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Cepheid Posts 76 Percent Increase in Q1 Revenues

This article has been updated with comments from a conference call and a stock quote.
NEW YORK (GenomeWeb News) – Cepheid reported after the close of the market on Thursday first-quarter revenue growth of 76 percent year over year and a sharp drop in its net loss.
The firm brought in revenues of $44.8 million for the three-month period ended March 31, compared to revenues of $25.5 million in the first quarter of 2007. Sales of the firm’s GeneXpert systems rose to $14.3 million from $6.8 million year over year, while sales of reagents and disposables increased to $27.6 million from $15.2 million.
The Sunnyvale, Calif.-based company said that it installed a total of 126 GeneXpert systems and 565 modules during the quarter, primarily in North America and Europe. Cepheid CEO John Bishop said during a conference call that worldwide sales of its MRSA (methicillin-resistant Staphylococcus aureus) assay were more than $8 million in the first quarter. He added the firm is in track to meet its MRSA test revenue guidance of $52 million to $55 million for fiscal 2008.
“Our US placement of 50 systems and 395 modules was in line with our expectations for the first quarter,” Bishop said in a statement. He added that the firm also is "starting to see accounts purchase additional modules to accommodate potentially increasing test demand."
Cepheid's revenues are increasingly shifting to the general hospital market, after its initial revenue base was built on sales to the Veterans Administration network of hospitals. The VA has had an ongoing active surveillance program for MRSA, and Cepheid has sold many GeneXpert and MRSA tests into that system.
“As of the end of the first quarter, almost 60 percent of our US MRSA accounts, and almost 70 percent of our cumulative GeneXpert system placements, are now from the broader general hospital market,” said Bishop during the call.

In addition, company officials pointed to legislative initiatives throughout the country that are helping to drive adoption of its instrument platform and assays.

Currently, there are 29 states that have mandated hospital-acquired infection reporting, and 19 states have legislation pending, said Bishop. Four states have passed mandatory surveillance of HAIs, and six states have similar legislation pending for mandatory surveillance, he added.

“There is no doubt that legislation drives our sales,” Rob Koska, senior VP of worldwide commercial operations for Cepheid, said during the call. For example, he said, “Illinois is leading the country with GeneXpert placements, and that’s based on the strength of legislation they have there.”

Cepheid’s net loss dropped 69.4 percent to $1.85 million, or $.03 per share, from $6.2 million, or $.11 per share, in the first quarter of 2007.
The firm’s R&D expenses rose 43.5 percent to $9.9 million from $6.9 million, while SG&A spending increased 39.3 percent to $11.7 million from $8.4 million.
Cepheid finished the quarter with $20 million in cash and cash equivalents.
The firm said that it expects to report full-year 2008 revenues of $183 million to $190 million, and a net loss of between $10 million and $12 million.
In Friday morning trade on the Nasdaq, shares of Cepheid were up 4.6 percent at $22.19.

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