CIPH Ciphergen Biosystems (MM)

Latest ovarian cancer data previewed at recent Winter SGO meeting FREMONT, Calif., Feb. 16 /PRNewswire-FirstCall/ -- Ciphergen Biosystems, Inc. (NASDAQ:CIPH) today announced financial results for the fourth quarter and full year ended December 31, 2005. For the fourth quarter of 2005, Ciphergen's total revenue was $6.6 million as compared to $10.1 million in the fourth quarter of 2004. Ciphergen's net loss from continuing operations was $10.2 million in the fourth quarter of 2005 as compared to $7.4 million in the fourth quarter of 2004; the fourth quarter of 2005 included a $2.5 million non-cash charge for the impairment of goodwill. Ciphergen's net loss was $9.2 million in the fourth quarter of 2005, which included a $1 million gain from discontinued operations, as compared to net income of $10.3 million in the fourth quarter of 2004, which included a $17.8 million contribution from discontinued operations. For fiscal year 2005, Ciphergen's total revenue was $27.2 million, as compared to $40.2 million in fiscal 2004. The net loss from continuing operations for 2005 was $36.4 million as compared to $36.6 million in 2004. Ciphergen's net loss was $35.4 million in 2005, which included a $0.9 million gain from discontinued operations, as compared to $19.8 million in 2004, which included a $16.7 million contribution from discontinued operations. As of December 31, 2005, the Company's cash and investments were $28.0 million. Long term debt net of current portion totaled $31.1 million, of which $28.6 million was convertible debt. "The new senior management team has spent these last six weeks focused on establishing our key priorities for the coming year and implementing action steps to reduce costs and drive greater efficiency out of all that we do," stated Gail S. Page, President and Chief Executive Officer. "I'm quite pleased by those initiatives and very excited about the predictive results of our ovarian cancer diagnostics program previewed at the winter meeting of the Society of Gynecological Oncologists." Other Recent Highlights -- Ovarian Cancer Diagnostic Progress. During August and September 2005, Ciphergen performed a large, multi-institutional study for its ovarian cancer diagnostics program, encompassing over 1,000 patient samples. This study was aimed at (1) validating biomarkers described in the August 2004 Cancer Research paper, (2) identifying biomarkers that could distinguish between benign and malignant pelvic mass, and (3) identifying biomarkers that could predict patient outcome. To accomplish this, Ciphergen employed its Deep Proteome(TM) tools and developed quantitative SELDI-based assays to specifically measure the three biomarkers identified in the Cancer Research paper. The results of this study were consistent with prior studies in terms of changes to the biomarkers in the panel, and the Company discovered new potential biomarkers that may have additional diagnostic value. In December 2005, Ciphergen ran an additional validation study using 202 new samples, obtained in a prospective collection, using its latest assay protocols. Results for this pivotal study were previewed at the winter Society of Gynecological Oncologists (SGO) meeting on February 2. The data demonstrated that our multi-protein biomarker panel in combination with CA125 had a significantly better positive predictive value in identifying ovarian cancer from among patients with a suspicious pelvic mass than CA125 alone. These data will be formally presented at the SGO Annual Meeting running March 22-26. As an additional validation step in our ovarian program, we have just run an additional new set of 300 samples obtained from a collaborator in Japan. Data analysis for this study is underway. -- Pharmacoproteomics Collaborations. Ciphergen has recently signed a preclinical pharmacoproteomic collaborative agreement with sanofi- aventis, 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. -- Patents. Ciphergen filed an additional 18 patent applications during 2005. These applications relate to our products and technologies, and to biomarker discoveries. Our patent portfolio now consists of 30 issued US patents and 90 pending US patent application families. Conference Call A conference call and webcast will be held on Thursday, February 16 at 5:00 p.m. EST 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 7:00 p.m. on February 23, 2006. The replay number for domestic callers is 800-558-5253 and for international callers 1 + 416-626-4100. The reservation number for both domestic and international callers is 21283740. 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 statements 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 potential for our ProteinChip technology to yield useful protein biomarkers for clinical questions associated with ovarian cancer and/or other diseases; and efforts to reduce costs and drive greater efficiency. 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; the risk that pharmaceutical companies will not expand their use of our products and services; 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 filed December 21, 2005, for further information regarding these and other risks related to the Company's business. Ciphergen, ProteinChip and Biomarker Discovery Center are registered trademarks of Ciphergen Biosystems, Inc. Ciphergen Biosystems, Inc. Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2004 2005 2004 2005 Revenue $10,098 $6,601 $40,181 $27,246 Cost of revenue 3,867 3,626 15,075 13,693 Gross profit 6,231 2,975 25,106 13,553 Operating expenses: Research and development 3,702 2,965 19,268 13,196 Sales and marketing 6,188 3,808 26,019 18,009 General and administrative 3,425 3,676 14,136 14,404 Goodwill impairment -- 2,453 -- 2,453 Total operating expenses 13,315 12,902 59,423 48,062 Loss from operations (7,084) (9,927) (34,317) (34,509) Interest and other income (expense), net (550) (399) (2,145) (1,850) Loss from continuing operations before income taxes (7,634) (10,326) (36,462) (36,359) Income tax provision (benefit) for continuing operations (186) (96) 109 7 Net loss from continuing operations (7,448) (10,230) (36,571) (36,366) Discontinued operations(1): Loss from discontinued operations, net of tax (768) -- (1,797) -- Gain from sale of BioSepra business, net of tax 18,527 1,000 18,527 933 Net income from discontinued operations 17,759 1,000 16,730 933 Net income (loss) $10,311 $(9,230) $(19,841) $(35,433) Basic and diluted loss per share information: Loss from continuing operations $(0.25) $(0.29) $(1.25) $(1.13) Income from discontinued operations 0.60 0.03 0.57 0.03 Net income (loss) $0.35 $(0.26) $(0.68) $(1.10) Shares used in computing basic and diluted income (loss) per share 29,419 35,961 29,244 32,321 (1)Amounts attributable to our BioSepra business, which was sold on November 30, 2004, have been reclassified to gain (loss) from discontinued operations. Ciphergen Biosystems, Inc. Unaudited Condensed Consolidated Balance Sheets (in thousands) December 31, December 31, 2004(1) 2005 ASSETS Current assets: Cash and cash equivalents $35,392 $25,738 Short term investments 2,175 2,240 Accounts receivable, net 10,811 5,828 Notes receivable from related parties 126 -- Prepaid expenses and other current assets 1,847 1,746 Inventories 6,919 5,594 Total current assets 57,270 41,146 Property, plant and equipment, net 9,315 7,320 Goodwill 2,529 76 Other intangible assets, net 3,040 2,417 Other long term assets 2,223 1,852 Total assets $74,377 $52,811 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,369 $3,188 Accrued liabilities 7,499 6,298 Current portion of deferred revenue 5,529 4,132 Current portion of capital lease obligations 16 21 Current portion of long term debt 925 377 Total current liabilities 17,338 14,016 Deferred revenue, net of current portion 855 508 Capital lease obligations, net of current portion 28 28 Long term debt, net of current portion 377 -- Long term debt owed to related party -- 2,500 Convertible senior notes, net of discount 28,051 28,586 Other long term liabilities 1,013 650 Total liabilities 47,662 46,288 Stockholders' equity: Common stock 29 36 Additional paid in capital 187,133 202,485 Notes receivable from stockholders (349) -- Accumulated other comprehensive income (loss) 263 (204) Accumulated deficit (160,361) (195,794) Total stockholders' equity 26,715 6,523 Total liabilities and stockholders' equity $74,377 $52,811 (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. First Call Analyst: FCMN Contact: scarruthers@ciphergen.com DATASOURCE: Ciphergen Biosystems, Inc. CONTACT: Sue Carruthers, Investor Relations of Ciphergen Biosystems, Inc., +1-510-505-2297 Web site: http://www.ciphergen.com/

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