Accounting Rules Prevent Illumina from Recognizing Revenue on Some Solexa Sequencers
Accounting rules will prevent Illumina from booking most of the revenue from the sale of at least 13 Genome Analyzers that Solexa shipped to early-access customers, Illumina President and CEO Jay Flatley said at an investor conference last week.
A few weeks before it was acquired by Illumina in late January, Solexa said it had begun invoicing early-access customers in the fourth quarter, and that it expected to begin recording revenue from these placements in the current quarter.
“Due to the wonders of acquisition accounting, much of the revenue that occurred [before the merger was completed], even though it was not recognized as revenue for Solexa … will not be recognizable by us,” said Flatley, who spoke at the Cowen and Company 27th Health Care Conference in Boston. “So that revenue will disappear, it will not be recognized either by Solexa or by Illumina.”
The rule will affect all 13 units that Solexa shipped in 2006, as well as any additional systems shipped between Jan. 1 and Jan. 26, the date Illumina completed the acquisition, a company spokeswoman told BioCommerce Week sister publication In Sequence.
Also at the conference, Flatley said although the integration of Solexa is “going quite well,” R&D has not been consolidated yet. “We think it will take a little bit longer for us to put together all of the key R&D teams,” Flatley said.
Illumina had been conducting internal research in the area of sequencing, he added, which will be combined with Solexa’s R&D groups.
He also reiterated that as of early February, the company had received 40 orders for the instrument, including the 13 systems it had shipped to early-access customers by the end of 2006.
Illumina Launches BeadXpress Platform
Illumina this week launched its BeadXpress system, the platform at the base of its molecular diagnostics strategy.
The BeadXpress is based on the VeraCode digital microbead technology the firm gained through its $17.5 million acquisition of CyVera in April 2005.
Illumina CFO Christian Henry said at the Lehman Brothers Global Healthcare Conference in Miami this week that the firm has already made its first shipments of the BeadXpress system.
According to Illumina, the BeadXpress system allows researchers to assay tens to hundreds of analytes in a single sample at one time. In addition to molecular diagnostics, Illumina anticipates the system will be used for biomarker research and validation, pharmaceutical development, industrial testing, and agricultural research.
“What this platform does is it enables us to move all the way down into lower and mid-multiplex ranges, which we really believe are going to be critical in the molecular diagnostics space,” said Henry. “We’re believers that microarrays are not the right approach to molecular diagnostics, in that they’re not flexible enough, the reaction times are too long, and they’re too expensive.”
The firm expects 2007 revenue of between $295 million and $315 million, said Henry.
MDS Acquires 92 Percent of Molecular Devices’ Shares
Molecular Devices’ shareholders this week tendered 92 percent of the firm’s shares in the acquisition offer from MDS.
In January, the companies had agreed to a deal under which MDS would buy Molecular Devices for $615 million in cash, or $35.50 a share for all of Molecular Devices’ common stock (see BioCommerce Week 1/31/2007).
MDS said it would make an additional offering for the remaining 8 percent of shares outstanding. That offering is at the same price of $35.50 per share and will expire on March 23.
Upon completion of the acquisition, Molecular Devices and MDS’ Sciex unit will be combined into a business unit called MDS Analytical Technologies. The new unit will be led by MDS Sciex President Andy Boorn.
According to MDS, Molecular Devices and MDS Sciex combined brought in 2006 revenue of $432 million.
Thermo Fisher Expands Asset Management Services in Europe
Thermo Fisher Scientific said last week that it has expanded its asset management services capabilities in Europe.
In addition to a new management team, new services are being launched to help customers in the pharmaceutical, chemical, petrochemical, and biotechnology sectors optimize the management of their laboratory assets.
“By establishing a full presence in Europe, existing and new customers will benefit from local support and solutions tailored to their individual needs,” Thermo Fisher said in a statement.
The European Asset Management Services, based in the UK, will focus on companies there, in Germany, France, Spain, Italy, the Netherlands, and Scandinavia.
FDA Clears Cepheid’s Meningitis Molecular Dx
The US Food and Drug Administration last week cleared for marketing a Cepheid test designed to help physicians detect viral meningitis within two and a half hours.
The test is Cepheid’s third molecular diagnostic assay to receive 510(k) clearance since the beginning of 2006.
Cepheid’s Xpert EV test is an automated diagnostic that uses reverse transcription PCR on cerebrospinal fluid samples to determine if a patient has enterovirus, which causes 90 percent of meningitis cases. The test is run on the company’s GeneXpert diagnostic system, one of two RT-PCR platforms developed by Cepheid. The other is its SmartCycler.
According to a statement released by the FDA last week, in a multi-site study the test was 96-percent accurate in detecting viral meningitis, and 97-percent accurate in patients who did not have the enterovirus.
Bacterial meningitis is far more lethal than the viral form of the disease, and requires swift diagnosis. Because symptoms of the two diseases are so similar, doctors currently treat viral patients empirically with antibiotics for the bacterial form.
Being able to swiftly determine which pathogen a patient has should allow doctors to make more accurate therapeutic decisions and avoid unnecessary antibiotic treatments, the FDA said.
Two Banks Upgrade ABI’s Stock
Two investment banks last week upgraded their ratings on Applied Biosystems’ stock.
Am Tech/JSA Research upgraded ABI’s stock to “buy” from “neutral,” while Matrix Research raised its rating for ABI to “buy” from “hold.”
ABI’s shares rose 4.1 percent over the past week to close at $29.73 on Tuesday.
Investment Bank Starts Coverage of Luminex
Investment bank Thomas Weisel Partners this week initiated coverage of Luminex with an “overweight” rating.
The rating follows an upgrade in December from investment firm Soleil Securities on Luminex’s stock from “hold” to “buy.”
Luminex’s shares closed at $14.75 on Tuesday.
US Air Force Extends CombiMatrix Contract to Develop Influenza Dx
CombiMatrix last week said that the US Air Force has extended a contract to continue developing an influenza genotyping system.
Under the $890,000 deal, CBMX will develop a field-deployable system designed to identify all influenza strains, including H5N1 avian flu, and other respiratory pathogens.
The original program started in 2005 when the USAF’s Institute of Occupational Health paid CBMX $340,000 for a one-year deal to begin developing an array to identify the infections.
Last year’s agreement enabled the company to retain the right to sell the resulting assays to other customers.
CBMX CEO Amit Kumar said it is important to be able to track mutations in bird flu, and added that CBMX’s system can “determine when any other strain of influenza A is gaining an upper hand in a population, and can identify other infectious diseases that cause flu-like symptoms.
The company said the first effort will be to update the array with new information from influenza A sequencing that is related to human disease.