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Celera Genomics Group
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Business New Haven
9/4/2000
By: Kristine Hansen
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Celera Genomics Group
(NYSE: CRA)
45 West Gude Drive
Rockville, MD 20850
President and chief scientific officer: J. Craig Venter, Ph.D.
Revenues (FYE June 30, 2000):
$42.7 million
Net profit/loss (FYE June 30, 2000): ($92.7 million)
Employees: 400
Previously this company was relatively little-known, but an early summer announcement from the White House may have nudged more than a few to listen.
Celera Genomics had completed the very first sequencing of the human genome, the chemical letters ordered and located in the human gene that make up our genetic code. Such scientific knowledge may not be so thrilling for the average person except for the hope that it now presents - the potential in the future to find cures for diseases.
To achieve this sequencing milestone, Celera used its “Whole Genome Shotgun Assembly” method for its research on the human genome. With the assembly phase of the human genome completed, the company now begins the analysis and annotation phase.
Celera will use its “Regional Assembler” to cross-validate its findings from the shotgun assembly and compare them with the findings of the Institute for Genomic Research, which has also done extensive work on mapping the human genome.
Additionally, Celera has begun sequencing mouse DNA and expects to complete this task by the end of 2000. This information is especially important to researchers who use mice as a model for human medicine and biology. The company also indicates that it plans to extend its work to the decoding of genomes of other organisms such as dogs, rats and chimpanzees.
Celera is part of Connecticut-based PE Corp., formerly Perkin Elmer. In 1999 Perkin Elmer changed its focus to the life sciences and sold its Analytical Instrument Division. The resulting new and re-capitalized PE Corp. created two businesses, one of which is PE Biosystems Group (NYSE: PEB), a manufacturer of biochemical instrument systems. Its customers, including its sister PE company, Celera Genomics, use these instruments in the pursuit of life-science research.
Celera's focus is to become an information company that supplies genomic, biological and medical information to researchers and commercial enterprises for a fee. Currently several drug makers subscribe to Celera's databases for multi-year periods, including such companies as Amgen, Pharmacia Corp. and Pfizer, as well as overseas firms Novartis AG of Switzerland and Takeda of Japan.
More recently, Celera has added to its list of subscribers American Home Products, Immunex Corp. and the Australian National Health & Medical Research Council, as well as four universities: Harvard, the University of Texas Southwestern Medical Center, Ohio State and the University of Cincinnati.
With two years of operating history now under its belt, Celera has been generating revenue increases largely due to its subscription agreements. Revenues for the fiscal year ended June 30 were $42.7 million, more than triple 1999 revenues of $12.5 million. Not yet showing a profit, the company incurred a net loss for its 2000 fiscal year of $92.7 million ($1.73 per diluted share), compared to a net loss of $44.9 million (89 cents per diluted share) for the previous year.
Celera has strong backing from its $1.5 billion-asset size parent. A financing policy adopted by PE directors includes provisions for allocating debt and preferred stock between Celera and PE Biosystems. Also, cash may be contributed to Celera from PE Biosystems in exchange for an equity interest. PE Biosystems has invested more than $1 billion in Celera. The company uses 300 of PE Biosystems DNA sequencers, the ABI PRISM 3700, for the genome project.
Celera has embarked on recent collaborations with Geron Corp. to identify certain gene functions, and with Life Technologies Inc. to create gene clones. Although the company plans to continue its focus on providing genetic and scientific information to others, it recently confirmed that it is investigating the possibility of entering into the development of cancer treatments. However, at this juncture the company has no plans to convert to a pharmaceutical company.
Analyst response to the company is positive, with recommendations of buy and strong buy. Estimates on net losses per share come in at 49 cents per share for the quarter ending December 31. For the fiscal year ending June 30, 2001 the per-share net-loss estimate is $1.70. The stock has traded in the $80 range, closing on August 23 at 82 11/16.
Celera describes its goal “to become the definitive source of genomic and related medical information.” The many recent collaboration and subscription agreements certainly indicate that the company is making progress toward that lofty objective.
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