Prepared and filed by St Ives Financial

10-K 1 b406663-10k.htm Prepared and filed by St Ives Financial

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 Or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended June 30, 2005

Transition Report Pursuant to Section 13 Or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission File Number 1-4389

Applera Corporation
(Exact name of registrant as specified in its charter)

DELAWARE	06-1534213
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

301 Merritt 7, Norwalk, Connecticut	06851-1070
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: 203-840-2000

Securities registered pursuant to Section 12(b) of the Act:

Title of Class	Name of Each Exchange on Which Registered

Applera Corporation-Applied Biosystems Group Common Stock (par value $0.01 per share)	New York Stock Exchange Pacific Exchange

Rights to Purchase Series A Participating Junior Preferred Stock (par value $0.01 per share)	New York Stock Exchange Pacific Exchange

Applera Corporation-Celera Genomics Group Common Stock (par value $0.01 per share)	New York Stock Exchange Pacific Exchange

Rights to Purchase Series B Participating Junior Preferred Stock (par value $0.01 per share)	New York Stock Exchange Pacific Exchange

Securities registered pursuant to Section 12(g) of the Act:

Title of Class: Class G Warrants

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

As of December 31, 2004, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of Applera Corporation-Applied Biosystems Group Common Stock (based upon the average of the high and low price) held by non-affiliates was $4,106,530,516, and the aggregate market value of Applera Corporation-Celera Genomics Group Common Stock (based upon the average of the high and low price) held by non-affiliates was $1,016,061,100. As of August 19, 2005, 195,335,563 shares of Applera Corporation-Applied Biosystems Group Common Stock and 74,472,343 shares of Applera Corporation-Celera Genomics Group Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Stockholders for Fiscal Year ended June 30, 2005 - Parts I, II, and IV.
Proxy Statement for 2005 Annual Meeting of Stockholders - Part III.

TABLE OF CONTENTS

PART I			1
Item 1.	Business		1
		Company Overview	1
		Scientific Background	4
		Applied Biosystems Group Business	6
		Celera Genomics Group Business	28
		Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics	40
		Applera Genomics Initiative	55
		Employees	56
		Financial Information About Industry Segments	56
		Financial Information About Geographic Areas	57
		Executive Officers of the Registrant	57
Item 2.	Properties		58
		Applied Biosystems Group Facilities	58
		Celera Genomics Group Facilities	58
		Celera Diagnostics Facilities	59
		Corporate Facilities	60
Item 3.	Legal Proceedings		60
		Commercial Litigation	60
		U.S. v. Davis	64
		Settled Roche Legal Proceedings	64
Item 4.	Submission of Matters to a Vote of Security Holders		65

PART II			66
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		66
		Information about our Common Stock and its Holders	66
		Forward-Looking Statements and Risk Factors	68
Item 6.	Selected Financial Data		102
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		102
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		102
Item 8.	Financial Statements and Supplementary Data		102
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		103
Item 9A.	Controls and Procedures		103
		Disclosure Controls and Procedures	103
		Internal Control Over Financial Reporting	103
Item 9B.	Other Information		104

PART III			104
Item 10.	Directors and Executive Officers of the Registrant		104
		Identification and Business Experience of Directors	104
		Identification and Business Experience of Executive Officers	104
		Family Relationships	105
		Involvement in Certain Legal Proceedings	106
		Audit Committee and Audit Committee Financial Expert	106
		Recommendation of Nominees to our Board of Directors	106
		Section 16(a) Beneficial Ownership Reporting Compliance	106
		Code of Ethics	106

Item 11.	Executive Compensation		107
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		108
		Securities Authorized for Issuance Under Equity Compensation Plans	108
		Security Ownership of Certain Beneficial Owners	111
		Security Ownership of Management	111
		Changes in Control	111
Item 13.	Certain Relationships and Related Transactions		111
Item 14.	Principal Accountant Fees and Services		111

PART IV			112
Item 15.	Exhibits and Financial Statement Schedules		112
		Financial Statements	112
		Financial Statement Schedule	113
		Exhibits	113

SIGNATURES			119

EXHIBITS, INCLUDING CERTIFICATIONS

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PART I

Item 1.

Business

Company Overview

Business Segments

Applera Corporation conducts business through three business segments, which are described below. Throughout this report, terms such as “Applera,” “we,” “us,” or “our” may be used to refer to Applera Corporation.

Applied Biosystems Group. Our Applied Biosystems Group, which we refer to as “Applied Biosystems” throughout this report, serves the life science industry and research community by developing and marketing instrument-based systems, consumables, software, and services. Its customers use these products and services to analyze nucleic acids (DNA and RNA), small molecules, and proteins to make scientific discoveries, develop new pharmaceuticals, and conduct standardized testing. Applied Biosystems’ products also serve the needs of some markets outside of life science research, which we refer to as “applied markets,” such as the fields of: forensic testing and human identification; “biosecurity,” which refers to products needed in response to the threat of biological terrorism and other malicious, accidental, and natural biological dangers; and food and environmental testing. A description of this business segment and developments during our 2005 fiscal year is set forth below in this Item 1 under the heading “Business–Applied Biosystems Group Business.”

Celera Genomics Group. Our Celera Genomics Group, which we refer to as “Celera Genomics” throughout this report, is engaged principally in the discovery and development of targeted therapeutics for cancer, autoimmune, and inflammatory diseases. Celera Genomics is leveraging its proteomic, bioinformatic, and genomic capabilities to identify and validate drug targets, and to discover and develop small molecule therapeutics. It is also seeking to advance therapeutic antibody and selected small molecule drug programs in collaboration with global technology and market leaders. A description of this business segment and developments during our 2005 fiscal year is set forth below in this Item 1 under the heading “Business–Celera Genomics Group Business.”

Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics. Celera Diagnostics, a joint venture formed by Applied Biosystems and Celera Genomics in April 2001, is focused on the discovery, development, and commercialization of diagnostic products. A description of this business segment and developments during our 2005 fiscal year is set forth below in this Item 1 under the heading “Business–Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics.”

Information about the risk factors associated with our business segments is set forth below in Item 5 of Part II of this report under the heading “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities–Forward-Looking Statements and Risk Factors.”

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We maintain a corporate staff to provide accounting, tax, treasury, legal, information technology, human resources, and other shared internal services for Applied Biosystems, Celera Genomics, and Celera Diagnostics.

Corporate History and Structure; Two Classes of Stock

Applera was incorporated in 1998 under the laws of the State of Delaware. Applera is the successor to “The Perkin-Elmer Corporation,” a corporation originally formed in 1939, as a result of a recapitalization completed in May 1999. As part of the 1999 recapitalization, Applera established the following two classes of common stock that were intended to reflect separately the relative performance of the businesses of Applied Biosystems and Celera Genomics, which are business units of Applera and are not separate legal entities:

	•	Applera Corporation-Applied Biosystems Group Common Stock, which we refer to in this report as “Applera-Applied Biosystems stock”; and

	•	Applera Corporation-Celera Genomics Group Common Stock, which we refer to in this report as “Applera-Celera Genomics stock.”

More information about Applera-Applied Biosystems stock and Applera-Celera Genomics stock is set forth below in Item 5 of Part II of this report under the heading “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities–Information about our Common Stock and its Holders.” Also, information about the risk factors associated with our capital structure and our two classes of common stock is set forth below in Item 5 of Part II of this report under the heading “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities–Forward-Looking Statements and Risk Factors–Risks Relating to a Capital Structure with Two Separate Classes of Common Stock.”

Available Information

Websites. We maintain Internet websites for Applera, Applied Biosystems, Celera Genomics, and Celera Diagnostics. All interested persons can access the following information on our Applera, Applied Biosystems, and Celera Genomics websites, free of charge:

	•	our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed with or furnished to the Securities and Exchange Commission;

	•	Section 16 “insider transaction” reports, which include Forms 3, 4, and 5, filed by our officers and directors with the SEC; and

	•	information relating to our corporate governance, including: our Corporate Governance Guidelines; our Code of Business Conduct and Ethics, which is applicable to our officers, directors, and employees; the charters for the Audit/Finance Committee, the Management Resources Committee, and the Nominating/Corporate Governance Committee of our Board of Directors; information on how to communicate with our Board of Directors, including our non-management directors; and information on how to report valid complaints to the Company regarding accounting and related matters.

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We make our SEC reports and the insider transaction reports available on our websites as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.

The following table indicates how to access the documents described above on our Applera, Applied Biosystems, and Celera Genomics websites. In addition, you can obtain copies of these materials by calling our corporate Secretary at 203-840-2000 or by making a request in writing mailed to: Attention: Secretary, Applera Corporation, 301 Merritt 7, P.O. Box 5435, Norwalk, CT 06856-5435.

	Website Addresses:	www.applera.com
		www.appliedbiosystems.com
		www.celera.com

	SEC Filings:	Click on the link to “SEC Filings” in the “Investors & Media” or “Investors” section, as applicable, of the website, and then click again on the link to “SEC Filings.”

	“Insider Transaction” Reports:	Click on the link to “SEC Filings” in the “Investors & Media” or “Investors” section of the website, as applicable, and then click again on the link to “SEC Insider Filings.”

	Corporate Governance Information:	Click on the link to “Corporate Governance” in the “Corporate” section of the Applera website. Click on the link to “Corporate Governance” in the “Investors & Media” or “Investors” section, as applicable, of the Applied Biosystems or Celera Genomics websites.

Except for any documents on our websites that are expressly incorporated by reference into this report, the information contained on our websites is not incorporated by reference into this report and should not be considered to be a part of this report. This includes the websites referred to in the table above, as well as other websites that we refer to elsewhere in this report. All of these website addresses are included in this document as inactive textual references only.

Information Incorporated by Reference. The SEC allows us to “incorporate by reference” some information from parts of other documents filed with the SEC, including:

	•	our Annual Report to Stockholders for our 2005 fiscal year, which we refer to in this report as our “2005 Annual Report”; and

	•	our Proxy Statement relating to our Annual Meeting of Stockholders to be held on October 20, 2005, which we refer to in this report as our “2005 Proxy Statement.”

When we “incorporate by reference,” that means that we are referring you to important information in other documents that have been filed with the SEC rather than repeating that information in this report. We recommend that you refer to the information that we indicate is contained in the other documents and which is incorporated by reference into this report. The portions of our 2005 Annual Report that are incorporated by reference into this report are included as Exhibit 13 to this report.

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Scientific Background

All living organisms contain biological molecules. The most numerous are in the categories of: nucleic acids, which include DNA and RNA; proteins; carbohydrates; and lipids. Biological molecules are typically much larger and more complex than common molecules, and there is a wide diversity in the types of biological molecules present in living organisms. These characteristics make the analysis of biological molecules significantly more complex than the analysis of smaller compounds. Key advances in therapeutics have often come from an understanding of either proteins or DNA.

DNA molecules provide instructions that ultimately control the synthesis of proteins within a cell, a process referred to as gene expression. DNA molecules consist of chemical subunits, called nucleotides, bound in two long strands formed by a chemical “backbone” made up of sugar and phosphate molecules. There are four nucleotides – adenine, cytosine, guanine, and thymine – often abbreviated with their first letters A, C, G, and T and often referred to as bases. In a DNA molecule, the nucleotides in the two strands are bound together in pairs to form a structure that resembles a twisted ladder, which is often referred to as a “double helix.” The bound pairs of nucleotides, which form the rungs of the “ladder,” are often referred to as base pairs.

Genes are individual segments of these DNA molecules that carry the specific information necessary to construct particular proteins. Genes may contain from several dozen to tens of thousands of nucleotides. The entire collection of DNA in an organism, called the “genome,” may contain a wide range of nucleotides, including as few as 4 million nucleotides in the case of simple bacteria and 3.1 billion base pairs of nucleotides in the case of human beings.

RNA molecules are similar to DNA in structure and are essential for biological function through a number of biochemical activities within the human body. There are different types of RNA molecules, each of which has a different function. For example, messenger RNA, the most common form of RNA, acts as an intermediary between DNA and protein, transcribing the genetic code from DNA into protein.

Principally driven by the “biotechnology revolution” and the increasing focus on DNA, researchers are developing a better understanding of DNA's role in human disease. An increased appreciation of how DNA ultimately determines the functions of living organisms has generated a worldwide effort to identify and sequence genes of many organisms, including the genes that make up the human genome. We believe the best scientific evidence to date indicates that the number of genes in the human genome that code for proteins is between 25,000 and 30,000. The study of genes and other genetic material of organisms is now commonly referred to as genomics.

The field of genomics research generally includes three broad categories of analysis, consisting of sequencing, genotyping, and gene expression studies:

•

Sequencing is performed to determine the exact order of the individual nucleotides in a DNA strand. Sequencing was used to identify the nucleotides in the entire human genome and other species. It has also been used to identify naturally occurring genetic variations in the human genome, which are referred to as single nucleotide polymorphisms, or SNPs. Scientists believe that SNPs can be correlated with, for

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		example, susceptibility to disease, disease prognosis, therapeutic efficacy, and therapeutic toxicity, and therefore may have diagnostic or therapeutic utility.

	•	Genotyping is performed to determine a particular sequence variant of a gene and its particular association with an individual’s DNA. Genotyping is not performed to determine the complete structure of the gene, but rather is performed to determine if the particular DNA sequence variant, typically a SNP, can be associated with, for example, susceptibility to a particular disease or response to a particular drug.

	•	Gene expression is performed to determine whether a particular gene is expressed, or present, and in some cases at what levels, in a relevant biological material. This analysis can be used, for example, to measure and compare gene activity in various biological samples, such as samples from populations of healthy and diseased individuals, or from populations at different stages of disease development. These types of studies may be useful in the development of diagnostic tests and therapeutic treatments.

As researchers learn more about DNA and genes, they are also developing a better understanding of the role of proteins in human disease through efforts in the field of proteomics, the study of proteins expressed, or coded, by genes. Proteins are the products of genes and, along with gene expression and modification, are believed to be key drivers and mediators of cellular function and biological system activity. The understanding and treatment of disease today involves the study of genes and the proteins they code for, and frequently involves the measurement of a drug’s ability to bind to specific proteins in the body.

Although DNA contains the code for proteins, scientists have discovered that the body may modify proteins after they have been made in cells. These modifications, referred to as post-translational modifications, can alter a protein’s function, leading to changes in the biological reactions that take place in cells, which researchers refer to as biological pathways. These post-translational modifications complicate the study of proteins, because scientists studying proteins and seeking to understand their role in health and disease need a more thorough characterization of proteins than simply knowing their genetic, or DNA, code.

We believe that gene and protein research will increase as companies in the pharmaceutical and biotechnology industries seek to improve their drug discovery and development efforts. We also believe that ongoing drug discovery and development efforts will increase research of cells as researchers seek to further understand how drugs work in the body.

The growth in DNA, protein, and other life science research has created the need for systems that facilitate the collection, organization, and analysis of the large amounts of data generated by this research. This demand has led to the development of the science of bioinformatics. The science of bioinformatics seeks to blend biology and computing to transform massive amounts of data into useful information.

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Applied Biosystems Group Business

Overview

Applied Biosystems serves the life science industry and research community by developing and marketing instrument-based systems, consumables, software, and services. Its customers use these products and services to analyze nucleic acids (DNA and RNA), small molecules, and proteins to make scientific discoveries, develop new pharmaceuticals, and conduct standardized testing. Applied Biosystems’ products and services are designed to address the demand for increased automation and efficiency in pharmaceutical and biotechnology laboratories by combining the detection capabilities of analytical instruments with advances in automation and laboratory work-flow design. The markets for Applied Biosystems’ products and services span the spectrum of the life sciences industry and research community, including: basic human disease research and genetic analysis performed by universities, government agencies, and other non-profit organizations; pharmaceutical drug discovery, development, and manufacturing; and agriculture research. Applied Biosystems’ products also serve the needs of some markets outside of life science research, which we refer to as “applied markets,” such as the fields of: forensic testing and human identification; “biosecurity,” which refers to products needed in response to the threat of biological terrorism and other malicious, accidental, and natural biological dangers; and food and environmental testing.

During our 2004 fiscal year, Applied Biosystems engaged a leading strategy consulting firm to assist management in an in-depth review of the group’s entire product portfolio. The purpose of this review was to identify opportunities for growth, increased profitability, and shareholder value creation. The project, which was conducted in three phases, was completed during the first half of our 2005 fiscal year, and Applied Biosystems has been formally integrating the output from the review into its strategic and business development planning process. The first phase included a rigorous fact-based analysis of Applied Biosystems’ current product portfolio, and an evaluation of research and development investments in an attempt to achieve optimum alignment with future growth opportunities. This has led to changes in, and may in the future result in further changes in, Applied Biosystems’ product and business mix and research and development programs. The second phase included an examination of Applied Biosystems’ business processes with a goal of improving operational efficiency and productivity. As a result, Applied Biosystems implemented the organizational restructuring described in the next paragraph. In the third phase, Applied Biosystems sought to identify and analyze additional internal and external growth opportunities.

During the first half of our 2005 fiscal year, Applied Biosystems completed the implementation of a new organization structure which resulted from the strategic review described in the preceding paragraph. The new structure created the following four business divisions, each led by a division President: Molecular Biology; Proteomics and Small Molecules; Applied Markets; and Services and Solutions. Applied Biosystems believes these integrated and fully-functioning divisions have the resources necessary to execute their business plans, including strategic planning, research and development, marketing, and sales professionals. The four new business divisions are supported by several cross-divisional functions, including units focused on Applied Biosystems’ strategic planning and business development, investigation of advanced technologies, and incubation of new businesses in new

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or underserved markets. Also, these operating activities will continue to be supported by a shared service organization responsible for functions such as human resources, finance, communications, legal, and intellectual property.

Subsequent to the implementation of this new organization structure, in June 2005, Applied Biosystems announced a reduction and rebalancing of its workforce. Applied Biosystems terminated about 250 positions, primarily in research and development, marketing, and operations. However, during our 2006 year, Applied Biosystems anticipates expanding personnel in other functional areas including field sales and support, manufacturing quality, and advanced research. Applied Biosystems took this action to better align its resources with the needs of its customers and to improve operational efficiency and quality.

Also, in August 2004, Michael W. Hunkapiller, Ph.D., retired as Senior Vice President and President, Applied Biosystems Group. At the same time, Catherine M. Burzik, formerly a Vice President of Applera and Executive Vice President and Chief Operating Officer of Applied Biosystems, was promoted to the position left by Dr. Hunkapiller.

For information on revenues from instruments and consumables for our 2003, 2004, and 2005 fiscal years, refer to pages 36 and 38 of Management’s Discussion and Analysis in our 2005 Annual Report, which pages are incorporated herein by reference.

Products for the Genomics Market

Customers in the genomics market use systems for the analysis of nucleic acids for: basic research; pharmaceutical and diagnostic discovery and development; biosecurity; food and environmental testing; analysis of infectious diseases; and human identification and forensic analysis. Applied Biosystems has developed technologies and products to support key applications in genomics research such as sequencing, genotyping, and gene expression studies. Applied Biosystems’ products for the genomics market are described in the following paragraphs.

PCR Instruments, including Thermal Cyclers and Real-Time PCR Systems, and Related Consumables. Polymerase chain reaction, commonly referred to as PCR, is a process in which a short strand of DNA is copied multiple times, or amplified, so that it can be more readily detected and analyzed. Applied Biosystems’ PCR product line includes amplification instruments, known as thermal cyclers, several combination thermal cyclers and PCR detection systems, known as real-time PCR systems, and reagents, disposables, and software necessary for the PCR amplification and detection process.

The following table lists the thermal cyclers offered by Applied Biosystems:

	Instrument	Capacity

	9800 Fast PCR System	96 well
	GeneAmp^®PCR System 9700 Thermal Cyclers	60, 96, Dual 96, and Dual 384 well
	Applied Biosystems 2720 Thermal Cycler	96 well

Technologically, these instruments are distinguished primarily based on their capacity for simultaneously processing multiple samples, determined based on the number of consumable “wells” that can be accommodated, and the speed at which the thermal cycling process is completed. The model 9800 instrument is the most recent addition to this product line. Applied Biosystems began sales and marketing of this instrument in October 2004. This instrument is the

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most advanced thermal cycler offered by Applied Biosystems, and can complete the thermal cycling process substantially faster than other instruments offered by Applied Biosystems and other commercial vendors of these types of instruments.

Applied Biosystems’ real-time PCR systems, which it previously referred to as “sequence detection systems,” include the following instruments:

	Instrument		Capacity/Speed

	Applied Biosystems 7900HT Real-Time PCR System		96 or 384 well/Available as Fast 96 well
	Applied Biosystems 7500 Real-Time PCR System		96 well/Available as Fast
	Applied Biosystems 7300 Real-Time PCR System		96 well
	ABI PRISM 7000 Sequence Detection System		Dual 384 well

All of these real-time PCR instruments are enhanced versions of Applied Biosystems’ thermal cyclers, which are described above. However, unlike a general PCR instrument, which is used only to amplify a sample, these instruments are used to detect and for some applications quantify a sample during the PCR amplification process for purposes of conducting, for example, genotyping or gene expression analysis. Technologically, these instruments are distinguished based on their capacity for simultaneously processing multiple samples, determined based on the number of consumable “wells” that can be accommodated, the speed at which the detection and quantification process is completed and the level of automation, and the applications for which the instruments can be used. The model 7900HT Fast system and the model 7500 Fast system are the most recent additions to this product line. Applied Biosystems began sales and marketing of the model 7900HT Fast system in October 2004, and for the model 7500 Fast system in January 2005. These instruments are the most advanced real-time PCR systems offered by Applied Biosystems, and can complete the detection and quantification process substantially faster than other instruments offered by Applied Biosystems and other commercial vendors of these types of instruments. The model 7900HT systems incorporate robotics to enable large-scale gene expression and genotyping studies.

Generally, the PCR and real-time PCR product lines are designed to offer instruments suitable for use by a wide range of users, from the individual researchers to research laboratories conducting high-volume research. The suitability of any particular system for any researcher or research laboratory will depend on the nature of the work being performed and the capital budget of the researcher or research laboratory. The model 7000 Sequence Detection System is an older real-time PCR system that was the precursor to the model 7300 and 7500 real-time PCR systems. Limited demand for this product is expected to continue because some research and applied markets applications require the use of a system such as the model 7000 system that has been previously validated, or demonstrated acceptable, by users for those applications.

Applied Biosystems’ PCR product line also includes reagents and disposables for use in the PCR process. PCR reagents include specialized enzymes to enable the PCR amplification process. Enzymes represent a class of proteins which activate biological processes. PCR enzymes are optimized to efficiently make copies of a segment of DNA while exposed to the high temperatures required by the PCR process. Applied Biosystems offers a range of products containing these PCR enzymes. These include products for use in general PCR, as well as special formulations designed for real-time PCR applications. Disposables include plastic devices which are used to hold DNA samples and PCR reagents throughout the PCR amplification process. A number of different disposable devices are available for use with the full range of PCR and real-time PCR instruments offered by Applied Biosystems.

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Applied Biosystems’ real-time PCR systems enable TaqMan^® chemistry, a unique PCR technology that can be used both for measurement of gene expression and for genotyping. TaqMan gene expression chemistry detects the product of PCR amplification and quantifies the amount of the target gene sequence present in the sample during the amplification process. This technique is referred to as quantitative real-time PCR. The real-time PCR systems analyze a sample by measuring fluorescence resulting from the reaction of the TaqMan chemistry and the sample. This product line has been widely accepted in the scientific research market. Applied Biosystems’ TaqMan Gene Expression Assays and SNP Genotyping Assays are TaqMan chemistry-based assays designed for use on Applied Biosystems’ real-time PCR systems. These products are described below in Item 1 of this report under the heading “Business–Applied Biosystems Group Business–Products for the Genomics Market–Genomic Assays.”

Applied Biosystems’ real-time PCR systems product line also includes its ABI PRISM™ 6100 Nucleic Acid PrepStation for sample preparation. The ABI PRISM 6100 Nucleic Acid PrepStation extracts DNA and/or RNA from whole cells, blood, and other samples. This DNA or RNA, largely separated from the other molecules found in cells such as proteins, can then be analyzed in instruments largely without interference from those other molecules. The ABI PRISM 6100 Nucleic Acid PrepStation was designed to decrease the labor and cost involved in preparing DNA and RNA for analysis by automating some aspects of this key phase in the sample preparation process.

Applied Biosystems offers a proprietary TaqMan Low Density Array, which was jointly developed with 3M Company, and a modified version of its model 7900HT system to support the Low Density Arrays for gene expression analysis. The Low Density Arrays are consumable laminated plastic sheets containing 384 microscopic fluid channels and wells. They are designed for use instead of plastic trays with sample wells generically referred to as microtiter plates, which are used in many types of laboratory analyses, including gene expression or genotyping studies on Applied Biosystems’ instruments. The microscopic fluid channel design of the Low Density Arrays enables researchers to automatically route a sample to the reaction wells rather than doing this by hand or using expensive and complex robotics as is required when using microtiter plates. Applied Biosystems is currently offering the Low Density Arrays pre-loaded with its human, mouse, and rat TaqMan Gene Expression Assays, which are described below in Item 1 of this report under the heading “Business–Applied Biosystems Group Business–Products for the Genomics Market–Genomic Assays.” Using an on-line ordering system, customers can customize the cards by selecting the assays that are pre-loaded onto the Low Density Arrays.

Genetic Analysis Instruments; Genotyping and Resequencing Systems. Applied Biosystems’ genetic analysis instruments, referred to as DNA or genetic analyzers or sequencers, can be used to perform both DNA sequencing and fragment analysis. DNA sequencing is used to determine the exact order of nucleotides in a strand of DNA. DNA fragment analysis is used to determine the size, quantity, or pattern of DNA in a strand of DNA. Genetic analysis instruments have been used extensively to obtain the DNA sequence of the human genome and the genomes of other species and to identify SNPs and other genetic mutations. With the completion of human genome sequencing and the completion of the sequencing of other important genomes, Applied Biosystems believes that researchers are transitioning to performing an increasing amount of resequencing, which is also referred to by some researchers as medical sequencing or directed resequencing. Resequencing involves the sequencing of a selected segment or segments of a genome, such as a pre-selected set of genes, in one or more organisms after a reference genome for that organism has been determined. The DNA sequence information of these

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organisms is then compared to the known reference sequence to determine whether any genetic variations are present. Scientists may use this information to, for example, better understand the causes and prevention of disease, facilitate the development of better and more targeted therapies and diagnostics, and understand individual response to treatment. This may be particularly true with a disease such as cancer, which scientists are finding to be associated with a large number of unique DNA mutations that may not be identified using commercially-available genotyping tools, including those offered by Applied Biosystems.

Applied Biosystems’ genetic analysis instruments use a process referred to as electrophoresis to analyze DNA molecules. During electrophoresis, the DNA molecules being analyzed are placed in a separation medium, usually a gel, and then subjected to an electric charge. The molecules will pass through the gel at different speeds because the molecules have different lengths and electrical charges. Typically, the molecules being analyzed are labeled, or chemically linked, with fluorescent “tags” before being subjected to electrophoresis, with each of the four different nucleotides of the DNA molecule – A, C, G, and T – being labeled with a different color tag. During electrophoresis, the genetic analysis instrument analyzes the molecules by directing a laser beam at them and then “reading” the fluorescent tags with an optical device that can detect the light that is emitted by the tags. Applied Biosystems offers several sequencing chemistries optimized for various customer requirements. Samples prepared using these chemistries are then analyzed on Applied Biosystems’ genetic analysis instruments.

All of Applied Biosystems’ genetic analysis instruments now use capillaries, which are tubes through which a DNA sample moves during electrophoresis. Capillary systems have higher throughput and greater automation than those based on slab-gels, an older and less efficient technology. Applied Biosystems offers the following genetic analysis instruments:

	Instrument		Capacity

	Applied Biosystems 3730xl DNA Analyzer		96 capillaries
	Applied Biosystems 3730 DNA Analyzer		48 capillaries
	ABI PRISM^®3130xl Genetic Analyzer		16 capillaries
	ABI PRISM^®3130 Genetic Analyzer		4 capillaries
	ABI PRISM^®310 Genetic Analyzer		1 capillary

The model 3730xl, 3730, 3130xl, and 3130 instruments all incorporate advanced sequencing technology that Applied Biosystems believes represents the leading industry standard for high-throughput sequencing. The model 3130xl and model 3130 instruments are the most recent additions to this product line, and were introduced for use by low- to medium- throughput laboratories to supersede the previously-marketed ABI PRISM^® 3100 Genetic Analyzer and ABI PRISM^®3100-Avant Genetic Analyzer. Applied Biosystems began sales and marketing of these new instruments in November 2004. These instruments were designed to deliver enhanced automation, faster turnaround times, higher reliability, and higher data quality than previous generation technologies incorporated in the predecessor instruments.

Applied Biosystems provides servicing and customer support for all of these instruments. Applied Biosystems also provides servicing and support for the model 3100 and 3100-Avant instruments, which were phased out of production during our 2005 fiscal year with the introduction of the model 3130xl and 3130 instruments, and also for the model 3700 DNA Analyzer and the ABI PRISM 377 DNA Sequencer, both of which were discontinued in prior fiscal years but which are still used by some researchers. The model 3700 DNA Analyzer was the precursor to the model 3730xl instrument. At the time of its introduction in 1999, the model

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3700 instrument represented a significant advance in DNA sequencing technology because it could perform high-throughput analysis of samples in unattended operation. The model 3700 instrument was the principal instrument used by Celera Genomics for sequencing human and other genomes, and we believe the model 3700 instrument was also the principal instrument used by the Human Genome Project for its sequencing projects. The ABI PRISM 377 DNA Sequencer is the last of Applied Biosystems’ instruments to use slab-gel technology.

Applied Biosystems believes that the growing importance of DNA resequencing to disease research, as described above, will be a significant factor in the continuing demand for its sequencing instruments and consumable products. Applied Biosystems has therefore developed the VariantSEQr™ Resequencing System, a product for detecting variants in 274 human genes. Applied Biosystems believes that the VariantSEQr system enables scientists to perform resequencing studies that were previously impractical and too expensive to perform because of the amount of time, labor, and expertise needed for experiment setup. The VariantSEQr system integrates reagents and software for use on the Applied Biosystems 3730, 3730xl, 3130, and 3130xl genetic analysis instruments.

Applied Biosystems also offers the SNPlex™ Genotyping System. The SNPlex system uses multiplexing, a scientific term that refers to multiple reactions in a single tube or well, to rapidly identify large numbers of target SNPs in a single biological sample. Using this system, which can be used with the Applied Biosystems 3730 and 3730xl DNA Analyzers, customers can perform studies based on their own customized set of reference SNPs. Applied Biosystems developed this system as an alternative to the PCR-based genotyping that can be performed using Applied Biosystems’ real-time PCR instrument systems. The suitability of this system for any particular researcher or research project compared to PCR-based genotyping depends on several factors, including the type of study being performed, scientific requirements, access to the needed instrumentation, and cost considerations.

Genomic Assays. Our genomic assays are chemical tests used to measure a DNA or RNA target. A genomic assay combines a set of pre-selected oligonucleotides, sometimes referred to as “oligos,” which are synthetic single-stranded pieces of DNA, with other analytical reagents that allow a researcher to measure differences between samples of genetic material. For example, a gene expression assay is a chemical test to measure how much RNA is being produced from a specific gene in the cells of a tissue sample. A genotyping assay is a chemical test to measure the presence or absence of a specific genetic sequence variation or mutation among DNA samples from different populations that can be used to correlate genetic traits with physical traits such as disease susceptibility or drug response. Applied Biosystems’ genomic assays include several products and services for both gene expression and genotyping, which are described in the following table.

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	Gene Expression Assays		Description

	TaqMan^®Gene Expression Assays		Ready-made gene expression assays that can be ordered from
			Applied Biosystems’ inventory

	TaqMan^®Pre-Designed Gene Expression Assays		Pre-designed gene expression assays that can be made to
			order

	Custom TaqMan^®Gene Expression Assays		Service for the manufacture of custom TaqMan chemistry-
			based gene expression assays based on targets supplied by
			researchers

	SNP Genotyping Assays		Description

	TaqMan^®SNP Genotyping Assays		Ready-made SNP genotyping assays that can be ordered from
			Applied Biosystems’ inventory

	TaqMan^®Pre-Designed SNP Genotyping Assays		Pre-designed SNP genotyping assays that can be made to
			order

	TaqMan^®Coding SNP Genotyping Assays		Ready-made SNP genotyping assays within protein coding
			regions of genes that can be ordered from Applied
			Biosystems’ inventory

	Custom TaqMan^®SNP Genotyping Assays		Service for the manufacture of custom TaqMan chemistry-
			based SNP genotyping assays based on targets supplied by
			researchers

Since the initial launch of its genomic assays in our 2002 fiscal year, Applied Biosystems has continued to increase the number of assays available and currently offers a large library of ready-made and pre-designed SNP genotyping and gene expression assays. This library includes approximately 2.3 million human SNP genotyping assays, 200,000 gene expression assays for the human genome, and 300,000 gene expression assays for the mouse and rat genomes. The ability to study the mouse and rat genomes is important to researchers involved in, for example, therapeutic research and development, because mice and rats have genes that are believed to correspond to human genes and the results of disease research or safety, toxicology, or other studies on mice or rats may therefore be correlated to humans with corresponding genetic characteristics. Also, in May 2005 Applied Biosystems expanded this product line and commenced sales and marketing of Pre-Designed TaqMan Gene Expression Assays for two additional scientifically important model organisms, the Arabidopsis plant and the Drosophila fruit fly. Arabidopsis is a standard model genome used in plant science and agricultural studies, and Drosophila is a model for studying developmental biology with numerous potential implications for human disease research. The new assays include approximately 38,000 gene expression assays for the Drosophila genome, and approximately 95,000 gene expression assays for the Arabidopsis genome.

Researchers traditionally have used “home brew” assays, which are assays that researchers both design and prepare themselves in their laboratories, a process that is relatively time consuming and expensive. Applied Biosystems believes that its ready-made and pre-designed genomic assays offer significant advantages to researchers compared with home brew assay design. These advantages include:

	•	facilitation of experiments with many genes in parallel;

	•	substantial reduction in experiment setup time;

	•	decreased assay cost; and

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•

creation of a set of standard and validated assays that enable comparisons of data between laboratories.

Applied Biosystems’ SNP genotyping and gene expression assays are designed to be used with Applied Biosystems’ real-time PCR systems.

Microarrays. Applied Biosystems offers the Applied Biosystems Expression Array System for gene expression analysis of the human, mouse, and rat genomes. This system combines microarray technology and a proprietary chemiluminescence technology and was designed to detect the expression of a greater number of genes, with higher sensitivity and specificity, while using less biological sample, than other commercially-available microarray technologies. This system is highly sensitive because it can detect low levels of gene expression, and highly specific because of its accuracy in identifying the presence of expressed genes without falsely “reading” the presence of expression from other genes.

Microarray technology involves the miniaturization of reactions on a single consumable product to enable a large number of simultaneous reactions or analyses. Applied Biosystems’ microarrays are small, porous nylon plates that can be used to analyze the expression of a large number of genes in a sample in parallel. The microarrays are used in combination with the 1700 Chemiluminescent Microarray Analyzer, an instrument that measures gene expression by detecting chemiluminescence, which is the conversion of chemical energy stored within a molecule into light. DNA “probes,” which are single-stranded pieces of DNA, are chemically attached to the microarray and designed to cause a chemiluminescent reaction in the presence of expression targets. The DNA probes used for this application are approximately 60 bases long. Applied Biosystems believes the use of chemiluminescence rather than fluorescence, and the use of longer probes, results in higher sensitivity and specificity compared to other commercially-available microarray systems.

In January 2005, Applied Biosystems released an updated version of its human genome microarray for use with the Expression Array System. The updated human genome microarray can be used to analyze the expression of approximately 29,000 genes, which Applied Biosystems believes includes more than 8,000 genes not covered by any similar commercially-available gene expression microarray system. Also, in December 2004, Applied Biosystems commenced commercial sales of whole genome expression arrays for the rat genome, complementing the arrays for the mouse genome that it had begun marketing during our 2004 fiscal year.

Applied Biosystems designed this system to complement the gene expression capabilities of its TaqMan chemistry-based real-time PCR system products. Researchers performing whole genome expression studies using the Expression Array System can validate their results and perform further analysis on Applied Biosystems’ real-time PCR systems using TaqMan^® gene expression assays.

DNA Synthesis. DNA synthesizers produce synthetic single-stranded pieces of DNA for genetic analysis. These molecules, referred to as oligonucleotides or sometimes oligos, are an essential reagent for PCR and DNA sequencing and are also used in drug discovery applications. DNA synthesis is used both by companies performing high-throughput synthesis as a service as well as individual laboratories that synthesize DNA for their own use. Applied Biosystems offers several models of synthesizers and supporting reagents for the needs of its different

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customers. Applied Biosystems also provides custom synthesis, in which oligonucleotides are made to order and shipped to customers.

PNA. Applied Biosystems has a license, which is exclusive for some applications, to manufacture and sell peptide nucleic acid within various markets including the molecular biology research market. Peptide nucleic acid, which is often referred to as PNA, resembles DNA in its chemical structure except that it has a neutral peptide-like “backbone,” whereas DNA has a negatively charged sugar phosphate backbone. The unique chemical structure of PNA enhances its affinity and specificity as a DNA or RNA probe. Probes are used in various types of analysis, and are used to search for DNA and RNA sequences in a sample by binding to those sequences if they are present. PNA may be used in many areas, including basic research, pharmaceutical discovery, diagnostic development, and food and environmental testing. During our 2002 fiscal year, Applied Biosystems acquired additional rights to PNA technology, particularly exclusive rights in the field of diagnostics, through its acquisition of Boston Probes, Inc. and a party related to Boston Probes. During the fourth quarter of our 2004 fiscal year, Applied Biosystems recorded pre-tax charges of $14.9 million relating to Boston Probes. These charges are described in Note 2 to our fiscal 2005 Consolidated Financial Statements, which are incorporated by reference into Item 8 of this report.

Products for the Proteomics Market

Genes code for proteins in biological organisms, and proteins are the key biological molecules that function in all aspects of living things such as growth, development, and reproduction. The body may also modify proteins after they are made in cells, and such modifications, referred to as post-translation modifications, often alter the function of the modified protein. These post-translational modifications are not encoded in the protein’s genetic, or DNA, code.

Differences in the types or amounts of specific proteins in biological systems are thought to be the primary differences between healthy and diseased systems or organs. A majority of drugs to treat human disease bind to and affect proteins. Proteins are large biological molecules made up of peptides, and peptides are made up of amino acids chemically linked together in long chains and frequently modified by the addition of chemical units such as “carbohydrate chains” or “phosphate groups.” Customers in the proteomics research market need systems for the analysis of proteins and peptides for the purpose of discovery of drug targets, protein therapeutics, and diagnostics. Applied Biosystems has developed products for the identification, characterization, and measurement of expression of proteins and peptides. Applied Biosystems’ products for the proteomics market are described in the following paragraphs.

Mass Spectrometry. Mass spectrometry has become very useful for the analysis of large molecules of biological importance such as proteins. Analysis of proteins and other molecules by mass spectrometry involves the very accurate measurement of the mass, or size, of components in a sample, such as the measurement of the multiple different peptides that make up a defective protein. The sensitive electronics of mass spectrometry instruments can measure fine differences in very small quantities of complex samples having multiple components. Mass spectrometry instruments incorporate the following key technological processes:

•

A unique sample preparation process called ionization to charge the molecules for analysis. Applied Biosystems sells instruments with ionization by either a laser based system called MALDI, which refers to matrix assisted laser desorption

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		ionization, or a high voltage electric system called ESI, which refers to electrospray ionization.

	•	Mass analysis and detection, which involves the separation and electronic measurement of the mass of molecules and the measurement of the relative amounts present. Applied Biosystems has a variety of mass analysis technologies which separate and measure the mass of molecules in a sample. These include TOF, which refers to time of flight, which measures mass based on flight time in an electric field under vacuum; and quadrupole or quad, and linear ion trap, both of which measure mass using radio frequencies and electric charges though using related but different technologies.

Mass spectrometry instruments are often referred to or named based on their sample preparation and mass analysis technologies. For example, a “MALDI TOF” instrument is an instrument that uses MALDI to charge molecules for analysis and TOF for mass analysis. Also, mass spectrometry instruments are often referred to or named based on whether they are connected to liquid chromatography separation devices, which are used for sample preparation prior to analysis using mass spectrometry. For example, an “LC/MS” system is a liquid chromatography device connected directly to a mass spectrometry instrument, and an “LC/MS/MS” system is a liquid chromatography device coupled with tandem mass spectrometry instruments. Tandem mass spectrometry enables a more detailed and accurate analysis of the components of the molecules being studied.

The market for mass spectrometry is served by a wide range of instrument types, based on a variety of technologies for both ionization and mass analysis, which are combined together in different combinations in different instruments. The different instrument types, technologies, and combinations result in differing performance characteristics and price levels, and the suitability of any particular system for any researcher or research laboratory will depend on the nature of the work being performed and the capital budget of the researcher or research laboratory.

Applied Biosystems and Applied Biosystems/MDS SCIEX Instruments, a 50/50 joint venture between Applied Biosystems and MDS Inc. of Canada, supply a broad family of mass spectrometry products for the proteomics market that involve different combinations of these technologies. Customers select from this range of product types based on their budgets, workflows, sample types, preferences, and experience. Under the terms of the joint venture agreement with MDS Inc., Applied Biosystems has been the exclusive worldwide distributor of LC/MS systems manufactured for the joint venture by the MDS SCIEX Division of MDS Inc. for the analytical instruments market. During our 2005 fiscal year, Applied Biosystems and MDS Inc. expanded the scope of their Applied Biosystems/MDS SCIEX Instruments joint venture. As part of the transaction, which was completed in October 2004, Applied Biosystems sold MDS a 50 percent interest in intellectual property assets related to Applied Biosystems’ MALDI TOF mass spectrometry systems and next-generation products then under development, together with a 100 percent interest in some MALDI TOF product-related manufacturing and research and development assets. Subsequent to the sale, the parties each contributed their MALDI TOF and related intellectual property to the joint venture. In exchange, Applied Biosystems received $8 million in cash and a $30 million promissory note, which is payable in five annual installments beginning in October 2006. Applied Biosystems, as part of its responsibilities to the joint venture, will continue to market, sell, service, support, and provide research support for MALDI TOF products, and the joint venture agreement was amended so that Applied Biosystems’

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exclusive worldwide distribution rights now also include MALDI TOF products. MDS, through its MDS Sciex Division, as part of its responsibilities to the joint venture, has assumed substantially all research and development as well as primary manufacturing responsibility for MALDI TOF product lines.

The following table summarizes the mass spectrometry instruments for the proteomics market offered by Applied Biosystems, which are manufactured through the Applied Biosystems/MDS SCIEX Instruments joint venture:

Instrument Name	Ionization	Mass Analyzer

Voyager™-DE PRO Biospectrometry Workstation	MALDI	TOF
Voyager™-DE STR Biospectrometry Workstation	MALDI	TOF
4800 MALDI TOF/TOF™ Analyzer	MALDI	TOF/TOF™ Optics
4700 Proteomics Discovery System	MALDI	TOF/TOF™ Optics
QSTAR^®XL Hybrid LC/MS/MS System	ESI or MALDI	Hybrid quad/TOF (often referred to as a Qq-TOF)
4000 Q TRAP^®LC/MS/MS System	ESI	Hybrid quad/linear ion trap
3200 Q TRAP^®LC/MS/MS System	ESI	Hybrid quad/linear ion trap

Technologically, these instruments are distinguished based on their: sensitivity, or ability to identify very small quantities of molecules within a sample; resolution, or ability to distinguish among several different types of molecules within a complex sample; mass accuracy, or ability to accurately quantify or determine the mass of the molecules being studied; and overall ease of use. The 4800 MALDI TOF/TOF Analyzer and the 3200 Q TRAP LC/MS/MS System are the most recent additions to this product line. Applied Biosystems began sales and marketing of the 4800 MALDI TOF/TOF Analyzer in May 2005, and for the 3200 Q TRAP LC/MS/MS Systems in April 2005. The 4800 MALDI TOF/TOF Analyzer is the first MALDI TOF instrument introduced under the Applied Biosystems/MDS Sciex Instruments joint venture subsequent to its expansion as described above. The 4800 MALDI TOF/TOF Analyzer includes innovative new optics and electronics that give the instrument 10 times the sensitivity of the 4700 Proteomics Discovery System, which had previously been the most sensitive mass spectrometry TOF/TOF system offered for this market by Applied Biosystems. Applied Biosystems believes that this improved performance may enable the identification and quantification of low abundance proteins in complex samples that previously could not be identified and quantified. The 3200 Q TRAP system was introduced to replace the Q TRAP LC/MS/MS System, which was phased out of production during the 2005 fiscal year. The 3200 Q TRAP system offers improved sensitivity over its predecessor, and is marketed as a more affordable alternative to the more technologically advanced 4000 Q TRAP LC/MS/MS System.

In addition to the range of mass spectrometry instruments and software used to operate those instruments, Applied Biosystems has developed and commercialized reagents for quantifying, or measuring, levels of molecules in one or more samples, including ICAT^® and iTRAQ™ reagents. Researchers use the ICAT chemistry to “tag” or affix a chemical marker to a peptide containing a specific type of amino acid known as cysteine. This process, when used with various mass spectrometry systems, enables the quantitation and identification of proteins in experiments that compare normal and diseased cells or samples. Researchers use the iTRAQ reagents to affix chemical markers to all types of peptides within a protein-rich mixture, enabling the quantitation of a greater number of proteins, including the ability to detect post-translational modifications, and enabling the comparison of expression patterns within up to four samples in

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the same experiment. Applied Biosystems believes the iTRAQ reagents complement the ICAT reagents because they enable experimentation that in many cases cannot be accomplished with the ICAT reagents. The ICAT and iTRAQ reagents offer laboratories a way of running protein experiments using mass spectrometry and are the foundation of an expanding family of Applied Biosystems consumables, software, and systems for proteomics. In June 2005, Applied Biosystems entered into a marketing and sales alliance agreement with Invitrogen Corporation. Pursuant to the alliance agreement, the two companies agreed to jointly market a suite of labeling technologies offered by them, including the ICAT and iTRAQ reagents. Applied Biosystems believes that the broader marketing of the reagents resulting from the alliance may increase the use of ICAT and iTRAQ reagents.

Biochromatography. Biochromatography is an important step in both research applications and manufacturing of biopharmaceuticals, which refers to protein-based pharmaceutical products. Researchers studying complex protein samples through mass spectrometry must first prepare these samples and separate them into the components to be analyzed. A common and important technique for the separation, and in some cases purification, of biological molecules is generally referred to as biochromatography, a process by which molecules are separated according to one or more of their physical properties such as their size, shape, charge, or affinity to other molecules.

Applied Biosystems’ biochromatography media products are used in “liquid chromatography.” Liquid chromatography is a process that separates molecules by passing them, in a liquid, across a stationary or solid medium such as chemically modified plastic beads specially designed for this process. Separation occurs because different molecules, which have different affinities to the beads, will migrate, or pass, across the beads at different rates.

Applied Biosystems’ biochromatography media products such as its POROS^® beads are used in the proteomics discovery process and in the development and manufacturing of biopharmaceuticals. Applied Biosystems believes its biochromatography products offer productivity advantages, enabled by high speed separation combined with high capacity and resolution, over competitive product offerings.

Protein Sequencing and Synthesis. Proteins are large biological molecules and are made of peptides, and peptides are made of amino acids chemically linked together in long chains. Protein sequencers provide information about the sequence of amino acids that make up a given protein by chemically disassembling the protein and analyzing the amino acids. The Procise^® Protein Sequencing system uses a protein sequencing chemistry known as Edman chemistry to sequence a peptide, one amino acid at a time, and in turn to identify or characterize the protein that contains the peptide.

Synthetically produced peptides are used in understanding antibody reactions and as potential drugs or drug analogs. The Applied Biosystems 433A Peptide Synthesis system is designed for the quality synthesis of peptides, peptide analogs, and small proteins. Applied Biosystems also manufactures and sells proprietary synthesis reagents and chemicals for use with this and other products.

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Products for the Small Molecule Analysis Market

Applied Biosystems has a number of mass spectrometry products that life science researchers use to analyze small molecules. Small molecules studied in lif