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Complete Genomics Posts Flat Q3 Revenues

NEW YORK (GenomeWeb News) – Complete Genomics reported after the close of the market Monday flat revenues year over year for the third quarter, but it beat analysts' consensus estimate for the top line.

The Mountain View, Calif.-based whole human genome sequencing services firm brought in total revenues of $4.2 million for the three-month period ended Sept. 30, even with revenues from Q3 2010. It beat the Wall Street forecast of $3.7 million.

The firm recognized revenues on more than 700 genomes compared to more than 300 for the third quarter of 2010.

Complete Genomics' net loss for the quarter was $21.6 million, or $.65 per share, compared to $20.5 million, or $21.87 per share, for Q3 2010, when the firm was still privately held. Complete Genomics went public in November 2010. Analysts had expected a loss of $.55 per share.

The firm's R&D costs for the quarter were $9.5 million, up around 90 percent from $5 million. Its SG&A spending jumped 87 percent to $7.3 million from $3.9 million. Its cost of revenues was $8.2 million, which is an item with no effect on its bottom line last year. However, the 2010 third quarter included $6 million in start-up production costs versus no such costs in the most recent quarter.

Complete Genomics Chairman, President, and CEO Cliff Reid said on a conference call following the release of the results that the company signed orders for approximately 3,400 genomes worth roughly $17 million during the quarter. That total includes about $14 million associated with orders from the National Cancer Institute and the Inova Translational Medicine Institute — orders that were mentioned on its Q2 conference call in August.

Reid said that translational medicine will be an important new market for the firm. "We are now in early-stage discussions with a number of other institutions that are looking at using whole genome sequencing in their translational studies," he said.

Complete Genomics signed up 25 new customers during the third quarter and now has over 100 customers that have used the firm's services, said Reid.

Its order backlog as of the end of the quarter was around $24 million and 4,800 genomes.

An expansion of its sample preparation capabilities during the quarter "did not go smoothly," Reid said on the call. As a result of quality control issues with new instruments, the firm lost around 30 days of sample prep operations. Though the problem has been completely fixed and the sequencers are operating at full capacity, Reid said the delay has shifted approximately 700 genome shipments from late Q4 this year to early Q1 2012.

"We now expect to ship between 900 and 1,200 genomes in the fourth quarter this year, resulting in annual shipments in 2011 of 3,200 to 3,600 genomes," said Reid.

Complete Genomics currently has 24 production sequencers in house, and during Q3 it began upgrading the sequencers to use higher-density arrays, which enable throughput of 1.5 genomes per sequencer per day, up from 1 genome per day. Reid said the upgrades will be made during the current quarter and during the first quarter of 2012. "After all the sequencers have been upgraded, our sequencing capacity will be in excess of 1,000 genomes per month," he said.

The firm's next generation of sequencers are expected to be in use by mid-2012. Those new sequencers will initially have a throughput of roughly six genomes per day.

"We continue to make progress on offering diploid genomes and achieving CLIA certification of our facilities, both of which we expect to occur around mid-2012," said Reid. "These new developments are important steps toward addressing the emerging clinical applications for whole genome sequencing."

The company ended the third quarter of 2011 with $105.1 million in cash, cash equivalents and short-term investments.

In early Tuesday trade on the Nasdaq, shares of Complete Genomics were down 5 percent at $4.80.

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