Ciphergen Biosystems(CIPH): Message Board

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Biotech / Medical : Ciphergen Biosystems(CIPH):

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To: mact who started this subject	8/20/2004 1:11:45 AM
From: mopgcw	of 510

Piper Ciphergen (CIPH - $2.71) Underperform Volatility: Medium Price Tgt -- $4.00 Price: $2.71 52 Week High: $13.97 52 Week Low: $2.61 Shares Out (mil): 29.2 Market Cap. (mil): $79.1 Avg Daily Vol (000): 235 Book Value/Share: $0.96 Cash Per Share: $1.02 Debt to Total Capital: 38% Publishes Promising Results of Biomarkers for Detection of Ovarian Cancer KEY POINTS: * This morning, Ciphergen announced data of its OvaSure product in the journal Cancer Research. The article describes the discovery of a multi-marker pattern assay to detect early stage ovarian cancer. * The study, performed in collaboration with the Johns Hopkins School of Medicine, identified three protein biomarkers that detected stage I/II ovarian cancer with 74% sensitivity at a specificity of 97%. This compares to a sensitivity of approximately 30-50% for the currently approved marker for monitoring the post-treatment reoccurrence of ovarian cancer. * In the study, Ciphergen's SELDI-based ProteinChip system was used to examine 503 women to determine protein expression profiles from women with ovarian cancer, benign pelvic disease or healthy individuals. Each of the identified proteins, which are cleaved products of the precursor proteins ITIH4 (truncated form of transthyretin) and apolipoprotein A1, have gone through both cross validation and independent validation studies. * Ciphergen's OvaSure product addresses the unmet clinical need of early diagnosis of ovarian cancer. The company has licensed the test from Johns Hopkins and is currently undergoing validation in a 1500 sample trial for the commercialization of the product. We expect a partnership with a lab to commercialize the test as an ASR late this year or in early 2005. * Johns Hopkins is also collaborating with Ciphergen in prostate, breast and pancreatic cancer providing a pipeline of tests expected to come to market over the next few years. INVESTMENT RECOMMENDATION: We are maintaining our Underperform rating on Ciphergen with a $4 price target. We arrive at this target by applying a 2x revenue multiple to our $56.5 million revenue forecast. This revenue multiple is at the low end of the historical range of 2-4x and reflects a slower growth outlook. This price target does not include the potential impact of a diagnostic collaboration. RISKS TO ACHIEVEMENT OF TARGET PRICE: Among the risks associated with Ciphergen are product adoption delays that could result in slower-than-forecast revenue growth. Ciphergen may not improve margins or control expenses, thereby missing projected breakeven of 2Q:05. Proteomics is a competitive arena with the potential for new technologies and litigation. COMPANY DESCRIPTION: Ciphergen Biosystems Inc. is a leading proteomics company that commercialized the ProteinChip system. The Company has established a large research franchise and is now advancing its protein research into biomarker discovery for molecular diagnostic applications. Ciphergen acquired BioSepra in 2001 and now sells biosorbents for protein purification and manufacturing.

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