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Cepheid Reports 24 Percent Spike in Q3 Revenues

NEW YORK (GenomeWeb News) – Cepheid reported after the market closed on Thursday that its third quarter revenues increased 24 percent year over year.

The Sunnyvale, Calif.-based molecular diagnostics firm reported total revenues of $100.1 million for the three months ended Sept. 30, compared to $80.5 million for the third quarter of 2012. It exceeded the consensus analysts' estimate of $93.9 million.

Cepheid reported clinical systems sales of $17.5 million, a 34 percent increase from $13.1 million, and clinical reagents sales of $74.4 million, a 36 percent increase from $54.5 million in Q3 2012. Cepheid's non-clinical revenues were $8.2 million, down 36 percent from $12.9 million in the year-ago period.

Cepheid delivered a record 574 GeneXpert systems in the quarter, bringing its cumulative global total to more than 5,000. This figure includes 1,400 systems in the US, where there are now "more GeneXpert systems in use than any other clinical molecular diagnostic system," John Bishop, Cepheid's chairman and CEO, said in a statement.

The company installed a total of 133 GeneXpert systems as part of its commercial clinical business, and 441 systems as part of its High Burden Developing Country (HBDC) program. The 133 commercial clinical placements included 56 placements in North America, of which nine were high-throughput GeneXpert Infinity systems.

Third-quarter revenue was driven by "record HBDC revenue, record commercial clinical reagent sales, and record GeneXpert system placements," Bishop said during a conference call recapping Cepheid's Q3 financial results.

Bishop also noted during the call that GeneXpert system placements are being driven by its expanding test menu, including "two important additions" to the US Xpert menu this year: Xpert CT/NG and Xpert MTB/RIF.

"Xpert CT/NG in particular … is a critical product release to measure the extent to which customers are willing to consolidate testing on to the GeneXpert System," Bishop said. "With close to 300 Xpert CT/NG customers in the US at the end of the third quarter in varying stages of ramp-up, we are seeing good momentum and strong interest in platform consolidation. Xpert CT/NG is now an annualized $12 million year business."

Meantime, Bishop noted that although it is "very early days" for Xpert MTB/RIF, the test "got off to a strong start" in the third quarter with more than 90 customers ordering it, including a number of public health labs and a number of conversions from an older molecular test. "To be clear, only 15 or so of our accounts could be considered fully ramped at this time, and indeed, most of these were previous [research-use only] users," Bishop said. "So the incremental US revenue contribution was modest but we are excited by early customer response among both our installed base and new customers."

Bishop also updated Cepheid's test-development pipeline, noting that its HPV test is progressing through trials with "very promising data" that the company will share soon. "We expect HPV to be shipping outside the US in early 2014, two or three months later than we originally targeted," Bishop said.

Meantime, the company expects to launch tests for norovirus, trichomonas, and multi-drug-resistant organisms to launch outside the US in the first half of 2014; and for quantitative and qualitative HIV tests and an HCV assay to launch in the second half of 2014.

Cepheid posted a net loss of $1.4 million, or $.02 per share, for the quarter, compared to a net loss of $21.3 million, or $.32 per share, in Q3 2012, which included a charge of $15.1 million, or $.23 per share, associated with the company's settlement of patent infringement litigation with Abaxis. Analysts, on average, had anticipated a loss per share of $.12.

The firm's R&D spending in Q3 increased to $18.6 million from $16.1 million, while its SG&A expenses increased to about $29.3 million from $27.8 million.

Cepheid finished the quarter with $68.8 million in cash and cash equivalents, and $5.8 million in short-term investments.

The company upped its FY 2013 revenue guidance to between $389 and $391 million from the $380 million to $385 million that it estimated last quarter. The company said this would result in a net loss between $.24 and $.26 per share. Cepheid expects non-GAAP EPS of $.22 to $.24.

In Friday morning trade on the Nasdaq, shares of Cepheid were up around 1 percent at $38.78.

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