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454 Attributes Decline in Q2 Revenues to Delays from Customers Awaiting GS FLX+ Upgrade


By Julia Karow

This article, originally published July 21, has been updated with comments from 454's president and CEO, Chris McLeod.

454 Life Sciences' revenues decreased by an undisclosed amount in the second quarter as sales from Roche's genomic analysis business, which includes 454 and NimbleGen, declined 12 percent during the first half of 2011.

454 President and CEO Chris McLeod attributed the revenue decline to the launch of the GS FLX+, an upgrade to the GS FLX that the company launched in late June. "Customers delayed purchases of reagents on the GS FLX system as they waited for their upgrade to GS FLX+," he told In Sequence by e-mail, adding that the rollout of the upgrade is "proceeding smoothly."

The upgrade comes with a new sequencing chemistry, GS FLX Titanium XL+, which increases the peak read length to about 700 bases, with some reads reaching more than 1,000 bases (IS 5/24/2011).

McLeod said that 454 is seeing a stronger than expected interest in new instrument purchases of the GS FLX+ system, "pointing to the continued importance of high-quality, long-read sequencing that, for many applications, is complementary to short-read sequencing approaches."

In addition, 454 continues to see "steady placement" of its GS Junior system, "particularly in medical laboratories and institutes with a focus in virology and infectious disease, oncology, and immunology research," he said.

McLeod noted that while there is "increasing competition in the benchtop sequencing market," the GS Junior did well on the recent assembly of the German Escherichia coli outbreak strain by the UK Health Protection Agency, compared to other platforms. "Ultimately, market penetration is determined by the capability of a system to answer biologically-relevant genomic questions," he said.

First-half sales in Roche's genomic analysis group, which includes results from 454 Life Sciences and Roche NimbleGen, declined 12 percent in local currencies to less than CHF 100 million ($122 million), according to Roche's half-year earnings presentation. The company did not provide sales numbers for the second quarter alone, but in the first quarter, genomic analysis sales had still been on the rise, growing 1 percent year over year (IS 4/19/2011).

Applied Science, one of five business areas of Roche's diagnostics division and the home for the genomic analysis business, recorded CHF 179 million ($219 million) in revenue for the second quarter — a 16-percent decline in Swiss francs and a four percent decline in local currencies that the firm said is "mainly due to the year-on-year effect of H1N1 influenza testing, with increasing competition in gene sequencing and flat research funding as contributing factors."

Have topics you'd like to see covered in In Sequence? Contact the editor at jkarow [at] genomeweb [.] com.