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Invitrogen Will Focus On Cell-Culture, Stem-Cell Segments in ’08, CEO Says

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Invitrogen this year will focus on its specialty cell-system business as it seeks to develop its cell-culture and stem-cell technologies on the heels of its acquisition of CellzDirect, CEO Greg Lucier said this week.
 
The specialty cell-system business is one of five “growth areas” that Invitrogen will focus on in 2008, Lucier said. The other four are emerging markets, cellular analysis, certain instrumentation components, and applied markets.
 
He added that the firm “may increase” its acquisition activities “slightly” during 2008 compared to 2007. "But again, staying close to the core, close to what we’re trying to do with our business in and around the cell,” said Lucier.
 
The company disclosed the strategy on the day it reported that revenue in the fourth quarter grew 12 percent and a net loss swung to a profit on “sustained pricing improvements, better sales execution, improved profit availability, new products, and many new customers” in the firm’s BioDiscovery and Cell Systems segments.
 
Invitrogen said revenue from the Cell Systems segment, which includes its cell-based assay products, climbed 7 percent to $97 million from a year ago. Total fourth-quarter revenue grew to $336.4 million from $301.6 million in the comparable period of 2006.
 
Lucier said that the company’s cellular-analysis business continues to have “attractive growth “as “[Invitrogen] launched new antibody products.”
 
Invitrogen disclosed its strategy one month after it said it plans to acquire primary cell provider CellzDirect for around $57 million in cash in an effort to expand its cellular-analysis business, especially in the human hepatocyte segment (see CBA News, 1/11/08). During the earnings call, Lucier mentioned that the acquisition closed on Jan. 31.
 
This week Lucier said that while the hepatocyte cell market is growing “much more rapidly” than the traditional cell-culture research market, “it is supply constrained due to the difficulty of securing the cells and the complexity of the steps required to isolate, characterize, preserve, and culture them.”
 

“Understanding biology within the context of the cell will be the next big thing that really takes place in science.”

He also said that CellzDirect is “highly differentiated along many, if not all, of these dimensions,” and provides drug-drug interaction and drug-metabolism studies in addition to providing the cells.
 
Lucier said CellzDirect “will enhance [Invitrogen’s] research offering and open up new direct applied markets for cosmeceutical testing and services because of [CellzDirect’s] strength in skin cells.”
 
He said Invitrogen and CellzDirect “will now begin the integration using a revised approach formulated over the last 18 months to ensure that the least amount of disruption takes place and that the most synergy is realized.”
 
During the call, Lucier said that over the next several months, the firm plans to invest more heavily in cell biology because it sees “extremely promising growth trends” in the field.
 
Lucier also said that understanding biology within the context of the cell “will be the next big thing that really takes place in science.”
 
Invitrogen’s specialty cell-system business is one of five “growth areas” the company will focus on in 2008, Lucier said. The other four are “emerging markets, where we will continue to invest in distribution infrastructure to increase our direct presence; cellular analysis, by further enhancing our play in cell biology; instrumentation, focused only on those instruments that can offer a complete solution with our reagents that can radically improve the scientific workflow; [and] applied markets, where we plan to leverage our existing portfolio while tapping into new distribution outlets, whether it be directly or through some partnerships like we have done already.”
 
Also in the fourth quarter, Invitrogen said R&D expenses rose 26.8 percent to $31.2 million from $24.6 million, while SG&A costs increased 9.4 percent year over year to $106.8 million from $97.6 million.
 
The firm posted net income of $41.1 million compared to a net loss of $100.2 million in the fourth quarter of 2006.
 
Invitrogen finished 2007 with $671.3 million in cash and investments.
 
Company officials said during the call that they expect full-year 2008 revenues to grow in the mid-single digits and profit to increase in the low-double digits. Quarterly growth rates will vary due to a variety of factors, they said.

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