-----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, NzG8ZVhfQn3V/kDi+3nlHQ7xYLZRXlE6AwJzrOAcGCJ8MjlES1muM2V5Sp+VIRXA 7NDeLS98bik1KfQECcB82Q== 0001275287-05-004401.txt : 20051103 0001275287-05-004401.hdr.sgml : 20051103 20051103160743 ACCESSION NUMBER: 0001275287-05-004401 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051103 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051103 DATE AS OF CHANGE: 20051103 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: 051177101 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 ce4015.txt FORM 8-K ================================================================================ 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 Nov 3, 2005 ------------------------------------------------ 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 November 3, 2005, Cepheid issued a press release announcing its financial results for the quarter ended September 30, 2005 and certain other information. The press release is attached to this report as Exhibit 99.01. ITEM 9.01: FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. Number Description - ------ ------------------------------------ 99.01 Press release dated November 3, 2005 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: November 3, 2005 By: /s/ JOHN L. BISHOP --------------------------------- Name: John L. Bishop Title: Chief Executive Officer EXHIBIT INDEX Number Description - ------ ------------------------------------- 99.01 Press Release dated November 3, 2005. EX-99.01 2 ce4015ex9901.txt EXHIBIT 99.01 Exhibit 99.01 [LOGO OF CEPHEID] Cepheid CONTACTS 904 Caribbean Drive Sunnyvale, CA 94089 AT THE COMPANY: Telephone: 408.541.4191 --------------- Fax: 408.541.4192 John L. Bishop John R. Sluis CEO, Cepheid CFO, Cepheid 408-541-4191 408-541-4191 john.bishop@cepheid.com john.sluis@cepheid.com FINANCIAL RELATIONS BOARD: -------------------------- Tricia Ross Investor/Analyst Information 617-520-7064 tross@financialrelationsboard.com
FOR IMMEDIATE RELEASE CEPHEID REPORTS THIRD QUARTER 2005 RESULTS 43% Increase in Product Sales Drive 45% Increase in Total Revenues Product Sales for the Nine Months Period Increase by 90% SUNNYVALE, Calif., November 3, 2005 -- Cepheid (NASDAQ: CPHD) today announced financial results for the quarter and nine months ended September 30, 2005. Product sales for the quarter ended September 30, 2005 increased 43% to approximately $19.2 million from approximately $13.4 million for the corresponding prior year period while product sales for the nine months ended September 30, 2005 increased 90% to approximately $58.2 million from approximately $30.6 million for the corresponding prior year period. The increase in product sales for the quarter and nine months ended September 30, 2005 as compared to the corresponding prior year periods was primarily due to a 103% and 266%, respectively, increase in reagent and disposable sales, respectively. Total revenues for the quarter ended September 30, 2005 increased 45% to approximately $20.4 million compared to approximately $14.1 million for the corresponding prior year period while total revenues for the nine months ended September 30, 2005 increased 88% to approximately $61.4 million from $32.6 million for the corresponding prior year period. The increase in total revenue for both the quarter and nine months ended September 30, 2005 as compared to the corresponding prior year periods was due primarily to the increase in product sales. Contract revenue of $0.8 and $2.2 million for the quarter and nine months ended September 30, 2005 was primarily derived from the amortization of up-front license fees in connection with the Company's collaboration with bioMerieux. Gross Margin Dollars on product sales (total product sales less cost of product sales) for the quarter and nine months ended September 30, 2005 increased by 28% and 76%, respectively as compared to the corresponding prior year periods. The gross margin percentage on product sales for the quarter ended September 30, 2005 decreased to 40% from 44% in the corresponding prior year period and decreased to 42% for nine months ended September 30, 2005 as compared to 46% for the corresponding prior year period. The decline in gross margin percentage on product sales for the nine months ended September 30, 2005 as compared to the corresponding prior year period was due primarily to the impact of production problems with the anthrax test cartridge occurring in the second and third quarters. The resulting manufacturing inefficiencies and inventory exposures are not expected to recur in the fourth quarter. In addition, amortization of up front license fees and higher ongoing royalty costs associated with the Company's patent license agreements entered into with Applera Corporation and F. Hoffman-LaRoche Ltd in the second and third quarter of 2004 as well as one time favorable pricing achieved in the first quarter of 2004 which did not occur in the nine months ended September 30, 2005 further impacted the gross profit margin. Gross margin on product sales for the full year 2005 is expected to be in the range of 40% to 45%. Net loss for the quarter and nine months ended September 30, 2005 was approximately $3.3 million, or $0.08 per share and $10.4 million, or $0.24 per share, respectively, compared to a net loss of approximately $2.9 million, or $0.07 per share and $10.8 million, or $0.26 per share, respectively, for the corresponding prior year periods. "We continued to realize substantial growth in product sales during the quarter. However, our realized rate of growth in gross profit on product sales was less than the actual rate achieved for product sales. This is due to the negative impact of manufacturing inefficiencies and inventory exposure on production of our anthrax test cartridges, which occurred during the quarter. During the course of an extensive process review, we believe we have identified the underlying root cause of our current and previous quarter inefficiencies. A solution for this problem has been identified and implemented. Further, we have implemented additional process controls to rapidly identify any quality variants early in each production run. As a result, we expect to see an improvement of approximately three to four percentage points in future gross profit margins on product sales, which we expect to begin to realize in the fourth quarter," stated John Bishop, Cepheid's CEO. Mr. Bishop continued, "Sales in our clinical market segment were particularly strong in the third quarter followed by sales in the biothreat segment. ASR products for Flu A/B, mecA, M. pneumoniae and RSV were released to the market during the quarter. This brings our available ASR product menu to twelve products. We currently have clinical trials underway for Group B Strep (GBS) on both our SmartCycler(R) and GeneXpert(R) systems and Enterovirus (EV) on the GeneXpert(R) system. Subsequent to the close of the quarter, we announced the release of the GeneXpert system in the clinical molecular research market along with a BCR/ABL (RUO) product. These products will be available for shipment on November 15, 2005." "Recently, there has been increased discussion and concern surrounding Avian Influenza (AI). Cepheid previously discussed that we have been working with the USDA, through our CSR program, in producing an AI specific test for use in testing poultry and migratory water fowl. Further evaluation of our recently released ASR product for Flu A/B has found that this product will detect virus strains associated with AI and as such may be of help in tracking AI with regard to potential human infection." "Sales in the biothreat market segment also continued to grow during the third quarter with continued deployment of Biohazard Detection Systems (BDS) within the United States Postal Service (USPS) processing centers and further utilization of the GeneXpert system by the Department of State (DOS). Nearly 1.5 million anthrax tests have been run within the USPS and DOS with no false positives. Currently, over 1000 GeneXpert(R) based systems have been deployed for routine use. We continue to expect BDS deployment within the USPS processing centers to be completed by the end of the year." "In the Industrial market, Public Health Laboratory Issues in Brief; April 2005 reported that our SmartCycler(R) system is the leading real time PCR testing platform used in public health. Separately, as previously reported, a third party evaluation of products for environmental water testing found a strong performance by Cepheid's products utilizing our recently acquired scorpions technology." 2005 OUTLOOK Commenting on Cepheid's outlook for the remainder of 2005, Mr. Bishop stated: "We expect to continue to make progress in the development and marketing of our clinical products. As previously stated, the GeneXpert(R) system and BCR/ABL (RUO) product will be available for shipment to potential clinical molecular research customers on November 15, 2005. Clinical trials for GBS are expected to be completed during the fourth quarter followed by a 510k FDA submission by the end of the year or just after the first of the year 2006. Clinical trials are also currently underway for our EV product. We expect Clinical trials for both GBS and EV to be completed during the fourth quarter. We currently expect our GBS, EV and BCR/ABL products to be CE marked and released in Europe during the first quarter of 2006. These are expected to be followed by release in the US market in the second quarter pending FDA clearance. Development of our MRSA test is continuing with a key objective focused on providing the clinician with the ability to specifically identify methicillin sensitive and resistant strains of Staphylococcus aureus (SA), and to avoid detection of staphylococcus strains that could lead to a false positive clinical result." "We received a purchase order from Northrop Grumman for 2.3 million anthrax cartridges during the third quarter. Deliveries against this new purchase order began in August and will run through September of 2006. Development of our new 3 agent cartridge including anthrax, Y. pestis and F. tularensis is continuing and the product is expected to be available for market launch in the first quarter 2006. We expect the USPS to evaluate the product during the second and third quarters with potential routine use beginning in the fourth quarter of 2006. Separately, discussions are currently underway regarding the potential use of the GeneXpert(R) system with open cartridges for use by international groups interested in using their own probe and primer designs." "We reaffirm that we expect our 2005 product sales to be in the range of $80.0 million to $84.0 million, based on anticipated sales for the USPS program and sales expected from other existing and new products. As previously stated, we expect our 2005 net loss to be in the range of $12.0 million to $14.0 million or $0.28 to $0.33 per share based on actual weighted average shares outstanding of 42.6 million as of September 30, 2005." As of September 30, 2005, the Company had $40.2 million in unrestricted cash and marketable securities. 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 800-219-6110 (domestic) or 303-205-0044 (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 November 3, 2006. A replay of the conference call will be available at 800-405-2236 (domestic) or 303-590-3000 (international) through November 10, 2005; the conference ID is 11043556. The replay will be available after 6:30 pm (Eastern). ABOUT CEPHEID Cepheid (Nasdaq: CPHD), based in Sunnyvale, Calif., is a leading developer, manufacturer and marketer of fully integrated systems that enable genetic assessment when and where it is needed. Founded in 1996, the company is commercializing its technology and products worldwide for research, medical, and industrial applications requiring assessment of the human genome, infectious disease and biothreat agents. 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 clinical trials, future product releases, product performance, future revenues, future margins, future net losses and the status of the USPS BDS program. 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: the scope and timing of actual USPS funding and deployment of the BDS; the occurrence of delays with respect to the BDS, the rate of environmental testing using the BDS conducted by the USPS, which will affect the amount of consumable products sold, and whether the BDS performs to specifications; unforeseen development and manufacturing problems, including with respect to the GeneXpert(R) system, cartridges, and reagents; the effectiveness of our recently-implemented process controls; the need for additional licenses for new tests and other products and the terms of such licenses; our ability to complete clinical trials successfully in a timely manner for products to be marketed in clinical markets; our ability to successfully commercialize our stand-alone GeneXpert(R) system; lengthy sales cycles in certain markets; the performance and market acceptance of new products; sufficient customer demand in the other markets; our reliance on distributors to market, sell and support our products; the occurrence of unforeseen expenditures, acquisitions or other transactions; our success in increasing direct sales; 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 2004 and in its most recent quarterly report on Form 10-Q, each 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 STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ------------------------ 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Revenues: Instrument sales $ 8,300 $ 8,064 $ 21,921 $ 20,648 Reagent and disposable sales 10,938 5,385 36,272 9,918 ---------- ---------- ---------- ---------- Total Product Sales 19,238 13,449 58,193 30,566 Contract revenues 822 624 2,212 2,044 Grant and government sponsored research revenues 352 4 957 13 ---------- ---------- ---------- ---------- Total revenues 20,412 14,077 61,362 32,623 ---------- ---------- ---------- ---------- Costs and operating expenses: Cost of product sales 11,601 7,494 33,617 16,625 Collaboration profit sharing 2,904 1,474 10,112 2,506 Research and development 4,754 4,037 13,797 11,531 Selling, general and administrative 4,518 3,984 14,110 11,485 Expense for patent related matter - - - 1,264 ---------- ---------- ---------- ---------- Total costs and operating expenses 23,777 16,989 71,636 43,411 ---------- ---------- ---------- ---------- Loss from operations (3,365) (2,912) (10,274) (10,788) Other income (expenses), net 103 (3) (80) 15 ---------- ---------- ---------- ---------- Net loss $ (3,262) $ (2,915) $ (10,354) $ (10,773) ========== ========== ========== ========== Basic and diluted net loss per share $ (0.08) $ (0.07) $ (0.24) $ (0.26) ========== ========== ========== ========== Shares used in computing basic and diluted net loss per share 42,581 41,889 42,430 40,775 ========== ========== ========== ==========
CEPHEID CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
September 30, December 31, 2005 2004 -------------- -------------- (unaudited) (1) ASSETS Current assets: Cash and cash equivalents $ 10,052 $ 23,189 Marketable securities 30,196 34,250 Accounts receivable 16,693 14,584 Inventory 8,364 6,544 Prepaid expenses and other current assets 1,037 402 -------------- -------------- Total current assets 66,342 78,969 Property and equipment, net 12,573 9,756 Restricted cash 661 688 Intangible assets, net 29,605 30,902 -------------- -------------- Total assets $ 109,181 $ 120,315 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 13,831 $ 8,074 Accrued compensation 2,199 2,836 Accrued royalties 2,619 2,113 Accrued other liabilities 5,660 4,517 Current portion of deferred revenue 3,024 3,847 Current portion of license fee payable 9,477 10,476 Current portion of equipment financing 2,420 1,889 -------------- -------------- Total current liabilities 39,230 33,752 Long term portion of deferred revenue 4,762 6,190 Long term portion of license fees payable - 8,561 Long term portion of equipment financing 2,478 1,604 Line of credit 4,000 4,000 Deferred rent 708 599 Commitments Shareholders' equity: Preferred stock - - Common stock 154,721 152,136 Additional paid-in capital 7,518 7,517 Accumulated other comprehensive gain/(loss) 25 (137) Accumulated deficit (104,261) (93,907) -------------- -------------- Total shareholders' equity 58,003 65,609 -------------- -------------- Total liabilities and shareholders' equity $ 109,181 $ 120,315 ============== ==============
(1) The balance sheet at December 31, 2004 has been derived from the Company's audited financial Statements, which are included in the Company's 2004 Annual Report on Form 10-K filed with the Securities and Exchange Commission. -----END PRIVACY-ENHANCED MESSAGE-----