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Cepheid Places 125 GeneXperts in Q3, Sees First Impact of PCR Royalty Expirations on Bottom Line

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Cepheid last week reported a 35 percent increase in third-quarter revenues and a sharply lower net loss compared to the third quarter of 2009.

The company posted total revenues of $56.1 million for the three months ended Sept. 30, compared to $41.6 million for Q3 2009.

Clinical systems sales rose 47 percent to $8.6 million from $5.8 million, while clinical reagents sales increased 38 percent to $33.2 million from $24.1 million. Industrial sales dropped 6 percent, meantime, to $4.7 million from $5 million, and partner revenues dropped 41 percent to $1.1 million from $1.9 million. Sales of the company's biothreat products increased 83 percent to $7.3 million from $4 million,

Cepheid said that it placed 125 GeneXpert systems during the quarter, of which 60 were placed in the US. Company officials said during a third-quarter conference call 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 narrowed to $1.1 million, or $.02 per share, from $3.8 million, or $.07 per share.

"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," Cepheid CEO John Bishop said during the conference call.

Cepheid no longer has to pay PCR-related royalties to Roche for systems and tests sold in the US. 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.

The firm's third-quarter R&D spending rose 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," Bishop said in a statement.

Company officials reiterated previous statements that they hope 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 projected full-year 2010 revenues of between $207 million and $210 million.

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