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Life Tech Books Orders for 100 Protons as Ion Torrent Business Continues to Drive Revenue Growth

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This article was originally published Aug. 6.

Life Technologies has booked more than 100 orders for its Ion Proton desktop sequencer, which it plans to commercially launch this September, the company said last week during a conference call discussing its 2012 second-quarter earnings.

Officials said that the Ion Torrent business has been one of the company's primary revenue drivers, helping to increase total second-quarter revenue 1 percent to $949.3 million. As of June 30, the company had installed more than 1,000 Ion Torrent PGM machines, making it "the leading next-generation benchtop sequencer," CEO Greg Lucier said during the call.

Strong Ion Torrent sales offset an expected decline in SOLiD instrument sales of around $30 million for the quarter.

Proton and PGM

Among the orders Life Tech took for its upcoming Proton machine were four from the New York Genome Center, which recently signed a 20-year lease in lower Manhattan (see related story, this issue).

Lucier said that the company is on track to begin shipping the Proton to customers in September. Internally, it is sequencing exomes on the Proton I chip and in July the company began sharing some of the exome data with early-access customers.

The Proton will be a "game changer in research," Lucier said, due to its ability to generate sequence in as little as 90 minutes, as well as its flexibility and price.

Lucier said it could be the instrument of choice for a large genome center or could be scaled down to do targeted sequencing very economically.

Even with the anticipated launch of the Proton, there is still increasing demand for the PGM, Lucier said. He added that the company is on track to launch its 400-base read kits for the PGM by the end of the year.

Lucier said that moving forward, the Ion Torrent business — including both the Proton and the PGM — would continue to be a major driver of the company.

"We're extremely bullish on Ion Torrent, both for research and clinical diagnostics," he said. The Proton will be primarily a research instrument at first, transitioning eventually to the clinic, while the company aims to target the PGM to the clinical market in the near term with plans to submit it to the US Food and Drug Administration for 510(k) clearance this year.

This strategy is in line with the current sequencing application landscape, where "the research market focuses on work with exomes, while the diagnostic testing market is using gene panels," he said.

Growth in Asia

The Asia Pacific region saw the company's highest second-quarter growth rate, at 17 percent. Over the last two years, product shipments to that region have increased four-fold, Lucier said.

Japan and Europe grew by 6 percent and 1 percent, respectively, while the Americas declined 2 percent.

In June, the company established a Global Instrument Center of Excellence in Singapore, which manufactures and distributes both the Ion Torrent instruments and molecular diagnostic instruments.

To address rising demand in the Asia Pacific region, Lucier said the company plans to increase the square footage of that center from 75,000 square feet to 133,000 square feet.

Financial Outlook

Life Tech recognized revenues of $949.3 million for the second quarter, up 1 percent from $945 million in the year-ago period. The company saw its biggest growth in the Asia Pacific region, which grew 17 percent.

Revenues for the company's Genetic Analysis business, which includes sequencing, declined 6 percent to $350 million, due to a $30 million decline in SOLiD sales and an $8 million falloff in qPCR royalties, both of which were expected.

These losses were partially offset by the Ion Torrent business, but the company did not break out revenue figures for that product line.

Discounting the impact of reduced SOLiD sales and qPCR royalties, Genetic Analysis revenues would have grown by 5 percent, the company said.

Revenues for the company's Applied Sciences business, meantime, rose 15 percent year over year to $194 million, while revenues for the Research Consumables business grew by 1 percent to $403 million.

The company cut its R&D costs by 7 percent to $84.8 million from $91.1 million a year ago, while SG&A spending increased 4 percent to $266 million from $254.8 million.

Net income for the quarter rose to $122.3 million from $95.2 million in the year-ago quarter.

Previously, Life Tech projected that it would see full-year revenue growth in 2012 of between 2 percent and 4 percent. During the call, Lucier said the company expects that growth to be on the lower end, "closer to 2 percent," primarily due to a slowdown in Europe, especially western Europe.

Additionally, the company continues to take a conservative outlook on research spending in the US due to the uncertain National Institutes of Health budget.

Life Tech finished the quarter with $303.5 million in cash and short-term investments.