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Proteomics Platform Sales Remain Strong as Bio-Rad Reports 6.76 Percent Q2 Rev Growth

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Strong sales of its Proteon XPR36 protein interaction array system and the Bio-Plex suspension array system for quantitative peptide and protein analysis helped push up sales at Bio-Rad Laboratories to $339.1 million during its second quarter, an increase of 6.7 percent compared to $317.7 million a year ago.
 
The year-ago figure included additional revenue of $11.7 million resulting from a licensing settlement reached with bioMerieux. Excluding the agreement, revenue growth for the second quarter of 2007 was 10.8 percent.
 
The company’s Life Science segment, which houses the Proteon and Bio-Plex platforms, as well as other tools with proteomics uses, posted sales of $146 million for the three months ended June 30, up 8.6 percent from the year-ago period.
 
Company officials pointed to the performance of the Proteon and Bio-Plex systems, citing their “strong growth,” though they did not elaborate further. According to Brad Crutchfield, vice president and group manager of life science for Bio-Rad, the Proteon system, which was introduced late last year, has a sales cycle of one year to 18 months “and we’re starting to get really into that window and placing a lot of instruments,” he said in a conference call accompanying the release of its earnings.
 
The system, which Bio-Rad introduced in September after purchasing ProteOptics, has been seen from the start as a crucial part of the company’s strategy to bulk up sales in the protein research field, a segment that Bio-Rad went after aggressively throughout last year [See PM 03/02/06].
 
Prior to the purchase of ProteOptics, Bio-Rad’s main proteomics platform had been its Bio-Plex system. The Proteon instrument is based on surface plasmon resonance technology and simultaneously tracks optical changes at different sites in an array without the need for molecular labeling.
 
Late last year, Bio-Rad completed its purchase of the surface enhanced laser desorption ionization platform from Ciphergen, but the company had little to say this week about the effect of the purchase on its balance sheet. Christina Tsingos, vice president and CFO, said that Life Science segment profits were down sequentially to $1.5 million for the quarter, “reflecting higher spending for research and development as well as costs associated with the absorption of the SELDI business and increased personnel.”
 
Indeed, the company has remained mum about the SELDI product line, although officials did say recently that they continue to develop the system [See PM 07/26/07]
 
Profits companywide dropped 20.4 percent during the quarter to $25.7 million, compared to $32.3 million a year ago. However, the year-ago figure included about $6.5 million in profits due to the settlement agreement with bioMerieux.
 

The Proteon system has a sales cycle of one year to 18 months “and we’re starting to get really into that window and placing a lot of instruments.”

During the second quarter, Bio-Rad announced it had agreed to purchase Swiss immunohematology firm Diamed Holding for about $400 million. This week, company officials said that much of the $502.9 million cash and short-term investments Bio-Rad had as of June 30 will be used to finance the acquisition.
 
Tsingos said the company will also explore other options to finance the transaction.
 
“Traditionally, we’ve accessed the public high yield market and that is certainly something we would look at this time as well,” she said. “Clearly, there’s a lot of cash on the balance sheet today and we don’t need to finance the entire purchase price, but some portion of it quite frankly makes good sense for us, given that rates are still fairly attractive, and we want to maintain a certain amount of liquidity to continue to be opportunistic” in relation to possible merger and acquisition activity.
 
Bio-Rad’s Clinical Diagnostics segment posted receipts of $189.8 million, up 5.4 percent from $180.2 million during the second quarter of 2006. During the quarter, the company entered into two multi-year agreements with Quest Diagnostics for the placement of the BioPlex 2200 diagnostic platform for analysis of disease markers, autoimmune test reagents, and HIV test systems and quality controls in Quest’s network of reference laboratories.
 
During the quarter, R&D spending rose to $34.8 million, up 12.2 percent.
 
Asked where R&D investment would be directed during the near term, company president and CEO Norman Schwartz said that most would go toward further development of new assays for its BioPlex 2200 system.
 
The company gave guidance for the remainder of 2007 of mid-single digit growth in sales.

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