Celera Genomics Reports First Quarter Fiscal 2003 Results
Rockville, MD - October 24, 2002
Celera Genomics Group (NYSE:CRA), an Applera Corporation business, today reported results for the first quarter of fiscal year 2003 ended September 30, 2002. All per share amounts refer to per share of Applera Corporation-Celera Genomics Group Common Stock.
For the recently completed quarter, Celera Genomics reported a net loss of $19.6 million, or $0.28 per share, compared to $15.6 million, or $0.25 per share, in the same period last year. Increased R&D expenses associated with small molecule therapeutic programs, higher development expenses within the Celera Diagnostics joint venture with Applied Biosystems, and lower interest income were partially offset by lower SG&A expenses and higher Online/Information Business operating income. Revenues for the quarter decreased to $23.6 million from $27.3 million for the same quarter in fiscal 2002, primarily due to Celera's decision not to pursue additional sequencing service business. At the end of the quarter, the Group's cash and short-term investments were approximately $881 million, a decrease of approximately $8 million, net of one-time cash receipts of approximately $20 million.
R&D expenses were $32.5 million, compared to $27.8 million in the same period last year. A $2.9 million asset write-off associated with the Rockville sequencing facility is included in this quarter's results due to the change in business focus to therapeutics. Higher expenses for drug discovery and development and for the Applera Genomics Initiative were partially offset by reduced spending related to DNA sequencing.
Online/Information Business revenue was $20.6 million for the quarter, compared to $17.0 million in the same period last year. Operating income for the Online/Information Business was approximately $9.1 million compared to $2.1 million in the same period last year.
"Celera's transformation is moving ahead. Its management team has made progress in prioritizing its small molecule development programs, and the team is reaching other strategic decisions," said Tony L. White, Appleras Chief Executive Officer. "We intend to provide more visibility regarding its strategy towards the end of this calendar year."
"We have recently directed more resources to the advancement of internal drug development efforts, including our most promising projects targeting asthma and anti-coagulation," said Kathy Ordoņez, President, Celera Genomics. "We are currently finalizing a business plan that delineates how we will expand our in-house development and clinical capability and advance these and other drug discovery programs."
In October 2002, Celera purchased a number of pre-clinical oral tryptase inhibitors for the treatment of asthma from Bayer AG. These compounds were generated under a prior collaboration between the companies. The agreement also provides Celera with study data and a broad intellectual property estate pertaining to use of these compounds in all fields.
Celera is also pursuing a program to develop oral and/or parenteral inhibitors of Factor VIIa for anticoagulation indications such as deep vein thrombosis. Celera has already demonstrated anti-thrombotic effect achieved with a potent and selective parenteral inhibitor without extension of bleeding time. Both anticoagulation and asthma are established, multi-billion dollar pharmaceutical markets with significant unmet medical needs.
Celera Genomics Outlook
Celera Genomics has initiated the process of building a drug development organization and recruiting a head of development and other staff. It expects to obtain pilot-scale quantities of several of the asthma compounds recently acquired from Bayer AG, and to complete additional toxicology and safety evaluations in the coming months. IND-enabling studies with these asthma compounds are anticipated in calendar 2003, pending evaluation of the data from these additional evaluations.
The outlook for Celera Genomics remains consistent with that provided on July 25, 2002 and is as follows:
This outlook does not include all potential expenses for downstream pre-clinical or clinical development programs that may be added in the future.
The comments in the Outlook sections of this press release, including the Celera Diagnostics Joint Venture outlook below, reflect management's current outlook. The Company 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.
Celera Diagnostics Joint Venture
During the first quarter of fiscal 2003, end-user sales of products manufactured by Celera Diagnostics, a 50/50 joint venture between Applied Biosystems and Celera Genomics, were $3.9 million, a 63 percent increase over the $2.4 million in the comparable year-earlier period, primarily due to continued higher sales of its cystic fibrosis reagents. Reported fiscal 2003 first quarter revenues for Celera Diagnostics were $3.0 million, compared to $1.8 million in the same period last year. On October 1, 2002, sales responsibilities for products manufactured by Celera Diagnostics were largely transferred from Applied Biosystems to the diagnostic division of Abbott Laboratories, which now records end user sales. Net cash use was $16.0 million in the first quarter of fiscal 2003 compared to $7.4 million in the first quarter of fiscal 2002. The pre-tax loss for the quarter was $13.3 million, compared to $9.4 million in the same period last year. Developments at Celera Diagnostics over the last three months include the following:
Celera Diagnostics Joint Venture Outlook For fiscal 2003, Celera Diagnostics continues to anticipate end-user sales, including those from its alliance with Abbott Laboratories, in a range of $18 to $22 million. This outlook assumes continued demand growth, both from new products and from higher sales of existing products, and successful product migration into the alliance. For fiscal 2003, Celera Diagnostics anticipates pretax losses of $50 to $60 million and net cash use in the range of $55 to $65 million, including capital spending of approximately $10 million.
Conference Call & Webcast
A conference call with Applera Corporation executives will be held October 24, 2002, at 10:00 a.m. (EDT) with investors and media to discuss these results and management's current financial outlook for the Company. The call will be formatted to focus on each of the Applera businesses separately, with the following expected start times:
|Applied Biosystems Group||10:00 a.m. (EDT)|
|Celera Diagnostics||10:45 a.m.|
|Celera Genomics Group||11:00 a.m.|
Investors, securities analysts, representatives of the media and other interested parties who would like to participate should dial (+1) 706.634.4992 (code "applera") at any time from 9:45 a.m. until the end of the call. This conference call will also be webcast. Interested parties who wish to listen to the webcast should visit either www.applera.com and go to the Investor Relations section of the web site, or www.celera.com and go to the Investor section. A digital recording will be available two hours after the completion of the conference call from October 24 to November 2, 2002. Interested parties should call 706.645.9291 and enter Conference ID 6096430.
About Applera Corporation and Celera Genomics
Applera Corporation comprises two operating groups. The Celera Genomics Group, located in Rockville, MD, and South San Francisco, CA, is engaged principally in integrating advanced technologies to discover and develop new therapeutics. Celera intends to leverage its proteomic, bioinformatic, and genomic capabilities to identify and validate drug targets and diagnostic marker candidates, and to discover and develop new therapeutics. Its Celera Discovery SystemTM online platform, marketed exclusively through the Knowledge Business of Applied Biosystems, is an integrated source of information based on the human genome and other biological and medical sources. The Applied Biosystems Group (NYSE:ABI) develops and markets instrument-based systems, reagents, software, and contract services to the life science industry and research community. Applied Biosystems is headquartered in Foster City, CA, and reported sales of $1.6 billion during fiscal 2002. Celera Diagnostics, a 50/50 joint venture between Applied Biosystems and Celera Genomics, is focused on discovery, development, and commercialization of novel diagnostics products. Information about Applera Corporation, including reports and other information filed by the company with the Securities and Exchange Commission, is available at www.applera.com, or by telephoning 800.762.6923. Information about Celera Genomics is available at www.celera.com.
Certain statements in this press release, including the Outlook sections, are forward-looking. These may be identified by the use of forward-looking words or phrases such as "believe," "expect," "intend," "anticipate," "should," "planned," and "potential," among others. These forward-looking statements are based on Applera Corporation's current expectations. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. In order to comply with the terms of the safe harbor, Applera Corporation notes that a variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks and uncertainties that may affect the operations, performance, development, and results of Celera Genomics' businesses include but are not limited to (1) Celera Genomics expects operating losses for the foreseeable future; (2) Celera Genomics' reliance on Applied Biosystems' emerging Knowledge Business for incremental revenues to Celera Genomics from the Celera Discovery System and Celera Genomics' related information assets; (3) Celera Genomics' and Celera Diagnostics' unproven ability to discover, develop, or commercialize proprietary therapeutic or diagnostic products, (4) the risk that clinical trials of products that Celera Genomics or Celera Diagnostics do discover and develop will not proceed as anticipated or may not be successful, or that such products will not receive required regulatory clearances or approvals; (5) the uncertainty that Celera Genomics' or Celera Diagnostics' products will be accepted and adopted by the market, including the risk that that these products will not be competitive with products offered by other companies, or that users will not be entitled to receive adequate reimbursement for these products from third party payors such as private insurance companies and government insurance plans; (6) reliance on existing and future collaborations, including, in the case of Celera Diagnostics, its strategic alliance with Abbott Laboratories, which may not be successful; (7) Celera Genomics' and Celera Diagnostics' reliance on access to biological materials and related clinical and other information, which may be in limited supply or access to which may be limited; (8) intense competition in the industries in which Celera Genomics and Celera Diagnostics operate; (9) potential product liability or other claims against Celera Genomics or Celera Diagnostics as a result of the testing or use of their products; (10) Celera Genomics' reliance on scientific and management personnel having the training and technical backgrounds necessary for Celera Genomics' business; (11) potential liabilities of Celera Genomics related to use of hazardous materials; (12) uncertainty of the availability to Celera Genomics and Celera Diagnostics of intellectual property protection, limitations on their ability to protect trade secrets, and the risk to them of infringement claims; (13) Celera Genomics' dependence on the operation of computer hardware, software, and Internet applications and related technology; (14) legal, ethical, and social issues which could affect demand for Celera Genomics' or Celera Diagnostics' products; (15) risks associated with future acquisitions by Celera Genomics, including that they may be unsuccessful; (16) uncertainty of the outcome of existing stockholder litigation; (17) Celera Diagnostics' limited commercial manufacturing experience and capabilities and its reliance on a single manufacturing facility; (18) Celera Diagnostics' reliance on a single supplier or a limited number of suppliers for key components of certain of its products; (19) the risk of electricity shortages and earthquakes, which could interrupt Celera Diagnostics' operations and (20) 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 press release is as of the date of the release, and Applera does not undertake any duty to update this information, including any forward-looking statements, unless required by law.
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