreign currency exchange being offset by reduced net interest expense. Analysts, on average, had estimated a significantly higher EPS of $.62.
During Q2, Bio-Techne's R&D expenses rose about 9 percent year over year to $22.5 million from $20.7 million. Its SG&A expenses dropped 8 percent to $93.0 million from $100.7 million.
The firm ended the quarter with $164.7 million in cash and cash equivalents and $32.1 million in short-term available-for-sale investments.