Shifting the business of its units, Applera Corp. created what it called a Knowledge Business by integrating the genomic and biological information of one company with the marketing and distribution capabilities of another.
Applera said its Applied Biosystems Group will exclusively distribute the Celera Discovery System (CDS) operated by its Celera Genomics Group, integrating that system and other genomic information into the Knowledge Business. The arrangement is expected to increase revenues and income for both Applera groups, while continuing Celera’s push toward becoming a drug discovery and development company.
“While Celera Genomics and Celera Diagnostics may become more scientifically aligned to maximize resources and speed discovery, we are planning no changes to our corporate structure,” Applera President and CEO Tony White said during a conference call. “To realize the value potential of Celera’s information, it needs to be integrated with a broader platform.”
Kathy Ordonez was named president of Celera Genomics, at the same time retaining her responsibilities as president of the Celera Diagnostics joint venture with Applied Biosystems.
“Quite simply, Kathy has a track record of turning technology into money,” said White, who had served as Celera’s interim president since the January resignation of Craig Venter, who maintains his affiliation with Celera as the chair of its scientific advisory board.
Foster City, Calif.-based Applied Biosystems expects its online information business to include genomic assays and related content, as well as other information-rich products, services and analytical tools for life sciences customers.
“Applied Biosystems’ assays-by-design and assays-on-demand products will provide reagents based on [genetic] data that will allow scientists to query specific genetic elements,” Applied Biosystems President Michael Hunkapiller said during the call. “The focal point of our new Knowledge Business will be an e-commerce platform that will allow scientists to design experiments based on access to CDS content and bioinformatics tools.”
He said the company expects the first version to be operational early this summer.
In exchange for marketing and distribution rights to CDS and access to its content, Applied Biosystems will provide Celera with a low-to-mid-single-digit royalty stream on Knowledge Business revenues over the 10-year term of the agreement. The royalty rate will progress with the level of sales through 2008, but decline annually starting in 2009, eventually resulting in a cumulative cash flow of between $200 million to $300 million, the company said.
Celera will continue to earn revenues from existing CDS customers, with whom Celera will look to expand the relationships on the basis of the new arrangement. Rockville, Md.-based Celera’s proteomics laboratory will exclusively support therapeutic research conducted within Celera and on behalf of its therapeutic collaborators.
“The greatest value creation opportunity for Celera is a successful drug discovery and development business,” White said. “At the same time, and this is also important, Celera will maintain its access to CDS data for Celera’s discovery programs, and will retain control of the intellectual property.”
Celera’s therapeutics business will continue to have access to data and other intellectual property associated with the online information business for the benefit of its discovery programs, including for its collaborations with third parties.
Celera Diagnostics will not be affected by this arrangement and will continue to have access to Applera intellectual property for human in vitro diagnostics.
Deborah Smeltzer, who has been serving as Applied Biosystems’ vice president of finance, was appointed vice president of the Knowledge Business. Celera employees associated with the information business will continue to support the CDS product, and they will remain Celera employees working under Jason Molle, the general manager of Celera’s online information operations.