Increasing sales in its drug-discovery and life-science research product lines helped Molecular Devices' first-quarter revenues grow 6 percent organically, but the company's acquisition of Axon, sealed last July, boosted total receipts by 43 percent, the company said last week.
Molecular Devices, which said net profits in the period grew 57 percent, also said it will launch a new imaging system and software next month in order to give its Discovery-1 and ImageXpress platforms a boost in the marketplace.
Revenues for the three months ended March 31 increased to $39.1 million from $27.3 million during the same quarter last year. Sales of Molecular Devices' drug-discovery products, which include several platforms for cell-based assays — such as the FLIPR plate reader, the IonWorks and PatchXpress patch clamping systems, and the Discovery-1 and ImageXpress imagers — contributed $14.9 million, just over a third of overall revenues. Sales of these products increased 41 percent year over year, but 10 percent of that increase was from organic growth.
Life science products accounted for the remaining $24.2 million in revenues. This segment, which includes lower-end products more geared towards research, grew 44 percent, but 3 percent of that was from organic growth.
For both business segments, total revenue growth included revenue from Axon.
Molecular Devices did not break down the contributions of individual product lines to the growth of either segment. But with regard to drug-discovery products, Keegan called the FLIPR family, which posted double-digit growth this quarter, "one of the strongest."
Additionally, sales of IonWorks and PatchXpress products "significantly exceeded our expectations for the quarter," he said. This product family "has become our second biggest drug-discovery product line," he added.
While IonWorks offers higher throughput for earlier stage drug discovery, PatchXpress, which MDCC obtained through its acquisition of Axon last year, provides higher data quality but lower throughput for follow-up analyses, Jan Hughes, vice president for global marketing, told CBA News. Several pharmaceutical customers have both instrument types in their labs, he said.
In February, MDCC launched a new version of IonWorks, called Quattro, that offers higher throughput and is "clearly having a very positive impact on this family of products," said Keegan in the conference call. Keegan didn't elaborate on this statement.
The Discovery-1 and ImageXpress imaging systems, however, apparently did not do as well as the others, as Keegan only said he continues "to be optimistic about the potential" of this product group. To give it a boost, MDCC plans to introduce a third imaging system, as well as new software that will control all of its imagers, and analysis software, this quarter.
The new "imaging strategy" will be launched at the Marcus Evans High-Content Screening meeting in London next month, according to Hughes. He declined to disclose details about the new system but said it would initially be closer in price and features to Discovery-1 than to ImageXpress, and would have "more performance than the Discovery-1 at a more cost-effective price."
The company will continue to sell both its Discovery-1 and ImageXpress systems "for the foreseeable future," he said.
Discovery-1, which was originally developed by Universal Imaging (which Molecular acquired in 2002), does not compete directly with ImageXpress, Hughes said.
While Discovery-1 is targeted to researchers, ImageXpress, which costs about three times more, offers higher throughput for screening purposes and more features such as the use of live cells.
The Transfluor technology, which MDCC acquired from Xsira for $11 million earlier this year (see CBA News, 3/15/2005), is still in the launch phase and will contribute to revenues starting this quarter or next, according to Hughes. Xsira has said that licensing Transfluor generated about $4 million in revenue in 2004, up from $2.1 million in 2003 — and that the number is expected to increase.
MDCC plans to offer universal site licenses to the technology rather than individually negotiated licenses that Xsira sold. It will also sell reagents to license holders.
"We feel that the technology is ready for general use, and we would like to make it generally available at a fixed price," Michael Sjaastad, MDCC's director of marketing for imaging, told CBA News.
For an annual fee, a site license will include use of the technology for an unrestricted number of GPCR targets and compounds.
In addition, MDCC will bundle reduced licenses for Transfluor with its imaging systems. "[For] those customers who are in the market for a new imaging system, on which they would like to run Transfluor, we want to make it really attractive," Hughes said.
Where will Molecular Devices go next, after shoring up its imaging with the acquisitions of Universal Imaging and Axon? Answering a question from an analyst during the conference call, Keegan suggested that it might be label-free detection, a promising technology for protein-protein interactions. "I'd say it's an area that we are keeping our eye on closely, and when we feel the right opportunity comes along, we would enter," he said.
Elsewhere in Molecular Devices first-quarter earnings, the company reported that it spent $6.2 million on R&D in the first quarter of 2005, up from $4 million in the year-ago period.
Molecular Devices reported net income of $2.2 million in Q1 2005, up from $1.4 million in the same quarter last year.
As of March 31, Molecular Devices had $8.3 million in cash and cash equivalents on hand, the company said.