Exhibit 99.01
Cepheid CONTACTS
904 Caribbean Drive
Sunnyvale, CA 94089 AT THE COMPANY: John R. Sluis
Telephone: 408.541.4191 --------------- CFO, Cepheid
Fax: 408.541.4192 John L. Bishop 408-541-4191
CEO, Cepheid john.sluis@cepheid.com
408-541-4191
john.bishop@cepheid.com
FINANCIAL RELATIONS BOARD:
--------------------------
Tricia Ross
Investor/Analyst Information
617-520-7064
tross@financialrelationsboard.com
CEPHEID REPORTS FIRST QUARTER 2006 RESULTS
Product sales increase of 3% driven by 89% increase in Clinical and
Industrial Sales offset by planned decrease in USPS GeneXpert Module Sales
SUNNYVALE, Calif., May 4, 2006 -- Cepheid (NASDAQ: CPHD) today announced
financial results for the first quarter ended March 31, 2006. During the
quarter, the Company implemented the provisions of SFAS 123R which resulted in
stock compensation expense impacting operating results for the first time. Net
loss for the first quarter of 2006 was approximately $6.7 million, or $0.15 per
share compared to a net loss of approximately $3.5 million, or $0.08 per share
for the corresponding prior year period. Included in this net loss for 2006 was
$1.7 million of stock compensation expense which had an impact of $0.04 per
share for the quarter.
Total product sales for the first quarter of 2006 increased 3% to approximately
$19.3 million from approximately $18.8 million for the corresponding prior year
period. The increase in product sales for the quarter was driven by strong
product sales growth in the clinical and industrial markets of 89% offset by the
planned decrease in GeneXpert module sales to the United States Postal Service
(USPS).
Clinical product sales increased 131% to $3.7 million in the first quarter of
2006 from $1.6 million in the first quarter of 2005 and represented 19% of total
product sales for the first quarter of 2006 as compared to 8% of total product
sales for the first quarter of 2005. Industrial product sales increased 58% to
$3.5 million in the first quarter of 2006 from $2.2 million in the first quarter
of 2005 and represented 18% of total product sales in the first quarter of 2006
as compared to 12% of total product sales in the first quarter of 2005.
Biothreat product sales decreased by 19% to $12.1 million in the first quarter
of 2006 from $15.0 million in the first quarter of 2005 and represented 63% of
total product sales in the first quarter of 2006 as compared to 80% in the first
quarter of 2005. The expected decrease in product sales in the biothreat market
was as a result of the fourth quarter 2005 completion of the installation of the
Biohazard Detection Systems (BDS) in the USPS processing centers and the
resulting discontinuance of GeneXpert modules sales for the USPS BDS program.
Other revenues including contract and government sponsored research revenue
increased 9% to approximately $0.9 million for the first quarter of 2006 as
compared to $0.8 million in the first quarter of 2005. The increase in other
revenues for the quarter as compared to the corresponding prior year period was
due primarily to the increase in government sponsored research revenue driven by
an increase in revenue from the Company's grant from the National Cancer
Institute.
The gross margin percentage on product sales for the quarter ended March 31,
2006 decreased to 41% from 45% for the prior year quarter. The cost of product
sales for the first quarter ended March 31, 2006 included $0.2 million of stock
compensation expense which had an impact of 1% on product gross margin
percentage for the quarter. The remaining decrease in product gross margin
percentage was primarily driven by unfavorable product mix as compared to the
prior year quarter. During the first quarter of 2006, the Company did not
experience a recurrence of process manufacturing inefficiencies.
"Installation of Biohazard Detection Systems (BDS) within United States Postal
Service (USPS) processing centers was completed during the fourth quarter of
2005. As expected, no sales of additional GeneXpert modules for the USPS program
are planned for 2006. However, this expected decrease in GeneXpert module sales
was more than offset by an 89% increase in Clinical and Industrial sales during
the quarter thereby, contributing to the previously stated 3% increase in total
product sales for the first quarter," stated John Bishop, Cepheid's CEO.
"In the Clinical market, a 510k for our Group B Streptococcus (GBS) assay on the
GeneXpert System was submitted to the FDA during the quarter. This was followed
by our second 510k for Enterovirus meningitis on the GeneXpert System which was
submitted to the FDA subsequent to the close of the first quarter. In addition,
CE IVD assays for BCR/ABL and GBS on the GeneXpert System were also released in
Europe during the quarter."
"The Smart Cap, which enables nested real time PCR to be run on the SmartCycler
System, was launched in the Industrial market during the quarter. We have also
initiated our open GeneXpert system cartridge program for selected accounts.
This program will enable selected laboratories to develop `Home Brew' assays for
use on the GeneXpert System."
"In the Biothreat market, we released our second product to simultaneously test
for the presence of three biothreat agents during the quarter. This newest
product simultaneously tests for the presence of Anthrax, Y. pestis and F.
tularensis. We also entered into a collaborative program with Health Canada
during the quarter to develop a cartridge which will simultaneously test for the
presence of Ebola, Lassa and Marburg hemorrhagic viruses."
"The Company also completed a follow-on offering during the quarter selling 10
million shares for gross proceeds of $86.0 million. In addition, subsequent to
the end of the first quarter, the underwriters exercised the over allotment
option for an additional 1.4 million shares for additional gross proceeds of
$12.2 million. Cepheid realized total net proceeds from the initial sale and the
over allotment of $91.9 million. We currently intend to use the net proceeds to
fund future acquisitions of molecular markers and/or complementary products,
technologies or companies in the fields of infectious diseases, oncology and
other fields appropriate for molecular diagnostics."
"As of March 31, 2006, the Company had $108.8 million in unrestricted cash and
marketable securities, not including the additional approximately $11.3 million
in net proceeds from the sale of the over allotment shares in April 2006."
2006 OUTLOOK
Commenting on Cepheid's outlook for 2006, Mr. Bishop stated:
"Development of our GeneXpert System MRSA/MSSA assay is continuing with the
assay in alpha trials. Our objective is to provide the clinician with the
ability to simultaneously identify methicillin sensitive and resistant strains
of Staphylococcus aureus (SA), and to confirm that a detected strain of MRSA is
actually carrying the MEC A gene, which confers Methicillin resistance. This may
avoid potential false positive clinical results, which might otherwise occur
through detection of staphylococcus strains that are carrying an empty cassette
without the MEC A gene. We continue to expect to launch the product in the
United Sates market before the end of 2006."
"Our European initiative to release a number of European CE IVD marked products
during 2006 is continuing to progress. As previously noted, these assays will be
released as Conformite Europeene or European Conformity CE IVD Mark products
under the European Directive on In Vitro Diagnostic Medical Devices, providing
for routine clinical diagnostic use. In addition to the already launched assays
for BCR/ABL and GBS on the GeneXpert System, we continue to expect to release
Enterovirus meningitis (EV) on our GeneXpert platform and Epstein - Barr virus
(EBV) and cytomegalovirus (CMV) on our SmartCycler platform during the first
half of 2006."
"We expect to initiate a marketing launch of our new 16 module GeneXpert System
during the American Society of Microbiology meeting May 22 - 25 in Orlando,
Florida. Delivery of this high through-put central lab system is expected before
year-end."
"We continue to expect our 2006 product sales to be in the range of $94.0
million to $98.0 million, based on anticipated sales from existing and new
products and sales expected from the USPS program. We expect our 2006 net loss
to be in the range of $7.0 million to $9.0 million or $0.13 to $0.17 per share
based on expected weighted average shares outstanding of approximately
52.3 million. This is inclusive of additional interest income to be generated
from the proceeds of our follow on offering completed during the first quarter.
We also continue to expect to cross over to profitability on an operating basis
during 2006. This does not include the effect of stock compensation expense
under the requirements of SFAS 123R."
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. The call will be simultaneously
broadcast over the Internet. Interested participants and investors may access
the teleconference call by dialing 800-240-2134 (domestic) or 303-262-2053
(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 4, 2007. A replay of the conference call will be
available at 800-405-2236 (domestic) or 303-590-3000 (international) through May
11, 2006; the conference ID is 11059387. The replay will be available after
6:30 pm (Eastern).
ABOUT CEPHEID
Cepheid (Nasdaq: CPHD), based in Sunnyvale, Calif., is a molecular diagnostics
company that develops, manufactures, and markets fully-integrated systems for
genetic analysis in the clinical, industrial and biothreat markets. The
company's systems enable rapid, sophisticated genetic testing for organisms and
genetic-based diseases by automating otherwise complex manual laboratory
procedures. The company's easy-to-use systems integrate a number of complicated
and time-intensive steps, including sample preparation, DNA amplification and
detection, which enable the analysis of complex biological samples in its
proprietary test cartridges. Through its strong molecular biology capabilities,
the company is focusing on those applications where rapid molecular testing is
particularly important, such as identifying infectious disease and cancer in the
clinical market; food, agricultural, and environmental testing in the industrial
market; and identifying bio-terrorism agents in the biothreat market. 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 clinical
trials, timing of future product releases, product performance, future revenues,
future margins, future net losses and other future financial results such as
expectations for profitability. Because such statements deal with future events,
they are subject to various risks and uncertainties, and actual results could
differ materially from the Cepheid's current expectations. Factors that could
cause actual results to differ materially include risks and uncertainties such
as those relating to: the scope of actual USPS funding in the future; 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; unforeseen development and manufacturing problems, including
with respect to the GeneXpert(R) system, cartridges, and reagents; the
effectiveness of our process controls; the need for additional licenses for new
tests and other products and the terms of such licenses; our ability to complete
clinical trials successfully in a timely manner for products to be marketed in
clinical markets; uncertainties related to the FDA regulatory and European
regulatory processes; our ability to successfully commercialize our stand-alone
GeneXpert(R) system; lengthy sales cycles in certain markets; the performance
and market acceptance of new products; sufficient customer demand in the other
markets; our reliance on distributors to market, sell and support our products;
the occurrence of unforeseen expenditures, acquisitions or other transactions;
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 2005 and its
other reports 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.
(FINANCIAL STATEMENTS FOLLOW)
CEPHEID
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Three Months Ended
March 31, 2006 March 31, 2005
------------------ ------------------
Revenues:
Instrument sales $ 4,538 $ 6,360
Reagent and disposable sales 14,734 12,392
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Total Product Sales 19,272 18,752
Contract revenues 611 646
Grant and government sponsored
research revenues 278 168
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Total revenues 20,161 19,566
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Costs and operating expenses:
Cost of product sales 11,393 10,274
Collaboration profit sharing 3,811 3,606
Research and development 5,829 4,506
Selling, general and administrative 6,146 4,555
------------------ ------------------
Total costs and operating
expenses 27,179 22,941
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Loss from operations (7,018) (3,375)
Other income (expenses), net 346 (83)
------------------ ------------------
Net loss $ (6,672) $ (3,458)
================== ==================
Basic and diluted net loss per share $ (0.15) $ (0.08)
================== ==================
Shares used in computing basic and
diluted net loss per share 44,946 42,245
================== ==================
CEPHEID
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2006 2005
------------------ ------------------
(unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $ 59,708 $ 16,072
Marketable securities 49,050 21,150
Accounts receivable 11,152 13,976
Inventory 7,445 7,989
Prepaid expenses and other current assets 2,231 583
------------------ ------------------
Total current assets 129,586 59,770
Property and equipment, net 13,824 13,000
Restricted cash 661 661
Intangible assets, net 29,199 29,757
------------------ ------------------
Total assets $ 173,270 $ 103,188
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,537 $ 9,293
Accrued compensation 2,376 3,191
Accrued royalties 2,475 3,115
Accrued other liabilities 5,124 6,812
Current portion of deferred revenue 2,758 2,963
Current portion of license fee payable 8,009 8,538
Current portion of line of credit - 4,000
Current portion of equipment financing 1,085 2,297
------------------ ------------------
Total current liabilities 35,364 40,209
Long term portion of deferred revenue 3,977 4,402
Long term portion of license fees payable - 387
Long term portion of equipment financing 161 2,052
Deferred rent 782 735
Commitments
Shareholders' equity:
Common stock 237,916 155,347
Additional paid-in capital 9,241 7,518
Accumulated other comprehensive gain/(loss) 2 39
Accumulated deficit (114,173) (107,501)
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Total shareholders' equity 132,986 55,403
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Total liabilities and shareholders' equity $ 173,270 $ 103,188
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Note:
(1) The balance sheet at December 31, 2005 has been derived from the Company's
audited financial statements, which are included in the Company's 2005 Annual
Report on Form 10-K filed with the SEC.