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Celera Corporation Reports Fourth Quarter and Fiscal 2008 Results
ALAMEDA, Calif., Jul 23, 2008 (BUSINESS WIRE) -- Celera (NASDAQ:CRA) today reported net revenues of $43.4 million
for the fourth quarter of fiscal 2008, compared to $10.2 million in
the prior year quarter. The fourth quarter fiscal 2008 results
included net revenues from Berkeley HeartLab, Inc. (BHL) and Atria
Genetics Inc., which were acquired during the second quarter of fiscal
2008. Excluding revenues from these acquisitions, Celera's net
revenues for the fourth quarter of fiscal 2008 were $15.0 million.
For the fourth quarter of fiscal 2008, Celera reported a net loss
of $96.8 million, or $1.21 per share, compared to a net loss of $8.0
million, or $0.10 per share, for the prior year quarter. For the
fourth quarters of fiscal 2008 and 2007, Celera recorded items that
affected the comparability of results and a breakdown of these items
is listed in the reconciliation table below. For the fourth quarter of
fiscal 2008, these items increased the net loss by $96.3 million,
which included a $91.2 million non-cash tax charge to establish a
valuation allowance, or reserve, against Celera's deferred tax assets
as a result of the split-off from Applera Corporation. The tax charge
is further described in the Financial Highlights below. For the fourth
quarter of fiscal 2007, items affecting comparability increased the
net loss by $2.9 million. Fourth quarter fiscal 2008 loss per share on
a non-GAAP basis, excluding the items listed in the reconciliation
table below, was $0.01, compared to a loss of $0.07 per share for the
prior year quarter. All per share amounts are pro forma based on
Applera Corporation-Celera Group Common Stock.
For fiscal 2008, Celera reported net revenues of $139.4 million
compared to $43.4 million for the prior year. Fiscal 2008 results
included net revenues from BHL and Atria Genetics; excluding revenues
from these acquisitions, Celera's net revenues in fiscal 2008 were
$62.5 million.
For fiscal 2008, Celera reported a net loss of $103.2 million, or
$1.30 per share, compared to a net loss of $20.6 million, or $0.26 per
share, for fiscal 2007. For fiscal 2008 and 2007, Celera recorded
items that affected the comparability of results and a breakdown of
these items is listed in the reconciliation table below. For fiscal
2008, these items increased the net loss by $104.1 million, which
included the $91.2 million non-cash tax charge. For fiscal 2007, items
affecting comparability increased the net loss by $2.1 million. Fiscal
2008 earnings per share (EPS) on a non-GAAP basis, excluding the
non-cash tax charge and other items described in the reconciliation
table below, were $0.01, compared to a loss of $0.24 per share for the
prior year.
"The quarter's operating performance was good, closing out a solid
fiscal 2008 - a pivotal year for Celera," said Kathy Ordonez, Chief
Executive Officer of Celera. "The business developed as planned, as we
achieved our annual financial goals for revenue and profitability on a
non-GAAP basis. This year, we also completed the separation from
Applera according to schedule, acquired two important businesses,
Berkeley HeartLab and Atria Genetics, and defined our path forward as
an independent company.
"We're pleased with the contributions to revenue from both our
Berkeley HeartLab Service business and our Products business during
the quarter," Ms. Ordonez added. "The trial market for KIF6 testing at
BHL has been successful and we're optimistic for the test's potential
future contribution to Celera following its full scale launch this
week."
Financial Highlights
Celera has three categories of revenue: Product sales, including
equalization payments from our alliance partner Abbott; Service
revenue; and Royalty, License and Milestone revenues. Product sales
consist of Celera's portion of sales of Atria human leukocyte antigen
(HLA) products and shipments of Celera-manufactured products to
Abbott, at cost. Equalization payments result from an equal sharing of
alliance profits and losses between the partners and vary each period
depending on the relative income and expense contribution of each
partner. Service revenue consists primarily of sales by BHL.
-- Revenue by category for the fourth quarter of fiscal 2008
compared to the prior year quarter was: $9.0 million for
Product sales compared to $6.1 million in the prior year
quarter, primarily due to sales of Atria HLA products;
Royalty, License and Milestone revenue was $8.3 million
compared to $4.1 million in the prior year quarter, primarily
due to higher licensing and royalty revenue from patent
licenses; and revenue from Services was $26.1 million in the
fourth quarter of fiscal 2008. As noted above, revenue from
Services consists primarily of sales by BHL, which was
acquired in the second quarter of fiscal 2008.
-- R&D expenses for the fourth quarter of fiscal 2008 were $9.4
million, compared to $13.5 million in the prior year quarter,
primarily due to a reduction in spending in discovery research
and alliance-related projects. SG&A expenses for the fourth
quarter of fiscal 2008 increased to $25.1 million from $8.3
million in the prior year quarter, primarily due to activities
relating to BHL.
-- At June 30, 2008, Celera's cash and short-term investments
were approximately $335 million.
-- For the fourth quarter of fiscal 2008, Celera recorded a $91.2
million non-cash tax charge to establish a reserve against its
deferred tax assets as a result of the split-off from Applera
Corporation. As described in Celera's Form S-1 Registration
Statement, this charge recognizes that Celera may, or may not,
be able to use these assets as an offset to taxable income in
future periods, and a full valuation allowance was deemed
necessary due to Celera's history of losses. Certain of these
assets are expected to expire in three to twelve years, if not
used before then. With Celera's anticipated future
profitability, the use of these deferred tax assets is
expected to offset taxable income and payments in those
periods.
Supplemental Financial Information
-- For the fourth quarter of fiscal 2008, total end-user sales of
products in the alliance with Abbott were $35.9 million
compared to $27.0 million in the prior year quarter, an
increase of 33%. Increased sales of HIV, HCV and HBV
RealTime(TM) viral load assays used on the m2000(TM) system,
HLA products, ViroSeq(TM) HIV-1 Genotyping System, and the
Fragile X and thrombosis analyte specific reagents (ASRs) all
contributed to the year-over-year quarterly growth. These
increased sales were partially offset by lower sales of cystic
fibrosis reagents. Following Abbott's settlement of its
litigation with Innogenetics in the third fiscal quarter of
fiscal 2008, the HCV genotyping reagents were reintroduced
onto the menu of tests offered through the alliance.
-- For fiscal 2008, total end-user sales in the alliance with
Abbott were $123.6 million compared to $100.3 million in the
prior fiscal year, an increase of 23%, with the contributors
for this growth similar to those described for the fourth
quarter above.
Business and Scientific Developments
-- This week, BHL broadly launched its laboratory developed KIF6
test as part of the service portfolio that is offered to its
physician base. This follows a successful trial market that
began in March when BHL started offering the test to a target
group of physicians. Uptake of the KIF6 test to date has been
strong and outperformed all previous trial markets of new
tests conducted by BHL. The trial market was successful in
refining the price and key positioning for the KIF6 test,
along with its expected reimbursement. Nearly 15,000 KIF6
tests were requested through BHL during the trial market,
which ended on July 18. Published studies have shown that
untreated carriers of the risk form of the KIF6 gene have up
to 55 percent increased risk for coronary heart disease, which
is substantially reduced by statin therapy.
-- In July, Celera's ViroSeq(R) HIV-1 Genotyping System software
v2.8 was cleared by the United States Food and Drug
Administration (FDA). This software is used in conjunction
with the ViroSeq(TM) HIV-1 Genotyping System, which is
intended for use in detecting HIV mutations that confer
resistance to specific types of antiretroviral drugs as an aid
in monitoring and treating HIV infection. Two new drugs,
INTELENCE(TM) (etravirine) and PREZISTA(TM) (darunavir) from
Tibotec Therapeutics, a division of Ortho Biotech Products,
L.P., are included in the revised drug resistance algorithm
included in the v2.8 software.
-- In July, Abbott disclosed that it had received a CE Mark for
an HCV genotyping assay, further expanding the infectious
disease menu on the m2000 system sold through its alliance
with Celera, and that clinical trials for HCV and HBV assays
performed on the m2000 system are ongoing. Abbott also
reported that it had received 510(k) clearance from the FDA
for the Chlamydia and Gonorrhea assays performed on the m2000
system.
-- On July 1, Celera Corporation separated from Applera and began
trading on the Nasdaq Stock Market. Celera's new Board of
Directors includes Richard Ayers, Jean-Luc Belingard, William
Green, Gail Naughton, Ph.D., Kathy Ordonez, and Bennett
Shapiro, M.D. William Green has been elected non-executive
Chairman of the Board.
-- In June, two studies from Celera's autoimmune disease program
were published in peer-reviewed journals, Rheumatoid Arthritis
and Public Library of Science Genetics.
Celera Analyst Day
Celera intends to host a meeting for analysts and investors in New
York, N.Y. on Tuesday, September 9, 2008, when Celera's senior
management will discuss the strategy for the business following the
separation from Applera and update the investment community on the
status of key products and development programs.
Outlook for the Remaining Six Months of Calendar 2008
Celera's Board of Directors intends to align the company's fiscal
year with the calendar year. As part of this process, Celera is
issuing its outlook for the remaining six months of calendar 2008.
Subject to the inherent risks and uncertainties that may affect
Celera's financial performance, which are detailed in the
Forward-Looking Statements section of this release, Celera has the
following expectations regarding its financial performance for the
remaining six months of calendar 2008:
-- Total reported revenues are anticipated to be $88 - $93
million.
-- Reported R&D expenses are anticipated to be $18 - $21 million,
and SG&A expenses are anticipated to be $45 - $50 million.
-- Celera anticipates low single digit EPS on a non-GAAP basis
for the second half of calendar 2008, although non-GAAP
earnings for the period ending September 27, 2008, may be near
break-even.
-- Amortization of intangibles relating to acquisitions, which
are excluded in the determination of non-GAAP earnings per
share, are expected to be approximately $5 million, with an
EPS impact of approximately $0.04.
-- The total pre-tax impact of FAS 123R is expected to be between
$3 - $4 million, with an EPS impact of approximately $0.03.
The comments in the Outlook section of this press release reflect
management's current outlook. The Company does not have any current
intention to update this Outlook and plans to revisit the outlook for
its businesses only once each quarter when financial results are
announced.
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, both
historical and forward-looking, and including earnings per share
adjusted to exclude some costs, expenses, gains and losses and other
specified items. These measures are not in accordance with, or an
alternative for, generally accepted accounting principles, or GAAP,
and may be different from non-GAAP financial measures used by other
companies. Among the items included in GAAP earnings but excluded for
purposes of determining adjusted earnings or other non-GAAP financial
measures that we present are: gains or losses from sales of operating
assets and investments; restructuring charges, including severance
charges; charges and recoveries relating to significant legal
proceedings; asset impairment charges; amortization of acquired
intangibles; costs incurred in connection with the separation of
Celera from Applera; and special tax items. We believe the
presentation of non-GAAP financial measures provides useful
information to management and investors regarding various financial
and business trends relating to our financial condition and results of
operations, and that when GAAP financial measures are viewed in
conjunction with non-GAAP financial measures, investors are provided
with a more meaningful understanding of our ongoing operating
performance. In addition, these non-GAAP financial measures are among
the primary indicators we use as a basis for evaluating performance,
allocating resources, setting incentive compensation targets, and
planning and forecasting future periods. Non-GAAP financial measures
are not intended to be considered in isolation or as a substitute for
GAAP financial measures. To the extent this release contains
historical non-GAAP financial measures, we have also provided
corresponding GAAP financial measures for comparative purposes.
However, in the case of forward-looking non-GAAP financial measures,
we have not provided corresponding forward-looking GAAP financial
measures because these measures are not accessible to us. We cannot
predict the occurrence, timing, or amount of all non-GAAP items that
we exclude from our non-GAAP financial measures but which could
potentially be significant to the calculation of our GAAP financial
measures for future fiscal periods.
Financial Information
The information provided in this release presents historical
financial information for Celera Corporation which has been adjusted
to show our results of operations as though we were a separate company
as of the dates and for the periods presented. Prior to July 1, 2008,
our results were attributable to Applera Corporation's Celera Group,
and reported as a business segment of Applera.
Conference Call & Webcast
A conference call will be held today at 4:30 p.m. (ET) to discuss
these results and other matters related to the businesses when Kathy
Ordonez, Chief Executive Officer, and Joel Jung, Chief Financial
Officer, will make prepared remarks and answer questions from
securities analysts and investment professionals. Investors,
securities analysts, representatives of the media and other interested
parties who would like to participate should dial (888) 396-2386, or
(617) 847-8712 for international callers, and enter passcode 82911269
at any time from 4:15 p.m. (ET) until the end of the call. This
conference call will also be webcast. Interested parties who wish to
listen to the webcast should visit the "Investors & Media" section on
www.celera.com. A digital recording will be available approximately
two hours after the completion of the conference call on July 23 until
August 7, 2008. Interested parties should call (888) 286-8010, or
(617) 801-6888 for international callers, and enter passcode 31506190.
About Celera
Celera is a healthcare business delivering personalized disease
management through a combination of products and services
incorporating proprietary discoveries. Berkeley HeartLab, a subsidiary
of Celera, offers services to predict cardiovascular disease risk and
improve patient management. Celera also commercializes a wide range of
molecular diagnostic products through its strategic alliance with
Abbott and has licensed other relevant diagnostic technologies
developed to provide personalized disease management in cancer and
liver diseases. Information about Celera Corporation, including
reports and other information filed by the company with the Securities
and Exchange Commission, is available at http://www.celera.com.
Forward-Looking Statements
Certain statements in this press release, including the Outlook
section, are forward-looking. These may be identified by the use of
forward-looking words or phrases such as "believe," "expect,"
"should," "anticipate," and "intend," among others. These
forward-looking statements are based on Celera's current expectations.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for such forward-looking statements. In order to comply with
the terms of the safe harbor, Celera notes that a variety of factors
could cause actual results and experience to differ materially from
the anticipated results or other expectations expressed in such
forward-looking statements. The risks and uncertainties that may
affect the operations, performance, development, and results of
Celera's business include but are not limited to: (1) Celera may not
successfully integrate the business and workforce of Berkeley
HeartLab, or BHL, which has approximately doubled Celera's workforce,
and it may not successfully operate and grow this business as planned,
among other reasons due to the fact BHL operates in the regulated
clinical laboratory testing market, a new business area for Celera;
(2) the sale of clinical laboratory testing services and diagnostic
products is dependent on government insurance programs such as
Medicare and private insurance companies accepting the use of those
services and products as medically necessary and worthy of
reimbursement; (3) the revenue generated from the sale of clinical
laboratory testing services and diagnostic products is highly
dependent on the amounts that these government and private payors will
pay for the services and products, and these amounts may be reduced in
response to ongoing efforts by these payors to control healthcare
costs; (4) Celera's clinical laboratory testing services are subject
to a wide variety of federal and state laws and regulations that
govern, for example, clinical testing of human specimens, improper
kickbacks or referrals to healthcare providers, and the privacy and
security of patient data, and failure to comply with these laws and
regulations could cause an interruption in operations, damage to our
reputation, exclusion from participation in healthcare programs, fines
or other legal penalties, and damages payable to patients or others;
(5) Celera depends on physicians, laboratories, and others to collect
and process patient specimens and send them overnight via Federal
Express to its clinical laboratory for testing, and any interruption
or delay in the delivery of specimens could cause them to spoil,
prevent testing, and harm Celera's business; (6) Celera's
commercialization of diagnostic products is substantially dependent on
maintaining its existing strategic alliance with Abbott Laboratories
and entering into new collaborations, alliances, and similar
arrangements with other companies, which may not be successful; (7)
clinical trials of diagnostic products may not proceed as anticipated,
may take several years and be very expensive, and may not be
successful; (8) diagnostic products may not receive required
regulatory clearances or approvals; (9) the markets for clinical
laboratory testing services and diagnostic products are very
competitive, healthcare providers may prefer to use better-known
laboratories for clinical testing, and healthcare providers may not
accept new diagnostic products developed by Celera or its
collaborators; (10) the U.S. Food and Drug Administration has issued
an interpretation of the regulations governing the sale of Analyte
Specific Reagent products which could harm Celera's business because
the interpretation may require regulatory clearance or approval for
some existing Celera and Abbott products that to date have been sold
without clearance or approval, and because it may make development of
new Analyte Specific Reagent products more difficult; (11) the FDA has
issued draft guidance on a new class of complex laboratory-developed
tests that may require our clinical laboratory to obtain regulatory
clearance or approval before it can perform these tests and that may
require other laboratories to obtain regulatory clearance or approval
for these complex tests before they can perform clinical testing using
our diagnostic products or based on intellectual property licensed
from us; (12) Celera relies on access to biological materials and
related clinical and other information for some of its research and
development efforts, and such materials and information may be in
limited supply or inaccessible to Celera; (13) Celera may be subject
to product liability or other claims as a result of its clinical
laboratory testing services or the testing or use of its or its
collaborators' or licensees' diagnostic products; (14) Celera relies
on scientific and management personnel having the necessary training
and technical backgrounds and also on collaborations with scientific
and clinical experts at academic and other institutions who may not be
available to Celera or who may compromise the confidentiality of
Celera's proprietary information; (15) Celera may be subject to
liabilities related to its use, manufacture, sale, and distribution of
hazardous materials; (16) Celera's ability to protect its intellectual
property is uncertain, its ability to protect its trade secrets is
limited, Celera is subject to the risk of infringement claims, and it
may need to license intellectual property from third parties to avoid
or settle such claims; (17) Celera is dependent on the operation of
computer hardware, software, and Internet applications and related
technology; (18) an adverse outcome in legal proceedings involving
Abbott could harm Celera's business and subject it to liabilities;
(19) legal, ethical, and social issues related to the use of genetic
information could adversely affect demand for Celera's clinical
laboratory testing services and diagnostic products; (20) future
acquisitions by Celera may not be successful, may divert management
from operations, may cause dilution, and may result in impairment or
other charges; (21) the outcome of the existing stockholder litigation
is uncertain; (22) Celera relies on a single laboratory testing
facility and a single manufacturing facility, it would be difficult to
repair, replace, or expand these facilities on a timely basis should
that be necessary due to, for example, significant damage caused by
natural disaster or other events or a substantial and unexpected
increase in demand for products or services, and Celera does not have
any backup facilities or arrangements should these events occur; (23)
Celera relies on a single supplier or a limited number of suppliers
for some kits used for its clinical laboratory testing services and
some key components for manufacturing its diagnostic products; and
(24) other factors that might be described from time to time in
Celera's filings with the Securities and Exchange Commission. All
information in this press release is as of the date of the release,
and Celera does not undertake any duty to update this information,
including any forward-looking statements, unless required by law.
Copyright(C) 2008. Celera Corporation. All Rights Reserved. Celera
is a registered trademark of Celera Corporation or its subsidiaries in
the U. S. and/or certain other countries.
CELERA CORPORATION
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Dollar amounts in millions, except per share amounts)
(Unaudited)
Three months ended Twelve months ended
June 30, June 30,
2008 2007 2008 2007
------------ ------------ ------------ ------------
Net revenues $ 43.4 $ 10.2 $ 139.4 $ 43.4
Cost of sales 12.1 3.9 39.8 17.6
------------ ------------ ------------ ------------
Gross margin 31.3 6.3 99.6 25.8
Selling, general
and
administrative 25.1 8.3 74.6 30.4
Research and
development 9.4 13.5 40.9 51.7
Amortization of
purchased
intangible assets 2.5 - 7.1 -
Employee-related
charges, asset
impairments and
other 2.7 4.3 7.0 10.3
Asset dispositions
and legal
settlements - - (1.1) (2.4)
------------ ------------ ------------ ------------
Operating loss (8.4) (19.8) (28.9) (64.2)
Loss on
investments - - (3.0) -
Interest income,
net 2.6 6.9 17.7 27.8
Other income, net - 0.2 - 0.5
------------ ------------ ------------ ------------
Loss before income
taxes (5.8) (12.7) (14.2) (35.9)
(Provision) /
benefit for
income taxes (91.0) 4.7 (89.0) 15.3
------------ ------------ ------------ ------------
Net loss $ (96.8) $ (8.0) $ (103.2) $ (20.6)
============ ============ ============ ============
Net loss per
share:
Basic and diluted $ (1.21) $ (0.10) $ (1.30) $ (0.26)
Weighted average
number of common
shares:
Basic and diluted
(i) 79,904,000 78,832,000 79,491,000 78,325,000
(i) The weighted average number of shares of Celera Corporation common
stock assumed to be outstanding is equal to the weighted average
number of shares of Applera Corporation - Celera Group Common
Stock outstanding for the periods ended June 30, 2008 and 2007.
CELERA CORPORATION
REVENUES BY PRODUCT CATEGORIES
(Dollar amounts in millions)
(Unaudited)
Three months
ended
June 30,
2008 2007 Change
------- ------ ------
Services $ 26.1 $ -
% of total revenues 60% -
Products, including alliance
equalization 9.0 6.1 48%
% of total revenues 21% 60%
Royalty, licenses and milestones 8.3 4.1 102%
% of total revenues 19% 40%
------- ------
Total $ 43.4 $10.2 325%
======= ======
Twelve months
ended
June 30,
2008 2007 Change
------- ------ ------
Services $ 71.0 $ -
% of total revenues 51% -
Products, including alliance
equalization 32.1 25.3 27%
% of total revenues 23% 58%
Royalty, licenses and milestones 36.3 18.1 101%
% of total revenues 26% 42%
------- ------
Total $139.4 $43.4 221%
======= ======
CELERA CORPORATION
RECONCILIATION OF GAAP AMOUNTS TO NON-GAAP AMOUNTS
(Dollar amounts in millions, except per share amounts)
(Unaudited)
Three months ended Twelve months ended
June 30, June 30,
2008 2007 2008 2007
------------- ------------- -------------- -------------
GAAP loss
before
income taxes $ (5.8) $(12.7) $ (14.2) $(35.9)
Costs
associated
with the
split-off
from Applera 2.6 - 3.7 -
Amortization
of purchased
intangible
assets 2.5 - 7.1 -
Restructuring
charges 0.3 4.3 2.9 6.8
Revenue from
the sale of
a small
molecule
drug
discovery
and
development
program - - - (2.5)
Write-down of
an
investment - - 3.0 -
Share of
litigation
settlement
between
Abbott and
Innogenetics
N.V. (0.2) - 0.4 3.5
Gain on legal
settlement - - (1.1) (2.3)
--------- ------------- ----------- -------------
Non-GAAP
(loss) /
income
before
income taxes $ (0.6) $ (8.4) $ 1.8 $(30.4)
--------- ------------- ----------- -------------
GAAP
(provision)
/ benefit
for income
taxes $(91.0) $ 4.7 $ (89.0) $ 15.3
Provision for
deferred tax
valuation
allowance 91.2 - 91.2 -
Tax effect of
the
reconciling
items above (0.1) (1.4) (3.8) (2.0)
Tax effect of
R&D tax
credits - - 0.7 (1.4)
--------- ------------- ----------- -------------
Non-GAAP
benefit /
(provision)
for income
taxes $ 0.1 $ 3.3 $ (0.9) $ 11.9
--------- ------------- ----------- -------------
GAAP net loss $(96.8) $ (8.0) $(103.2) $(20.6)
========= ============= =========== =============
Non-GAAP net
(loss) /
income $ (0.5) $ (5.1) $ 0.9 $(18.5)
========= ============= =========== =============
Non-GAAP pro
forma
diluted net
(loss) /
income per
share $(0.01) $(0.07) $ 0.01 $(0.24)
Weighted
average
number of
common
shares (i)79,904,000 (i)78,832,000 (ii)80,932,000 (i)78,325,000
(i) The weighted average number of shares of Celera Corporation
common stock assumed to be outstanding is equal to the weighted
average number of shares of Applera Corporation - Celera Group
Common Stock outstanding for the periods ended June 30, 2008 and
2007.
(ii) The weighted average number of shares of Celera Corporation
common stock assumed to be outstanding is equal to the weighted
average number of fully diluted shares of Applera Corporation -
Celera Group Common Stock outstanding for the twelve months
ended June 30, 2008.
SOURCE: Celera
Celera David Speechly, Ph.D., 510-749-1853 David.Speechly@celera.com
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