By Julia Karow
This article, originally published April 27, has been updated with additional information from Life Technologies' earnings call and post-earnings Q&A.
First-quarter revenues for Life Technologies' Genetic Systems division increased 14 percent over last year, driven by an 80-percent surge in the firm's next-generation sequencing business, as well as strong sales of capillary electrophoresis instruments and reagents and double-digit growth in its human identification business.
Overall, Life Technologies reported $884.9 million in revenues for the first quarter of 2010 last week, a 14-percent increase over the same period last year. Genetic Systems, which includes both CE and next-gen sequencing platforms and reagents, contributed $238 million to those revenues.
Life Tech continues to "gain traction" in next-generation sequencing as it improves both performance and ease of use of its SOLiD platform, said Senior Vice President and Chief Financial Officer David Hoffmeister during a conference call to discuss the firm's first-quarter earnings. More specifically, during a post-earnings Q&A, Investor Relations Senior Director Eileen Pattinson confirmed an analyst's suggestion that revenues from SOLiD instruments and consumables grew about 80 percent over the year-ago quarter.
"Ongoing improvements in the technology, new product launches such as the SOLiD PI system, along with investments in our field support sales teams and marketing, are paying off," Hoffmeister said, pointing to the recent sale of 10 SOLiD systems to the Genome Sciences Centre at the British Columbia Cancer Agency (IS 4/13/2010).
However, to date, the company has placed no SOLiD systems at the Ignite Institute of Individualized Health, which said earlier this year that it would acquire 100 SOLiD 4 machines under a partnership with Life Tech. These systems were to be installed starting in the first quarter and over the course of 2010 (IS 2/2/2010), but the institute recently lost some of its financial backers and is apparently still searching for a permanent location (IS 4/13/2010 and GWDN 4/22/2010).
"Ignite needs to get funding," Pattinson said. "Once they have funding, we are more than happy to partner with them." She added that the company presently does not know when SOLiD systems will be installed at Ignite this year.
However, the company has been "very active" rolling out the SOLiD 4 system during the first quarter, according to President and Chief Operating Officer Mark Stevenson, who characterized it as "our best quarter ever" in terms of SOLiD business. In addition, he said, the EZ Bead system that Life Tech introduced in January — a sample prep system to automate the emulsion PCR — has been well received by customers.
According to CEO Greg Lucier, the company is increasingly focused on medical applications for the SOLiD system. He said Life Tech believes the platform has "a distinct accuracy advantage" over other platforms. "Customers that are discriminating are starting to understand that, and we think that really allows SOLiD to be a preferred platform for medical applications."
In March, for example, the company announced a collaboration with the Translational Genomics Research Institute and US Oncology to demonstrate whether cancer genome sequencing can help define treatment strategies for patients.
"While we have been second [to market], we might just be first in terms of medical applications of sequencing," Lucier added, referring to the fact that the SOLiD system was commercialized after Illumina's Genome Analyzer.
The division's CE business — still the largest part of Genetic Systems — grew by a mid-single digit percentage in the quarter, according to Hoffmeister.
While there was "solid growth" of CE consumables sales both for research and applied applications, CE instrument revenues grew due to strong sales in clinical research, with high demand for the 3500 Genetic Analyzer platform in particular. This growth was partially offset by a year-over-year decline of instrument sales into applied markets, for which the company had a particularly large sale in the first quarter of 2009.
With regards to its single-molecule sequencing technology, dubbed "Project Starlight," which is still in development, Stevenson said that the company is beginning to talk to potential early-access customers and expects to "more fully engage with them" at the end of this year.
Life Tech's research and development expenses for the quarter increased to $86.3 million, from $80.3 million during the year-ago period.
The company's selling, general, and administrative costs increased to $259.7 million for the quarter, up from $241.1 million a year ago.
Life Tech's net income for the first quarter rose to $91.5 million, from $15.6 million during Q1 of 2009.
As of March 31, the company had $641.9 million in cash and short-term investments.
For the remainder of the year, Life Tech still expects overall revenues to grow in the mid- to high-single-digits, the actual growth depending on how quickly stimulus funding from the National Institutes of Health will come through. Not currently included in this guidance are revenues from SOLiD instruments to be installed at the Ignite Institute.