Ciphergen's Q2 Earnings 'Unreliable' as Auditors Investigate Other Periods; Problem Not Likely Nefarious
Ciphergen Biosystems' second-quarter earnings report should "no longer be relied upon" and should be restated after the company last week brought into question the validity of around $500,000 in revenue from that period, Ciphergen said this week.
The company said the audit committee it appointed to investigate the revenue recommended that it restate its second-quarter earnings to "recognize revenue in a manner consistent" with the company's policy, the statement added.
The audit committee had been investigating how and why Ciphergen recognized approximately $500,000 in sales for the three months ended June 30, the firm said last week (see PM 11/11/2005). The investigation caused Ciphergen to delay releasing its third-quarter financial results, which were originally scheduled to appear Nov. 3, according to a notice on Ciphergen's website that has since been removed.
"To date, the investigation has identified four transactions involving instances of revenue recognition in a manner inconsistent with the company's revenue recognition policy," Ciphergen said in a statement released yesterday. "Based on the findings of its advisors and the progress of the investigation to date, the committee believes that these transactions resulted in improperly recognized revenue of approximately $503,000 for the quarter ended June 30, 2005."
This represents around 7 percent of the company's reported revenue for the quarter, Ciphergen said. The company said it expects that striking this revenue would cause net loss for the second quarter to increase by approximately $301,000, representing approximately 3 percent of the company's reported net loss for the quarter.
Ciphergen said the committee's investigation is not over. "The committee and its advisors are currently reviewing the appropriateness of revenue recognition in connection with certain transactions that took place in the fourth quarter of fiscal 2004 and in fiscal 2005," the company said. Due to the ongoing nature of the Committee's investigation, the reported periods affected and the financial impact of the transactions described above may change as further information becomes available."
In addition, the company has not finished assessing "how the errors it has identified reflect on the adequacy of its internal controls over financial reporting." Ciphergen added that it "expects that, either individually or in the aggregate, these errors may result in the company reporting one or more material weaknesses in its internal controls over financial reporting.
Ciphergen said that it and its audit committee "are continuing to assess these matters and their implications on the adequacy of the company's internal controls."
Though Ciphergen officials declined to comment on the specifics of the investigation, a former company official who spoke on the condition of anonymity said Ciphergen could be struggling to deal with the new Sarbanes-Oxley accounting laws. He also suggested that mistakes in accounting were not likely to be nefarious in nature.
"To satisfy the auditors, you can't recognize a sale until all the i's are dotted and all the t's are crossed," said the source, who asked not to be named because of his proximity to the company. "It could be as simple as saying, 'We'll train six people if you buy the instrument,' but until that training was done, they couldn't recognize the sale."
The source, who spoke to ProteoMonitor last week, added that he doubted that Ciphergen was dealing with "subversive stuff" where they were trying to get around the act. "Dan Caserza, the accountant for the group, is pretty squeaky clean about that stuff," he said.
Also this week, Ciphergen said that on Nov. 15, the Nasdaq Listings Qualification Department notified the company that its common stock will be delisted from the Nasdaq National Market as of Nov. 25 unless the company requests a hearing. The company added that it will appeal the decision.
Nasdaq said Ciphergen "has not complied with its periodic reporting requirements for the filing of" its third-quarter earnings report. Also, beginning today, Ciphergen's ticker symbol will be changed to CIPHE from CIPH.
Nasdaq Removes Ciphergen from Biotech Index
Ciphergen Biosystems has been removed from the Nasdaq Biotechnology Index as part of a semi-annual update, the exchange said this week.
The index, which can be seen here, currently lists 152 companies. As part of the re-ranking, seven will be removed, and 17 added. The changes take effect at the start of trading on Monday, Nov. 21.
The exchange updates NBI semi-annually, in May and November. Securities must meet the maintenance criteria of $100 million in market capitalization and 50,000 shares average daily trading volume to remain in the index. Securities missing the criteria for two consecutive rankings are removed.
Covalys, Fisher Unit to Co-develop, Co-market SNAP-tag Protein Products
Covalys Biosciences and Fisher Biosciences unit Pierce Biotechnology will jointly develop and promote products related to Covalys' SNAP-tag technology, Pierce said this week.
Under the agreement, Pierce and Covalys will promote products for protein-chemistry applications. Pierce will develop products based on Covalys' biotin SNAP-tag ligands in combination with its streptavidin and NeutrAvidin-coated microplates.
The Basel, Switzerland-based company's SNAP-tag is a self-labeling protein tag that links chemical probes to any protein of interest without prior purification and with high stability.
Financial details were not disclosed.
Shimadzu Opens Mass-Spec Lab at Its Maryland Facility
Shimadzu opened a new mass spectrometry laboratory at its Columbia, Md., headquarters, the company said this week.
The new biotech applications laboratory will support US customers and conduct research and development work. The laboratory will be the central US facility for developing methods.
The laboratory will be staffed by five applications chemists and assisted by technical support personnel in the field.
DNT, Lumera to Co-develop Surface Chemistries for Lumera's ProteomicProcessor
Dendritic Nanotechnologies and Lumera will co-develop surface chemistries for Lumera's label-free array reader ProteomicProcessor, the companies said last week.
Under the agreement, Lumera will test and evaluate the dendrimer-based approaches built by DNT on Lumera's surfaces. DNT's dendrimer technology is called Priostar.
Additional terms were not disclosed.
Prolexys and Ariadne to Integrate Software, Database
Ariadne Genomics and Prolexys Pharmaceuticals will pair their pathway-analysis tools to target the pharmaceutical research market, the companies said this week.
Under the terms of the agreement, Prolexys' Human Interactome Database, a collection of experimentally verified human protein-protein interactions, will be integrated with Ariadne's PathwayStudio and PathwayExpert pathway-analysis software.
The Prolexys database will be available from Ariadne Genomics for an additional fee to its commercial customers, Prolexys and Ariadne said.
Agilent Shares Climb 5 Percent On 5-Percent Fiscal Q4 Revenue Gain and Decreased Profits
Shares in Agilent were up 5.14 percent, or $1.69, at $34.59 in mid-afternoon trading on Nov. 16 after the company said revenue from its Bio-Analytical Measurement segment grew nearly 10 percent during its fiscal fourth quarter.
Agilent's total revenue for the fourth quarter grew 5 percent to $1.4 billion from $1.3 billion for the fourth quarter of fiscal year 2004, the company reported yesterday. Orders increased $308 million for the quarter, or 25.8 percent over last year.
The segment reported a 9.8-percent increase in total orders for the quarter ended Oct. 31 to $402 million from $366 million last year. Total revenue in the segment grew 8.5 percent for the quarter to $382 million from $352 million last year.
Increased orders for Life Sciences and Chemical Analysis contributed to the increase in total revenue, the company said, citing mixed demand from large pharmaceutical companies but strength in biotech and generic pharmaceutical firms.
Demand for Agilent's new gas chromatograph and mass spectrometry platform was higher than earlier in the year, the company said. Net income declined 65 percent for Agilent during the quarter to $26 million, or $.05 per share, from $74 million last year, or $.15 per share, year over year.
As part of its divesture activities, Agilent plans to complete the sale of its Semiconductor Products business by Dec. 1 and to spin off its Semiconductor Test Solutions business. The initial public offering is expected in the middle of fiscal year 2006. Agilent will receive proceeds from the sale of its 47-percent stake in Lumileds within the month, the company said.
Agilent's board authorized a share repurchase of approximately $2.7 million, or 73 million shares of its common stock, the company said. As of Oct. 31, Agilent has 500 million outstanding shares.
The modified "Dutch Auction" tender offer will purchase shares at a price between $32 and $37 and is expected to commence today and expire Dec. 13.
Agilent's quarterly research and development expenses increased 11 percent to $188 million from $169 million in the year-ago period.
Agilent had $2.2 billion in cash and cash equivalents as of Oct. 31.
Pressure BioSciences Sells First Bench Top Sample-Prep System to FDA
Pressure BioSciences sold its first bench-top PCT sample-preparation system to the US Food and Drug Administration, the company said this week.
The company also signed a one-year lease with the University of New Hampshire and a three-month lease with a midwestern biotech firm for the system.
The FDA is expected to use the system to extract proteins from bacteria, to process food to detect allergen contamination, and to evaluate dietary supplements, Pressure said.
The University of New Hampshire and the biotech company are expected to use the system to process biological samples to study DNA, RNA, and proteins.
Additional details were not disclosed.
Bruker, Closing Roentec and Princeton Gamma-Tech Acquisitions, Builds Microanalysis Unit
Bruker AXS this week closed its previously announced acquisition of Roentec and Princeton Gamma-Tech, and has formed a new microanalysis business unit, Bruker AXS Microanalysis.
Financial details of the transactions remain undisclosed.
Bruker said the intent of the acquisitions and the formation of the new unit is to stake a place in the "$150 million" X-ray microanalysis market. Both Roentec and PGT specialize in X-ray detector instruments.
In addition, Bruker's new unit will retain members of the acquired companies' management teams. Roentec's Thomas Schuelein has been named vice president for microanalysis and PGT's Douglas Skinner has been appointed assistant vice president of the new unit, Bruker said.