CEPHEID (CPHD, Financial) filed Quarterly Report for the period ended 2010-03-31.
Cepheid has a market cap of $1.21 billion; its shares were traded at around $20.52 with and P/S ratio of 7.1. CPHD is in the portfolios of PRIMECAP Management.
Research and development expenses consist of salaries and employee-related expenses, including stock-based compensation, clinical trials, research and development materials, facility costs and depreciation. Research and development expenses decreased 6% to $9.7 million for the first quarter of 2010 from $10.3 million for the first quarter of 2009. The decrease in research and development expenses of $0.6 million is due to an approximately $0.8 million decrease in beta and clinical trial costs, offset by an approximately $0.1 million increase in salaries and employee-related expenses. We expect that our research and development expenses will increase in the remainder of 2010 as we expect to have an increase in our beta and clinical trial costs for products currently under development.
Sales and marketing expenses consist primarily of salaries and employee-related expenses, including commissions and stock-based compensation, travel, facility-related costs and marketing and promotion expenses. Sales and marketing expenses increased 32% to $9.0 million for the first quarter of 2010 from $6.8 million for the first quarter of 2009. The increase in sales and marketing expenses is primarily due to a $1.2 million increase in salaries and employee-related expenses and a $0.7 million increase in tradeshow expenses, sales meeting expenses and a corporate marketing campaign. We expect our sales and marketing expenses will increase in the remainder of 2010 as we continue to expand our efforts in the Clinical market, with particular emphasis on pursuing the market opportunities for our healthcare associated infection and infectious disease products.
General and administrative expenses consist primarily of salaries and employee-related expenses, which include stock-based compensation, travel, facility costs, legal, accounting and other professional fees. General and administrative expenses increased 8% to $5.7 million for the first quarter of 2010 from $5.3 million for the first quarter of 2009. The increase is due to an increase of approximately $0.4 million of professional services. We expect our general and administrative expenses to remain relatively flat in the remainder of 2010.
Net cash used in investing activities was $1.4 million and $1.6 million for the three months ended March 31, 2010 and March 31, 2009, respectively. For the three months ended March 31, 2010, net cash used in investing activities consisted of net capital expenditures and payments for technology licenses, and the cost of an asset acquisition offset by proceeds from the sales and maturities of marketable securities and short-term investments. The sales and maturities of marketable securities and short-term investments were related to the settlement of $4.1 million of our auction rate securities, leaving $20.7 million of auction rate securities at cost. For the three months ended March 31, 2009, net cash used in investing activities consisted of payments of technology licenses and net capital expenditures and the cost of an acquisition, offset by a transfer to restricted cash. The change in net cash used in investing activities for the three months ended March 31, 2010 from the same period ended March 31, 2009 is primarily due to an increase in capital expenditures offset by an increase in proceeds from the maturities of marketable securities.
Net cash provided by (used in) financing activities was $(0.6) million and $1.5 million for the three months ended March 31, 2010 and 2009, respectively. During the first quarter, $4.1 million of our auction rate securities settled, leaving $20.7 million of auction rate securities at cost. The increase of principal payment of bank borrowing was offset by an increase in net proceeds from the issuance of common shares under our employee stock purchase plan and exercises of stock options.
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Cepheid has a market cap of $1.21 billion; its shares were traded at around $20.52 with and P/S ratio of 7.1. CPHD is in the portfolios of PRIMECAP Management.
Highlight of Business Operations:
Cost of product sales consists of raw materials, direct labor and stock-based compensation expense, manufacturing overhead, facility costs and warranty costs. Cost of product sales also includes royalties on product sales and amortization of intangible assets related to technology licenses and intangibles acquired in the purchases of Sangtec and Stretton. Cost of product sales increased 26%, or $5.4 million, from $20.7 million in the first quarter of 2009 to $26.1 million in the first quarter of 2010, as a result of the increased overall product sales. Our product gross margin percentage was 45% for the first quarter of 2010 and 43% for the first quarter of 2009. The increase in product gross margin percentage in the three months ended March 31, 2010 versus the same period in 2009 was primarily due to Clinical reagent volume increases and manufacturing efficiencies driving lower Clinical reagent unit costs as well as favorable product mix with higher margin Clinical reagent sales comprising a higher percentage of our total product revenue.Research and development expenses consist of salaries and employee-related expenses, including stock-based compensation, clinical trials, research and development materials, facility costs and depreciation. Research and development expenses decreased 6% to $9.7 million for the first quarter of 2010 from $10.3 million for the first quarter of 2009. The decrease in research and development expenses of $0.6 million is due to an approximately $0.8 million decrease in beta and clinical trial costs, offset by an approximately $0.1 million increase in salaries and employee-related expenses. We expect that our research and development expenses will increase in the remainder of 2010 as we expect to have an increase in our beta and clinical trial costs for products currently under development.
Sales and marketing expenses consist primarily of salaries and employee-related expenses, including commissions and stock-based compensation, travel, facility-related costs and marketing and promotion expenses. Sales and marketing expenses increased 32% to $9.0 million for the first quarter of 2010 from $6.8 million for the first quarter of 2009. The increase in sales and marketing expenses is primarily due to a $1.2 million increase in salaries and employee-related expenses and a $0.7 million increase in tradeshow expenses, sales meeting expenses and a corporate marketing campaign. We expect our sales and marketing expenses will increase in the remainder of 2010 as we continue to expand our efforts in the Clinical market, with particular emphasis on pursuing the market opportunities for our healthcare associated infection and infectious disease products.
General and administrative expenses consist primarily of salaries and employee-related expenses, which include stock-based compensation, travel, facility costs, legal, accounting and other professional fees. General and administrative expenses increased 8% to $5.7 million for the first quarter of 2010 from $5.3 million for the first quarter of 2009. The increase is due to an increase of approximately $0.4 million of professional services. We expect our general and administrative expenses to remain relatively flat in the remainder of 2010.
Net cash used in investing activities was $1.4 million and $1.6 million for the three months ended March 31, 2010 and March 31, 2009, respectively. For the three months ended March 31, 2010, net cash used in investing activities consisted of net capital expenditures and payments for technology licenses, and the cost of an asset acquisition offset by proceeds from the sales and maturities of marketable securities and short-term investments. The sales and maturities of marketable securities and short-term investments were related to the settlement of $4.1 million of our auction rate securities, leaving $20.7 million of auction rate securities at cost. For the three months ended March 31, 2009, net cash used in investing activities consisted of payments of technology licenses and net capital expenditures and the cost of an acquisition, offset by a transfer to restricted cash. The change in net cash used in investing activities for the three months ended March 31, 2010 from the same period ended March 31, 2009 is primarily due to an increase in capital expenditures offset by an increase in proceeds from the maturities of marketable securities.
Net cash provided by (used in) financing activities was $(0.6) million and $1.5 million for the three months ended March 31, 2010 and 2009, respectively. During the first quarter, $4.1 million of our auction rate securities settled, leaving $20.7 million of auction rate securities at cost. The increase of principal payment of bank borrowing was offset by an increase in net proceeds from the issuance of common shares under our employee stock purchase plan and exercises of stock options.
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