Forward Looking Statement

Transcription

1 NASDAQ: CPHD

2 Forward Looking Statement During the course of this presentation, we may make projections or other forward looking statements regarding future events or the future financial performance of Cepheid. We wish to caution you that such statements are just projections and that actual events or results may differ materially. We refer you to the documents that we have filed from time to time with the SEC, specifically our last filed Form 10-K and most recent Form 10-Q filed. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in these projections and forward looking statements. 2

3 Cepheid Investment Highlights Integrated Molecular Diagnostics Company Unique scalable system platform Broad and expanding pipeline Broad market applicability CLIA High Complexity Labs CLIA Moderate Complexity Sites CLIA Waived Sites The leader in the rapidly expanding HAI molecular market Established base of operations in US and Europe ~500 employees 2007 revenue - $130 million; Q revenue - $45 million, 76% growth Expected 2008 revenue - $183 to $190 million* 3 *Last updated May 1, 2008

4 GeneXpert : Molecular Lab in a Cartridge Contains all reagents for a particular test Contamination Control: Sample and reagents never leave cartridge Universal sample prep Runs nested PCR Reflexive test capability Easy disposal of biological materials Broad market utility Infectious disease Oncology Genetic disease PCR Reaction Tube Cartridge Body with Multiple Reagent Reservoirs Rotary Valve Ultrasonic Interface 4

5 GeneXpert System: A Disruptive Technology Accuracy Sensitivity Specificity On-Demand Testing Random Access Short Time-to-Result Compact Footprint Universal Environmental and Market Application 5

6 GeneXpert System Scalability GeneXpert Module GX-I GX-IV GX-XVI GX Infinity Systems 6

7 Modular Scalability Enables System-wide Access Hospital Reference Lab Labor and Delivery Central Lab Regional Lab Main Laboratory ER Department ICU 7

8 GeneXpert Infinity Systems GX Infinity tests /24 hours* Expected End 2008 GX Infinity tests /24 hours* Expected March *Assumes ~50 minute assay time.

9 Competitive Landscape GeneXpert System* GX-I GX-IV GX-XVI GX Infinity-48 GX Infinity-72 Number of Tests/24 hrs ,382 2,074 Time to First Result** 52 mins 52 mins 52 mins 52 mins 52 mins Price Per System $27K $78K $155K $399K $499K Competitor System* Number of Tests Time to First Result** Price Per System Gen-Probe Tigris DTS Roche Cobas BD Viper Abbott m /12 hrs 144/12 hrs 564/8hrs 186/8hrs 5 hours 6 Hours 4 hours 5.6 Hours ~$438K ~$185K - $315K ~$165K ~$225K 9 *GeneXpert estimates based on 50 minute assay. Competitor data based on published information. **Includes sample prep time.

10 Current U.S. Molecular Market: A Fraction of the Potential Market Expansion Driven by Decentralization of Medical Tests to Less Specialized Labs CLIA Laboratories by Classification 7,000 Highly Complex 2,250 Current Molecular 20,561 Moderately Complex 159,173 Waived 10 * Data from Health Care Direct

11 Universe of U.S. Waived Laboratories Type of Facility # of Waived Laboratories Ambulance 2,809 Ambulatory Surgery Center 3,660 Ancillary Test Site 1,711 Community Clinic 5,440 End Stage Renal Disease Dialysis 3,971 Home Health Agency 10,282 Hospice 1,849 Hospital 1,757 Independent 1,402 Intermediate Care Facility 983 Other (Insurance labs, Industrial labs, Blood banks, etc.) 17,872 Pharmacy 3,568 Physician office 86,544 Public Health Lab 132 Rural Health Clinic 1,022 School/Student Health Service 1,660 Skilled Nursing/ Nursing Facilities 14,511 Total 159,173 11

12 U.S. Test Pipeline Strategy: Cepheid & Partner Cepheid Cepheid & Grant/Contract GBS STD s HPV STD Waived Vaginitis Waived HSV Waived MRSA MRSA/SA/mecA BC MRSA/SA/mecA SSTI VRE MRSA Nasal Waived MRSA/SA/mecA Nasal C. diff MRSA/VRE Combo C. diff Waived Norovirus EV MDR TB HIV Gram (-) SSTI Gram +/- BC Sepsis Gm+ Sepsis Gm- Sepsis Fungal Bact. Meningitis HSV CSF EBV CMV VZV Lung Bladder ER Bladder SD Bladder HR BCR-ABL PML-RARA Jak2 BCL2 Factor II/V Women s Health Healthcare Associated Infection Critical Infectious Disease Immuno-Compromised Oncology Hem-Onc Genetics 12 Expected 2008 Cepheid Pipeline as of June 2008; subject to strategic modification

13 Healthcare Associated Infections Associated with approximately 100,000 deaths annually ~ 8% of all HAI caused by MRSA ~ 20% of HAI deaths are associated with MRSA MRSA infection rates U.S: 3-4%* Colonization rate: 4-9%** The Netherlands: 0.5% 13 * 2007 APIC point prevalence study ** Based on current published data from CID, Annals of Internal Medicine, JAMA, and Journal of H. Infection

14 Significant Market for HAI Testing: WW 2012 WW Projected Total Market Expenditures All Products $ MM Application Pathogen Annual Test Opportunities Available Market MRSA 85 Million 1,699 Surveillance VRE 30 Million 586 Sub-Total - 2,285 MRSA/SA 9 Million 415 Diagnostics C. Diff 7 Million 280 Sub-Total Pre-Surgical Testing MRSA/SA 11 Million 431 TOTAL 3, Projected annual expenditures for all methodologies in moderate and highly complex labs.

15 Significant Market for HAI Testing: U.S U.S. Projected Total Market Expenditures All Products $ MM Application Pathogen Annual Test Opportunities Available Market Surveillance Diagnostics MRSA 52 Million 1,180 VRE 26 Million 530 Sub-Total - 1,710 MRSA/SA 7.5 Million 332 C. Diff 3.2 Million 148 Sub-Total Pre-Surgical Testing MRSA/SA 7 Million 333 TOTAL 2, Projected annual expenditures for all methodologies in moderate and highly complex labs.

16 U.S HAI Market Drivers Legislative Activity Mandatory HAI Reporting Mandated surveillance testing Mandated HAI infection and control programs VA System Mandate Public Awareness Reimbursement Reform CMS fiscal 09 proposal 3 rd party payer activity Source: Association of Professional Infection Control & Epidemiology, Inc. * Some states that have enacted mandatory HAI Reporting have introduced additional legislation

17 U.S HAI Legislative Update (as of June 2, 2008) Mandated Reporting Enacted: 29 States Legislation Pending: 9 States Mandated Surveillance: 4 States Illinois Minnesota New Jersey Pennsylvania Pending Legislation** CA, DC, IA, KY, NY Mandated HAI Prevention and Control Programs Enacted TN, CT Pending Legislation MA, RI Pending Federal Legislation S. 2525, MRSA (Menendez) S.2278 (Durbin), HR.4214 (Cummings), CHAIR S.2313 (Brown), HR.3697(Matheson), STAAR HR.1174 (Murphy), Healthy Hospitals Source: Association of Professional Infection Control & Epidemiology, Inc. ** Some states that have enacted mandatory HAI Reporting have introduced additional legislation

18 Hospital Universe Hospital Bed Size # of Hospitals Avg. Admissions/ Day Avg. High Risk Admissions/Day Total High Risk Total All Admissions > ,250 4, , ,080 3, ,472 4, ,740 5, ,645 8, ,876 12, ,460 17, ,309 21, ,240 33,280 < ,935 7,740 6,107 36, , * TWP Hospital Acquired Infections Report and AHDadmissions statistics

19 Significant Market for HAI Testing: EU 2012 EU Projected Total Market Expenditures All Products $ MM Application Pathogen Annual Test Opportunities Available Market Surveillance Diagnostics MRSA 29 Million 481 VRE 2 Million 25 Sub-Total MRSA/SA 1.2 Million 49 C. Diff 2.7 Million 115 Sub-Total Pre-Surgical Testing MRSA/SA 3 Million 85 TOTAL Projected annual expenditures for all methodologies.

20 European HAI Market Development England NHS Hygiene Code of Practice calls for MRSA testing: All Emergency Room admissions; ~4 million tests All elective admissions by 3/2009; ~7 million tests NHS & Novation contract for MRSA surveillance pending Near-patient GeneXpert study approaching completion: Study at Sandwell and West Birmingham Hospitals Admissions department testing showed ~97% correlation with laboratory results Mandatory reporting of C. diff infections 20

21 European HAI Market Development Scotland: One year pilot study began April 2008; Cepheid involvement pending N. Ireland: 3 of 9 major hospitals use the GeneXpert System The (Xpert MRSA) test reveals that the patient's quarantine can be reduced by 80% thanks to the new detection method. For big hospitals this means a big difference in workload and money. - Professor Marc Bonten, Red Cross Hospital in Beverwiik, Netherlands The Netherlands: Leaders in MRSA eradication using Dutch model 13 Xpert MRSA accounts, includes largest medical center Germany: 25 + % of hospitals participating in German national nosocomial surveillance infection program Currently 50 Xpert MRSA accounts Belgium: Moving toward Dutch model Currently 10 Xpert MRSA accounts 21

22 HAI Product Portfolio Availability Surveillance Europe US MRSA: Nasal Now Now MRSA: Nasal - CLIA Waiver VRE: Rectal Diagnostic MRSA/SA/MEC A: SSTI Now 08 MRSA/SA/MEC A: BC Now 08 C. Diff: Diarrhea Pre-surgical Testing MRSA/SA/MEC A: Nasal

23 Cost Per Reportable Result Comparison Competitive PCR Product Number of Patients/Run Avg. Price/ Test Actual Consumable Cost/Assay Labor Cost Cost/ Reportable 14 $25.50 $33.57 $48.14 $ $25.50 $35.76 $46.07 $ $25.50 $38.33 $43.99 $ $25.50 $41.36 $41.92 $ $25.50 $45.00 $39.84 $ $25.50 $49.44 $37.77 $ $25.50 $55.00 $35.69 $ $25.50 $62.14 $33.62 $ $25.50 $38.33 $31.54 $ $25.50 $45.00 $29.47 $ $25.50 $55.00 $27.39 $ $25.50 $71.67 $25.32 $ $25.50 $ $23.24 $ $25.50 $ $21.17 $ Xpert MRSA Number of Patients/Run Avg. Price/ Test Actual Consumable Cost/Assay Labor Cost Cost/ Reportable 1 $38.00 $0 $1.26 $39.26 Assumptions: Labor calculated at $0.83/min. at Med Tech level Labor = 2 min/test sample prep plus 13 minutes batch time, assay procedure is 30 seconds/ test plus 5 minutes batch time 2 Controls added to each batch Master mix is enough for 8 reactions Assumptions: Labor calculated at $0.63/minute at Med. Lab Tech level Each cartridge takes less than 2 minutes prep 23

24 HAI Diagnostic: C.difficile Issues CDI results in over $1B in US healthcare costs/yr CDI adds an additional $3,669 to $7,234 per hospitalization C. diff mortality rate up to 14%* Benefits: Xpert C. difficile Differentiation aids correct therapy selection Tox B+ / Binary- / tcdc- : standard Rx: metronidazole Alternative regimens based on clinical severity Tox B+ / Binary+ / tcdc+ : consider oral vancomycin, discontinue quinolones such as moxifloxacin Test results in 50 minutes or less 24 *Mortality rate increases with patient age, up to 14%

25 HAI Surveillance: VRE Issues VRE have become a major cause of nosocomial infections Enterococci account for over one third of infections within ICU VRE infected case adds $17,143 - $36,380 per case VRE mortality rate up to 57% Current culture method takes hours Benefits: Xpert VRE Provides results in 43 minutes or less Potentially improved patient outcome Enables earlier patient isolation

26 GeneXpert System Scalability North American Placements: 61% GX-XVI Cabinets As of 3/31/08 26

27 Summary: GeneXpert Systems & Modules Cumulative Q Incremental Q Incremental Q Incremental Q Cumulative Total Systems Modules Systems Modules Systems Modules Systems Modules Systems Modules Average Modules per Instrument U.S , EU Total , In Q1 08, 126 systems placed in US and Europe 93 VA system placements in 87 accounts Average module placement in Q1 was 7.9 in US and 2.2 in Europe 27

28 Manufacturing Capacity Current Production Levels Systems 25 modules/day X 5days/week Tests ROBAL 1200 tests/hr 28

29 Financial Highlights: Q1 08 Total product sales up 90% Clinical growth 246% System sales up 110% Test sales up 81% Strong growth in all geographical markets North American sales, excl. USPS, up 191% European sales up 150% Non-GAAP product gross margin up 700+ bp s to 47% Achieved Non-GAAP profitability 29

30 Sales by Market Segment 72% Clinical 58% 52% 61% Industrial Biothreat 35% 30% 24% 11% 17% 18% 13% 9% 30

31 Non-GAAP Income Statement Highlights ($mm) Q Product Sales $82.4 $116.5 $41.9 Other revenue Total Revenues Product Gross 41% 42% 47% Margin (1) Collaboration profit sharing R&D Sales and marketing G&A Operating Income (22.9) (12.4).1 (loss) Net income (loss) (18.6) (9.3) (1) Product gross margin equals non-gaap gross margin as % of product sales

32 Margin Improvement Drivers: Product gross margins As of Q1 08: 47%* Projected 2012: mid-60 s* Strategic shift to higher margin clinical products Volume driven overhead absorption ROBAL automated cartridge manufacturing line Dry: implemented Wet: projected 2009 implementation Reduction of royalty load 32 *Non-GAAP

33 Wet ROBAL Increased simplicity Just add the test specimen Specimen Reagent 2 Reagent 1 New Current 33

34 Expected Average Gross Margins Mfg. Margin 2008 Gr. Margin Including Royalties Tests: Clinical 65-75% 45-60% 65-75% Industrial 55-65% 50-65% 55-65% Biothreat 50-60% 50-60% 50-60% Systems: Clinical 60-70% 35-45% 55-60% Industrial / Biothreat 60 70% 35 45% 55 65% 34 Projected as of 12/31 Does not include non-standard cost of goods sold

35 2008 Financial Guidance - Non-GAAP As of Total revenues expected: $183 - $190 million Product sales expected: $176 - $181 million Xpert MRSA test sales expected: $52 - $55 million Other revenues expected: $7 - $9 million Net income expected: $3 - $5 million or $.05- $.08 per share 35

36 2008 Expected Milestones Market shipment of GX-I Market shipment GX 6 color system Market shipment of LIS software for GeneXpert Systems Implementation of direct sales organization in the U.K. European release of Xpert HemosIL (FII/FV) test Signed contract with Premier GPO European release of Xpert MRSA/SA nasal FDA Clearance of Xpert MRSA/SA test for SSTI FDA Clearance of Xpert MRSA/SA test for Blood Culture FDA Clearance of Xpert HemosIL (FII/FV) test European release of Xpert VRE test European release of Xpert C. difficile test Market shipment of GeneXpert Infinity-48 System 36 Completed Expected

37 NASDAQ: CPHD