Exhibit 99.1
Cepheid Reports First Quarter 2004 Results
Total Revenues Increase by 92% Driven by 112% Increase in Product Sales
Gross Margin Dollars on Product Sales Increase by 174%
SUNNYVALE, Calif., May 5 /PRNewswire-FirstCall/ -- Cepheid (Nasdaq: CPHD)
today announced financial results for the quarter ended March 31, 2004.
Product sales for the quarter ended March 31, 2004 increased 112% to
approximately $6.6 million from approximately $3.1 million for the
corresponding prior year period. The increase in product sales for the
quarter ended March 31, 2004 as compared to the corresponding prior year
period was due to a 423% increase in reagent and disposable sales and a
74% increase in instrument sales.
Total revenues for the quarter ended March 31, 2004 increased 92% to
approximately $7.3 million compared to approximately $3.8 million for the
corresponding prior year period. The increase in total revenue for the
quarter ended March 31, 2004 as compared to the corresponding prior year
period was due primarily to the increase in product sales. Contract revenue
of $0.6 million for the quarter ended March 31, 2004 was primarily derived
from the amortization of up-front license fees in connection with the
Company's collaboration with bioMerieux.
Gross Margin Dollars on product sales (total product sales less cost of
product sales) for the quarter ended March 31, 2004 increased by 174% as
compared to the corresponding prior year period. The gross margin percentage
on product sales for the quarter ended March 31, 2004 increased to 55%
compared to 42% for the corresponding prior year period. The increase in
gross margin percentage on product sales for the quarter ended March 31, 2004
as compared to the corresponding prior year period is due primarily to a
change in product mix to higher gross margin products. Gross margin on
product sales for future quarters will be substantially impacted by higher
royalties related to an anticipated license arrangement discussed below, but
are expected to remain within the range of management's previous guidance.
Operating expenses for the period ended March 31, 2004, included an
accrued liability in the amount of $1.3 million for anticipated royalties on
past product sales. In that regard, the company approached the owner of
certain patents to negotiate a worldwide license to certain technology for
which general terms have been agreed upon and the negotiations are ongoing to
finalize the definitive license agreement. The Company expects to record
resulting future royalty obligations as the related product sales are
recognized.
Inclusive of the noted accrual, net loss for the quarter ended March 31,
2004 was approximately $4.1 million, or $0.11 per share, compared to a net
loss of approximately $4.7 million, or $0.15 per share for the corresponding
prior year period.
"The Company had a strong quarterly performance on both an operating and
strategic level," stated John Bishop, Cepheid's Chief Executive Officer.
"We completed a public offering of 5,500,000 shares of common stock which
increased our cash balance by $57.7 million, net of expenses. This places us
in a strong position to carry out key strategic initiatives while also
potentially achieving positive cash flow from operations without returning to
the capital markets.
Significant sales of GeneXpert(R) modules and anthrax test cartridges were
realized during the quarter for Biohazard Detection System (BDS) units
scheduled to be deployed at selected United States Postal Service (USPS)
sites. Site deployment was initiated in March with a number of units deployed
at multiple sites. However, as discussed in Cepheid's press release on
April 29, additional deployment is temporarily on hold pending resolution of
an observed increase in the rate of non-determinate results, which occurred at
a small number of sites on a limited number of mail sorting lines on which BDS
units were installed.
Our collaborator Infectio Diagnostic Inc. (IDI) received 510(k) clearance
from the US Food and Drug Administration (FDA) to market its new IDI-MRSA(TM)
test for detecting methicillin-resistant Staphylococcus aureus (MRSA).
According to IDI it is the first MRSA test cleared by the FDA for use directly
on clinical specimens. This represents the second in our developing pipeline
of Clinical Genetic Assessment products. Running on our SmartCycler(R)
system, the speed and simplicity of IDI-MRSA test is expected to make it ideal
for routine laboratory use, with rapid results helping to ensure effective
management of true MRSA carriers in the hospital environment. MRSA is one of
the main causes of hospital-acquired infections affecting thousands of
hospitalized patients every year.
Sales of our other existing products in the Life Sciences and Clinical
Genetic Assessment markets also demonstrated positive growth during the
quarter in both our domestic and international markets."
2004 Outlook
Commenting on Cepheid's outlook for the remainder of 2004, Mr. Bishop
stated:
"We expect to move forward with a number of key events during the second
quarter. Three significant market launches are scheduled to take place at the
American Society of Microbiology meeting during the week of May 24, 2004. The
IDI-MRSA test for use on the SmartCycler is planned for market launch along
with the market launch of the SmartCycler family of higher throughput systems
specifically set up for simultaneous analysis of 16, 32, 48 and 64 tests. The
GeneXpert System for use in the BioThreat market along with the anthrax test
cartridge and a manual sample collection kit is also scheduled for launch.
In addition, as previously announced our expected release of the GeneXpert
System into the Life Sciences market is planned for later in the year with an
ASR product for use in Leukemia research. We also expect to release a number
of ASR products for use in infectious disease on the SmartCycler System before
the end of the year that have not previously been discussed. These products
are expected to include specific analytes for Herpes simplex 1&2,
Cytomegalovirus (CMV), Bordetella pertussis, Enterovirus (EV), Epstein-Barr
virus (EBV) and Norwalk virus. We further expect to significantly expand our
ASR product lines for use in infectious disease research in 2005 along with
additional tests for cancer research.
As discussed in our press release dated April 29, 2004, the further
deployment of the BDS units at USPS sites around the country has been
temporarily suspended in order to investigate an anomaly in the rate of
non-determinate tests experienced on a small number of mail sorting lines on
which BDS units have been installed. A non-determinate test does not indicate
a threat is suspected; it simply means that the test did not provide an
answer. A team comprised of representatives from the USPS, Northrop Grumman
and Cepheid scientists is investigating the issue. Adjustments made to some
of the mail sorting lines involved appear to have eliminated the previously
observed anomaly; however, additional work is continuing to better
characterize the phenomenon. At this time, we are confident that the
GeneXpert module and anthrax test cartridges are functioning as expected. We
are currently continuing to ship test cartridges for use on deployed units and
to build modules for BDS units yet to be deployed.
We reaffirm that we expect our 2004 product sales to be in the range of
$42.0 million to $46.0 million, based on phase one sales for the USPS program
and sales expected from other existing products. Due to the March
implementation of the BDS deployment and due to seasonal factors, we continue
to expect realization of our product sales to be more heavily weighted toward
the second half of the year. This guidance does not include any potential
product sales that may result if the USPS elects to initiate deployment of the
phase two option during 2004. Our gross profit margin on product sales for
2004 is expected to improve over that achieved in 2003; however, it may not be
at the level achieved for the first quarter of 2004. We also reaffirm that we
expect our 2004 net loss to be in the range of $10.5 million to $12.5 million
or $0.27 to $0.32 per share based on actual weighted average shares
outstanding of 38.7 million as of March 31, 2004."
As of March 31, 2004, the Company had $72.5 million in unrestricted cash.
This is expected to carry the Company to a positive operating cash flow
position consistent with our strategic plan.
Conference Call Information
Cepheid's CEO, John Bishop, and Senior V.P. and CFO, John Sluis will host
a conference call today at 4:30 pm (Eastern) to discuss Cepheid's financial
results, business highlights and outlook. Also joining them will be Kurt
Petersen, PhD., Cepheid's President and CTO and Joseph Smith, Cepheid's Senior
V.P. and General Counsel and Business Development. The call will be
simultaneously broadcast over the Internet. Interested participants and
investors may access the teleconference call by dialing 800-215-6437
(domestic) or 706-679-7393 (international). There will also be a live webcast
of the call on the Investor Relations section of Cepheid's web site at
www.cepheid.com. Web participants are encouraged to go to the web site at
least 15 minutes prior to the start of the call to register, download, and
install any necessary audio software.
After the live webcast, the call will remain available on Cepheid's
website, www.cepheid.com, through May 5, 2005. A replay of the conference
call will be available at 800-642-1687 (domestic) or 706-645-9291
(international) through May 12, 2004; the conference ID is 7141561. The
replay will be available after 5:30 pm (Eastern).
About Cepheid
Cepheid (Nasdaq: CPHD), based in Sunnyvale, Calif., is a leading
developer, manufacturer and marketer of fully integrated systems that enable
genetic assessment when and where it is needed. Founded in 1996, the company
is commercializing its technology and products worldwide for research,
medical, and industrial applications requiring assessment of the human genome,
infectious disease and biothreat agents. See www.cepheid.com for more
information.
This press release contains forward-looking statements that are not purely
historical regarding Cepheid's or its management's intentions, beliefs,
expectations and strategies for the future, including those relating to future
product releases, future revenues, gross margin, future net losses and other
financial data, Cepheid's cash needs, the status of the USPS BDS program, and
business prospects. Because such statements deal with future events, they are
subject to various risks and uncertainties, and actual results could differ
materially from the company's current expectations. Factors that could cause
actual results to differ materially include risks and uncertainties such as
those relating to: the scope and timing of actual United States Postal
Service (USPS) funding and deployment of the Biohazard Detection System (BDS);
the occurrence of additional delays with respect to the BDS, the rate of
environmental testing using the BDS conducted by the USPS, which will affect
the amount of consumable products sold, and whether the BDS, performs to
specifications; development and manufacturing problems, including with respect
to the GeneXpert system and reagents; the need for additional licenses for new
tests and other products and the terms of such licenses; our ability to
successfully commercialize our stand-alone GeneXpert system; lengthy sales
cycles in certain markets; the performance and market acceptance of new
products; our reliance on distributors to market, sell and support our
products; the occurrence of unforeseen expenditures, acquisitions or other
transactions; our success in increasing its direct sales; the impact of
competitive products and pricing; our ability to manage
geographically-dispersed operations; underlying market conditions worldwide.
Readers should also refer to the section entitled "Risk Factors" in Cepheid's
Annual Report on Form 10-K for 2003 and "Factors that Might Affect Future
Results" in its most recent quarterly report on Form 10-Q, each filed with the
Securities and Exchange Commission.
All forward-looking statements and reasons why results might differ
included in this release are made as of the date of this press release, based
on information currently available to Cepheid, and Cepheid assumes no
obligation to update any such forward-looking statement or reasons why results
might differ.
For further information, please contact John Bishop, CEO,
bishop@cepheid.com, or John Sluis, CFO, sluis@cepheid.com, both of Cepheid,
+1-408-541-4191; or Media, Cynthia Martin, +1-312-640-6741,
cmartin@financialrelationsboard.com, or Investor/Analyst Information, Tricia
Ross, +1-310-407-6540, tross@financialrelationsboard.com, both of Financial
Relations Board, for Cepheid
CEPHEID
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
Quarter Ended March 31,
2004 2003
Revenues:
Instrument sales $4,871 $2,794
Reagent and disposable sales 1,777 340
Product sales 6,648 3,134
Contract revenues 613 32
Grant and government sponsored research
revenue -- 613
Total revenues 7,261 3,779
Costs and operating expenses:
Cost of product sales 3,018 1,808
Research and development 3,630 3,643
Selling, general and administrative 3,067 2,980
Expense contingency for patent related matter 1,264 --
Collaboration profit sharing 425 --
Total costs and operating expenses 11,404 8,431
Loss from operations (4,143) (4,652)
Other expenses, net (4) (36)
Net loss $(4,147) $(4,688)
Basic and diluted net loss per share $(0.11) $(0.15)
Shares used in computing basic and diluted
net loss per share 38,710 31,393
CEPHEID
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2004 2003
ASSETS (unaudited) (1)
Current assets:
Cash and cash equivalents $72,538 $18,510
Accounts receivable 4,874 3,504
Collaboration receivable 5,000 5,000
Inventory 6,201 5,088
Prepaid expenses and other
current assets 1,815 650
Total current assets 90,428 32,752
Property and equipment, net 8,261 8,071
Restricted cash 688 688
Other assets 242 47
Total assets $99,619 $41,558
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,462 $ 1,823
Accrued compensation 1,864 1,604
Accrued royalties 1,632 233
Accrued other liabilities 3,073 2,117
Current portion of deferred revenue 4,276 3,239
Current portion of equipment financing 1,992 1,897
Total current liabilities 15,299 10,913
Long-term portion of deferred revenue 7,619 8,095
Equipment financing, less current portion 2,022 1,978
Deferred rent 530 497
Commitments
Shareholders' equity:
Preferred stock -- --
Common stock 150,920 92,694
Additional paid-in capital 7,504 7,501
Accumulated other comprehensive loss (21) (13)
Accumulated deficit (84,254) (80,107)
Total shareholders' equity 74,149 20,075
Total liabilities and shareholders'
equity $99,619 $41,558
(1) The balance sheet at December 31, 2003 has been derived from the
audited financial statements, which are included in the Company's
2003 Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
SOURCE Cepheid
-0- 05/05/2004
/CONTACT: John Bishop, CEO, bishop@cepheid.com, or John Sluis, CFO,
sluis@cepheid.com, both of Cepheid, +1-408-541-4191; or Media, Cynthia Martin,
+1-312-640-6741, cmartin@financialrelationsboard.com, or Investor/Analyst
Information, Tricia Ross, +1-310-407-6540, tross@financialrelationsboard.com,
both of Financial Relations Board, for Cepheid/
/Web site: http://www.cepheid.com /
(CPHD)
CO: Cepheid
ST: California
IN: HEA MTC BIO
SU: ERN CCA ERP