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Cepheid Boasts 35 Percent Revenue Growth for Q3

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Cepheid reported after the close of the market Thursday that its third-quarter revenues rose 35 percent year over year, and the firm cut its net loss by more than two-thirds.

The Sunnyvale, Calif.-based molecular diagnostics firm brought in total revenues of $56.1 million for the three-month period ended Sept. 30, compared to $41.6 million for Q3 2009. It surpassed analysts' consensus estimate of $52.9 million.

Sales for the firm's clinical systems increased 47 percent to $8.6 million from $5.8 million, while clinical reagents sales were up 38 percent to $33.2 million from $24.1 million. Its industrial sales were down 6 percent to $4.7 million from $5 million, while biothreat sales increased 83 percent to $7.3 million from $4 million, and partner revenues dropped 41 percent to $1.1 million from $1.9 million.

The firm placed 125 of its GeneXpert systems during the quarter, of which 60 were placed in the US. Company officials said during a conference call following the release of the Q3 results that sales to US Veterans Administration hospitals were stronger than expected, with 15 of the 60 US placements going to those facilities.

Cepheid's net loss for the quarter dropped sharply to $1.1 million, or $.02 per share, from $3.8 million, or $.07 per share. Analysts, on average, had expected a loss of $.06 per share.

The firm's R&D spending for the quarter jumped around 26 percent to $11 million from $8.7 million, and its SG&A spending increased 30 percent to $16 million from $12.3 million.

"Cepheid continues to make solid progress on its two-pronged strategy to establish the GeneXpert System as the molecular platform of choice while also working steadily towards sustainable profitability," Cepheid CEO John Bishop said in a statement.

"These financials show the first benefits from the phase out of the very heavy royalty burden that we have carried since the launch of the GeneXpert back in 2006," Bishop added during the conference call.

Cepheid no longer has to pay PCR-related royalties to Roche for systems and tests sold in the US, and in 2011, royalties to Roche for systems and tests in Europe will also discontinue as will royalties to Applied Biosystems for systems in the US.

Though Cepheid has concentrated on getting its GeneXpert systems into hospitals beyond the VA system — and has been successful in placing its instruments in slightly more than 50 percent of large hospitals in the US — the firm also is eyeing the CLIA lab market. According to company officials, Cepheid hopes to submit a CLIA-waived GeneXpert program with US authorities next year with a possible clearance by the end of 2011.

Cepheid finished the quarter with cash and cash equivalents of $65.2 million.

The company has guided for full-year revenues of between $207 million and $210 million, and a net loss per share of between $.14 and $.17.

In early Friday trade on the Nasdaq, shares of Cepheid jumped 9 percent to $19.53.

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