Affymetrix, Inc., (NASDAQ:AFFX) today reported its operating
results for the third quarter of 2010. Total revenue for the
quarter was $74.0 million as compared to total revenue of $78.2
million in the third quarter of 2009.
For the third quarter of 2010, product revenue was $67.3
million, service revenue was $4.9 million, and royalties and other
revenue were $1.8 million. This compares to third quarter 2009
product revenue of $66.2 million, service revenue of $9.9 million,
and royalties and other revenue of $2.1 million.
The Company reported a net income of approximately $1.0 million,
or $0.01 per diluted share, in the third quarter of 2010, which
includes a $4.1 million, or $0.06 per diluted share, gain on debt
repurchase from the convertible notes buyback of $71.9 million of
aggregate principal amount. This compares to a net loss of $8.8
million, or $0.13 per diluted share, in the third quarter of
2009.
For the third quarter of 2010, cost of product sales was $29.8
million compared to $30.7 million in the same period of 2009. Cost
of services and other was $3.7 million compared to $5.1 million in
the same period of 2009.
Product gross margin was 56 percent, as compared to 54 percent
in the same period of 2009.
For the third quarter of 2010, operating expenses were $42.5
million as compared to operating expenses of $49.1 million in the
third quarter of 2009.
“We continue to move the business toward profitability through
the adoption of new products, improvements in gross margins and by
lowering operating expenses. During the third quarter we
strengthened our balance sheet and significantly reduced future
interest payments through the repurchase of approximately $72
million of our 3.50% senior convertible notes. Through the first
nine months of 2010, we generated approximately $25 million in
cash-flow from operations,” said Kevin M. King, president and
CEO.
“We are making good progress in expanding our commercial
opportunities downstream of basic research,” continued King. “This
includes the launch of our OncoScan FFPE Express service for
analyzing tumor biopsy samples, as well as delivering on an
important diagnostic milestone by completing a 510K filing for
IVD-MDCFM clearance of our Human U133 gene expression array.”
During the third quarter the
Company:
- Completed a 510K filing for IVD-MDCFM
(medical device for further manufacturing) clearance of the Human
U133 gene expression array, the most widely published array in
studies exploring the disease process. The Company expects that FDA
approval will accelerate the path to commercialization of
array-based tests and therapeutics derived from discoveries of new
regulatory pathways, drug targets, biomarkers, and deeper
understanding of the mechanisms of diseases, and toxicological
response analysis.
- Began commercialization of the AxiomTM
Chinese myDesignTM Genotyping Array, the first product that
provides maximum power for genome-wide association studies (GWAS)
specifically for Chinese populations. The new Chinese myDesign
Genotyping Array is part of a suite of population-optimized arrays
to be released this year that leverage the Affymetrix Axiom Genomic
Database, the world's largest collection of validated common and
rare SNPs for creating custom arrays containing 50,000 to as many
as 2.6 million SNPs.
- Launched the OncoScan FFPE Express, a
service that allows cancer researchers to analyze the genetic
signatures of tumors that are Formalin-Fixed and Paraffin-Embedded
(FFPE).
- Released an unparalleled data set based
on extensive validation of novel SNPs from the 1000 Genomes
Project. This data will give researchers access to more rare
mutations for genome-wide association studies and will enable the
rapid design of custom arrays for a variety of applications,
including the validation of sequencing results.
- Highlighted the results of an
international collaboration led by scientists at Boston College,
the Broad Institute, and Imperial College London that used an
Affymetrix custom microarray to advance the study of malaria by
assessing the variation in genetic structure and detecting known
and novel genetic differences among malaria vector mosquito
populations. This study will enable association studies that link
mosquito genes to insecticide resistance and parasite infection
susceptibility, ultimately helping to reduce malaria
transmission.
- The Company completed a previously
announced repurchase of approximately $72 million face value of
3.50% senior convertible notes for $66.9 million, generating a gain
of $4.1 million. The Company has approximately $149 million in
outstanding 3.50% senior convertible notes as of October 27,
2010.
Affymetrix's management team will host a conference call on
October 27, 2010 at 2:00 p.m. PT to review its operating results
for the third quarter of 2010. 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: (877) 407-8291,
international: (201) 689-8345.
A replay of this call will be available from 5:00 p.m. PT on
October 27, 2010 until 8:00 p.m. PT on November 3, 2010 at the
following numbers: domestic: (877) 660-6853, international: (201)
612-7415. The passcode for both replays is 359017. An archived
webcast of the conference call will be available under the Investor
Relations section of the Company's website.
About Affymetrix
Affymetrix technology is used by the world's top pharmaceutical,
diagnostic, and biotechnology companies, as well as leading
academic, government, and nonprofit research institutes. More than
2,000 systems have been shipped around the world and over 22,000
peer-reviewed papers have been published using the technology.
Affymetrix is headquartered in Santa Clara, Calif., and has
manufacturing facilities in Cleveland, Ohio, and Singapore. The
Company has more than 900 employees worldwide and maintains sales
and distribution operations across Europe and Asia. For more
information about Affymetrix, please visit the Company's
website.
All statements in this press release that are not historical are
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act as amended, including statements
regarding Affymetrix' "expectations," "beliefs," "hopes,"
"intentions," "strategies" or the like. Such statements are subject
to risks and uncertainties that could cause actual results to
differ materially for Affymetrix from those projected, including,
but not limited to: risk relating to the Company’s ability to
successfully commercialize new products, risk relating to past and
future acquisitions, including the ability of the Company to
successfully integrate such acquisitions into its existing
business; risks of the Company's ability to achieve and sustain
higher levels of revenue, higher gross margins and reduced
operating expenses; uncertainties relating to technological
approaches, risks associated with manufacturing and product
development; personnel retention; uncertainties relating to cost
and pricing of Affymetrix products; dependence on collaborative
partners; uncertainties relating to sole-source suppliers;
uncertainties relating to FDA and other regulatory approvals;
competition; risks relating to intellectual property of others and
the uncertainties of patent protection and litigation. These and
other risk factors are discussed in Affymetrix' Annual Report on
Form 10-K for the year ended December 31, 2009, and other SEC
reports, including its Quarterly Reports on Form 10-Q for
subsequent quarterly periods. Affymetrix expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in Affymetrix' expectations with regard thereto
or any change in events, conditions or circumstances on which any
such statements are based.
PLEASE NOTE:
Affymetrix, the Affymetrix logo, GeneChip, and all other
trademarks are the property of Affymetrix, Inc.
AFFYMETRIX, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (IN THOUSANDS) (UNAUDITED)
September 30, December 31, 2010
2009 ASSETS: (Note 1) Current
assets: Cash and cash equivalents $ 40,141 $ 65,642 Restricted
cash—short-term portion 409 1,686 Available-for-sale
securities—short-term portion 80,432 213,377 Accounts receivable,
net 52,354 64,933 Inventories 52,337 54,490 Deferred tax
assets—short-term portion 1,167 1,172 Prepaid expenses and other
current assets 12,155 15,903 Total
current assets 238,995 417,203 Available-for-sale
securities—long-term portion 148,763 64,760 Property and equipment,
net 59,012 68,182 Acquired technology rights, net 41,455 49,855
Deferred tax assets—long-term portion 4,712 4,720 Restricted
cash—long-term portion - 1,109 Other assets 14,499
25,121 Total assets $ 507,436 $ 630,950
LIABILITIES AND STOCKHOLDERS’ EQUITY: Current
liabilities: Accounts payable and accrued liabilities $ 42,686 $
57,183 Deferred revenue—short-term portion 12,559
14,534 Total current liabilities 55,245 71,717
Deferred revenue—long-term portion 4,007 3,898 Other long-term
liabilities 10,854 10,295 Convertible notes 148,588 247,201
Stockholders’ equity: Common stock 707 710 Additional paid-in
capital 739,846 733,378 Accumulated other comprehensive income
2,682 4,051 Accumulated deficit (454,493 ) (440,300 )
Total stockholders’ equity 288,742 297,839
Total liabilities and stockholders’
equity
$ 507,436 $ 630,950
Note 1: The condensed consolidated balance sheet at
December 31, 2009 has been derived from the audited
consolidated financial statements at that date included in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2009.
AFFYMETRIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED) Three Months Ended
Nine Months Ended September 30, September 30,
2010 2009
2010 2009 REVENUE:
Product sales $ 67,273 $ 66,172 $ 205,819 $ 198,198 Services 4,929
9,901 14,134 33,678 Royalties and other revenue 1,770
2,118 5,884 6,430 Total
revenue 73,972 78,191 225,837
238,306
COSTS AND EXPENSES: Cost of
product sales 29,822 30,728 85,816 95,047 Cost of services and
other 3,677 5,142 11,820 20,299 Research and development 16,175
18,764 52,469 60,408 Selling, general and administrative 26,309
30,608 86,116 96,276 Restructuring charges -
(296 ) - 1,897 Total costs and expenses
75,983 84,946 236,221
273,927 Loss from operations (2,011 ) (6,755 )
(10,384 ) (35,621 ) Interest income and other, net 760 774 (2,100 )
1,290 Interest expense 1,537 2,430 6,309 8,510 Gain on repurchase
of convertible notes 4,108 -
5,852 17,447 Income (loss) before income taxes
1,320 (8,411 ) (12,941 ) (25,394 ) Income tax provision 352
408 1,252 1,310
Net income (loss) $ 968 $ (8,819 ) $ (14,193 ) $ (26,704 )
Basic net income (loss) per common share $ 0.01 $
(0.13 ) $ (0.21 ) $ (0.39 ) Diluted net income (loss) per
common share $ 0.01 $ (0.13 ) $ (0.21 ) $ (0.39 )
Shares used in computing basic net income (loss) per common share
68,875 68,799 68,945
68,569 Shares used in computing diluted net
income (loss) per common share 69,223 68,799
68,945 68,569
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