-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GOBwrIA7XBtXsj4+/zHh8ACsTlnfcU/aOPip+ZiA1GUixcqGjraOf+8zPqKWfEpJ /Y5rV4TPXajEK82lHmCJFQ== 0001144204-07-022561.txt : 20070503 0001144204-07-022561.hdr.sgml : 20070503 20070503162058 ACCESSION NUMBER: 0001144204-07-022561 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070503 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070503 DATE AS OF CHANGE: 20070503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CEPHEID CENTRAL INDEX KEY: 0001037760 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 770441625 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30755 FILM NUMBER: 07815826 BUSINESS ADDRESS: STREET 1: 1190 BORREGAS AVE CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4085414191 MAIL ADDRESS: STREET 1: 1190 BORREGAS CITY: SUNNYVALE STATE: CA ZIP: 94089 8-K 1 v073665_8k.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 May 3, 2007 - -------------------------------------------------------------------------------- Date of Report (Date of earliest event reported) CEPHEID - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) California 000-0030755 77-0441625 - -------------------------- ------------------------- ------------------------ (State of incorporation) (Commission file number) (I.R.S. Employer Identification No.) 904 Caribbean Drive Sunnyvale, CA 94089 - -------------------------------------------------------------------------------- (Address of principal executive offices, including zip code) (408) 541-4191 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02: Results of Operations and Financial Condition. The information in this report and the exhibit attached hereto are being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing. On May 3, 2007, Cepheid issued a press release announcing its financial results for the quarter ended March 31, 2007 and certain other information. The press release is attached to this report as Exhibit 99.01. Item 9.01: Financial Statements and Exhibits. (d) Exhibits. Number Description 99.01 Press release dated May 3, 2007 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CEPHEID Date: May 3, 2007 By: /S/ JOHN L. BISHOP -------------------------------- Name: John L. Bishop Title: Chief Executive Officer Exhibit Index Number Description - ------ ----------- 99.01 Press Release dated May 3, 2007. EX-99.1 2 v073665_99-1.txt Cepheid CONTACTS 904 Caribbean Drive Sunnyvale, CA 94089 At the Company: John R. Sluis -------------- Telephone: 408.541.4191 John L. Bishop CFO, Cepheid Fax: 408.541.4192 CEO, Cepheid 408-541-4191 408-541-4191 john.sluis@cepheid.com john.bishop@cepheid.com Financial Relations Board: -------------------------- Lasse Glassen Investor/Analyst Information 310-854-8313 lglassen@financialrelationsboard.com CEPHEID REPORTS FIRST QUARTER 2007 RESULTS SUNNYVALE, Calif., May 3, 2007 -- Cepheid (NASDAQ: CPHD) today announced financial results for the first quarter ended March 31, 2007. Total product sales for the first quarter ended March 31, 2007 were $22.1 million, an increase of15% from the $19.3 million for the first quarter ended March 31, 2006. Clinical product sales for the first quarter increased 103% to $7.4 million from the corresponding prior year period. Clinical product sales represented 34% of total product sales for the first quarter of 2007 compared to 19% of total product sales for the first quarter of 2006. Industrial product sales for the first quarter decreased 8% to $3.2 million from the corresponding prior year period. Industrial product sales represented 14% of total product sales for the first quarter of 2007 compared to 18% of total product sales in the first quarter of 2006. Biothreat product sales decreased 6% to $11.5 million from the corresponding prior year period. Biothreat product sales represented 52% of product sales in the first quarter of 2007 compared to 63% of total product sales in the first quarter of 2006. Total revenues of $25.5 million for the first quarter of 2007 include $3.4 million of other revenue compared to other revenues of $0.9 million in the first quarter of 2006. Other revenues were driven largely by R&D collaborations, including assays for Tuberculosis with FIND, Avian Flu and flu A/B with the Centers for Disease Control and Prevention (CDC), hemostasis with Instrumentation Laboratories (IL), and others. The reimbursement of these research and development programs is a significant factor in determining our R&D spending levels. Gross margin on total revenues, or total revenues less cost of goods sold, as adjusted to a non-GAAP measure (attached Table A) was 48% in the first quarter of 2007 compared to 44% for the first quarter of 2006. Gross margin on product sales, adjusted for stock compensation expense and amortization of acquired intangibles (Table A), was 40% percent in the first quarter of 2007 compared to 42% for the first quarter of 2006. This decrease in gross margin was largely due to the higher percentage of lower margin sales through distributors in Europe (attached Table B), which have higher royalty rates on European instrument sales. Net loss for the first quarter of 2007 was approximately $6.2 million, or $0.11 per share. This is compared to a net loss of approximately $6.7 million, or $0.15 per share, for the quarter ended March 31, 2006. Net loss for the first quarter of 2007, adjusted for stock compensation expense and the amortization of acquired intangibles (Table A) was $3.9 million, or $0.07 per share, for the first quarter of 2007 as compared to $4.9 million, or $0.11 per share, for the first quarter of 2006. "The Company had a particularly productive first quarter with the completion of the Sangtec Molecular Diagnostics AB acquisition, the bioMerieux sepsis collaboration and the FDA clearance of the Xpert(TM) EV test. Subsequent to the close of the quarter we added to this list of accomplishments with the FDA clearance of the Xpert(TM) MRSA test and the collaboration with Instrumentation Laboratories to develop and market hemostasis tests. The clearance of the Xpert(TM) MRSA test provides us with a menu of tests on our GeneXpert(R) System which should enable us to begin to build a significant position in the Clinical Molecular Diagnostics Market," commented John Bishop, Cepheid's CEO. Mr. Bishop added, "We are gaining traction with our Xpert(TM) GBS and EV tests. Our instrument base for GeneXpert(R) Systems increased to 166 systems during the quarter. These systems comprise 478 individual GeneXpert modules. We see the market for MRSA surveillance continuing to grow at a rapid rate. The Veterans Administration or VA hospitals initiative is an example of a relatively lengthy list of initiatives which are under development and implementation at varying levels across the U.S. in addition to programs in Europe." "As we have planned, the Clinical market is now emerging as the key driver to the growth of our business with a substantial level of strategic opportunity. We expect our Industrial and Biothreat markets to continue to provide a continuing base of sales but growth rates will likely vary depending on other factors such as the availability of government funding for the research markets and USPS actions involving their biothreat program." "Biothreat sales were impacted during the first quarter by additional deferred revenue recognition of $0.6 million of sales which otherwise might have been realized on the anthrax test cartridges shipped during the quarter. As noted in our Q4 2006 discussion, this action was taken in connection with our currently active negotiations with Northrop Grumman and the USPS on a five year cartridge purchase contract. As the potential five year agreement would become effective with the USPS' 2007 fiscal year beginning October 1, 2006, the potential new price point per test cartridge has been applied to test cartridge shipments for the first quarter in addition to those shipped in the fourth quarter of 2006. The deferred revenue will be recognized during 2007 in the event that we do not reach agreement on the terms of a five year purchase agreement. We should also note that in the event we do not reach agreement on the terms of a five year purchase agreement the program will continue with our existing terms which will continue to be applied on a year to year basis based upon a volume of anthrax test cartridges to be agreed for each government fiscal year. The program continues with outstanding performance as to date 4.7 million tests have been run with no false positives. This is a feat never before achieved by any molecular test system." "Industrial product sales were impacted in the first quarter by a slow down in government research funding. We currently expect funding to continue to be an issue for the Industrial market throughout 2007." 2007 Outlook Commenting on Cepheid's outlook for 2007, Mr. Bishop stated: "We continue to expect 2007 to be a significant year of achievement in the Clinical market. The early FDA clearance of our Xpert MRSA product should add to the expected growth in our clinical sales. We continue to expect to receive a CLIA Moderate Complexity categorization for the Xpert MRSA test. As noted in our previous discussion, we continue to expect to see a rapidly developing MRSA market opportunity. In addition to the growing interest in our Xpert EV and GBS products we are seeing increased demand for our GeneXpert system with the mix favoring our GX-XVI system." "Based upon early indications of our success in the Clinical market we are evaluating a potential further expansion of our U.S. direct sales force ahead of planned additions. Our new product launches are also being supported with increased marketing and promotional expenses as the rate of product adoption will have a determining impact on our timeline to profitability and positive cash flow." "We also continue to expect our other revenues to double, or possibly triple, last year's other revenues, potentially reaching the $12 to $15 million range. These programs are being supported with significant investments in research and development." "Our own product development programs are underway for MRSA/MSSA in skin and soft tissue infections and for use with blood culture testing in addition to C. difficile and VRE. Additional collaborator, foundation and government funded programs are underway for drug resistant tuberculosis, sepsis, flu, and tests for factors II and V in hemostasis testing. We expect to release the Xpert MRSA/MSSA in skin and soft tissue infections and for use with blood culture testing in Europe as a CE marked product during the fourth quarter this year." "Systems development programs are currently underway for a six color capability for the GeneXpert, a GX-I system and the GX-HV system, a 48 module high volume robotic system which will automatically load and unload test cartridges. The six color project is expected to provide the ability to simultaneously test for up to 15 different targets in a single test cartridge and is expected to be available in production systems by the end of 2007. The GX-I system is also expected to be available for shipment before the end of 2007." "We expect sales in the Industrial market to continue to be effected by a decrease in available government research funding. As a result, we expect Industrial sales to be flat to slightly down in 2007 as compared to 2006." "In the Biothreat market, we expect to either complete the five year contract under mutually agreeable terms with Northrop Grumman and the USPS during the second quarter or to return to use of a year-by-year contract and the corresponding pricing matrix. The USPS anthrax test cartridge volume for the USPS' fiscal year 2007 is expected to be approximately the same as that for fiscal 2006, which was approximately 2 million. However, based on a potential shift of BDS units in conjunction with the deployment to flats canceller systems during USPS' fiscal year 2008 starting October 1st, 2007, we expect to see a decrease in test cartridge volume for our calendar year 2007. This will be partially offset by a corresponding increase in the price per test cartridge." "We expect to complete integration of Cepheid AB, based in Bromma, Sweden, by the fourth quarter and we are on track to introduce the products for CMV, EBV, and VZV in the U.S. before the end of the year." "Given the mix of positive factors in the Clinical market and other factors which may affect the Industrial and Biothreat markets we are going to maintain our previously announced guidance for 2007." "On a consolidated basis, we currently expect our 2007 total revenues to be in the range of $112 million to $120 million, with product sales to be in the range of $100 million to $105 million. We expect our 2007 net loss, not including the effect of stock compensation expense which is currently estimated at $7 million and any amortization expense arising from our announced acquisitions, to be in the range of $8 million to $11 million or $0.14 to $0.20 per share based on expected weighted average shares outstanding of 55.6 million. We expect our 2007 net loss, when including the effect of stock compensation expense but not any amortization expense arising from our announced acquisitions, to be in the range of $15 million to $18 million or $0.27 to $0.32 per share based on expected weighted average shares outstanding of 55.6 million. We expect our quarterly operating results to show a definitive trend towards profitability in the second half of 2007 based upon successful introduction of our Xpert EV and Xpert MRSA IVD tests in the U.S. market. We expect to achieve positive operating cash flow by the end of 2007 and to be profitable for the entire year of 2008." Conference Call Information Cepheid's CEO, John Bishop, and Senior V.P. and CFO, John Sluis will host a conference call today at 4:30 pm (Eastern) to discuss Cepheid's financial results, business highlights and outlook. The call will be simultaneously broadcast over the Internet. Interested participants and investors may access the teleconference call by dialing 800-257-1836 (domestic) or 303-262-2191 (international). There will also be a live webcast of the call on the Investor Relations section of Cepheid's web site at www.cepheid.com. Web participants are encouraged to go to the web site at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. After the live webcast, the call will remain available on Cepheid's website, www.cepheid.com, through May 3, 2008. A replay of the conference call will be available at 800-405-2236 (domestic) or 303-590-3000 (international) through May 10, 2007; the conference ID is 11089144. The replay will be available after 6:30 pm (Eastern). About Cepheid Cepheid (Nasdaq: CPHD), based in Sunnyvale, Calif., is a molecular diagnostics company that develops, manufactures, and markets fully-integrated systems for genetic analysis in the Clinical, Industrial and Biothreat markets. The company's systems enable rapid, sophisticated genetic testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures. The company's easy-to-use systems integrate a number of complicated and time-intensive steps, including sample preparation, DNA amplification and detection, which enable the analysis of complex biological samples in its proprietary test cartridges. Through its strong molecular biology capabilities, the company is focusing on those applications where rapid molecular testing is particularly important, such as identifying infectious disease and cancer in the Clinical market; food, agricultural, and environmental testing in the Industrial market; and identifying bio-terrorism agents in the Biothreat market. See www.cepheid.com for more information. This press release contains forward-looking statements that are not purely historical regarding Cepheid's or its management's intentions, beliefs, expectations and strategies for the future, including those relating to potential growth in clinical products sales, FDA approvals, the status of government funding, timing of future product releases, future revenues and demand for certain test products, future net losses and profitability, other future operating results, potential benefits of the recent Sangtec acquisition, the status of the USPS BDS program and collaboration and product development efforts. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the Company's current expectations. Factors that could cause actual results to differ materially include risks and uncertainties such as those relating to: our ability to complete clinical trials successfully in a timely manner for products to be marketed in clinical markets; uncertainties related to the FDA regulatory and European regulatory processes; the scope of actual USPS funding in the future; the rate of environmental testing using the BDS conducted by the USPS, which will affect the amount of consumable products sold; the fact that future levels of government funding are inherently uncertain; unforeseen development and manufacturing problems; the need for additional licenses for new tests and other products and the terms of such licenses; lengthy sales cycles in certain markets; our success in increasing direct sales, and the effectiveness of new sales personnel; the performance and market acceptance of new products; sufficient customer demand for new products; the Company's reliance on distributors to market, sell and support our products; the occurrence of unforeseen expenditures, acquisitions or other transactions; unforeseen issues relating to integration of acquisitions, including the operations and product lines of the acquired businesses; the ability of Cepheid to retain and motivate key employees of acquired businesses, particularly research and development personnel; incurrence of unexpected liabilities in connection with acquisitions; the impact of competitive products and pricing; our ability to manage geographically-dispersed operations; and underlying market conditions worldwide. Readers should also refer to the section entitled "Risk Factors" in Cepheid's Annual Report on Form 10-K for 2006 and its other reports filed with the Securities and Exchange Commission. All forward-looking statements and reasons why results might differ included in this release are made as of the date of this press release, based on information currently available to Cepheid, and Cepheid assumes no obligation to update any such forward-looking statement or reasons why results might differ. (FINANCIAL STATEMENTS FOLLOW) CEPHEID CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS (in thousands, except per share data)
Three Months Ended March 31, -------------------- 2007 2006 -------- -------- Revenues: Instrument sales $ 6,837 $ 4,538 Reagent and disposable sales 15,230 14,734 -------- -------- Total product sales 22,067 19,272 Contract revenues 1,890 611 Grant and government sponsored research revenue 1,587 278 -------- -------- Total revenues 25,544 20,161 -------- -------- Costs and operating expenses: Cost of product sales 13,877 11,393 Collaboration profit sharing 3,497 3,811 Research and development 6,922 5,829 Selling, general and administrative 8,428 6,146 -------- -------- Total costs and operating expenses 32,724 27,179 -------- -------- Loss from operations (7,180) (7,018) Other income, net 1,027 346 -------- -------- Net loss $ (6,153) $ (6,672) ======== ======== Basic and diluted net loss per share $ (0.11) $ (0.15) ======== ======== Shares used in computing basic and diluted net loss per share 55,012 44,946 ======== ========
CEPHEID CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS (in thousands)
March 31, December 31, 2007 2006 --------- --------- ASSETS Current assets: Cash and cash equivalents $ 7,884 $ 17,186 Marketable securities 45,750 77,750 Accounts receivable, net 16,644 15,246 Inventory 12,951 10,240 Prepaid expenses and other current assets 2,989 1,390 --------- --------- Total current assets 86,218 121,812 Property and equipment, net 15,184 14,097 Restricted cash 661 661 Other non-current assets 378 666 Intangible assets and goodwill 57,908 30,425 --------- --------- Total assets $ 160,349 $ 167,661 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 8,132 $ 8,977 Accrued compensation 3,413 3,319 Accrued royalties 4,807 3,516 Accrued collaboration profit sharing 2,000 3,497 Accrued other liabilities 4,581 4,107 Accrued expense for patent-related matter -- 3,350 Current portion of deferred revenue 4,923 3,913 Current portion of license fees payable -- 447 Current portion of equipment financing 166 313 Current portion of note payable 49 11 --------- --------- Total current liabilities 28,071 31,450 Long-term portion of deferred revenue 2,262 2,663 Long-term portion of equipment financing 3 3 Long-term portion of note payable -- 41 Deferred rent 801 798 --------- --------- Total liabilities 31,137 34,955 --------- --------- Commitments and contingencies Shareholders' equity: Common stock 251,865 251,132 Additional paid-in capital 17,043 15,065 Accumulated other comprehensive loss (57) (5) Accumulated deficit (139,639) (133,486) --------- --------- Total shareholders' equity 129,212 132,706 --------- --------- Total liabilities and shareholders' equity $ 160,349 $ 167,661 ========= =========
Table A - GAAP vs. Non GAAP Measures Three months ended March 31, - ------------------------------------ 2007 2006 Total Product Sales $ 22,067 $ 19,272 Total Revenues $ 25,544 $ 20,161 Cost of product sales $ 13,877 $ 11,393 Stock compensation expense 266 174 Amortization of acquired inventory step-up in basis 64 -- Amortization of purchased intangible assets 203 -- -------- -------- Non-GAAP measure of cost of goods sold $ 13,344 $ 11,219 Gross Margin on Product Sales per GAAP 37% 41% Gross Margin on ProductSales per Non-GAAP 40% 42% Gross Margin on Total Revenues per GAAP 46% 43% Gross Margin on Total Revenues per Non-GAAP 48% 44% Research and development $ 6,922 $ 5,829 Stock compensation expense 744 593 -------- -------- Non-GAAP measure of cost of research and development $ 6,178 $ 5,236 Non-GAAP R&D measure as percent of Total Revenues 24% 26% Selling, general and administrative $ 8,428 $ 6,146 Stock compensation expense 991 956 -------- -------- Non-GAAP measure of cost of selling, general and administrative $ 7,437 $ 5,190 Non-GAAP SG&A measure as percent of Total Revenues 29% 26% Net Loss $ (6,153) $ (6,672) Stock compensation expense 2,001 1,723 Amortization of acquired inventory step-up in basis 64 -- Amortization of purchased intangible assets 203 -- -------- -------- Non-GAAP measure of Net Loss $ (3,885) $ (4,949) Basic and diluted net loss per share $ (0.11) $ (0.15) Stock compensation expense 0.04 0.04 Amortization of acquired inventory step-up in basis 0.00 -- Amortization of purchased intangible assets 0.00 -- -------- -------- Non-GAAP measure of Net Loss $ (0.07) $ (0.11) Shares used in computing basic and diluted net loss per share 55,012 44,946
Table B - Instrument and Reagent Sales Mix Three months ended March 31, 2007 2006 Product Sales Instrument sales $ 6,837 $ 4,538 Reagent and disposable sales 15,230 14,734 ------- ------- Total product sales $22,067 $19,272 Percent of Product Sales Instruments 31% 24% Reagents and disposables 69% 76% ------- ------- Total product sales 100% 100% Table C - Geographic Sales Mix Three months ended March 31, 2007 2006 Percent of Instrument and service sales US & ROW 60% 75% Europe 40% 25% --- --- Total Instrument and Service Sales 100% 100% Percent of reagent and disposable sales (including USPS) US & ROW 92% 98% Europe 8% 2% --- --- Total Reagent and Disposable Sales 100% 100% Percent of Reagent and Disposable Sales (without USPS) US & ROW 69% 91% Europe 31% 9% --- --- Total Reagent and Disposable Sales 100% 100% Percent of Total Product Sales (including USPS) US & ROW 82% 93% Europe 18% 7% --- --- Total Product Sales (including USPS) 100% 100% Percent of Total Product Sales (without USPS) US & ROW 63% 81% Europe 37% 19% --- --- Total Reagent and Disposable Sales 100% 100% -----END PRIVACY-ENHANCED MESSAGE-----