Affymetrix Reports Fourth Quarter and Fiscal Year 2007 Results.SANTA CLARA, Calif. -- Affymetrix Inc. (Nasdaq:AFFX) today reported its operating results for the fourth quarter and fiscal year ended December 31, 2007. Total revenue for the fourth quarter was $107.6 million, as compared to total revenue of $104.2 million in the fourth quarter of 2006. For the full year, total revenue was $371.3 million as compared to $355.3 million for 2006. Product and product related revenue was $100.0 million, product sales to Perlegen Sciences Inc. were $0.6 million and royalties and other revenue were $7.0 million for the fourth quarter of 2007. For the full year, product and product related revenue was $337.6 million as compared to $323.8 million for 2006. The Company reported net income of approximately $12.8 million or $0.17 per diluted share in the fourth quarter of 2007, which includes a pretax restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $2.4 million or $0.03 per diluted share, as compared to net income of $8.7 million or $0.13 per diluted share in the fourth quarter of 2006, which includes a pretax restructuring charge of $3.5 million or $0.05 per diluted share. Fiscal year 2007 net income was $12.6 million or $0.17 per diluted share, which includes a pretax restructuring charge of $15.3 million or $0.18 per diluted share, as compared to net loss of $13.7 million or $0.20 per diluted share for 2006, which includes a pretax restructuring charge of $13.5 million or $0.20 per diluted share. "Driven by the introduction of innovative new genetic products and a focus on improved operations, in 2007 we delivered improved operating results and laid the foundation for long term growth and continued profitability," said Kevin King, president of Affymetrix. "We enter 2008 with a strengthened organization, a solid product portfolio, and are well positioned to take advantage of the high growth market opportunity for genetic analysis." Fourth quarter sales included GeneChip([R]) consumable revenue of $79.9 million, consisting of array revenue of $61.6 million, reagent revenue of $16.3 million, genotyping services revenue of $1.4 million and $0.6 million of Perlegen revenue. Additionally, the Company reported instrument revenue of $10.7 million in the fourth quarter of 2007. For the year, consumable revenue was $272.5 million, as compared to $251.2 in fiscal year 2006. Affymetrix shipped 44 GeneChip systems in the quarter, bringing its cumulative systems shipped to around 1,722 at the end of the fourth quarter. Cost of product sales and product related revenue were $37.7 million in the fourth quarter of 2007 compared to $38.7 million in the same period of 2006. Product and product related gross margin was 62.3 percent in the fourth quarter of 2007 compared to 59.3 percent in the fourth quarter of 2006. In 2007, cost of product sales and product related revenue were $133.9 million as compared to $123.7 million in 2006, resulting in product and product related gross margin of 60.3% in 2007 as compared to 61.8% in 2006. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were $55.7 million for the fourth quarter of 2007, which includes restructuring charges of $2.4 million, as compared to $54.1 million in the fourth quarter of 2006, which includes restructuring charges of $3.5 million. In 2007, operating expenses were $226.5 million, which includes restructuring charges of $15.3 million, as compared to $244.9 million in 2006, which includes restructuring charges of $13.5 million. Financial Outlook for 2008 For fiscal 2008, the Company expects total revenue to be in the range of $505 million to $525 million. Total revenue includes a one-time $90 million intellectual property payment in the first quarter. Total gross margin is expected to be approximately 69 percent, of which 7 percent is expected to be attributable to the one-time $90 million payment. The Company expects total operating expenses between $225 million to $230 million, including total restructuring and intangible amortization costs of approximately $8 million. Recent Highlights DNA Analysis DNA analysis Any technique used to analyze genes and DNA. See Chromosome walking, DNA fingerprinting, Footprinting, In situ hybridization, Jeffries' probe, Jumping libraries, PCR, RFLP analysis, Southern blot hybridization. * Scientists at University of Ottawa Heart Institute The University of Ottawa Heart Institute was founded in 1976 on the site of the Ottawa Civic Hospital by Dr Wilbert J. Keon. Since then it has become a global leader in the fight against heart disease. (UOHI UOHI University of Ottawa Heart Institute ) will use the Affymetrix Genome-Wide Human SNP Array 6.0 for its whole-genome association study on coronary artery disease coronary artery disease, condition that results when the coronary arteries are narrowed or occluded, most commonly by atherosclerotic deposits of fibrous and fatty tissue. (CAD). Over the next three years, researchers at UOHI will use the array to screen the DNA DNA: see nucleic acid. DNA or deoxyribonucleic acid One of two types of nucleic acid (the other is RNA); a complex organic compound found in all living cells and many viruses. It is the chemical substance of genes. of more than 12,000 individuals to not only confirm their previous findings, but also to identify new associations that provide scientists with a better understanding of how to identify and develop personalized treatments for the causes of CAD. * Affymetrix announced the Coriell Institute for Medical Research will use the Affymetrix Genome-Wide Human SNP Array 6.0 for a series of whole-genome association studies for the Delaware Valley Personalized Medicine Project. The goal of the project is to identify genes that affect the risk of developing cancer, heart and blood vessel blood vessel n. An elastic tubular channel, such as an artery, a vein, a sinus, or a capillary, through which the blood circulates. blood vessel(s), n the network of muscular tubes that carry blood. diseases, lung disease lung disease Pulmonary disease Pulmonology Any condition causing or indicating impaired lung function Types of LD Obstructive lung disease–↓ in air flow caused by a narrowing or blockage of airways–eg, asthma, emphysema, chronic bronchitis; , as well as stroke and other complex health conditions. Scientists at Coriell will conduct studies on DNA samples from 10,000 individuals initially, with the ultimate goal of reaching 100,000 participants. * Researchers at Massachusetts General Hospital Massachusetts General Hospital Health care The major teaching hospital for Harvard Medical School, widely regarded as one of the best health care centers in the world and Harvard Medical School Harvard Medical School (HMS) is one of the graduate schools of Harvard University. It is a prestigious American medical school located in the Longwood Medical Area of the Mission Hill neighborhood of Boston, Massachusetts. used the Affymetrix 500K array set and a modified protocol to examine expression levels of maternally and paternally derived alleles. Published in the November 16, 2007 issue of Science, scientists found in a genome-wide scan of 4000 human genes that in over 300 only the maternal or paternal allele allele (əlēl`): see genetics. allele Any one of two or more alternative forms of a gene that may occur alternatively at a given site on a chromosome. was expressed. Termed monoallelic expression, the relatively high occurrence of this genetic phenomenon may be a source of human diversity. RNA RNA: see nucleic acid. RNA in full ribonucleic acid One of the two main types of nucleic acid (the other being DNA), which functions in cellular protein synthesis in all living cells and replaces DNA as the carrier of genetic Analysis * Scientists at the Salk Institute used GeneChip Exon Exon In split genes, a portion that is included in the ribonucleic acid (RNA) transcript of a gene and survives processing of the RNA in the cell nucleus to become part of a spliced messenger RNA (mRNA) or structural RNA in the cell cytoplasm. 1.0ST arrays to study human embryonic stem cells and neural progenitor cells. Published in the October 3, 2007 issue of PLoS Computational Biology PLoS Computational Biology is an open-access computational biology journal published by the nonprofit organization Public Library of Science in association with the International Society for Computational Biology (ISCB). , researchers introduced a new methodology for Exon Array analysis, leading to new insights into the complexity of alternative splicing in human embryonic stem cells and their transition to neural stem cells stem cells, unspecialized human or animal cells that can produce mature specialized body cells and at the same time replicate themselves. Embryonic stem cells are derived from a blastocyst (the blastula typical of placental mammals; see embryo), which is very young . * Researchers at McGill University and collaborators used GeneChip Exon 1.0ST arrays to examine correlations between SNPs and expression of transcript isoforms. Published in the January 13, 2008 issue of Nature Genetics, scientists detected 324 genes with significant associations between flanking SNPs and transcript levels. The study results indicate that regulatory effects of genetic variation in a normal human population may be far more complex than previously observed, which could account for natural phenotypic variation and disease susceptibility. Drug Metabolism Drug Metabolism/Interactions Definition Drug metabolism is the process by which the body breaks down and converts medication into active chemical substances. Precautions Drugs can interact with other drugs, foods, and beverages. * Affymetrix announced the availability of its Drug Metabolizing Enzymes and Transporters (DMET DMET Directorate of Marine Engineering Training (India national institute) DMET Defense Management Education & Training DMet Doctor of Metallurgy DMET Distance Measuring Equipment - TACAN ) Early Access solution, currently the world's most comprehensive method for assaying the genetics of drug metabolism. The DMET offering profiles more than 1,069 drug metabolism biomarkers, including 172 "core" genetic markers, enabling pharma researchers to assess all clinically relevant ADME ADME Absorption, Distribution, Metabolism, and Excretion ADME Association of Destination Management Executives ADME Active Duty Medical Extension markers in a single assay. Targeted Arrays * Affymetrix announced the launch of the MyGeneChip(TM) Program, which offers custom gene expression and genotyping arrays for plant and animal genomes. MyGeneChip Custom Arrays utilize the same proven GeneChip technology that has been the industry standard in microarray research for the past decade. In addition to whole-genome 3' in vitro in vitro /in vi·tro/ (in ve´tro) [L.] within a glass; observable in a test tube; in an artificial environment. in vi·tro adj. In an artificial environment outside a living organism. transcript expression and resequencing arrays, researchers may now order custom whole-transcript expression, tiling and genotyping arrays to explore plant and animal genomes in greater detail than ever before. Molecular Diagnostics * The Company announced that its GeneChip technology will form the foundation of the new molecular cytogenetic cytogenetic /cy·to·ge·net·ic/ (-je-net´ik) 1. pertaining to chromosomes. 2. pertaining to cytogenetics. cytogenetic pertaining to or originating from the origin and development of the cell. service offering by Laboratory Corporation of America. The new service will correlate deletions, gains and other chromosomal rearrangements with congenital diseases such as autism autism (ô`tĭzəm), developmental disability resulting from a neurological disorder that affects the normal functioning of the brain. It is characterized by the abnormal development of communication skills, social skills, and reasoning. , mental retardation mental retardation, below average level of intellectual functioning, usually defined by an IQ of below 70 to 75, combined with limitations in the skills necessary for daily living. and developmental delay developmental delay n. A chronological delay in the appearance of normal developmental milestones achieved during infancy and early childhood, caused by organic, psychological, or environmental factors. in children. Affymetrix' genotyping technology will enable high resolution analysis of copy number changes and loss of heterozygosity Loss of heterozygosity (LOH) in a cell represents the loss of one parent's contribution to part of the cell's genome. LOH can arise via several pathways, including deletion, gene conversion, mitotic recombination and chromosome loss. (LOH LOH Loss of Heterozygosity LOH Ladies Of Harley LOH Line Overhead LOH Light Observation Helicopter LOH Legion of Honor LOH Lay on Hands (Paladin ability; Everquest game) LoH Loop of Henle (kidney nephron) ) not possible with traditional karyotype or FISH technologies. * Affymetrix partner Navigenics, Inc. announced their official corporate launch, naming a team of advisers and investors from leading communities in science, medicine, technology and public policy who are supporting the company. Navigenics educates and empowers customers with knowledge of their genetic predispositions, and then motivates them to act on the information to prevent the onset of disease, achieve earlier diagnosis, appropriately manage disease, or otherwise lessen its impact. The company has a signed agreement with Affymetrix to provide lab services via its CLIA-certified laboratory in Sacramento, California. Software * Affymetrix announced the availability of its Genotyping Console(TM) 2.0 (GTC GTC See: Good 'til cancelled order GTC See good-till-canceled order (GTC). 2.0) Software, an easy-to-use analysis tool for determining single nucleotide polymorphism Noun 1. single nucleotide polymorphism - (genetics) genetic variation in a DNA sequence that occurs when a single nucleotide in a genome is altered; SNPs are usually considered to be point mutations that have been evolutionarily successful enough to recur in a (SNP SNP Scottish National Party Noun 1. SNP - (genetics) genetic variation in a DNA sequence that occurs when a single nucleotide in a genome is altered; SNPs are usually considered to be point mutations that have been evolutionarily ) genotypes and chromosomal copy number changes in whole-genome association and cytogenetic studies. GTC 2.0 works together with the Genome-Wide Human SNP Array 6.0 to offer researchers up to 10 times the sensitivity for detecting copy number changes than competing platforms. The new features of GTC 2.0 make it easier for researchers to extract and interpret both inherited and novel copy number changes. * The Company announced the full commercial launch of Affymetrix GeneChip Command Console [R] Software, which in conjunction with Expression Console(TM) and Genotyping Console, provides scientists with integrated laboratory and data analysis workflows to suit their growing research requirements. The Command Console offers customers a new paradigm New Paradigm In the investing world, a totally new way of doing things that has a huge effect on business. Notes: The word "paradigm" is defined as a pattern or model, and it has been used in science to refer to a theoretical framework. in instrument control and genomic data organization software. Acquisitions * The Company acquired USB USB in full Universal Serial Bus Type of serial bus that allows peripheral devices (disks, modems, printers, digitizers, data gloves, etc.) to be easily connected to a computer. Corporation for approximately $75 million in cash. USB corporation is a privately held Cleveland, Ohio-based company that develops, manufactures and markets an extensive line of molecular biology molecular biology, scientific study of the molecular basis of life processes, including cellular respiration, excretion, and reproduction. The term molecular biology was coined in 1938 by Warren Weaver, then director of the natural sciences program at the Rockefeller and biochemical reagent products. The acquisition will enable Affymetrix to accelerate the development and commercialization of new genetic analysis solutions and increase the value of its current product portfolio. Financing * Affymetrix closed its registered offering of $316.50 million aggregate principal amount of unsecured 3.50% Senior Convertible Notes due 2038. Affymetrix intends to use the net proceeds from the offering for working capital and general corporate purposes, which may include funding its operations, capital expenditures, potential acquisitions of businesses, product or technologies it believes to be of strategic importance and repurchases or redemption of all or a portion of its 0.75% Senior Convertible Notes due 2033. Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. * Affymetrix and Illumina, Inc. entered into an agreement to resolve their intellectual property dispute. Under the terms of the agreement, Illumina made a one-time payment in January to Affymetrix of $90 million. Affymetrix agreed to dismiss with prejudice all lawsuits it had brought against Illumina and granted to Illumina certain covenants not to sue. Affymetrix' management team will host a conference call on January 31, 2008 at 2:00 p.m. PT to review its operating results for the fourth quarter and fiscal year 2007. 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: (866) 500-AFFX, international: (706) 643-2771. A replay of this call will be available from 5:00 p.m. PT on January 31, 2008 until 8:00 p.m. PT on February 6, 2008 at the following numbers: domestic: (800) 642-1687, international: (706) 645-9291. The passcode for both replays is 30994152. An archived webcast of the conference call will be available under the Investor Relations section of the Company's website at www.affymetrix.com. About Affymetrix Affymetrix GeneChip[R] microarray technology is the industry-standard tool for analyzing complex genetic information. After inventing microarray technology in the late 1980s, Affymetrix scientists have been dedicated to developing innovative products that provide researchers with a more complete view of the genome. These products continue to accelerate genetic research and enable scientists to develop diagnostics and tailor treatments for individual patients by identifying and measuring the genetic information associated with complex diseases. Today, Affymetrix technology is used by the world's top pharmaceutical, diagnostic and biotechnology companies, as well as leading academic, government and not-for-profit research institutes. More than 1,700 systems have been shipped around the world and more than 11,000 peer-reviewed papers have been published using the technology. Affymetrix is headquartered in Santa Clara, Calif., and has manufacturing facilities in Sacramento, Calif., Cleveland, Ohio and Singapore. The company has about 1,100 employees worldwide and maintains sales and distribution operations across Europe and Asia. For more information about Affymetrix, please visit: www.affymetrix.com. 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 related to past and future acquisitions; 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, manufacturing and product development; personnel retention; uncertainties related to cost and pricing of Affymetrix products; dependence on collaborative partners; uncertainties relating to sole-source suppliers; uncertainties relating to FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. 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' Form 10-K for the year ended December 31, 2006, 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 and GeneChip are trademarks owned or used by Affymetrix, Inc. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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