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 Cepheid

3 Cepheid Investment Highlights Integrated Molecular Diagnostics Company Broad biologics development capabilities Unique scalable system platform Broad market applicability CLIA High Complexity Labs CLIA Moderate Complexity Sites CLIA Waived Sites Expanding market adoption of Molecular Diagnostics First PCR Molecular product CLIA categorized as Moderate Complexity First cleared molecular product for viral meningitis The leader in the rapidly expanding HAI molecular market Established base of operations in US and Europe ~500 employees 2007 revenues - $130 million Expected 2008 revenues - $182 to $189 million Cepheid

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 Cepheid

5 GeneXpert System: A Paradigm Shift in Molecular Automation Accuracy Sensitivity Specificity On-Demand Testing Random Access Short Time-to-Result Compact Footprint Universal Environmental and Market Application Cepheid

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

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

8 GeneXpert Infinity Systems GX Infinity tests /24 hours* Expected End 2008 GX Infinity tests /24 hours* Expected March Cepheid *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* Gen-Probe Tigris DTS Roche Cobas BD Viper Abbott m2000 Number of Tests 1000/12 hrs 144/12 hrs 564/8hrs 135/8.5hrs Time to First Result** 5 hours 6 Hours 5 hours 4.5 Hours Price Per System ~$438K ~$185K - $315K ~$165K ~$225K Cepheid *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 Growth Through 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 Cepheid * 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, Cepheid

12 Test Pipeline Strategy: Cepheid & Partner Cepheid Cepheid & Grant/Contract GBS STD s HPV MRSA MRSA/SA C. diff VRE Sepsis Panel EV TB HIV HCV EBV CMV VZV BCR-ABL Breast Cancer Prostate Lung Bladder Factor II/V 2C9/VKORC1 Women s Health Healthcare Associated Infection Critical Infectious Disease Immuno-Compromised Oncology Genetics Cepheid

13 US Strategic Pipeline Market Opportunity ($ in millions) 1200 MRSA Market Value Lung MRSA/SA VRE HPV STD s Prostate BC Sepsis GBS 2C9/VKO EV Bladder Early Growth Mid Mature II/V C.diff TB IC HIV HCV BCR/ABL Market Stage Cepheid Cepheid Projected Potential

14 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: ~ 6% Switzerland : 1% Netherlands: 0.5% Cepheid

15 HAI: Building Market Momentum Sample subtitle The Perfect Storm Reporting Legislative Activity* as of 3/8/08: Mandatory : 27 States Legislation Pending: 20 States No legislation: 9 States *APIC.org; some states with mandatory reporting have introduced additional legislation Market Drivers Mandatory Reporting VA System Mandate Reimbursement Reform Public Awareness Federal and state legislative hearings Surveillance Mandates Illinois Minnesota New Jersey Pennsylvania Additional legislation introduced: State MRSA surveillance** CA, DC, HI, NY, TN, IA, KY HAI prevention and control RI, WA, WV, MA National S (Menendez), MRSA S.2278 (Durbin), HR.4214 (Cummings), CHAIR S.2313 (Brown), HR.3697(Matheson), STAAR HR.1174 (Murphy), Healthy Hospitals Cepheid **MD bill received unfavorable Finance committee report 2/25/08; HI bill deferred by Health com 2/14; MS bills died in committee 2/29

16 SCREENING STRATEGIES Slide presented during 2007 AACC national meeting 12

17 MRSA Bacteremia LOS> Number of Infections *P< /3 2003/4 2004/5 2005/6 August through July ENH Data Slide presented during 2007 AACC national meeting

18 Impact of Universal Surveillance for Methicillin- Resistant Staphylococcus aureus (MRSA) at a Large United States Healthcare Organization Ari Robicsek,, MD, Jennifer L. Beaumont,MS,, Suzanne M. Paule,, BS, Donna M. Hacek, MT (ASCP), Richard B. Thomson, Jr., PhD, Karen L. Kaul,, MD, PhD, Peggy King, RN, MBA, and Lance R. Peterson, MD Northwestern University s s Feinberg School of Medicine, Departments of Medicine and Pathology; Evanston Northwestern Healthcare, Department of Medicine, Division of Infectious Diseases and Department of Pathology and Laboratory Medicine, Division of Microbiology, Department of Risk Management, and Center on Outcomes, Research, and Education, Evanston, Illinois U.S.A. Slide presented during 2007 AACC national meeting 27

19 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 < , Cepheid * TWP Hospital Acquired Infections Report and AHDadmissions statistics

20 GeneXpert North American Hospital Penetration Hospitals Non-VA Veteran Administration All Hospitals Mean Bed Size Median Bed Size Average U.S. Hospital Size Cepheid

21 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, Cepheid Projected annual expenditures for all methodologies in moderate and highly complex labs.

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

23 Cost Per Reportable Result Comparison Competitive PCR Product Number of Patients/Run Avg. Price/ Actual Consumable Cost/Assay Labor Cost Cost/ Reportable Test 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 $ 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 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 $0.63/minute at Med. Lab Tech level Each cartridge takes less than 2 minutes prep PAGE Cepheid

24 Slide presented during 2007 AACC national meeting

25 Xpert C. difficile Unmet Clinical Need A rapid, sensitive test differentiating Toxin B+ strains from hypervirulent strains w/binary Toxin & tcdc deletion 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. Alternative oral and IV regimens based on clinical severity. Statistics CDAD results in over $1B in healthcare cost in the US/YR CDAD adds an additional $3,669 to $7,234 per hospitalization Xpert C. difficile Reports out Tox B, Binary Toxin, and tcdc deletion Provides rapid (~50 min.), sensitive and specific results Cepheid

26 Xpert VRE Unmet Clinical Need CDC & SHEA/APIC guidelines call for VRE active surveillance to reduce transmission Currently, culture is used, taking hours Statistics VRE infections add $17,143 - $36,380 per case VRE mortality rate up to 57% Xpert VRE Rapid results (~50 minutes) allow for proper isolation and management of patients Coupled with Xpert MRSA provides a rapid, comprehensive surveillance program Cepheid

27 2007 MRSA Market Development North America Cumulative GX Placements (End Q3) Cumulative GX Placements (End Q4) Other Hospitals 55% VA Placements 45% Other Hospitals 65% VA Placements 35% Cumulative US MRSA Accounts (End Q3) Cumulative US MRSA Accounts (End Q4) Other Hospitals 36% VA Hospitals 64% Other Hospitals 52% VA Hospitals 48% Cepheid

28 NA GeneXpert Placements GX-2 9% GX-1 2% GX-16 32% GX-4 28% GX-4HT 8% GX-8 18% GX-12 3% 61% GX-16 Cabinets Cepheid

29 Summary: Systems & Modules Cumulative Q2 Systems Modules Incremental Q3 Systems Modules Incremental Q4 Systems Modules Cumulative Total Systems Modules Average Modules per Instrument United States , Europe Total , In Q4 07, 76 US systems included 3 additional VA placements Average module placement in Q4 was 8.1 in US and 2.4 in Europe, up from cumulative average of 8.0 and 2.2 respectively Cepheid

30 U.S. Account Ramp Rate/Menu Utilization* Average time to ship, install and validate = 6 Weeks Xpert Test Average Time to Live After Install (months) MRSA GBS % of customers are using more than one assay EV Cepheid *Live, validation or training

31 Cepheid Expected 2008 WW MRSA Product Sales - Nasal Surveillance $52 to $55 million - Xpert MRSA Cepheid

32 Worldwide Reach Direct Sales 35 North American Sales Positions 8 North American FTSS Positions 6 UK Sales Positions 1 UK FTSS Position Distributed Sales 75 Worldwide Distributors Direct Sales Distributed Sales Cepheid

33 Sales & Marketing: Headcount EU Marketing EU Sales & Support Corporate Marketing U.S. Field Sales & Support Cepheid

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

35 Income Statement Highlights ($mm) Q Q Q Q Product Sales $80.4 $82.4 $22.1 $23.6 $34.0 $36.9 $116.5 Licenses, Grants, Contracts Total Revenues Product Gross Profit Product Gross Margin 1 43% 41% 40% 42% 43% 43% 42% Collaboration profit sharing Operating Expenses R&D SG&A Net Loss (13.6) (18.7) (3.9) (2.7) (1.5) (1.2) (9.3) 1 Product sales only 2 Contribution margin equals Product Gross Profit plus revenue from Licenses, Grants and Contracts 3 SG&A in 2004 includes $1.3m and 2006 includes $3.35m for patent related matters 4 All results exclude stock compensation expense 5 Does not include acquisition related amortization of intangibles Cepheid

36 Sales by Market Segment % 100% 100% 72% 58% 52% 35% 24% 17% 18% 11% 13% Clinical Industrial Biothreat Combined Cepheid

37 Margin Improvement Drivers: Strategic shift to higher margin clinical products Volume driven overhead absorption ROBAL automated test cartridge manufacturing systems Dry: implemented Wet: in development Reduction of royalty load Product GP margins Current: 43% Projected 2012: 60-68% Cepheid

38 Expected Average Gross Margins Tests: Clinical Mfg. Margin 2007 Gr. Margin Including Royalties % 45-55% 45-60% 65-75% Industrial 55-65% 50-60% 50-65% 55-60% Biothreat 50-60% 40-50% 50-60% 50-60% Systems: Clinical 60-70% 30-35% 35-45% 55-60% Industrial / Biothreat 60 70% 35 40% 35 45% 55 65% Cepheid Projected as of 12/31 Does not include non-standard cost of goods sold

39 Financial Guidance for Full Year 2008: Total revenues are expected to be in the range of $182 million to $189 million Product sales are expected to be in the range of $175 million to $180 million Other revenues are expected to be in the range of $7 million to $9 million Net income for 2008, excluding stock compensation expense and the amortization of acquired intangibles, is expected to be in the range of $3 million to $5 million Cepheid

40 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 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 Cepheid Completed Expected

41 NASDAQ: CPHD