Celera loss widens to 48 cents a share

Company's revenue more than doubles

April 27, 2001|By Julie Bell | Julie Bell,SUN STAFF

Celera Genomics Group reported yesterday losing $29.1 million, or 48 cents a share, in its fiscal third quarter even as revenue more than doubled.

The loss in the quarter ending March 31 came on revenue of $23.4 million and widened from a loss of $24.1 million, or 45 cents a share, on revenue of $11.1 million in the corresponding period a year earlier.

The Rockville-based company also said a diagnostics unit, which its parent company announced last year, would be a joint venture between Celera and sister company Applied Biosystems Group of Foster City, Calif.

Celera and Applied Biosystems, which makes scientific equipment, are units of Norwalk, Conn.-based Applera Corp. The diagnostics unit is expected to develop products that help physicians tailor treatments to individuals.

The results for the most-recent quarter included a noncash charge of $10.9 million, or 17 cents a share, related to amortization of Celera's June 2000 acquisition of Paracel Inc., a maker of software used to search gene databases.

Selling, general and administrative expenses increased 44 percent to $15.1 million while research and development expenses remained roughly level at $52.2 million.

Analysts had predicted that Celera would report a loss of 57 cents a share for the quarter, according to the average estimate of nine analysts surveyed by IBES International Inc.

Shares of Celera fell $1.20, or 3.3 percent, to $35.40, despite what Credit Suisse First Boston analyst Meirav Chovav described as a "strong quarter" for the company.

But some analysts seemed to want to know more than Celera is telling them about how well its plans are going to expand into drug discovery from simply selling genomic information.

"The strategy itself is a pretty obvious strategy for an information company," Morgan Stanley Dean Witter analyst Douglas D. Lind said yesterday. "What has been less clear is what the milestones will be going forward."

Milestones are events Wall Street watches for, such as announcements of alliances with large pharmaceutical companies, that give an indication of how valuable a company's technology or information is. Many young companies must do such deals early on as a way of bringing in money to stay afloat. But the deals also reveal to investors that a company is making progress toward its goals.

Lind, however, noted that Celera - which raised $820 million last spring in a secondary offering - has plenty of capital of its own. That means there is no immediate pressure to sell pharmaceutical companies rights to any drug discoveries immediately and, subsequently, no visible way to tell how well Celera is doing at morphing from a strictly information business to a drug-discovery one.

Celera, best known for sequencing the human genome, initially focused on selling drug companies and academic scientists subscriptions to its databases of genomes, genes and proteins, helping them research ways to treat disease. It continues to sell new subscriptions, and it announced yesterday that it had sold two more - to the Ludwig Institute for Cancer Research, a nonprofit with branches in seven countries, as well as to a consortium of Spanish public research laboratories and biomedical centers.

Celera began talking publicly last year about expanding its strategy, saying it also wanted to use its databases itself to discover molecular targets for drugs and potential therapies.

To that end, the company has been 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.

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