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Celera Reports Second Quarter Revenues of $35.0 Million

Rockville, MD - January 23, 2002

Celera Genomics Group (NYSE: CRA), an Applera Corporation business, today reported results for its second quarter of fiscal 2002 ended December 31, 2001. All per share amounts refer to per share of Applera Corporation-Celera Genomics Group Common Stock.

For the quarter, Celera reported revenues of $35.0 million, up from $20.3 million for the same quarter in fiscal 2001. The increase in revenues resulted principally from new subscription agreements with commercial and academic customers and from contract sequencing and other services. Included in the quarter's results is a $99.0 million non-cash, non-recurring charge for acquired in-process research & development related to the acquisition of Axys Pharmaceuticals. The Group's net loss before the non-recurring charge was $18.9 million, or $0.29 per share, compared with $29.7 million, or $0.49 per share, for the same quarter in fiscal 2001. The lower net loss was attributable primarily to continued operating growth in the online business, the completion of R&D related genome sequencing programs and lower amortization of goodwill. Continued investment in the Celera Diagnostics joint venture with Applied Biosystems and lower interest income partially offset these factors. The reported net loss was $117.9 million, or $1.82 per share, including the special charge. At the end of December 2001, the Group had cash and short-term investments of approximately $941 million.

R&D expenditures for the quarter were $30.6 million, in comparison to $42.3 million in the same period last year. R&D expenses associated with therapeutic discovery programs continued to increase in comparison to the prior year. For the quarter, these increases were more than offset by lower R&D expenses associated with the shotgun phase of certain whole genome sequencing programs.

For the six months ended December 31, 2001, Celera reported revenues of $62.3 million, a 61 percent increase over the $38.6 million in revenues for the same period last year. The net loss before the special charge for this period was $34.5 million, or $0.55 per share, compared to a loss of $55.4 million, or $0.92 per share, for the comparable period in fiscal 2001. Including the special charge, the reported net loss for this period was $133.5 million, or $2.11 per share.

"Celera continued to add to its therapeutic discovery capability through internal expansion, the Axys acquisition and new technology collaborations. We are pleased with the progress in the therapeutic collaborations with Merck and Aventis," stated Tony L. White, Applera's Chief Executive Officer. "The online information business continued to expand both its customer base and its product content and functionality, driving large year-over-year increases in revenues and offsetting some of our discovery R&D costs."

Mr. White continued, "In the two months since the Axys acquisition closed, we have made significant progress in the integration of its talented staff and its portfolio of pre-clinical therapeutic programs. Now we are combining the growing output from Celera's proteomics platform with our recently acquired expertise in protease inhibitors and small molecule discovery. We plan to apply high throughput methods for the validation of potential therapeutic targets and the identification of potential new drugs in parallel."

Recent Developments
Celera has reported a number of developments in its businesses over the last three months.

Drug Discovery
  • The acquisition of Axys closed in November 2001 and scientific staff moved into a new medicinal chemistry building on its South San Francisco campus.


  • Merck & Co., Inc. extended its osteoporosis drug discovery collaboration with Celera for a sixth year until November 2002.


  • Celera announced an additional research milestone payment from Aventis Pharma, the pharmaceutical company of Aventis, as part of the Cathepsin S inhibitor collaboration between the companies. This milestone marked the selection of Celera Cathepsin S inhibitor compounds as Early Development Candidates (EDC) for inflammation and autoimmune diseases.


  • Celera entered into two technology collaborations intended to support therapeutic discovery via structural proteomics and chemical annotation:
    • Celera and Syrrx, Inc. plan to collaborate in the determination of three-dimensional structures of proteins identified by Celera as potential drug targets. This collaboration may result in the more efficient discovery of small molecule drugs to treat human diseases.


    • Celera and Graffinity Pharmaceuticals of Heidelberg, Germany, plan to utilize Graffinity's unique chemical microarrays of drug fragments to chemically annotate new proteins discovered using Celera's proprietary proteomics platform. This approach is expected to contribute to the parallel validation of targets and identification of therapeutic candidates.

Online

    The online business announced three new commercial customers, Otsuka Pharmaceuticals, Serono S.A., and Oxagen, bringing the total to 19. Celera also added 30 new academic and institutional organizations as subscribers to the Celera Discovery SystemTM (CDS)-Celera's proprietary bioinformatics platform of database content, analysis and visualization tools-increasing the total number of academic and institutional subscribers to 180.

  • Celera announced two new content collaborations. John Wiley & Sons, Inc. agreed to develop links between cited article references, abstracts, and full-text articles available on the Wiley InterScience online service and the CDS. Celera is also working with Inpharmatica to develop and commercialize a new version of Inpharmatica's BiopendiumTM target and drug discovery platform, with the objective of creating a unique resource of integrated sequence, structural and functional information.

Other

  • This week Celera announced Dr. J. Craig Venter is stepping down as the Group's President. Dr. Venter will continue his affiliation with Celera as Chair of its Scientific Advisory Board.


  • Celera announced a strategic alliance in agriculture-genomics with Paradigm Genetics, Inc. Paradigm acquired Celera's AgGen plant genomics and genotyping business and became the exclusive marketing partner to provide Celera services to the plant-based agriculture industries.

Outlook

  • Revenue: Celera continues to expect a 40 to 50 percent increase in revenue for fiscal 2002 in comparison to the prior year. During the recently completed quarter, Celera allocated a larger portion of its sequencing capacity toward revenue generating customer commitments, freeing up additional sequencing capacity in the balance of fiscal 2002 for the Applera SNP discovery program. This shifted several million dollars of revenue to the second quarter from the balance of fiscal 2002.


  • R&D expenses: The Group has revised its outlook for fiscal 2002 R&D expenses to the range of $140 to $150 million. This decrease reflects reductions within programs outside of therapeutic discovery. R&D expenses are expected to increase over the balance of the fiscal year as a result of:
    • Increased spending associated with the Applera genomics initiative;


    • Higher proteomics output; and


    • Continued investment in pre-clinical therapeutic programs from Axys, and new therapeutic programs. Research, development, and engineering expenses include the Celera component of Applera's anticipated $75 million fiscal 2002 investment in the Applera genomics initiative involving Applied Biosystems and Celera Diagnostics. The initiative has recently been expanded to include gene validation and expression, which the Company believes will require approximately an additional $25 million investment in fiscal 2003.


  • SG&A expenses: The Group expects fiscal 2002 SG&A expenses in a range similar to the prior year's expenses of $58.3 million.


  • Celera Diagnostics: Fiscal 2002 pre-tax losses related to the Celera Diagnostics joint venture are expected to be approximately $55 to $65 million.


  • Cash Burn: The most likely range for Celera's fiscal 2002 net cash use remains between $155 and $170 million. Most of the anticipated benefit of lower R&D expenses should be offset by retirement of debt assumed from Axys.

The comments in the Outlook Section reflect management's current outlook. The Company does not have any current intention to update this outlook and plans to revisit the Group's outlook only once each quarter when financial results are announced.

Conference Call & Webcast
A conference call with Applera Corporation and Celera Genomics executives will be held January 24, at 10:00 a.m. (ET) with investors and media to discuss these results and management's current financial outlook for the Company. Investors, securities analysts, and representatives of the media calling from the U.S. or Canada who would like to participate should dial 800.598.1707 (code "applera") between 9:45 a.m. and 10:00 a.m. International participants should dial (+1) 706.634.4992. 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. An audio replay of the conference call is expected to be available later tomorrow for 10 days. Callers from the U.S. or Canada should dial 800.642.1687. International callers should dial (+1) 706.645.9291. The conference ID number is 2832090.

About Applera Corporation and Celera Genomics
Applera Corporation comprises two operating groups. The Celera Genomics Group, headquartered in Rockville, MD, is engaged principally in integrating advanced technologies to create therapeutic discovery and development capabilities for internal use and for its customers and collaborators. Celera's businesses are its online information business and its therapeutics discovery business. The online information business is a leading provider of information based on the human genome and other biological and medical information. Through the therapeutic discovery business, Celera intends to leverage its genomic and proteomic capabilities to identify drug targets and diagnostic marker candidates, and to discover novel therapeutic candidates. 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 2001. Celera Diagnostics, a joint venture between Applied Biosystems and Celera Genomics, is focused on discovery, development, and commercialization of novel diagnostics tests. Information about Applera Corporation, including reports and other information filed by the company with the Securities and Exchange Commission, is available on the World Wide Web at www.applera.com, or by telephoning 800.762.6923. Information about Celera is available on the World Wide Web at www.celera.com.

Certain statements in this press release, including the Outlook section, are forward-looking. These may be identified by the use of forward-looking words or phrases such as "believe," "expect," "intend," "anticipate," "should," "planned," "estimated," 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) expected operating losses; (2) dependence on the continued assembly and annotation of the human and other genomes; (3) uncertainty of revenue growth; (4) unproven use of genomics information to develop or commercialize products; (5) intense competition in the industry in which Celera Genomics operates; (6) dependence on customers in, and the risks that affect, the pharmaceutical and biotechnology industries; (7) reliance on its strategic relationship with the Applied Biosystems Group; (8) potential product liability claims; (9) potential liabilities related to use of hazardous materials; (10) lengthy sales cycles; (11) dependence on the unique expertise of its scientific and management staff; (12) uncertainty and availability of patent, copyright, and intellectual property protection and the ability to protect trade secrets, and the risk that Celera Genomics may become the subject of infringement claims; (13) dependence on computer hardware, software, and Internet applications; (14) the potential adverse effect on Celera Genomics' intellectual property protection and the value of its products and services due to public disclosure of genomics sequence data; (15) Celera Genomics' need for access to biological materials; (16) legal, ethical, and social issues which could affect demand for products; (17) the possibility of disruptions which could be caused by rapid growth of the business; (18) potential for government regulation of Celera Genomics' or its customers' products and services; (19) risks associated with future acquisitions, including that they may be unsuccessful; (20) uncertainty of the outcome of existing stockholder litigation; (21) the lengthy and uncertain development cycle for therapeutic and diagnostic products, and Celera Genomics' unproven ability to develop or commercialize such products; (22) the risk that the Axys business will not be integrated successfully into Celera Genomics; (23) the risk that the collaborations established by Axys will not be successful and that clinical trials will not proceed as anticipated or may not be successful; (24) Celera Diagnostics' unproven ability to discover, develop, and commercialize novel diagnostic tests and the uncertainty that Celera Diagnostics will become profitable; and (25) other factors that might be described from time to time in Applera Corporation's filings with the Securities and Exchange Commission.

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