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Q3 2012 Earnings Call
November 05, 2012 5:00 pm ET
Doug Farrell - Vice President of Investor Relations
Franklin R. Witney - Chief Executive Officer, President and Director
Timothy C. Barabe - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
David C. Clair - Piper Jaffray Companies, Research Division
Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division
Jonathan P. Groberg - Macquarie Research
Daniel Brennan - Morgan Stanley, Research Division
Zarak Khurshid - Wedbush Securities Inc., Research Division
Shaun Rodriguez - Cowen and Company, LLC, Research Division
Isaac Ro - Goldman Sachs Group Inc., Research Division
Peter Lawson - Mizuho Securities USA Inc., Research Division
Bryan Brokmeier - Maxim Group LLC, Research Division
Derik De Bruin - BofA Merrill Lynch, Research Division
Previous Statements by AFFX
» Affymetrix Management Discusses Q2 2012 Results - Earnings Call Transcript
» Affymetrix's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Affymetrix's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Thank you, operator. Good afternoon, everyone. Welcome to our third quarter conference call. At the close of the market today, we released our operating results for Q3. If you haven't had the chance to review those, you can access the press release on our website. Joining me on the call today is Frank Witney, our President and CEO; and our Chief Financial Officer, Tim Barabe.
I'd like to remind callers that our discussion may include forward-looking statements about future projections, expectations and prospects for the company. We believe these statements are based on reasonable assumptions, but actual results may differ materially from those indicated. Important factors which could cause actual results to differ materially from those in the forward-looking statements are detailed in our filings with the Securities and Exchange Commission. It is our intent that these forward-looking statements be protected under the Safe Harbor created by the Private Securities Litigation Reform Act of 1995.
We encourage you to review these documents carefully, as forward-looking statements are made as of today's date, and we make no obligation to update this information. Additionally, we will be discussing GAAP and non-GAAP measures. A full reconciliation of the non-GAAP measures to GAAP can be found in today's press release or on our website. As a reminder, today's call is being recorded and the audio from the call is being webcast over the Internet on our homepage at affymetrix.com.
So with that, let me turn the call over to Frank.
Franklin R. Witney
Good afternoon, everyone. As I told you when I rejoined the company last July, our priorities are to stabilize and diversify the business in the first phase of this turnaround and then focus on growth and improved profitability in the second phase. Since that time, we reorganized the company into highly-focused business units, strengthened the management team and significantly diversified and extended our product portfolio for translational medicine and clinical diagnostics through the acquisition of eBioscience, as well as internal product development.
Through these efforts, we've established the foundations for our return to growth and profitability. And for the third quarter of 2012, our total revenue excluding eBioscience declined 2% on a constant currency basis as compared to the prior year, a significant improvement over Q3 2011 and another sign that the business is stabilizing. Solid growth in our Genetic Analysis business and mid single-digit growth in our Panomics portfolio helped to offset the headwinds we continue to face in sales of our Gene Expression arrays. Our eBioscience business unit grew by about 1% currency adjusted in the third quarter and about 5% through the first 3 quarters of the year.
Turning to our business units. I'll start with Gene Expression, which is off 11% for the quarter, a rate of decline that exceeded recent trends. We experienced a 16% decline in our expression array revenue and was partially offset by growth of 5% in our Panomics expression products. Stabilizing our array-based expression revenue is our single biggest challenge. This business currently represents about 34% of our overall revenue, is under pressure from both new technologies, as well as low-priced arrays from competitors. There are a number of things we're doing to stabilize our expression revenue including introducing new products, developing newer low-cost array formats and bundling our reagents to capture more revenue per sample.
During the third quarter, we launched several new products including our SensationPlus FFPE Amplification and 3’ IVT labeling kits, which provides superior correlation between FFPE and fresh frozen samples, thereby enabling the discovery of biomarkers in Gene Expression signatures in archived FFPE samples. The SensationPlus IVT FFPE reagent has been validated on 3 IVT arrays, our value-priced PrimeView family, our industry-leading U133, as well as the new Almac Xcel Array, which has been optimized for biomarker discovery in FFPE samples.
In addition, we launched a whole new -- a new whole transcript arrays for human, mouse and rat gene 2.0 products in 3 formats, cartridges, plates and scripts with updated content. This includes adding the latest new gene content to our fastest-growing and most differentiated arrays. Both the human and mouse arrays include the addition of long non-coding RNAs associated with intervention of mRNA cell regulation in cancer.
Last quarter, we announced the partnership with Leica that is focused on automating our QuantiGene ViewRNA FISH technology for a variety of applications. I'm happy to tell you that we're in the process of placing our first early access to system from the partnership with an international and recognized researcher at a leading teaching hospital in the United States. We believe that our collaboration with Leica will help us to develop a portfolio of unique assays for translational medicine and clinical applications.