Qiagen N.V. (QGEN) Earnings Call Transcript & Summary

Welcome to our next QIAGEN Deep Dive. Today, we will focus on our Sample Technologies business. The sample is the starting point of every discovery of every molecular workflow. Preparing a sample and getting the DNA and RNA out of it is the foundation of all molecular testing, and it's where QIAGEN began. Sample Technologies are at the core of what we do. And today, we will show you what makes this business so exciting, what makes our leadership in Sample Technologies unmatched, and how we're expanding this leadership with automation, high-value applications, and new technologies. Before we begin, a quick legal note, as with any of our investor events, this presentation contains a safe harbor statement. You're likely familiar with this from our other presentations, so I won't read it in full. However, please remember that we will be making forward-looking statements. Actual results may differ materially from those projected, and the factors driving those are detailed in our most recent Form 20-F filed with the Securities and Exchange Commission. A copy is also available on our website. So what makes it so challenging to prepare a sample? And why does QIAGEN consistently lead in this field? And how are we going to lead the next wave of innovation? Michael Scheffler, our Vice President and Head of Global Sample Technologies, took me on a Sample walk. [Presentation]

So as you just heard, all three new systems are well on track for launch in 2025 and 2026. The first QIAsymphony are already with our customers. It's an exciting time for QIAGEN and it's also a very exciting time for our customers, a clear sign that innovation across our portfolio is accelerating. So how do we win? Let's hear from our Senior Vice Presidents, Nitin Sood, Head of Product Portfolio and Innovation; and Fernando Beils, Head of Global Commercial Operations. [Presentation]

The world around us constantly changes and so do the challenges related to samples. Let's look at forensics. Crimes can get more complex, criminals better equipped. Who would have thought that it's even possible to rob the Louvre. And once again, QIAGEN Sample tech solutions are right on scene. So why do we continue to innovate because with every new challenge, we are inspired to push the boundaries of what Sample tech is able to do, whether it's for new discoveries, health, or justice. The next story once again highlights how essential our Sample Technologies solutions are. A short disclaimer: The following story contains descriptions of sexual assault, trauma, and related sensitive subjects. Viewer discretion is advised. [Presentation]

I'm now very pleased to welcome our CEO, Thierry Bernard. Hi, Thierry. Great to have you here.

I'm very glad to be with you.

So we've seen how Sample Technologies are central for what we do. From your perspective, how does this business contribute to the strength of our strategy and position us for future growth?

That's a very good question, Domenica. You see for QIAGEN, Sample technology stands at the very heart of what we are and what we mean as a company. We mean scientific excellence. We mean investment in research and development and innovation. We mean quality and trust, the trust that the customers are placing in our Sample technology. QIAGEN is born with Sample technology. There is definitely a before and after QIAGEN because we did really 40 years ago, standardized and revolutionized. Sample technology for so many researchers and scientists all over the world. But not only is it part of our history, it also the future of QIAGEN. And this is why we invest in Sample technology because there are so many growing applications. So where do we invest? First, we invest in automation. QIAGEN is about to launch three major new instruments in Sample technology between the end of 2025 and 2026. We invest as well in new applications, what we call high added value Sample technology, liquid biopsy, for example, or minimal residual disease for oncology, microbiome. Last but not least, we do invest into new territories, technologies that are growing so fast. And this is the example of the recent acquisition of Parse in the world of single cell. We invest and also we leverage on our brand. There is definitely a QIAGEN brand for Sample tech, and this is 40 years of trust from our customers.

Thanks, Thierry, for your insights. Now let's hear from our customers what they think about our Sample Technologies solutions and how QIAGEN is making a real impact. [Presentation]

This highlights the relevance of high-quality sample prep and automation and the impact of QIAGEN. So Thierry, let's move now to a totally different application, agriculture. You already had the chance to meet the next customer. What was most inspiring of what she's doing?

Yes, really. And the following customer is really a fantastic example that the application for Sample techs are countless. I flew to Brazil indeed to visit this lab. And everybody knows QIAGEN for our presence in Sample tech in research, academia, once again, all the clinical work. But who knows that we are working hand by hand with the agri industry basically to test the quality of soil in this example. And once again, this is confirmed by recent news that our applications are everywhere. Look at what happened in the Louvre recently, which company did test the more than 150 samples -- DNA samples to try to identify potential suspect, QIAGEN. Recently, in the U.K., there was a report on the Ed Sheeran, the famous singer. And guess what? There was a moment in that report where they spoke about QIAGEN because they tested one sample of Ed Sheeran's hair and it was our company again who did the testing. That proves again that we have so many applications do deploy our Sample tech technology and they keep coming.

So let's watch together the customer testimonial video. [Presentation]

Great insight with Go Genetic. And with that, we're ready for the Q&A.

[Operator Instructions] Today, hosting with me the Q&A are Daniel Wendorff and John Gilardi. Welcome. And Thierry, together with Nitin, Fernando, Michael, and Justus are going to take the questions. Let's get started so that we can answer as many questions as possible. Daniel, why don't you take the first one?

Thank you, Domenica. So the first question actually came from a number of people. QIAGEN created the Sample tech market but a long time ago. How has competition changed over time? And what is enduring about QIAGEN's market position? And what are the levers of innovation?

That's a fair question. And indeed, as we have tried to show during this 1-hour deep dive is 40 years ago, we literally created the market of Sample technology. There is a before and after QIAGEN, we democratized access to molecular biology, thanks to what we created in the field Sample technology. And then obviously, the market evolved little by little from manual technologies to automated technologies, and covering more and more potential sample types, not only for research, academia, clinical laboratories, pharmaceutical companies, biotechs, but beyond those applications. We talked about forensic. We talked about agri business as well. So obviously, geographically in some of our mature markets, some competitors emerge. But the breadth of coverage of QIAGEN, the number of samples that our solution can address is uncomparable. The ability to provide solution, manual solution, but also automated any kind of throughputs to so many different customers is also uncomparable. So this is why we continue to have this leadership and take probably between 55% and 60% of the market in Sample technology.

Thanks. John, do you want to take the second one.

Sure. Thanks, Domenica. Just a question that came in was, can you elaborate on the high throughput opportunity, especially as you go into this market against legacy players? What are customers asking for in a solution like QIAsprint Connect? And what makes you decide to go into this market now as opposed to in recent years?

First of all, as you said, John, and it's another good question. This is a new market for QIAGEN. This is interesting to note that we are going to create a completely new installed base. We estimate that the potential for placement for QIAsprint Connect is around 10,000 placements over time, obviously. Customers are expecting reliability, obviously, trust and the ability once again to cover many applications. And I'm going to ask Michael Scheffler to complete also what customers are expecting with this new launch.

Yes, absolutely. We clearly see that also the evolution of the -- towards the high-throughput demand is what we learned from the conversations with our customers. And this is where we took the effort in order to also launch the first major innovation in the high-throughput segment for many years. We really put some effort in order to increase the usability and also the efficiency in the system. For example, now with our setup that you saw on the video, we're able to process more than 100 or 92 samples in one single run. And that's really what customers are appreciating this seamless operation and the integration with the workflows in order to manage their daily operations within the lab. This is also the trusted QIAGEN chemistry that customers will appreciate here. This is the power portfolio. We already have seen the plasmid portfolio that we even had made it better with the Bode Technology. So customers can very much looking forward to that new technology. And we just concluded also the first field test. They were very successful. Customer really appreciated the features that we've shared with them, and we remain fully committed for the launch in quarter 1, 2026.

In addition, Michael, to obviously, state-of-the-art user interface. And as you know, it's extremely satisfying for QIAGEN to see that the system is not even launched, QIAsprint Connect, as Michael just said, will be launched in Q1 of 2026, we have already received some purchase orders. That's how customers are trusting that development by QIAGEN. Nitin, would you like to add something to that?

Yes. I think one other thing I would like to highlight is the fact that it's really a very high throughput platform, but it's also low footprint. As you all know, that lab space is at a premium and the combination of high throughput with low footprint, low plastic use, open platform, ease of use really make QIASprint very likely to be very successful, and we're feeling very confident about the launch in March of 2026.

Thanks Michael and Nitin.

So the next one -- the next question is from Patrick Donnelly. It's around liquid biopsy. So we mentioned that liquid biopsy is a big growth area with over 35% growth. Can you provide some context to the liquid biopsy market and the MRD market as well?

Patrick, thanks for the question. What we are trying to show here is that we do invest into what we call high added value application. This is why most of the market is growing. This is where most of the market is growing. So we spoke about liquid biopsy. We said also -- we spoke -- we mentioned that minimal residual diseases, microbiome analysis. When we think liquid biopsy, Patrick, we think the total market of oncology. The potential here is significant. It's probably close to a $6 billion market, and it's growing fast. Look at the main player, the end application players, the Nateras, the Guardant Health in the world. Those companies are processing their results or generating the results, thanks to QIAGEN. And this is why we are growing by more than 35% in this segment of liquid biopsy, and we do not see this to slow down. We have developed, for example, the QIAsymphony Connect in very close relationship with Natera. And as Nitin said in the presentation, our QIAsymphony Connect is currently already installed at Natera for further evaluation. This is those kind of partnerships hand in hand with companies like Guardant, Natera, NeoGenomics that will ensure the future of Sample tech at QIAGEN. And this is why we are growing so fast there.

Perfect. Daniel, the next one.

Yes, sure. So this is also coming from a number of people. Can you walk us through the rollout time lines for the new automation platforms overall and what customers and investors can see them demonstrated?

That's a good question. I think what we are very proud of those last years at QIAGEN is that we execute on sales and we execute on guidance every quarter, but I would like to add as well, we execute on product development. We said in New York that we would launch two new instruments, QIAsymphony Connect and QIAsymphony and QIAsprint. We are going to launch three. And the three of them are perfectly on time, on spec and on budget. QIAsymphony Connect, as we said, is already installed in some laboratories. It's a prelaunch, I would say, before a full launch in 2026. Michael and Nitin just said that QIAsprint Connect will be launched in Q1 of 2026. And we believe that QIAmini will be ready for launch in H2 of 2026.

Good. John, do we have more?

Sure. Let me try and combine some questions from Jan Koch, Harry Gillis at Berenberg and Ishan. The first part of the question is, when you think about QIAsprint Connect and QIAmini targeting new markets, does this require incremental investments in your sales force? And related to that, is there any pent-up demand that you're anticipating because of the current academic environment in the U.S.? And how is that going to play out in terms of your plans for '26, '27, '28? That's kind of the question right there.

So first of all, let's remind everybody that QIAGEN believes in specializations of our sales force. So we have dedicated people everywhere we can choose Sample tech and to the sales and marketing of our Sample tech solutions. So we do not expect to have to invest a significant amount of new sales rep to be able to promote and deliver QIAsymphony Connect, QIAsprint Connect and QIAmini to our customers. We already have salespeople, marketing people, and technical people to support those systems. Obviously, we all know that currently, there are some constraints on capital expenses in many labs in the world, research, academia, especially not only in the U.S., by the way, John, but in many countries all over the world. We also believe at QIAGEN that this environment will stabilize, that those labs are going to invest because we are bringing added value solutions. QIAsymphony Connect, QIAsprint Connect, QIAmini will all add something new and bring something new to those labs. And that's why we are confident that this -- those investments will happen. So it's a significant part of the growth expectation we have given for our Sample tech franchise towards 2028. Nitin highlighted again that we want to achieve $750 million by 2028. And this will very much driven by automation, by those new applications and beyond that, obviously, by the acquisition of new technologies that single-cell and Parse. Perhaps, Fernando, you want to add something from our sales force standpoint?

Yes, sure. So we have a total geographical coverage through our direct sales, through our service teams, through our field application specialists, where we already placed a huge number of QIAsymphony classics, and that will also be part of this and in the part to cover this demand. Furthermore, we are also in the mid-throughput segment, as has been shown by Nitin before, where we are also through our EZ family and our QIAcube family are covering all aspects. What you observe is transition from manual to automation, and this is where a system like the QIAmini will get the access and for high-throughput solution, as you heard, this is the advantage for other users.

And I think it's sometimes forgotten indeed that we said that during the presentation today, we are talking about more than 30,000 systems installed by QIAGEN in Sample Technologies. And with the potential brought by QIAmini, we believe that the market is potentially 100,000 placement in the coming years. We believe that, as we said, QIAsprint has a potential of 10,000 placement over the coming years, more than 5,000 extra placement also with QIAsymphony Connect. So we don't want to be complacent, obviously, but we have strong ambition for those instruments.

So the next one, let's move to Parse. Can you elaborate on the scalability of Parse and how it performs in high-volume studies?

That's one of the key differentiations of Parse indeed, together with being instrument free. So I'm going to ask Nitin to elaborate.

Yes. Parse has demonstrated scalability very nicely. It has generated the largest single cell data set, which is about 100 million cells. These are 50 cancer cell lines treated with 400 drugs, so very powerful data. In addition to scalability, Parse is instrument-free. So it's very easy to adopt. Over 3,000 labs worldwide have adopted Parse's technology. And lastly, it generates really high-quality data. As you know, customers demand the best quality of data. So Parse can generate 25% more genes per cell than competing technologies. And this is all fueling what's happening in pharma companies and in academic labs, which is research dollars are shifting towards what is called AI-driven biology or AI-driven drug discovery. And given Parse's scalability, it's really well-positioned to capture this trend.

I'd like to add something here that really Parse is a very natural acquisition for QIAGEN. It's a natural extension of our leadership in Sample Technologies. And what was very, very intriguing and interesting for us at QIAGEN since we met Parse. The very first time we met Parse was around 2018 is that since then, they systematically walked the talk and delivered on what they told us they would develop. Technology-wise, creation of a significant installed base of already more than 4,000 customers all over the world, they deliver. And this is why it makes such a competitive alliance for the future.

Great. We have time for 1 or 2 more questions. Daniel?

Yes. So another question here is from Casey Woodring, JPMorgan. What is your market share in manual wells automated? And how do you see that 60-40 manual automated split in the market progressing over time? Is there a ceiling to automated penetration rates?

First of all, as we said, we believe that the market currently is rather around 40% automated and manual and 60% manual. Fernando just alluded to that. There is a natural attrition of skilled technicians in laboratories all over the world. And this is why bringing smart, easy-to-use automated solutions is so key. And so the market trend will be clearly automation. And once again, we are going to offer different kind of automations, very high throughput QIAsprint Connect. mid-sized throughput with QIAsymphony, and QIAsymphony addition addresses that a key segment of liquid biopsy. But with QIAmini, we are going to offer to so many researchers, academics in the labs, the opportunity to stop pipetting endlessly and just automate the run. I mean, for this instrument, the sky is really the limit. But the trend on the market is definitely automation.

So we have one more, and then we are running out of time. So John, you take the last one.

Sure. So just to kind of bundle together some questions from Jack Meehan and some others, it's about what sample prep does as an anchor to get you into a lab and be able to sell upstream into the sequencer or into a platform like digital PCR and then tying it into QDI and the bioinformatics off the back end. Can you give some insights how -- as to how sample prep really opens those doors? And what are the initiatives to be able to use that and be able to cross-sell as Fernando was asking about?

Well, this is a fundamental question, and it is at the very heart of QIAGEN's positioning because we need to all understand that Sample tech is the very first step of any biology workflow and all those customers or potential size researchers, academic, clinical, they rely on an excellent Sample tech, extraction of nucleic acid purification of nucleic acid to get the best possible result downstream. So the positioning of QIAGEN in Sample tech in so many labs offer them what we call share of wallet opportunities because once we are establishing those lab with Sample tech, we can then promote our PCR solution, our digital PCR solution, our NGS, next-generation sequencing chemistry or our QDI solution. There is a natural spillover effect between our positioning and Sample tech and the rest of our portfolio. But perhaps Justus, you want to give some concrete examples to that.

Yes. Thanks, Thierry. As you've just alluded to, the entry into the lab is the most significant piece of it. It gives us the starting, we get to know the lab, we get to know the demands of the customer. Around that, we have developed some of the new platforms in Sample tech already. And this also gives us the possibility to get to know what the customer really is looking for further downstream in DPCR and PCR and through NGS applications and then even further downstream into QDI. So the first entry into the lab is the key to open the lab door and to be able to walk through the door and build on the share of wallet across the entire workflow from Sample to inside.

There is something that we said during the presentation and something that is sometimes forgotten. Unlike many other tool or diagnostic company, something we all have to understand is that there is not any PhD student in the world and I insist in the world who doesn't know QIAGEN, who has not been working on the bench with the famous QIAGEN red boxes or blue boxes. 35 Nobel Prize winners are using our solutions in Sample Technologies. This is unprecedented and probably unbeatable as well.

Perfect. We are almost at the end of the deep dive. Thierry, do you want to have -- give some closing remarks to the audience?

Well, once again, and thanks to you, Domenica, thanks to you, Daniel and John. We have tried in 1 hour to give you the reasons, the rationale behind our leadership in a key segment of our portfolio. QIAGEN is born 40 years ago with Sample Technologies. But Sample Technologies is also the future of the QIAGEN. We are embarking in an unprecedented launch of three new instruments. We continue to develop very high-value application in liquid biopsy, in minimal residual diseases, in microbiome, segments of applications that are growing very fast, much more than double digit. Last but not least, we invest into new technologies with single cell. So definitely Sample tech is a leadership for QIAGEN, but it's also the future of this company. Thank you.

And with that, I would like to close today's Sample Technologies Deep Dive. If you have further questions, as always, please do not hesitate to contact us. And have a great day. Bye-bye.