Executive Management Changes Announced FREMONT, Calif., Dec. 21
/PRNewswire-FirstCall/ -- Ciphergen Biosystems, Inc. (NASDAQ:CIPHE)
today announced that it has filed its amended Second Quarter 2005
Form 10-Q and its Third Quarter 2005 Form 10-Q, and that the
Company has announced executive management changes. For the second
quarter of 2005, Ciphergen has restated its financial statements to
reflect $6.9 million in revenue as compared to the previously
reported $7.5 million, due to the improper recognition of $552,000
for the quarter ended June 30, 2005. The removal of this revenue
from previously reported results causes the Company's reported net
loss for the second quarter of 2005 to increase by $354,000 to $9.4
million. For the third quarter of 2005, Ciphergen's total revenue
was $7.1 million as compared to $8.5 million in the third quarter
of 2004. Ciphergen's net loss was $7.5 million in the third quarter
of 2005 as compared to $9.5 million in the third quarter of 2004.
As of September 30, 2005, the Company's cash and investments were
$31.1 million. Long term debt totaled $29.7 million, of which $28.5
million was convertible debt. Executive Management Changes
Ciphergen is also announcing the retirement of William E. Rich as
Chief Executive Officer and as a Board Member, effective December
31, 2005. Gail S. Page is being promoted from President and Chief
Operating Officer to President and Chief Executive Officer, and has
been elected a member of the Board of Directors. In addition, James
L. Rathmann has been appointed Executive Chairman of the Company
and John Young will act as Lead Outside Director. "We've made
significant progress in the second half of the year including the
signing of a strategic alliance agreement with Quest Diagnostics
and further development of our pipeline of potential diagnostic
tests," stated Gail S. Page, President and Chief Operating Officer.
"The restatement was a distracting event for the Company, but we
have been making appropriate changes to our internal controls and
we are now focused on moving forward with the business." "I'd like
to recognize the significant contributions that Bill Rich made to
Ciphergen over the last ten years. Bill and his team were
successful in taking a powerful technology from its academic roots
and driving it into a commercially important technology that has
generated over 400 scientific publications and concurrently
generated the content for a rich pipeline of potential diagnostic
tests," stated John A. Young, Lead Outside Director. Other Recent
Highlights * Quest Diagnostics Alliance. During the third quarter,
Ciphergen signed a strategic alliance with Quest Diagnostics to
develop and commercialize novel proteomic diagnostic tests based on
Ciphergen's proprietary SELDI ProteinChip(R) technology. Quest
Diagnostics is the leading provider of diagnostic testing,
information and services in the U.S. The strategic alliance will
focus on the commercialization of selected assays chosen from
Ciphergen's pipeline over the next three years. In addition, for an
aggregate purchase price of $15 million, Quest Diagnostics has
purchased 6.225 million shares of Ciphergen common stock, or
approximately 17% of shares outstanding, and a five-year warrant to
purchase an additional 2.2 million shares for $3.50 per share.
Quest Diagnostics has also agreed to loan Ciphergen up to $10
million to fund certain development activities. The loan would be
forgiven based on achieving certain milestones. Ovarian Cancer
Diagnostic Progress. During August and September, Ciphergen
performed a large, multi-institutional study encompassing over
1,000 patient samples. This study was aimed at validating
biomarkers described in the August 2004 Cancer Research paper, at
identifying biomarkers that could distinguish between benign and
malignant pelvic mass, and at identifying biomarkers that could
predict patient outcome. To accomplish this, Ciphergen developed
quantitative SELDI-based assays to specifically measure the three
biomarkers identified in the Cancer Research paper, and the Company
employed its Deep Proteome tools. The results of this study were
consistent with prior studies in terms of changes to the three
biomarkers in the panel in the disease state, and the Company
discovered new potential biomarkers that may have additional
diagnostic value. In December, Ciphergen is running an additional
validation study using 202 new samples, obtained in a prospective
collection, using its latest assay protocols; results for this
pivotal study are expected to be known in January. To further its
research and assay development activities in ovarian cancer
diagnostics, Ciphergen has recently entered into two agreements
with leaders in the field. The first is with the University of
Kentucky, which operates one of the largest ovarian cancer
screening programs in the world and performs more than 500
gynecological operations annually. The second is with University
College London, where our principal investigator, Professor Ian
Jacobs, is recognized as a world authority on ovarian cancer. He
and his team manage the largest screening trial in the world, the
United Kingdom Collaborative Trial of Ovarian Cancer Screening,
involving 200,000 women. In both cases, the Company will be working
with its collaborators to apply its suite of proteomic solutions
(Deep Proteome(TM), Pattern Track(TM) process and ProteinChip
Systems) to address multiple clinical questions including early
diagnosis, differentiation of cancer from benign ovarian disease,
and prediction of clinical course and overall outcome. * Other
Diagnostic Initiatives. -- Hepatitis. Over the last several years,
Ciphergen and a number of its customers have independently
discovered sets of biomarkers that may be useful for staging the
degree of liver fibrosis in the setting of infection by hepatitis
virus. Patients chronically infected with hepatitis virus are at
increased risk for developing end stage liver fibrosis, cirrhosis
and hepatocellular carcinoma. The current standard for patient care
includes monitoring for progression of liver disease via biopsy; a
non-invasive blood test would be beneficial in cases where biopsy
is contraindicated and could also reduce the impact of sampling
error via biopsy. Ciphergen and its customers have found a
consistent set of biomarkers correlated to disease progression in
independently conducted studies, and has signed an agreement with
the University of Texas, Medical Branch (Galveston) to further
validate and characterize these biomarkers, with the next set of
results expected in January. -- Breast Cancer. Ciphergen has also
launched a breast cancer diagnostic development program, building
on multiple studies it has conducted and published in scientific
forums. The results of two studies were presented in early December
at the San Antonio Breast Cancer Symposium. The Company is now
embarking on multi-site studies, including with University College
London, to validate several candidate biomarkers that could form
the basis of a multi- marker assay to detect ductal carcinoma in
situ (DCIS), since the majority of women at this stage can be
cured. * Pharmacoproteomics Collaborations. Ciphergen has recently
signed a preclinical pharmacoproteomic collaborative agreement with
a major pharmaceutical company in addition to a clinical
collaboration signed earlier with Bayer Pharmaceuticals, and is in
various stages of discussions with multiple parties regarding
potential projects. These initiatives are intended to accelerate
and streamline pre-clinical and clinical development of new drugs
through the identification of important biomarkers of toxicity
and/or drug response. * Deep Proteome(TM) Capabilities
Demonstrated. Ciphergen's Deep Proteome Research Services enable
scientists to look at low abundance proteins in various biological
samples and significantly improve their biomarker discovery power.
This capability was highlighted in two recent scientific
publications, the first in Electrophoresis and the second in the
Journal of Proteomics. In the latter paper, the authors described
the identification of over 250 previously undescribed proteins in
urine, bringing the total unique gene products present in urine up
to around 800 species. This capability is being actively employed
in our internal biomarker discovery programs as well as in selected
pharmacoproteomics collaborations. * Award for Leadership in
Translational Proteomics. Ciphergen recently received the 2005
Frost & Sullivan Technology Leadership Award for its success in
supplying pioneering instrumentation, consumables and software to
companies involved in biomarker discovery and translational
medicine. Conference Call A conference call and webcast will be
held on Thursday, December 22 at 9:00 a.m. EDT to discuss the
contents of this press release. To listen to the live webcast of
the conference call, please visit the "Investors" section of the
http://www.ciphergen.com/ web site. A telephonic replay of the
conference call will be available two hours after the call and will
be available until 11:59 p.m. on January 6, 2006. The replay number
for domestic callers is 800-633-8284 and for international callers
1 + 402-977-9140. The passcode for both domestic and international
callers is 21279450. In addition, an archived webcast of the
conference call will be available under the "Investors" section of
the company's website at http://www.ciphergen.com/. About Ciphergen
Ciphergen 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
Center(R) laboratories for biomarker discovery for new diagnostic
tests as well as pharmacoproteomic services for improved drug
toxicology, efficacy and theranostic assays. Ciphergen develops,
manufactures and markets a family of ProteinChip(R) Systems and
services for clinical, research and process proteomics
applications. ProteinChip Systems enable protein discovery,
validation, identification and assay development to provide
researchers with predictive, multi-marker assay capabilities and a
better understanding of biological function at the protein level.
Additional information about Ciphergen can be found at
http://www.ciphergen.com/. Safe Harbor Statement Note Regarding
Forward-Looking Statements: This press release contains
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 regarding the discovery of proteomic biomarkers
that may have diagnostic value; translating any proteomic
biomarkers that may be discovered into highly predictive research
and clinical diagnostic assays; the progress of discovery projects
using our Deep Proteome products and their ability to detect low
abundant proteins; and the potential for our ProteinChip technology
to yield useful protein biomarkers for clinical questions
associated with ovarian cancer, hepatitis, breast cancer and/or
other diseases. Actual results may differ materially from those
projected in such forward-looking statements due to various
factors, including the risk that our ProteinChip technology is
unable to discover, validate and/or develop protein biomarkers as
diagnostic or toxicology assays; the risk that we do not achieve
clinical diagnostic launch milestones due to a failure to validate
the performance of potential clinical assays in larger studies, an
inability to translate research assays into highly reproducible
commercially acceptable assays, a failure to achieve cGMP status
and other factors; the risk that pharmaceutical companies will not
expand their use of our products and services; the risk that we do
not successfully launch our new product introductions and that such
new products do not receive market acceptance or generate revenue
at a rate or in the amounts we anticipate; and the risk that we are
unable 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 December 21,
2005, for further information regarding these and other risks of
the Company's business. NOTE: Ciphergen, ProteinChip and Biomarker
Discovery Center are registered trademarks of Ciphergen Biosystems,
Inc. Ciphergen Biosystems, Inc. Unaudited Condensed Consolidated
Balance Sheet (in thousands) June 30, 2005 As Previously Reported
As Restated Accounts receivable, net $6,746 $6,134 Inventories
6,542 6,696 Total current assets 38,224 37,806 Total assets 53,785
53,367 Deferred revenue 4,865 4,801 Total current liabilities
15,421 15,357 Total liabilities 45,220 45,156 Accumulated deficit
(178,734) (179,088) Total stockholders' equity 8,565 8,211 Total
liabilities and stockholders' equity 53,785 53,367 Unaudited
Condensed Consolidated Statements of Operations (in thousands,
except per share data) Three Months Ended Six Months Ended June 30,
2005 June 30, 2005 As Previously As As Previously As Reported
Restated Reported Restated Revenue-products $5,438 $4,886 $9,919
$9,367 Total revenue 7,493 6,941 14,141 13,589 Cost of
revenue-products 2,770 2,570 4,882 4,682 Total cost of revenue
3,783 3,583 6,918 6,718 Gross profit 3,710 3,358 7,223 6,871 Net
loss (9,041) (9,395) (18,373) (18,727) Net loss per share, basic
and diluted (0.31) (0.32) (0.62) (0.63) The restatement had no
effect on the Company's net cash used in operating activities.
Ciphergen Biosystems, Inc. Unaudited Condensed Consolidated
Statements of Operations (in thousands, except per share data)
Three Months Ended Nine Months Ended September 30, September 30,
2004 2005 2004 2005 Revenue $8,495 $7,056 $30,083 $20,645 Cost of
revenue 2,938 3,349 11,208 10,067 Gross profit 5,557 3,707 18,875
10,578 Operating expenses: Research and development 4,274 3,098
15,566 10,231 Sales and marketing 6,534 4,136 19,831 14,201 General
and administrative 3,482 3,482 10,711 10,728 Total operating
expenses 14,290 10,716 46,108 35,160 Loss from operations (8,733)
(7,009) (27,233) (24,582) Interest and other income (expense), net
(626) (503) (1,595) (1,451) Loss from continuing operations before
income taxes (9,359) (7,512) (28,828) (26,033) Income tax provision
(benefit) for continuing operations 103 (36) 295 103 Net loss from
continuing operations (9,462) (7,476) (29,123) (26,136) Loss from
discontinued operations, net of tax (1) (67) -- (1,029) -- Loss
from sale of discontinued operations, net of tax (1) -- -- -- (67)
Net loss $(9,529) $(7,476) $(30,152) $(26,203) Basic and diluted
loss per share information: Loss from continuing operations $(0.33)
$(0.23) $(1.00) $(0.84) Loss from discontinued operations (0.00) --
(0.03) -- Net loss $(0.33) $(0.23) $(1.03) $(0.84) Shares used in
computing basic and diluted loss per share 29,319 32,282 29,186
31,328 (1) Amounts attributable to our BioSepra business, which was
sold on November 30, 2004, have been reclassified to loss from
discontinued operations. Ciphergen Biosystems, Inc. Unaudited
Condensed Consolidated Balance Sheets (in thousands) December 31,
September 30, 2004 (1) 2005 ASSETS Current assets: Cash and cash
equivalents $35,392 $28,913 Short term investments 2,175 2,224
Accounts receivable, net 10,811 6,237 Notes receivable from related
parties 126 -- Prepaid expenses and other current assets 1,847
1,479 Inventories 6,919 6,048 Total current assets 57,270 44,901
Property, plant and equipment, net 9,315 7,630 Goodwill 2,529 2,529
Other intangible assets, net 3,040 2,595 Other long term assets
2,223 1,954 Total assets $74,377 $59,609 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,369
$2,439 Accrued liabilities 7,499 5,518 Current portion of deferred
revenue 5,529 4,362 Current portion of capital lease obligations 16
23 Current portion of long term debt 925 561 Total current
liabilities 17,338 12,903 Deferred revenue, net of current portion
855 513 Capital lease obligations, net of current portion 28 45
Long term debt, net of current portion 377 1,250 Convertible senior
notes, net of discount 28,051 28,451 Other long term liabilities
1,013 713 Total liabilities 47,662 43,875 Stockholders' equity:
Common stock 29 36 Additional paid in capital 187,133 202,348 Notes
receivable from stockholders (349) -- Accumulated other
comprehensive income (loss) 263 (86) Accumulated deficit (160,361)
(186,564) Total stockholders' equity 26,715 15,734 Total
liabilities and stockholders' equity $74,377 $59,609 (1) The
condensed consolidated balance sheet at December 31, 2004 has been
derived from the audited consolidated financial statements at that
date included in the Company's Form 10-K for the fiscal year ended
December 31, 2004. DATASOURCE: Ciphergen Biosystems, Inc. CONTACT:
investors, Sue Carruthers of Ciphergen Biosystems, Inc., +1-510-505
2297 Web site: http://www.ciphergen.com/
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