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Celera Reports Fiscal Third Quarter 2002 Results

Rockville, MD - April 25, 2002

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

For the quarter ended March 31, 2002, Celera reported revenues of $30.5 million, up from $23.4 million for the same quarter in fiscal 2001. The increase in revenues was primarily due to new subscription agreements with commercial and academic customers signed over the past 12 months. Online/Information business revenues for this period were $18.5 million, compared to $12.4 million in the year earlier period. The balance of Celera's revenues was mainly attributable to contract services such as sequencing grants and genotyping, and to Paracel.

Included in the quarter's results are $25.9 million of non-recurring special charges related to the Paracel business. These charges are comprised of $23.0 million related primarily to the impairment of all remaining goodwill and other intangibles, and an accrual for excess lease space included in other special charges, and a $2.9 million write down of inventory included in cost of sales. The Group's net loss before non-recurring charges was $28.5 million, or $0.42 per share, compared with $29.1 million, or $0.48 per share, for the same quarter in fiscal 2001. The lower net loss was attributable primarily to continued growth in subscription revenues and lower R&D expenditures and amortization of goodwill. Higher development expenses within the Celera Diagnostics joint venture with Applied Biosystems and lower interest income partially offset these factors. The reported net loss for the quarter was $49.5 million, or $0.72 per share, including the special charges. At the end of March 2002, the Group had cash and short-term investments of approximately $909 million.

For the nine months ended March 31, 2002, Celera Genomics reported a net loss before special charges of $63.0 million, or $0.97 per share, compared to a net loss of $84.5 million, or $1.40 per share, for the comparable period in fiscal 2001. The special charges during this period included a $99.0 million non-cash charge related to the acquired in-process R&D associated with the Axys acquisition, and the Paracel-related charges described above. Including the special charges, the reported net loss for this period was $183.0 million, or $2.82 per share. Total revenues for this period were $92.8 million, compared to $62.0 million for the same period last year. Online/Information business revenues were $52.8 million, compared to $34.3 million for the same period in fiscal 2001.

Tony L. White, Applera's Chief Executive Officer, said, "When I took on the role of interim President of Celera Genomics three months ago, my goal was to speed the transformation of Celera into a drug discovery and development business with sustainable competitive advantage, and to build a management structure to accomplish this. I believe the recently announced appointment of Kathy Ordoņez and the Celera Discovery System marketing and distribution agreement with Applied Biosystems places Celera Genomics on a solid path toward this goal."

Recent Developments

  • Over the last three months, Celera Genomics has taken the following steps in support of its drug discovery strategy:
    • Kathy Ordoņez has been appointed as President of Celera Genomics. The first goals for her executive team are to complete Celera Genomics' therapeutic strategy and organization and to prioritize its preclinical portfolio.


    • Celera Genomics has advanced two additional small molecule programs into pre-clinical evaluations, including safety/toxicology and in vivo models, bringing the total number of programs in later stage pre-clinical evaluations to eight. In its proteomics lab, Celera Genomics is completing its pilot study in pancreatic cancer samples, and has recently initiated proteomic studies related to non-small cell lung cancer.


    • Celera Genomics has decided not to pursue additional sequencing grants and contract service agreements unrelated to its therapeutic discovery efforts. While these services have been a source of revenue and covered overhead expenses, contract and grant sequencing has not significantly contributed to the bottom line. The Group will continue to perform under its existing commitments.


    • Celera Genomics entered into a long-term marketing and distribution agreement under which Applied Biosystems will become the exclusive distributor of the Celera Discovery SystemTM (CDS). This arrangement is intended to enhance the return on Celera Genomics' investment in this product by facilitating its integration into a broader information and product platform, while otherwise permitting Celera Genomics to retain control of the technology to help support its therapeutic business.
  • Celera Genomics sold its AgGen animal genomics and genotyping business to MetaMorphix.


  • The Applera Genome Project has progressed towards its expected completion before the end of calendar 2002. The resequencing of genes and regulatory regions is underway at Celera, single nucleotide polymorphism (SNP) validation is underway at Applied Biosystems, and disease gene association studies are underway at Celera Diagnostics. The Project is currently finding 12 SNPs per gene, of which approximately 60% are believed to be novel.


  • During the first nine months of fiscal 2002, Celera Genomics' share of the expenses for the Applera Genome Project was $11.0 million. This expense has not been allocated between the Online/Information and Therapeutic businesses.

Online/Information Business

  • During the past three months, the Online/Information business added Aventis Pharma and ImClone Systems, Inc. as new commercial customers. Celera also added more than 50 new academic and institutional organizations as subscribers to the Celera Discovery System, increasing the total number of subscribing organizations to over 250.


  • Celera Genomics integrated into CDS sets of Lynx's Massively Parallel Signature Sequencing (MPSSTM) high-resolution gene expression data, derived from normal human tissues.


  • Through the first nine months of fiscal 2002, operating income for the Online/Information business, before allocation of expenses for a portion of the Applera Genome Project, was approximately $6 million.

Celera Diagnostics Joint Venture

  • Fiscal third quarter revenues were $2.7 million, compared to $1.8 million in the same period last year. Revenues reflected higher sales of its cystic fibrosis diagnostic product, resulting from a recent recommendation by the American College of Obstetricians and Gynecologists for increased use of cystic fibrosis testing.


  • At the end of the third quarter, Celera Diagnostics had 140 employees. All key management positions have been filled.


  • Celera Diagnostics' 510(k) submission for the ViroSeqTM test for genotyping the HIV virus has been under review by the FDA (Food & Drug Administration) since July of last year. In February, the business responded to all of the FDA's questions regarding the test. The next FDA response, which may be in the form of additional questions or a ruling, is expected by the end of this quarter.

Financial Outlook

  • Fiscal 2002 Revenue: Consistent with Celera Genomics' transformation into a drug discovery business, management believes that revenues for the remainder of the fiscal year attributable to low-margin services and collaborations will be lower than previously anticipated. As a result, revenues for the fiscal fourth quarter of 2002 are expected to be between $27 and $29 million, including approximately $20 million in Online/Information business revenues. Total revenues for fiscal 2002 are expected to be between $119 and $121 million, including approximately $73 million in Online/Information business revenues.


  • Fiscal 2002 Expenses: The Group expects R&D expenses to be in the range of $135 to $140 million. The outlook for SG&A expenses has been lowered to a range of $50 to $55 million. Pre-tax losses related to the Celera Diagnostics joint venture are now expected to be approximately $50 million.


  • Fiscal 2002 Cash Burn: Celera Genomics' fiscal 2002 net cash use expectation has been reduced by at least $35 million since its last update, to between $110 and $120 million. The lower expected cash use is primarily due to lower R&D expenses and related capital expenditures, lower development expenses within Celera Diagnostics, and higher than anticipated cash receipts from the exercise of stock options.


  • Fiscal 2003 Revenue: Revenue for CDS subscriptions and for Knowledge Business royalties for fiscal 2003 is expected to be between $75 and $80 million. Celera Genomics anticipates total revenues between $85 and $95 million, based upon its new focus on cash flow and the decision not to pursue new service business.

The comments in the Financial 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. Celera plans to update other aspects of its fiscal 2003 financial and therapeutic programs outlook when it announces results for the fiscal fourth quarter 2002.

Conference Call & Webcast
A conference call with Applera Corporation and Celera Genomics executives will be held today, April 25, 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 who would like to participate should dial (+1) 706-634-4992 (code "applera") between 9:45 a.m. and 10:00 a.m. 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 April 25 to May 5, 2002. Interested parties should call (706) 645-9291 and enter Conference ID 3609219.

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 genomic and proteomic technology platforms to identify drug targets and diagnostic marker candidates and to discover novel therapeutics. Its Celera Discovery SystemTM online platform, to be 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 2001. Celera Diagnostics, a joint venture between Applied Biosystems and Celera Genomics, is focused on discovery, development, and commercialization of novel diagnostic 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 Financial Outlook section, are forward-looking. These may be identified by the use of forward-looking words or phrases such as "expect," "intend," "anticipate," "should," 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) uncertainty of revenue growth; (3) unproven use of genomics information to develop or commercialize products; (4) intense competition in the industry in which Celera Genomics operates; (5) dependence on customers in, and the risks that affect, the pharmaceutical and biotechnology industries; (6) reliance on its strategic relationship with the Applied Biosystems Group; (7) potential product liability claims; (8) potential liabilities related to use of hazardous materials; (9) lengthy sales cycles; (10) dependence on the unique expertise of its scientific and management staff; (11) 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; (12) dependence on computer hardware, software, and Internet applications; (13) 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; (14) Celera Genomics' need for access to biological materials; (15) legal, ethical, and social issues which could affect demand for products; (16) the possibility of disruptions which could be caused by rapid growth of the business; (17) potential for government regulation of Celera Genomics' or its customers' products and services; (18) risks associated with future acquisitions, including that they may be unsuccessful; (19) uncertainty of the outcome of existing stockholder litigation; (20) the lengthy and uncertain development cycle for therapeutic and diagnostic products, and Celera Genomics' unproven ability to develop or commercialize such products; (21) 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; (22) Celera Diagnostics' unproven ability to discover, develop, and commercialize novel diagnostic tests and the uncertainty that Celera Diagnostics will become profitable; (23) the successful integration of CDS into the Applied Biosystems' Knowledge Business product offering and market acceptance and adoption of the product offering; and (24) 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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