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Celera's Q3 Revenues Nearly Triple but Loss Rises on Higher SG&A Spending, Charges

NEW YORK (GenomeWeb News) – Celera reported after the close of the market on Tuesday that its revenues for the third quarter of calendar 2008 rose 284 percent while it swung from a profit to a loss due to higher SG&A spending and some charges to earnings.
 
The Alameda, Calif.-based firm, which split from parent firm Applera and sister company Applied Biosystems earlier this year, brought in revenues of $45.8 million for the three-month period ended Sept. 27, compared with revenues of $16.1 million for the three-month period ended Sept. 30, 2007.
 
Of the total revenues for the quarter, $30.1 million came from its lab services, which consists of sales made by its Berkeley HeartLab subsidiary. Celera acquired BHL a year ago for $195 million.
 
Product revenues for the quarter were $10.5 million, compared with $4.7 million in the comparable quarter a year ago. Celera said the increase was due to sales of Atria HLA products and a higher equalization payment from Abbott under their diagnostics alliance.
 
Corporate revenues dropped to $5.2 million from $11.4 million for the quarter. Celera said last year’s calendar third quarter included revenue of $5 million from its former small molecule business.
 
In addition, the firm did not realize royalty revenue from Cepheid during the most recent quarter because Celera “changed from an accrual basis to a cash received basis” for the licensing deal with Cepheid. However, during a conference call on Tuesday, Celera CEO Kathy Ordoñez said that the firm would recognize royalty revenue from Cepheid on a cash received basis commencing with the fourth quarter of calendar 2008. She added that the firm received royalty revenues of $11.6 million from Cepheid for the 12-month period ended June 30.
 
Celera posted a net loss of $7 million, or $.09 per share, compared with a profit of $700,000, or $.01 per share, for the comparable quarter a year ago.
 
For the quarter, Celera’s SG&A costs more than tripled to $25.2 million from $8.1 million, while its R&D expenses dropped around 25 percent to $8 million from $10.7 million. The most recent quarter also contained $2.5 million in charges related to amortization of purchased intangible assets, as well as $1.8 million in charges for employee-related charges and asset impairment.
 
Ordoñez said that the increase in SG&A spending was partially due to transition costs associated with its split from Applera.
 
As of Sept. 27, Celera had cash and short-term investments of around $317 million.
 
Celera expects to report revenues of between $89 million and $93 million for the second half of calendar 2008. The firm’s fiscal year has traditionally run from July 1 to June 30, but since becoming an independent company, Celera has decided to switch its fiscal year to match the calendar year.
 
The firm’s BHL subsidiary this past summer launched its KIF6 testing service, which identifies a gene variant associated with risk for heart disease and statin benefit. Ordoñez said during the call that Celera would soon offer the test in a buccal swab format, which is “expected to broadly expand the use of the KIF6 testing service beyond BHL’s current reach in the secondary care cardiovascular market.”
 
She said that before the end of the year, the firm would roll out a direct-to-physician program to market the new cheek swab test to selected markets followed by a broad commercial launch next year. She also said the firm has been meeting with FDA officials to discuss clinical studies and a path to regulatory clearance for the KIF6 test in the US.

In addition, Ordoñez said that the Abbott alliance would launch a new test for human papillomavirus in Europe next month, joining a number of molecular diagnostic firms already competing in that market or planning on entering that market with their own HPV tests. Company officials said that the Celera-Abbott test, which will run on Abbott’s m2000 system, is a real-time assay that detects type 16 and 18 and other high-risk types of HPV.

The test “should be medically equivalent” to the Qiagen and Third Wave tests, said Celera officials, but they believe that their test will have an advantage in running on a system that already has a broad menu of other STD and viral assays. “We think this can be an important new assay for Abbott and Celera,” said Ordoñez.

 
In early Wednesday trade on the Nasdaq, shares of Celera were up nearly 4 percent at $9.82

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