8
Lab System could take several years,
and these companies won't feel the
competitive threats immediately.
For heavy-duty work, the re-
search lab capability can be expanded
using Caliper's high-throughput
screening system. Caliper's is an auto-
mated and integrated system that util-
izes its microfluidic-based chips for
large-scale analysis of chemical com-
pounds. Similar to the Personal Lab
System, at the center of Caliper's
high-throughput screening system lies
a specially developed version of its
LabChip System. Called "sipper
chips," these consist of a capillary
tube attached to a chip, thus allowing
the transport of reagents for analysis.
Caliper does have competition to
the high-throughput screening sys-
tem: Aclara Biosciences, like Caliper,
is developing a microfluidic screening
technology. Aclara has not yet intro-
duced a product to the market. Once
on the market, Aclara will most likely
be Caliper's most direct competitor,
and has signed PE Biosystems and
Johnson & Johnson as a marketing
partner. While there will likely be a
place for more than one company in
the high-throughput screening indus-
try, Aclara and others will be playing
catch-up to Caliper/Agilent.
(In January 2001, Caliper's liti-
gation with Aclara regarding Aclara's
alleged misappropriation of trade se-
crets and Caliper's alleged patent in-
fringement was settled. Both compa-
nies have agreed to dismiss all suits as
well as to cross-license selected pat-
ents. Plus, Aclara will pay Caliper a
$37.5 million settlement over the next
three years in a combination of stock,
cash, and minimum guaranteed royal-
ties.)
Caliper reported Q1 earnings of
$1.03, but excluding the settlement
with Aclara, Caliper had a loss of 5
cents per share. In its conference call,
the company is pleased with its re-
sults, but because of its relationship
with Agilent, Caliper isn't allowed to
disclose number of bioanalyzers sold.
Secondly, it could not provide finan-
cial guidance for the rest of the year
since its technology is "so new" and it
is difficult to gauge acceptance and
adoption by the market. So far, cus-
tomers have been very satisfied.
Caliper has developed microflu-
idics technology as an answer to the
pressing needs of drug development
companies. Increased speed, minia-
turization, integration, automation,
and lower reagent costs will allow the
microfluidics technology to drive re-
search productivity forward by a
quantum leap. With drug develop-
ment companies under increasing
pressure to pump up product pipe-
lines, microfluidics technology is an
excellent answer to these needs.
BSR
finds Caliper a compelling company
that will probably not disappoint in-
vestors. However, Caliper will not be
added to the BioPortfolio because our
focus this report is on the needs of
drug development companies and the
number of tool-enabling technologies
included in our BioPortfolio is lim-
ited.
#####
The biotech boom of 1999-2000
came to a halt during the first three
months of 2001: stock prices fell
while venture capital deals and initial
public offerings all ceased. And even
now most profitable biotech firms still
have stock prices far in excess of any
price-earnings-growth ratio. Thus,
with these high prices, no wonder
Lehman Brothers' analyst Rachel Le-
heny warned in early April that big
biotech firms like Amgen and Genen-
tech are at risk of a 20 to 30% correc-
tion during the next several months.
As a result, in April the NASDAQ
Biotech Index reached levels not seen
since late 1999, but since then has
rebounded. To put the index in per-
spective, its all-time high close of
1,596.53 on March 6, 2000 was far
above this year's high of 1,595.70 on
January 29.
So what happened?
Fueled by a revolution in technol-
ogy, and led by the emergence of the
Internet from 1995 through March
2000, we had the greatest bull market
in history. Greed drove Wall Street as
trillions of dollars were raised in
thousands of private placements,
IPOs, secondaries, and debt instru-
ments. Dozens of tech companies with
nothing more than business plans
were receiving hundreds of millions
of dollars in funding.
It was all working because the
BioTech Stock Updates
BioTech Sage Report, May 2001
This section is not only to update and inform our
readers on the significant news of those stocks that
are in our BioPortfolio, but to provide insight,
market conditions that will influence the biotech
sector.
