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Illumina Posts 31 Percent Q2 Revenue Growth; Acquires PCR Instruments Firm

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Illumina reported after the close of the market Tuesday that its second-quarter revenues grew 31 percent year over year, and the firm disclosed the acquisition of PCR systems maker Helixis.

The San Diego-based firm brought in total revenues of $212 million for the three-month period ended July 4, compared to $161.6 million for the second quarter of 2009. Its product revenues jumped to $198.5 million from $153.2 million, while its service and other revenues increased to $13.5 million from $8.4 million.

Its revenues easily beat analysts' consensus expectation of $193.9 million.

Consumables revenues for the quarter were $126 million, up from $97 million, with demand coming from both the sequencing and microarray segments, according to Christian Henry, Illumina's CFO and GM of the Life Sciences Business Unit.

He said that instrument revenues were $70 million for Q2 2010, up from $54 million for the comparable period of 2009. Henry said during a conference call that instrument revenue growth was driven by the firm's HiSeq 2000, its newest sequencing system that was launched earlier this year.

"HiSeq demand has vastly exceeded our initial expectations," said Henry, adding that the firm is increasing production of the systems to meet demand.

Illumina President and CEO Jay Flatley noted during the call that sequencing revenues grew more than 50 percent year over year. He said the firm has shipped more than 100 HiSeq systems for revenue since its first shipment in early March. He also said customers are opting to purchase the HiSeq rather than the older Genome Analyzer when they can afford the higher purchase price, which was listed at $690,000 when it launched.

Flatley also noted that the firm's microarray business grew sequentially for the third quarter in a row and grew over the second quarter of 2009. "We're seeing encouraging uptake of our Omni family of whole-genome arrays, as they comprise the largest component of our microarray shipments," he said.

During the quarter, Illumina received US Food and Drug Administration clearance for its BeadXpress system for in vitro diagnostics with Factor II and Factor V assays. While the assays were used to support the FDA submission, the firm does not plan to market the tests.

"These approvals are an important step in Illumina's diagnostic strategy, and we believe it demonstrates our ability to meet the stringent regulatory requirements in designing and manufacturing FDA-cleared in vitro diagnostic devices," said Flatley. He added that it "paves the way for internal content development programs and also enables opportunities for our clinical and commercial partners to pursue their own diagnostic content on the platform."

Illumina posted a profit of $29.8 million, or $.21 per share, for the quarter compared to $24.7 million, or $.18 per share, for Q2 2009. Its non-GAAP EPS was $.26 per share, beating analysts' consensus estimate of $.23.

The firm spent $43.7 million on R&D during the quarter, up 32 percent from $33.1 million for Q2 2009. Its SG&A expenses climbed 28 percent to $53.7 million from $41.9 million.

Illumina finished the quarter with $785.4 million in cash and investments.

The firm said that it expects to report full-year revenue growth of around 28 percent over its 2009 revenues of $666 million, and non-GAAP EPS of between $.93 and $1.

Illumina also disclosed today that it has acquired Helixis, a firm developing high-performance, low-cost, real-time PCR systems for genetic analysis, for $70 million in cash and up to $35 million in contingent payments. According to Henry, Helixis was acquired early in the second quarter, and Illumina's results include two months of Helixis operating expenses.

In a separate announcement, Illumina announced that it has launched Helixis' primary product, the Eco Real-Time PCR System. Flatley said the Eco system has a list price of $13,900, approximately a quarter of the price for systems on the market with comparable performance. It also is complementary to the BeadXpress system, he said, as it will enable the firm to "more cost-effectively address the market below a complexity of 96 markers."

Flatley said the Eco system will begin shipping next month.

In addition, Helixis CEO Alex Dickinson has joined Illumina as senior VP of PCR Solutions.

Illumina also noted that its board of directors has authorized a $200 million stock buyback program, with $100 million allocated to repurchasing common stock under a 10b5-1 plan over the next 12 months and $100 million allocated to repurchasing common stock at management's discretion during open trading windows.

In Wednesday morning trade on the Nasdaq, shares of Illumina were up 7 percent at $44.19.

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