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Complete Genomics' Q1 Revenues Drop 43 Percent

NEW YORK (GenomeWeb News) – Complete Genomics reported after the close of the market Monday that its first-quarter revenues declined 43 percent year over year, falling short of Wall Street's consensus estimate on the top line.

The Mountain View, Calif.-based whole human genome services firm had total revenues of $3.9 million for the three months ended March 31, compared to $6.8 million for the first quarter of 2011. Analysts, on average, expected sales of $4.8 million.

The miss led to a 13 percent drop in Complete Genomics' stock price to $2.34 in Tuesday morning trade on the Nasdaq.

During the quarter, it recognized revenue for more than 900 genomes, and delivered data for approximately 1,200 genomes, which included more than 100 non-revenue generating genomes under the Wellderly and cancer grant programs. As of the end of the quarter, its backlog was around 5,700 genomes, including 1,000 genomes booked in the quarter, representing a total revenue potential of around $27 million.

On a conference call following the release of the results, Complete Genomics CEO Cliff Reid attributed the decline in revenue to the production delays the company experienced in the third and fourth quarters of last year.

"The revenue dynamic of our business is that customers start small and then go larger," Reid said. "By delaying delivery of data, it has a very detrimental effect on our business because customers who are waiting for small projects to come in before they turn around and place a larger order are delayed.

"We saw significant numbers of examples of that, where some large transactions that we expected to get done in Q1 and early Q2 have been delayed due to our delays in delivering data back to our customers," he added.

Reid said the firm expects to deliver approximately 2,000 genomes to customers in the second quarter.

Complete Genomics' net loss for the quarter was $20.2 million, or $.60 per share, compared to a net loss of $12.5 million, or $.48 per share, for Q1 2011. Wall Street expected a loss of $.62 per share.

The firm's R&D spending increased 28 percent to $8.7 million from $6.8 million, while its SG&A expenses nearly doubled to $5.3 million from $2.7 million.

Complete Genomics finished the quarter with $63.1 million in cash, cash equivalents, and short-term investments, and $500,000 in restricted cash.

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