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Life Tech Reports Increase in CE Business for Research and Clinical Labs, Strong Growth in SOLiD Sales in Q2

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By Julia Karow

This article was originally published July 30.

Strong growth in next-generation sequencing and an increase in some aspects of its capillary electrophoresis business helped Life Technologies’ genetic systems division grow 5 percent in the second quarter, the company said last week.

In total, genetic systems, which includes both CE and the next-gen sequencing, booked non-GAAP revenues of $235 million, up 5 percent over the same period last year, and 7 percent organically. The company did not report GAAP revenues for the business segment.

Part of this growth came from a mid-single-digit increase of sales of CE instruments and consumables to research and clinical labs.

During a conference call to discuss the firm’s second-quarter earnings, chairman and CEO Greg Lucier specifically mentioned the 3500 Genetic Analyzer, a low-to-mid-throughput CE instrument Life Tech launched last year, saying that it has “reinvigorated” the CE business. So far, the company has placed 400 of the machines, and demand for the 3500 “continues to be very robust,” he said.

The company plans to apply for 510(k) approval of the system next year, according to a presentation to investors in June.

The strong CE business for research and clinical use, however, was “partially offset” by a decline in sales of CE instruments and consumables sold to applied markets, according to chief financial officer David Hoffmeister. He attributed the decline to particularly strong sales in the year-ago quarter due to a large order from the Japanese police.

According to the June presentation, Life Tech’s CE business currently accounts for about 90 percent of its sequencing business, consisting of about 70 percent from CE for basic research and about 20 percent from CE for applied markets.

Life Tech’s next-generation sequencing business, making up the remaining 10 percent of sequencing, showed strong double-digit growth during the quarter, as customer feedback on the SOLiD 4 and the EZ Bead emulsion PCR system “continues to be very positive,” Hoffmeister said.

He noted that so far, approximately half of the installed base of SOLiD 3.5 instruments has been upgraded to SOLiD 4.

“We continue to see good progress into the market with the SOLiD technology,” said Mark Stevenson, Life Tech’s president and chief operating officer.

According to Stevenson, the SOLiD continues to be taken up by smaller genome centers, both in North America and Europe, for use “particularly in the area of cancer.”

He said the company expects to broaden the base of SOLiD with the launch of the smaller SOLiD PI system later this year (IS 3/2/2010), and to drive down the cost of genome sequencing further with the hq update package for the SOLiD 4, also scheduled for later this year (IS 2/2/2010).

Stevenson also commented on the single-molecule sequencing platform under development at Life Tech, saying that the company is “making good progress in developing the system” and continues “to engage with customers around early access and discussing the experiments and applications that they see for single-molecule sequencing.” As of June, Life Tech said that early-access instruments will be available for collaborations in the fourth quarter of this year.

Overall, Life Technologies booked $904 million in second-quarter revenues, up 8.5 percent over last year’s revenues during that period.

Research and development costs totaled $90.3 million, up 10 percent over last year.

Selling, general, and administrative expenses during the quarter were $252.8 million, approximately even with the year-ago period.

The company reported net income of $110.5 million, up almost three-fold compared to last year’s second quarter.

As of June 30, Life Tech had $706.4 million in cash and short-term investments.

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