Ciphergen to sell proteomics instrument business to Bio-Rad for $20 million; will focus on diagnostics

By Jennifer Lanning Drey

Eugene, Ore., Aug. 14 - Ciphergen Biosystems, Inc. announced Bio-Rad Laboratories, Inc. will buy its proteomics instrument business for $20 million in cash, according to a company news release.

Bio-Rad is also making a $3 million equity investment in Ciphergen.

Ciphergen's proteomics business includes its Surface Enhanced Laser Desorption/Ionization (Seldi) technology, ProteinChip Arrays and accompanying software.

"This transaction provides us a dynamic strategic partner, Bio-Rad, and the ability to focus our efforts solely on commercialization of our diagnostics business," said Gail S. Page, Ciphergen's president and chief executive officer, during a company conference call held Monday.

Under the terms of the agreement, Bio-Rad will manufacture, sell and market the Seldi technology for proteomics applications such as biomarker discovery, characterization and valuation, according to the release.

Ciphergen will retain exclusive rights to the diagnostics market.

"With a leaner organization, our operating expenses will be greatly reduced. In addition, our financial position after the transaction is approved will be strengthened," said Page.

Also under the agreement, Ciphergen will have a supply agreement with Bio-Rad to purchase Seldi instruments and consumables, according to the release.

The companies will collaborate to identify Seldi customers interested in partnering with Ciphergen to commercialize biomarker discoveries, Page said.

The transaction is subject to approval by Ciphergen's stockholders and other customary closing conditions. Ciphergen said it expects the stockholder meeting to approve the transaction will be held during the fourth quarter.

"Bio-Rad's announcement has significant implications for the way we will structure our business going forward," Page said.

"Reduced operating expenses coupled with the cash infusion from the deal will help give us the resources needed to commercialize our diagnostics program."

During the second quarter, Ciphergen reported clinical data supporting its ovarian and prostate cancer diagnostics programs.

The company has also established a Scientific Advisory Board to help direct and prioritize its other programs for further development, Page said.

Net loss at $7.7 million

Ciphergen reported a GAAP net loss of $7.7 million, or $0.21 per basic and diluted share, in the second quarter on revenues of $5.3 million, according to a separate news release.

The numbers compared to a net loss of $9.4 million, or $0.32 per basic and diluted share, on revenues of $6.9 million in the second quarter of 2005, according to the release.

At June 30, the company's cash and investments were $20.6 million, compared to $24.4 million at March 30, 2006.

Page said Ciphergen plans to hold another conference call within the next few weeks to discuss more specifically its vision of how the transaction with Bio-Rad will affect its financial position.

Fremont, Calif.-based Ciphergen is dedicated to translating protein biomarkers and panels of biomarkers into protein molecular diagnostic tests that improve patient care.

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