At Celera, the Swagger is Gone
This article was originally published in Start Up
Executive Summary
Virtually nothing about Applera's Celera Genomics Group looks the same as it did six months ago. Gone are the academic struttings of former president Craig Venter and the venture culture that permeated the organization during the race to finish the rough draft of the human genome sequence. In its place is a lower-profile management team focused on acquiring the tools needed for long-term drug development. Celera's founding business, predicated on the sale of genomic information and tools for its analysis for which it raised a billion dollars from investors, has moved to Applera sister company Applied Biosystems and is now merely a residual income source: in effect, ABI can now use genomic information like a piece of capital equipment in a reagent rental business model: the economics of its sale, or lease, to customers is driven by the opportunity to sell ABI's other products.
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Out of Sequence
Applied Biosystems' unexpected last-quarter drop in earnings and revenues, which caused its stock to tumble, were due to an 80% drop in revenues from sales of its high-end sequencing system, and market uncertainty due to a longer-than-usual delay in setting the 2002 NIH budget. But most troubling was the company's comment that "We are just not able to forecast the way we used to." What is certain, however, is that the drop in sequencer sales shows that most of the largest genome centers and commercial genomics companies have adequate sequencing capacity for their near-term needs as they shift from Big Biology whole genome sequencing to Small Biology genome analysis applications.
The Best of Three Worlds
Celera Diagnostics, a 50/50 JV between Applera Corp.'s two divisions, Applied Biosystems and Celera Genomics, is using the discovery, assay development, and systems expertise of its founders to help it commercialize reagent and software-based standardized molecular diagnostic tests. But Applera didn't step up to the plate until after it obtained an expanded license to PCR from Roche, giving it freedom to operate in the diagnostics arena, and convinced Kathy Ordoñez, president of Roche Molecular Systems, to join Applera and head the diagnostics program. Celera Diagnostics believes it will distinguish itself from other genomics-based companies pursuing diagnostics -- as well as from the traditional diagnostics players - by being able to efficiently discover new diagnostic markers by performing association studies to confirm the link between SNP sets and disease. Celera Diagnostics could also serve as an "earliest access" customer that contributes to and drives a new molecular diagnostics platform strategy for Applied Bio.
Inside Applera: Celera Genomics Becomes Applied Bio's Diagnostics Angel
Applera Corp.'s new $75 million high-throughput genotyping initiative to be equally funded by its three businesses, Celera Genomics Group, Applied Biosystems Group, and Celera Diagnostics (a joint venture of Celera Genomics and Applied Bio) has provided a context for the company to begin to reveal its diagnostics strategy. New information about the structure of the joint venture also sheds more light on the acceleration of Celera Genomics' business strategy as it moves toward a collaborator-oriented drug discovery company model.