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Mass Spec Sales Are Up in Q2; Waters Delays UPLC Shipments, ABI Nixes SPR


Mass spec sales were up for all three major instrument vendors that reported their earnings for the quarter this week, though sales for proteomics applications varied.

Applied Biosystems reported an increase of 40 percent in mass spec revenues for its fiscal fourth quarter ended June 30, compared to the same quarter last year, while Waters’ mass spec sales increased by 11 percent, excluding currency effects. Thermo Electron, which does not quantify its mass spec sales growth for competitive reasons, characterized them as “phenomenal.”

ABI Abandons SPR Instrument

Applied Biosystems also came out with new results from its company review during its fourth quarter earnings call this week. The company said it will no longer sell its high-throughput surface plasmon resonance instrument, the 8500 Affinity Chip Analyzer, which it co-developed with HTS Systems (see PM 5-6-02). “We made the decision to transfer the 8500 Affinity Chip Analyzer product line back to HTS Systems,” said COO Cathy Burzik during the call.

An ABI spokeswoman told ProteoMonitor that the review had shown the instrument did not meet the company’s financial targets. About a year ago, ABI introduced the system for characterizing antibodies, mapping epitopes, and finding sandwich pairs of antibodies and receptors. The company sold the first instrument in January (see PM 1-16-04).

The 40 percent increase in ABI’s mass spectrometry revenues — which totaled $119.5 million — was driven in part by sales of the 4000 Q Trap, which has some protein analysis applications. This instrument had been introduced, but not sold, a year ago, explaining some of the growth rate. Mass spec sales were strong in all major markets, including proteomics, ABI president Mike Hunkapiller said during the call. “We almost surely have captured share … over the last 12 months, particularly in the last quarter,” he said.

The company expects mass spec revenues will continue to increase over the next year, in part due to increased use of ABI mass specs for proteomics research.

Overall, ABI reported $460.5 million in revenues for the quarter, up from $432.9 million during the same quarter last year. Its R&D costs were $56.4 million, similar to last year’s $58.2 million during the same quarter. The company’s net income for the quarter was $51.1 million, down from $96.1 million during the year-ago quarter, when ABI had $47.9 million in income from special items. ABI did not state its assets on its earnings sheet.

Waters said in its Q2 earnings call that its new Acquity UPLC system, introduced at Pittcon in March, was not ready for bulk shipment in the second quarter. Therefore, the company decided to delay most shipments of the new system to the third quarter.

Waters: UPLC Backlogged, Q-TOF Expected

Despite this measure, Waters’ revenues from HPLC sales, excluding currency effects, grew by 5 percent, a rate that was slower than expected. Meanwhile, Waters built up $5 million worth of backlog orders for its Acquity system, which it plans to ship fully in the third quarter. CEO Douglas Berthiaume explained that the delay was necessary to test the instrument’s use in combination with various mass spectrometers, and to refine quality control test protocols prior to large-scale production. In particular, he said, the company wanted to make sure there were no conflicts between the HPLC software and the mass spec software. “[We wanted] to make sure that customer experience out of the box was going to be a very good one,” he said.

The company’s mass spectro-metry business in the second quarter grew by 11 percent, year-over-year, excluding currency effects. However, this was not true for the proteomics-related business: Sales of the current Q-TOFs continued to decline, possibly in anticipation of the new Q-TOF Premier, introduced at ASMS in May, that will start shipping later this year. However, sales of the LCT Premier — used to some extent in proteomics, but mostly for small molecule analysis — were strong.

The decline in Q-TOF sales might also indicate a lower overall demand in proteomics, although that is difficult to prove. “I think proteomics applications are not that robust, but our specific situation [regarding the Q-TOF] is pretty unique,” Berthiaume said in response to an analyst’s question.

But Waters is still optimistic about the prospects for its new Q-TOF. “We expect Q-TOF sales to pick up later in the year as we have the opportunity to demonstrate the newly launched Q-TOF Premier to more researchers and begin shipment in the fourth quarter,” Berthiaume said. But Waters’ revenues from new Q-TOFs will probably not make a significant mark on its balance sheet this year. The company has only recently started to demonstrate the instrument to potential customers, and only expects to ship a small number of units in the fourth quarter. “The Q-TOF Premier is a little bit more complicated than [other mass specs], that’s why we are being a little more cautious about shipping late in the fourth quarter,” Berthiaume said.

Berthiaume also said he hopes the Q-TOF, in combination with a nanoflow version of the new UPLC called nanoAcquity, will gain back some market share lost to FTMS instruments that were launched by other vendors last year. In the proteomics market, “we think that the Expression system, with the new Q-TOF Premier and nanoAcquity, will be competitive with the FTMS systems,” he said.

Though Waters says it is still interested in FTMS technology, it has apparently abandoned its collaboration with IonSpec, first announced in 2002 (see PM 9-2-02), to develop a multi-quadrupole FTMS instrument of its own. Asked by an analyst about the company’s plans regarding an FTMS instrument, Berthiaume said “It’s an area of interest, but we have no collaboration at this point.”

Waters reported $260.5 million in total revenues for the second quarter, up from $232 million during the same quarter last year. Its R&D expenses totaled $15.7 million, up from $13.8 million during last year’s quarter. Net income was $59.8 million, or $0.49 per share, up from $42.1 million, or $0.33 per share, during the same period last year. This includes $17.1 million in income from a litigation settlement with Applera for thermal analysis technology (see PM 3-19-04). As of July 3, Waters had $420 million in cash and cash equivalents.

Thermo: NIH Funding for Proteomics is Strong

For its life and laboratory sciences division, which includes mass spectrometry, Thermo Electron reported a two-percent increase in year-over-year second-quarter revenues, after subtracting effects from currency and acquisitions. Revenues for this segment totaled $369.8 million.

Part of this increase was due to strong sales of mass spectrometry systems: “Our mass spectrometry business continues to do phenomenally well,” said CEO Marijn Dekkers during the company’s second quarter earnings call this week, but did not provide a specific number. The growth in mass spec was due to ion traps, triple quad instruments, as well as the FTMS hybrid, according to the company.

“All our three basic technol-ogies are growing very, very robustly,” said Dekkers. “I think we have the benefit there, as well, of two new products: the Finnigan LTQ, the linear trap, and the hybrid LTQ-FT, the FTMS that we introduced both in the second quarter of last year. [At that time] those products had no sales. We now have the full-year benefit of that. When we look at our growth there, we are absolutely convinced that we are gaining share in the life sciences mass spectro-metry area.”

According to Thermo, US government funding for proteomics remains strong. Dekkers indicated that NIH funding drove a number of sales of mass spectrometers for proteomics. “It seems that a lot of NIH funds are funneled towards proteomics,” Dekkers said, “so we probably get our own fair share of the NIH funding at this particular moment in time for mass spectro-metry.”

Thermo Electron had $525.3 million in total revenues for the quarter, up from $467.3 million during the same period a year ago. The company’s R&D expenses were $32.6 million, up from $32.6 million during the year-ago period. Thermo’s net income for the second quarter was $91.1 million, or $0.54 per share, up from $53.1 million, or $0.32 per share, during the same period last year.

As of July 3, the company had $306.6 million in cash and cash equivalents, and $65.2 million in short-term investments.


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