Bio Rad Laboratories Inc (BIO) 2006 Q2 法說會逐字稿

Welcome to the Ciphergen second-quarter conference call. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded today, Monday, August 14, 2006. I will now turn our conference over to Sue Carruthers. Please go ahead.

Thank you. Welcome to Ciphergen Biosystems, Inc.'s second quarter 2006 conference call. Today we issued two press releases -- our quarterly financial release, and a release announcing a definitive agreement with Bio-Rad. Both of these releases are on our Website, and we encourage you to view them.

At the request of the Company this call is being recorded. The entire conference contents of the call, including the presentation and the question-and-answer session that will follow, are the copyrighted property of Ciphergen Biosystems, Inc., with all rights reserved. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Ciphergen Biosystems, Inc. is strictly prohibited.

I am here with Gail Page, President and CEO, and [Jim Pardee], consulting CFO.

Some of our commentary and answers to questions may contain forward-looking statements that are based on current expectations and involve risks and uncertainties that could cause actual results and outcomes to be materially different. Certain of these risks and uncertainties may include, but are not limited to, competitive environment, changes in government regulations, and changing relationships with customers and strategic partners, and other factors described in Ciphergen's 2005 Form 10-K and subsequent filings.

A recording of our prepared remarks will be made available later today on our Website, at www.Ciphergen.com. Now I'd like to introduce Gail Page, President and CEO of Ciphergen.

Thank you, Sue. Today we announced an important strategic achievement for Ciphergen, one that I have been focused on since my appointment as President and CEO earlier this year. We have signed a definitive agreement with Bio-Rad Laboratories for them to acquire our proprietary proteomics instrument business. With Bio-Rad as a strategic partner, we intend to accelerate our transformation into a leading specialized diagnostics provider. This is a goal we have articulated and have been dedicated to achieving.

In view of this exciting news, the primary focus of today's call will be to discuss the deal with Bio-Rad, our strategy for Ciphergen as a new specialized diagnostics company, and an update on advances we have made with several promising diagnostic programs.

Today, Bio-Rad's announcement has significant implications for the way we will structure our business going forward. For this reason, we will not spend much time on today's call discussing past financial results. In the next several weeks we intend to hold an additional call to discuss the organizational and financial specifics we envision once we receive shareholder approval.

Now let me turn to the deal specifics. Bio-Rad will acquire our instrument business for approximately 20 million in cash. In addition, Bio-Rad is making a 3 million equity investment, which we believe is a clear indication of their commitment and belief in Ciphergen's future success.

The transaction is progressing with the regulatory and other customary closing conditions and shareholder approval. We would expect it to close in the fourth quarter of this year.

Bio-Rad will manufacture, sell, and market our SELDI technology to the life sciences marketplace for proteomics applications such as biomarker discovery, characterization and validation.

Bio-Rad is an ideal strategic partner for Ciphergen, as the Company is committed to and understands life sciences research, has a broad product line and a substantial sales force. This means that the SELDI proteomics technology will have the resources and support to attain wider adoption.

Ciphergen will retain exclusive rights to the diagnostics market. We will have a supply agreement with Bio-Rad to purchase SELDI instruments and consumables for the continued development of our diagnostics business.

The companies will collaborate to identify SELDI customers interested in partnering with Ciphergen to commercialize biomarker discovery.

Ciphergen's experienced management team, established earlier this year, will stay in place. With approximately 40 individuals total, we will move Ciphergen forward as a company that is focused on the development and commercialization of cutting-edge specialized diagnostics. With a leaner organization, our operating expenses will be greatly reduced.

In addition, our financial position after the transaction is approved will be strengthened. Our ending cash on June 30th was 20.6 million, and reduced operating expenses, coupled with the cash infusion from the deal, will help give us the resources needed to commercialize our diagnostic program.

Let me turn now to our progress in diagnostics and our strategic alliance with Quest. Throughout the last quarter we have made excellent progress. Our alliance with Quest is on track, and we obtained favorable clinical results supporting our ovarian and prostate cancer diagnostic programs. We presented several studies at the ASCO and AUA annual meetings which truly highlight our innovative approach.

Last July we entered into a three-year strategic alliance with Quest to develop and commercialize novel proteomic diagnostic tests from our pipeline, including the first proteomics-based test for ovarian cancer. The alliance is functioning as we envisioned, with Ciphergen supply potential biomarkers and Quest providing the expertise on their conversion to commercial tests. The transfer of our technology to Quest Diagnostics has gone very smoothly and is now fully integrated in Quest's process. In summary, Quest and Ciphergen remain on track with our ovarian cancer diagnostics program.

Let me take a moment to describe other diagnostic programs. In developing our ovarian cancer clinical program, we have analyzed over 2000 samples taken from women with ovarian cancer or benign disease, and some healthy women. The findings from these studies provided the discovery and independent validation underlying the clinical development of a test intended to help triage women with a persistent pelvic mass.

In early June at the ASCO meeting, we announced results of the first-ever large-scale, multi-institutional independent validation study of biomarkers discovered through current clinical proteomics efforts. As in previous studies, an index derived from the seven markers tested demonstrated improved specificity for discriminating ovarian cancer from benign pelvic masses, as well as for the detection of early-stage cancer.

The biomarkers demonstrated statistically-significant power to differentiate ovarian cancer patients from women with benign disease. These results validate the markers across diverse populations, a critical step in the commercialization process.

This study is a part of a conference of program being conducted with several leading collaborators at the Johns Hopkins University School of Medicine, the University of Texas MD Anderson Cancer Center, University College London, and the University of Kentucky. In addition to developing assays designed to distinguish between benign and malignant pelvic mass, studies are underway to predict recurrence of ovarian cancer and to provide additional tools to aid physicians in triaging women considered at high risk of ovarian cancer.

Let me now turn to our prostate cancer program. At the annual meeting of the American Urological Association, or AUA, held in late May, researchers from Johns Hopkins presented data on two proprietary biomarkers that may aid in the management of prostate cancer, including detection, staging and prediction of recurrence.

These markers, a fragment of protein C inhibitor, or PCI, and complement factor 4, known as C4a, were identified in a multicenter study of 400 men and a five-year longitudinal study following 104 patients after radical prostatectomy. These studies demonstrated that PCI provides information useful for the detection and staging of prostate cancer, and the combined use of pre-surgery PCI, PSA and C4a is predictive of prostate cancer recurrence. Validation studies are underway to better determine the optimal commercialization pathway for these markers.

Over the last year we were very focused on three objectives. First, we said that we would do a business development deal, which we did with Quest. Second, we promised to reduce our expenses and focus our efforts on diagnostics, thereby leveraging our unique technology. Today we announced the Bio-Rad partnership, which will allow us to do just that. And third, we want to put in place a prestigious array of advisers.

Along this line, we recently established a Scientific Advisory Board to help direct and prioritize our other programs for further development and commercialization. We are very pleased and honored to have such a high-caliber advisory board, consisting of distinguished members of academia and industry.

The SAB held its first meeting this past month. It was a very productive meeting in which the SAB discussed our progress in various programs and gave recommendations as to how we could broaden and further examine them in the future. In particular the SAB discussed our preliminary data on candidate markers, distinguishing patients with ovarian or prostate cancer with good prognosis from those with poor prognosis, and found the data to be very promising.

In conclusion, today marks a significant milestone for Ciphergen. It is a milestone that we have worked hard to achieve. Since becoming President and CEO, I have been intent on leveraging our technology and focusing our efforts on diagnostics. This transaction provides us a dynamic strategic partner, Bio-Rad, and the ability to focus our efforts solely on commercialization of our diagnostics business.

We have the dedication, technology and resources to advance an exciting business strategy for long-term growth. We now have additional cash resources and reduced operating expenses. This, in combination with our veteran team of executives, who have extensive commercialization and scientific expertise, gives us the ability to execute this strategy. We believe that Ciphergen is well positioned to drive our pipeline forward and to become a leader in the high-value molecular diagnostics market. We anticipate that as we deliver on these stated objectives, shareholder values will increase.

Operator, we are now ready for questions.

(OPERATOR INSTRUCTIONS). I'm showing no questions at this time. Excuse me; we are showing a question now. [John Pora].

This is [Mike Kaufman] calling for John. Gail, we actually -- we'll talk to you off-line, but we just wanted to say great job on the sale. Well done.

Thank you very much.

That's all we have to say. We'll talk to you later.

(OPERATOR INSTRUCTIONS). Ms. Page, I'm showing no questions at this time.

Let's concludes the call, then. Thanks again to all of you for joining us today. We are very excited to move forward in this newly specialized diagnostics company, and we look forward to updating you on our progress soon. Having Bio-Rad, Quest, and the leading research institutes, such as Hopkins and Anderson, on our team provides us with tremendous credibility and backing as we launch our emerging diagnostics business. Our goal again as a specialized diagnostics company is to build an attractive business for long-term growth and sustained shareholder value. Thanks for joining us.

Thank you for participating in today's teleconference. You may now disconnect.