Ciphergen Biosystems
Updated Oct 26, 2001
| Years |
Jan-Sep
2001 |
Dec
2000 |
Dec
99 |
Dec
98 |
Dec
97 |
97-99
3-yr Annual |
| Sales (Mln US$) |
11.7 |
8.9 |
5.0 |
2.9 |
1.3 |
|
| Sales Growth % |
97 |
78 |
|
|
|
|
| Net Loss (Mln US$, excl spec. items) |
-18.7 |
-20.3 |
-8.0 |
-8.0 |
-6.0 |
|
| Special Items |
|
-27.2 |
|
|
|
|
| Gross Margin % |
67 |
61 |
66 |
|
|
|
| R&D (Mln US$) |
8.9 |
7.5 |
3.1 |
4.6 |
3.2 |
|
| Net Loss per Share |
0.71 |
|
|
|
|
|
| Cash Flow / Debt |
|
|
|
|
|
|
Market Cap.:
102 million US$ (Oct 25, 2001)
Cash & Short Term Investment: 81.6
million US$ (Sep 30, 2001)
Total Assets:
110.7
Long Term Debt:
Total Liabilities:
Shareholders Equity:
98.7
How does it make money?
Ciphergen sells ProteinChip System to labs in both pharmas
and academic research centers for discovering proteins and its functions.
Genomics helps to explain the relationship between
gene activity and disease. The genes make proteins and instruct what
should they do. So the actual functions in the body are carried out
by proteins. The majority of drug targets nowadays are proteins.
The study of proteins, proteomics, has therefore become a hot new area
in pharmaceutical and biotech industry.
Ciphergen makes money from selling tools to explore
this new market for pharmaceuticals. It is like selling drilling
equipment to oil companies.
What is ProteinChip?
ProteinChip is a system to automate the process of analyzing
proteins. The instrument will detect and analyze the proteins in
hours or days. According to a cancer researcher at the University
of Washington, it completed 3 experiments in a week when his staff had
been working on for months.
This is how the System works (source: San Francisco
Chronicle).
1. Scientists take samples of healthy and diseased
protein tissues and put them into 2 different soups.
2. Tiny sample from each "soup" are dropped onto
different chips (ProteinChip Array). Each chip contains chemical
"hooks" that capture the proteins of
interest.
3. Each chip is inserted into a laser device (called
ProteinChip Reader) about the size of a 2-drawer file cabinet. It
contains a measuring system that can determine how much of each protein
is present in the sample.
4. The differences between the protein makeup of
the 2 samples guide further research. The sick patient may have a
protein not present in the healthy sample. Scientists can ask when
that protein come from, and perhaps effect a cure.
Does it have a strong demand? How big is the market?
As a new area of scientific research, there are only
a few instrument for studying proteins. There is surely a great demand
for such kind of tool that could save time and manpower in the research.
For pharmaceuticals, it is a research driven business.
About 30%-40% of the revenues are spent on research. Together with
academic and government granted organisations, it is a huge market.
As estimated by an analyst with ING Baring, the
current market for protein-analysis equipment is about $500 million annually.
Ciphergen targets its market at the following:
1. Basic biology research labs - study of general
biological processes and understanding of the molecular basis of disease.
2. Clinical research and diagnostics - associating
clinical disease symptoms to changes in certain proteins.
3. Pharmaceutical research and development - the
responses to a drug candidate can be evaluated by observing the change
in specific proteins. ProteinChip System can improve the effectiveness
in drug development.
Current customers include:
Pharma & biotech : Amgen, AstraZeneca, Glaxo SmithKline,
Human Genome Sciences, Merck, Roche Vitamins, Schering Plough, BASF, Novartis,
Pharmacia, Tanabe, Yamanouchi
Academic & Govt. granted: John Hopkins Medical School, MIT,
Cambridge Medical Research Council, National Cancer Institute, Stanford
Univ., UCSF Cancer Center, UBC, Univ. of Notre Dame
In May 1999, the new ProteinChip System, Series
PBS II was commercially launched. For the 1st half of 2000, Ciphergen
recorded a 78% growth is revenue, comparing to the same period last year.
It means the initial response to the product is excellent.
Is it the market leader? Who are its competitors?
Ciphergen is the only supplier of protein chips.
Its technology is protected by patent. There is no direct competition
at this moment.
There are some other suppliers for protein analysis
instrument by using different technology.
Is the market price too high?
Market cap in Oct 2000
0.7 b
Market cap in 2005
2.1 b (expecting an annual 20% return on stock price)
Supposing PE 40 in 2005, earning has to be
52 m
Based on profit margin of 30%, sales need to be
173 m
It should not be too hard to achieve. Sales of Affymetrix, a DNA
chip maker, in 1999 was $143 million.