Ciphergen to be delisted from Nasdaq due to earnings report problems; company to appeal

By Ted A. Knutson

Washington, Nov. 16 - Ciphergen Biosystems, Inc. said it was notified by the Nasdaq Listings Qualification Department Tuesday that the company's stock will be delisted from the Nasdaq National Market on Nov. 25, unless the company requests a hearing.

Ciphergen said it will request a hearing from Nasdaq, thereby delaying the delisting.

Ciphergen said the reason given for the action was that the firm had not met the filing requirements for its 10-Q financial report for the quarter ended Sept. 30.

In an 8-K filing with Securities and Exchange Commission, the company said its audit committee has determined the company's second-quarter financial report should not be relied on and will be restated.

The company said the audit committee review is not complete.

The committee has identified four transactions involving instances of revenue recognition in a manner inconsistent with the company's revenue recognition policy.

Based on the findings of its advisers and the progress of the investigation to date, the audit committee believes that these transactions resulted in improperly recognized revenue of about $503,000 for the quarter ended June 30, 2005, representing about 7% of reported revenue for the quarter.

Ciphergen said it expects that the removal of this revenue would cause the company's reported net loss for the second quarter of fiscal 2005 to increase by about $301,000, representing about 3% of the company's reported net loss for the quarter.

In addition, company said it has not completed its assessment of how the errors it has identified reflect on the adequacy of its internal controls over financial reporting.

Ciphergen is a Fremont, Calif.-based biotechnology company dedicated to the discovery of protein biomarkers.

Effective as of the opening of business on Thursday, the trading symbol for the company's common stock will be changed to CIPHE from CIPH.

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