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Ciphergen Says Weak Balance Sheet Raises 'Substantial Doubt' About Ability to Stay Afloat

NEW YORK (GenomeWeb News) — Ciphergen said in a US Securities and Exchange Commission filing last week that its current cash balances “may not be sufficient to fund planned expenditures."
 
According to the company, "This raises substantial doubt about our ability to continue as a going concern."
 
The disclosure came a few days after Ciphergen said in an earlier SEC filing that first-quarter revenue ran dry as R&D spending dropped 36 percent and losses widened 11 percent.
 
In that filing, CEO Gail Page said the company would change its name to Vermillion. Page said the company believes the name Vermillion, which is a color similar to scarlet, "befits the substantial transformation" in the company as it moves to becoming a diagnostics company with tests on the market.
 
Page said shareholders will vote on the name change at the company's annual meeting in late June.
 
Total receipts for the three months ended March 31 dwindled to $21,000 from $7.1 million year over year. Revenue was affected by the sale of the company's proteomics tools business to Bio-Rad.
 
The company did not specify where the first-quarter revenue came from.
 
Ciphergen had said previously that its revenue would evaporate after the sale of the proteomics business, and that it did not expect new income until it gets one of its diagnostics to the market.
 
The company has three tests in validation and in clinical studies that it is trying to commercialize: an ovarian triage test, a test for a hematologic disease that causes abnormal clotting, and a test for peripheral arterial disease. 
 
Ciphergen expects to submit the ovarian cancer test to the US Food and Drug Administration for clearance in 2007, and plans to continue pursuing collaborations to identify and in-license biomarkers it could use for other diagnostics. 
 
The company said R&D spending decreased to $1.9 million from $3 million year over year while losses rose to $6 million from $5.5 million in the year-ago period.
 
Ciphergen said it had around $13.5 million in cash and cash equivalents as of March 31. An SEC filing said this balance “may not be sufficient to fund planned expenditures" and "raises substantial doubt about our ability to continue as a going concern."
 
Page said in a recent conference call that the company may seek to find ways to raise extra funds, whether from public or private sources, GenomeWeb Daily News sister publication ProteoMonitor reported last week.
 
During the presentation, Page said if the company has to look outside for capital, Ciphergen has "a lot of opportunities, we're extremely well positioned after this past year. I think it's our job to continually look at these and opportunistically fund our operations going forward."

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