Celera offers glimpse into future

Revenue increases

losses widen, but by less than expected

January 26, 2001|By Julie Bell | Julie Bell,SUN STAFF

Celera Genomics Group executives brought the company's evolving strategy into sharper focus yesterday, giving insight into how discoveries made by its genome-searching computers could be used to develop tests that help doctors tailor treatments to a patient's genetic makeup.

But on an earnings conference call, Celera Chief Executive Officer Tony L. White and other company executives also said details of the strategy will be withheld for the next several months.

"I think it will be a quarter or two before we really see what the product of this is," White told analysts and others during the call, which was held to discuss the company's fiscal second-quarter earnings.

Rockville-based Celera continued to increase revenue by adding subscribers to its genomic databases, which drug companies and academic researchers use to help find therapies. But losses widened as the company spent more on research and development and on expanding its sales and business development groups.

Revenue in the three months that ended Dec. 31 jumped 145 percent, to $20.3 million from $8.3 million. Celera has more than 30 customers, including nonsub- scribers with whom it has collaborations.

The company reported a net loss of $29.7 million, or 49 cents a share, compared with a loss of $24.3 million, or 47 cents a share, posted for the corresponding period a year earlier. Analysts had expected a loss of 58 cents a share, according to the average estimate of eight analysts surveyed by Zacks Investment Research Inc.

The results include an $11 million noncash charge primarily related to Celera's June acquisition of Paracel Inc., a California-based company that makes hardware and software used to search genomic databases.

Best known for sequencing the human genome, Celera initially planned to make money as a scientific information company selling database subscriptions. But over the past year, Celera executives have taken steps to turn it into a drug-discovery company, too, one that would use its databases to find therapies.

Celera is building a "proteomics factory" at its Rockville headquarters that will use super-fast machines to determine what proteins are at work in certain cancers and other diseases.

Yesterday, Celera continued a stream of recent announcements that detail its migration into the drug-discovery and diagnostic fields.

The company said it had signed a research agreement with Institut de Recherche Pierre Fabre, a French corporation.

The two companies, using patients enrolled in clinical trials at Pierre Fabre, plan to research whether variations in genes play a role in how well breast cancer drugs work in some women compared with others, and in what side effects result from the drugs.

"That's another move into the clinical world," said Salomon Smith Barney analyst Meirav Chovav, who said the company has yet to lay out its strategy but is delivering hints at a future in medical products and diagnostics.

Publicly traded Celera is a unit of Norwalk, Conn.-based Applera Corp. Its sister company, publicly traded Applied Biosystems Group of Foster City, Calif., is a maker of genome sequencers and other scientific equipment.

Applera announced in November that it had hired former Roche Molecular Systems President Kathy Ordonez to head a "molecular diagnostics initiative."

Applied Biosystems is preparing to apply to the federal government to market a diagnostic test for human immunodeficiency virus genotyping that would allow doctors to keep abreast of mutations in the virus affecting their AIDS patients and tailor therapies accordingly.

Eventually, said Banc of America Securities analyst James F. Reddoch, the molecular diagnostics group might be spun off into a third publicly traded unit of Applera.

Yesterday, White declined to give further details of any planned financial structure for the unit.

Reddoch described the molecular diagnostic unit as "the bridge" between Celera and Applied Biosystems.

The formation of the unit, with its possibilities for developing additional diagnostic testing along the lines of the HIV genotyping test, means Celera might be able to share in revenues from diagnostic products long before any drugs it discovers begin moving toward the market.

Diagnostics, Reddoch said, provide "a medium term goal for turning genomics into products."

Shares of Celera lost 94 cents yesterday to close at $49.44.

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