RAPID COVID-19 TEST PROPELS QUIDEL CORP.’S REVENUE TO NEW HIGHS

San Diego biotech company announces revenue well above Wall Street estimates

San Diego’s Quidel Corp. said its third- and fourth-quarter revenue will be significantly higher than Wall Street analysts’ forecasts on the strength of its 15-minute diagnostic test for COVID-19.

Back in May, Quidel was the first company to get U.S. Food and Drug Administration approval for a rapid antigen test, which detects pieces of the novel coronavirus from nose or throat swabs. Demand has been soaring as schools and businesses seek quick results from daily tests to help them reopen safely and prevent outbreaks.

Last month, the company inked a deal with the Pac-12 Conference to test student-athletes daily, which is credited with helping the conference resume football games. This week, Quidel added the Big Ten Conference as a customer.

For its third quarter ended Sept. 30, Quidel expects revenue in the range of $475 million to $477 million. Wall Street analysts on average had predicted sales of about $400 million.

The company will release official third-quarter financial results in late October.

“Moving forward, we expect even greater success in augmenting our supply chains and production for our COVID-19 diagnostic products, resulting in $800 million or more in revenue in our final quarter of 2020,” said chief executive Douglas Bryant in a statement on Thursday.

Analysts on average had pegged fourth-quarter revenue at $466 million.

The better-than-expected results should not come as a surprise, said Raymond James analyst Andrew Cooper in a research note.

“Our stance has been that the company could sell all it could manufacture in the near-term, and this remains the case, even if it is manufacturing more than the Street conservatively modeled,” wrote Cooper. “Our confidence continues to be bolstered by things like the Big Ten Conference partnership that will see all student-athletes and staff personnel involved in close contact sports competition tested before every practice and every game. These use cases are what drive the demand that we called virtually insatiable.”

Antigen tests aren’t as sensitive as the more common molecular tests, which can pick up trace amounts of virus. But molecular tests are often sent to centralized labs and take days to process. By the time results comes back, an infected person could have spread the virus to others, sparking an outbreak.

Quidel’s system delivers results on-site in about 15 minutes after a swab is placed in the company’s desktop Sofia 2 diagnostic reading device.

The company has doubled production of Sofia rapid antigen tests to about 2 million tests per week at its

San Diego manufacturing facility. “We are constructing additional production lines that will more than double our current capacity once again. Our goal is to reach a run-rate of over 220 million tests per year by July of 2021,” the company said in a statement.

There are other antigen tests on the market. The Trump administration recently said it would direct millions to Abbott Labs’ antigen test aimed at safeguarding kindergarten through 12-grade students as they return to class.

According to Quidel, the competition from Abbott is serving to raise awareness about the benefits of widespread, rapid testing. “In this pandemic, the medical diagnostics industry is competing against COVID-19, not among companies. The need for testing appears virtually unlimited at this time.”

In addition to its antigen test, Quidel makes a molecular COVID-19 test for highvolume diagnostic machines at centralized labs. It also is developing a combination test to detect both the f lu and COVID-19 as the flu season approaches.

The bulk of manufacturing capacity for Sofia products in the fourth quarter likely will go towards the COVID-19/f lu combo test, said Cooper, the Raymond James analyst.

The skyrocketing demand for coronavirus testing won’t last forever, noted Cooper. But the timing of when it drops off is unclear, and some level of coronavirus testing demand could continue long-term.

Quidel’s shares ended trading Friday up more than 4 percent at $235.34 on the Nasdaq exchange.