Cepheid Enters Into Five-Year Agreement With Northrop Grumman for the Purchase of Anthrax Test Cartridges for Use in United States Postal Service Biohazard Detection Systems

Saturday, August 18, 2007 General News
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SUNNYVALE, Calif., Aug. 16 Cepheid(Nasdaq: CPHD) today announced that it has entered into a five-year masterpurchase order with Northrop Grumman for the purchase of up to $200 million inBacillus anthracis (anthrax) test cartridges and associated materials. Theanthrax test is currently used in Biohazard Detection Systems (BDS), installedat United States Postal Service (USPS) mail processing centers nationwide. Theagreement covers the USPS fiscal years of 2007 through 2011. Cepheid begansupplying USPS with GeneXpert(R) modules and anthrax test cartridges in 2003.

Under the terms of the agreement, the purchase quantity of anthrax testswill be determined on an annual basis, based on the USPS fiscal year ofOctober 1 through September 30. Cepheid has received notice that expected testpurchases for fiscal 2008 will be approximately two million cartridges.

"This agreement is a testament to the success of the ongoing program withthe USPS, in which more than 5.2 million tests have been run with no falsepositives," stated John Bishop, Cepheid CEO. "The achievements in thebiothreat market reflect the versatility and the reliability of the GeneXpertSystem that is now being brought to the molecular clinical diagnostic market."

The GeneXpert modules and anthrax test cartridges serve as the foundationof the BDS system. The BDS system rapidly analyzes air samples taken from themail sorting systems in order to detect any potential trace levels of DNA fromanthrax spores as mail travels through the mail processing equipment.

About Cepheid

Cepheid (Nasdaq: CPHD), based in Sunnyvale, Calif., is an on-demandmolecular diagnostics company that develops, manufactures, and marketsfully-integrated systems for genetic analysis in the clinical, industrial andbiothreat markets. The Company's systems enable rapid, sophisticated genetictesting for organisms and genetic-based diseases by automating otherwisecomplex manual laboratory procedures. Cepheid's easy-to-use systems integratea number of complicated and time-intensive steps, including samplepreparation, DNA amplification and detection, which enable the analysis ofcomplex biological samples in its proprietary test cartridges. Through itsstrong molecular biology capabilities, the Company is focusing on thoseapplications where rapid molecular testing is particularly important, such asidentifying infectious disease and cancer in the clinical market; food,agricultural, and environmental testing in the industrial market; andidentifying bio-terrorism agents in the biothreat market. Seehttp://www.cepheid.com for more information.

This press release contains forward-looking statements that are not purelyhistorical regarding Cepheid's or its management's intentions, beliefs,expectations and strategies for the future, including those relating to theproposed purchases for the USPS BDS program, and business prospects. Becausesuch statements deal with future events, they are subject to various risks anduncertainties, and actual results could differ materially from the company'scurrent expectations. Factors that could cause actual results to differmaterially including that the maximum of $200 million may not be achieved,include risks and uncertainties such as those relating to: the rate ofenvironmental testing using the BDS conducted by the USPS, which will affectthe amount of consumable products sold; whether the BDS continues to performto specifications; manufacturing problems, including with respect to theGeneXpert system and reagents. Readers should also refer to the sectionentitled "Risk Factors" in Cepheid's Annual Report on Form 10-K for 2006 and"Risk Factors" in its most recent quarterly report on Form 10-Q, each filedwith the Securities and Exchange Commission.

All forward-looking statements and reasons why results might differincluded in this release are made as of the date of this press rele

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