The stock is holding up surprisingly well in light of the weak systems and chip sales. We've gotten a little visibility in the diagnostics area. They'll use panels developed at Hopkins or Virginia, so that they have the marketing rights. Ovarian seems to be the lead indication, with pancreatic and prostate contenders for the next, I'd guess.
>>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, 2003. For the quarter ended December 31, 2003, total revenue increased 12% to $15.2 million, up from $13.6 million in the fourth quarter of 2002. The net loss for the fourth quarter of 2003 was $6.7 million or $0.23 per share as compared to a net loss of $6.7 million or $0.25 per share in the comparable quarter of 2002.
For the fiscal year 2003, total revenue increased 49% to $58.4 million, up from $39.3 million in 2002. Due to the litigation settlement achieved in the second quarter, Ciphergen recorded $7.3 million in the second quarter as a non-recurring expense which was recorded in cost of revenue. The net loss for 2003 was $36.7 million or $1.31 per share as compared to a net loss of $29.1 million or $1.08 per share in 2002.
At December 31, 2003, the Company's cash and investments were $47.3 million. Total long term debt totaled $30.9 million, of which $27.5 million is convertible debt.
"We made tremendous strides in our business in 2003, including significant new product introductions and scientific papers contributing to substantial revenue growth. In addition, we have recently established a Diagnostics Division to leverage our biomarker discovery efforts and continued growth in our intellectual property estate," commented William E. Rich, President and CEO of Ciphergen. "Although ProteinChip® System sales in the U.S. for the fourth quarter did not meet our initial expectations, we're looking forward to 2004 with confidence based on expansion of our biomarker marketing and sales programs, further new product introductions and potential strategic collaborations, and the impact of the Diagnostics Division."
Financial Outlook for 2004
The Company provides the following financial guidance for 2004:
-- Revenue. Ciphergen expects revenue growth of approximately 30-40% in
2004, for total forecasted 2003 revenue of approximately $76-82
million. Based on seasonality and other factors, we would expect
approximately 20% of annual revenue to be in the first quarter,
approximately 23% in the second quarter, approximately 26% in the third
quarter and approximately 31% in the fourth quarter.
-- Gross Margin. We expect our gross margin to be in the 67-70% range
during 2004.
-- Net Loss. Ciphergen anticipates a net loss in 2004 of approximately
$16-19 million. The Company's net loss per quarter is expected to
decline over the year, driven by the anticipated growth in revenue.
Summary Highlights for 2003 and 2004 Year to Date:
-- Results-Driven Marketing. Ciphergen's increase in sales in 2003
reflects increasing awareness of the power of ProteinChip technology by
the scientific community, driven by our customers' scientific
successes. The use of ProteinChip technology was cited in
70 scientific papers in 2003, bringing our total publications list to
over 225. Ciphergen scientists teamed up with our customers to present
48 papers or posters at the American Association for Cancer Research
meeting (compared to 25 citations in 2002). In addition, 26 papers
were presented at the American Society for Mass Spectrometry (ASMS)
annual meeting. Ciphergen's ProteinChip System was awarded the
Proteomics Technology of the Year Award by Frost & Sullivan, a leading
international market research and consulting firm.
-- New Product Introductions. Ciphergen has invested heavily in research
and development over the past three years in two broad categories
-- improved products and projects run at our Biomarker Discovery
Center(R) facilities.
During 2003, Ciphergen launched the first of a new generation of
ProteinChip Array surfaces. These novel, patented SEND (Surface
Enhanced Neat Desorption) surfaces do not require addition of "organic
acid matrix" to function and provide significant improvements in the
detection of small organic molecules (drug candidates) and peptides.
These SEND surfaces represent one of 16 new or improved ProteinChip
arrays or kits introduced in 2003.
The Company also launched its Interaction Discovery Mapping(TM)
platform, which enables rapid protein interaction studies and
complements our proven Expression Difference Mapping(TM) capability for
biomarker discovery while providing significant improvements in
functional proteomics applications.
Finally, Ciphergen introduced several new software tools
(CiphergenExpress(TM) Data Manager 2.0 including Biomarker Analysis and
Biomarker Patterns Modules) which, in combination with the Ciphergen
AutoLoader and customized Biomek(R) 2000 robotic workstation, provides
customers with a fully automated system for protein biomarker
discovery, validation and assay on a single platform.
We anticipate announcing further product introductions during the
course of 2004 to enhance our offerings to researchers and clinicians.
-- Asian Sales Growth. Ciphergen experienced a solid year of growth in
system placements and revenue in the Asian market. We achieved
break-even for the year in Japan. China also grew rapidly for us and
we have appointed GE Medical Systems Trade and Development Co., Ltd. as
our exclusive post-sale services partner for ProteinChip Systems to
hospitals in China, Hong Kong and Taiwan.
-- Solid Progress in Process Proteomics. Our BioSepra business unit's
sorbents and process proteomics services continued to grow solidly in
2003. BioSepra's newer sorbents, such as MEP HYPERCEL(TM), are
incorporated in a large number of antibody production processes at
varying stages of development. We also opened a process proteomics
center in the U.S. to complement our European center.
-- Formation of Diagnostics Division. During 2003 Ciphergen continued its
pioneering efforts in the discovery and validation of biomarkers, both
on our own and in collaboration with strategic partners. To further
extend our progress in this area, we recently formed a Diagnostics
Division, which we believe will enhance our ability to convert our many
exciting biomarker discovery programs into commercially viable
diagnostic tests.
-- Executive Hired to Lead Diagnostics Division. Gail Page has
joined Ciphergen as President of the Diagnostics Division and
as an Executive Vice President of Ciphergen Biosystems, Inc.
Gail has a 25 year career in the diagnostics industry, covering
all critical functions ranging from senior management to
sales/marketing and business development, technology assessment
and acquisitions, as well as operations.
-- Ovarian Cancer Program. During 2003, Ciphergen and its
collaborators at Johns Hopkins University School of Medicine
completed a multi-site study employing over 500 patient serum
samples, in which the team identified a multi-marker panel that
may have utility in the detection of ovarian cancer,
particularly focusing on early stage cancer where the impact of
detection dramatically alters patient survivability. This
study also led to the discovery of several interacting proteins
that may provide additional diagnostic information, allowing us
to pursue new avenues for assay improvement, and further
understanding of the biological pathways in ovarian cancer. We
have now commenced a validation study using over 1,000 samples
obtained from multiple sites around the world.
-- Expanding Pipeline of Biomarker Discovery Projects.
Ciphergen's Biomarker Discovery Centers, in collaboration with
notable institutions such as Johns Hopkins and Virginia
Prostate Center, continue to discover disease-associated
protein biomarkers and develop multi-protein assays designed to
address a variety of clinical questions in cancer,
cardiovascular, neurological and infectious diseases. For
example, our Johns Hopkins collaborators published a study on
February 6, 2004 in the Journal of Clinical Cancer in which the
ProteinChip technology was used to discover biomarkers that may
have potential diagnostic utility with respect to pancreatic
cancer. As a result of these studies, we are aggressively
filing patents around these biomarkers, patterns of biomarkers
and associated assays that we feel may have diagnostic utility.
-- Diagnostic Collaborations. During 2003, Ciphergen announced
collaborations with Biosite and Toronto Medical Labs around
clearly defined fields of use or territories.
-- Increasing Collaborations with Major Pharmaceutical Companies.
Ciphergen has master agreements in place with Pfizer and
Novartis covering a variety of biomarker discovery projects.
The Company has expanded the scope of work at multiple
pharmaceutical companies from initial studies primarily focused
on finding surrogate toxicology markers into clinical trial
stratification studies (separating responders from
non-responders or those likely to experience adverse drug
side-effects). Ciphergen believes that these clinical trial
stratification studies have demonstrated important
proof-of-principle of the Company's technology to enable
protein-based theranostics and the added value of our Biomarker
Discovery Centers.
-- Patents. We filed an additional 26 patent applications during 2003,
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 35 issued U.S. patents and
97 pending U.S. patent applications. Important recent patent issuances
include a European patent on our core SELDI technology and a U.S.
patent covering a pattern recognition algorithm ('classification and
regression tree analysis" or CART) method of identifying diagnostic
patterns of proteins derived from mass spectrometry data.
About Ciphergen
Ciphergen's Biosystems Division develops, manufactures and markets a family of ProteinChip® Systems and services for clinical, research, and process proteomics applications, as well as a broad range of bioseparations media for protein purification and large scale production. ProteinChip Systems enable protein discovery, characterization, identification and assay development to provide researchers with predictive, multi-marker assay capabilities and a better understanding of biological function at the protein level. Ciphergen's Diagnostics Division is dedicated to the discovery of protein biomarkers and panels of biomarkers and their development into protein molecular diagnostic tests that improve patient care; and to providing collaborative R&D services through its Biomarker Discovery Centers® for biomarker discovery for new diagnostic tests as well as pharmacoproteomic services for improved drug toxicology, efficacy and theranostic assays. Additional information about Ciphergen can be found at www.ciphergen.com.
Safe Harbor Statement
Note Regarding Forward-Looking Statements: For purposes of the Private Securities Litigation Reform Act of 1995 (the "Act"), Ciphergen disclaims any intent or obligation to update these forward-looking statements, and claims the protection of the Safe Harbor for forward-looking statements contained in the Act. Examples of such forward-looking statements include statements regarding anticipated revenue growth, gross margin and net loss for 2004, new product introductions in 2004, anticipated results of collaborations, the potential for our ProteinChip technology to yield useful protein biomarkers, our ability to develop and commercialize protein molecular diagnostics that improve patient care, the business to be conducted by our new Diagnostics Division and its ability to provide services that lead to improved toxicology assays and diagnostic assays. Actual results may differ materially from those projected in such forward-looking statements due to various factors, including the risk that the Company is unable to generate significant growth in unit sales while maintaining pricing, managing our manufacturing costs and operating expenses consistent with our plans, the ProteinChip technology is unable to discover, validate and/or develop protein biomarkers as diagnostic or toxicology assays, Ciphergen's ability to successfully commercialize any such tests, and our ability to protect and promote our proprietary technologies. Investors should consult Ciphergen's filings with the Securities and Exchange Commission, including its Form 10-Q dated November 14, 2003, for further information regarding these and the other risks of the Company's business.
NOTE: Ciphergen, ProteinChip and Biomarker Discovery Center are registered trademarks of Ciphergen Biosystems, Inc.
Ciphergen Biosystems, Inc.
Summary Financial Information
(Unaudited)
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2002 2003 2002 2003
Revenue $13,592 $15,195 $39,300 $58,372
Cost of revenue (A) 3,876 5,311 12,758 27,845
Gross profit 9,716 9,884 26,542 30,527
Operating expenses:
Research and development 6,062 6,128 20,754 24,920
Sales and marketing 5,679 6,910 20,321 24,827
General and administrative 4,731 3,545 15,008 15,831
Amortization of
intangible assets 208 208 829 829
Total operating expenses 16,680 16,791 56,912 66,407
Loss from operations (6,964) (6,907) (30,370) (35,880)
Interest and other income, net 201 376 1,391 508
Loss (income) attributable
to minority interest 58 -- (32) 32
Loss before income taxes (6,705) (6,531) (29,011) (35,340)
Income tax provision -- 178 61 1,407
Net loss $(6,705) $(6,709) $(29,072) $(36,747)
Net loss per share,
basic and diluted $(0.25) $(0.23) $(1.08) $(1.31)
Shares used in computing
net loss per share 27,143 28,918 26,965 28,154
Dec. 31, Dec. 31,
2002 2003
Cash, cash equivalents and investments
in securities $42,541 $47,316
Total assets 87,615 102,026
Long term debt, net of current portion 2,313 30,879
Stockholders' equity 68,354 47,892
(A) In the year ended December 31, 2003, cost of revenue included a
non-recurring $7,257 expense related to our litigation settlement
achieved in the second quarter of 2003.<<
Cheers, Tuck |
