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Cepheid Reports Higher Revenues as Equipment Sales Increase

NEW YORK, April 23 – Cepheid of Sunnyvale, Calif., said Monday its more than tripled to $3.3 in first-quarter 2001, compared with $900,000 in the year ago period.

Cepheid attributed the increase in revenues to initial sales of its SmartCycler DNA testing system, which the company began selling through distributors in May of 2000. In January, the company began receiving revenue from sales of the SmartCycler in Europe, sold through its Belgian distributor, Eurogentec.

The maker of equipment for rapidly preparing and analyzing DNA also reported an increase in contract revenue for the first quarter of the year, to $987,000 from $765,000 a year ago.

The company also said Monday that its American distributor of the SmartCycler, Fisher Scientific Life Sciences Research, had filed a lawsuit against Cepheid alleging that the company had illegally hired former Fisher Scientific employees. 

In a conference call with investors, Cepheid CEO Tom Gutshall said that he was surprised by the lawsuit, given that the two companies had made progress in improving their relationship, but that “we do, of course, intend to vigorously defend ourselves.”

Cepheid’s R&D expenses also rose from the same period a year ago, to $3.7 million from $3.5 million in the first quarter of 2000. The company expects R&D expenses to increase eight percent per quarter for the next several quarters, said Cathy Smith, Cepheid’s CFO, in the conference call.

The reasons for the increase lie partly in the company’s shift towards developing the GeneXpert technology, which prepares, amplifies, and analyzes a DNA sample within 30 minutes, Gutshall said. The company hopes to have a prototype of the product by the end of 2001, and bring the technology to market by early 2003.    

Selling, general, and administrative costs increased 11 percent from the year-ago quarter, to $1.4 million, excluding the cost of non cash stock compensation, and the company expects SG&A expenses to continue to rise at 10 percent per quarter, Smith said, as the company hires and trains a direct sales force to complement its distributing arrangements.

The company’s net loss narrowed only slightly from the same period in 2000, to $3.2 million, or 12 cents a share, compared with $3.3 million in the year ago period, or 18 cents a share,  excluding the effects of a stock offering in June of last year.

The stock offering included a deemed dividend of $19.1 million, pushing Cepheid’s net loss in the first quarter a year ago to $22.4 million, or $1.22 a share.

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