By Tony Fong
NEW YORK (GenomeWeb News) – Coming off a soft second quarter, Greg Lucier, CEO of Life Technologies said at the UBS Global Life Sciences Conference today that the company is "now repositioning" itself for the challenges it faces ahead and has started the process of righting itself.
He also highlighted the performance of Life Tech's Ion Torrent Personal Genome Machine benchtop sequencer, saying it has seen "incredible uptake."
During the company's most recent earnings release in August, the Carlsbad, Calif.-based company fell short of analyst estimates on both the top-line and bottom-line, leading a number of investment analysts to lower their full-year 2011 estimates for the firm.
During his presentation today at UBS, Lucier acknowledged that during the first-half of 2011 Life Tech had seen "a tough set of challenges," but that the company has taken steps to try to remedy the situation. While he didn't reference it during his talk today, those efforts include layoffs that were first disclosed last month.
In total, Lucier said, the cost-savings initiatives are on track to reduce spending at Life Tech at a run rate of between $10 million and $20 million, Lucier said.
Also pulling down Life Tech's Q2 earnings results was a change in the firm's sales strategy in China, when it went to a direct sales model on its consumables. Without providing details, Lucier said at UBS that its China business is "recovering in Q3 as we said it would."
He repeated previously stated guidance for revenue growth of between 2 percent and 4 percent for full-year 2011 with EPS between $3.70 and $3.80 on a constant-currency basis.
Life Tech's most-talked about product is the Ion Torrent PGM platform launched late last year, and which recorded $13 million in revenue during the second quarter. Today, Lucier said adoption of the instrument is exceeding company's expectations and the platform has moved beyond the basic research market into other spaces, including molecular diagnostics.
David Hoffmeister, the company's CFO, added during a breakout session that the platform, which sells for $50,000 will pull in $80,000 per machine in consumables each year, based on three runs per week.
Since its launch, Life Tech has been building out PGM's throughput capabilities by further developing its chips, and in the "next couple of weeks," Life Tech will introduce the 318 chip with 1 gigabase throughput and an average read-length of 200 base pairs, Lucier said.
He also suggested that the semiconductor-based technology on which PGM is built, could be the future of sequencing — for Life Tech, at least.
"Nothing can compete with semiconductor sequencing in terms of speed, economics, and simplicity," he said.
Asked about the company's plans for its high-throughput sequencers, such as the 5500 Series Genetic Analysis System, which use light-based technology, he said that Life Tech is committed to those platforms. At the same time, though, he said that expanding the capabilities of the light-based sequencing technology presents more challenges than making improvements on semiconductor-based systems, and added that the 5500 is "not as profitable for us."
Demand for the 5500 continues, and since its launch late last year, hundreds of systems have been installed, Lucier said. Customers should also expect improvements to the systems' throughputs. But he cautioned that there "isn't a forever runway" for the light-based technology, which also underlies Illumina's sequencing platforms.
Life Tech, he said, is "unequivocally … putting all chips into Ion Torrent" and the PGM.
While the instrument has created buzz among researchers and the investor community, it has also raised concern about potential cannibalization of Life Tech's capillary electrophoresis sequencing business. During Illumina's talk at the conference on Monday, its CEO Jay Flatley indicated that Illumina's own benchtop sequencer, MiSeq, anticipated to launch during the fourth quarter, would eat into the CE market.
Lucier, however, brushed off predictions that CE sequencing would disappear due to instruments such as PGM or MiSeq as "erroneous." While Life Tech's CE business declined during the second quarter by an undisclosed amount, Lucier said that to date there has been no indication that Ion Torrent has eaten into the sales of its CE instruments.
CE sequencing, he said, is the established gold standard for identifying specific sequences. Also CE read-lengths are "so long" and no other technology can match the technology on that measurement. As a result, CE "is not going away anytime soon," Lucier said.
In five years, he said, there may be some cannibalization, but if that were to happen, Life Tech would be the one doing the cannibalizing.
On academic/government funding, he expects National Institutes of Health funding to be "OK" for 2012. It may be flat compared to 2011, or slightly down, but "it won't be gutted.
"There is still strong underlying commitment to basic research," on the part of NIH, he said.