Celera and the VirusCelera and the Virus

A review of current prospects of A review of current prospects of Applera Applera

SoCalBSI 2004SoCalBSI 2004

Timothy NgTimothy Ng

07/07/0407/07/04

What is Applera?What is Applera?

founded in 1998, recapitalized by PE Inc in 1999founded in 1998, recapitalized by PE Inc in 1999 Divided into three groups: Celera Genomics (CG), Divided into three groups: Celera Genomics (CG),

Applied Biosystems (AB) and Celera DiagnosticsApplied Biosystems (AB) and Celera Diagnostics Only CG and AB publicly tradedOnly CG and AB publicly traded Diagnostics begun as join ventureDiagnostics begun as join venture CG develops wetlab materials and machines, e.g. CG develops wetlab materials and machines, e.g.

drugsdrugs AB develops and markets instrument based AB develops and markets instrument based

hardware, e.g. ABI PRISM sequencers; consumables, hardware, e.g. ABI PRISM sequencers; consumables, software and servicessoftware and services

Diagnostics focuses on developing new and unique Diagnostics focuses on developing new and unique diagnostic toolsdiagnostic tools

Who controls Applera?Who controls Applera?

Controlled by executive board and board of directorsControlled by executive board and board of directors Tony White, CEO and PresidentTony White, CEO and President Dennis Winger, CFODennis Winger, CFO Kathy Ordonez, President of CG and DiagnosticsKathy Ordonez, President of CG and Diagnostics Michael Hunkapiller, President of ABMichael Hunkapiller, President of AB Divided into several committees: Audit/Finance, Divided into several committees: Audit/Finance,

Board, Management Resource, Nominating/Corporate Board, Management Resource, Nominating/Corporate Governance, Technology Advisory CommitteeGovernance, Technology Advisory Committee

Note: Technology Advisory Committee seems to Note: Technology Advisory Committee seems to perform function of HOT for Appleraperform function of HOT for Applera

Applera GovernanceApplera Governance

What about What about Diagnostics?Diagnostics? AB and CG fund operating costs of Diagnostics AB and CG fund operating costs of Diagnostics CG is responsible for funding $300 M of initial CG is responsible for funding $300 M of initial

operating costs of Diagnosticsoperating costs of Diagnostics If operating costs > $300 M, CG and AB will equally If operating costs > $300 M, CG and AB will equally

fund costsfund costs Profits of Diagnostics distributed in 65:35 ratio to CG Profits of Diagnostics distributed in 65:35 ratio to CG

and AB respectivelyand AB respectively After operating costs are reimbursed, profits will be After operating costs are reimbursed, profits will be

reimbursed 50:50reimbursed 50:50 AB will reimburse CG for all tax benefits generated by AB will reimburse CG for all tax benefits generated by

DiagnosticsDiagnostics Expect for $200 M of initial loss before equal sharing Expect for $200 M of initial loss before equal sharing

between CG and ABbetween CG and AB

AlliancesAlliances

Bristol-Myers Squibb, which receives information from Bristol-Myers Squibb, which receives information from Applera studies and in turn has given exclusive rights Applera studies and in turn has given exclusive rights for diagnostic product marketingfor diagnostic product marketing

UCSF’s Comprehensive Cancer CenterUCSF’s Comprehensive Cancer Center Merck & Co., Inc. joint venture – cancer prognostic Merck & Co., Inc. joint venture – cancer prognostic

teststests Genomics Collaborative, Inc. identifying sequence Genomics Collaborative, Inc. identifying sequence

patterns in rheumatoid arthritispatterns in rheumatoid arthritis Abbott Laboratories -helping to market VIROSeq and Abbott Laboratories -helping to market VIROSeq and

assists CG with clinical studiesassists CG with clinical studies

Alliances (cont)Alliances (cont)

Aventis, develop and market Cathepsin S inhibitor Aventis, develop and market Cathepsin S inhibitor compoundscompounds

Merck & Co., Inc., Merck & Co., Inc., in vivoin vivo evidence of the role of evidence of the role of Cathepsin K inhibitors in osteoporosisCathepsin K inhibitors in osteoporosis

Maxim Pharmaceuticals which is using nearly 500 k Maxim Pharmaceuticals which is using nearly 500 k compounds from the Celera library to test for induced compounds from the Celera library to test for induced cell apoptosis in cancer cells. cell apoptosis in cancer cells.

VIROSeqVIROSeq

Developed by DiagnosticsDeveloped by Diagnostics Designed to detect mutation in HIV-1 single to multiple Designed to detect mutation in HIV-1 single to multiple

samples samples Algorithm includes tests for gene patterns known to Algorithm includes tests for gene patterns known to

cause resistance in 23 anti-retroviral drugscause resistance in 23 anti-retroviral drugs Recently acquired FDA 510(k) approval in February Recently acquired FDA 510(k) approval in February Analyzes 335 first codons of protease and reverse Analyzes 335 first codons of protease and reverse

transcriptase (roughly 2/3 of the reverse transcriptase transcriptase (roughly 2/3 of the reverse transcriptase gene)gene)

Program creates consensus sequence of multiple Program creates consensus sequence of multiple samples or continuous assembled sequence which is samples or continuous assembled sequence which is compared to a reference strain, pNL4-3compared to a reference strain, pNL4-3

Design for physician useDesign for physician use

VIROSeq ProtocolVIROSeq Protocol

Obtain Blood

Sample

Isolate HIV

Purify HIV RNA

cDNA

PCR Amp

Purify DNA

Dye-Label DNA

Purify DNA

DNA Sequence

HIV Genotype Report

Protocol NotesProtocol Notes

Single primer is used for transcription, due to Single primer is used for transcription, due to polymorphism at 5’ end several primers may have to polymorphism at 5’ end several primers may have to be usedbe used

Software checks for poor quality data, corrects for Software checks for poor quality data, corrects for basecalling errors, checks of base mutations that basecalling errors, checks of base mutations that result in amino acid sequence changes, gene patterns result in amino acid sequence changes, gene patterns that correlate with drug resistance, discrepancies that correlate with drug resistance, discrepancies between consensus and reference sequences, etc.between consensus and reference sequences, etc.

Designed specifically to work with ABI PRISM 377 DNA Designed specifically to work with ABI PRISM 377 DNA Sequencer and ABI PRISM 310 Genetic Analyzer, AB Sequencer and ABI PRISM 310 Genetic Analyzer, AB GeneAmp PCR System 9600 and 9700GeneAmp PCR System 9600 and 9700

Sold with most required hardware to perform protocol Sold with most required hardware to perform protocol For further reference: For further reference:

http://www.celeradiagnostics.com/cdx/publicationshttp://www.celeradiagnostics.com/cdx/publications

Company ProfileCompany Profile

Summarises CRA NASDAQ over 2 yearsSummarises CRA NASDAQ over 2 years Experienced -4% loss over the last 52-week periodExperienced -4% loss over the last 52-week period Net revenue $ 62 MNet revenue $ 62 M Current stock value approx. $ 11 per shareCurrent stock value approx. $ 11 per share

Company Profile (cont)Company Profile (cont)

Fiscal year ends: June 30Fiscal year ends: June 30 According to Investors.com: 29According to Investors.com: 29thth percentile of all percentile of all

stocks in Investors.com databasestocks in Investors.com database Total Net Worth: $ 738.74 MTotal Net Worth: $ 738.74 M Total Debt: $ 10.486 M Total Debt: $ 10.486 M Share Holders: Company 1.44%, Institutions 73.65%Share Holders: Company 1.44%, Institutions 73.65% in the technical rating: 24th place out of 44 stocks in in the technical rating: 24th place out of 44 stocks in

the Medical-Genetics stock group, 40th out of 44 in the Medical-Genetics stock group, 40th out of 44 in fundamentals, and 15th out of 44 in stock fundamentals, and 15th out of 44 in stock attractiveness attractiveness

Received lowest possible company grade from Received lowest possible company grade from Investors.comInvestors.com

ConclusionsConclusions

I do not think the company will do well in the future I do not think the company will do well in the future due to present trends in company management and due to present trends in company management and recent financial trends in the last fiscal year. recent financial trends in the last fiscal year.

However, due to the number of projects and their However, due to the number of projects and their possible implications, it is likely that Applera will possible implications, it is likely that Applera will continue to be a viable company for a few more years. continue to be a viable company for a few more years.

ReferencesReferences

http://biotechinfowire.com/news.asp?nid=731&ntid=1http://biotechinfowire.com/news.asp?nid=731&ntid=107&pg=107&pg=1 (510(k) approval of VIROSeq) (510(k) approval of VIROSeq)

www.appliedbiosystems.co.kr/dataDir/ pds/ViroSeqwww.appliedbiosystems.co.kr/dataDir/ pds/ViroSeq%20kit/F11300211320_User%20Manual-Viroseq.pdf %20kit/F11300211320_User%20Manual-Viroseq.pdf (User Manual)(User Manual)

www.applera.comwww.applera.com (Company Website) (Company Website)