AFFX Affymetrix, Inc.

Affymetrix, Inc., (NASDAQ:AFFX) today reported its operating results for the first quarter of 2011. Total revenue for the quarter was $73.7 million, as compared to total revenue of $80.2 million in the first quarter of 2010.

The Company reported a slight profit in the first quarter of 2011. This compares to net loss of $9.6 million, or $0.14 per diluted share, in the same period of 2010.

For the first quarter of 2011, product revenue was $67.5 million, which consisted of consumable revenue of $62.9 million and instrument revenue of $4.6 million. Service revenue was $4.5 million, and royalties and other revenue was $1.7 million. This compares to first quarter 2010 product revenue of $73.4 million, which consisted of consumable revenue of $66.2 million and instrument revenue of $7.2 million. Service revenue was $4.5 million, and royalties and other revenue was $2.3 million.

For the first quarter of 2011, cost of product sales was $23.9 million compared to $28.5 million in the same period of 2010. Cost of services and other was $3.2 million compared to $4.6 million in the same period of 2010.

Product gross margin was 65%, as compared to 61% in the same period of 2010.

For the first quarter of 2011, operating expenses were $43.5 million as compared to operating expenses of $49.9 million in the same period of 2010, a reduction of 13%.

“A key goal for 2011 is to generate at least 25% of our revenue from new markets including cytogenetics and cancer. We grew this segment to 22% of revenue through the first quarter,” said Kevin M. King, president & CEO. “We continue to make progress in our efforts to return to sustained profitability, with operating expenses down by 13% and gross margins improving 4 percentage points, generating a slight profit on $74 million of quarterly revenue.”

During the First Quarter, the Company:

• Launched the GeneChip® miRNA 2.0 Array. This enhanced microRNA tool enables the research community's pursuit of personalized medicine by accelerating the identification of biomarkers and gene expression signatures associated with disease. The miRNA 2.0 Array combines the most comprehensive miRNA view with the highest level of sensitivity available.
• Introduced the Affymetrix SNP 6 Core Reagent Kit, a comprehensive workflow solution that provides pre-mixed and validated reagents for nearly every step in the SNP 6.0 assay. This convenient kit eliminates the need for mixing buffers, reduces the need to order from multiple vendors, and enables easier inventory management with a single kit. Comprised of validated reagents available from Affymetrix and leading reagent suppliers, the SNP 6 Core Reagent Kit performs to Affymetrix specifications with genomic DNA from blood, saliva, and cell lines, as well as whole-genome-amplified DNA.
• Announced OncoScan™ FFPE Express 2.0, a second-generation platform that offers enhanced coverage of tumor suppressors and oncogenes. Designed in collaboration with leading cancer researchers representing the Stand Up To Cancer (SU2C) initiative, OncoScan FFPE Express 2.0 overcomes the challenge of analyzing DNA from formalin-fixed, paraffin-embedded (FFPE) tissues to extract important retrospective clinical data from archived samples. This innovative assay goes beyond limitations of standard array comparative genomic hybridization methods to yield copy number, allelic ratio, and somatic mutation data from only 75 nanograms of input DNA, the lowest sample requirement available. In addition, it provides the highest quality data, as demonstrated by greater than 92 percent pass rates across thousands of the most degraded and challenging FFPE samples.
• Expanded its Axiom™ product line with the Genome-Wide CHB 1 Array, the first commercial product to maximize genetic coverage of common alleles in Han Chinese populations. The CHB 1 array is a powerful tool for characterizing the genetic basis of disease and studying disease associations in Han Chinese populations. To design the array, researchers at the Bio-X Center of Shanghai Jiao Tong University and Beijing's Fuwai Hospital took advantage of more than 10 million validated markers in the Axiom Genomic Database, including content drawn from the 1000 Genomes Project and the International HapMap Project.

Affymetrix' management team will host a conference call on April 27, 2011 at 2:00 p.m. PT to review its operating results for the first quarter of 2011. 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 April 27, 2011 until 8:00 p.m. PT on May 4, 2011 at the following numbers: domestic: (877) 660-6853, international: (201) 612-7415. The passcode for both replays is 370998. 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 2,100 systems have been shipped around the world and over 23,000 peer-reviewed papers have been published using the technology. Affymetrix is headquartered in Santa Clara, California, 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, Asia and Latin America. 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, 2010, and other SEC reports. 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)

    March 31, December 31, 2011 2010 ASSETS: (Note 1) Current assets: Cash and cash equivalents $29,629 $35,484 Restricted cash—short-term portion 305 287 Available-for-sale securities—short-term portion 52,129 67,223 Accounts receivable, net 51,674 52,281 Inventories 49,068 49,373 Deferred tax assets—short-term portion 1,002 1,071 Prepaid expenses and other current assets 6,935 9,422 Total current assets 190,742 215,141 Available-for-sale securities—long-term portion 161,755 134,190 Property and equipment, net 51,415 54,177 Acquired technology rights, net 35,723 38,858 Deferred tax assets—long-term portion 4,942 4,894 Other long-term assets 12,046 13,525 Total assets $456,623 $460,785   LIABILITIES AND STOCKHOLDERS’ EQUITY: Current liabilities: Accounts payable and accrued liabilities $38,293 $44,259 Deferred revenue—short-term portion 10,367 10,950 Total current liabilities 48,660 55,209 Deferred revenue—long-term portion 4,428 4,601 Other long-term liabilities 11,641 11,748 Convertible notes 95,472 95,472 Stockholders’ equity: Common stock 705 706 Additional paid-in capital 744,574 742,206 Accumulated other comprehensive income 1,637 1,376 Accumulated deficit (450,494) (450,533) Total stockholders’ equity 296,422 293,755 Total liabilities and stockholders’ equity $456,623 $460,785

_____________

Note 1: The condensed consolidated balance sheet at December 31, 2010 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, 2010.

 

AFFYMETRIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)

 

    Three Months Ended    

March 31,

   2011   

 

   2010   

REVENUE: Product sales $67,463 $73,443 Services 4,508 4,463 Royalties and other revenue 1,753 2,281 Total revenue 73,724 80,187 COSTS AND EXPENSES: Cost of product sales 23,899 28,459 Cost of services and other 3,200 4,589 Research and development 16,268 18,479 Selling, general and administrative 27,212 31,379 Total costs and expenses 70,579 82,906 Income (loss) from operations 3,145 (2,719) Interest income and other, net (1,894) (3,598) Interest expense 938 2,432 Income (loss) before income taxes 313 (8,749) Income tax provision 274 871 Net income (loss) $39 $(9,620)   Basic net income (loss) per common share $0.00 $(0.14) Diluted net income (loss) per common share $0.00 $(0.14)   Shares used in computing basic net income (loss) per common share 70,648 67,889 Shares used in computing diluted net income (loss) per common share 71,267 67,889