Celera narrows loss to 25 cents a share

1Q losses declined from 43 cents last year as revenue rose 49%

October 25, 2001|By Julie Bell | Julie Bell,SUN STAFF

Celera Genomics Group reported yesterday that its losses narrowed in its fiscal first quarter as revenue grew 49 percent and costs fell.

The Rockville company, which brings in money primarily by selling online subscriptions to its gene databases, predicted that end of its business would become profitable next year.

But Celera's executives shied away from making predictions on when the company's more recent focus on drug research would lead to diagnostic or therapeutic products.

Celera, known for its role in mapping the human genome, reported a net loss of $15.6 million, or 25 cents a share, on revenue of $27.3 million for the three months that ended Sept. 30. That compares with a loss of $25.7 million, or 43 cents a share, on revenue of $18.3 million in the first fiscal quarter last year.

The loss includes a pre-tax loss of $9.4 million from Celera's interest in Celera Diagnostics, of Alameda, Calif., a joint venture with sister company, Applied Biosystems Group, a scientific toolmaker in Foster City, Calif.

Both Celera Genomics and Applied Biosystems are publicly traded units of Applera Corp., based in Norwalk, Conn.

Celera also announced yesterday that Chief Operating Officer Peter Chambre was stepping down after slightly more than a year in the job.

The company declined to provide an explanation, but Celera President J. Craig Venter told analysts during a conference call that the company plans to beef up its management team by adding people with biopharmaceutical experience.

The hiring of Chambre, the former chief executive officer of Bespak PLC, a London maker of drug delivery systems such as inhalers, was announced in July 2000.

He was charged with helping Celera form a plan for making money after its sequencing of the human genome."[Chambre's departure is] a reflection of the fact that Celera is evolving from a database company ... to a pharmaceutical company," said Eric Schmidt, an analyst with SG Cowen Securities Corp.

Applera's three-pronged strategy is to use Celera to discover proteins to treat diseases and molecular markers to diagnose them; to use information discovered by Celera to develop diagnostic tests at Celera Diagnostics; and to make and market scientific tools through Applera.

Celera Genomic's smaller net loss reflects in part the company's lower research and development expenses and the fact that it is spreading a smaller amount of costs over several quarters.

Revenue is rising because of more subscribers to company gene databases.

The company recently added 15 academic subscribers and three business subscribers, including two announced yesterday: Genentech Inc., a biotechnology company in South San Francisco and Immusol Inc., a private biopharmaceutical company in San Diego. With the additions, Celera has 16 business subscribers and 150 academic and institutional ones.

But investors are more focused on whether Celera's efforts to become a drug-discovery company will pay off.

Analysts said the company will take a step in that direction after it acquires Axys Pharmaceuticals Inc. a small California company that has expertise in identifying and testing drug candidates in the laboratory. The acquisition, initially valued at $174 million, is expected to close in mid-November.

The companies would be complementary, analysts say. The Rockville company has capabilities for identifying disease-regulating molecular targets, particularly proteins, while Axys is able to rapidly test tens of thousands of chemical compounds against those targets. That process helps identify potential treatments.

Shares of Celera rose 54 cents in trading yesterday to close at $26.44 on the New York Stock Exchange.

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