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Executives

John Gilardi –VP, Corporate Communications and Investor Relations

Peer Schatz – CEO

Helge Lubenow – VP and Head of Molecular Diagnostics Business

James Mahony – Head, Regional Virology, McMaster University

Roland Sackers – CFO

Ellen Sheets – Chief Medical Officer

Stephen Little – VP, Personalized Healthcare

Veena Singh – MD, bioTheranostics

QIAGEN N.V. (QGEN) Investor Day Call November 17, 2011 2:00 PM ET

John Gilardi

Good afternoon. If you’ll please take your seats, we’re ready to start the event. There are some seats still here in the front that are open.

I’m John Gilardi, Vice President of Corporate Communications and Investor Relations at QIAGEN. I’d like to welcome all of you to our Annual Analyst and Investor Day. We have about 50 participants here in the room in Dallas, and as you know, our event is being held here at the Annual Meeting of the Association for Molecular Pathology, or AMP.

I want to thank all of you who made the trip to be here with us in Texas, and we’d also like to thank AMP for their support and letting us hold this event here at their venue. For those of you on the webcast, I’d like to also thank you as well for joining our event, particularly those of you in Europe where it’s now evening.

A replay will be available, starting on Friday, on the “Investor Relations” section of our homepage, at www.qiagen.com, and documents for this event are also available on our website. Today, we want to provide you with insights into our business activities and, in particular, Molecular Diagnostics. But, also, we wanted to give you an opportunity to hear from some of our customers.

We’re going to begin our program today with Peer Schatz, the CEO of QIAGEN, who will provide a strategic update. Our second speaker will be Helge Lubenow, Vice President and Head of our Molecular Diagnostics Business. Dr. James Mahony from McMaster University in Canada will be our third speaker, and he’ll provide some customer views on lab automation and, in particular, on QIAsymphony.

We’re going to then hold our first Q&A session. Roland Sackers, our Chief Financial Officer, and Dr. Ellen Sheets, our Chief Medical Officer, will also be participating in this Q&A session with our three speakers.

After a break, we’ll discuss our Personalized Healthcare business in greater detail. Our first speaker, as you can see, will be Dr. Stephen Little, Vice President of Personalized Healthcare. He will then be followed by Dr. Veena Singh from bioTheranostics in California. And then, afterwards, we’re going to hold a second Q&A session.

Following the event, I want to remind those of you here at AMP that we will be breaking up into three groups so that we can visit QIAGEN booth down on the exhibition floor. But before I turn over to Peer, I have to take care of the obligatory legal requirements.

Please keep in mind that the following discussion and responses to your questions reflect management’s view as of today, November 17, 2011. As we share information to help you better understand our business, we will make statements and provide responses that state our intentions, beliefs, expectations or predictions of the future.

These constitute forward-looking statements for the purpose of the Safe Harbor provisions. These involve certain risks and uncertainties that could cause QIAGEN’s actual results to differ materially from those projected. QIAGEN disclaims any intention or obligation to revise any forward-looking statements. For a description of risks and uncertainties, please refer to our Form 20-F filed with the U.S. Securities and Exchange Commission.

I’d now like to hand over to Peer Schatz. Thank you.

Peer Schatz

Yeah. Thank you, John, and a warm thank you to all of you for making it down here to Dallas to the AMP 2011 meeting. It’s an extremely important meeting for our industry. We’ve been very active here since many, many years. I’d also like to say a special thanks to everybody participating on the webcast. Some, I saw, actually are dialing in from Europe, and I’d like to thank them for their energy late in the evening for this as well.

I wanted to structure my presentation today into four different topics. The first is, I wanted to show you, in what operating environment we’re actually active – the opportunities for our company going forward, as defined by macro trends.

Then I’d describe, in a second session, how we are going to benefit from these trends through active development and commercialization programs. I’ll talk then about the growth opportunities in a little bit more detail – select growth opportunities, and then talk about how we’re going to translate that growth into shareholder value going forward.

Today, the molecular revolution has started. It is clearly evident. If you walk the halls of the AMP conference, molecular technologies have taken front and center stage. This was not the case a few years ago.

For those of you who have been here 10 years ago, it was not about molecular technologies or not nearly as visible as it is today, and it has changed dramatically. And it will continue to change going forward, as molecular technologies are creating a substantial benefit for the world of pathology and in that for the whole healthcare industry.

And this is extremely important, because we are moving towards a very difficult situation in healthcare overall – aging population and tremendous pressures for better, safer treatments, increasing efficacies and costs driving the decisions in the healthcare world more than ever. And scientific advances are happening at a breakneck speed.

For those of you who have been in this industry 20 years ago and compare now the rate of innovation of new product introductions to what we’re seeing today, this is truly a completely different, completely more significant rate of innovation that we have seen than we’ve seen ever in the last 20 years. And the technology is disseminating.

So we’re not anymore talking about pathology being confined to very select spaces or molecular testing, in general, but it is going all across the healthcare industry and also into everyday life. So let me talk very briefly how we are positioned in this industry going forward.

In Molecular Diagnostics, we’re today generating about 46% of our sales base. And we are seeing very substantial long-term growth opportunities based on the fact that this technology is revolutionizing clinical care and providing new answers, better answers to the needs in the healthcare industry.

Our customers are typically reference lab from the hospitals, and we have a number of strengths that we are putting special emphasis on. It’s Personalized Healthcare, QIAsymphony, the QuantiFERON technology portfolio, and also the world of prevention and, in particular, HPV testing.

Applied Testing, however small, is a very, very exciting growth driver and is growing at very high double-digit growth rates. We expect this market to continue for many years at high double-digit growth rates, because it is addressing markets that are typically vast in size but, only to a very small degree, penetrated with molecular technologies.

Our customers are forensic labs, industrial customers, government agencies, veterinary centers and so on and so on. And we are continually launching new portfolios in this area as soon as a sub-segment gets critical size, which can be as low as $5 million in sales. We address that market with a portfolio of tests that run on the same instruments that we sell into hospitals and clinical labs or into the pharmaceutical and academic environments.

The third sector in the Pharmaceutical industry – we definitely are talking about a lot of mergers and acquisitions and cost pressures in that space. And the Pharma industry is definitely challenged at the moment, and probably will be for quite a few years to come. However, what we are addressing in the pharmaceutical industry is a question, which is a tremendously important indoor quest to increase the development efficiency that has definitely been lagging over the last few years.

Our Molecular Technologies are used in clinical trials, are used to profile patients, to select patients, to monitor diseases progression and to provide better answers for better drug development. We are seeing great growth in this area, in the clinical research phase, which is primarily in the pharmaceuticals sector, but increasingly also in the academic sector.

And the reason why we’re getting premium growth in this space is because we have this crossover between academic and clinical portfolios. So products that basically can be use for both types of applications and fulfill the quality and regulatory requirements for both areas and we are also putting onto those portfolios content.

So the fact that we today have about 60,000 assays that can be blasted against clinical samples and almost seamlessly be transitioned into clinical products under the same roof is a tremendous benefit for our customers in Pharma and in clinical research in Academia.

Let me talk about some of these pillars in a little bit more detail. But before we go there, our position in general is one that we see as an opportunity to simplify, to accelerate and to improve the process from taking a raw biological sample, here a draw of blood, into digital information. And there are 100s of different options to do that. That diversity is constantly underestimated.

So if you walk the floors of, for instance, AMP, people will be talking about processing anything from blood samples, to plasma samples, to tissue samples of different forms, fresh tissue, FFPE tissues. They’ll be talking about stool and urine samples. They’ll be talking about anything under the sun basically that contains genetic information that has to be processed.

Now this is not a simple process, but needs a very diverse technology portfolio. And our expertise always has been and is now increasingly showing value, the ability to create a funnel to take raw biology into an analyte that can be ultimately then analyzed using our assay technology. So this transition from a component supplier to a work flow supplier covering all of these different workflow elements was key and that happened over the last 10 years.

If we look at where the various players are active, that has been changing as well. So the academic sector has been reaching out beyond by basic research and biomarkers into translational medicine even into clinical trials. If you read about some of the initiatives that are happening here in the United States but also many other countries of the world, the academic sector is reaching into clinical development expanding beyond clinical research into routine clinical development even, and in some cases even pursuing drug development. This is a new trend.

At the same time, molecular diagnostics and this is also evident here from AMP is going much deeper into the earlier phases of research. So moving through the translational medicine field even into biomarker and in some cases even looking at basic biological research. But this trend is one that the pharmaceutical industry is now looking at in more detail because their challenges here in the middle, in the translational medicine and clinical trial and approval area to basically translate that basic research into routine products and they are also relying on the various pillars that are used across this continuum. The only area that is more traditional like the diagnostics industry was let say, 10 years or 15 years ago, very strong compartmentalization is the applied testing field which is less linked to the research or even the development world.

And this brings me now to a slide that shows our competitive landscape or at least benchmarks us against companies that we’re very often compared to. The differentiation that we as a company have is that, we basically span in all of our areas both the Life Sciences and Molecular Diagnostics. We have great and formidable competitors in the various sub-segments at the market, but there is no company, that spans the continuum from the basic research field through the development processes into routine molecular diagnostics.

Most of the companies are blank on the academic field and the diagnostic space. We’re blank on the diagnostics activities here for companies who are active in the life sciences area. That continuum will become more and more important going forward because the transitional buyer marker from clinical development into routine diagnostics is happening at a break next speed.

We’re not going to see the traditional 10 years wait, 15 years wait, we’re going to see a much faster transition of these types of techniques, and going forward, the ability to basically allow that to happen on the same platforms with the same types of technologies is going to be a true differentiator.

If you look at the various diagnostics fields that we have down, I’ll focus on that. We see the Prevention, Profiling, Personalized Healthcare, and Point of Need activities that we highlighted here. Our focus is clearly at the moment in the area of prevention and profiling in terms of sales base. But in terms of the leadership position, our position in personalized medicine is really second to none. And this is something that we will talk about in little bit more detail also in the course of this presentation. Now, so there might be some misclassifications here. It’s always very subjective, but it was – this slide was done also with some analytical support and might be of help for any analysis going forward.

So let me talk about a few of the growth opportunities in more detail. But I’ll do that in a balance way. We are also looking the risks and the challenges that we’ve been facing. So if we look at 2011, we had growth drivers of QIAsymphony’s. We have now – are targeting towards the end of the year 550 placements of QIAsymphony, which is a record placement number. I don’t think there has ever been a medium throughput testing system in this industry that sold anywhere close to this type of a ramp-up that we seen here for this noble platform.

The assays are available at least to a great degree in Europe, but are now starting to be migrated over into the United States based on the longer regulatory hurdles. And going forward, we see these as the growth drivers coming forward. While, the system today is primarily used as an open system in the States, that growth that we’ve seen over the course of 2011 was primarily from Europe. We’re replacing it with the full portfolio of blood virals and microbiology and virology portfolio that are the major assays in any molecular diagnostic lab. So this is a complete solution for a molecular diagnostic lab in Europe, or in select countries in Asia and we’re replicating that now into the United States.

The further portfolio is going forward in the forensic and veterinary areas are very, very interesting. They are able to generate double digit million dollars of sales, revenue bases but clearly food safety and veterinary one is which is little bit further out. In veterinary, we have a double digit million dollar sales base, well into the double digit million dollars of sales in this space. Food is a much smaller market, which is just emerging and which we entered there for last year is at the chief critical mass for us.

Now some people are asking why we’re doing so well in the pharmaceutical and the academic sectors currently? And the answer might be here in this line. We over the last few years started hot-wiring the academic and the clinical diagnostic areas a lot more. And glue that holds these two together is not only the platform, but also the content portfolio that we’ve created. We’ve created a portal with 60,000 assays with very intense annotation behind them and references against them. Based on data mining activities that have been done over the last years to create a portfolio of assays that academic customers and clinical research and pharmaceutical customers are able to blast against their clinical samples to generate early stage validation or discovery results and this has been doing very, very nicely.

We acquired SABiosciences a couple of years ago in 2009, but already started working on Gene Globe two years prior to that. And this is currently very successful growing at very high double digit growth rates. This translates into a success and translational medicine where we’ve been doing very well also in the pharmaceutical industry. The fact that our instruments are typically compliant with regulatory standards and conversation into diagnostics has been a great success factor in this great area between discovery and research. It allows the faster translation and that’s what word here implies, translational medicine should ensure that discovery translates faster into a product ultimately and this is something that is a lot easier if people don’t have to migrate platforms during that process, but can simply use the same thing that they’ve been using in earlier stages of research.

What has also been doing very, very well and I’ll talk about this in a minute is the QuantiFERON portfolio. We acquired the QuantiFERON technology this year, closed the deal in the third quarter, and are extremely pleased with the uptake of this technology and I’ll have a few slides on it. But the growth in this space is on a – approximately $50 million run rate, quite phenomenal and we expect it to be very, very attractive from many years to come, as this market is hardly penetrated. So we have a revolutionary new technology that is going to change the world of TB testing.

The challenges that we had and I’ll describe that in a little more detail, is that the U.S. healthcare utilization declined rapidly post-recession. So we all saw the numbers, we saw 15%, 20%, 25% declines in utilization rates, primarily in preventive services such as HPV testing. And at the same time, competition started to emerge, but this was not really a two big factor, so this factor was at least five times higher than this factor here. So the fact that we actually saw this decline in utilization was really quite major. The question is how long can decline continue or at least the soft position continue, and how long do we basically see also the market still trying to reshuffle market shares in HPV testing. 15% of our sales are currently exposed to this or to this two numbers here. And this is probably going to reshuffle over a couple over three years or so. And we’ll see a more long-term market share situation in that area following that.

We’re managing a very broad pipeline, which is a challenge. This is more an internal challenge that has not really been too visible. The growth in the portfolio has to be driven by a very large initiative across multiple sites to develop more content and platform additions. In addition, we had general macroeconomic factors such as the austerity measures across Europe and also in many other countries of the world.

So if you look at the strategic trajectory, I’ll go back a few years and many of you have known the company for a long time. When we were here at the early years of the millennium, our company was 80% based on sales into academic and pharmaceutical customers. We had OEM sales into diagnostics. We recognize that this is a challenge. Now at some point in time this market would probably max out, we’d have a difficulty to show the double-digit growth rates that we saw on the early years of the millennium.

So what was critical for us is to start diversifying into larger ponds to get more room to grow and this was done through the entry into the clinical markets. And we wanted to create critical mass very quickly, we acquired HPV testing and did a number of other targeted acquisitions as well and built a – quite substantial infrastructure in this clinical arena. The original plan was for a competition to start coming in into in the HPV markets in this year, but probably the market expansion to be able to continue well into the year 2012 and 2013 because of the low penetration.

The good news is that competition took a lot longer to enter, namely, somewhere around here, first entries here with smaller market share additions, but the larger competitor somewhere around here. But the problem was that the recession basically created an Ipsogen shock to this which threw us off this path. This meant that the second cylinder of growth which was expected to drive us through 2013 didn’t generate the power that was required to create the mid teens growth rate that we have seen in the years prior to that.

This however does not mean that the third pillar of growth, which is based on the medium volume systems, the QIAsymphony systems with the broad menu on that and including also the personalized medicine portfolio not to be able to ignite sometime around here to generate these types of growth rates. These types of markets are easily significantly larger than what we have in these base markets that we acquire to get critical mass.

This is a story that we are on right now. So yes, we are facing a very difficult time here based on the number of factors in this market, but we are very enthusiastic about the opportunities that we have on the medium term to generate growth for a very long term using these platforms that we have just launched.

And this is therefore also the base for our initiatives that we will also use as a framework for the year 2012 and also use partially for 2011. The four major initiatives, the first is to drive platform success. The roll out of the QIAsymphony worldwide, we’ll talk about that in a minute, the advancement of the QIAensemble strategy the screening systems and also the Point-of-Need platforms that are developing as well.

Most important in this phase, add content, add content, add content. We have a fantastic platform. We are adding more applications and this is the greatest focus for us currently. What we want to do is then to take these platforms and take them as broad – as broadly geographically as possible. And there I’ll talk a little bit about that in a minute. And then clearly this has to be done very efficiently and effectively with sustained growth in terms of top line, but also in terms of bottom line.

Let me show you how we tracked on that in 2011 and how we plan to develop on that in 2012? The 2011 achievements in the platform area are quite remarkable. We play – are targeting to place over 550 systems by the end of the year. Again, this is a record placement number for a system like this, where we might be selling more systems than our two largest competitors combined. This is a definitely a very, very attractive base from which we can grow and add more menu and therefore revenue going forward.

We launched the QIAensemble decapping unit, which is very important part of the workflow enhancements in the screening area and we migrated or merged the QIAensemble strategy to make platform compatibility possible between the QIAsymphony and QIAensemble’s family to make sure that assay can be migrated better than the original plan called for.

2012 will call for a significantly expansion on the QIAsymphony installed base. We expect to – so again, a very good year there. Improve the HPV test automation and deliver QIAensemble milestones here as well. And here the important thing for next year will be the menu.

We have select submissions that went in this year, KRAS for Erbitux and KRAS for Vectibix, completely separate clinical trials by the way. And we just submitted influenza and careHPV was also submitted as well, which is a very important product for us for developing world initiatives. And as we all know, that’s where 80% of cervical cancer happens. And the fact that we have a portable platform for low resource settings or settings where – with more limited resources combining that with the Hybrid Capture 2 platform gives us a very significant advantage.

The additions of Cellestis and Ipsogen are very exciting and I’ll talk about that in a minute. We have a number submissions plan for 2012 in the United States, and we’ll be reporting on those going forward as well. We launched in India and Taiwan this year, and we want to focus on Eastern Europe and select countries in Asia and Americas next year, but there’s still a substantial opportunity for us to grow geographically, and we will try to address that in various steps over the next few years.

Very importantly, in times like these, we are clearly also looking at the efficiency and effectiveness of our infrastructure and initiatives to make sure that this translates into superior bottom line performance as well and therefore also in shareholder value.

Could you flip to the next slide please? Okay, now if you want to look at diagnostic companies and analyze, you are very familiar with the system but I would just like to reiterate it, there are three phases in the lifecycle of a diagnostic company or a diagnostic platform strategy. The first phase is that you build a new platform with one or two interest assays, either a unique platform or a unique assay or both and then you try to roll it out as aggressive as possible. You try to create as much real estate in the industry, place it in every laboratory that could use a platform like this.

The second phase starts in about five years after that, is to start expanding the menu aggressively and add new features to the system. So there might be a version 2 of the system coming out and the menu expansion is full underway.

The next phase is then to maximize the value of the system by basically extracting also a profit from the system, start developing a new system which typically starts 10 years to 15 years after the launch of the initial phase.

The reason why we are so excited right now about our trajectory is because we are somewhere here. We are still in an area where the growth trajectory is ramping up, but we are doing extremely well. The 550 systems that we target towards the end of the year are definitely a very, very good performance and we will be growing this base quite significantly over the next few years.

And as you see here, in this phase, you typically enter into a growth phase which is quite high. I wouldn’t call it hyper-growth, but there are some examples also of companies in that phase that have launched single system and are suddenly here and are showing growth rates which are quite high, the important thing is to make sure that before that growth rate seduce that a new system has invested in, and that, not all the values are extracted here and put into other purposes, other than new system development.

So we are at an early phase and this is something we are very focused on, because this phase is in front of us and starting, you know, somewhere if you look at it around 2012, ‘13, ‘14 where we start ramping up the install base. There are several ways of assays that are being put on to these platforms as I described before.

On the medium throughput platforms and then also on the high throughput platforms, the good news is that these assays, thanks to the new strategy can be migrated, that is the target between the low and the high throughput systems that was not possible before. So there would – have to be a completely separate development of an assay and also a validation and regulatory approval of an assay if the platforms are not compatible, if they are compatible there is certain simplifications in terms of the regulatory process that can significantly accelerate the ability to put the assays on new system like we have here.

Again this is pretty much using the identical components and chemistries as the medium throughput system. So a lot of these assays, we will be going through the FDA with here in the States for use on the low to medium throughput system, but we’ll be clearly targeting to migrate them also to the higher throughput system as it comes forward.

Let me talk about some of the growth drivers in more detail and I talk – like to talk a little bit about personalized healthcare because this is an important theme here at this conference. A new number, I think we’ve never really put this out is that, we are doing about $75 million in sales in this space. This is quite remarkable. So this is not a pie in the sky several years out maybe it will happen, may it will provide value for QIAGEN. This is real, now and today and it’s growing at a very high growth rate. There are three components that – and this is not at scale here, but the co-development projects are the FTE reimbursements we’re getting from the pharmaceutical partners to develop assays. We typically do that at a – on a cost plus spaces. But frankly, this is not what we’re really focused in the long-term. What we’re focused on are the commercial assays that we can validate with our pharmaceutical company – partners. They have access to the samples, they have access to the drugs and they can basically make this co-development a lot more efficient if we do this together.

We today have about 30 commercial assays that we’re commercializing in various forms. We’re extremely excited to have the hematology portfolio that Ipsogen is bringing to our group and JAK2 and BCR-ABL are just two of these examples. As you see here there are several others and there are many more in the portfolio. This is a very exciting addition because it gives us a unique technology – unique IP portfolio, but also a very strong position and a niche of pathology namely hematopathology, which is a very rapidly growing field as well.

Then there are all the platform technologies, the instruments and their agents that we sell into the pathology market that are the other third. This is therefore always been a very important market for us. The AMP conference was since many, many years, let’s say, 10 maybe even 15 years back always an important conference for us because there are lot of opinion leaders here are very early also in the development phase for new types of technologies and specially personalized medicine, genetic testing has been something that everybody was extremely excited on, about.

So, we are looking towards – for a very good double-digit growth in 2012 in personalized healthcare of a base of 75 million. The growth rates are very high in the double digits and you see that this is a meaningful contributor providing percentage points of organic growth to our overall revenue, which is about 15 times larger than this revenue base.

The second growth driver that we’re very excited about is QuantiFERON. Now, QuantiFERON is a technology, which we call pre-molecular. It is a technology that allows our customers to test for things that they couldn’t test for using molecular technologies, because there is simply not, not enough or no DNA available to test for. What we therefore doing is we are querying the immune system for memory effects that would allow us to infer if a specific paradigm was seen by the immune system, for instance, an infection, a cancer or a certain immune status.

TB is the first product that made it to the market, and this is quite exciting in many ways, because we are today with TB testing, much further advanced than HPV testing is today, in terms of regulatory approvals and in terms of reimbursement. Namely, we have all regulatory approvals in all major jurisdictions. We have reimbursement in all major jurisdictions and attractive reimbursement, the United States, in Europe and Japan, primarily.

And, we are in a -here right now just starting to address the market. The market is probably in the range of between 3% and 5% penetrated with a vast opportunity in front of it. It is a replacing 120-year old skin test, 120-year old skin test. So it’s hardly any innovation in this space. And the skin test is ineffective in large parts of the global population, because similar – BCG vaccinated population will respond to the skin test and, therefore, the skin test cannot be use on them.

Also it requires only one visitor, a lot of benefits that you see. Just look at the dramatic increases in specificity and sensitivity and these are clinical numbers here that are quite well also validated in multiple studies that we’re done around the world.

TB is an extremely important diagnostic challenge for us over the next few years. And we hold a key to diagnosing latent TB, which is probably one of the most important ways of detecting TB and to managing the diseases going forward.

TB goes latent as we know. It becomes active for some people who are immunocompromised or if whatever reasons suddenly see the bacterial flare up and everybody who’s active typically infects 20 people before it is diagnosed. And this is why latent TB detection is really the only way to contain the diseases going forward.

Now there are many, many different sub-segment where latent TB testing is currently being employed. And if you look at all of the sub-segments here they all are quite different, everything from prisons, to travel medicine, to professions at risk, to contract tracing and clinical patients in general. Our technology were for instance, used in the TV outbreaks this summer in Italy and in other countries of the world are the absolute standard as well. And it is increasingly also now being used as a personalized healthcare product.

So we all know TNF-alpha blockers are rising in importance, also going forward we expect more of these types of products to come to market and the testing for latent TBs requirement prior to the administration of such a drug. Similar also in transplantations, cancer, HIV/AIDS, and here you see the link to the molecular portfolio that we have. So detecting for latency and then detecting active diseases in the second step. Here, for instance, you see that some of the transplantation assets we have will be matched up with the latent or with immune status querying QuantiFERON technology to create an even earlier and synergistic piece of information for further treatment.

So – now I can say a lot of great things about this technology, but I think what is quite exciting to see is how it is – changing clinical care. I said before that probably only about 3% of the market is converted, maybe 5%, and in many countries of the world despite this technology now being adopted and also being fully reimbursed, it is still something that people are learning about and this makes such an interactive opportunity for us to pump into our global sales and marketing channels very similar to what HPV testing was 10, 15 years ago in terms of size, maybe even at least as large.

Now, it is not only transforming everyday clinical care, but also care on TV and I’d like to show you a small clip, TV clip that we had nothing to do with. I’d like to say that in advance, but gives the message probably better than I can.

(Video Presentation)

Okay. See even on TV, it’s transforming their care there. And this is pretty indicative of what we’re seeing around the globe. We got that a few days ago, it was just purely by coincidence we thought you’d enjoy it, so we put it in.

(Video Presentation)

It’s very validated and well positioned solutions for different types of resource setting. So we are well positioned in many countries, because we have portfolios that are specifically designed for emerging and developing countries. As you all know, we have a large manufacturing and development site in China. We have assays that are manufactured there for use in the developing world.

The assays need different specifications not only do they have to be less expensive, but they also require different specifications. That’s something we started doing six, seven years ago, and are selling now millions of assays into these types of emerging and developing world settings. We expect this to be a big benefit for us to be able to generate a lot more in terms of sales and a lot more in terms of growth over the next few years from the emerging countries.

So how do we want to translate these growth initiatives of which some I showed to you now in the last few slides into shareholder value. Over the last few years, we’ve seen significant growth growing about seven-fold in the first decade of the millennium, and in 2011, we recorded growth rate and organic growth rate of 3%, which clearly is not what we want to see long term. It was probably better than what the market showed in 2011, but still we have much higher ambitions. We were still able to achieve a profitability increase and also record or have a target now for the year of $0.96 to $0.97 up from 93 in last year.

However, going forward again, our ambition is to show stronger top-line growth. We have already said that for 2012 this is a very clear goal that we set in the same time we want to make this growth even more effectively translated into bottom line growth and into shareholder value.

And basically there are three pillars of measures that we can use to generate shareholder value. The first is to create sustainable sales expansion. We are trying to improve the constant exchange rate growth rates in 2012 versus 2011. And 2013 onward what I described before is the third cylinder of our franchise namely the growth and the exponential then growth of the menu revenues on the QIAsymphony platform from neurology personalized healthcare, microbiology and other portfolios is going to kick in generating a faster growth rate than 2012 as well.

We want to improve margin development as well. The margin should increase over the next few years, our ambition remains to achieve an adjusted operating margin of about 30% or higher by the end of 2013. And to deliver on these goals we are constantly reviewing ways to improve productivity and find ways to streamline our operations to become more efficient. And we are very active currently in reviewing options to accelerate that – value generation from the item number two here in 2012.

Number three is the taxes and capital allocation. We’ve seen very effective tax management over the last few years and expect to continue to manage this very aggressively also going forward. We have a very efficient tax structure worldwide under our Deutsche Holding company structure and expect to see benefits of that further come forward to us over the next few years.

And capital allocation measures are constantly reviewed including share repurchase programs and that is also one measure that we have to improve our shareholder value in the near term. Many of you know our balance sheet is significantly underleveraged compared to our peers, and therefore has a lot of potential here as well.

If we look at deploying resources, we’re looking at targeted acquisitions like we did in 2011. Novel technologies in particular novel test, we’re extremely excited about the addition of the Ipsogen portfolio, it’s a perfect addition, very well run company that is adding a leadership position in a important market of the future. We’re looking geographic expansions. I talked a lot about QuantiFERON, the growth initiatives are clearly laid out here and we’re part of the four initiatives that I described in the introduction slides, and we’re looking actively at increasing the translation of this into shareholder value.

So if you look at QIAGEN in 2015 a few years out, our vision is that we will be playing a very pivotal role in the molecular revolution overall, leveraging the synergies of our molecular technologies across all customer classes. We’re not about a specific product, we’re not about a specific technology, we’re about the ability to create utility for our customers in these product classes and across the various geographies in customer classes as well.

Strong sales growth and improved profitability, this is a market that will expand over the next decades. So this is not a market that we expect to see a strong big cap on. Remember, the generation of information in the healthcare industry is about 1% to 1.5% of overall healthcare cost. You’ve all heard this stat very often. But it is driving almost 80% of all decisions.

If you buy a car today, you’re spending more on investments in information generation resources than the healthcare industry is. This is simply not affective. We’re driving with the frozen windshield and we are trying to put small holes into it. But we today have the ability to carve out big, big areas of site and create a lot better management of the expensive therapeutic and care resources in the healthcare industry and that’s what molecular industry will able to provide.

And diagnostics, our target is to be the number one worldwide. Primarily, due to QIAsymphony but also to the screening platforms, a broad test menu, and be the driver, and the leader in personalized healthcare overall. Rapidly, growing the industrial markets, our partner of choice for discovery and development across the continuum from discovery through to routine testing. And in the academic markets we will always have an extremely important pillar, which provides us not only a very attractive market in terms of profitability, but also an innovation driver and competitive advantage as we can translate that innovation better than anybody into a team testing solutions that are emerging.

So, well positioned, not anymore reliant on one or two cylinders of funding, but diversified cylinders of funding with significant growth opportunities. That is what we basically created over the last few years. That is where our investments went in and at the same time we increased earnings per share and the top line and also profitability in terms of margins as well.

With that, I would like to handover to the next section which would be Dr. Helge Lubenow.

Helge Lubenow

Okay. Good afternoon. In my presentation I will briefly summarize QIAGEN’s position in the molecular diagnostics space and give some more details to the underlying business metrics, but then, focus on the commercialization strategy that will drive our near-term growth and illustrate that by some selected case studies.

So on this next slide, this depicts that, as you probably all are aware, the artus real time PCR portfolio and the addition of the digene HPV test were the anchor points to build our molecular diagnostics franchise. Today, improving on the automation and expanding the assay menu are the key drivers to position ourselves and establish ourselves as a total solution provider in molecular diagnostics, further broadening our geographic reach makes us a true global player.

We have successfully penetrated the established businesses as we can access them today and what do you see on this chart here on the upper side is pie charts, which are depicting our market share in the accessible markets as for prevention, profiling and personalized healthcare today.

With the accessible, I mean both with the products and the menu at hand and in the regulatory environment that we’re acting in. Obviously, this accessible market is going to expand over time on the one hand by the addition of the new assays to the menu, but importantly as well on the other hand by through the execution of our regulatory strategy so for some of the assays, which we’ve already at hand today and market in selected regions, gaining regulatory approval in more countries.

So as to the dynamics for example in prevention, opportunity growth will mostly come from the addition of assays and I’m particularly referring here to Chlamydia, Gonorrhea testing or an expansion of a women’s health portfolio, or as in profiling the biggest driver actually is execution on our regulatory strategy, and here I’m specifically referring to a broadening franchise of U.S. FDA approved assays and specifically the area of blood-borne virus testing.

So to summarize the environment in HPV, we have a solid environment in HPV in the U.S. We are driving conversion actively and later on I will show a case study that will illustrate this further. We are working actively with contracts to stabilize our business in multiyear contracts. And, we’re improving on our automation franchise. One example, being the – very soon to be launch Decapper Unit that you will be able to view at the booth store after these presentations, so it’s out there on display.

In terms of the rest of the world, we’re very actively driving conversion of cervical cancer prevention to primary screening by the HPV, DNA tests and for that to provide future opportunity.

With the QIAsymphony RGQ we are very well-positioned for market share gain in a competitive environment. There is actually three main criteria, very distinct criteria that drive a lapse choice for any platform. And that is the availability or that is workflow consolidation, menu consolidation, and the availability of an open platform.

Consolidation of the workflow results in increased efficiencies and increased asset utilization. Menu consolidation likewise and results by basically structuring of the whole workflow in a lab result in increased workflow utilization as well. And with the open platform it provides flexibility to the lab to transfer their own lab develop test on the same platforms that are employed for the commercial assays.

Thus all the reduced complexity basically leads to reduce complexity in the processes, increased efficiency and profitability for the labs, that’s why that’s the underlying drivers for them to choose vendors.

I’d like to illustrate a little further, the underlying business model for the QIAsymphony, which is a reagent rental model. That is the predominant business model in molecular diagnostics as opposed to capital sales which would be the dominant model for instrument sales and life sciences.

In reagent rentals scheme, the customer pays a premium on the assay and then that basically carries the lease of the platform into running cost. So there is no initial capital sales of the equipment, but the – so platform costs actually deferred into the running cost of the lab.

That together with a relatively long sales cycle and a three to eight month validation time that that labs need to undertake to be able to fully employ a platform into routine, leads to somewhat differed revenue recognition on our side. At the same time, after a ramp up phase of two to three years, we will be enjoying very stable contribution to our top line business.

Now for the second part of the talk, I’d like to come to some case studies and to illustrate how in the different business segments, so again, profiling, prevention and personalized healthcare, our commercialization focuses along three drivers, that is market development, market share gain and broadening our geographic presence.

My first example is a profiling example, so again is a QIAsymphony example. And the customer that I want to talk about is the St. Elisabeth Hospital in Tilburg, in the Netherlands, which is a typical mid-size European hospital, catering to mid-sized European lab. They cater to eight hospitals and clinics. They have roughly a turnaround of 70,000 tests annually at this point in time growing double-digit, and they carry an assay menu of 49 molecular tests.

This lab had some issues in terms of their efficiencies and profitability, and what they did is they initiated a lean analysis, in which they would analyze all their workflows and processes with the aim to restructure them and increase their efficiency. And the outcome of this analysis basically was that they did decide to employee the QIAsymphony as their central platform to streamline their workflows on.

And this just depicts this here in an illustrious manner, so initially they had a suite of different platforms from seven different vendors that wouldn’t run assays from five different providers. After the analysis and streamlining of the processes, they now have only three different platforms employed in the lab, and one assays from three different providers. Of this, the QIAsymphony carries the vast majority of the volume, so they had streamlined now or put 38 out of their 49 assay menu of on the QIAsymphony.

Please note that at this point in time these are all LDTs. So these are not commercial assays. These are their own lab-developed tests, which actually provides a further opportunity for us, this is a stepwise process. We’re talking with our app to over time consecutively adopt commercial assays and so basically to add to the total opportunity in our side. And actually, Dr. Mahony in the next talk will discuss similar undertaking for this own lab and explain and talk about his experiences with the QIAsymphony in his lab.

My next case study is about the preventive space and this about a very imminent trend in the U.S., where more and more physicians and hospitals are joining integrated health networks. So they are not operating independent anymore but they are they are joining larger institutions. These networks they provide for quality care based on evidence-based medicine and there is a strong drive within these organizations to implement guidelines that’s guidelines of these institutions that are enforced throughout the organization.

As such, obviously the medical director is these integrated health networks are excellent contact points for us to work on adoption of co-testing for HPV screening. And my example that I would like to refer you today is PeaceHealth, an integrated health network located in the Pacific Northwest. They today comprised of nine hospitals and seven physician groups. That’s actually a growing franchise as well. We started to work with their medical team just about six-month back, in the first quarter of this year. We were relatively quickly able to convince them to adopt HPV co-testing as part of their guidelines. And since then, we’ve been working with them on implementation and basically enforcement of these guidelines throughout their organization.

Already, in this relatively short timeframe that we’ve been working with them, we have now doubled the penetration rate. So, at the beginning 12% of their affiliated physicians would be co-testing and today we’re at 25%. This is still an ongoing process. I’m not trying to imply that this is the endpoint.

Coming to the next example, which is an example from prevention in HPV-testing as well, but an example from a different region, I’m going over to Mexico. In Latin America, actually for a lot of the countries, cervical cancer is the number one cancer in women, so this is somewhat different to the situation Europe or in the U.S.

As such, there is a very high unmet medical need and high public awareness as well. Every single Latin American country has a public health program established that technically should allow for access to cervical cancer preventive care for every woman.

In reality, these programs reach anywhere between 15% and 45% of the eligible population. Why is that? It’s because these countries have a lack of skilled physicians, because cytology requires skilled physicians being able to perform the test and be able to drive care, and with that these countries struggle.

Now, the Hybrid Capture 2 test is a very forgiving test. It’s a relatively forgiving technology in that test together with collection system from QIAGEN, the STM system. Actually allows for the establishment of a completely integrated workflow that takes the art away from the cytology. It allows for an automated test to be established with a simple readout that almost anybody then could use in patient management. So this is actually a system that lends itself perfectly to adoption in low skilled or low complexity environments and that’s exactly what has happened in Mexico.

Our market development team has been working with the Mexican government since 2003. And actually in 2008, the government formally recognized the test as a means of primary screening. It has been received a federal recommendation and has been added to the national catalog, which is a prerequisite for it become employed in public screening or public health programs.

We’ve been working with an institution called SSA, which provides care to the indigent population in Mexico. And this organization SSA is now in the fourth year of a pilot program, where they work with each region in Mexico to implement. They are looking at concluding the program next year and to initiate a nationwide rollout of the program. This has led to a very significant opportunity for us in the development of the markets and we are carrying this further now into other countries in Latin America.

My last example is from Personalized Healthcare. And again another region, I want to talk about Japan this time. You may be aware that in Japan actually molecular diagnostic testing is highly centralized with the vast majority of the volume actually being covered by three commercial labs.

In the case of person’s healthcare in KRAS testing its even more extreme, with more than 90% of the volume actually being covered by one single lap, which is the SRL. The SRL had initially established their own lab developed test or homebrew test which happened sometime in 2008, but then because of the high volume, beginning of 2009 or 2010 they started to talk to us about automation. And we, in the mean time have been able to convince them of the value of a commercial assay solution. And beginning of this year, we did install a completely integrated automated workflow as Peer spoke custom work for actually catering to their very high throughput.

They have already this year tender on 20,000 tests based on this solution and they are looking at 30% to 50% sales growth for the next year. So with this, practically all KRAS testing in Japan is done on a QIAGEN Solution.

And today, of course, this process was accompanied by an effort to gain regulatory approval in Japan. Today we’re actually the only commercial entity holding a marketing authorization for the commercialization of KRAS testing in Japan.

So I’ve shown you four examples, which stand representative for our commercialization strategy and each of the segments in molecular diagnostics. And we do belief with that we’re well positioned to drive on the interim growth. And obviously, you’ve heard from Peer, as to how additions to our portfolio then setting up for future growth.

And with that, I would like to conclude and actually handover to Dr. Mahony. And we’re very curious to hear about his experience with the QIAsymphony in the lab.

James Mahony

So the title of my talk is the use of the QIAsymphony platform for lab develop test. I’m Clinical Virologist and run a diagnostic virology lab and we develop a lot of our own tests.

So next slide. So what I’m going to do today is talk about several applications that we’ve recently deployed on the QIAsymphony RGQ, which we had installed in our lab just in June of this year.

So I’m going to talk about Influenza virus subtyping assay, a couple of Respiratory multiplex PCRs and Enteric virus PCR assay and Multiplex assay. Talk about processing stool samples to remove amplification inhibition, which is very important and give you some examples of workflow.

So the first example that I want to talk about is subtyping influenza virus. Typically, influenza virus is subtype by looking at the hemagglutinin gene and neuraminidase gene the 16 of the former and nine of the later, you’ve heard of H1N1, H3N2 combination of hemagglutinin and neuraminidase. But we decided to take a totally different approach to subtyping and that is to use a Matrix gene as our target and to clearly the sequence within the Matrix gene.

So influenza prior to the outbreak in 2009, we had a seasonal H1 and H3 circulating. We’ve had some influenza AVN influence are coming and then the big pandemic of 2009, which was an H1N1.

So, why do we want to know about subtypes? Because the vaccine is remodified every year based on the circulating viruses in the community. The World Health Reference Labs looks into this. We have drugs for influenza testing, Amantadine and Oseltamivir. Just like in HIV where all the drugs we’ve introduced the virus has become resistant within six months of treatment. We have resistance developing to Amantadine and Oseltamivir, so resistance testing becomes important. And I am going to show you that we can use subtyping as surrogate for resistant typing. All right.

And treatment failures have thus led to the development of antiviral susceptibility testing for Oseltamivir and Amantadine. So for susceptibility testing, this mutation in the – introduced gene H275Y is very important? We have developed Multiplex PCR assays that will achieve both things. We can do subtyping and Oseltamivir testing within the same multiplex assay and we published this in September of 2010.

But what’s really important is the ability to use subtyping as a surrogate for antiviral susceptibility testing, recognizing the fact that not all clinical labs do sequence and yeah, so if you can do a simple PCR and get the same information, why not. And again, this is based on the Matrix gene only not the hemoglobin or the neuraminidase. So our objective was to develop a multiplex subtyping assay on the QIAsymphony RGQ platform using Flu specimens from the last three years.

This is an assay based on one gene amplification with three different probes, one prob specific for each of these three H1H3 and the pandemic H1 subtypes and the samples are extracted on the QIAsymphony and then set up and tested for the three viruses in a multiplexed assay with each of different subtypes being detected on each of three different channels in the Rotor-Gene.

So out of 125 specimens tested, 123 gave very clear cut typing results. No cross talk between the channels whatsoever, showing the robustness of the Rotor-Gene instruments. Two of the samples, the RNA didn’t survive storage. Some of these samples were from 2008. And there was no cross talk for very strong samples that had low crossing points or weak samples that had the later crossing points.

So the Matrix gene assay, subtyping assay, we’re also wanted to know how sensitive it was, so we had the CDC detection assay in our labs. So the subtyping assay was just as sensitive as the CDC’s detection assay with a lower limit of detention of about 10 genomic equivalents. So subtyping usually takes a hit, but it’s pretty good here.

So we next ask the question, well, how good is the QIAsymphony as an extractor, because we’ve gone through QIAGEN spin columns, we’ve gone through the easyMAG, the miniMAG and all these. So we had a couple of easyMAGs in the lab, so we decided to compare the QIAsymphony SP to the bioMerieux easyMAG by selecting 40 influenza positives from the current year 2011 and then testing these.

So we have extracted, we just flipped the sample and extracted an aliquot with the bioMerieux, easyMAG and extracted an aliquot with the QIAsymphony. 39 out of the 40 samples give a positive result in both assays with very similar crossing points. These are fairly strong positive samples.

And we feel that the extraction with the QIAsymphony SP was as efficient as the easyMAG extraction, which is one of the major competitors for extraction. So that was the first application just to subtyping assay and a little bit of introduction to extraction.

The second application is a detection of respiratory viruses in the clinical laboratory. And there is a number of reasons to identify what respiratory virus a patient is infected by. We have specific treatments that I’ve mentioned for influenza, for rhinovirus and Synagis, a humanized monoclonal for RSV. Infection controllers are important, knowing if people are positive for respiratory viruses. Some of these have big public health consequences. SARS had a huge public health and an economic consequence and whenever a new emergent virus comes out, we develop a diagnostic test straight away. We build a SARS test in five days and a Pandemic Influenza test in three days.

So detecting eight different respiratory viruses, there have been papers, you know, literature on multiplex, home-brew test, lab develop test, commercial test have come out in the last five years. So what we developed in a diagnostic lab is two lab developed assay, multiplex assays for the detection of eight respiratory viruses. The first assay detects three viruses, Flu A, Flu B and RSV. The second assay detects Para Influenza types 1, 2, 3, human melanoma virus and adenovirus taking advantage of the five channels of the Thermal Cycler, the Rotor-Gene with an internal control in one channel that we always run. And both of these assays have been in routine use in our service lab now in our Diagnostic Virology Lab and we did above 5,000 respiratory specimens a year.

We’re going to add rhinovirus this year to the first one, there’s a channel available here, because rhinovirus is actually the most prevalent of all respiratory viruses. In a two year survey we did, 37% of all deposits as rhino, flu is at 11% and parainfluenza at 9%. So, rhinovirus is now known to be a major cause of hospitalization in young children, it’s a very important virus.

So, that’s was a second application developing two multiplex assays for respiratory virus using the QIAsymphony. So, the third application is enteric virus testing. So we developed the multiplex PCR four respiratory viruses. Two of them are shown here in photoelectron micrographs Norovirus and Rotavirus. So the objective was to develop a multiplex assay for four viruses again, this was designed using four sets of primers and four probes. One probe specific for Rota A, Norovirus Genotype I, genotype II and Adenovirus.

And here we’re working with stool samples, which are very messy to work with, very hard to work with. So, the stool samples are extracted on the QIAsymphony, the specimen processing module and the eluted nucleic acid five micro liters are set up on the set up module and then detected by our multiplex PCR on the thermocycler, the Rotagene.

And the amplified products are easily identified again one virus in each channel, the orange, the yellow, and the red channel, and the green channel. So what did the results look like? Out of 45 specimens there were 21 Rotaviruses, 6 Adenovirus, 13 positive for Norovirus a genotype II, III, dual positives and two negatives.

Sensitivities were very good for these assays, a 100%, specificities is very good 100% for three of them and 96% for one. Small sample set here, but again just shows you the flexibility of the system for both extracting a sample, setting up for doing PCR and detecting multiple pathogens in a multiplex assay. And also the sensitivity and specificity of this particular multiplex assay was equivalent to assays run on one of the competitor’s platform.

Okay. So extracting stool samples, very difficult, there was no protocol from QIAGEN to extract stool samples on this instrument, so we developed one. We had found out in the last couple of year that C. difficile testing on stools, we found that above 15% to 20% were inhibitory. So if we spike in some MS2 RNA it doesn’t get amplified. So there is inhibitors there they get co-purify within claque asset so that’s problematic.

Some of these stools are viscous probably due to the presence of mucous. So what we did is we evaluated a pre-treatment step that we have used for respiratory samples, nasal pharyngeal and sputa samples which have mucous in them and which are difficult to handle and are inhibitory, so we took this SL solution from Copan Italia and – because we’ve shown what their respiratory samples, the NP and the sputa that are reduces the viscosity and reduces the inhibition rate. So we took this SLS solution and applied it to stools.

Okay. So we selected initially. I am going to show you three little studies that we did. The first one we selected 16 inhibitory stools that were extracted with bioMerieux and tested and they were inhibitory. The internal control didn’t work, so we know they are inhibitory. And we ran them through our protocol that we developed using the SLS. We make 10% suspension of the store with the SLS and then we process it on the QIAsymphony. 15 of these stools that were inhibitory after extraction by the bioMerieux, easyMAG were rendered non-inhibitory by the SLS QIAsymphony SP extraction.

So the SLS and the QIAsymphony have removed inhibitors 15 of 16 of these samples. That’s encouraging we went on to do another study. We prospectively this time process 45 stools, same extraction protocol. And we tested these by our multiplex PCR after resolving the discordance between our traditional tests in the service lab and this molecular test. We had 32 positives, 17 Rota’s, 4 Adeno’s, 3 Noro’s, 9 Noro GII, 1 dual positive Rota and Adeno positive and 11 negatives.

So the extraction method worked in these samples because we’re getting positive results. How did these positive result compared with traditional test? We use the CombiSTICKs test, Norovirus PCR and Adenovirus culture, while their traditional tests in the service lab only picked up 18 positives. This molecular test using a QIAsymphony platform picked up 32 positives. So you can see an improvement here with the molecular multiplex PCR testing. But more importantly none of the 45 stools were inhibitory. Our internal control amplified in all cases indicating at this protocol with SLS and the QIAsymphony removed all of the inhibitors.

Okay. So we were happy with that. We did a second prospect of evaluation using our extraction protocol and this time we used stool samples from Botswana University, why, because we’re doing a study in Botswana University, that is funded Grand Challenges Canada and Gates Foundation. And here we took 147 prospectively collected stools from children that are hospitalized with acute gastroenteritis. We froze them and shipped them to Canada, it took a lot of paper work to do that. And we extracted the nucleic acid with this protocol that we just developed, the SLS QIAGEN System. And then we tested an aliquot of the extracted nucleic acid. And this time we didn’t tested in our gastro panel. We tested it in the xTAG GPP Assay which Luminex’s develop that detects nine bacteria, three viruses and three parasites. We thought this would be a better challenge for these samples rather than just testing for two or three targets, now we’re testing for nine targets.

Okay. So what did the results look like? Well, the important thing here is that only one out of 147 samples were inhibitory. So again, our extraction protocol is successfully removing inhibitors. This compared to our historic rate that we have been testing for the C. difficile test on stools of Hamilton within an inhibition rate of about 15%.

We did a little comparison because we didn’t really know whether was the SLS solution alone or it was QIAsymphony that is better than easyMAG. So we did a very direct comparison of SLS plus easyMAG to SLS plus QIAsymphony. And it looks like the QIAsymphony is a little bit better than the easyMAG for extracting when we use SLS in both systems, all right. So there’s a contribution of the SLS solution and a contribution of the QIAsymphony SP for extraction.

Okay. Workflow analysis. I was asked to put something in about workflow analysis in this talk that you give you yesterday this is a shorter version of yesterday’s talk. So in my service lab we do a number of different PCR assays, C. difficile, respiratory viruses, cytomegalovirus etcetera and we do a number of different runs throughout the day and we have an number of different samples as you can imagine samples coming out one, samples coming out throughout the day.

So what Sylvia in my lab did to draw up one of on the scenarios that might happen in our lab, where sample come in and get set up at different time points during the day. They get purified and then they get setup and amplify. So in this particular sample, we can get clinical results of 144 samples, starting at 9.30 in the morning when my research staff starts, the service lab staff starts, starts at 8’o clock in the morning, where we can generate a 144 results from four different PCR assays in the course of just over one working day, eight hour shift. So that’s one scenario.

The second scenario would be six different PCR runs, again on a 144 specimens, spread out across today, this time with smaller batches coming in, being processed 24 at a time and finishing at about 8’o clock. But the interesting thing here is the QIAsymphony has been used in this scenario in place of the three easyMAG extractors that we have.

The disadvantage of the easyMAG extractors is the technologist has to be present during the license step, when you are license the sample on the instrument and the technologist has to be present at the end to take the beads out of the cartridge. So the QIAsymphony is a letter better with a little less hands on time for the technologist.

And then just another scenario for you, in the research lab, we often have a large number of samples that I throw at Sylvia and say, test these and I want to results today. So we can actually do a 120 samples and get a single PCR results by the end her working day at 6’o clock by setting up different numbers and extracting them at different stages throughout the day. So that’s just a slightly different scenario in the service line or in the research lab.

So in summary, I have eight points. The QIAsymphony RGQ platform is readily amendable through running lab develop test as I’ve indicated with examples that I’ve shown you. Those examples include an influenza subtyping assay and Enteric virus Multiplex PCR for four viruses, and two different Multiplex PCR’s for seven different respiratory viruses, all run on the RGQ and Rotor-Gene. All of the Multiplex assays had excellent sensitivities and specificities.

We’ve developed an extraction protocol for stool samples using this SLS solution and the QIAsymphony SP which removes the amplification inhibitors from over 99% of samples and we feel this is important. The SLS, QIAsymphony SP was better than the easyMAG for removing inhibitors. There were fewer inhibitory stools and the crossing points were lower indicating more efficient extraction of nucleic acids better quantitative recovery of the nucleic acid.

The stool extraction protocol has been validated as I’ve indicated in three different studies, one retrospective and two prospective studies involving over 200 samples. And the workflow analysis indicate that results for 24 specimens, I didn’t actually show this can be generated in about five hours or less, using the RGQ platform and we can generate results for 144 specimens using four, five or six different PCR assays in four to five or six different runs throughout the day and that data can be generated in about 11 hours.

So if you have a lab that has shift work you can carry it over into the second shift and you can generate a significant amount of results in one day. Of course you could buy two QIAsymphony’s and double that too, so all right. So thank you for your attention.

John Gilardi, Vice President, Corporate Communications

Okay. So we are now going to move to the Q&A session. And I’ll let these people from back to (inaudible) come over and stand upfront. And then Alf Lori, Ellen, you’re supposed to upfront, Al and Roland. And so Alf Lori is going to be walking around with microphone and why don’t you – who wants to ask the first question? Nandita?

Question-and-Answer Session

Unidentified Analyst

Peer, could you talk about the typical development cost of a companion diagnostic assay, what are the development costs? And then how some of those contracts are structured with pharma partners? You said it’s a cost-plus arrangement, so does QIAGEN take on any risk in that development financially?

And then just, as a follow-up to that. In the market today the FDA hasn’t really come down as strongly against lab-developed tests for companion diagnostics and the commercialization for some FDA development tests – FDA-approved tests has been a little bit slower. So how are you thinking about the potential for your KRAS assays next year for instance?

Peer Schatz

Okay. So the first part of the question is, do we take on development or do we take on financial risk in the development of a companion diagnostic assay. There I would say the answer is clearly yes, but the answer might be a little bit different than you might immediately think.

The real goal for us is to generate revenues from these kits going forward. So frankly the revenue that we generate in the development phase through the compensation of development activities that we undergo is really not the goal that we have. We have so many projects that we have to be selective what we do. And, so for us, there is an issue if a pharma partner for whatever reasons has to or decides to discontinue a program, we take on that attrition risk, that the revenues that we generate post-launch do not occur. That is the financial risk that we take on.

So, if the development costs or time period is three years or so for a program like that, the risk is not in the compensation of that upfront development cost. The risk is in the downstream loss, so they are potential revenue driver in having allocated valuable and scarce resources to a development program that could have otherwise been developed – allocated to something else.

Second question is on the uptake of companion diagnostics following an FDA approval, I would say, we have to simply give this a little bit more time. The first companion diagnostic, molecular companion diagnostics are just coming to the market right now, some for narrow indications. And one of the benefits that we have is that, we provide a platform approach with a very, very deep list of assays that are being ported onto that platform.

So, what we want to do for our pathology customers, is to ensure that when they go through the expense of buying a platform from us, they can amortize it across many different assays and don’t have to amortize it across one assay where they are suddenly stuck with let’s say $100,000 upfront investment cost for a new platform and can only amortize it across one assay. We will be able to provide them a broad suite of assays with which they can then amortize the system.

So I think the early uptake of FDA approved test is not indicative of where the trend will go in the future. The FDA has been very clear that in specifically high risk test and specifically also companion diagnostic test should be regulated by the FDA and they are currently trying to find the right process to take this forward.

James Mahony

Anything we do here is extremely sensitive, because there is a big and valuable LDT market. Our customers in all the labs in the world that are doing LDT’s are providing us huge value to healthcare overall. So you have to watch out, how you deal with this certain transition into a approve product era.

Peer Schatz

Okay. Next question will come here with Dave Clair and then we will go to Quintin next.

Unidentified Analyst

So is there any way to quantify what instrument growth would have been if you were to sold all the instruments so no reagent rentals?

Peer Schatz

Roland do you want to?

Roland Sackers

Yeah. What we actually see is that specially now with once QIAsymphony in the U.S. early this year is actually a significantly opportunity in the so-called reagent rentals model. If you look back once you know that probably more than – actually more like 95% of our revenues in instrumentation plus sales that has changed with the launch of QIAsymphony in Europe couple of years ago and now QIAsymphony in U.S. it accelerated.

So it is quite now roughly half and half and it’s clearly something what as – as laid out earlier has advantages and of course short-term disadvantages. The disadvantage is clearly that you are missing upfront revenue recognition for the instrument. So the advantage of course is all of the lifestyle is actually the more profitable deal and of course, typically also leads into another – as a extension or placements once we’re ready whoever comes first and its lifetime. So overall, we’re actually quite happy with the number of placement and as I said right now it’s roughly half-half.

Peer Schatz

Okay. Next question, Quintin.

Unidentified Analyst

Thank you. A couple of questions. First for Dr. Mahony. I attended your session yesterday. Did you said that you started with the QIAsymphony in June and all of this work is done in June and then have you expanded the program from your – just original QIAsymphony RGQ?

James Mahony

Yes.

Peer Schatz

Please use the hand mic.

James Mahony

Yes. We just got the system in June and we developed. These assays were in-house and developed for other machines, other instruments. I mean we have nine thermal cyclers. We got the Rotor-Gene 1 a Corbett instrument and (inaudible). So we have a lot of experience in a lot of instrument.

So, we’ve got a good set of primers in the lab. I mean that’s where most of the work comes as you can appreciate this, finding your target to amplify and designing a primers and once you got those done, you can put it on a very flexible platform like this one and you can build the test very, very quickly, all right.

So these are primers and probes that we might have used on other instruments that we’ve adapted to this instrument, this platform and shown that they actually work on this platform and they’ve worked very well with equal sensitive and specificity to another platform that we might have looked at in the past. All right, does that answer your question?

Unidentified Analyst

And then, so do you just have one QIAsymphony RGQ or –

James Mahony

Yeah, just one.

Unidentified Analyst

Okay.

James Mahony

But we have four rumsey’s.

Unidentified Analyst

Okay. I see. And then, for you Peer you talked a little bit about your M&A strategy and capital deployment. So are we to interrupt that that you feel like that you have the pieces in place and now it’s just going to be niche M&A going forward? And then the capital deployment on a go-forward basis is going to be maybe toward the share repurchase side?

Peer Schatz

Quintin, I wouldn’t want to say definitively either or right now. I think the – it solves the question of the opportunities on the M&A side that emerge. But our primary M&A target right now is basically two fold one content, I’d say two content, three content. It’s really about putting more apps on our platforms that thereby increase the utility for our customers.

The second area could be regional exquisite but if you look at both of these things together, these are not huge transactions, I’d say QuantiFERON with a $300 million ticket was really exceptional. How many pure play – pure content companies out there – are there out there with $50 million to $60 million sales with high run rates. So we were lucky to find that. I think the nice profile of a target is for instance Ipsogen, which a very well laid out product portfolio running on our systems, super easy to port over to our platforms.

And I’d like to pick on – pick up on that what Dr. Mahony said before. We designed the QIAsymphony to make the quotation of assays on to the QIAsymphony very easy and to build a home for multiple LDTs to be run alongside commercial assays. If you go down to the pathology universe, you’ll see that I don’t know, but probably I’d say 70% of the menu is actually laboratory developed. Okay.

So I know we’re very often from the investment perspective look at, where our interesting diagnostic company supplying into that. But by far the majority is laboratory developed. That makes it very difficult to grasp, understand that, but think of that, if you can provide a home for all of these LDT’s, for pathology or also for virology areas with lower volume assays, it’s a huge value and that’s what we try to create. And that’s what we can create for M&A target as well.

Peer Schatz

In the back we have Dan, and then we will go to Evan and Jeff.

Unidentified Analyst

Thanks. Peer, you mentioned managing a broad pipeline is one of your key headwinds can you elaborate on that and also how you plan to address it?

Peer Schatz

The development of systems, which include instrument, software and assays, consumables for the system’s, is extremely complex in the phase running up to the launches and then expanding the menu. So right now we have a significant investment in development organization around the world who are developing assays for these platforms. So this is a significant focus that we have right now and there is obviously it’s a lengthy process especially in United States with the clinical trials and the regulatory process in general.

And that if you run multiple sites we have a large team in Manchester, we have a team in Germany, we have a team in Maryland, and we have a team in Shenzhen, and a team in Singapore, and they are developing assays all for individual categories for their systems. So it’s a geographically distributed effort that you have to have for various reasons, but that requires lot of coordination and maybe I refer you to Dr. Sheets who is running one of the development units here in Maryland.

Ellen Sheets

Sure. Peer. Does it sound – okay, I think in terms of thinking through the structure of putting assays together is to start with the foundation that allows you to have a global reach. So when we put these assays together and look at according in assays from Ipsogen or other places just to make sure that they not only fit with the platforms that we’re targeting, but also fit with the regulatory structure as we go forward. So I think that’s complexity in the headwinds that you see is making sure as you go forward with an assay development process worldwide as you coordinated across that period of time and that scope. Does that answer your question or...?

Unidentified Analyst

I guess I am wondering if it specific bottleneck in the process and some bottleneck (inaudible)?

Ellen Sheets

Yeah, the biggest risk is communication to make sure you’ve site – actually understand and you move cross in a regulated fashion with a great quality system, so that when you do these things bring the menu coordinate them very quickly, and that’s the strength that I think we – that we have in terms of internally developing this process.

Peer Schatz

If I may add to that. A very good output in this industry is two to three assays a year. And if you look at the output we’re trying to put forward over the next few years it is quite a tasks. That’s why internally this is something that we’re very focused on and, which is a heavy burden in terms of resources.

Ellen Sheets

And again the accomplishment this year, the three submissions in the U.S. You remember today it was the first time that we talked about the influenza submission in the United States as a regulatory submission that was also completed then recently too, so we’ve done three this year. I think next for Evan and Jeff.

Unidentified Analyst

As you expand the menu looking out next year and the year after, how do you look at expanding margins with the incremental headwinds of sales and marketing cost in regulatory for all these submissions in clinical trials, what are some of the levers that you can pull on the other side to reduce it?

Peer Schatz

The increasing volume would allow us to amortize – basically spread cost of an individual assay over a larger revenue base, so that’s what I showed with this one curve that moves up or if the life cycle curve of the development process, you’ll see especially in the early phase as you very often have a negative impact of this. We’re actually doing quite well in terms of the net impact of the QIAsymphony launch, but going forward you enter into phase where you have an increasing installed base of systems and an increasing menu, and the two together create these very high growth rates that you sometime see with instruments that have been out five to seven years. The danger is that these – there you have to start thinking about the next generation in that phase.

But if you do that, you can create an extremely profitable phase of five, seven years, during which the instrument base gradually expands and you have exponential growth through the expanding menu on that installed base. And so that does not necessarily create a headwind, that actually creates a reducing, because if you put out two to three five assays a year, that is a fixed cost on a increasing revenue base. So it will become a – it’s less of a headwind than it is currently.

Unidentified Analyst

Some of the submissions you had this year, as those roll off the submissions next year, will kind of pick up that incremental cost is what you’re saying. I know that the inflection point maybe not in a very near-term but more of the medium term as they gain volume?

James Mahony

The inflection point on the top line, you would see as probably sometime in the range of the next 12 to 18 months.

Peer Schatz

Roland do you want to add something.

Roland Sackers

Yes, and of course just in general as passive (inaudible) R&D side, we clearly have a significant advantage as we do have pharma partners clearly, helping us on the development side buyer. Paying a significant part of our development costs and more important on the SG&A side, we clearly see a significant leverage opportunities.

So we are quite focus on the EBIT target, Peer has said before, of 31% by end of 2013 on an adjusted basis. Especially, SG&A is an area where we expect significant leverage not only over 2012 but also going forward. We’re having clearly significant sales and marketing force also. And if we add more menu to our machines, we don’t have to add here left and right new people.

Unidentified Analyst

Peer, on – so let’s just talk a little bit about the large market opportunity being only 3% to 5% penetrated. Can you talk about it on a geographic basis, where that’s different, some that are more, I’m sure, some that are less and what are less is from the geographies you’ve adapted faster?

Peer Schatz

It’s a good question. It’s – I’d say there are certain regions where the product is in the process of being adopted in general and there is certain regions where we’re looking at further additions to the potential target populations. So from the United States there is reimbursement for – with a number of different reimbursement codes for the different subclasses of patients. And we’re just adding more of those going forward, as more and more drugs are coming out that require this type of testing.

So this is just a plus as you saw from the movie, a lot of people haven’t even heard about this yet. So now through the fact that we actually have preventive HPV testing, preventive TB testing in combination, we actually have a very nice package to bring forward to hospitals and to healthcare markets. Do you want to add to that Helge?

Helge Lubenow

There’s – is that all. There is certainly a differentiated marketing strategy as for celestus catering to different regulatory environments. For example the majority of the sales in the U.S. would come from healthcare worker testing, which is very established. It’s mandatory and thus, you know, a stable foundation for our business. That is less so established in Europe. That’s an active target for our market development. At this point in time Europe really more focuses on testing in the context of transplant testing, for example are rheumatology and so we have different audiences. But as you say there is learning’s and we are certainly transferring them to other regions.

Then there is some really some untapped potential as well, as for example migrant worker testing, specifically like into the Arabic world or Asia Pacific, which we really haven’t tapped into at this point in time. And that comes through that mind map which Peer was point out with all of the target audiences. We are really in selected years. We already have a reasonably high penetration, that’s far from being rolled out globally.

Unidentified Analyst

Great. And then also as we think about the QIAsymphony and the opportunity there among lab full of test before the broad FDA menu becomes available becomes available. How do we – how should we think about cannibalization i.e. how much of the sample preparations that you are currently pulling through are loss sales or sales that you would have had without the instrument? And how much is a de novo added revenue? Thanks.

Roland Sackers

As you know from the – also from the slide I showed here in the area of sample preparation in diagnostics our market share is equally very high. It’s difficult to say where it is per application, you know, it might be anywhere from 50 to 70% depends on the application. It was very, very high. And so there is certainly a type of cannibalization there but that revenue portion is actually quite insignificant. If you look at the cost of an overall assay, the sample preparation is $5, $3, $5, $7 depending on the application of the assay can be $25. So the real value is if you can consolidate the assays on to the platform, you create a much higher share of the overall value then just selling modules on the sample preparation of the reagents by itself.

So the LDT portfolio is actually it’s a three digit million dollar business for us. So we’re let’s say, one of the biggest suppliers to the LDT universe, but this is a very, very important market for us because it is also something we can combine with the commercial assays and make it – as you saw here increase the productivity for laboratory combining multiple different types of assays on one platform.

Peer Schatz

We’ve time for one more questions, two more questions. We’ll take three real quick.

Unidentified Analyst

Three or four, make it four. Question for Dr. Mahony, you said the SLS clearly contributed in the extraction benefit, over moving inhibitors, I think I heard you say that the SPA appear to have a small benefit over easyMAG, are you able to quantify how you’re going to benefit with this?

James Mahony

No. We haven’t – the numbers are pretty small. That was a subset of the total that I showed. So I really don’t know that. I won’t lie you. I don’t know that, but we do see an improvement certainly if you look at the crossing threshold you’re getting more nucleic acid out is amplifying coming up quicker. So it’s probably a combination of both and that’s really I like to say at this point.

Unidentified Analyst

And a quick one for Peer. You talked QIAensemble milestones in ‘12 is being part of the driving platform success, can you explain a little bit about what some of those milestones would be?

Peer Schatz

If I could add to the first question actually in virology, the beamer platform is a very tough competitor. They had a platform which they rolled out very nicely in the virology sub-segment, which is where Dr. Mahony is putting out lot of his efforts. And so, this type of an analysis to have an improvement over the system and quality, but a significant improvement in workflow is actually for us a very positive achievement.

And the second question is on the workflow over the next 12 months in the QIAsymphony platform we have some major new software additions, that might sound like something quite simple, but it is unleashing a number of big benefits to the QIAsymphony platform, which is coming out early in the first quarter, I think of next year, for second quarter where we have a number new features for the QIAsymphony that will be available for our customers.

The other benefit that we have coming forward is on the – now with the decapping and aliquoting systems, the front end to our screening for women’s health samples, the ability to take liquid cytology valves uncap them, aliquot them into plates that can be processed in an automated format. That’s a big advantage, nobody else has anything like this in the market and is a differentiator for everybody who is interested in creating a seamless workflow in particular HPV screening.

Those are – then we have a number of benefits coming forward in the first and second quarter in terms of the DNA purification steps on the screening side that more process a number of different types of liquid cytology media in the new format and these will be advanced in Europe. In U.S. this has planned to come forward as well with these products.

The benefit there is that we’re creating a full workflow through all work steps from the sample through to the readout and also here we’ll create an – previously not possible degree of automation for the Hybrid Capture 2 assay. Those are I think the major developments that we have, right. There is new software for the Rotor-Gene system, which is a further step up in the clinical utility positioning. And also for our usage with some of the novel diagnostics that we have coming forward that is to a certain degree also regulatory requirement.

Unidentified Analyst

And also on tissue protocols would be important for symphony next year too.

James Mahony

Absolutely. So the symphony system stool protocol is here you heard one being developed. Actually this is actually type of flexibility that we wanted to build into the system. So you can even develop your own protocols on this platform on the front-end side. But we will have a stool protocol that will be available also going forward, new FFPE protocols to process formalin-fixed, paraffin-embedded tissue, which was the sample of choice of many of the customers going to this type of a trade show. And that will bring the protocols in the symphony are going into the dozens in the mean time. And there are over 200 protocols in the QIA2, just to tell you how many different types of extraction challenges there are and that is being replicated in the QIAsymphony.

Peer Schatz

Okay. We want to go quick, one last question and we got to take break we will pick up in the second one session, last one for this session.

James Mahony

Okay.

Unidentified Analyst

Shall I go first.

Peer Schatz

Okay. Last question.

Unidentified Analyst

The slide on 15 years of development and five to seven years of fast growth, I mean that’s seems to be the key from 2013 onwards, but there is a, I think there is a big assumption there that the next generation is going to happen within QIAGEN only and it’s going to happen seven years later only. What are the chances that it happens outside QIAGEN, are you looking outside, are you – do you run a risk on that one?

Peer Schatz

Very valid question. I think there are two answers to that. First of all, the diagnostic markets move very slowly, right. So we are talking about real time PCR testing and the patent just expired. So this is a market that doesn’t, that adopts quickly in certain niches but it takes a long time for it to go to mainstream so it moves very-very slowly typically.

At the same time, we are very, very open to other technologies as well, and we are looking at multiple different options already today for the next generation platforms that we will start developing in a few years. But the important phase now if you are talking about focus is rolling out the system as aggressively as possible, placing as much content on it as possible and making this the system of choice for the medium throughput world, be it in pathology, be it in microbiology, be it in virology, be it in applied testing or in the pharmaceutical research, this should be de-go-to system for medium throughput random access, continuous load processing. And if we achieve that it’s such a vast opportunity for the next few years and for many years to come.

Unidentified Analyst

Okay. Thanks.

John Gilardi

With that, I’d like to close the first part of our program. We’re going to take a 15 minute break now. We’re going to cut it a little bit short and we’re going to start again at 10 minutes after 3, so at 3:10 we’ll start off with a deep dive on Personalized Healthcare. Thank you very much.

(Break)

John Gilardi

Thank you for coming back and especially the people online. We are going to start it now with the second part of our program. We are going to have two speakers like I discussed earlier. First will be Dr. Stephen Little, who is the Vice President of Personalized Healthcare. He’s going to be giving you an overview as for activities in this area and then we’re going to have Dr. Veena Singh from bioTheranostics as the second speaker giving some customer perspectives. Then we are going to have some time for short Q&A session and we’ll be ending promptly at 4.00 PM and then moving on to the booth tours.

So I’d like to hand over to Steve Little. Thanks.

Stephen Little

My name is Steve Little. I’m responsible for Personalized Healthcare. Certainly, during the presentations this afternoon from Peer and Helge, we heard about Personalized Healthcare. It’s an area that’s important to us and it’s also an area that’s great interest within the community, if you wanted to go a Personalized Healthcare conference you can go to one every week. That’s how much coverage there is.

I think it’s an area that causes a little bit of confusion, what it is? More at the point, how do make some money out of it? So, I’ll talk a little bit about our overall strategy for Personalized Healthcare. And how we are tackling it at QIAGEN?

Going to see four things, really. The first thing is, with Personalized Healthcare. It really does seem to be something that’s good for everybody. It’s kind of better healthcare for less money. So it’s a very attractive proposition. This is the important change over the last two or three years.

The pharmaceutical industry has embraced the transformation and that certainly wasn’t the case about 10 years ago and that’s had some real implications for us as a diagnostics business. And we’ve ceased this. We are the clear leader in co-development projects with drug companies and it’s really how it’s clearly the fast growing and we believe a very sustainable business.

So people have different definitions of Personalized Healthcare. Some of them are very broad, somewhat wily. Ours is quite narrow. These are the companion diagnostic to predict in advance which patients are most likely to benefit from a particular therapy.

And I’m sure many of you have seen a schematic a little bit like this before, so in the past we would just take the patients. We wouldn’t test them. It would be a trial-and-error approach and the efficacy of the drug would be low in the population. By using a diagnostic we can find likely responders, we get better treatment outcomes, and more efficient spending. So it’s a very simple concept, really just select patients who were likely to benefit from these therapies.

And if we look around the stakeholders involved in this, the patients, the physicians, drug companies, healthcare providers, payors, as well the – and providers of diagnostics like ourselves, everyone seems to benefit, to some extent patients get better medicine. We get new more opportunities, payors get cost savings, pharma companies can create value for their products. So with all these benefits, why is it taking such a long time before this, this concept has actually been around for a quite a long time becomes reality.

Well, here’s the challenge for most diagnostics that you want to develop, it’s really the diagnostic company to make that happen, but for companion diagnostics it’s an association between a drug and the diagnostics. So clearly you have to get the drug in there somewhere. And without the involvement or the engagement of the pharmaceutical industry that’s actually a pretty tricky thing for any diagnostic company to pull off.

So here’s the chain that we’ve noticed pharma embracing the transformation. This is the environment that pharmas were working in. Healthcare costs, there’s a real push. I mean, it’s nothing new, but it’s got worst. Healthcare finance is finite. There’s a lot of money wasted on an effective treatments, that’s encouraging drug companies to think about, not just showing that their drugs are effective, but that their drugs are cost effective. Those really changes in both technology in terms of what we can measure and science in terms of what we might think about measuring that was kicked off with the human genome projects. It’s taken a few years to get here, but that was the initiation of that and there is always a demand from patients, physicians and peers for better, safer medicines and drug companies are looking for ways that they can differentiate their medicines against the competition to achieve that.

So filers responded to that and what we’ve seen is that the drug industries really start to embrace personalized medicine. There is graph on the left that shows the proportion of clinical trials, all clinical trials, not just oncology trials that included biomarkers. You can see that even in Phase 3, 35% are using biomarkers in the trials.

So there is a number of influences on the Pharma. First of all, and really this may be the most important one, the influence of the regulators. Regulators, FDA of EMEA they’ve always been quite strong supporters of personalized healthcare, but they are really tied to now exit a bit more regulatory influence and really encourage drug companies to think about how they are going to top of their medicine. And if as a drug company you are told well without a diagnostic, you are not brining your drug to market, that would really focus your mind and encourage you to do that.

It helps in terms of reimbursement. You got a better argument for the peers in terms of cost effectiveness, increases the competitiveness of products and the other one is a better chance of success. There are quite a few drugs that would have just failed totally in their Phase 3 trials without some sort of stratification, but with a carefully targeted approach to the right patients the drug works, so that’s – it could be a more likely to get a drug on the market.

One of the objections that’s been heard over and over and over again over the years was, well isn’t the drug industry just cutting down its market? Why would it even do that? And this arguments while that isn’t the case, but here is some, some evidence. So here is four drugs have been targeted.

Vectibix from Amgen, the biomarker was KRAS. It takes out 40% of the population and leave 60% of the population. Herceptin goes down to 20% of the population. Iressa which is targeted using EGFR mutations looks at 15% population and the drug that was launched by Pfizer just a few weeks ago Xalkori uses the ALK biomarker which is present in 5% of lung cancer. So really what we can say is that, pharma is prepared to go very low in terms of the proportion of a population that it’s prepared to target a therapy to and these drugs they seem to be very successful.

So I think that fear of biomarkers and the fear of diagnostics is gone out of the pharmaceutical industry. So 80% of drug companies working on personalized medicines. Up to 50% of current clinical development projects involve personalized medicines and this a call from Tuffs, within five to 10 years, all new oncology drugs will have a companion diagnostic. And for us what that’s done it’s creating a market for companion diagnostics which is worth if thought to be round about $1.5 billion in 2015.

So given the drug industry is interested in having a companion diagnostic that then creates an opportunity. It creates an opportunity for company like QIAGEN to partner with Pharma, to co-develop diagnostics and bring those companion diagnostic products to market. So our strategy then in Personalized Healthcare is twofold. First of all, we looked to perform strong partnerships with drug companies and work with them to co-develop the products. Then subsequently we launched those products and sell it to our ordinary customers, the labs around the world who will actually buy them and use them in their clinical services and here is the benefits of this approach.

The first one is that pharma – if we can persuade the pharmaceutical industry to pay for the companion – for the development of companion diagnostics and we’ll run that business at a margin as well. So typically round about 50% is the margin we’ll get on the cost of development. So it’s quite unusual situation for a diagnostic company to be actually paid to develop its own products.

The second one is probably the most important. It solves the clinical utility issue. The biggest single problem in terms of bringing companion diagnostics to market in terms of bringing of any diagnostic to market is to show that it actually means something that the information that you have actually generates useful clinical data.

To do the sorts of randomized perspective, clinical trials that you need to show a companion diagnostic works is really hugely expensive, it would be if you try to do it yourself. But by partnering with the pharmaceutical industry we can take the same Phase III trial that’s used to show that the drug works and as long as it’s got our diagnostic in it, it also shows that the diagnostic works. So we get two products for the price of one effectively. It’s a very cost effective way of making things happen.

And then the drug success guarantees that companion diagnostic market, unique content, encourages platform uptakes. So going back to what we talked about earlier on it’s a way of creating menu for our platform, in fact, unique menu for the platform. We get the chance to co-market with pharma. We can align our sales forces to better penetrate the market and also because often the pharmaceutical industry tends to hunt in packs, and if one company is targeting a pathway, several companies are likely to be targeting the same pathway. We get the chance to develop once and sell a biomarker program more than one times. So, it’s a very nice business model for us.

And then, of course, we have a number of benefits in terms of our global presence, our automation platform, our technology, our regulatory experience, which is very helpful to pharma. So, that’s our strategy in terms of personalized healthcare, the pharma partnership approach.

But, if you think what we are as a business now, it kind of complicates things a little bit, because here we as QIAGEN, and now we have two sets of customers that we have to keep happy. So, on this slide, we have the pharmaceutical companies and they have all their requirements, which I have listed down here.

But then with regards to product, we have to keep the laboratories happy and they’ve got a slightly different set of requirement. So, if we look at the sort of things that the drug companies and the diagnostic labs are looking for, so the drug industry for example, wants to work with a company that’s got a global presence, because it wants to sell its drug in many markets around the world, so the partner has got to have the capability to get to many markets around the world, and of course QIAGEN has that. That isn’t so important for an individual lab. They don’t care whether we sell in China not as long as we can sell in America.

Automated lab solutions is most important for the laboratory, they want a convenient and practical system. Both labs and pharma need us to have reliable manufacturing. Pharmaceutical industry, in particular, requires that we have very strong and deep regulatory strength. That’s really what they are paying for in the first instance. The labs are interested in a very broad test menu, not so much the pharma.

The pharma companies wanted to be – want us to be independent. What I mean by that is that, probably our two biggest competitors in this field Roche and Abbott are not just diagnostic companies, they’re also pharmaceutical companies. So, you could image that could create some sort of conflict, if the diagnostic was been built to launch a drug, which was going to compete with the drug that the first company already have.

So independence is a feature that QIAGEN has. It’s not important to the labs. It’s important to Pharma. And then finally intellectual property how many licenses is important to both build place.

So in terms of how do we achieve that as a global presence, we are worldwide direct operations in 30 countries. We’ve already talked about the QIAsymphony in Rotor-Gene RGQ is our automated platform. We have specialized cGMP manufacturing facilities that’s in Manchester in the U.K.

As regard to our regulator expertise, I think – I don’t know this, but I would be very surprise if our – we’ve had a regulatory Manchester, Chris Breed has had more meeting with the FDA on companion diagnostics and I think anybody else in the world, he is there on a fairly regular basis. So we have a lot of expertise there. We have broad test menu and that’s expanding. We’re not a drug company. So there is a no conflict. And our strategy on intellectual property is to always respected and takes gene licenses wherever and whenever we can.

And on the basis of that we’ve been able to bring in a number of deals. These are some of the ones that we’ve announced Amgen, Pfizer, AstraZeneca, Boehringer, Lilly – BMS Lilly, ImClone and then some other ones that we haven’t talked about. Most of them I mean oncology, but we are seeing a move out of oncology in two other ways. And I’m going to say a little bit about that just in a second.

So to give you an example of how we grew in the business, we recently acquired Ipsogen this give us access to the JAK2 test and the JAK2 IP. Very shortly after that, we announced that we signed to deal with Lilly, who requires JAK2 mutation as if JAK2 drug that they had in development. So that was a very attractive and very straight forward process flows, but of course, Lilly aren’t the only people with the JAK2s in development, here are some other companies that have got other drugs that target the JAK2 mutation in development, so plenty of more opportunities, for us to build on the early success with Lilly.

In terms of where we’re going next, I think oncology is clearly the leader here for personalized healthcare. And as we’ve said, we believe that all oncology drugs will have companion diagnostics in the years to come.

And obvious, I think this is a McKinsey chart, they’ve tried to – I think where they might – will indicate where they think the next – excuse me, set of areas for personalized medicine will go. Certainly in terms of autoimmune that fits very well with what we’re observing in the marketplace that is where we are seeing some interest. And we’ve also got interest over here in CNS and Antipsychotics as an emerging area for us.

Excuse me, I’ve got a terrible cold, I wouldn’t come close to me, if I was you.

So, what with the promise of personalized medicine, the way the pharma is embracing the transformation, our partnerships we believe we’re creating a fast growing and a sustainable business.

This is the companion diagnostic roadmap. We split it into three sections. First of all, it’s necessary to identify what biomarkers with a drug company is going to use in terms of targeting its therapies. QIAGEN is not a biomarker discovery company, but through our research, reagents and products and also through assay bio we provide tools to drug companies to help them identify biomarkers.

Second stage, working with those two co-development drug in the diagnostic, and then the third stage to sell the diagnostic and to sell the therapies.

And we’re really doing this not just in Europe, America is a very important market for us and really the FDA, and the standards that the FDA set on the companion diagnostics is driving the regulatory agenda, but taking this out around the world is the overall strategy.

So in terms of creating a sustainable business, we start off with co-development projects. We can run many of these. They pay for themselves. And what they do, they allow us to get to the next stage which is to have products which with – were tightly linked to particular therapies.

We have automated solutions, so for our laboratory customers the products are very attractive. We have market exclusivity either in terms of IP or regulatory exclusivity. It will be the only approved KRAS test on the market next year. And we’re taken this out, not just in the U.S., but then taking it out around the world.

So to conclude then, we – the biomarker data is transforming the medical marketplace and it’s not just in oncology, we’re seeing it moving pass there. There really are proven benefits for all the stakeholders, its ending trial-and-error treatments. It’s more effective healthcare spending and it leads to faster regulatory approvals. And within this space, within the former partnership world in companion diagnostics, within molecular diagnostics, obviously, QIAGEN really is the dominant market leader in meeting lab and pharma customers needs.

We believe we’re the partner of choice for co-development project. And we’re expanding our global presence. So I think the strategy is well thought through. I think it holds together. And I think we’re executing on it very well so far. So I think as long as we can continue to do that, this is going to be a long-term and a sustainable business for QIAGEN. Thanks very much.

Veena Singh

Good afternoon, everyone. I am Dr. Singh. I am the Laboratory Medical Director of bioTheranostics here at Oncology Reference Lab located in San Diego, California. And I am here to give a perspective as a client of QIAGEN Diagnostic Lab Director, who currently uses a number of QIAGEN’s both EGFR, as well as KRAS kits. This is going to give you a overview of – general broad overview of personalized medicine with emphasis on the diagnostic lab perspective, as well as the regulatory issues surrounding diagnostic test from a laboratory standpoint.

Briefly in this field of oncology as we’re all aware of the past two years and coming years have provided rapid emerging biomarkers, both for predictive and prognostic biomarkers in tumors, basically these markers look at the tumors tissue at cellular molecular level and identify targets that optimize patient outcomes.

So, just you know, continuing the line of one’s shoe doesn’t fit all sizes, one shoe size doesn’t fit all sizes, each patient is different, in the past patients were classified as having either lung cancer or colorectal carcinoma. But now with the advent of specific biomarkers linked to predictive therapeutics agents, there has been ultimately what they are looking at us is that improve patient survival in terms of both overall survival, progression-free survival and time to relapse.

Just a classic example is of course non-small cell lung carcinoma if that the molecular pathogenesis of lung carcinoma has evolved significantly over the past few years. And so much so that lung cancer is basically considered to be different diseases in different patients.

And one of the kits that we commonly use is the EGFR mutation analysis kit and this is actually part of the National Comprehensive Center Guidelines and every patient has non-small cell lung carcinoma, adenocarcinoma now as standard of care under the EGFR testing and then there is a diagnostic algorithm. EGFR testing is followed by KRAS for prognosis and then just now a recently approved ALK inhibitors. So we’ll be able to look at EML4-ALK disruption for the LG.

So essentially from – so what does personalized medicine mean to diagnostic laboratory? What it means is we need reliable tests so we can be sure, when we say a patient sample has EGFR mutation or KRAS mutation. The communication that we are putting forth to the clinicians who are ultimately going to be figuring the patient is accurate and this is of course can be accomplishing in two ways.

There are seven tests call lab developed assays or LDTs and then you have tests that fall under the FDA approved categories. Now to develop tests is no mean feat because you have to determine sensitivity, specificity, reproducibility, accuracy for each and every biomarker, which is normally in feet, because many of these mutations are quite rare and many of these tumor samples are very limited, so there is limited amount of testing that we can perform on them. Once mutational status is determined then you can – report it out to your clinician and then the patient will undergo calculative therapy.

Now the perspective from a laboratory standpoint is, in addition to developing test you want to make sure your incompliance with regulatory requirements. Now in the past and it’s still is the fact that most clinical labs are – In United States all clinical labs come under the preview of CLEAR, which is an agency that accredits labs in the United States. CLEAR it’s actually comes under the Department of Health and Human Services and Centers for Medicare & Medicaid.

However the FDA actually can regulate lab develop test, but in the past it has stayed away from regulation of lab developed test sort of a test uses discretion, enforcement discretion to determine whether they are going to regulate LVTs or not. But with the advent of personalize medicine and companion diagnostics, these test are seen as high risk in terms of treat patient outcomes, and in identifying subset of patients who respond to optimized therapy.

So the trend now is for the FDA to start co-labeling drugs with the companion diagnostic, in fact companion diagnostic testing is now part of the FDA package, that’s something that recently we saw with the BRAF-V600E mutation that was – the mutation testing was approved along with the BRAF inhibitor.

So moving forward both from a diagnostic lab standpoint as well as from regulatory and reimbursement issues, FDA approval is definitely a major benefit. And to a diagnostician it gives – FDA approval stamp gives greater confidence when you’re reporting out the results to your clinicians or patients.

And that’s all I had. Thank you very much. Any questions?

John Gilardi

So, we’re going to do our second Q&A session. And with some of the speakers on Personalized Healthcare, we can also bring Helge and Ellen Sheets back. And so we have from Molecular Diagnostics and from Chief Medical Officer, we also have Roland here as well. So I promised first question in the back corner.

Question-and-answer session

Unidentified Analyst

Hi, thank you. I have a companion diagnostics questions that I think touches on test labeling, reimbursement as well as intellectual property. And that is, when I’m at this meeting, I see a bunch of labs, many academic, but many not that are putting out tests that are comprehensive in nature, these panel tests that they say include this large number of variants that have been associated with various forms of cancer. How do you make sure that that you get the business on these companion diagnostic tests given that you are going through the trouble of developing them.

Stephen Little

I think there is probably four elements, but the first is on clinical utility. There is no question that new biomarkers are being distributed all the time, but I think there is big difference between measurement of biomarker and knowing what to do about. So the first thing that we’ve done is by aligning our diagnostic tests with drug company trials, we are absolutely certain that the information that we’re giving is safe and reliable.

The second thing is a regulatory point. We believe that the FDA will start to increase its oversight over what they call high risk tests and companion diagnostics, as Dr. Singh said, certainly in that high risk category.

The third one is, for not all the tests, but the some tests there is an IP issue and often there is a gene license which is required to perform a test. We can make that problem go away by including the gene license as a label license.

And then fourthly, I think we aim to provide very reliable and very competitive products that we have on good platform. So even within the absence of FDA approvals and in the absence of gene licenses we would like to think that we were selling something to customers that they would actually want to buy. So I think all in all we end up with the fairly compelling package.

Peer Schatz

Could I maybe add to that, the clinical utility of a biomarker is underlies the same attrition. You for instance have with drug, the compounds that you start out with are many and you end up maybe with one target molecule. So what is the benefit of having the others? The one that you want to have is the one that is validated so you want to make sure that the information you generate is very, very clearly validated and the more of these targets you have to correlate with each other, the more complexity of bring into everything, the higher the cost of the development of the companion diagnostic.

Stephen Little

Dr. Singh would you like to add a point here.

Veena Singh

Sure. Just to reinforce what Peer has mentioned is, the validation of a clinical test is of utmost important because, as a physician you need to be sure that when you are reporting out a test, the test you’re reporting out has been totally validated in terms of sensitivity, specificity as well as limit of detection. And having an FDA approved stamp definitely adds, and I can tell you that I’ve had clinicians call and ask me if the test has been FDA approved. So just from a practical like a point, clinicians want to have that knowledge before they sell the treatment.

Because think about it, you can potentially be denying a patient treatment, if your test is not able to detect specific mutation or your limit of detection is too high. And if you have 10% LOD, you’re going to do – you’re going to miss mutations that fall below that range like if it’s at 5% or 3%.

So having an FDA approved mark definitely as both from the diagnostic and clinical view is – it just improves your confidence. It improves the confidence you have in the results, because you’re – at the end of the day you’re either going to treat or not treat a patient. It just improves confidence for the patients and their clinicians.

Unidentified Analyst

Maybe just two questions, one on the companion diagnostic and then one quick for Roland. But may be just a little bit following-up on that. I know that the – I guess where are we in terms of some of the laboratory association have wanted to make sure that the FDA, when they approve some of these companion diagnostics, don’t approve it with a specific manufacturers test assigned to it, but instead having it be a more general test.

I guess, one, where are we with respect to that? And then two, doctors seem pretty – I guess as you think laboratories going forward and you talk about the cost effectiveness of doing some of this it’s possible that there could be technologies out there that could give you less than the cost of one of these tests, could give you the answer to a 100 or 200 genes from one run and you could get a lot of these answers and maybe kind of how you are thinking about that going forward from a technology perspective?

Stephen Little

With regard to the first answer, there’s no – that isn’t what happens. The FDA approved a single test with a single trial. In fact, the final version of the test would ideally be used at the beginning of the Phase III trial and it’s a really, tightly controlled process. So there is no possibility whatsoever of the FDA saying, do whatever KRAS test you like. It will be – whichever KRAS test is being proven to work with that therapy.

Now if another manufacturer another diagnostic manufacturer wants to prove it with another KRAS test, that’s absolutely acceptable, but the approval is to the test that the FDA have seen. And its – you need to understand it’s a very exacting process. It takes about 2.5 years, typically costs around $15 million. It involves thousands of samples, hundreds of thousands of PCR runs in a really controlled manufacturing process. So it’s not the sort of thing you can knock up in the back of your lab in the weekend. It’s a pretty detailed activity.

Now, the second question, I think is really – how is the technology going to change? And do we see how is next generation sequencing systems coming along that can offer more testing at a lower cost. I think, we are very cautious about that. We’re not ruling it out at some stage in the future.

But there’s two, you made two points. The first one is one of cost, will we be able to get the same information for less money. And at the moment the costs of the test, and the price of the test aren’t the same thing, so we shouldn’t get confused between the price that we charge for diagnostic and the cost of goods, I mean, they aren’t the same thing.

I am cautious on the idea that you can sequence a whole genome for $1,000. If anyone at the Elumina talk yesterday they can sequence a whole genome, it costs $15,000 and it takes five weeks. So I don’t think that’s a very practical proposition, but that’s a margin that gets better.

Even then you’ve got to see what the information mean, and I think we have to be worried of finding things that we’ve never seen before. As a diagnostic manufacturer, we can’t say to our customer that we’ve never seen this before, so you have a guess at what it is that it means. Because that’s not a diagnostic, that’s a hunch.

So what we are trying to do is we’re trying to be very focused on seeing, well, these things that we measure, we understand what they mean and on these you’re going to need a very accurate clinical decision. That’s the route that we’ve chosen to take. I don’t rule out the possibilities that other things might happen. That’s the way that we are thinking about diagnostics.

Peer Schatz

I think to interject an interesting point before have Helge provide some commentary on branding, how important that will be in addition to the regulatory status for these kits. Do you want to speak a bit about the branding for the companion diagnostics with the therascreen brand?

Helge Lubenow

I mean I think what I’m probably refereeing to what’s more interesting is actually that the commercialization of these assays is a joint approach together with our pharma partners. So whereas they actually have a reach, say, to the oncologist site, to the physicians that are treating the patients and that are getting lab site, we have the reach to the lab site that are actually undertaking the assays.

At this point in time, there is actually not even too much interchange between these two audiences. They are interdependent. There is a feed one of the other, but then at the same time, there is – they have very different needs. One is on the treatment – on the assurance and on the liability side. The other side is really more lab operations, efficiencies and economies. We provide that reach to the labs whereas the pharma partners have the reach to the oncologists and together, I mean, we basically join forces in the promotion and commercialization of the assays.

Unidentified Analyst

And then just one follow up a larger question either Peer or Roland, can you just remind us, did that 31% operating margin target, what kind of organic growth do you need to see, I think you mentioned that volume leverage was a way that you were going to get there?

Roland Sackers

Yeah if I look at the actual content which I see from you guys, I think there is a kind of – you are comfortable with, so we’ll be able to reach out to all – EBIT margin goals for end of 2013. To a larger degree of course as you have seen in the past where we are quite able to have a significant variability in our cost structure. Just look at the year 2011, which clearly on one hand side was a challenging year in terms of revenue growth, nevertheless we were able to keep our EBIT EPS target alive and actually now in the third quarter we are able to upgrade a little bit.

So I think in general, the flexibility we have about costing is a significant asset we have. And as Peer said before we are even going to accelerate on that. We clearly see opportunities for us in terms of leveraging this organization and it is clearly one area of focus for us in terms and combination with (inaudible) to allocate sources to the area where we believe some more significant growth is coming from in 2012 and 2013.

Peer Schatz

Where is the next question, Dan?

Unidentified Analyst

There might be an obvious answer for this, but when you are looking at Companion Diagnostics and you’re already doing a lot with the pharmaceutical companies, why not give the test away and set up a relationship where the Pharma companies are giving you almost a reimbursement as part of the drug that’s factored on the cost of the drug instead?

Peer Schatz

We flow the idea with some drug companies. They don’t like it very much. I think it’s – in a way you’re not wrong. You could come up with an argument for them in that sort of approach. And – but it hasn’t seem to be attractive. The drug companies don’t – have not been interested in forming that sort of partnership. They are much happier with the idea, “they sell drug, we sell the diagnostic”. Not works well for us though. So it’s not that it won’t work, it’s just that we haven’t had any uptick when we’ve talked about alternative business ideas like that.

Stephen Little

And there are some cases in the past where the reimbursement lagged the introduction of the product, where the pharmaceutical company for a certain period of time basically compensated us for the diagnostic, which we placed basically in the market of the early adopter.

But I was always with the goal in mind of basically having a sustainable separated business. I think the best partnerships are always the ones where each partner relies on his or her own strength. And going forward can continue as their business model in the future. So as soon as you have these intertwining complications, it’s just an additional burden. If you can do it under your existing business line it’s always easier and better for everybody.

Roland Sackers

And I guess the example of that is Roche himself who will be BRAF drug and BRAF tested, they don’t give the test away, it’s still separating. So even when it’s an integrated company that doesn’t come in place.

Peer Schatz

Dan, I think you are next and then we’ll take David in front.

Unidentified Analyst

Sure. I have two questions. The first one on the KRAS test you submitted this year. What would be the process and the expected timing on when you can move those tests over to the QIAsymphony for traction?

And then my other question is on this portfolio of test you talked about. Are there any of these we should think of as potential blockbusters or are you thinking of this more as a family of a singles and maybe doubles.

Peer Schatz

In terms of the QIAsymphony strategy, I mean, it’s in the pipeline with the priorities to get the FDA approved test into the marketplace and then bring in the extraction subsequent to that. So it will be probably not next year, probably little bit after.

James Mahony

The reason for that is the trials were underway when DxS and QIAGEN merged. And, luckily, I think DxS, just like Ipsogen, is also an example of a company who was actually using our platform technologies. In this case, the QIAsymphony was not out yet, so they were using the automated version of QIAamp, which is our premier column-based extraction technology, but that porting we’ve done several times and we have the FFP protocols Formal and Fixed Paraffin-Embedded Tissue Protocols on the QIAsymphony system, so you can port them over.

Peer Schatz

With regard to the second question all of these tests can be a blockbuster? I guess a blockbuster is really a function of the numbers of times that the test gets sold and the price of the test. So, in terms of the price, our strategy is to sell these tests within the investment levels. We’re not trying to be – we’re not trying to put them in a volume price, which could thousands of dollars. We’re going to sell them at a price that a lab can buy them and get reimbursed. And part of the thinking there is that we’re in the business of forming long-lasting relationships in many drug companies.

And, clearly, if you took the first test and not like the price in order to buy it, that wouldn’t be seem to be a success. So that kind of sets a window for the price. And in terms of the volume, I think in oncology, we’re always going to limited because of any one type of cancer, there isn’t going to be that many particular patients. So tens of millions of dollars, I guess.

Roland Sackers

I would like to add to that. I know only of – maybe a handful of diagnostics that do more than $100 million in sales in molecular. So you didn’t have the blood virals and HPV and CT/NG. And then it already starts dropping off. So a diagnostics with tens of millions of dollars of sales is big that’s already approaching a major product in diagnostics because what you have on these platforms is the sum of all of these assays and together and that gives you us the whole value proposition. So, well, let’s say a drug company might laugh about a $50 million product that is think of how many molecular diagnostics do more than 50 million and you’re a top 10 product and that’s what we’re really after you.

In terms of the reimbursement, if you look at the price of a product they reimburse me, you typically have a factor of anywhere between two and five that’s the mark-up that they do in multiple. So if you look at the value proposition for the laboratory in these large companion diagnostics, if it’s an expensive product you see that actually you’re getting very good reimbursement on it, making it economically a very attractive test for them to perform.

Unidentified Analyst

Okay.

Peer Schatz

But I think the other thing that we also say is that as we move out of oncology into some of these other areas, other diseases. Already seen with our oncology drug companies are prepared to take a very low strata of the population as long as they get very good efficacy in that strata. So imagine a disease like Alzheimer’s now and we’re still getting a very low strata with the population, but the testing population is so much bigger. So as we move our oncology towards the areas with much more common diseases, yes, we do see potentially bigger diagnostics, but whether that happens or not I think is going to be driven very much by the intervention in the therapy rather than the ability to find biomarkers and diagnostics.

Unidentified Analyst

Okay.

Unidentified Analyst

Yes. So just kind of a general question here for Peer, but so QIAGEN has had a lot of success with sample preparation – reagents, but outside of HPV in the U.S., you’ve had more little bit less success with – on the clinical side. So what has held you back and why should this change going forward?

Peer Schatz

Okay. Well, we are today doing more sales in clinical sample – in clinical LDT supplies, for instance, than we’re doing in HPV testing. I think that’s a number that – this is difficult to grasp, that’s why. But the whole portfolio of products we’re selling into the clinical world, the customers to LDTs, you saw a number of LDT is being mentioned today, that is actually larger than HPV testing.

And there we’re talking to about competition, we heard about one competitor here, I think which is rarely talked about in the public domain, but that – if you look at that LDT space that’s one where we actually have a tremendous position and that is clearly in the clinical. We have some sub segments in the clinical world and transplantation testing in this stage where we have very strong positions or in companion diagnostics.

The reason why we have the timelines as they are, if you remember when we acquired Corbett was in basically late 2008. We are two and half years out and the first products have already come to market. So 2.5 years after we had the detection platform, which is the key element for us to actually go forward with the regulatory approvals, we already have three FDA submissions in and a huge pipeline behind that.

So as I said before on that wave slide, our original wave idea was to have the life science and the HPV elements of prevention pull us through 2012, 2013 with growth in terms of market penetration. And the goal was to then fire the next cylinder after that period and basically create the next wave of growth on top of that critical mass we have by then. So there has not really been a significant change with that plan going forward.

The regulatory process in the States is simply a lot longer. We took some very difficult assays for it cytomegalovirus, KRAS, KRAS, new to the world, cytomegalovirus new to the world, if you are done influenza is easy one or if CT/NG is easy ones to take forward. But we decided to go for some real differentiators as the cornerstone of the product going forward and that’s why they took longer. Longer as overall process than some of the shorter submissions that you could have done.

John Gilardi

Okay. We have time for one last question. Nandita.

Unidentified Analyst

Thanks, John. Peer, could you talk about, at what stage do you get involved with the Pharma company in the drug developing process. How early on is that, because a lot of the stratified drugs that we saw up on your slide were almost more in retrospect or – they sort of came up with it late in the development process.

Peer Schatz

Right.

Unidentified Analyst

So at what – is it getting earlier and earlier when QIAGEN gets engaged and how planned is that process on the drug company side?

Peer Schatz

You are absolutely right. The engagement is coming earlier and earlier, which is something we have always encouraged. Because the earlier we can get in, the easier we can make it for all participants to move very effectively and with lowest risk forward.

What we are actually doing and is – we are hot wiring it with the clinical validation and even discovery phases through our GeneGlobe portal. So there is synchronicity in the panels that we have in the GeneGlobe portal into the companion diagnostic growth. And that continuum allows us to go into early stages of research even be the partner of choice. Therefore, the blast against the clinical sample of many different genes and then move through the attrition of the biomarker into companion diagnostic without changing the platform, that’s completely unique.

And that has led to us actually helping pharma company setting – set up across indication biomarker departments that also go from discovery straight through to post launch companion diagnostic marketing in a seamless array. And so do you want to add to that? Steve?

Stephen Little

One of the things that’s really being quite encouraging to be honest is three or four years ago, when you go to see a drug company, they didn’t really understand the world of diagnostics and they didn’t understand the time scales involved and they didn’t understand what, what a diagnostic actually meant in terms of regulatory process.

Nearly all drug companies now setup something they call a biomarker department, or a translational science department or the diagnostic department. So I think we’ve seen a much bit of awareness within the industry about what it is – that we will have to do and what has led to as much earlier engagement with us as a diagnostic partner, which has been wholly beneficial. Because what the worst thing is when we’re starting a trial next Wednesday, can we have diagnostic by then, it isn’t going to work.

John Gilardi

Okay. I think we’re out of. It’s 4 o’clock now. On behalf of QIAGEN management I’d like to thank you for coming to Dallas to our event and especially those who are watching the webcast. We’ll be now going to stop the program and we’re going to have the booth tours for those of you who would like to go down to the exhibition floor and be able to talk to some of our experts. And again, you’re all welcome to our reception tonight at 7 PM in the old hickory wine bar downstairs, where it’s going to have an informal get-together with management.

So, again thank you very much for coming and we’d look forward to seeing you on our next event.

Peer Schatz

Thank you.

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