Good day, welcome to the BioFire Q1 2018 business review conference call. During today's conference call, all lines will be in a listen-only mode until the question-and-answer session. Today's conference is being recorded. At this time, I would like to turn the conference over to Sylvain Morgeau. Please go ahead, sir.
Thank you very much. Good day, everyone. Thank you for joining us to review BioFire's performance for this first fiscal quarter of 2018. Today, I am on the line with Mr. Alexandre Mérieux, Chairman and Chief Executive Officer, as well as Mr. Guillaume Bouhours, who joined as the Group Chief Financial Officer since March. Alexandre will start this call by a short introduction to give you its main takeaway messages about the quarter. Most of the call will be dedicated to the Q&A session. Before I hand the call over to management, please note that this conference call will include forward-looking statements.
I would like to remind you of the usual disclaimer saying that forward-looking statements are based entirely or partially on assessments or judgments that may change or be modified due to uncertainties and risks related to the company environment, notably those that are described in the 2017 registration document, including but not limited to economic conditions, financial exposure to currency exchange fluctuations, change in government policies or regulations, third-party reimbursement policies, timing of the onset, length, and severity of flu season and competition. Accordingly, we cannot give any assurance as to whether we will achieve these objectives. BioFire issued its press release related to the Q1 2018 business review this morning at 7:00 A.M. French time. If you have not received our communication or if you would like to be added to the company's distribution list, please feel free to contact me.
I also remind you that today's call is being recorded and that a replay will be available on the website biomerieux-finance.com. With this, now I will hand the call over to Alexandre Mérieux.
Thank you, Sylvain. Good morning and good afternoon to all of you. I would like to start the call by highlighting the good performance of BioFire in the first quarter, as we recorded an organic growth of 12.5%. On a reported basis in EUR, sales growth reached 3.4%, impacted by about 900 basis points of negative FX impact. As expected, the U.S. dollar accounted for most of the impact. Before leaving time to more interaction with you through the Q&A, I would like to cover three main topics relevant with this first quarter and relevant for the future of the company.
First one being molecular biology and BioFire, second being Asia-Pacific, the third being about immunoassays. Let's start with molecular biology. The strong flu season we have experienced this winter has obviously driven a higher demand for Respiratory Panels, we have been able to serve existing and new customers during this period. This performance is reflected in the numbers, as the BioFire sales reached EUR 130 million in the quarter, up at a fast pace of nearly 50% organic on a solid basis of comparison. It is also interesting to note that this growth was obviously driven by RP Panels for the reason we just discussed, but also by all the other panels of the FilmArray menu, GI, meningitis, BCID did all very well, growing even faster than the RP Panel.
It highlights the importance of proposing a large and adapted menu to the hospital and labs that are adopting the syndromic approach. On the instrument front, the install base continued its rapid expansion and now reaches close to 6,700 instruments with a strong growth in the U.S. The international deployment of the BioFire range also continued in a healthy way, sales outside the U.S. represented 13% of total sales as compared to 10% at the end of last year, end of Q1 last year. In terms of innovation and pipeline, we announced that the new Pneumonia Panel has been filed to the FDA in April, in line with our plan. It is our most advanced panel to date, it carries a strong medical value. With 33 targets in about an hour, with 15 targets reported with quantitative information.
We believe there will be a strong interest for Pneumonia Panel in the hospitals, as most of the time, doctors are unable to pinpoint the specific cause of pneumonia. Therefore, more sensitive, faster tests to identify causes of pneumonia and to promote better treatment will bring medical value. As a word of conclusion, BioFire continues to provide exciting growth perspective for the group, we follow our path to make BioFire the undisputed leader of molecular syndrome testing. As a second topic, let us move now to Asia-Pacific, as we are also very satisfied with the performance of this region. After a 5% growth in Q4 of 2017, the APAC region recorded a 25% growth in Q1, the uptake of sales was mostly driven by the strong progression of regional sales from all strategic ranges in most countries.
Except Japan, which was expected due to change of our distribution model, all countries delivered a sound performance, in particular China, India, Southeast Asian countries, Korea. The growth was notably strong on the immunoassay range, with VIDAS® high medical value markers such as PCT or cardiac markers performing well, supported by a more moderate but still very decent mid-teens growth on routine assays.
Microbiology also reached a noticeable growth during the quarter. We sell up double digits in VITEK, BACT/ALERT and culture media. The impact of FilmArray becomes visible with strong performance, such as in India, driving up the molecular sales for the region. Even if Asia Pacific is characterized by the certain volatility quarter on quarter, we believe that this region is a strategic area for the future, as it accounts for more than half of the worldwide population with still important unmet medical needs related to infectious disease. I would like to end these preliminary comments talking about the immunoassays and more particularly about the recent acquisition of Astute Medical. This company has really impressed our team in the way they discover, develop, register, and build scientific and medical evidence for the use of novel biomarkers for the risk assessment of acute kidney injury, AKI.
Today, about half of ICU patients develop AKI, which, apart from an increased risk of mortality, increases also the total patient cost. The available solutions come too late to help prevent kidney damages, hence the need of a predictive diagnostic test for all those patients. The NephroCheck test developed by Astute is a strategic move for BioFire. It perfectly fits BioFire objective to differentiate by that through proprietary markers. Also ambition to provide high medical value contents to our customers. We are very enthusiastic about the future business opportunity associated with these markers. As a conclusion, BioFire was again able to deliver very solid commercial performance this quarter. In parallel, was able to invest for the future of the company with the future launch of the Pneumonia Panel and also with the acquisition of Astute for the benefit of patients and of the immunoassay franchise.
If we can resume, I propose we move on to the Q&A session.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will pause for a moment to allow anyone an opportunity to signal. Again, that is star one to ask a question. Our first question is from Peter Welford from Jefferies. Please go ahead.
Hi. Yes, thanks for taking my questions. Apologies, I joined a little bit late there. I wonder if you could tell us, and if you may have said this, what the number of placements were of the FilmArray instruments in both the U.S. and ex-U.S. regions during the quarter, what the March end number of FilmArray instruments is. I wondered also if you could possibly give us the contribution you think from the flu season. It was obviously a more severe flu season, but can you sort of perhaps give us a magnitude of how much you think the incremental benefit was, if possible? I appreciate you may not be willing to do that. Going on to BioFire Defense, could you possibly disclose what the sales of the BioFire Defense business were in the quarter? Could you just comment a bit further on VIDAS?
The tone of the commentary in the press release suggests that the trend there is somewhat slowing for the high medical value tests that you have. I appreciate the headwinds obviously you're facing from competition in the U.S. Could you provide any more insight into the dynamics you're seeing in that business line? Thank you.
We will try to answer to the 4 questions. The first one, the total installed base now of the FilmArray instrument is close to 6,700 instruments, which is a nice uptake compared to the last figures we communicated in end of Q4. We also said that now we have in Q1, we have 13% of the sales which are done outside of the U.S., which is higher than what we had at Q1 at the same time last year. Clearly, the flu season has helped, we believe, in the growth of BioFire. Difficult to quantify really the impact, as We are on a growing phase with FilmArray. As I mentioned also during my call that RP clearly grew, but it's true also that the other panels grew quite well also, and sometime at a faster pace than RP.
Yes, I believe like our competitors, we benefited. If you said it's grown from the intense flu season, difficult to quantify exactly, but it's a good start. It's a good Q1 for us. The sales of BioFire Defense on the first quarter were at $5 million. Your other questions was around the PCT, I guess, in the U.S. Let's say if you globally at immunoassay on the first quarter, on a worldwide basis, we grew quite well the immunoassay franchise. Asia Pacific was a key contributor of this growth. In the U.S., as I've mentioned, yes, we are facing a tougher competition with an impact on the ASP, while the volume of test of PCT is still growing for us in the U.S. Am I forgetting a question?
That's great. Thank you. I'll jump back. Thank you.
That's it.
As a reminder, please press star one to ask a question. We have another question from Seb Sarchet from RBC Capital Markets. Please go ahead.
Yeah. Hi there, guys. Thank you for taking my questions. Apologies, I'm joining the call a bit late. I was just late for the call. I have a number of questions. Just wondering, can you brief me on the clinical trial data for the Pneumonia Panel that I saw the release this morning on the specificity and the sensitivity that you saw in the clinical trial? Also, how many subspecies do the 18 bacteria cover? What is the speed to answer of this panel from the time for sample to answer? Yes, it will be helpful if you could give me a bit of detail here.
Yeah. I won't deep dive too much into the technology of the test. We announced today that we filed this-
Yes
this panel. It's not FDA approved yet. It will take some time to get the FDA review. We will mention it. We believe that it's a high medical value panel because as I mentioned, I think most of the time it's difficult for the doctors to pinpoint the right treatment relating to-
Yep
pneumonia. The benefit we have with this test is the fact that it's quite comprehensive, and it's 33 targets. Time to result is in the one-hour range. The beauty of it is also it's working on different type of samples such as BAL, sputum, and I always forget the English word for endotracheal.
Endotracheal.
Endotracheal aspirate.
Okay.
There will be more specific information to come on future communication.
Yeah. As you know, the ECCMID Congress, which is the European Congress from infectious disease, is in the next few days, we will unveil some data around the Pneumonia Panel at ECCMID.
Oh, okay.
There will be detail in those coming days.
Okay.
Thank you.
Okay, but, just one more question, if I may. Is the Pneumonia Panel, do you have CE mark already?
No, not yet. We are preparing this one also.
Okay. Great.
Okay.
Okay, thank you. Oh, can I ask one more follow-up question? Sorry. I understand that obviously you include the bacteria resistance markers and the viruses as well. Normally, people say that the majority of LRT infections are caused by bacteria and fungus. Can you provide me a little bit of information on why you included the viruses as well?
We know that it has a medical relevance. What I can say, when I get to come back, I think there will be more communication on the scientific communication around this, maybe in a different setting than this call.
Okay, perfect. Okay, thank you very much.
Thank you.
Yeah, thank you.
Please press star one to ask a question. Our next question is from Peter Welford from Jefferies.
Hi. Sorry, just one quick follow-up. On the Astute Medical deal, I think you mentioned in the press release that there could be a 60 basis points impact on the contributed EBIT targets for the year. Just curious, is that a 60 basis point impact potential on the margin, or is that a potential 60 basis points impact on the absolute number? On that, to comment on, I guess, why haven't you changed your outlook for the full year based on that deal? Is it because it's yet to close, or do you think that there are other parts of the business that could somewhat mitigate the impact of the Astute Medical acquisition? Thank you.
Yes, we did mention a 60 basis points impact for the year from this acquisition. As you understand, this acquisition is still in, let's say, development mode, especially for the automated version of their NephroCheck test. That's why there are still significant, let's say, costs there in the development phase. The 60 basis points, just to clarify, is the impact on the global group margin, contributive operating margin, I mean. This is compared to our earlier guidance, which was a EUR 325 million-EUR 345 million of contributed EBIT. I'm not sure it was fully understood, but we did actually change, with this announcement, our guidance.
Right. That's great. Thank you.
Again, please press star one to ask a question. There are no questions in the queue at the moment. We do have another question from Hugo Solvet from Bryan, Garnier & Co. Please go ahead.
Hi. Hello. Thanks for taking the question. On the strong contribution from Asia Pacific and what seems to be an increased digitization rate here. Can you give indication on the trend that you expect for the remaining of the year and if any ordering pattern impacted Q1 sales to the point of offsetting a weaker Japan, actually? Thanks.
It was a strong Q1, that's for sure. I believe that the performance of Asia Pacific in 2018 will be, I would say maybe in the same range as what we did the last years, we keep moving the momentum of the company in this region.
The growth.
Yeah. We are favored by, I would say our investment and the fact also that I mentioned that there are still a lot of unmet clinical needs there, where BioFire is well positioned to take position. Japan? You had a specific question on Japan?
Not specifically, just putting it back in the context of Asia Pacific, but if you just follow up on the answer you just gave. If we're supposed to end 2018 at around the same growth rate as last year, it means that Q1 has definitely been impacted by strong ordering. Which country might have drive this increase then in Q1? Which specific instruments?
No, China was great in this Q1. It's one quarter. There was a bit of a volatility we see in the region. All in all, the trend in Asia Pacific is quite good and in line with our expectation and in line with the investment we have done in the region.
Okay. Thank you.
Thank you.
Our next question is from Christophe Jeannerat from Oddo. Please go ahead.
Hello. Good afternoon, everyone. Thank you for taking my question. Actually, I have four then. Maybe I'd like to hear you about Brazil. Do you think that we shall expect an impact of the change of your software on Q2, or is it fully temporary and completely passed after this first quarter? The second question relates to Europe. Do you see in the reasons that does explain the trend on the first quarter, a reason for changes so that we shall expect acceleration in Europe in the coming quarters? The third question would be on the proportion now of the machines, so equipments and consumables on BioFire. Can you provide us an update on these proportion figures? The last one is related to Japan.
Here again, can you provide maybe a little update on when shall we expect take-off on your sales now since that you have reshuffled your local organization, let's say. Thanks.
Okay. The first question is on Brazil. Brazil, the impact this month or this quarter is linked to the change of our ERP system. We believe this is more linked to, I would say, type of invoicing type of issues and not showing, I would say, a change of dynamic for BioFire in Brazil. Even if Brazil is a complex market by itself, quite volatile. For Europe, your question, I forgot your question. I'm sorry.
Acceleration.
Acceleration. Europe, I think, we have our plan. Okay. Maybe. Still no questions?
No questions.
Okay. Very good. Thank you, all of you, for your participation to this call. Our next release will be in July, and so we are looking forward to seeing you in several conferences or several meetings by then. Thank you very much. Bye-bye.