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Ciphergen Blames Competition for Disappointing Q4, Embraces Diagnostics

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The ovarian cancer program at Ciphergen is the first of several discovery-to-assay projects that Ciphergen hopes will kick-start its new diagnostics division, which the company officially launched last month. “Discovery to assay is the key theme of our company,” said Gail Page, who was recently named president of the division, noting that similar projects for other cancers, Alzheimer’s disease, and cardiovascular disease are in the works.

In line with this revised mission, Ciphergen focused on diagnostics during the company’s quarterly earnings conference call this week. Chief financial officer Matthew Hogan said that the company would shift more of its R&D dollars into biomarker discovery and diagnostics this year. “I would expect we’re going to moderate our ProteinChip tools side of the investment and increase our investment in [biomarker discovery centers] and on the diagnostics front,” Hogan said. Last year, 80 percent of R&D spending was on the tools side, with 20 percent for biomarker discovery, he said.

The company’s instrument sales, including that of its SELDI system, made up 45 percent of total revenues in the fourth quarter of 2003. Sales of ProteinChip and sorbents made up 39 percent of revenue, and ProteinChip sales grew 49 percent year-over-year in Q4, Ciphergen said.

Still, overall Q4 revenue came in lower than expected, due to a “disappointing drop in productivity” in the US that Hogan attributed to increased indirect competition from core labs seeking to gain control of in-house biomarker discovery, and from “direct competition from other mass spec companies claiming biomarker discovery capability.” Revenues for the quarter were $15.2 million, up from $13.6 million during the same period in 2002.

Hogan said that many orders that were scheduled to come in during Q4 did not, but added that he expected the majority of these to still come through this year.

For the quarter, the company reported R&D expenses of $6.1 million, almost the same as during the year-ago period, and flat year-over-year net loss of $6.7 million, or $.23 per share, compared to $6.7 million, or $.25 per share, during the same quarter a year ago. The company’s cash and investments as of Dec. 31 came to $47.3 million.

Ciphergen said that it is also planning new product introductions for this year, although the company would not say what those would be or when they will be released.

Meanwhile, Bruker BioSciences, which positioned itself as a competitor to Ciphergen with the release of its ClinProt biomarker discovery system last year (see PM 9-5-03), this week announced that it will release updated versions at Pittcon of its autoflex MALDI TOF and TOF/TOF mass specs. The company is promoting this pair of instruments as a solution for discovering and identifying biomarkers in one fell swoop.

Bruker CEO Frank Laukien seemed to take a swipe at SELDI’s reputation as a lower-end mass spec technology with the statement in a company press release that “the biomarker discovery community, as well as the FDA, have recently become concerned about the robustness and reproducibility of earlier mass spectrometry technologies in clinical proteomics publications.”

— KAM

 

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