May 21, 2003 — Cepheid expects to receive up to $29.75 million in 2004 as the supplier of the detection component in a system that alerts mail sorters of anthrax and other hazards.

Chief Executive John Bishop said Tuesday that Cepheid should receive 15 percent – 17 percent of a $175 million contract awarded by the U.S. Postal Service to lead contractor Northrop Grumman Corp. to provide the Biohazard Detection System. The system will use Cepheid’s GeneXpert, a portable and fast DNA-based system for identifying pathogens, as well as its disposable cartridges to conduct periodic tests in mail sorting facilities.

Northrop Grumman announced Monday that it received the long-delayed award, which begins in January 2004 and expires in October. In a conference call Tuesday, Bishop said the award appeared to be the first of a two-phase program, with an optional part likely to kick in after October. “The second phase should be equal to or slightly larger (than the initial $175 million),” Bishop said.

He projected Sunnyvale, Calif.-based Cepheid initially will make most of its revenue from sales of the GeneXpert but anticipated the sales of its consumable cartridge will continue to grow incrementally after the hardware is installed. In previous announcements, the postal service has discussed installing one or more detection systems in about 290 facilities. Air-sampling tests using Cepheid’s disposable cartridges could occur as often as every half hour.