Yikes, sizeable revenue miss in what is supposed to be their seasonally strongest quarter, and '05 guidance a bit below analyst projections, too. They are going to some lengths to whitewash this with detailed reporting of progress on the diagnostic front. They need a partner soon for their ovarian test or they'll be out of cash in a year. They are going to have to structure for some upfront cash in lieu of high royalties on any such deal (including Alzheimer's) until they get cash flow positive.
>>FREMONT, Calif., Feb. 17 /PRNewswire-FirstCall/ -- Ciphergen Biosystems, Inc. (Nasdaq: CIPH - News) today announced financial results for the fourth quarter and full year ended December 31, 2004. Because of the sale of Ciphergen's BioSepra chromatography business to Pall Corporation on November 30, 2004, the financial results discussed herein reflect the BioSepra business as a discontinued operation. For the quarter ended December 31, 2004, total revenue decreased 13% to $10.1 million, as compared to $11.6 million in the fourth quarter of 2003; but total revenue increased 19% sequentially as compared to the third quarter of 2004. The net loss from continuing operations was $7.6 million in the fourth quarter of 2004 as compared to $7.4 million in the fourth quarter of 2003 and $9.6 million in the third quarter of 2004. During the fourth quarter of 2004, Ciphergen recorded net income from discontinued operations of $17.9 million, of which $18.5 million represented a gain from the sale of BioSepra. Because of this gain, Ciphergen's net income for the fourth quarter of 2004 was $10.3 million as compared to a net loss of $6.7 million for the comparable quarter of 2003.
For the fiscal year 2004, total revenue decreased 8% to $40.2 million, as compared to $43.6 million in 2003. The net loss from continuing operations for 2004 was $36.9 million as compared to $38.9 million in 2003; 2003 results included a non-recurring expense of $7.3 million related to a litigation settlement. Ciphergen's net loss for 2004 was $19.8 million as compared to a net loss of $36.7 million in 2003; 2004 results included net income from discontinued operations of $17.1 million.
At December 31, 2004, the Company's cash and investments were $37.6 million. Total long term debt totaled $28.5 million, of which $28.1 million was convertible debt.
Financial Outlook for 2005
The Company provides the following financial guidance for 2005:
* Revenue. Ciphergen expects total 2005 revenue of approximately $44-
48 million. The Company expects that revenues for the first quarter
of 2005 will be approximately $8-9 million, with increasing
quarterly revenue thereafter in 2005.
* Gross Margin. The Company expects that its gross margin will be in
the 65-68% range during 2005.
* Net Loss. Ciphergen expects that its net loss in 2005 will be
approximately $21-25 million. The Company's net loss per quarter is
expected to decline over the year, driven by the anticipated growth
in revenue and steps taken to reduce operating expenses in the
Biosystems Division, partially offset by increased investment in the
Diagnostics Division.
"We believe that our new product introductions and the results that prestigious laboratories are achieving through use of ProteinChip(R) technology is creating growing acceptance by the market and we anticipate renewed revenue growth to result in 2005," commented William E. Rich, President and CEO of Ciphergen. "We are also looking forward to achieving major milestones in our Diagnostics Division during the year, including commercialization partnerships as well as the potential launch of our first clinical diagnostic test."
Recent Highlights
* Strategic Sale of BioSepra Chromatography Business and Collaboration
with Pall. On November 30, 2004, Ciphergen completed the sale of
the BioSepra chromatography business to Pall Corporation for
approximately $32 million and also entered into a collaboration with
Pall for process proteomics, based on the combination of Ciphergen's
ProteinChip technology and BioSepra's leading chromatography
products. Ciphergen also retains certain rights to access
BioSepra's chromatography sorbent technology for manufacture, use
and sale in the research and diagnostic markets.
* Biosystems Progress.
* New Product Introductions. In the third quarter of 2004,
Ciphergen launched the ProteinChip System, Series 4000 and
Pattern Track(TM) Process which provides the biomarker
proteomics market with the only complete system solution to
rapidly translate biomarker discovery to high value assays at
the benchtop. At the PepTalk meeting in December, Ciphergen
presented promising results using our Deep Proteome(TM) sample
preparation family of products including Equalizer Beads(TM);
these products potentially provide a breakthrough in detection
of low abundant proteins, a major problem today in proteomics.
We anticipate commencing customer shipments of our Deep
Proteome products during 2005.
* Pharma Biomarker Proteomics. The ProteinChip system is
currently being evaluated by the majority of major
pharmaceutical companies to identify biomarkers of drug safety
and efficacy to monitor drug treatment and reduce late-stage
attrition of compounds. Advances in the analysis and
identification of low abundance proteins through the
implementation of Deep Proteome products should further enable
the elucidation of biological pathways perturbed by drug
treatment and even reveal new drug targets. As a separate
pharma initiative, discussions are currently underway with
multiple pharmaceutical companies to partner in the field of
Alzheimer's Disease based on promising discovery work conducted
by our Biomarker Discovery Center(R) scientists and
collaborators.
* Clinical Proteomics Research. There is a growing list of
customers using ProteinChip Systems for disease biomarker
discovery and assay development applications with over 600
systems now sold worldwide, many with multiple users or
applications per system. For example, Alzheimers (>100 users
or applications), prostate cancer (>100), ovarian cancer
(>130), breast cancer (>130), colon cancer (>40), other cancers
(>85), cardiovascular diseases (>100), HIV/AIDS (>135),
infectious diseases (>95), diabetes (>55), kidney disease (>45)
and arthritis (>15).
* Publication Progress. This broad use of ProteinChip technology
led to 122 scientific papers in 2004; this represents a 60%
increase in publications over the number of publications in
2003 and brings our total publications list to over 350.
Ciphergen scientists and/or our customers presented 48 papers
or posters at the 2004 American Association for Cancer Research
meeting, among other major disease-based conferences. This
growing list of successes continues to feed our systems growth
and potential diagnostics pipeline and validates our Pattern
Track process and ProteinChip technology.
* Diagnostics Progress. During 2004, Ciphergen continued its
pioneering efforts in translating the discovery and validation of
biomarkers into both research use and commercial clinical diagnostic
and theranostic assays. The Company believes that continued progress
in this area will further validate its competitive advantage as well
as produce new diagnostic business opportunities.
* Ovarian Cancer Program. Ciphergen's Biomarker Discovery Center
scientists and investigators from several leading institutions
published in Cancer Research in August 2004 the use of
Ciphergen's ProteinChip System to discover three protein
biomarkers that, when combined, form the basis of a potential
clinical assay designed to detect stage I/II ovarian cancer.
This study examined 503 patients and employed a multi-
institutional study design, with both cross-validation and
independent validation of the individual biomarkers as well as
of the multi-marker pattern. The pattern of three biomarkers
was able to diagnose early stage (I/II) ovarian cancer with 74%
sensitivity at 97% specificity.
In addition, Ciphergen and European collaborators presented at
the International Gynecologic Cancer Society in Edinburgh
results from a study suggesting that two of these ovarian
cancer markers may be useful for multiple clinical applications
in addition to initial diagnosis, such as monitoring response
to therapy and for recurrence.
Finally, Ciphergen and the M.D. Anderson Cancer Center recently
entered into a collaboration agreement involving analysis of
clinical samples provided by M. D. Anderson for ovarian cancer
using Ciphergen's Deep Proteome and Pattern Track suite of
proteomics tools. This work will address multiple clinical
questions, including validation of markers described in the
Cancer Research article, discovery of markers that distinguish
ovarian cancer from other gynecologic masses and prediction of
treatment response. Ciphergen has exclusive rights to license
discoveries made during the course of this collaboration.
* Milestones Demonstrating Utility of ProteinChip System as a
Potential Diagnostic Platform.
* In January 2005, the NCI's Early Detection Research
Network published a paper in Clinical Chemistry
demonstrating excellent reproducibility of SELDI-TOF-MS in
a multi-site NCI sponsored clinical study, a pre-requisite
validation for a clinical diagnostic assay platform.
* The NCI's Clinical Proteomics Research Laboratory
presented results of a study of ovarian cancer sera with
total inter-day precision from 6-12%, based on the use of
the ProteinChip System, PBS IIc at the 2005 annual meeting
of the Association for Laboratory Automation (ALA). An
independent study presented at the ALA meeting by
Ciphergen scientists demonstrated precision of
approximately 10% using the ProteinChip System, Series
4000.
* Expanding Pipeline of Potential Diagnostic Assays. Ciphergen's
Biomarker Discovery Centers and research scientists, in
collaboration with leading translational researchers worldwide,
continue to use Ciphergen's Pattern Track Process to discover
disease-associated protein biomarkers that form the basis of
potential multimarker assays designed to address a variety of
clinical questions in cancer, cardiovascular, neurological and
infectious diseases.
* Scientists at the Children's Hospital Boston, working in
collaboration with scientists from Ciphergen, presented
results at the American Society for Hematology 46th Annual
Meeting in December suggesting proteomic analysis of
circulating platelets can potentially be useful for early
cancer diagnosis.
* The Johns Hopkins University School of Medicine and
Ciphergen renewed their agreement to discover and validate
biomarkers for the detection of early stage breast,
ovarian, pancreatic and prostate cancer. The collaboration
has resulted in publications in journals such as Cancer
Research, Clinical Cancer Research, and Clinical
Chemistry.
* M.D. Anderson and Ciphergen are collaborating to discover
and characterize markers that can predict a lung cancer
patient's response to platinum therapy. Only a subset of
lung cancer patients responds to platinum therapy, which
is extremely costly and has negative side-effects.
* Investigators at INSERM are collaborating with Ciphergen
to identify biomarkers derived from inflammatory cells
that can predict outcome in patients with colon cancer.
The inflammatory reaction is an important component of the
host response protein amplification cascade that may
provide targets for cancer detection, monitoring and
therapeutics.
* Ciphergen and a separate group of investigators at INSERM
are collaborating to identify biomarkers that are
protective against hypertension, a major cause of
morbidity and mortality including myocardial infarction,
stroke and renal disease.
* The Institute Paoli-Calmettes and Ciphergen are working
together to identify proteins that can predict response to
anthracycline or Herceptin(R) therapy. Better prediction
of response would permit more tailored therapeutic
decisions.
* Ciphergen is a participant in the ADDNET consortium in
Scandinavia, dedicated to discover, characterize and
validate urinary biomarkers for renal impairment in
patients with diabetes. Ciphergen technology and expertise
in biomarker discovery and assay are key components in
this effort to develop novel diagnostic tests for the
early detection of renal failure due to diabetes.
* Researchers at Stanford are collaborating with Ciphergen
to discover novel biomarkers that can be used to diagnose
peripheral artery disease, a major complication of
diabetes. Preliminary results were presented at the
Society for Vascular Medicine and Biology meeting and will
be presented in the Young Investigator Award competition
at the American College of Cardiology meeting in March
2005.
* Ciphergen and a multi-institutional roster of
investigators have identified a set of biomarkers that
appear to be changed in the early stages of Alzheimer's
disease. Many of these markers appear to have a
pathophysiological basis, suggesting that they may be
useful in identifying drug targets or monitoring for drug
efficacy. These results were presented in a plenary
lecture by Dr. Kaj Blennow (Gothenburg University, Sweden)
at the 9th International Congress for Alzheimer's disease
in July 2004.
* McGill University and Ciphergen are collaborating to
discover, validate and identify blood biomarkers for
parasitic diseases, including Chagas disease,
toxoplasmosis and malaria. Early detection of these
diseases may reduce morbidity associated with long-term
infection.
* Patents. We filed an additional 27 patent applications during 2004,
the most new filings of any year in our history. These applications
relate to our products and technologies, and to biomarker
discoveries. Our patent portfolio now consists of 23 issued U.S.
patents and 102 pending U.S. patent application families. In
January 2005, we were granted U.S. patent 6,844,165, directed to the
detection of multiple diagnostic markers by SELDI-TOF-MS for the
diagnosis of disease; this patent complements several existing
issued U.S. patents covering biomarker proteomics.<<
snip
Glad to be out. Suspect all time lows are on the way. Might finally be approaching a good time for bottom fishing with a small gambling position. However, I had based my previous nibble call (in the middle high $3s, ouch) on the theory that sales traction would eventually kick in. That was six months ago, and no such sign yet. Rich's last sale caused me to exit my position with a small profit; I believe I noted that here.
JNCI has some reproducibility commentary regarding the Correlogic work that is not favorable, either. It's old news, though. Correlogic's ovarian test (based on a different, proprietary pattern than the one now being dissed that appeared in Lancet 3 years ago) has been dead in the water for almost a year now, and Ciphegen has an increasing lead here.
Still not much cheer here, Tuck |
