Current | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000

Applera Corporation Teleconference, October 24, 2002 First Quarter Fiscal 2003 Earnings Call Script

- October 24, 2002

Peter Dworkin

Good morning. I am Peter Dworkin, Vice President, Investor Relations, for Applera Corporation.

Thank you for joining Applera Corporation management to discuss the first quarter FY 2003 financial results that were issued this morning for Applied Biosystems Group, Celera Genomics Group, and Celera Diagnostics, the 50/50 joint venture between Applied Biosystems and Celera Genomics.

In response to requests from many of you in the investment community, today we are moving to a new format for the Applera quarterly earnings calls. First, management will review Applied Biosystems and take your questions on Applied Biosystems. Then, at about 10:45 a.m. Eastern time, we will cover Celera Diagnostics and take questions on that business unit. After that, at approximately 11:00 a.m., we will discuss Celera Genomics.

Present today are Tony White, CEO of Applera; Dennis Winger, Chief Financial Officer of Applera; Mike Hunkapiller, President of Applied Biosystems; and Kathy Ordoņez, Presi dent of Celera Genomics and Celera Diagnostics. Other business managers are present to assist in answering your questions.

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 Securities & Exchange Commission.

Please note that during 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 within the Applied Biosystems and Celera Genomics web sites.

Our first speaker this morning will be Tony White.

Tony White

Good morning. I'm going to keep my comments short, so that there is ample time to hear from Mike, Kathy, and Dennis and to take your questions.

We are pleased that Applied Biosystems had reasonable sales growth during the quarter at a time when spending by pharma and biotech companies remained constrained. In the last 18 months, Applied Biosystems has made major investments in research and development, and products funded by these investments are now coming to market - products such as the new 3730 DNA sequencer, AB's genomic assays, and its new mass spectrometers. These are products that offer compelling performance and economic advantages. Customer interest in these new products has been good, although I would caution - and this shouldn't be surprising -- that in this market the sales cycle for some emerging technologies are expected to be longer than it was when budgets were more robust.

Now I'd like to make a few comments about Celera Genomics and Celera Diagnostics. When Kathy Ordoņez became president of Celera Diagnostics, we agreed she would take several months to develop a well thought out business plan. Over the last two quarters, Kathy and her management team have successfully implemented important elements of their plan while advancing new products and entering into important strategic alliances.

When Kathy took over as president of Celera Genomics six months ago, we agreed that she should start just as she did at Celera Diagnostics; by building a strong leadership team, which she has accomplished; and by drafting a comprehensive business plan. This team started with a clean slate in drafting its plan, and we have seen some decisive moves already, such as Celera's restructuring and its acquisition of pre-clinical asthma compounds from Bayer. We intend to provide you with more visibility regarding Celera's strategy, its leading programs, and some additional milestones following the presentation of this plan to the Applera Board. We are optimistic that the program Kathy will share with you around year-end will lay out a compelling and differentiated strategy and a roadmap by which you can measure the journey to value creation at Celera Genomics.

Next, Mike Hunkapiller will review the quarter at Applied Biosystems.

Mike Hunkapiller

Thank you, Tony.

When we reported our 2002 earnings last quarter, I concluded by saying that despite the uncertainties in our customer markets, we were nonetheless optimistic that our new product offerings as a result of ongoing R&D would be strong contributors to future growth. I am pleased to report the return to growth in this first quarter of fiscal 2003 has justified that statement.

Revenues increased 8 percent in the first quarter, 7 percent after currency, to $396 million from the year-ago quarter, driven primarily by a 16 percent rise in instrument sales and a 24 percent increase in revenues from other sources. This "Other Sources" category includes service contracts, royalties, licenses, and contract research. Consumable sales declined by 7 percent year over year mainly due to lower sales of sequencing reagents.

A highlight of the quarter was the return to growth in our sequencing instrument product line. This has been driven by very encouraging early shipments of our second-generation high-throughput, production-level DNA sequencer, the Applied Biosystems 3730xl instrument, to some of the large genome centers in the U.S. The 96-capillary 3730xl model has more throughput, sensitivity, and uniformity than the 3700 model that was used to produce the first draft sequence of the human genome. We expect that it will substantially replace the 3700 in the largest genome centers worldwide, although the timing of these replacements will vary by customer and according to customer access to funding. We are also pleased with early sales of the 48-capillary 3730 model, which is designed for core labs in the academic and commercial sectors, as well as the standardized testing markets.

The decline in sequencing consumables may be best explained by the fact that sequencing capacity has not been increasing fast enough to keep pace with the rate of reagent dilution. It has always been our objective to drive down the cost of sequencing, and we anticipate that the lower operating costs and the greater capacity of the ABI 3730 DNA Analyzer product line is likely to lead to more sequencing and related applications using DNA electrophoresis technology. Consequently, when the whole sequencing product category is considered, we see a positive trend emerging as increased sequencing capacity and lower sequencing costs will drive more sequencing.

The outlook for AB's revenues from selling sequencing reagents is quite difficult to forecast accurately as these revenues depend on several factors, including the total volume of sequencing activity; the mix of instruments in use; what research projects customers are engaged in - because some types of sequencing use more reagents than others; and the utilization of consumables per unit of sequencing. For planning purposes, we anticipate revenue from sequencing consumables will continue to trend down on a year-to-year basis for the remainder of this fiscal year. It is worth noting that we expect the declines to moderate in the second half of the year. We anticipate revenue from selling sequencing instruments will continue to increase year over year as it did in the first quarter. Our goal for this fiscal year is to get the total sequencing product line to grow again or at least to stem the decline, and we are encouraged by the fact that we were virtually at a neutral point in the first quarter.

Another highlight of the quarter was the extraordinary increase in mass spectrometry revenue of more than 50 percent over the prior year period. As in previous quarters, this increase was driven by the continuing success of the API 4000 LC/MS/MS product in the drug metabolism and pharmacokinetics market. Significantly, we also saw good demand for the 4700 Proteomics Analyzer with TOF/TOFTM Optics and the QSTARŪ LC/MS/MS systems that serve the high-end discovery proteomics market, as well as adoption of the recently launched Q TRAPTM system. While I am pleased with the success in this product category, we anticipate that this rate of revenue growth for the mass spectrometry product line is likely to moderate as we move past the first full year of substantial API 4000 instrument sales.

Sales of our Sequence Detection Systems and other applied genomics products also were strong in the first quarter, with year over year growth of approximately 21 percent. Both SDS instruments and reagents posted solid revenue gains, with instrument growth driven by the low-to-mid throughput ABI PRISM 7000 system. Also, demand for our TaqManŪ reagents that are analyzed on the SDS instruments continued to be robust.

During the first quarter, we introduced the first sets of next generation SDS reagents using the TaqManŪ chemistry, our validated Assays-On-DemandTM for SNP genotyping and for gene expression analysis. Presently, our web site offers approximately 120,000 SNP assays and nearly 13,000 gene expression assays. The number of available assays is growing every week.

We believe this product line represents the broadest collection of functionally validated, ready-to-use assays based on the human genome. We have various marketing and education programs underway to make customers aware of the benefits of Assays-On-Demand. We are also in the process of developing an e-commerce site rich in biological information to facilitate the purchase of these products. This is part of the long-term strategy of converting the Celera Discovery SystemŪ to a web-based portal. By next spring, the portal should be a powerful resource for our customers as a new method of designing, conducting, and analyzing scientific experiments.

In terms of revenue trends by customer base, the basic R&D segment, comprised of governmental and academic customers, showed firmness in their spending patterns. The exception was Japan, where we believe uncertainty about whether the government there will pass supplementary budgets for the current fiscal year ending next March affected spending by university labs. While supplementary budgets are fairly common, they are less of a certainty this year due to Japan's fiscal and economic problems. Customers from the commercial R&D segment, which is made up of pharmaceutical and biotechnology companies, showed a somewhat mixed spending pattern. A large part of the mass spectrometry product line is used in the clinical process involved in pharmacological studies, and the growth reported in this product category is testimony to the strength of these products and their ongoing contribution to enriching drug discovery and development. Revenues generated from our biotech custome rs continued to be softer than in prior years, as these companies are managing their costs and research activities around current difficult funding conditions.

In terms of revenue by geographical region, the United States accounted for approximately 54 percent of revenues in the first quarter - with revenues up 13 percent from the same period last year. Europe accounted for approximately 24 percent of revenues, and sales in Europe increased 2 percent. Adoption of new technologies in Europe generally trails adoption in the U.S., and we anticipate stronger growth in Europe in the coming quarters. Revenues in Japan and the Far East were flat with the prior year and accounted for 19 percent of sales. Revenues in the rest of the world accounted for 3 percent of sales and grew by 25 percent over the prior year quarter.

Next, Dennis Winger will cover the financial areas regarding Applied Biosystems.

Dennis Winger

Thank you, Mike.

Financial results for Applied Biosystems are spelled out in the press release, so I am going to focus on providing some additional color on a few aspects of the first quarter results and the outlook.

Income from continuing operations increased 6 percent to $34.2 million, excluding the litigation-related charge to discontinued operations mentioned in today's release. Earnings for the Group were 16 cents per diluted share from continuing operations, versus 15 cents in the first quarter of fiscal 2002.

During the first quarter of fiscal 2003, cash flow from operations was $15.6 million, and capital expenditures were $20.9 million. As of September 30th, accounts receivable were approximately $364 million, representing 75 days sales outstanding, versus $376.4 million, or 72 days, at the end of the fourth quarter of 2002. Inventory was $150 million, representing approximately 4 months of inventory on hand.

Turning to our financial outlook for Applied Biosystems, let me begin by stating that forecasting remains challenging in this environment. Spending patterns remain unpredictable in the pharmaceutical and biotechnology sectors. The Congress has yet to vote on the FY03 National Institutes of Health budget. While the 16 percent increase sought by the Bush Administration would be a very healthy funding level, it appears that an NIH budget may not be approved and signed into law until late in December or in January. Among other factors, there is also uncertainty, as Mike has noted, over the status of supplemental annual funding by the Japanese government in its current fiscal year, as well as difficulties in predicting trends in the consumption of sequencing reagents by ABI's customers.

At this time, we reiterate our expectation that revenue percentage growth in fiscal 2003 will be in the high single digits to low teens. We continue to expect that growth in fiscal 2003 w ill be heavily influenced by the adoption of new products. Gross margin in fiscal 2003 is expected to approximate fiscal 2002 levels. Additionally, the Group expects selling, general and administrative expense to rise somewhat more slowly than revenue during fiscal 2003.

While the Group anticipates that the Applera Genomics Initiative will be largely completed by the end of calendar year 2002, spending for this initiative, as well as development costs related to the Knowledge Business, are expected to lead to an increase in the level of overall R&D spending during the second quarter of fiscal 2003. However, as a percentage of revenues, R&D spending is expected to trend downward during the second and remaining quarters of fiscal 2003 and to approximate 14 percent of revenue for the fiscal year. This annual outlook includes approximately $12 million in expenses, the majority of which are expected to be spent during the first half of fiscal 2003, for Applied Biosystems' share of the A p plera Genomics Initiative funding. The Group expects the effective tax rate for fiscal 2003 to be approximately 28 percent, one percentage point lower than previously forecast, due to anticipated higher utilization of foreign tax credits. Future tax legislation may repea l or replace the existing U.S. export tax regime, as well as significantly change other international tax provisions of the Internal Revenue Code. Such changes may result in a change in the effective tax rate for the Group.

The Group reiterates its previous expectation that diluted earnings per share for fiscal 2003 from continuing operations will be in the range of $0.85 to $0.95. The Group expects diluted EPS from continuing operations during the first half of fiscal 2003 to be approximately flat with the prior year period due to the high levels of R&D spending anticipated during this period. The Group anticipates EPS growth in the second half of fiscal 2003 due to the expected increases in sales and the modera ti on in R&D spending growth.

Capital spending in fiscal 2003 is anticipated to be approximately $170 million, including approximately $80 million for the facilities expansion in Pleasanton, CA.

These comments 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.

Thank you, we'll now take your questions about ABI.

Peter Dworkin

We will now turn to Celera Diagnostics, a 50/50 joint venture between Applied Biosystems and Celera Genomics. Before we begin this portion of the call, let me remind you 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. The next speaker will be Kathy Ordoņez.

Kathy Ordoņez (CDx)

Thank you, Peter.

Over the past quarter, Celera Diagnostics continued to deliver against the scientific and business milestones we initially presented in December 2001 and have since expanded. We recently announced alliances with Quest Diagnostics, LabCorp and Bristol-Myers Squibb that provide Celera Diagnostics with leading channels to commercialize its newly developed products, as well as access to well-characterized patient samples.

Our relationships with Quest and LabCorp and the strategic alliance we established in June with Abbott are complementary. Quest and LabCorp are well experienced and positioned to launch novel testing services based on our discoveries and to build demand for these tests with physicians and patients through their sizable U.S. sales forces. Their CLIA-certified labs configure homebrew tests that they then validate and perform for customers. Abbott will work with Celera Diagnostics to market and distribute new molecular diagnostic products to hospitals and clinical laboratories, including LabCorp and Quest. This dual approach is intended to create demand for the new tests and to ensure this demand can be met at the testing laboratories.

For the quarter, end-user sales of Celera Diagnostics' products increased 63 percent versus last year to $3.9 million, driven mainly by continued strength in cystic fibrosis testing. Abbott began selling products manufactured by Celera Diagnostics on October 1, 2002, as originally scheduled. We have also advanced several new products through development. Our third generation cystic fibrosis reagents were introduced for commercial sale on August 29. These reagents are compliant with recommendations from the American College of Medical Genetics regarding CF testing. New analyte specific reagents for hepatitis viral load testing entered production this quarter and are being evaluated externally. Our hepatitis genotyping test is moving forward in development.

We are on target to complete our initial Alzheimer's disease association study before the end of the calendar year, and are now processing samples for studies involving cardiovascular disease and breast cancer. Samples for our cardiovascular study are being provided through our collaboration with Bristol-Myers Squibb, as well as from other sources.

The Applera Genomics Initiative continues to generate promising results: We remain on track to more than double the number of publicly known, functional SNPs when the project is completed. These are the SNPs that affect the amount, function or stability of proteins, and are therefore most likely to have medical utility. Some of these novel SNPs have the potential to become diagnostic markers for Celera Diagnostics and therapeutic targets for Celera Genomics, while being incorporated into Applied Biosystems' Assays-on-DemandTM product line.

Now we will take your questions regarding Celera Diagnostics.

Peter Dworkin

The third and final portion of our call today will cover Celera Genomics. 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.

Before we hear from Kathy, Tony White will repeat the introductory comments he made prior to the Applied Biosystems part of the call for the benefit of Applera shareholders and others who have just joined the teleconference.

Tony White

Good morning. I'm going to keep my comments short, so that there is ample time to hear from Kathy and Dennis and to take your questions.

We are pleased that Applied Biosystems had reasonable sales growth during the quarter at a time when spending by pharma and biotech companies remained constrained. In the last 18 months, Applied Biosystems has made major investments in research and development, and products funded by these investments are now coming to market - products such as the new 3730 DNA sequencer, AB's genomic assays, and its new mass spectrometers. These are products that offer compelling performance and economic advantages. Customer interest in these new products has been good, although I would caution - and this shouldn't be surprising -- that in this market the sales cycle for some emerging technologies are expected tobe longer than it was when budgets were more robust.

Now I'd like to make a few comments about Celera Genomics and Celera Diagnostics. When Kathy Ordoņez became president of Celera Diagnostics, we agreed she would take several months to develop a well thought out business plan. Over the last two quarters, Kathy and her management team have successfully implemented important elements of their plan while advancing new products and entering into important strategic alliances.

When Kathy took over as president of Celera Genomics six months ago, we agreed that she should start just as she did at Celera Diagnostics; by building a strong leadership team, which she has accomplished; and by drafting a comprehensive business plan. This team started with a clean slate in drafting its plan, and we have seen some decisive moves already, such as Celera's restructuring and its acquisition of pre-clinical asthma compounds from Bayer. We intend to provide you with more visibility regarding Celera's strategy, its leading programs, and some additional milestones following the presentation of this plan to the Applera Board. We are optimistic that the program Kathy will share with you around year-end will lay out a compelling and differentiated strategy and a roadmap by which you can measure the journey to value creation at Celera Genomics.

Now, Kathy will update you about Celera Genomics.

Kathy Ordoņez (CRA)

Thank you, Tony.

Today I will update you on the progress in business planning at Celera Genomics. We are preparing to present a detailed plan to our Board of Directors, and then to communicate key aspects of the plan and new milestones for our business at a subsequent investor event around year-end.

Today, we are prepared to discuss a few decisions we have already made regarding our therapeutic programs. Specifically, we are prioritizing existing small molecule programs and determining their appropriate resource allocation, and optimizing clinical development plans for each of the higher priority programs. Secondly, we are deciding how to integrate and balance our platform technologies to most efficiently discover and validate targets, and to maximize value from these efforts. Simultaneously, we are determining how to leverage our diagnostic know-how both in drug discovery and clinical trial design, with the goals of accelerating discovery and boosting our potential success rate.

We are also committed to building development and clinical capabilities to advance our current pipeline, as well as compounds that we discover or acquire. We believe this makes sense because there is a limited commercial market for targets, and because compounds command greater value as they proceed successfully further through the clinical trial process. Presently, most of Celera's R&D investment goes to early stage discovery activities-target identification, screening and lead optimization. We believe Celera can generate more value by advancing some of its proprietary programs internally.

Our business plan calls for directing a larger proportion of our effort to downstream activities such as toxicology, formulation and regulatory activities. Robert Booth, our new head of R&D, has made progress toward hiring a head of development and identifying staff to fill other positions, with the goal of strengthening our pre-clinical and development capabilities.

A few weeks ago, we announced the purchase of pre-clinical oral tryptase inhibitors for the treatment of asthma from Bayer, with whom we had previously collaborated. Our interest in these compounds was based on the market opportunity, our strong understanding of protease inhibition and a review of the study data generated with the pre-clinical compounds. Today there are approximately 30 million persistent asthmatics and over $5 billion of annual drug sales in the major markets, and recent studies have shown the prevalence of asthma is increasing. The marketplace would likely accept new alternatives with more convenient administration and a favorable safety profile. The lead compounds we acquired have shown good bioavailability and efficacy in several animal models. In the coming months, we intend to complete additional safety and efficacy work, and to determine the appropriate path forward for this program.

We have also shifted additional staff to our proprietary factor VIIa anti-coagulation program. Our goal is to develop oral and/or parenteral factor VIIa inhibitors and we have already demonstrated anti-thrombotic effect with a potent and selective parenteral inhibitor, without extension of bleeding time.

We are finalizing decisions regarding the appropriate level of support for other proprietary programs such as cathepsin F and the apoptosis collaboration with Maxim Pharmaceuticals. While some programs will be scaled down or eliminated, we plan to add other projects to the pipeline in the future from our discovery efforts, and possibly from in-licensing or acquisition.

Celera has assembled a combination of platform technologies for target identification and validation-proteomics, bioinformatics, genotyping and gene expression. Our goal is to strike the proper balance among these approaches, and to integrate these activities, as appropriate. Proteomics has initially focused on pancreatic cancer and lung cancer-diseases with substantial unmet medical needs. Celera further plans to evaluate potential targets identified through the disease association studies ongoing at Celera Diagnostics and bioinformatic analysis of other genomic data.

Let me close with a couple comments on our R&D spending and cash position. In the recent quarter, we spent only slightly more on R&D compared to last year, but a substantial proportion of that investment is now directed to target validation, drug discovery and pre-clinical development. Our cash position also remains very strong, sufficient to fund multiple early stage clinical trials and to carry Celera forward in its therapeutic mission.

Now, Dennis Winger will make a few comments on financial results for Celera Genomics.

Dennis Winger

Thank you, Kathy.

First, I will discuss the cash balance and cash flow in the first quarter. The cash balance changed by a very modest $8 million during the quarter. Several one-time cash inflows related to the exercise of options and prepayment of existing subscriptions during the quarter favorably impacted the balance. We continue to expect the fiscal 2003 change in cash balance to be in the range of $75 to 85 million.

Looking at the drivers of cash flow, approximately half of the 2003 cash burn for Celera is attributable to the Celera Diagnostics joint venture. Remember that we anticipate Celera Diagnostics will become profitable late in fiscal 2005 or 2006. In this fiscal year, Celera expects to receive most of its projected $85 to 95 million in revenues from the established CDS subscriptions. The online business provides operating cash flow to cover a significant portion of Celera's forecast R&D investment of $130 to 140 million. In the first quarter, the Online Information Business provided over $9 million in operating profit. The full year R&D expense outlook includes approximately $12 million for Celera's share of expenses associated with the Applera Genomics Initiative, the majority of which should be incurred during the first half of fiscal 2003. Since this project is shared equally between the three businesses, a similar expense will flow though Celera's P&L as a loss withi n the Celera Diagnostics joint venture. Other R&D expenses are expected to be fairly evenly distributed over the remaining quarters.

These comments 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.

We will now take your questions regarding Celera Genomics.

Peter Dworkin

Thank you for participating in this call today. Management's remarks should now be posted on our web sites. The audio replay will be available today by dialing the phone numbers listed in today's press release.

Certain statements made during management's prepared remarks for this conference call are forward-looking. These may be identified by the use of forward-looking words or phrases such as "believe," "expect," "should," and "planned," 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 Applied Biosystems include but are not limited to (1) rapidly changing technology could adversely affect demand for Applied Biosystems' products, and its business is dependent on development of new products; (2) uncertainty of successful integration of the Celera Discovery System' into the Applied Biosystems Knowledge Business and market acceptance and adoption of Knowledge Business product offerings; (3) Applied Biosystems' sales are dependent on customers' capital spending policies and government-sponsored research; (4) Applied Biosystems' significant overseas operations, with attendant exposure to fluctuations in the value of foreign currencies; (5) risks associated with Applied Biosystems' growth strategy, including difficulties in integrating acquired operations or technologies; (6) the risk of electricity shortages and earthquakes, which could interrupt Applied Biosystems' or Celera Diagnostics' operations; (7) uncertainty of the availability to Applied Biosystems or Celera Diagnostics of intellectual property protection, limitations on the ability of Celera Diagnostics to protect trade secrets, and the risk to Applied Biosystems and Celera Diagnostics of infringement claims; (8) the Applied Biosystems Knowledge Business' dependence on the operation of computer hardware, software, and Internet applications and related technology, (9) Celera Diagnostics' reliance on existing and future collaborations, including its strategic alliance with Abbott Laboratories, which may not be successful; (10) Celera Diagnostics' unproven ability to discover, develop, or commercialize proprietary diagnostic products, (11) the risk that clinical trials of products that Celera Diagnostics does 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, (12) the uncertainty that Celera Diagnostics' products will b e accepted and adopted by the market, including the risks 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; (13) 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, (14) legal, ethical, and social issues which could affect demand for Celera Diagnostics' products, (15) Celera Diagnostics' limited commercial manufacturing experience and capabilities and its reliance on a single manufacturing facility; (16) Celera Diagnostics' reliance on a single supplier or a limited number of suppliers for key components of certain of its products; (17) potential product liability or other claims against Celera Diagnostics as a result of the testing or use of its products; (18) intens e competition in the industry in which Celera Diagnostics operates; and (19) 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.

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 Cel era Diagnosti cs as a result of the te sting 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 experi ence and ca pa bilities and its relian ce 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.


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.