Hologic to launch 2nd coronavirus test amid broader sales slide

Dive Brief:

Hologic on Wednesday announced plans to launch a second SARS-CoV-2 diagnostic test that will run on its Panther platform, of which 1,800 systems are in use worldwide. The company last month received an FDA emergency use authorization for its first COVID-19 test, compatible instead with the Panther Fusion system, of which there are only about 200 systems placed globally.
The company expects to manufacture at least 1 million of the new Aptima molecular tests a week beginning in late May, and is gearing up to introduce a research-use version of the assay next week to hospital, public health, and reference laboratories certified under the Clinical Laboratory Improvement Amendments to perform high-compexity tests.
Hologic on Wednesday also reported a 7.6% decline in fiscal second-quarter revenue to $756.1 million, as the postponement of elective procedures dampened sales in late March.

Dive Insight:

Hologic's molecular diagnostics business was a bright spot in the company's second-quarter earnings results, with revenue in the division rising 13.6% to $190.6 million, its highest growth rate in eight years. On a conference call with analysts, CEO Stephen MacMillan said the company is ramping up investment in its diagnostics business to respond to the global pandemic while scaling back in other areas in the short term.

The company has scaled up its manufacturing to produce nearly 600,000 Panther Fusion SARS-CoV-2 tests a month, a 12-fold increase in prior capacity for similar tests that run on the system.

Now, the focus turns to the new assay, which will run on the company's more widely used Panther platform, of which 1,800 are installed in clinical laboratories in 60 countries. More than 1,000 of the systems are in use in the United States. Each system can provide test results in about three hours and process more than 1,000 coronavirus tests in a 24-hour period.

Jefferies analysts estimated in a note to investors that at an average selling price of $20 per test, the new assay could generate more than $400 million during the remaining two quarters of Hologic's fiscal year.

CLIA-certified labs may use the new assay after completing performance verification testing. Hologic said it plans to apply for an EUA for the Aptima test next week and register a CE mark for use in Europe later in May.

The company's surgical business finished the quarter with a 3.1% sales increase to $105.4 million, a pullback from the 14.7% growth rate of the first two months as elective procedures were postponed. Hologic said the surgical business is likely to be the hardest hit by COVID-19 procedures delays, with global sales expected to plunge by 85% in the month of April, compared to the prior-year period. Meanwhile, sales of breast health products declined 4.3% in the quarter to $307.8 million.

Overall organic sales are projected to be down 45% to 50% in April, compared to a year ago. Hologic formally withdrew its financial guidance earlier this month. The company has eliminated the positions of temporary employees and contractors, furloughed employees and temporarily shut down or shortened work weeks at several of its manufacturing plants, MacMillan said. Salaries were cut by 50% for the CEO and board, by 25% for top global executives, and by roughly 10% for other salaried employees.

Despite the gloom, MacMillan said the pandemic has generated tremendous interest in the company's Panther testing systems, prompting calls from governors' offices, the White House task force, members of Congress and other global leaders.

"We've got everybody reaching out to us and it is elevating our profile to a very different level than anything we've ever experienced. And there is no doubt in my mind that it is absolutely creating a tremendous runway for us coming out of this," he said, in response to an analyst's question.