Qiagen Partners with Bayer HealthCare for Companion Diagnostics (QGEN)

Qiagen NV (NASDAQ: QGEN), a technology provider for pre-analytical sample preparation and molecular diagnostics solutions, and Bayer HealthCare announced a collaboration agreement for the development and commercialization of companion diagnostics paired with novel drugs from the latter.

The Netherlands-based Qiagen offers approximately 500 core consumable products, such as sample and assay kits, and automated instrumentation systems that allow clients to transform raw biological samples into molecular information.

Qiagen also develops and validates companion diagnostics to guide medicine selection for cancer treatment. Through companion diagnostics, molecular information is retrieved from each patient’s tumor genome. The information assists in making treatment decisions with medications for cancers or other diseases.

Earlier in January 2012, the company expanded its portfolio by introducing the QIAensemble Decapper automation system. Qiagen, which was trading in the range of $13.00 to $15.00 per share for nearly 6 months, broke the $15.00 barrier following this news to reach $16.76 on January 25. The uptrend was also aided by the company’s deals with Insight Genetics and Personal Genome Diagnostics, as well as regulatory approval for its Therascreen EGFR Mutation Detection Kit RGQ in Japan.

The announcement of the FDA’s approval for Qiagen’s in vitro diagnostic use (IVD) products initiated another rally that lifted the share price to $17.23 on May 3. The fiscal 2012 second-quarter earnings that beat the Zacks consensus estimate propelled the share price of Qiagen to around $19.00 per share by the third week of September. A Seeking Alpha report published on September 29 pointed out that Qiagen is 50% undervalued compared to its peers.

However, a downgrade by HSBC Securities on October 11 from “neutral” to “downgrade” resulted in a decline in the share price to around $17.00.

Today, Qiagen opened with a positive gap of 21 cents from the previous close of $17.46 and continued to trade between $17.65 and $17.70 for most of the morning session. The second half of the day witnessed profit booking at the counters, which led the share price to briefly touch yesterday’s close of $17.46.

The partnership with Bayer HealthCare announced today is in addition to the 15 projects that are currently under way to co-develop and market companion diagnostics with leading pharmaceutical and biotech companies.

The Germany-based Bayer HealthCare is a subsidiary of Bayer AG. The agreement between Qiagen and Bayer HealthCare is initially to enhance the treatment of various solid tumors. However, the pact provides framework for further collaboration projects. Qiagen and Bayer will also collaborate on the development of technologies for patient profiling.

Qiagen is scheduled to report its fiscal 2012 third-quarter results on October 29. The average revenue and earnings estimate of analysts is $303.41 million and $0.24 per share for the third quarter of 2012.

Qiagen ended the day at $17.57 per share, up $0.11 or 0.6% on a volume of 382,512 shares.

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.