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Cepheid Declines on Forecast of Higher Clinical Trial Costs

Cepheid Inc., the maker of a rapid test for a drug-resistant staph infection known as MRSA, declined after saying research costs will rise in 2012.

Cepheid dropped 3.2 percent to $37.32 at the close of trading in New York. The shares have gained 64 percent this year.

Clinical trial expenses next year are expected to be about three times 2011’s levels, the Sunnyvale, California-based company said on a conference call after releasing third-quarter earnings yesterday. Dan Leonard, an analyst at Leerink Swann in Boston, reduced his earnings estimate for 2012 to 24 cents a share from 41 cents in part because of the higher costs.

Cepheid “sounded more cautious regarding the macro outlook,” Leonard wrote in a note to investors. “But utilization of its test menu continues to broaden, and its pipeline is progressing per plan.”

Leonard, who has a “market perform” on the company, also cut his 2011 earnings estimate to 9 cents a share from 11 cents.

Cepheid also said it is terminating a DNA test license with Roche Holding AG because the patents under the agreement aren’t “pertinent to Cepheid’s future business plans.” The company expects to have a one-time charge of $5.4 million, or 8 cents a share, in the fourth quarter.

Third-quarter net income was $1.9 million, or 3 cents a share, Cepheid said in a statement yesterday. Revenue jumped 25 percent to $70.2 million on demand for its Xpert tests, 11 of which are available in the U.S. and 12 that are available elsewhere.

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