Celera Genomics Reports Third Quarter Fiscal 2006 Results

Business Wire, April 27, 2006

ROCKVILLE, Md. -- Celera Genomics Group (NYSE:CRA), an Applera Corporation business, today reported a net loss of $23.3 million, or $0.31 per share, for the third quarter of fiscal 2006 ended March 31, 2006, compared to a net loss of $21.0 million, or $0.29 per share, for the third quarter of fiscal 2005. The third quarter fiscal 2006 results included a $20.9 million pre-tax charge for restructuring costs associated with the previously announced decision to partner or sell the small molecule drug discovery and development programs and the integration of Celera Diagnostics into Celera Genomics. The third quarter fiscal 2006 results also included a $3.1 million pre-tax gain from the sale of an investment. All per share amounts refer to Applera Corporation-Celera Genomics Group Common Stock.

"With the structural changes we made this quarter, Celera is now focused on its molecular diagnostics and proteomics endeavors," said Tony L. White, Chairman, President and Chief Executive Officer of Applera Corporation. "These efforts provide opportunities for both near- and longer-term value with a lower risk profile to shareholders."

"This was a strong quarter for us in terms of end-user sales growth and progress in new product introductions," said Kathy Ordonez, President of Celera Genomics. "End-user sales of products in our alliance with Abbott increased 27 percent from the prior-year quarter and 31 percent year-to-date. Losses from the alliance were down considerably both for the quarter and so far for the fiscal year. We were pleased with adoption in Europe of the HIV, HCV, and recently-launched Chlamydia and Gonorrhea tests that run on the m2000(R). We're also happy to have launched analyte specific reagents (ASRs) for thrombosis risk and fragile X.

"Outside our alliance with Abbott, we also made substantial progress toward demonstrating the medical utility of a Cirrhosis Risk Score(TM) for patients with chronic hepatitis C," added Ms. Ordonez. "These findings support the value of our genetic discoveries and their utility in the practice of Targeted Medicine."

Financial Highlights

Effective January 1, 2006, Celera Genomics acquired the 50 percent interest in the Celera Diagnostics joint venture previously owned by the Applied Biosystems group of Applera such that it now owns 100 percent of Celera Diagnostics. Prior to that date, Celera Genomics accounted for its interest in the Celera Diagnostics joint venture under the equity method of accounting and included 100 percent of the losses of Celera Diagnostics in its statement of operations as 'Loss from joint venture'. Additionally, Celera Genomics recorded 100 percent of net losses at Celera Diagnostics. Celera Genomics' historical results have been restated for comparative purposes to reflect the transaction. However, the acquisition did not affect Celera Genomics' net loss for the periods presented.

--Reported revenues for the third quarter of fiscal 2006 were $8.9 million, compared to $17.2 million for the third quarter of fiscal 2005. Third quarter fiscal 2006 reported revenues of $8.9 million are comprised of diagnostic-related revenues and are essentially consistent with Celera Diagnostics' revenues in the prior year period. The third quarter fiscal 2005 reported revenues also included revenues from the discontinued Online/Information business and Paracel.

Reported revenues for the Group are comprised of product sales, equalization payments, and license and collaborative revenue. Product sales currently consist primarily of shipments to our partner, Abbott, at a cost recovery price. In the future, product sales that are outside the alliance with Abbott also will be reported in this category. Equalization payments result from an equal sharing of alliance profits and losses between the alliance partners and vary each period depending on the relative income and expense contribution of the partners.

--R&D expenses for the third quarter of fiscal 2006 were $20.4 million, compared to $36.9 million in the prior year quarter, and SG&A expenses for the third quarter of fiscal 2006 decreased to $8.3 million, compared to $10.9 million in the prior year quarter. These reductions were due primarily to the decision to exit small molecule drug discovery and development and the discontinuation of the Online/Information Business.

--At March 31, 2006, the Group's cash and short-term investments were approximately $580 million, compared to approximately $620 million at December 31, 2005. This reduction in the Group's cash and short-term investments position at March 31, 2006 included a $30 million payment to Applied Biosystems as part of the consideration for its 50 percent interest in Celera Diagnostics.

Supplemental Financial Highlights

The following supplemental financial information is provided as a means of increasing the visibility for Celera's performance in terms of its strategic alliance with Abbott:

(Dollar amounts in millions)          Three months       Nine months
                                     ended March 31,   ended March 31,
                                      2006    2005      2006    2005
                                    ------- -------   ------- --------
Total Alliance end-user sales       $ 20.0  $ 15.7    $ 57.0   $ 43.5
Celera's 50% pre-tax loss from
 Alliance activities                  (5.4)   (8.6)    (18.3)   (28.2)