2017 & Beyond Next Phase Innovative Growth Drivers. Analyst Event July 27, 2015

Transcription

1 2017 & Beyond Next Phase Innovative Growth Drivers Analyst Event July 27,

2 Forward-Looking Statement During the course of this presentation, we may make projections or other forward-looking statements regarding future events or the future financial performance of Cepheid. We wish to caution you that such statements are just projections and that actual events or results may differ materially. We refer you to the documents that we have filed from time to time with the SEC, specifically our last filed Forms 10-K and 10-Q. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in these projections and forward looking statements. 2

3 John Bishop Chairman and CEO Joined Cepheid as CEO in 2002, Chairman since 2013 Formerly Vysis (acquired by Abbott), MicroProbe, GenProbe, and American Hospital Supply Chairman of AdvaMed Dx Director of Veracyte, Former Director of Conceptus (acquired by Bayer) 3

4 Cepheid s Achievements To Date 4 32% CAGR 23 Xpert Tests 182 Countries 8,903 GeneXpert Systems 43,000 Modules 13,000,000+ Anthrax Tests (Cumulative) 15,000,000+ Xpert Tests (Annually)

5 Commercial Clinical Reagent Revenue Growth $400 $350 $300 $250 32% CAGR ( ) $200 $150 $100 $50 $- Millions shown for illustrative purposes only chart is not reflective of company expectations.

6 Solid Record on Test Menu Expansion & More to Come US HAI Sexual Health Virology Oncology International

7 A Rate of System Placement Unmatched in the Industry HBDC International North America

8 More Systems Installed Than Any Other MDx Manufacturer 25% System Installed Base as % of Total Instruments (Different Colors Represent Different Systems Offered by Same Manufacturer) 20% 15% 10% 5% 8 0% Other Abbott Siemens Qiagen Meridian biomerieux LDT Becton Bioscience Dickinson Source: Market Diagnostics International, IVD Insights, Molecular Infectious Disease , March US Only. Excludes Unspecified or Incomplete Respondents. Hologic Roche Cepheid

9 Ongoing System Innovation : Honeycomb Module 2011: Infinity : Infinity : GeneXpert System 2000: SmartCycler 9

10 Focused Strategic Initiatives Driving Growth Menu Expansion Test Menu Additions & Extensions Hardware Innovations Software & Electronic Data Transmission Targeted ex-us: end 2015, end

11 Focused Strategic Initiatives Driving Growth Menu Expansion Test Menu Additions & Extensions Hardware Innovations Software & Electronic Data Transmission Market Segment Expansion Direct Reach into Smaller Hospitals Reference Labs $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 Global MDx Market POC Market Reference Lab Market Hospital Market CLIA-Waived, POC $ Source: Cepheid Estimates 11

12 Focused Strategic Initiatives Driving Growth Menu Expansion Test Menu Additions & Extensions Hardware Innovations Software & Electronic Data Transmission Cepheid Industry International North America Market Segment Expansion Direct Reach into Smaller Hospitals Reference Labs CLIA-Waived, POC International Expansion Extending Direct Footprint Entering New Markets (China, Japan, India, Brazil) Progressing through Regulatory 12

13 Today We re Addressing Just Two of Our Drivers Menu Expansion Test Menu Additions & Extensions: Oncology Hardware Innovations Software & Electronic Data Transmission Market Segment Expansion Direct Reach into Smaller Hospitals Reference Labs CLIA-Waived, POC International Expansion Extending Direct Footprint Entering New Markets (China, Japan, India, Brazil) Progressing through Regulatory 13

14 Introduction Oncology Target Business Model Updated 5 Year Menu Point-of-Care 14

15 Introduction Oncology Target Business Model Updated 5 Year Menu Point-of-Care 15

16 Michael Bates, MD Vice President, Oncology Research & Development Joined Cepheid in 2011 Formerly at Monogram, ViroLogic, Roche 20 yrs research in oncology, cardiology & ID UCSF, Dana Farber Cancer Institute/Harvard, Duke, Fred Hutchinson Cancer Research Center 16

17 Cancer Today 1 in 7 Global Deaths Caused by Cancer (more than TB, HIV & Malaria combined) 1 in 4 US Deaths Caused by Cancer 1 in 3 Lifetime Chance of Developing Cancer (Female, US) 1 in 2 Lifetime Chance of Developing Cancer (Male, US) 17

18 A Growing Problem as Population Ages, Urbanizes Diagnosed: Living with Cancer: Cancer Deaths: 14 million (2012) 33 million 8 million 18

19 A Growing Problem as Population Ages, Urbanizes Diagnosed: Living with Cancer: Cancer Deaths: 14 million (2012) 33 million 8 million 22 million (2030) 54 million* 13 million 19 Source: American Cancer Society Global Cancer Facts & Figures 2 nd Edition (2011) and 3 rd Edition (2015), *Cepheid Estimates

20 There is Some Good News 3 Routine Monitoring 2 Targeted Therapies 1 Earlier Diagnosis 20

21 Cancer Tomorrow 5-Year Survival Rate 49% 55% 68% Cancer as a Manageable Chronic Condition like HIV Future Source: Howlader N, Noone AM, Krapcho M, et al. (eds). SEER Cancer Statistics Review, , National Cancer Institute. 21

22 Oncology Diagnostics Today Improving Clinical Utility Slow Expensive Highly Complex Not Standardized Cepheid s Vision Faster and Earlier Diagnosis Cost Effective Testing Testing Closer to the Patient More Frequent Monitoring Improved Patient Outcomes 22

23 Oncology Opportunity Companion Diagnostic (Incidence Rate) Monitoring & Therapeutic Guidance (Prevalence Rate) Early Detection (Asymptomatic At Risk) 23 Source: Cepheid estimates based on internal analysis of breast and prostate cancers.

24 Extending GeneXpert Technology Capabilities RNA Expression DNA Mutations/Genomic Alterations (gene amplification, deletion, etc) DNA Methylation Changes 24

25 Foundational Technologies for Cepheid Oncology Paraffin Embedded Tissue Honeycomb ctdna 25

26 ctdna for Broad Applications in Solid Tumor Oncology Multiple studies* suggest feasibility of liquid biopsy Cepheid viral load assays are highly sensitive for nucleic acids in plasma/serum, similar to ctdna Optimizing to deliver ctdna-based Xpert tests * Bettegowda et al., Sci Transl Med, 2014 Misale et al., Sci Transl Med, 2014 Dawson, et al., NEJM, 2013 Diaz et al., JCO,

27 Foundational Technologies for Cepheid Oncology Paraffin Embedded Tissue Honeycomb ctdna Methylation 27

28 What is DNA Methylation and Why Does it Matter? DNA methylation changes occur very early in cancer development DNA promoter hypermethylation turns off tumor suppressors Because DNA hypermethylation occurs early in cancer, even before gene mutations, it provides an opportunity for early detection Normal Cancer Oncogenes Tumor Suppression 28

29 Methylation Until Now was Largely a Research Tool Correlation between cancer and DNA methylation well known Johns Hopkins investigators pioneered these discoveries in the 1980s-90s Detection methodology restricted to the research arena Slow, cumbersome Difficult to control Requires harsh chemicals 29

30 medna PCR: Same Xpert Ease-of-Use Integrated Platform and Test Add Serum to Lysis Reagent vial Vortex to mix Add Sample Insert Cartridge and Start Test Total Test Time <2 Hours 30

31 Impressive Early Xpert DNA methylation Results Strong agreement in blinded serum specimens (breast cancer) between GX prototype & John Hopkins assay Unpublished data (Fackler, Sukumar, Lai, Kohlway) Superior sensitivity Unpublished data (Kohlway, Lai) Data generated using ctdna 31 Source: Blinded comparison of GX-MSP and cmethdna Cumulative Methylation Index (CMI). Shared with permission.

32 Collaboration with Johns Hopkins on Methylation Xpert Breast CA Monitor Xpert Pancreatic CA Early Detection Xpert Prostate CA Early Detection Xpert Prostate CA Risk Stratification 32

33 Foundational Technologies for Cepheid Oncology Paraffin Embedded Tissue Honeycomb ctdna Methylation 33

34 Providing Broad Xpert Capability with Prototype Tests Analyte Type RNA Expression DNA Mutations Methylation Serum/Plasma, Urine, ctdna Tissue (FFPE) 34

35 Providing Broad Xpert Capability with Prototype Tests Analyte Type RNA Expression DNA Mutations Methylation Tissue (FFPE) Breast Stratifier Breast Signature Serum/Plasma, Urine, ctdna Bladder BCR-ABL Breast Monitor 35

36 Providing Broad Xpert Capability with Prototype Tests Analyte Type RNA Expression DNA Mutations Methylation Tissue (FFPE) Breast Stratifier Breast Signature ESR1 (Breast) EGFR (Lung) KRAS (Pancreatic/Colorectal) Prostate Risk Signature Serum/Plasma, Urine, ctdna Bladder BCR-ABL CLL ESR1 (Breast) EGFR (Lung) KRAS (Pancreatic/Colorectal) Breast Monitor Pancreatic Early Detection Prostate Early Detection 36

37 37 Can Cepheid Compete in Oncology?

38 Oncology Test Development In Practice Biomarker Discovery Test Prototype Test Optimization Training Dataset (Alpha-like) Confirmatory Dataset (Beta-like) Validation Dataset (Clinical Trial) 38

39 Oncology Test Development In Practice: Breast CA Signature Biomarker Discovery Test Prototype Test Optimization Training Dataset (Alpha-like) Confirmatory Dataset (Beta-like) Validation Dataset (Clinical Trial) Breast CA Signature Test Clinical Samples and Refine Tests Internal Testing Cutoffs Established, Test Refinement Final Preparation for Clinical Trials 39

40 Oncology Test Development In Practice: Breast CA Stratifier Biomarker Discovery Test Prototype Test Optimization Training Dataset (Alpha-like) Confirmatory Dataset (Beta-like) Validation Dataset (Clinical Trial) Breast CA Signature In public domain Breast CA Stratifier 40

41 Oncology Test Development In Practice: Breast CA Monitor Biomarker Discovery Test Prototype Test Optimization Training Dataset (Alpha-like) Confirmatory Dataset (Beta-like) Validation Dataset (Clinical Trial) Breast CA Signature In public domain Breast CA Stratifier Breast CA Monitor 41

42 Why Collaborate with Cepheid? Collaboration Biomarkers Samples for Training & Validation Scientific & Clinical Expertise Lab R&D Expertise KOL Support Post Launch Credibility Cepheid Commercialization of Discoveries World Class Technology Capability Largest Installed Base & Global Reach Test Development Expertise Clinical/Regulatory Expertise Funding 42

43 Oncology Pipeline at Cepheid GeneXpert adding new capabilities Focus monitoring and early detection, the big markets. Leveraging relationships with world-class collaborators Biomarker discovery First announcement of the Johns Hopkins collaboration Sample access First announcement of the ABCSG collaboration Unlocking the clinical potential of DNA methylation detection Able to do that using ctdna as a substrate 43

44 Warren Kocmond Executive Vice President, Chief Operating Officer Joined Cepheid in May 2013 Formerly Lam Research, Verigy, Affymetrix, Applied Materials, Silicon Graphics BS Mechanical Engineering, MS Systems Management 44

45 Foundational Technologies for Cepheid Oncology Paraffin Embedded Tissue Honeycomb ctdna Methylation 45

46 Foundational Technologies for Cepheid Oncology Honeycomb 46

47 Honeycomb: Strategic Extension into High-Level Multiplexing Over 1,000 wells for Real-Time PCR of 100s of Targets Both qualitative and multiplexed quantitative mrna expression Identical Cartridge proven sample prep 47

48 Honeycomb Technical Checklist Hardware Optics Tube Development Run PCR Well Contamination and Control System Available to R&D Volume Manufacturing 48

49 Precise, Real-Time Optics Hardware Optics 49

50 Honeycomb Tube Hardware Optics Tube Development Injection-molded High-volume, low cost manufacturing All tooling design and molding in-house 50

51 PCR Accomplished in Microwells Routinely imaging two-color, 1,000+ wells Hardware Optics Tube Development Run PCR Primers/probes customized in each well Full system prototypes available 51

52 Uniform, Consistent Well-Filling 1 Hardware Optics Tube Development Run PCR DIR Testing Well & Contamination Control 2 3 Q315 52

53 System on Track for Delivery to R&D by End 2015 Hardware Optics Tube Development Run PCR DIR Well Testing & Contamination Control System Available to R&D Q315 End

54 Manufacturing Leverages Semi-Conductor Automation End-to-End Instrument Hardware Optics Image Acquisition Tube Development Run PCR Well & Contamination Control System Available to R&D Volume Manufacturing Q315 End H16 54

55 First Honeycomb Test: Xpert Breast CA Signature Up to 17 mrna targets + 4 controls Replicated 5 times to increase robustness Targeted ex-us in , US in Enabling broadly disseminated testing 55

56 John Bishop Chairman and CEO 56

57 Moving Precision Medicine Closer to the Patient US-IVD BCR-ABL Ultra Breast CA Stratifier Bladder CA Symptomatic Bladder CA Recurrence Breast CA Signature Breast CA Monitor Breast CA Resistance Monitor Pancreatic CA Early Detection CLL Monitor CE-IVD BCR-ABL Ultra Breast CA Stratifier Bladder CA Symptomatic Bladder CA Recurrence Breast CA Monitor CLL Monitor Breast CA Signature Breast CA Resistance Monitor Pancreatic CA Early Detection Pancreatic CA Monitor 57

58 Cepheid s Oncology Opportunity Grows to $2.8B in 2020 $3,000 $2.8B $2,500 $2,000 $1,500 $1,000 $1.2B Pancreatic Leukemia Breast Bladder $500 $0.5B $ Source: Cepheid Estimate

59 Oncology Takeaways: Cepheid is a Credible Competitor + + Targets (Collaborators) Outcomes Data Samples (Collaborators) Delivery System (GeneXpert) 59

60 60 Question & Answers

61 61 Break Time

62 2017 & Beyond Next Phase Innovative Growth Drivers Analyst Event July 27,

63 Introduction Oncology Target Business Model Updated 5 Year Menu Point-of-Care 63

64 Ilan Daskal Executive Vice President & Chief Financial Officer Joined Cepheid in April 2015 Formerly at International Rectifier (acquired by Infineon), Savan Director of Ixia, Audit Committee Chair 64

65 2017 Target Non-GAAP Commercial Business Model As Presented at Cepheid Analyst Event 2012 Gross Margin High 60s R&D 15%-16% S&M ~18% G&A 8% Operating Margin Mid 20s 65

66 2017 Target Commercial Revenue Framework CAGR (Implied) Status Total Commercial CAGR High Teens to 20% 16% High Teens to 20% On Track Commercial Clinical CAGR Low 20%s 20% Low 20%s On Track 66

67 Bridge to Non-GAAP Commercial Gross Margin Target 68% Royalties 67% 66% 65% Mix & Allowance for ASP Erosion 64% 63% 62% 61% Operational Efficiencies 60% 67 59%

68 Non-GAAP Commercial R&D On Track for 2017 Target 25% 20% # Major Trials Peaks in % % 5% 68 0%

69 Non-GAAP Commercial R&D On Track for 2017 Target 25% 20% HPV Investment Peaks in % 10% HPV $5mn HPV $19mn HPV $3mn Test 5% 69 0%

70 Non-GAAP Commercial R&D On Track for 2017 Target 25% 20% HIV HCV HPV HPV Bladder Breast Clinical Trial Investment Eases from 2017 Peaks at 8% of Revenue in % 10% HPV Breast CW Test Normalizes ~3-4% in 2017 Virology Trials ~$10 million HPV Trial $35 $40 million 5% 70 0%

71 Non-GAAP Commercial Sales & Marketing 25% 20% 15% 10% Test Target was ~18% in 2017 Now Expected to be ~20% in 2017 Incremental +150bps Investment in Oncology $3bn Opportunity Incremental +50bps Investment in POC $1.4bn Opportunity 5% 71 0%

72 Non-GAAP Commercial General & Administrative 10% On track for targeted 8% in 2017 Scale Lower Legal Expenses 5% 72 0%

73 2017 Target Non-GAAP Commercial Business Model Commercial Gross Margin High 60s% R&D ~16% S&M ~20% G&A ~8% Operating Margin Mid 20s% 73

74 2017 Target Non-GAAP Emerging Markets Model Commercial Emerging Markets Gross Margin High 60s% High Teens% R&D ~16% S&M ~20% ~4% G&A ~8% Operating Margin Mid 20s% ~14% 74

75 2017 Target Non-GAAP Consolidated Business Model Corporate Commercial Emerging Markets Gross Margin ~60% High 60s% High Teens% R&D ~14% ~16% S&M ~17% ~20% ~4% G&A ~7% ~8% Operating Margin Low 20s% Mid 20s% ~14% 75 Corporate Model assumes ~18% of 2017 revenue is from Emerging Markets.

76 2017 Target Non-GAAP Corporate Business Model Corporate Commercial Emerging Markets Gross Margin ~60% High 60s% High Teens% Continued Focus on Innovation R&D ~14% On a ~16% $ basis, 2017 R&D Investment > 2015 S&M ~17% ~20% ~4% G&A ~7% ~7% Operating Margin Low 20s% Mid 20s% ~14% 76

77 Can Business Model Targets Go Higher? Sustainable Profitability our Near-Term Goal Longer Term Target Business Model to Follow Closer to Achievement of 2017 Targets But 2017 Targets are Not the End Point Higher Margin Tests (e.g. Oncology) More High Volume Tests (e.g. POC) 77

78 Business Model Takeaways On Track to Achieve 2017 Commercial Business Model Targets Corporate Level Targets Added to Target Business Model R&D on $ Basis Continues Aggressively Beyond

79 David H. Persing, M.D, Ph.D. Executive Vice President, Chief Medical & Technology Officer Joined Cepheid in 2005, Director since 2004 Formerly Corixa (acquired by GSK), Mayo Clinic 270 Peer-Reviewed Articles, 5 Text Books MD, PhD (Genetics) 79

80 Investment in Innovative Xpert Test Menu Continues HAI Available Now 17 Tests US, 23 Tests ex-us MRSA Surveillance SA Nasal Complete C. diff (US only) C. diff/epi Norovirus vana for VRE (US only) vana/b for VRE (CE-IVD only) MRSA/SA SSTI MRSA/SA BC Carba-R (CE-IVD only) United States Carba-R Group A Strep Trichomonas HIV Viral Load Breast CA Stratifier BCR-ABL Ultra Pertussis HPV GBS Ultra HCV Viral Load HBV Viral Load CMV Viral Load Bladder CA Monitor Bladder CA Symptomatic GI Panel Meningitis/Encephalitis Vaginitis/Vaginosis CLL Monitor Pancreatic CA Early Detect Breast CA Monitor Breast CA Resistance Monitor Breast CA Signature CID MTB/RIF EV Flu Flu A/B/RSV Ebola (EUA/WHO) Women s/ Sexual Health Virology Oncology/ Genetics CT (CE-IVD only) CT/NG Trichomonas (CE-IVD only) GBS & GBS Lim Broth (US only) HPV (CE-IVD only) HIV Qualitative (CE-IVD only) HIV Viral Load (CE-IVD only) HCV Viral Load (CE-IVD only) BCR-ABL Monitor (CE-IVD only) FII & FV CE-IVD MTB/RIF Ultra Group A Strep HBV Viral Load BCR-ABL Ultra Bladder CA Breast CA Stratifier 28 Pertussis MTB XDR GI Panel Sepsis Panel Vaginitis/Vaginosis GBS Ultra CMV Viral Load Breast CA Signature CLL Monitor Breast CA Monitor Meningitis/Encephalitis Pancreatic CA Early Detect Pancreatic CA Monitor Breast CA Resistance Monitor

81 Investment in Innovative Xpert Test Menu Continues HAI Available Now 17 Tests US, 23 Tests ex-us MRSA Surveillance SA Nasal Complete C. diff (US only) C. diff/epi Norovirus vana for VRE (US only) vana/b for VRE (CE-IVD only) MRSA/SA SSTI MRSA/SA BC Carba-R (CE-IVD only) United States Carba-R Group A Strep Trichomonas HIV Viral Load Breast CA Stratifier BCR-ABL Ultra Pertussis HPV GBS Ultra HCV Viral Load HBV Viral Load CMV Viral Load Bladder CA Monitor Bladder CA Symptomatic GI Panel Meningitis/Encephalitis Vaginitis/Vaginosis CLL Monitor Pancreatic CA Early Detect Breast CA Monitor Breast CA Resistance Monitor Breast CA Signature CID MTB/RIF EV Flu Flu A/B/RSV Ebola (EUA/WHO) Women s/ Sexual Health Virology Oncology/ Genetics CT (CE-IVD only) CT/NG Trichomonas (CE-IVD only) GBS & GBS Lim Broth (US only) HPV (CE-IVD only) HIV Qualitative (CE-IVD only) HIV Viral Load (CE-IVD only) HCV Viral Load (CE-IVD only) BCR-ABL Monitor (CE-IVD only) FII & FV CE-IVD MTB/RIF Ultra Group A Strep HBV Viral Load BCR-ABL Ultra Bladder CA Breast CA Stratifier 28 Pertussis MTB XDR GI Panel Sepsis Panel Vaginitis/Vaginosis GBS Ultra CMV Viral Load Breast CA Signature CLL Monitor Breast CA Monitor Meningitis/Encephalitis Pancreatic CA Early Detect Pancreatic CA Monitor Breast CA Resistance Monitor

82 Extending Lead with Upgrades and Improvements MTB/RIF Ultra BCR-ABL Ultra GBS Ultra 82

83 MTB/Rif Ultra: Targeting Smear & Culture Replacement MTB/RIF Ultra Current test is smear replacement MTB/RIF Ultra could compete with culture High resolution melt: improve accuracy for drug resistance ~30 minutes faster Economic and patient management benefit Targeted ex-us in early

84 Xpert BCR/ABL* Ultra: Moving Toward Test-of-Cure BCR/ABL Ultra Ultrasensitive detection Nested, quantitative amplification Accurate and reproducible measurement of a 4.5 log reduction WHO standardization for each lot Large sample volume input (200 μl to 4 ml) 1st US-IVD oncology product targeted for *Xpert BCR/ABL is currently available ex-us only.

85 Xpert GBS Ultra: Ready to Take GBS Testing to POC GBS Ultra Xpert GBS was our first IVD We ve learned a lot since then Potential for near-patient testing in OB setting Xpress test using fast PCR design rules Improved sensitivity => more intrapartum testing Incorporating Big Tube technology 85

86 86 Xpert GBS Ultra: Ready to Take GBS Testing to POC

87 Opportunity Further Expanded by Claim Extensions Carba-R CT/NG Virology 87

88 Xpert Carba-R*: Test for Carbapenem Resistance Carba-R 51 minute test for gram negative superbugs Detects 91 different resistance genes in 5 gene families Swab specimens for surveillance Claim extensions to include: Isolated colonies (drug resistance) GNR blood cultures Respiratory, urine samples (direct) 88 *Xpert Carba-R is currently available ex-us only.

89 Xpert HCV VL & HIV VL: Plasma to Whole Blood HIV Viral Load Plasma-based test requires centrifuge Claim extension to test from finger-stick Diagnosis and monitoring To enable and further disseminate testing at true point of care 89

90 Xpert CT/NG for Throat, Rectal Samples CT/NG Increasing prevalence of throat & rectal infections Current test limitations are failing to identify as many as 1/2 to 2/3 of cases in high risk groups Claim extension to include throat and rectal swabs targeted for Accelerate decentralization of testing to true point of care 90

91 Menu Takeaways: Continued Leadership in MDx Innovation Cepheid Continues to Innovate with Broad Menu Expansion Program Ongoing Investments Improve Existing Xpert Tests and Extend Lead Claim Extensions Leverage Previous Investments & Expand Opportunities 91

92 John Bishop Chairman and CEO 92

93 Cepheid s Initial Focus in the US was the Hospital Market Independent Reference Lab System Placement Opportunities Hospital Moderate & High Complexity 5,400 POL Moderate Complexity POC CLIA-Waived 93 Source: American Hospital Association, American Hospital Directory, CMS, Cepheid Internal

94 Extending Reach into High Volume Reference Laboratories System Placement Opportunities Independent Reference Lab 200 Hospital Moderate/ High Complexity 5,400 POL Moderately Complex POC CLIA-Waived 94 Source: American Hospital Association, American Hospital Directory, CMS, Cepheid Internal

95 Largest Placement Opportunity is in POL/POC System Placement Opportunities Independent Reference Lab 200 Hospital Moderate/ High Complexity 5,400 POL Moderately Complex 10,000 POC CLIA-Waived 100, Source: American Hospital Association, American Hospital Directory, CMS, Cepheid Internal

96 MDx Test Volume Distribution Today US MDx Test Volume (%), 2015 Independent Reference Lab 38% Hospital Moderate/ High Complexity 59% POL Moderately Complex POC CLIA-Waived <1% 2% 96 Source: Cepheid Estimate

97 Significant Volume Shift to POC US MDx Test Volume (%), 2020 Independent Reference Lab 24% Hospital Moderate/ High Complexity 37% POL Moderately Complex 3% POC CLIA-Waived 35% 97 Source: Cepheid Estimate

98 POC Success Factors Accuracy Time-To-Result Low Cost 98

99 POC Molecular Participants Alere i Roche LIAT GeneXpert 99

100 The POC Trade-Off Performance Time-to-Result 100

101 The POC Trade-Off Performance Time-to-Result 101

102 Introducing: Xpress Family of Products Group A Strep result in <15 minutes Same cartridge optimized for speed Initial Xpress tests targeted in late 2016 Group A Strep & Flu/RSV Xpress tests target time to result <30 minutes 102

103 POC Molecular Participants Alere i Roche LIAT GeneXpert 103

104 A Cepheid POC Option that Delivers it All? + + Accuracy Time-To-Result Low Cost 104

105 A Cepheid POC Option that Delivers it All? Yes! + + Accuracy Time-To-Result Low Cost 105

106 Introducing the GeneXpert Omni Small and Portable Proven Cartridge Technology Durable Low Power Consumption Automatic Connectivity Solid State Integrated Battery 106

107 POC Molecular Participants Alere i Roche LIAT GeneXpert 107

108 GeneXpert Omni: the Optimal POC Solution Alere i Roche LIAT GeneXpert GeneXpert Omni 108

109 Cepheid Cloud Control for Robust Data Management Real-time communications Automated remote data collection Accelerates clinical decisionmaking and patient management System-wide data surveillance 109

110 GeneXpert Omni Available in 2016 Price $2,

111 GeneXpert Omni: the True Point of Care System Game-Changing MDx System for POC Next Generation Connectivity & User Interface Cost Effective Solution Enabling Global Access 111

112 Peter Farrell Executive Vice President, Worldwide Commercial Operations Joined Cepheid in 2014 Formerly Divisional Vice President and General Manager of Abbott Point of Care 112

113 GeneXpert Omni: A Global Opportunity 100,000 US 100,000+ Emerging Markets Emerging Markets CLIA Waived Other POC 113 Source: Cepheid estimate

114 Potential to Transform Use of MDx: the NHLS Example Systems in 224 of 227 Hospitals in South Africa 10 National/Central Hospitals 17 Tertiary Hospitals 48 Regional Hospitals 149 District Hospitals Omni Potential 4,302 Health Centers 114 Source: NHLS & FIND. Used with permission.

115 Emerging Markets: Success Factors to Impact Patient Care Ability to drive decentralization Battery operated Portability, durability Broad test menu System & test cost Quality & speed of result Connectivity & Data Management 115

116 Emerging Markets: GeneXpert Omni Delivers System Price Portability Durability Battery Operated Data Management System Availability GeneXpert Omni $2, lbs 1H16 GeneXpert IV Now $17, lbs Alere q Now ~$15, lbs (w/o battery) Roche LIAT (IQuum) 2016 ~$12, lbs 116

117 GeneXpert Omni: Emerging Markets Menu Xpert MTB/RIF Ultra Xpert HIV Qualitative Xpert HIV Viral Load Xpert HCV Viral Load Xpert Ebola Xpert HPV Xpert CT/NG Full Xpert Menu 117

118 GeneXpert Omni: Global Opportunities 100,000 US 100,000+ Emerging Markets Emerging Markets CLIA Waived Other POC 118 Source: Cepheid estimate

119 Largest Placement Opportunity is in POL/POC System Placement Opportunities Independent Reference Lab 200 Hospital Moderate/ High Complexity 5,400 POL Moderately Complex 10,000 POC CLIA-Waived 100, Source: American Hospital Association, American Hospital Directory, CMS, Cepheid Internal

120 POC: Success Factors for CLIA-Waived Accounts Impact on patient care Return on investment Broad test menu Quality of result Patient satisfaction Time to result Connectivity & Data Management 120

121 POC: GeneXpert Omni is the Answer System Price Portability Time to Result Menu Data Management System Availability GeneXpert Omni ~$2, lbs mins Flu A/B/RSV Strep A (At Launch) Late 2016 GeneXpert I $27,000 9 lbs mins 17 Tests (US) Now Alere i Flu A/B Strep A Now ~$5, lbs ~15 mins Roche LIAT (IQuum) Strep A Now 121 ~$12, lbs ~15 mins

122 US CLIA-Waived Point-of-Care Menu Flu/RSV Xpress Group A Strep Xpress Flu/RSV HPV Xpress Pertussis Xpress GBS Ultra Xpress CT/NG Xpress Vaginitis/Vaginosis 122 Note: Xpress tests have a 15 to 30 minute targeted run-time

123 Cepheid s POC Opportunity Grows to $1.4B in 2020 $1,400 $1,200 $1,000 $800 $600 $400 CT/NG Vaginitis Pertussis HPV Group A Strep Flu/RSV $200 $

124 Distributors to Partner with Direct Cepheid Sales Immediate Access Cost Effective Scalable 124 Distributor 1 Distributor 1 Sales Reps Distribution footprint is for illustrative purposes only and will depend on final distribution agreements.

125 GeneXpert Omni Positively Impacts Patient Care Enables Global Access to Best-in-Class MDx Substantially Expands Addressable Market Hybrid Distribution Accelerates Realization of US POC Opportunity 125

126 John Bishop Chairman and CEO 126

127 Final Thoughts Clear Vision and Ability to Execute on Development of Oncology Franchise. Committed and On Track to Achieve 2017 Target Business Model. Target Menu Demonstrates Ongoing Innovation. Additional Investment in Existing Tests to Extend Lead, Expand Opportunities GeneXpert Omni is the True Point of Care System. 127

128 128 Question & Answers

129 129

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