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WaferGen Turns First Quarterly Profit on SmartChip Early-Access Sales

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On the heels of the full commercial launch of its SmartChip real-time PCR system earlier this month, WaferGen this week reported that it turned its first quarterly profit since the company went public in 2007.

In addition, WaferGen said that its revenues for the second quarter of 2010 grew by more than 500 percent year over year and nearly 10 percent sequentially; and that it was aiming to end 2010 with a four- to five-fold increase in revenues over the previous year.

The Fremont, Calif.-based genetic analysis tool provider said that its revenues grew to $432,000 during the second quarter ended June 30, compared to $69,000 in the second quarter of 2009. In addition, WaferGen said that its six-month receipts totaled $822,000 in 2010, compared to $111,000 for the six months ended June 30, 2009.

WaferGen said that the majority of the revenue was from its SmartChip early-access program, under which the company sold SmartChip systems, consumables, or services to select customers in advance of the full commercial launch of the system, which occurred two weeks ago (PCR Insider, 8/5/10).

WaferGen also reported a net income of $646,000, or $0.02 per share, for Q2 2010 compared to a net loss of $2.9 million, or $0.11 per share, in Q2 2009. The company also trimmed its year-to-date net loss by about 17 percent to $3.9 million from $4.7 million in the first half of 2009.

As expected, due to the preparation of the SmartChip system for market, WaferGen upped its quarterly R&D spending to $1.5 million from $1.2 million a year ago, and half-year R&D spending to $3 million from $2.2 million in 2009.

WaferGen said it had $1.5 million in cash and cash equivalents as of June 30, down from almost $6 million at the end of 2009.

Although WaferGen has an accumulated deficit of about $34 million, the positive second-quarter results may be a glint of light at the end of the tunnel for the company, which has accrued quarterly losses since it went public in 2007 in an effort to develop and commercialize the SmartChip system.

In an April prospectus filed with the US Securities and Exchange Commission, WaferGen said that it was going to need "additional working capital," likely obtained "through the sale of additional equity securities or otherwise," to support future operations (PCR Insider, 4/29/2010).

Indeed, in July the company announced the closing of a $7.2 million registered direct offering, which netted the company $6.7 million (PCR Insider, 7/8/2010).

This week, WaferGen said that it was aiming to reach approximately $1.5 million to $2 million in total revenue by the end of the year as it begins selling SmartChip systems to new customers and consumables to existing early-access and new customers.

If WaferGen can achieve this goal, it would represent a four- to five-fold increase over the $380,000 in total receipts logged by the company in 2009.

The entire SmartChip system comprises 5,184-well consumable chips preloaded with target-specific primers; a single-sample or multi-sample nanodispenser for dispensing samples and master mix onto a SmartChip panel under vacuum conditions; and the SmartChip cycler, which performs PCR thermal cycling, data collection, and amplicon melting.

WaferGen is targeting the system to customers at research institutions and biotech and pharmaceutical companies interested in performing gene expression studies and biomarker discovery and validation.

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