Affymetrix Reports First Quarter 2006 Results
Thursday April 20, 4:00 pm ET
Good for a $6 haircut
SANTA CLARA, Calif.--(BUSINESS WIRE)--April 20, 2006--Affymetrix, Inc. (Nasdaq:AFFX - News), today reported its operating results for the first quarter of 2006. On a GAAP basis the Company reported net income of approximately $1.8 million or $0.03 per diluted share in the first quarter of 2006, as compared to net income of $16.2 million or $0.24 per diluted share in the first quarter of 2005. On January 1, 2006, the Company adopted FAS 123R and is reporting employee stock-based compensation expense in its GAAP results. Excluding the impact of FAS 123R, the Company reported non-GAAP net income of approximately $4.2 million or $0.06 per diluted share in the first quarter of 2006.
Total revenue for the quarter was $86.4 million, of which $5.3 million was related to the sale of products to Perlegen Sciences, Inc., as compared to total revenue of $88.6 million in the first quarter of 2005, of which $2.2 million was related to the sale of products to Perlegen.
Product and product related revenue was $79.2 million for the first quarter of 2006, compared to $84.9 million in the same period in 2005.
First quarter sales included GeneChip® consumable revenue of $62.7 million, consisting of array revenue of $43.2 million, reagent revenue of $10.5 million, services revenue of $3.7 million and $5.3 million of Perlegen revenue. Additionally, the Company reported instrument revenue of $12.3 million. Affymetrix shipped 43 GeneChip Systems in the quarter, increasing the cumulative systems shipped to approximately 1420.
Royalties and other revenue were $1.9 million for the first quarter of 2006 compared to $1.6 million in the first quarter of 2005.
Total operating costs and expenses were $89.4 million for the first quarter of 2006 compared to $69.8 million in the first quarter of 2005.
Cost of product and product related revenue was $25.5 million in the first quarter of 2006 compared to $21.8 million in the same period of 2005. Product and product related gross margin was 67.8 percent in the first quarter of 2006 compared to 74.3 percent in the first quarter of 2005.
Research and development expenses were $23.5 million during the first quarter of 2006 compared to $17.1 million in the first quarter of 2005.
Selling, general and administrative expenses were $38.8 million for the first quarter of 2006 compared to $29.6 million in the first quarter of 2005.
Quarterly Highlights
RNA analysis
Affymetrix extended its GeneChip Exon Array product line with the launch of the Mouse and Rat Exon 1.0 ST Arrays. Syntenic design across the three species provides researchers with an easier way to perform comparative genomics between model systems and humans. Exon arrays enable a deeper understanding of alternative splicing on a whole-genome scale on a single array.
Affymetrix expanded its gene expression portfolio by launching nine Tiling Array products for five different organisms including Human, Mouse, Arabidopsis, S. cerevisiae, and S. pombe. These products enable genome-wide monitoring and discovery of RNA expression patterns, mapping sites of DNA-protein interactions and investigation of epigenomic changes like methylation or acetylation.
The Company partnered with Iconix Pharmaceuticals, Inc. to develop a database for pharmaceutical customers investigating the toxicological and pharmacological properties of drugs and drug candidates. Together, Affymetrix' GeneChip expression arrays and Iconix' analysis methods will provide detailed toxicology information that will help scientists to better prioritize candidates and make preclinical development decisions faster than ever before.
DNA analysis
Affymetrix announced that Korea's National Institutes of Health (NIH) and Center for Disease Control and Prevention will use the Affymetrix GeneChip Human Mapping 500K Array Set for a series of groundbreaking genome-wide association studies in critical disease areas, including diabetes, hypertension, asthma and metabolic syndrome. This study will generate more than 10 billion individual genotypes from 20,000 human DNA samples to help identify the genetic causes of these diseases.
Using the Affymetrix GeneChip Mapping 100K Array, researchers led by the Boston University School of Medicine identified a common genetic variant associated with a higher risk of obesity. Published in the April 14, 2006 issue of Science, the discovery of this predisposing genetic signature may enable better design of therapies to treat obesity.
Licensing
Abbott Molecular, a division of Abbott, obtained a royalty-bearing, non-exclusive, worldwide license to a number of Affymetrix patents that will allow it to manufacture and sell comparative genomic hybridization (CGH) microarrays, related readers and software in the research and diagnostics field.
Governance
Elected Robert H. Trice, Ph.D., senior vice president for business development at Lockheed Martin Corporation, to the Affymetrix Board of Directors. Since joining Lockheed Martin in 1996, he has held several senior management positions and has overseen many international aspects of the business.
Appointed Susan D. Desmond-Hellmann, M.D., M.P.H. to the Compensation Committee of the Affymetrix Board of Directors. Dr. Desmond-Hellmann is President, Product Development at Genentech, Inc. and has served as a director since 2004.
Affymetrix' management team will host a conference call on April 20, 2006 at 2:00 p.m. PT to review its operating results for the first quarter of 2006. A live webcast can be accessed by visiting the Investor Relations section of the Company's website at www.affymetrix.com. In addition, investors and other interested parties can listen by dialing domestic: (866) 500-2339, international: (706) 643-2771.
A replay of this call will be available from 5:00 p.m. PT on April 20, 2006 until 8:00 p.m. PT on April 27, 2006 at the following numbers: domestic: (800) 642-1687; international: (706) 645-9291. The passcode for both is 7725576. An archived webcast of the conference call will be available under the Investor Relations section of the Company's website at www.affymetrix.com.
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