Stratagene's Mx3005P instrument system chosen by Bayer for new diagnostic test

By Angela McDaniels

Seattle, March 7 - Stratagene Corp. said that Bayer Healthcare, Diagnostics Division, a member of the Bayer Group, will purchase customized Mx3005P instrument systems from Stratagene for use in a new platform Bayer is developing to perform molecular diagnostic tests.

"We believe Bayer chose to standardize on our instrument platform because of the quality and performance of our instrumentation," Stratagene president and chief executive officer Joseph A. Sorge said in the release.

"We believe our innovative Mx instrument offering, newly improved MxPro software and wide menu of unique reagent chemistry should allow us to sustain our double-digit growth rate for Quantitative PCR products into 2006."

For the full year 2006, Stratagene predicted that revenue will be between $100 million and $104 million and GAAP earnings per share will range from $0.37 to $0.41 per share.

For the fourth quarter ended Dec. 31, revenue grew by 153% to $57.1 million from $22.6 million in the fourth quarter of 2004. For the year ended Dec. 31, revenue increased by 54% to $130.3 million from $84.8 million in 2004.

Stratagene said revenue in the fourth quarter of 2005 benefited from a $34.1 million cash payment from Cambridge Antibody Technology related to in satisfaction of patent owners' interests in a collaboration for the development of Abbott Laboratories' Humira product. Excluding this one-time revenue item, fourth quarter 2005 revenue increased by 2.1% to $23.0 million, according to the release.

For the fourth quarter of 2005, net income increased by 18% to $2.0 million, or $0.09 per diluted share, from $1.7 million, or $0.08 per diluted share, in the comparable quarter of 2004.

For 2005, the company's net income increased 5% to $7.8 million, or $0.35 per diluted share, from $7.4 million, or $0.39 per diluted share, for fiscal 2004.

Net income in 2005 was negatively affected by a non-cash litigation charge related to a patent infringement damage award that affected income before taxes by roughly $20.6 million and $800,000 for legal expenses associated with patent litigation matters, Stratagene said in the release.

"In addition to a variety of unusual charges and credits, our fourth quarter net income was also impacted by a 43.1% or $1.1 million increase in research and development expenses and an 8.9% or $453,000 increase in sales and marketing spending," vice president and chief financial officer Steve R. Martin said in the release.

"These increased expenses were primarily related to our bioinformatics software co-development agreement with Strand Life Sciences, higher costs associated with Quantitative PCR instrument development activities and higher personnel costs."

Stratagene is based in La Jolla, Calif., where it develops, markets and manufactures specialized life science research and diagnostic products. It was a privately held company until June 2, 2004, when it merged with Hycor Biomedical Inc. Stratagene's results include Hycor from the merger date forward.

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