Cepheid enters into an exclusive collaboration with Novartis for the commercialization of a test for monitoring the BCR-ABL gene transcript in peripheral blood specimens from patients diagnosed with Philadelphia chromosome-positive chronic myelogenous leukemia (Ph+ CML). Together with other lab tests, monitoring levels of BCR-ABL transcripts in Ph+ CML patients will aid in patient management.

The collaboration reflects the commitment shared by Novartis and Cepheid to deliver the benefits of an FDA-cleared/approved molecular test that reports results which are linked to an internationally accepted standard called the "International Scale" (IS). With the development of the class of drugs called tyrosine kinase inhibitors, Ph+ CML patients have access to the broadest range of therapeutic options ever available. A standardized molecular monitoring BCR-ABL test with greater reproducibility is expected to support optimal patient management decisions. By moving to a rigorously developed, regulatory-cleared/approved test which is also linked to the IS, the collaboration aims to reduce the variability that is currently inherent in BCR-ABL testing.

"Across the healthcare industry, focused diagnostic tests offer a very real opportunity for improved patient care and resource management through more directed treatment decisions," said John Bishop, Cepheid's chief executive officer. "With this in mind, Cepheid's collaboration with Novartis aims to deliver a standardized and accurate molecular test to support the management of CML patients."

Continued Bishop, "Cepheid's unique combination of accuracy, ease-of-use and reproducibility is unmatched in molecular diagnostics, and has established the GeneXpert system as the leading molecular platform for healthcare associated infections. Benefiting from Novartis' global reach and experience as the well respected leader in the treatment of CML, we look forward to extending the benefits of our best-in-class GeneXpert system to patients in the oncology field."

Xpert BCR-ABL has a CE Mark in Europe, and it has been available outside the United States since 2006. Under the agreement announced today, the potential US commercialization of Xpert BCR-ABL will be accelerated, with Novartis funding the clinical studies and other development expenses. Following the commercial release of the test, Novartis and Cepheid will explore further collaboration to develop other diagnostics which will help physicians better manage patient treatment.

In addition to funding development and clinical trial costs, Cepheid will receive an upfront fee of US$ 5 million from Novartis with an additional US$ 3 million in milestone payments over the next twelve months. These monies will be recognized as 'Other Revenue,' ratably over approximately the next two years. Upon commercial release in the US, Novartis will have exclusive global distribution rights to the Xpert BCR-ABL test under a Cepheid / Novartis label working in conjunction with Cepheid's Commercial Operations team.

Cepheid is a leading molecular diagnostics company that is dedicated to improving healthcare by developing, manufacturing, and marketing accurate yet easy to use molecular systems and tests.