Affymetrix total revenue decreases to $65.2 million

May 4 2012

Affymetrix, Inc., (NASDAQ:AFFX) today reported its operating results for the first quarter of 2012. Total revenue for the quarter was $65.2 million, as compared to total revenue of $73.7 million for the same period of 2011.    

The Company reported a net loss of approximately $4.2 million, or $0.06 per diluted share, in the first quarter of 2012. This compares to a profit of less than $0.1 million in the same period of 2011.

For the first quarter of 2012, product revenue was $58.4 million, which consisted of consumable revenue of $53.7 million, instrument revenue of $4.7 million and service and other revenue was $6.8 million. This compares to the first quarter of 2011, product revenue of $67.5 million, which consisted of consumable revenue of $62.9 million, instrument revenue of $4.6 million and service and other revenue of $6.2 million.

For the first quarter of 2012, cost of product sales was $23.6 million compared to $23.9 million in the same period of 2011. Product gross margin was 59.7%, as compared to 64.6% in the same period of 2011. Cost of services and other was $3.8 million compared to $3.2 million in the same period of 2011.

For the first quarter of 2012, operating expenses were $41.3 million as compared to operating expenses of $43.5 million in the same period of 2011. The 2012 expenses included $1.3 million in acquisition and associated legal expenses.

"During the first quarter we began to realize the benefits of reorganizing the Company with a business unit focus and a strengthened commercial team. On a sequential basis our Genetic Analysis unit grew, including a strong performance from our CytoScan HD product which continues to gain momentum, as well as a mid-single digit decline in revenue from our Expression Business unit. We also generated an improved product gross margin of 60%," said Frank Witney, president and chief executive officer. "We had a better than expected quarter in Europe and Asia and we expect to generate year-over-year growth in our total revenue for 2012."

"In addition," Witney stated, "I'm pleased to announce that we have started to run samples for our CytoScan Dx clinical trial as part of our plan to file for FDA clearance in the latter part of 2012. We're also continuing our discussion with eBioscience and will update you once we have clarity on the transaction."

First quarter highlights:

• The Company has begun to run samples for its CytoScan Dx clinical trial in May and plans to file for marketing clearance in the latter part of 2012.
• The Company's GeneChip® System 3000Dx v.2 (GCS 3000Dx v.2) has been approved by China's State Food and Drug Administration (SFDA) for in vitro diagnostic use. The GCS 3000Dx v.2 is the first microarray instrument system to be granted SFDA registration for array-based diagnostics for enabling personalized medicine. China has more than 2,000 clinical centers that will now have access to the only SFDA-cleared microarray platform for clinical testing. The molecular diagnostic market in China is the fastest growing in the world and represents a significant growth opportunity for Affymetrix in Asia.
• The Company announced the release and immediate shipment of its Axiom Exome Genotyping Arrays, which provide the highest coverage of novel, putatively functional coding variants available. The Axiom Exome Genotyping Arrays exceed the coverage for high-value coding variants compared to currently available arrays on the market. These variants are very rare and cannot be efficiently imputed or tagged. Therefore, it is crucial that as many variants as possible are physically interrogated on the array to maximize important disease variants being screened, identified, and prioritized for functional validation. The Axiom Exome Genotyping Arrays not only offer greater content but also ensure content consistency over time. It is important that the content on a given array is highly reproducible over time among different manufacturing batches when genotyping rare variants in cohort and case-control studies. Unlike array manufacturing approaches where variation of array content can be observed between manufacturing batches, Affymetrix's array production technology assures that each Axiom Exome Genotyping Array produced in the future has exactly the same content as an array produced today.
• The Company signed a global distribution agreement with Almac Group Limited, a company that provides an extensive range of pharmaceutical services. In this agreement, Affymetrix has exclusive rights to distribute Almac's Xcel™ array for research use in biomarker discovery for multiple disease areas, including cancer. The Almac's Xcel™ array is a microarray, built on the industry-standard Affymetrix's GeneChip Human Genome U133 Plus array platform (RUO*), that has been optimized for RNA expression profiling from formalin fixed paraffin embedded (FFPE) samples. Standard collection practice is to collect tissue samples and store them as FFPE samples. The ability to extract accurate and high-quality gene expression information from FFPE samples will have a significant impact in enabling new discovery and validation from this valuable tissue source.

Source: Affymetrix