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PRESS RELEASES |
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Current | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 Applera Corporation Teleconference April 24, 2008 Management Remarks for Third Quarter Fiscal 2008 Earnings Call Alameda, CA - April 24, 2008 Peter Dworkin As in previous earnings calls, this morning we will discuss both of our businesses separately starting with Applied Biosystems and then moving on to Celera. The Celera portion of the call will begin at 11:45 a.m. Eastern Time. If the Applied Biosystems portion of the call should run beyond 11:45, the Celera portion will follow immediately thereafter. Present today are Tony White, Chief Executive Officer of Applera; Dennis Winger, Chief Financial Officer of Applera; Mark Stevenson, president of Applied Biosystems; and Kathy Ordoñez, president of Celera; and other executives from the Applera operating businesses. During this call, we will be making forward-looking statements about Applera’s businesses. These statements are subject to the risks and uncertainties relating to our businesses and corporate structure that are referred to in the releases issued this morning and in Applera’s filings with the SEC. We also will be discussing historical and forward-looking non-GAAP financial measures for both businesses. These non-GAAP financial measures are not in accordance with or an alternative for, GAAP and may be different from non-GAAP financial measures used by other companies. A reconciliation of GAAP and non-GAAP financials for each business can be found in today’s press release and on the Financial Reports page of the Investor Relations section of the Applied Biosystems website at www.appliedbiosystems.com and Celera website at www.celera.com. Please note that after this call, the text of these prepared remarks will be posted on the Investor Relations section of the Applera web site and on the separate Investor Relations sites of the Applied Biosystems and Celera web sites. First, Tony White and Applied Biosystems President Mark Stevenson will comment on the performance of Applied Biosystems during the quarter. Also on the call today is Bill Craumer, IR Director for Applied Biosystems. Tony White On the expense side we continued to manage costs prudently, in part to free up funds that we intend to redirect in future quarters to support higher-growth areas of the business. Careful expense management as well as the weaker U.S. dollar helped non-GAAP earnings per share increase 22%. Geographically, we saw 24% growth in Asia Pacific, with especially strong results in China , and we also had good growth in other emerging markets such as Latin America. Elsewhere business conditions were challenging. Most notably, compared to the prior year quarter, we saw more cautious capital spending by a number of larger pharmaceutical customers in the United States, Europe and Japan, affecting our mass spec sales in particular. During the third quarter, Applera filed a registration statement with the SEC to make possible the spin off of Celera. We remain hopeful that the spin off can be completed by June 30, the end of the current fiscal year. Following the spin off, our intention is to retire the Applera name and re-brand the company under the name Applied Biosystems Inc. Investors have asked about restrictions on Applied Biosystems in the in vitro diagnostics field if Celera becomes an independent company. The answer to this question is that the operating principles Applied Biosystems and Celera have agreed to as part of the proposed separation put time-limited constraints on Applied Biosystems. There is a three-year transition period during which Applied Biosystems has generally agreed not to commercialize assays or OEM instruments which compete with a defined set of Celera assays. These restrictions will end after three years. Applied Biosystems will continue with product supply arrangements with Celera. The specifics are set out in the registration statement. Among emerging opportunities in the broader healthcare market, molecular diagnostics may be a logical area for expansion for Applied Biosystems for the longer term, an d one that fits with our strategy of applying our technologies outside the research field. Now I’ll turn the call over to Mark. Mark Stevenson Today I’m going to start with a high-level commentary about each of our specific product lines and platforms. I’ll then give you some additional color on two important topics: SOLiD Next Generation Sequencing system development and our internal infrastructure project. I’m extremely proud of how our teams have executed in both of these areas. With DNA sequencing in transition, we are extremely pleased with the development progress we have made in Q3 with our SOLiD system and with the way we are managing through the market transition. As expected, CE instrument placements are declining in the research market as instrument funding priorities shift toward next-generation sequencing platforms. But related CE consumables volume continues to grow. CE instrument revenues in applied markets were also up during the quarter for both human identity and for quality and safety testing. We see good growth opportunity in biopharmaceutical manufacturing, where operators need to routinely monitor their products for the presence of bacterial and fungal contaminants. We recognized revenue in the third quarter for SOLiD shipments made during our second quarter (the December quarter), as units passed customer acceptance requirements. As indicated in our last call, in January we purposefully constrained shipments of SOLiD systems to new customers while we focused on supporting our existing customers and further improving the system. We are pleased that we are now past this stage. Next month we plan to ship, on an unrestricted basis, a significantly upgraded version of the current SOLiD platform -- one that will enable customers to double the throughput, to 6 gigabases per run, in far less time than the previous version. With this new upgrade, we continue to lead the next-gen field in platform performance, and we believe that no one comes close to our combination of throughput and accuracy. Just as important, we have a long runway in front of us and are convinced that SOLiD is the most scalable of the next-generation technologies on the market today. We have early-access upgrade customers who are already generating nearly 10 Gigs of data per run, while o ur research team has reported runs with significantly higher throughput. And our pipeline is filled with developing methods to automate and further reduce front-end time and to optimize new applications development. With the progress we are making with our SOLiD system, we’re confident that we are on our way to restoring our sequencing business as an overall contributor to the growth of Applied Biosystems. The Real-Time PCR/Applied Genomics category continues to be both our largest at 36% of revenue, and our fastest grower, weighing in with 10% growth over the prior-year quarter. PCR-based research consumables, which are recorded in this category, include our Ambion products, TaqMan assays and real-time PCR master mixes for genotyping and gene expression. Consumables revenues for DNA forensics and other applied markets are also included. The product lines I’ve just mentioned all contributed to the category growth this quarter. On the instrument side of real-time PCR, we are seeing strong demand for the StepOne products we introduced last year. These have set a new standard for ease-of-use and accessibility, and we are pleased that StepOne won the SelectScience Award for best new Life Science product in 2007. Our real-time PCR group now has a very strong new product pipeline. And even though our TaqMan assays are already the gold standard, we continue to improve the workflows, to develop related enzymes and master mixes, and to introduce performance-enhanced application-specific Taqman assays. In the last two months alone, we announced three new sets of gene expression tools: one for faster answers from cell-based samples; one for microRNA profiling; and one for performing digital gene expression research on our SOLiD system. We also introduced a new family of reagents for reverse transcription PCR. In the forensics area, during the quarter, in addition to strong operating performance, we introduced some powerful new software tools including a Mandarin-language forensics package. And in the fast-growing food quality and safety testing area, we announced that we will begin to sell pathogen detection kits directly to end users while continuing to supply instruments and reagents to DuPont Qualicon under an updated collaboration agreement. We introduced a salmonella test kit as part of the new direct-sales strategy and have several additional food pathogen assays in development. The Mass Spectrometry product revenue category increased approximately 1% compared to a tough comp in the prior year quarter when revenues rose nearly 12%. In addition to the tough comp, we’re facing a weakening economic and budgeting climate. We are challenged by constrained capital spending in pharma markets, particularly in Europe and Japan but also in the United States. Pharma spending has been offset somewhat by the shift to CROs where we have a broad footprint and strong market position. Our Applied Markets mass spec showed continued strength in North America and in Asia – particularly China. In fact, our high-end QTRAP and triple quad products exhibited good uptake in Applied Markets for applications like quality and safety monitoring in food and beverage markets and environmental testing. Overall we continue to see the mass spec market as one of the most competitive markets we participate in with some current challenges in customer spending patterns and both new and established players strengthening and broadening their offerings in both product types and application areas. We fully recognize the need to reignite growth in this category. Recently, we introduced a variety of software packages that improve ease-of-use and productivity, which are particularly important for applied market applications. In the mass spec area, we are focused on providing the required combination of new platforms, new software and new workflows for the high-growth markets we are in. I now want to add some additional color to our quarter. In many ways, Q3 was all about execution of our plans. Next-gen sequencing was the most obvious example, and our development teams deserve special mention for the work they’ve done in bringing our upgraded platform to market. From a customer standpoint, we have already made significant progress in a subsequent round of improvements that we expect will continue to position SOLiD as the performance leader in the field and drive even more experimental value into the marketplace. Finally, I want to recognize some ongoing work, the results of which have been seen indirectly by the street in our earnings growth. These results have been achieved by the team driving our infrastructure project. During this fiscal year, in addition to goals to drive revenue, we also set productivity goals to improve costs and margins that would both improve our earnings growth and free funds for re-investment in growth initiatives. As one example, R&D productivity and the number of new product introductions – especially in consumables -- have increased dramatically this year, even in the face of decreased overall research spending, underscoring the benefits of this renewed focus. The operational improvements we have made have been the result of the collective efforts of many people and functions across AB that have delivered well beyond our internal targets resulting in continued strong earnings growth. And now Dennis Winger will comment on Applied Biosystems’ financial results for the quarter. Dennis Winger As mentioned, our third quarter results were highlighted by solid gross and operating margins and strong EPS growth on both a GAAP and non-GAAP basis compared to the prior-year quarter. Gross margin in the third quarter of fiscal 2008 was 56.9% compared to 56.4% in the prior-year quarter. The favorable effect of foreign currency was the primary factor contributing to the improvement. During the third quarter, SG&A expenditures increased 6% from the prior-year level primarily due to employee-related costs, the unfavorable impact of currency and regional investments. R&D expenditures decreased 11% in the third quarter from the prior year period due principally to lower employee-related costs and the termination in June 2007 of a contract with the U.S. Department of Defense. Third quarter fiscal 2008 earnings per share on a non-GAAP basis were $0.44, an increase of approximately 22% compared to $0.36 in the prior year period. Excluding foreign currency, non-GAAP earnings per share increased approximately 11% over prior year. The Group’s accelerated share repurchase (ASR) transaction completed in January 2008 was accretive to quarterly per-share results by approximately one cent. To reiterate our comment made in January on the last earnings call, we continue to expect the ASR transaction to be accretive to Applied Biosystems fiscal 2008 earnings by approximately $0.02 per share. We did not make any open-market purchases of Applied Biosystems shares during the third quarter as we decided not to repurchase shares while we are finalizing the spin off of Celera from Applera. Our intention is to resume open-market share repurchases after we have finalized the registration statement and when we are not in a quiet period. The reconciliation of GAAP and non-GAAP financials can be found in today’s press release as well as on the Financial Reports page of the Investor Relations section of our website, www.appliedbiosystems.com. Cash flow from continuing operations during the third quarter was strong at $119 million and capital expenditures were $11 million. At the end of the third quarter accounts receivable were $459 million, representing 62 days sales outstanding, and inventory was $172 million, representing 3.9 months of inventory on hand. As of the end of the quarter, cash and short term investments were $365 million, down from $495 million as of June 30, 2007. This decrease was largely the result of a $602 million payment to Morgan Stanley for ASR transaction, a portion of which was funded with available cash and the balance of which was funded by $275 million in short-term debt. We have repaid $150 million of these borrowings, leaving $125 million outstanding as of the end if the quarter. Regarding Applied Biosystems expectations about its financial performance for fiscal 2008, I would refer you to today’s earnings release. Other than capital expenditures, we have made no changes to our outlook compared to that issued with second quarter results. That said, I will provide an abbreviated version. At current currency rates, we expect mid single-digit revenue growth, with revenues comparable to the prior year level for Instruments and up for Consumables. We also anticipate growth across all product categories with the exception of Other Product Lines. We anticipate gross margin improvement in fiscal 2008 compared to the fiscal 2007 and we expect to increase operating margin in 2008 by at least two hundred basis point compared to the prior fiscal year. Finally, we expect non-GAAP EPS to exhibit double-digit growth compared to FY 2007. We now expect cap ex for the fiscal year to be in the range of $50 - $55 million -- lower than that projected last quarter. We’ll now take your questions about Applied Biosystems. Peter Dworkin For those who may have just joined us this morning, please note that during this call we will be making forward-looking statements about the Company’s businesses. These statements are subject to the risks and uncertainties relating to our businesses and corporate structure that are referred to in the releases issued this morning and in Applera’s filings with the Securities & Exchange Commission. We also will be discussing historical and forward-looking non-GAAP financial measures for Celera. These non-GAAP financial measures are not in accordance with or an alternative for, GAAP and may be different from non-GAAP financial measures used by other companies. A reconciliation of GAAP and non-GAAP financials for Celera can be found in today’s press release and on the Financial Reports page of the Investor Relations section of the Celera website at www.celera.com. Tony White I’m encouraged with the continued progress at Celera this quarter as the management team has made substantial progress on the integration of Berkeley HeartLabs, or BHL, and Atria Genetics. The commercial and organizational focus that has been implemented over recent quarters is starting to gain traction, resulting in a business with a stronger financial profile. With a strong balance sheet, Celera is in a good position to exploit the growth opportunities in molecular diagnostics and personalized disease management. The business is still expected to be profitable on a non-GAAP basis for the year, and as planned, we filed a registration statement with the Securities and Exchange Commission this last quarter in an effort to complete the separation of the Celera and Applied Biosystems businesses by the end of the current fiscal year. I’ll now hand it over to Kathy who will discuss Celera in more detail. Kathy Ordoñez This was another productive period for us across all parts of our business. Our recent acquisitions of BHL and Atria Genetics continued to contribute both financially and strategically this quarter, while sales in our alliance with Abbott grew. We also made substantial progress in our cardiovascular programs, particularly around the development of our KIF6 assay, which are expected to contribute to the future of our business. As described in our registration statement, we now have three categories of revenue: revenues from services, consisting primarily of sales by BHL, revenues from product sales, which include equalization payments from our alliance with Abbott Laboratories; and, lastly, the revenues from licensing and collaboration activities. I’ll start by describing our service business, which contributed $22.6 million of revenues during the third quarter of fiscal 2008, representing more than half of Celera’s total revenue for the period. There are two key components to our strategy for growth within the BHL business: first to increase the number of patients and physicians participating in the Berkeley program, and second, to expand the menu of tests performed at Berkeley HeartLab. During the quarter, we continued to add resources in the field at BHL and expanded our presence and focus on selected market areas as we seek to identify more physicians and patients to participate in the Berkeley program, We have completed the training of most of our new hires and rolled out new tools to support the sales effort. Most of the field positions that we had planned for a few months ago have since been filled. In January, we opened an important 4myHeart Center in Englewood, New Jersey and currently have 18 4myHeart centers operational, supported by additional clinical educators who are mobile or supporting patients by phone. We are now seeing an uptake in sample volume in the laboratory as a result of these efforts. Our second strategy for BHL’s growth entails adding relevant new tests to the menu. Following the publication of 3 papers on Celera’s findings around KIF6 in the Journal of the American College of Cardiology in January, BHL completed the development and validation of a laboratory service assay for KIF6 status in the middle of March, and began offering the test to a select group of physicians participating in a trial market. Uptake of the KIF6 assay to date has been strong, and thus far appears to be outperforming previously successful trial markets conducted by BHL for Apo E, NT-proBNP, and Lp-PLA 2 tests at the same stage of trial marketing. The test market is expected to refine pricing and positioning for the KIF6 assay and also determine how the test will be reimbursed by major payors. The trial market activities for KIF6 are targeted to be completed by the end of the current quarter, in anticipation of a full scale launch of the KIF6 testing service at BHL over the summer. As a reminder, KIF6 is a novel gene variant that conveys up to 55% increased risk for coronary events versus people who do not have the risk form of the gene. This incremental genetic risk for coronary heart disease has been shown to be essentially mitigated by statin therapy. KIF6 is the most advanced of a number of new tests that are in various stages of development at Celera and have the potential to expand the menu of tests offered by BHL. Another example was reflected in the publication of a paper in the Journal of the American Medical Association in March based on our collaboration with scientists at the University of Leiden in The Netherlands that identified several novel gene variants that are each associated with approximately 50 percent increased risk of deep vein thrombosis. Other findings of our research could lead to potential tests that identify people who benefit from aspirin therapy and others that identify those people at elevated risk for stroke and early MI, or early heart attack. All of these complement the BHL vision for personalized disease management. Celera’s pipeline of diagnostic discoveries and their application in personalizing disease management was integral to our thinking in making the acquisition of BHL. I’ll turn now to the performance of our diagnostic, or IVD, product sales category that includes equalization payments from Abbott. This category also consists of Celera’s portion of sales of Atria human leukocyte antigen, or HLA, products and shipments of Celera-manufactured products to Abbott, at cost. Product sales in this category grew by 44% in this last quarter to $9.1 million from $6.3 million in the prior year quarter. Total end-user alliance sales were $30.8 million compared to $24.3 million in the prior year quarter, and the equalization payment from Abbott in this last quarter was $4.0 million compared to $3.7 million in the same period a year ago. Increased volume of HIV, HCV and HBV RealTime viral load assays used on the m2000 system and thrombosis ASRs all contributed to the year-over-year growth. These increased sales were partially offset by lower sales of cystic fibrosis reagents and the removal of HCV genotyping ASRs in the U.S. and a CE marked product in Europe due to an injunction against sales of these products by Abbott previously issued in litigation with Innogenetics N.V. As described in today’s press release, Abbott and Innogenetics settled this litigation this month, and these products have already been reintroduced onto the menu of products offered through the alliance. Efforts are also underway to register the HCV genotyping assays for use on the m2000 system. We were pleased with the sustained penetration of the m2000™ system in its existing markets in this last quarter, as the system continues to contribute substantially to the growth in alliance end-user sales. Last week, on its first quarter 2008 earnings conference call, Abbott reported that “the m 2000 RealTime™ PCR system continues to gain share worldwide, with more than 450 instrument placements at over 300 customers.” There were other advancements for new products in development that are part of our alliance with Abbott. First, the chlamydia and gonorrhea assays that run on the m2000 system are now under review at the FDA. These tests, which are already marketed in Europe , are expected to achieve FDA clearance and commercialization in the U.S. over the summer. Secondly, the alliance has developed an m2000 assay for human papillomavirus, or HPV. We have been working on this project for several years and anticipate this new test could be approved for launch in Europe during the first half of calendar 2009. A third development is in the HLA product line within the recently acquired Atria portfolio. During the quarter, we were awarded a bone marrow registry tender by the French National Blood Service for high resolution HLA typing using Celera’s HLA sequenced-based testing products. The term of the award is for three years and is effective immediately. It is anticipated that approximately 45,000 individuals will be tested over the coming three years, with each one tested over multiple loci for registry requirements, representing approximately 200,000 HLA tests performed on these repository samples. Separately, data on a new chimerism HLA product that assesses engraftment success was presented at the European Federation for Immunogentics in Toulouse , France . This new product may have utility with both bone marrow and solid organ transplants, and since the test is expected to be performed multiple times on a transplant patient, we believe it could add substantially to the Atria business. In our third category of revenues from royalties, licensing and milestones, revenues were $7.8 million in the third quarter of fiscal 2008, compared to $3.5 million in the prior year quarter, with the increase due primarily to higher licensing and royalty revenues. In April, we licensed up to 10 cancer targets to Merck for the development of RNAi-based therapeutics and continued to make progress in previously announced pharmacogenomic collaborations with Ipsen and Merck. Lastly, we have now completed the rebalancing of our R&D resources and other activities in line with our current business activities. This resulted in a charge of $2.2 million in the quarter. In closing, we’re pleased with the developments and growth across all parts of our business. We’re encouraged by the integration to date of BHL and Atria into Celera and with the consequent expansion of revenues from these sources, as well as the growth of our IVD product business. We anticipate the expansion of the service menu through the broad commercial launch of KIF6 testing over the summer, and this test is likely to contribute visibly to service revenues in our next fiscal year. With a balanced portfolio of revenues across products and services, we see opportunity for further improvement as we manage our pipeline of products in development more strategically and inject further discipline into our operations. Based on the performance this quarter, and thus far year-to-date, we’re tracking toward our stated goal of profitability on a non-GAAP basis for the fiscal year. We’re also working diligently to prepare for the planned separation from Applera by the end of June. Now, Dennis Winger will make a few comments regarding the financial results for Celera and our financial outlook for fiscal 2008. Dennis Winger In the third quarter of fiscal 2008, Celera reported a net loss of $7.4 million, or $0.09 per share, due to factors outlined in today’s press release, compared to a net loss of $4.5 million, or $0.06 per share, for the third quarter of fiscal 2007. Reported revenues for the third quarter of fiscal 2008 were $39.5 million, compared to $9.8 million for the third quarter of fiscal 2007. Excluding revenues that were derived from services and products related to the BHL and Atria acquisitions, Celera’s reported revenues for the third quarter of fiscal 2008 increased $4.9 million compared with the prior year quarter. The increase was primarily related to higher licensing and royalty revenues and a slightly higher equalization payment from Abbott. In the recent quarter, R&D expenses decreased by $2.8 million compared to the same quarter last year, primarily due to reduced spending in proteomics discovery efforts. SG&A expenses increased by $14.2 million in this last quarter compared to the prior year quarter, primarily reflecting expenditures relating to BHL service revenues. Celera ended the recent quarter with cash and short-term investments of approximately $338 million, down about $4 million in the quarter. The guidance that we can provide for Celera for the remainder of fiscal 2008 is as follows:
The Group believes this outlook and its financial performance could be affected by a number of factors and other risks and uncertainties outlined in today’s press release and in our filings with the SEC. These comments reflect management’s current outlook. Applera does not have any current intention to update this outlook and plans to revisit the outlook for its businesses only once each quarter when financial results are announced. We will now take your questions regarding Celera. Peter Dworkin Forward-Looking Statements The risks and uncertainties that may affect the operations, performance, development, and results of Applied Biosystems businesses , including its activities in the clinical diagnostics instrumentation market, include but are not limited to: (1) rapidly changing technology and evolving industry standards could adversely affect demand for Applied Biosystems’ products, and its business is dependent on development and customer acceptance of new products; (2) Applied Biosystems’ sales are dependent on customers’ capital spending policies and government-sponsored research; (3) Applied Biosystems has significant overseas operations, and fluctuations in the value of foreign currencies could affect Applied Biosystems’ financial and operating results; (4) Applied Biosystems’ growth depends in part on its ability to acquire complementary technologies through acquisitions, investments, or other strategic relationships or alliances, which may not be successful, may absorb significant resources, may cause dilution, and may result in impairment or other charges; (5) Applied Biosystems may be subject to liabilities related to its use, manufacture, sale, and distribution of hazardous materials; (6) some of Applied Biosystems’ principal facilities are subject to the risk of earthquakes, which could interrupt operations; (7) Applied Biosystems’ products are based on complex, rapidly developing technologies, which has resulted in some ongoing legal actions against Applied Biosystems and which creates a constant risk of lawsuits, arbitrations, investigations, and other legal actions with private parties and governmental entities, particularly involving claims for infringement of patents and other intellectual property rights; (8) some of the intellectual property that is important to Applied Biosystems’ business is owned by other companies or institutions and licensed to Applied Biosystems, and legal actions against these companies or institutions could harm Applied Biosystems’ business; (9) Applied Biosystems may need to license intellectual property from third parties to avoid or settle legal actions brought against Applied Biosystems; (10) Applied Biosystems is dependent on the operation of computer hardware, software, and Internet applications and related technology for its businesses, particularly those focused on the development and marketing of information-based products and services; (11) new clinical diagnostic instruments to be developed by Applied Biosystems may not receive required regulatory clearances and/or may not be accepted and adopted by the market; (12) Applied Biosystems relies on a single supplier or a limited number of suppliers for some key products and key components of some of its products; and (13) other factors that might be described from time to time in Applera Corporation’s filings with the Securities and Exchange Commission. The risks and uncertainties that may affect the operations, performance, development, and results of Celera’s business include but are not limited to: (1) Celera may not successfully integrate the business and workforce of Berkeley HeartLab, which has approximately doubled Celera’s workforce, and it may not successfully operate and grow this business as planned, among other reasons due to the fact Berkeley operates in the regulated clinical laboratory testing market, a new business area for Celera; (2) the sale of clinical laboratory testing services and diagnostic products is dependent on government insurance programs such as Medicare and private insurance companies accepting the use of those services and products as medically necessary and worthy of reimbursement; (3) the revenue generated from the sale of clinical laboratory testing services and diagnostic products is highly dependent on the amounts that these government and private payors will pay for the services and products, and these amounts may be reduced in response to ongoing efforts by these payors to control healthcare costs; (4) Celera’s clinical laboratory testing services are subject to a wide variety of federal and state laws and regulations that govern, for example, clinical testing of human specimens, improper kickbacks or referrals to healthcare providers, and the privacy and security of patient data, and failure to comply with these laws and regulations could cause an interruption in operations, damage to our reputation, exclusion from participation in healthcare programs, fines or other legal penalties, and damages payable to patients or others; (5) Celera depends on physicians, laboratories, and others to collect and process patient specimens and send them overnight via Federal Express to its clinical laboratory for testing, and any interruption or delay in the delivery of specimens could cause them to spoil, prevent testing, and harm Celera’s business; (6) Celera’s commercialization of diagnostic products is substantially dependent on maintaining its existing strategic alliance with Abbott Laboratories and entering into new collaborations, alliances, and similar arrangements with other companies, which may not be successful; (7) clinical trials of diagnostic products may not proceed as anticipated, may take several years and be very expensive, and may not be successful; (8) diagnostic products may not receive required regulatory clearances or approvals; (9) the markets for clinical laboratory testing services and diagnostic products are very competitive, healthcare providers may prefer to use better-known laboratories for clinical testing, and healthcare providers may not accept new diagnostic products developed by Celera or its collaborators; (10) the U.S. Food and Drug Administration has issued an interpretation of the regulations governing the sale of Analyte Specific Reagent products which could harm Celera's business because the interpretation may require regulatory clearance or approval for some existing Celera and Abbott products that to date have been sold without clearance or approval, and because it may make development of new Analyte Specific Reagent products more difficult; (11) the FDA has issued draft guidance on a new class of complex laboratory-developed tests that may require our clinical laboratory to obtain regulatory clearance or approval before it can perform these tests and that may require other laboratories to obtain regulatory clearance or approval for these complex tests before they can perform clinical testing using our diagnostic products or based on intellectual property licensed from us; (12) Celera relies on access to biological materials and related clinical and other information for some of its research and development efforts, and such materials and information may be in limited supply or inaccessible to Celera; (13) Celera may be subject to product liability or other claims as a result of its clinical laboratory testing services or the testing or use of its or its collaborators’ or licensees’ diagnostic products; (14) Celera relies on scientific and management personnel having the necessary training and technical backgrounds and also on collaborations with scientific and clinical experts at academic and other institutions who may not be available to Celera or who may compromise the confidentiality of Celera’s proprietary information; (15) Celera may be subject to liabilities related to its use, manufacture, sale, and distribution of hazardous materials; (16) Celera’s ability to protect its intellectual property is uncertain, its ability to protect its trade secrets is limited, Celera is subject to the risk of infringement claims, and it may need to license intellectual property from third parties to avoid or settle such claims; (17) Celera is dependent on the operation of computer hardware, software, and Internet applications and related technology; (18) an adverse outcome in legal proceedings involving Abbott could harm Celera’s business and subject it to liabilities; (19) legal, ethical, and social issues related to the use of genetic information could adversely affect demand for Celera’s clinical laboratory testing services and diagnostic products; (20) future acquisitions by Celera may not be successful, may divert management from operations, may cause dilution, and may result in impairment or other charges; (21) the outcome of the existing stockholder litigation is uncertain; (22) Celera relies on a single laboratory testing facility and a single manufacturing facility, it would be difficult to repair, replace, or expand these facilities on a timely basis should that be necessary due to, for example, significant damage caused by natural disaster or other events or a substantial and unexpected increase in demand for products or services, and Celera does not have any backup facilities or arrangements should these events occur; (23) Celera relies on a single supplier or a limited number of suppliers for some kits used for its clinical laboratory testing services and some key components for manufacturing its diagnostic products; and (24) other factors that might be described from time to time in Applera Corporation’s filings with the Securities and Exchange Commission. All information in this document is as of the date of the conference call, and Applera does not undertake any duty to update this information, including any forward-looking statements, unless required by law. Copyright 2008. Applera Corporation. All Rights Reserved. AB (Design), Applied Biosystems, Applera, and Celera are registered trademarks, and SOLiD is a trademark of Applera Corporation or its subsidiaries in the U. S. and/or certain other countries. Ambion is a registered trademark of Ambion, Inc. Ambion and Berkeley HeartLab are wholly owned subsidiaries of Applera Corporation. TaqMan is a registered trademark of Roche Molecular Systems, Inc. RealTime and m2000 are trademarks of Abbott Laboratories or its subsidiaries in the U.S. and/or certain other countries. HCV Liver Fibrosis GenoTypR is a trademark of Specialty Laboratories. Notice To Readers: Celera's press releases, presentations and printed remarks are included on this website for historical purposes only. The information contained in these documents should be considered accurate only as of the date of the relevant document. This information may change over time, and therefore visitors to this website should not assume that the information contained in these documents remains accurate at a later time. We do not have any current intention to update any of the information in these documents.
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