Exhibit 99.1
CIPHERGEN REPORTS FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FISCAL
YEAR 2004
Results Reflect Sale of BioSepra Operation, Including $18.5 Million Gain
FREMONT, Calif., Feb. 17 /PRNewswire-FirstCall/ -- Ciphergen Biosystems,
Inc. (Nasdaq: CIPH) today announced financial results for the fourth quarter and
full year ended December 31, 2004. Because of the sale of Ciphergen's BioSepra
chromatography business to Pall Corporation on November 30, 2004, the financial
results discussed herein reflect the BioSepra business as a discontinued
operation. For the quarter ended December 31, 2004, total revenue decreased 13%
to $10.1 million, as compared to $11.6 million in the fourth quarter of 2003;
but total revenue increased 19% sequentially as compared to the third quarter of
2004. The net loss from continuing operations was $7.6 million in the fourth
quarter of 2004 as compared to $7.4 million in the fourth quarter of 2003 and
$9.6 million in the third quarter of 2004. During the fourth quarter of 2004,
Ciphergen recorded net income from discontinued operations of $17.9 million, of
which $18.5 million represented a gain from the sale of BioSepra. Because of
this gain, Ciphergen's net income for the fourth quarter of 2004 was $10.3
million as compared to a net loss of $6.7 million for the comparable quarter of
2003.
For the fiscal year 2004, total revenue decreased 8% to $40.2 million, as
compared to $43.6 million in 2003. The net loss from continuing operations for
2004 was $36.9 million as compared to $38.9 million in 2003; 2003 results
included a non-recurring expense of $7.3 million related to a litigation
settlement. Ciphergen's net loss for 2004 was $19.8 million as compared to a net
loss of $36.7 million in 2003; 2004 results included net income from
discontinued operations of $17.1 million.
At December 31, 2004, the Company's cash and investments were $37.6 million.
Total long term debt totaled $28.5 million, of which $28.1 million was
convertible debt.
Financial Outlook for 2005
The Company provides the following financial guidance for 2005:
* Revenue. Ciphergen expects total 2005 revenue of approximately $44- 48
million. The Company expects that revenues for the first quarter of
2005 will be approximately $8-9 million, with increasing quarterly
revenue thereafter in 2005.
* Gross Margin. The Company expects that its gross margin will be in the
65-68% range during 2005.
* Net Loss. Ciphergen expects that its net loss in 2005 will be
approximately $21-25 million. The Company's net loss per quarter is
expected to decline over the year, driven by the anticipated growth in
revenue and steps taken to reduce operating expenses in the Biosystems
Division, partially offset by increased investment in the Diagnostics
Division.
"We believe that our new product introductions and the results that
prestigious laboratories are achieving through use of ProteinChip(R) technology
is creating growing acceptance by the market and we anticipate renewed revenue
growth to result in 2005," commented William E. Rich, President and CEO of
Ciphergen. "We are also looking forward to achieving major milestones in our
Diagnostics Division during the year, including commercialization partnerships
as well as the potential launch of our first clinical diagnostic test."
Recent Highlights
* Strategic Sale of BioSepra Chromatography Business and Collaboration
with Pall. On November 30, 2004, Ciphergen completed the sale of
the BioSepra chromatography business to Pall Corporation for
approximately $32 million and also entered into a collaboration with
Pall for process proteomics, based on the combination of Ciphergen's
ProteinChip technology and BioSepra's leading chromatography
products. Ciphergen also retains certain rights to access
BioSepra's chromatography sorbent technology for manufacture, use
and sale in the research and diagnostic markets.
* Biosystems Progress.
* New Product Introductions. In the third quarter of 2004,
Ciphergen launched the ProteinChip System, Series 4000 and
Pattern Track(TM) Process which provides the biomarker
proteomics market with the only complete system solution to
rapidly translate biomarker discovery to high value assays at
the benchtop. At the PepTalk meeting in December, Ciphergen
presented promising results using our Deep Proteome(TM) sample
preparation family of products including Equalizer Beads(TM);
these products potentially provide a breakthrough in detection
of low abundant proteins, a major problem today in proteomics.
We anticipate commencing customer shipments of our Deep
Proteome products during 2005.
* Pharma Biomarker Proteomics. The ProteinChip system is
currently being evaluated by the majority of major
pharmaceutical companies to identify biomarkers of drug safety
and efficacy to monitor drug treatment and reduce late-stage
attrition of compounds. Advances in the analysis and
identification of low abundance proteins through the
implementation of Deep Proteome products should further enable
the elucidation of biological pathways perturbed by drug
treatment and even reveal new drug targets. As a separate
pharma initiative, discussions are currently underway with
multiple pharmaceutical companies to partner in the field of
Alzheimer's Disease based on promising discovery work conducted
by our Biomarker Discovery Center(R) scientists and
collaborators.
* Clinical Proteomics Research. There is a growing list of
customers using ProteinChip Systems for disease biomarker
discovery and assay development applications with over 600
systems now sold worldwide, many with multiple users or
applications per system. For example, Alzheimers (>100 users
or applications), prostate cancer (>100), ovarian cancer
(>130), breast cancer (>130), colon cancer (>40), other cancers
(>85), cardiovascular diseases (>100), HIV/AIDS (>135),
infectious diseases (>95), diabetes (>55), kidney disease (>45)
and arthritis (>15).
* Publication Progress. This broad use of ProteinChip technology
led to 122 scientific papers in 2004; this represents a 60%
increase in publications over the number of publications in
2003 and brings our total publications list to over 350.
Ciphergen scientists and/or our customers presented 48 papers
or posters at the 2004 American Association for Cancer Research
meeting, among other major disease-based conferences. This
growing list of successes continues to feed our systems growth
and potential diagnostics pipeline and validates our Pattern
Track process and ProteinChip technology.
* Diagnostics Progress. During 2004, Ciphergen continued its pioneering
efforts in translating the discovery and validation of biomarkers into
both research use and commercial clinical diagnostic and theranostic
assays. The Company believes that continued progress in this area will
further validate its competitive advantage as well as produce new
diagnostic business opportunities.
* Ovarian Cancer Program. Ciphergen's Biomarker Discovery Center
scientists and investigators from several leading institutions
published in Cancer Research in August 2004 the use of
Ciphergen's ProteinChip System to discover three protein
biomarkers that, when combined, form the basis of a potential
clinical assay designed to detect stage I/II ovarian cancer.
This study examined 503 patients and employed a multi-
institutional study design, with both cross-validation and
independent validation of the individual biomarkers as well as
of the multi-marker pattern. The pattern of three biomarkers
was able to diagnose early stage (I/II) ovarian cancer with 74%
sensitivity at 97% specificity.
In addition, Ciphergen and European collaborators presented at
the International Gynecologic Cancer Society in Edinburgh results
from a study suggesting that two of these ovarian cancer markers
may be useful for multiple clinical applications in addition to
initial diagnosis, such as monitoring response to therapy and for
recurrence.
Finally, Ciphergen and the M.D. Anderson Cancer Center recently
entered into a collaboration agreement involving analysis of
clinical samples provided by M. D. Anderson for ovarian cancer
using Ciphergen's Deep Proteome and Pattern Track suite of
proteomics tools. This work will address multiple clinical
questions, including validation of markers described in the
Cancer Research article, discovery of markers that distinguish
ovarian cancer from other gynecologic masses and prediction of
treatment response. Ciphergen has exclusive rights to license
discoveries made during the course of this collaboration.
* Milestones Demonstrating Utility of ProteinChip System as a
Potential Diagnostic Platform.
* In January 2005, the NCI's Early Detection Research Network
published a paper in Clinical Chemistry demonstrating
excellent reproducibility of SELDI-TOF-MS in a multi-site
NCI sponsored clinical study, a pre-requisite validation for
a clinical diagnostic assay platform.
* The NCI's Clinical Proteomics Research Laboratory
presented results of a study of ovarian cancer sera with
total inter-day precision from 6-12%, based on the use of
the ProteinChip System, PBS IIc at the 2005 annual meeting
of the Association for Laboratory Automation (ALA). An
independent study presented at the ALA meeting by
Ciphergen scientists demonstrated precision of
approximately 10% using the ProteinChip System, Series
4000.
* Expanding Pipeline of Potential Diagnostic Assays. Ciphergen's
Biomarker Discovery Centers and research scientists, in
collaboration with leading translational researchers worldwide,
continue to use Ciphergen's Pattern Track Process to discover
disease-associated protein biomarkers that form the basis of
potential multimarker assays designed to address a variety of
clinical questions in cancer, cardiovascular, neurological and
infectious diseases.
* Scientists at the Children's Hospital Boston, working in
collaboration with scientists from Ciphergen, presented
results at the American Society for Hematology 46th Annual
Meeting in December suggesting proteomic analysis of
circulating platelets can potentially be useful for early
cancer diagnosis.
* The Johns Hopkins University School of Medicine and
Ciphergen renewed their agreement to discover and validate
biomarkers for the detection of early stage breast, ovarian,
pancreatic and prostate cancer. The collaboration has
resulted in publications in journals such as Cancer
Research, Clinical Cancer Research, and Clinical Chemistry.
* M.D. Anderson and Ciphergen are collaborating to discover
and characterize markers that can predict a lung cancer
patient's response to platinum therapy. Only a subset of
lung cancer patients responds to platinum therapy, which is
extremely costly and has negative side-effects.
* Investigators at INSERM are collaborating with Ciphergen to
identify biomarkers derived from inflammatory cells that can
predict outcome in patients with colon cancer. The
inflammatory reaction is an important component of the host
response protein amplification cascade that may provide
targets for cancer detection, monitoring and therapeutics.
* Ciphergen and a separate group of investigators at INSERM
are collaborating to identify biomarkers that are protective
against hypertension, a major cause of morbidity and
mortality including myocardial infarction, stroke and renal
disease.
* The Institute Paoli-Calmettes and Ciphergen are working
together to identify proteins that can predict response to
anthracycline or Herceptin(R) therapy. Better prediction of
response would permit more tailored therapeutic decisions.
* Ciphergen is a participant in the ADDNET consortium in
Scandinavia, dedicated to discover, characterize and
validate urinary biomarkers for renal impairment in patients
with diabetes. Ciphergen technology and expertise in
biomarker discovery and assay are key components in this
effort to develop novel diagnostic tests for the early
detection of renal failure due to diabetes.
* Researchers at Stanford are collaborating with Ciphergen
to discover novel biomarkers that can be used to diagnose
peripheral artery disease, a major complication of
diabetes. Preliminary results were presented at the
Society for Vascular Medicine and Biology meeting and will
be presented in the Young Investigator Award competition
at the American College of Cardiology meeting in March
2005.
* Ciphergen and a multi-institutional roster of
investigators have identified a set of biomarkers that
appear to be changed in the early stages of Alzheimer's
disease. Many of these markers appear to have a
pathophysiological basis, suggesting that they may be
useful in identifying drug targets or monitoring for drug
efficacy. These results were presented in a plenary
lecture by Dr. Kaj Blennow (Gothenburg University, Sweden)
at the 9th International Congress for Alzheimer's disease
in July 2004.
* McGill University and Ciphergen are collaborating to
discover, validate and identify blood biomarkers for
parasitic diseases, including Chagas disease, toxoplasmosis
and malaria. Early detection of these diseases may reduce
morbidity associated with long-term infection.
* Patents. We filed an additional 27 patent applications during 2004,
the most new filings of any year in our history. These applications
relate to our products and technologies, and to biomarker
discoveries. Our patent portfolio now consists of 23 issued U.S.
patents and 102 pending U.S. patent application families. In
January 2005, we were granted U.S. patent 6,844,165, directed to the
detection of multiple diagnostic markers by SELDI-TOF-MS for the
diagnosis of disease; this patent complements several existing
issued U.S. patents covering biomarker proteomics.
About Ciphergen
Ciphergen's Biosystems Division develops, manufactures and markets a family
of ProteinChip(R) Systems and services for clinical, research and process
proteomics applications. ProteinChip Systems enable protein discovery,
validation, identification and assay development to provide researchers with
predictive, multi-marker assay capabilities and a better understanding of
biological function at the protein level. Ciphergen's Diagnostics Division is
dedicated to the discovery of protein biomarkers and panels of biomarkers and
their development into protein molecular diagnostic tests that improve patient
care; and to providing collaborative R&D services through its Biomarker
Discovery Center(R) laboratories for biomarker discovery for new diagnostic
tests as well as pharmacoproteomic services for improved drug toxicology,
efficacy and theranostic assays. Additional information about Ciphergen can be
found at www.ciphergen.com.
Safe Harbor Statement
Note Regarding Forward-Looking Statements: This press release contains
forward-looking statements. For purposes of the Private Securities Litigation
Reform Act of 1995 (the "Act") Ciphergen disclaims any intent or obligation to
update these forward-looking statements, and claims the protection of the Safe
Harbor for forward-looking statements contained in the Act. Examples of such
forward-looking statements include our financial outlook for 2005, including
without limitation, statements regarding expected revenue and increasing
quarterly revenue, and expected gross margin and net loss, statements regarding
new product introductions in 2005, anticipated results of prestigious
laboratories and collaborations employing our products and services,
commencement of shipping of our Deep Proteome products in 2005, the potential
for our ProteinChip technology to yield useful protein biomarkers, our ability
to develop and commercialize protein molecular diagnostics that improve patient
care, the achievement of major milestones by our Diagnostics Division and its
ability to provide services that lead to improved toxicology assays and
diagnostic assays. Actual results may differ materially from those projected in
such forward-looking statements due to various factors, including the risk that
the Company is unable to generate significant growth in unit sales while
maintaining pricing, managing our manufacturing costs and operating expenses
consistent with our plans, the risk that our ProteinChip technology is unable to
discover, validate and/or develop protein biomarkers as diagnostic or toxicology
assays, Ciphergen's ability to successfully commercialize any such tests, and
our ability to protect and promote our proprietary technologies, the risk that
we do not successfully launch our new product introductions and that such new
products do not receive market acceptance or generate revenue at a rate or in
the amounts we anticipate, and the risk that our Diagnostics Division does not
achieve commercial partnerships due to an inability to come to mutually
acceptable business terms or does not achieve clinical test launch milestones
due to a failure to validate the performance of potential clinical assays in
larger studies, an inability to translate research assays into highly
reproducible commercially acceptable assays, a failure to achieve cGMP status
and other factors. Investors should consult Ciphergen's filings with the
Securities and Exchange Commission, including its Form 10-Q dated November 9,
2004, for further information regarding these and other risks of the Company's
business.
NOTE: Ciphergen, ProteinChip and Biomarker Discovery Center are
registered trademarks of Ciphergen Biosystems, Inc.
Ciphergen Biosystems, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------------- ---------------------------
2003 2004 2003 2004
------------ ------------ ------------ ------------
Revenue $ 11,562 $ 10,098 $ 43,638 $ 40,181
Cost of revenue (1) 3,916 3,867 22,594 15,075
Gross profit 7,646 6,231 21,044 25,106
Operating expenses:
Research and development 5,753 3,702 23,628 19,268
Sales and marketing 5,882 6,318 21,335 26,376
General and administrative 3,085 3,425 14,815 14,136
Total operating expenses 14,720 13,445 59,778 59,780
Loss from operations (7,074) (7,214) (38,734) (34,674)
Interest and other income
(expense), net (381) (550) (211) (2,145)
Loss from continuing operations
before income taxes (7,455) (7,764) (38,945) (36,819)
Income tax provision (benefit) for
continuing operations (71) (186) (47) 109
Net loss from continuing
operations (7,384) (7,578) (38,898) (36,928)
Discontinued operations (2):
Gain (loss) from discontinued
operations, net of tax 675 (638) 2,151 (1,440)
Gain from sale of BioSepra
business, net of tax -- 18,527 -- 18,527
Net income from discontinued
operations 675 17,889 2,151 17,087
Net income (loss) $ (6,709) $ 10,311 $ (36,747) $ (19,841)
Basic and diluted income (loss)
per share information:
Loss from continuing operations $ (0.25) $ (0.26) $ (1.38) $ (1.26)
Income from discontinued
operations 0.02 0.61 0.07 0.58
Net income (loss) $ (0.23) $ 0.35 $ (1.31) $ (0.68)
Shares used in computing basic and
diluted income (loss) per share 28,918 29,419 28,154 29,244
(1) In the fiscal year ended December 31, 2003, cost of revenue included a
non-recurring expense of $7,257 related to our litigation settlement.
(2) Amounts attributable to our BioSepra business, which was sold on
November 30, 2004, have been reclassified to gain (loss) from
discontinued operations.
Ciphergen Biosystems, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
As of December 31,
---------------------------
2003 2004
------------ ------------
(Note 1)
ASSETS
Current assets:
Cash and cash equivalents $ 32,853 $ 35,392
Short term investments 14,463 2,175
Accounts receivable, net 14,731 10,811
Inventories 8,300 6,919
Notes receivable from related parties 56 126
Prepaid expenses and other current assets 2,878 1,847
Total current assets 73,281 57,270
Property, plant and equipment, net 15,891 9,315
Goodwill and other intangible assets, net 9,879 5,569
Other long term assets 2,759 2,223
Notes receivable from related parties 216 --
Total assets $ 102,026 $ 74,377
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' INTEREST
Current liabilities:
Accounts payable $ 5,062 $ 3,369
Accrued liabilities 9,495 7,675
Current portion of deferred revenue 5,768 5,441
Current portion of capital lease obligations 324 16
Current portion of long term debt 662 925
Total current liabilities 21,311 17,426
Deferred revenue, net of current portion 594 767
Capital lease obligations, net of
current portion 2,274 28
Long term debt, net of current portion 1,090 377
Convertible senior notes, net of discount 27,515 28,051
Other long term liabilities 1,185 1,013
Total liabilities 53,969 47,662
Minority interest 165 --
Stockholders' equity:
Common stock 29 29
Additional paid in capital 186,043 187,133
Notes receivable from stockholders (1,093) (349)
Deferred stock-based compensation (725) --
Accumulated other comprehensive income 4,158 263
Accumulated deficit (140,520) (160,361)
Total stockholders' equity 47,892 26,715
Total liabilities, minority interest and
stockholders' equity $ 102,026 $ 74,377
(1) The condensed consolidated balance sheet at December 31, 2003 has been
derived from the audited consolidated financial statements at that
date included in the Company's Form 10-K for the fiscal year ended
December 31, 2003.
SOURCE Ciphergen Biosystems, Inc.
-0- 02/17/2005
/CONTACT: Sue Carruthers, Investor Relations of Ciphergen Biosystems,
Inc., +1-510-505 2297/
/Web site: http://www.ciphergen.com /