Affymetrix reports $10.1 million second quarter GAAP net loss; plans to focus on reducing operating costs

By Jennifer Lanning Drey

Eugene, Ore., July 31 - Affymetrix, Inc. will focus on increasing its top line revenue and reducing its operating cost structure after posting a second quarter net loss, according to Dr. Stephen Fodor, president and chief executive officer of Affymetrix.

The company reported a second quarter GAAP net loss of $10.1 million, or $0.15 per diluted share, on revenues of $80.1 million, according to a company news release.

By comparison, Affymetrix reported GAAP net income of $7.8 million, or $0.12 per share, on revenues of $84.1 million for the same period in 2005, according to the release.

"Since we have entered into a period of operating loss, our general and administrative cost structure has become out of line for the revenue base of the company," said Fodor during a company conference call held Monday.

At June 30, Affymetrix had cash and cash equivalents of $76.0 million, compared to $100.2 million on Dec. 31, 2005.

Fodor said the past year has been the most difficult in Affymetrix's history due to internal and commercial challenges that have been compounded by increased competition, especially in the genotyping market.

In the coming quarters, Affymetrix will primarily focus on getting its operating expenses in line and improving profitability, said Gregory T. Schiffman, chief financial officer of the company, during Monday's call.

In the third quarter, the company will reduce expenses by restructuring corporate, general and administrative expenses, Fodor said.

"These savings should bring the company into more profitable operations and position the company for a healthier expense structure for 2007," he said.

The company will continue to focus on sales, research and development and product launches, Fodor also said.

Affymetrix currently has eight commercial partnerships with 18 cancer diagnostic products in development.

In the category of genotyping, Affymetrix announced earlier this month that it will introduce a 1-million-SNP (single nucleotide polymorphisms) product in the first quarter of 2007. The 500K set will be offered as a single array by the end of the year, according to Fodor.

"Although this past year has been challenging, we continue to reinvigorate our product line to drive our top line growth and institute operational cost savings in order to improve profitability for the company," Fodor said.

Affymetrix is a biopharmaceutical company with headquarters in Santa Clara, Calif.

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