After several years of gradually de-emphasizing the genomics information business upon which it was launched, Celera Genomics last week officially pulled the plug on its commercial database efforts.
Celera said in a statement that it will "substantially discontinue" its online business once most of its current subscriptions expire on June 30. Furthermore, after July 1, the company will release its human, mouse, and rat genome data into the public domain through the National Center for Biotechnology Information.
Celera had handed over marketing of the Celera Discovery System to its sister company Applied Biosystems in 2002 [BioInform 04-29-02] , so the decision to exit the data business affects both halves of the Applera corporate family.
"We're basically exiting that piece of the business in terms of the subscription data product," Tony Kerlavage, senior director of ABI's online information business, told BioInform. "Right now, the focus is [on] 'How do we provide an advantage for AB's customers basically [in] using AB's instruments and reagents and other products [and] how do we help them with their data workflow?' And really that's independent of having any proprietary data."
This move is in line with recent changes in ABI's informatics strategy, which has shifted toward a services-based model during the course of 2005. The company's partnership with Deloitte Consulting, announced in March [BioInform 03-07-05], and its distribution deal with Geospiza (see story this issue), are examples of how ABI now views informatics more as part of its support infrastructure rather than a source of revenue in its own right.
One component of this new strategy is ABI's web presence, which the company was previously planning to split into two components: a free "community" website based on its Panther protein classification system, which it released in January [BioInform 01-10-05], and a subscription-based website based on CDS. The two were to be integrated with ABI's MyScience e-commerce portal, through which customers can order TaqMan gene-expression and SNP assays.
Kerlavage said last week that ABI's web presence is "evolving, and we are going through a lot of focus to make the purchasing of these information-rich products, and other products in general, easier for our customers. So we are putting a major effort into our portal and into our e-commerce system to enhance that purchasing experience."
Celera's revenues from its information business have been steadily declining over the last few years (see chart), but ABI still saw some commercial value in the system as recently as January, when a company official told BioInform that even if some portions of CDS were to be released publicly, the "value-added curation pieces" would still be made available through a subscription "or potentially bundled with some of our analysis tools."
ABI was most recently selling CDS for $875 per month for commercial subscribers and $175 per month for academic subscribers.
Now, the data will be freely available through NCBI. Kerlavage said that the company would deposit the raw sequence data from human, mouse, and rat into NCBI's trace repository, and that the latest versions of all three assemblies would also be released into the public domain.
Kerlavage said that for mouse and rat, Celera had sequenced several strains that were not previously available in the public domain, "so we think this is going to add a lot of value to the researchers in the mouse and rat community."
In particular, he said, because funding for finishing the rat genome has not yet been secured, "having these extra data can help improve the overall assembly and annotation of the rat genome, in addition to having different strains, which means that people can look for SNPs if they're interested."
Kim Worley, a scientist at the Human Genome Sequencing Center at Baylor College of Medicine who co-authored the rat genome sequencing paper in 2004, told BioInform that she wasn't familiar with the additional rat data that Celera plans to release into the public domain, but agreed with Kerlavage that additional strains would be helpful for researchers working in comparative genomics or SNP discovery.
She said the rat sequencing project is "in between phases" while it awaits funding for finishing. "There's nothing really active right now on annual updates" to the public data, she said.
Ultimately, Celera intends to see some commercial benefit from its release of the data into the public domain. In a conference call following the release of Celera's quarterly earnings last week, Kathy Ordoñez, president of the company, said that Celera "will continue to collect royalties on certain products sold by the Applied Biosystems group of Applera Corporation pursuant to the marketing and distribution agreement entered into in April 2002."
Public availability of the genome data is expected "to facilitate sales of these royalty-bearing Applied Biosystems products," Ordoñez said. "We believe that contributing these data sets should stimulate more experimentation among academic and commercial researchers, which should, in turn, increase demand for these Applied Biosystems products."
In addition to CDS, products that generate royalties under the agreement include the TaqMan assays, SNPlex genotyping system, VariantSEQr resequencing system, arrays used with ABI's Expression Array System, and TaqMan low-density arrays.
In February, ABI and Celera revised this agreement to fix the previously variable royalty rate at 4 percent, beginning in fiscal year 2006 and running through 2017 [BioInform 02-14-05].
In addition, ABI agreed to reimburse Celera for any "shortfall" in earnings during the 2003-2006 fiscal years below $62.5 million "if the shortfall is due to the actions of the Applied Biosystems group including changes in marketing strategy for CDS."
Celera said in a statement last week that its decision to discontinue the online business will result in a charge of "several million dollars" in the fourth quarter of its 2005 fiscal year, which ends June 30.
The company said that this charge is "not reflected" in its financial outlook for fiscal 2005, in which it projected total revenues in the range of $29 million to $32 million.
Celera posted revenue of $60.1 million for its 2004 fiscal year, $88.3 million in fiscal 2003, and $120.9 million in fiscal 2002.