Exhibit 99.1
Cepheid Reports Fourth Quarter and Fiscal Year 2004 Results
216% Increase in Product Sales for Fiscal Year 2004 Drive Total Revenue
Increase of 186% While Gross Margin Dollars on Product Sales Increase by 212%
SUNNYVALE, Calif., Feb. 28 /PRNewswire-FirstCall/ -- Cepheid
(Nasdaq: CPHD) today announced financial results for the quarter and year
ended December 31, 2004.
Product sales for the quarter ended December 31, 2004 increased 299% to
approximately $19.4 million from approximately $4.9 million for the
corresponding prior year period while product sales for the year ended December
31, 2004 increased 216% to approximately $50.0 million from $15.8 million for
the prior year. The increase in product sales for both the quarter and year
ended December 31, 2004 as compared to the corresponding prior periods was due
to an 846% and 686% increase, respectively, in reagent and disposable sales and
to a 103% and 115% increase, respectively, in instrument sales.
Total revenues for the quarter ended December 31, 2004 increased 285% to
approximately $20.3 million compared to approximately $5.3 million for the
corresponding prior year period, while total revenues for the year ended
December 31, 2004 increased 186% to $53.0 million from $18.5 million for the
prior year. The increase in total revenue for both the quarter and year ended
December 31, 2004 as compared to the corresponding prior periods was due to the
increase in product sales, driven in large part by sales related to the United
States Postal Service (USPS) Bio-hazard Detection System (BDS), and, to a lesser
extent, sales to Life Sciences and Clinical Genetic Assessment customers. Other
revenues of $0.9 million and $3.0 million for the quarter and year ended
December 31, 2004, respectively, 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 and year ended December 31, 2004 increased by
218% and 212%, respectively, as compared to the corresponding prior periods. The
gross margin percentage on product sales for the quarter ended December 31, 2004
was 44% as compared to 55% for the corresponding prior year period and was
consistent at 45% for the year ended December 31, 2004 and the prior year.
Net loss for the quarter and year ended December 31, 2004 was approximately
$3.0 million, or $0.7 per share and $13.8 million, or $0.34 per share,
respectively, compared to a net loss of approximately $4.5 million, or $0.13 per
share and $17.5 million, or $0.53 per share for the corresponding prior year
periods.
"The BDS program with the United States Postal Service continues to do well
and was the primary driver to the strong product sales growth realized in the
fourth quarter of 2004. To-date over 450,000 tests have been run with no false
positives."
"Sales continued to grow in the Clinical Genetic Assessment market as well
in Q4 and we completed development of four ASR's during the quarter, which will
form the basis of a more extensive menu to be completed during 2005."
"Given our dramatic growth in sales unit volume, one of the key focuses in
2005 will be in Operations. The team was substantially strengthened during Q4
2004 with the addition of Humberto Reyes as Senior VP of Operations. Humberto
brings a strong skill set in dealing with high growth complex operations, which
should help to better position the Company in 2005."
"An additional key activity for 2004 was the evaluation of internal
controls, required under section 404 of the Sarbanes-Oxley Act. We are pleased
to report that Cepheid has successfully completed all aspects of the evaluation
and no material weaknesses were noted," stated John Bishop, Cepheid's Chief
Executive Officer.
2005 Outlook
Commenting on Cepheid's outlook for 2005, Mr. Bishop stated:
"We expect continued growth in the Biothreat market with the previously
announced Phase 2 of the USPS program wherein, a purchase order was received for
approximately 300 GeneXpert modules. As an additional news item today, we have
just received a second purchase order for an additional 323 GeneXpert modules
bringing the total Phase 2 purchases to over 600 units. Phase 1 is currently
expected to be completed during Q1 of 2005 and Phase 2 in Q4."
"The Clinical Genetic Assessment market is a key market focus for Cepheid in
2005. We expect to see market expansion with the GBS and MRSA products. In
addition new clinical products are expected to be released on the GeneXpert for
GBS and Enterovirus. Separately we expect to introduce at least 10 new ASR
products throughout the year, which will complement the four ASR products
released during the fourth quarter of 2004."
"Growth in the clinical genetic assessment market will be a key driver to
our strategic success. Therefore, we will be further increasing our investment
in R&D and Sales & Marketing during 2005. Specifically, we will be expanding our
nucleic acid chemistry R&D group located in Bothell, Washington. The objectives
of this group are to:
* Develop proprietary dyes, quenchers, and linkers to reduce product
royalty burden and improve process and quality.
* Speed up the design and production of primers and probes.
* Develop or acquire/validate novel modified nucleotides to enable or
improve on required product performance characteristics.
* Support analytical specification development for oligonucleotide
product raw materials.
Separately, product clinical trial expense will increase as we expect to be
involved in up to five clinical trials during 2005."
"Regarding our Sales & Marketing programs, we recently created separate
clinical and life science sales forces and will be adding additional marketing
capability. These steps are expected to better position the company to more
strongly develop both market segments and leverage our expanding product menu."
"We expect our product sales for 2005 to be in the range of $80.0 million to
$84.0 million. Considering the increase in our investment in R&D and Sales &
Marketing, along with our expected level of collaboration profit sharing
expense, we expect our 2005 net loss to be in the range of $9.0 million to $11.0
million or $0.21 to $0.26 per share based on actual weighted average shares
outstanding of 42.0 million as of December 31, 2004, plus any additional amounts
we will be required to record as compensation expense under Financial Accounting
Standards Board (FASB) issued SFAS 123R which will be adopted on July 1, 2005
and which the valuation methodology and related amounts have not been finalized
by Cepheid.
Achieving profitability remains a key Cepheid objective. Considering the
dynamics of the biothreat and clinical genetic assessment markets along with our
increased investment in R&D and Sales & Marketing and the impact of
collaboration profit sharing with Applied BioSystems, we currently expect our
profitability crossover to occur in 2006, excluding the impact of stock
compensation expense as noted above."
As of December 31, 2004, the Company had $57.4 million in unrestricted cash,
cash equivalents and marketable securities.
Conference Call Information
Cepheid's CEO, John Bishop, and Senior V.P. and CFO, John Sluis will host a
conference call today February 28, 2005 at 4:30 pm (Eastern) to discuss
Cepheid's financial results, business highlights and outlook. The call will be
simultaneously broadcast over the Internet. Interested participants and
investors may access the teleconference call by dialing 800-218-0204 (domestic)
or 303-262-2130 (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, for 12 months. A replay of the conference call will be
available at 800-405-2236 (domestic) or 303-590-3000 (international) through
March 6, 2005; the conference ID is 11023544. The replay will be available after
6:30 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, future net losses and profitability, the
status of the USPS BDS program, development activities, 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 USPS funding and deployment of the BDS; uncertainties
relating to the timing of any approval of future deployments by government
agencies; the rate of environmental testing using the BDS conducted by the USPS,
which will affect the amount of consumable products sold, whether the BDS
performs to specifications; unforeseen research, development and manufacturing
problems, which could delay the introduction of new ASR products; unforeseen
manufacturing costs; the need for additional licenses for new tests and other
products and the terms of such licenses; lengthy sales cycles in certain
markets; our ability to successfully obtain regulatory approvals and introduce
new products in the clinical market; the performance and market acceptance of
new products; our reliance on distributors to market, sell our products; the
occurrence of unforeseen expenditures, acquisitions or other transactions; the
effect of acquisitions in our industry on relationships with partners; our
success in increasing direct sales; the impact of competitive products and
pricing; our ability to manage geographically-dispersed operations; and
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 L. Bishop, CEO,
john.bishop@cepheid.com, or John R. Sluis, CFO, john.sluis@cepheid.com, both of
Cepheid, +1-408-541-4191; or media, Tim Grace, +1-312-640-6741,
tgrace@financialrelationsboard.com, or investor/analyst information, Tricia
Ross, +1-617-520-7064, 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 Year Ended
December 31, December 31,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues: (1)
Instrument sales $ 7,273 $ 3,579 $ 27,922 $ 13,012
Reagent and disposable
sales 12,126 1,282 22,045 2,805
Product sales 19,399 4,861 49,967 15,817
Contract revenues 926 204 2,967 638
Grant and government
sponsored research revenue 20 219 34 2,079
Total revenues 20,345 5,284 52,968 18,534
Costs and operating expenses:
Cost of product sales 10,916 2,195 27,541 8,628
Collaboration profit sharing 3,590 262 6,096 262
Research and development 4,372 3,900 15,903 15,330
Selling, general and
administrative 4,649 3,508 16,134 11,872
Expense contingency for
patent related matter -- -- 1,264 --
Total costs and operating
expenses 23,527 9,865 66,938 36,092
Loss from operations (3,182) (4,581) (13,970) (17,558)
Other expenses, net 155 61 170 27
Net loss $ (3,027) $ (4,520) $ (13,800) $ (17,531)
Basic and diluted net loss
per share $ (0.07) $ (0.13) $ (0.34) $ (0.53)
Shares used in computing
basic and diluted net loss
per share 42,020 35,679 41,083 33,367
(1) Derived from the audited consolidated financial statements included in the
Company's 2003 Annual Report on Form 10-K.
CEPHEID
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
2004 2003
------------ ------------
ASSETS (unaudited) (1)
Current assets:
Cash and cash equivalents $ 23,189 $ 18,510
Marketable securities 34,250 --
Accounts receivable 14,584 3,504
Collaboration receivable -- 5,000
Inventory 6,544 5,088
Prepaid expenses and other current assets 402 650
Total current assets 78,969 32,752
Property and equipment, net 9,756 8,071
Restricted cash 688 688
Intangible assets, net 30,902 47
Total assets $ 120,315 $ 41,558
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,074 $ 1,823
Accrued compensation 2,836 1,604
Accrued royalties 2,113 233
Accrued collaboration profit sharing 3,052 262
Accrued other liabilities 1,465 1,855
Current portion of deferred revenue 3,847 3,239
Current portion of license fee payable 10,476 --
Current portion of equipment financing 1,889 1,897
Total current liabilities 33,752 10,913
Long term portion of deferred revenue 6,190 8,095
Long term portion of licensing fees payable 8,561 --
Equipment financing, less current portion 1,604 1,978
Line of credit 4,000 --
Deferred rent 599 497
Commitments
Shareholders' equity:
Preferred stock, no par value; 5,000,000
shares authorized, none issued or
outstanding -- --
Common stock, no par value; 100,000,000
shares authorized, 42,047,799 and
35,999,504 shares issued and outstanding
at December 31, 2004 and 2003,
respectively 152,136 92,694
Additional paid-in capital 7,517 7,501
Accumulated other comprehensive loss (137) (13)
Accumulated deficit (93,907) (80,107)
Total shareholders' equity 65,609 20,075
Total liabilities and shareholders' equity $ 120,315 $ 41,558
(1) Derived from the audited consolidated financial statements included in the
Company's 2003 Annual Report on Form 10-K.
SOURCE Cepheid
-0- 02/28/2005
/CONTACT: John L. Bishop, CEO, john.bishop@cepheid.com, or John R. Sluis,
CFO, john.sluis@cepheid.com, both of Cepheid, +1-408-541-4191; or media, Tim
Grace, +1-312-640-6741, tgrace@financialrelationsboard.com, or
investor/analyst information, Tricia Ross, +1-617-520-7064,
tross@financialrelationsboard.com, both of Financial Relations Board, for
Cepheid/
/Web site: http://www.cepheid.com /
(CPHD)