Genome delays hit Applied Bio

Budgetary delays at the USA's National Human Genome Research Institute, as well as mass spectrometry manufacturing obstacles, held back Applied Biosystems results for the first quarter of fiscal 2004, reported yesterday.

Net income for the quarter was $33.4 million, up from $17.8 million a year earlier (although the latter result included a loss of $16.4 million from discontinued operations). Earnings per share were the same in both periods at $0.16.

First-quarter revenues were $382.7 million, a 3 per cent decline on the same period in 2002 and with a contribution of about $7 million from currency factors. Instrument sales were the hardest hit, down 9 per cent to $172.2 million, and this occurred mainly because of a decline in sales of the company's 3730xl DNA Analyzer to large genome research centres.

Michael Hunkapillar, Applied Bio's chief executive, noted that delays in setting the NHGRI's budget for grants had a significant impact on the firm's DNA sequencing product category.

"The NHGRI was scheduled to notify sequencing grant recipients during September of their first-year funding levels for the upcoming three-year funding cycle to begin on 1 October,"​ he said. This is now expected to take place a month later, and the delay cut across Applied Bio's first quarter.

The decline in instrument sales more than offset sales in other segments, including the consumables and mass spectrometry businesses.

In mass spectrometry, sales shrank 2 per cent to $82.4 million and were held back by insufficient manufacturing capabilities to cope with the demand for the new 4000 Q Trap LC/MS/MS system, marketed by a joint venture between Applied Bio and MDS Sciex.

This was something of a double whammy, said Hunkapillar, because a portion of this demand came from customers who might otherwise have bought one of Applied Bio's other MS systems. These manufacturing issues are unlikely to be resolved before the third quarter, he added.

The MS revenues also suffered from comparison with the prior fiscal first quarter because this included $5.4 million in technology license fees.

The consumables businesses, including the SDS and the Other Applied Genomics categories, rose 13 per cent to $138.4 million. The latter two categories put in a 13 per cent rise to $98.4 million, offsetting the 16 per cent decline in the DNA sequencing business to $124.8 million.

Applied Bio reaffirmed its forecast of single-digit growth in fiscal 2004 and that predicted that first half sales would come in at the same level as in the prior year - provided all the issues mentioned above can be resolved.

Celera joint venture​

The joint venture between Applied Bio and Celera Genomics, Celera Diagnostics, also published its results yesterday. Fiscal first-quarter revenues leaped 83 per cent to $8.5 million, and the JV posted a loss of $12 million, down from the prior year's level of $13.3 million.

Sales by the JV's marketing partner Abbott Laboratories were $9.1 million, up from $3.9 million a year earlier and driven by cystic fibrosis analyte specific reagents.