This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
Caliper Life Sciences said last week that its first quarter revenues rose 28 percent, due primarily to products sold by Xenogen, which Caliper acquired in the second half of last year.
The firm expected that problems related to its OEM deals with Agilent and Affymetrix would continue into the first quarter and put a dent in its top line, but it anticipates those partnerships will provide an uptick in revenue over the course of the year. Caliper also believes some its new products will drive sales growth to pharmaceutical customer accounts.
Caliper reported total revenues increased to $28.4 million in the first quarter of 2007 from $22.3 million last year. Product sales contributed $15.3 million to that total, a 4 percent increase year over year; services brought in $8.9 million, a 77 percent increase; and licensing and contracts generated $4.3 million, a 66 percent increase over Q1 last year.
Caliper President and CEO Kevin Hrusovsky said during the firm’s conference call last week that although the company was on target with its revenue guidance, first quarter sales were soft, except for the Xenogen products.
“We had a soft Q1 due in part to Affymetrix not purchasing GCAS systems and Agilent’s reconfiguration of our OEM relationship with them,” said Hrusovsky during the call. “This performance was anticipated and was in line with our Q1 guidance.”
Hrusovsky had noted during a conference call two months ago that Caliper no longer provides the reagent packages with the chips it supplies to Agilent, which shaved between $1 million and $1.5 million from Caliper’s top line in 2006 (see BioCommerce Week 3/7/2007). But, he expects that the upcoming launch of Agilent’s cholesterol test, which uses Caliper’s technology, will help boost revenue in 2007.
The firm’s OEM sales were also hampered last year and in the first quarter of 2007 due to a decline in sales of liquid-handling products to partner Affymetrix.
“We anticipate an uptick at both of these accounts in the second half of 2007, providing year-on-year growth momentum,” Hrusovsky said last week. “At Agilent it will be for diagnostic chips, and at Affy it will be for the GCAS, which they have recently relaunched.”
In March, Affymetrix launched its GeneChip HT Array Plate System, a 96-well instrument that uses Caliper’s liquid-handling technologies.
“We have had meetings with Affymetrix and there is renewed interest in the GCAS,” said Hrusovsky. “They relaunched this about a month ago, so we feel good about second-half movement with Agilent and Affymetrix.”
Pharma Rebound Expected
Lower spending by certain pharma clients also negatively affected Caliper’s results, he said. In addition, Hrusovsky noted that there was “lumpiness” in automation sales compared with last year, when orders were placed during the first quarter that were not repeated in Q1 2007.
“We experienced some timing delays [in the quarter] … at pharma accounts for capital equipment,” Hrusovsky noted during the call. “We anticipate, however, relatively strong spending throughout the remainder of the year.”
He said the firm is encouraged by sales of its new products that were introduced late in 2006, including the Zephyr automated liquid-handling system and Desktop Profiler for in-house kinase profiling, and he expects those products to result in “solid” organic growth in 2007.
Hrusovsky noted that Merck and Serono are among the early users of Desktop Profiler.
“With big pharma, we generally feel very confident that this is going to be a better year than others relative to their spending patterns.”
“With big pharma, we generally feel very confident that this is going to be a better year than others relative to their spending patterns,” said Hrusovsky. “There are a few accounts that had their own set of issues that did plague them a little bit in Q1, but we do see a lot of evidence based on the trade shows that we just attended where we had a very strong lead volume.”
He cited the recent Society for Biomolecular Sciences and the American Association for Cancer Research annual meetings as primary examples.
“I think that indicates for us that we’re going to have a fairly robust year,” he said. “So, going forward we are projecting strong pro forma growth for our product lines.”
Hrusovsky added that the firm expects to see double-digit revenue growth for instruments in the second half of the year.
Caliper’s net loss for the first quarter increased to $9.6 million, or $.20 per share, from $4.4 million, or $.13 per share. However, its EPS beat the First Call consensus estimate by $.02.
Hrusovsky said the loss was anticipated and reflected the costs associated with its August acquisition of Xenogen. For the first quarter, the firm recorded $2.5 million in costs associated with amortization of intangible assets.
Caliper’s R&D spending increased to $5.8 million from $4.5 million year over year.
The firm had around $9.9 million in cash and cash equivalents as of March 31.
Company officials projected 2007 revenue of between $137 million and $143 million, or between 27 percent and 33 percent better than 2006.
In a separate announcement last week, the company said it has licensed the majority of Monogram Bioscience’s microfluidics patent portfolio. Financial details of the deal were not disclosed.
“This move expands the overall breadth and utility of our IP, which we can license to partners in our Caliper-driven licensing program or use for in-house development,” Hrusovsky said during the conference call.