NASDAQ: CPHDNASDAQ: CPHD

Baird’s 2008 Small Cap Health Care ConferenceSeptember 10, 2008

Baird’s 2008 Small Cap Health Care ConferenceSeptember 10, 2008

© 2008 Cepheid2

Forward Looking StatementDuring the course of this presentation, dated 10 September 2008, we may make projections or other forward looking statements regarding future events or the future financial performance of Cepheid. We wish to caution you that such statements are just projections and that actual events or results may differ materially. We refer you to the documents that we have filed from time to time with the SEC, specifically our last filed Form 10-K and most recent Form 10-Q filed. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in these projections and forward looking statements.

During the course of this presentation, dated 10 September 2008, we may make projections or other forward looking statements regarding future events or the future financial performance of Cepheid. We wish to caution you that such statements are just projections and that actual events or results may differ materially. We refer you to the documents that we have filed from time to time with the SEC, specifically our last filed Form 10-K and most recent Form 10-Q filed. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in these projections and forward looking statements.

© 2008 Cepheid

Cepheid Investment Highlights

• Integrated Molecular Diagnostics Company– Unique scalable system platform– Broad and expanding test pipeline

• Broad market applicability– CLIA High Complexity Labs– CLIA Moderate Complexity Labs – CLIA Waived Sites

• The leader in the rapidly expanding HAI molecular market– Building on MRSA Leadership => C.diff, VRE, others

• Strategic pipeline: expands from Infectious Disease to Oncology• Established base of operations in US and Europe

• Integrated Molecular Diagnostics Company– Unique scalable system platform– Broad and expanding test pipeline

• Broad market applicability– CLIA High Complexity Labs– CLIA Moderate Complexity Labs – CLIA Waived Sites

• The leader in the rapidly expanding HAI molecular market– Building on MRSA Leadership => C.diff, VRE, others

• Strategic pipeline: expands from Infectious Disease to Oncology• Established base of operations in US and Europe

3

© 2008 Cepheid

Competitive Landscape

Source: Scientia Analysis (used with permission), other industry reports, company presentations

2007 Global MDx Market ($ Bn): $3.4 2007 Global MDx Market ($ Bn): $3.4

^Other includes Beckman Coulter, Nanogen, Third Wave, Tm Bioscience, Veridex, and other emerging players

* Includes Abbott Molecular, Vysis (FISH rev.), and Celera** Only includes clinical diagnostics revenue

© 2008 Cepheid

Molecular Market: Where do we play?

BloodScreening

InfectiousDisease OncologyBiothreat Genetics

NovartisNanosphere

HologicsHologicsHologicsQiagenQiagenQiagen

VeridexbioMerieuxbioMerieuxbioMerieux

SiemensBD

AbbottAbbott AbbottGen-ProbeGen-ProbeGen-Probe

RocheRocheRocheRocheIdaho Technologies

ABICepheidCepheidCepheidCepheid

© 2008 Cepheid

Phased Portfolio Rollout: 2008-2013

2008-2009 2010-2011 2012-2013

Phase 1 Phase 2 Phase 3

HAI & Other Infectious Diseases

Other Genetic

Oncology

© 2008 Cepheid

ReflexiveSystem-level

intelligence; If this, then that answers

True Random AccessFully-automated System

Random AccessAutomated

Multi-ChannelBatch Testing

AutomatedSingle Channel Batch Testing

Development of Fully Automated Lab Systems

GeneXpert® System Clinical Chemistry Systems

Immuno Assay Systems

All Other Molecular Systems

© 2008 Cepheid

Scope of Clinical MDx Competitive Participation

7,000 Highly Complex

~2,300 Current MolecularCepheid, Roche, Gen-Probe, Siemens, Novartis, Abbott,

Qiagen, BD, BioMerieux

7,000 Highly Complex

~2,300 Current MolecularCepheid, Roche, Gen-Probe, Siemens, Novartis, Abbott,

Qiagen, BD, BioMerieux

159,173 WaivedCepheid

159,173 WaivedCepheid

* Data from Health Care Direct

20,561 Moderately ComplexCepheid

20,561 Moderately ComplexCepheid

© 2008 Cepheid

GeneXpert® SystemA Disruptive TechnologyGeneXpert® SystemA Disruptive Technology

© 2008 Cepheid

Molecular Lab in a Cartridge

• Universal sample prep

– Protocol for specific sample type is broadly applicable

• Closed test system provides:

– Nested PCR

– Reflexive test capability

• Broad target utility

– Infectious disease

– Oncology

– Genetic disease

• Universal sample prep

– Protocol for specific sample type is broadly applicable

• Closed test system provides:

– Nested PCR

– Reflexive test capability

• Broad target utility

– Infectious disease

– Oncology

– Genetic disease

Cartridge Bodywith Multiple ReagentReservoirs

Cartridge Bodywith Multiple ReagentReservoirs

PCR Reaction

Tube

PCR Reaction

Tube

Ultrasonic InterfaceUltrasonic Interface

Rotary ValveRotary Valve

© 2008 Cepheid

Unique Modular Design

• Accuracy

– Sensitivity

– Specificity

• On-Demand Testing

• Random Access

• Short Time-to-Result

• Compact Footprint

• Universal Environmental and Market Application

• Accuracy

– Sensitivity

– Specificity

• On-Demand Testing

• Random Access

• Short Time-to-Result

• Compact Footprint

• Universal Environmental and Market Application

© 2008 Cepheid1212

GeneXpert® System Scalability

GX-IGX-I GX-IVGX-IV GX-XVIGX-XVI GX Infinity SystemsGX Infinity Systems

GeneXpert ModuleGeneXpert Module

© 2008 Cepheid1313

Modular Scalability Enables System-wide Access

HospitalHospital

Central LabCentral Lab Regional LabRegional LabLabor and Delivery

Labor and Delivery

ER Department

ER Department ICUICU

Reference LabReference Lab

Main Laboratory

Main Laboratory

© 2008 Cepheid

GeneXpert® Infinity-48: The Pinnacle of Molecular Diagnostics Automation

Touch Screen Driven Xpertise™ Software

Cartridge Conveyor

Test CartridgeStaging Area

Cartridge Handling Robotic Gantry

16-48 Independent

Modules

Test CartridgePickup

Test Return Shuttle

Biohazard Disposal Bin

Expected ship date: December 2008

Expected ship date: December 2008

© 2008 Cepheid

204244Different Tests on-board

NA

~60mins

200/8hrs

BC

UniCel DxNCompetitor

System*Gen-Probe

Tigris® DTS™ Roche Cobas® BD Viper™ Abbott m2000™

Number of Tests 1000/12 hrs 144/12 hrs 552/8hrs 186/8hrs

Time to First Result** 5 hours 6 Hours 4 hours 5.6 Hours

Price Per System ~$438K ~$185K - $315K ~$165K ~$225K

Competitive Landscape – Infinity System

*GeneXpert estimates based on 58 minute assay. Competitor data based on published information.**Includes sample prep time.

4840322416Different Tests on-board

GeneXpert® Infinity System* 16 24 32 40 48

Number of Tests/24 hrs 397 595 794 993 1,200 - 1,300

Time to First Result** 58 mins 58 mins 58 mins 58 mins 58 mins

Price Per System $220,000 $264,500 $309,500 $354,250 $399,000

© 2008 Cepheid

Cumulative Clinical GeneXpert® System Placements by Model (Q2 2008)

North America

Combined NA & EU

Europe

58% GX-16 Placements

GX-423%

GX-235%

GX-136%

GX-161%

GX-81%

GX-4HT4% GX-4

23%

GX-235%

GX-136%

GX-161%

GX-81%

GX-4HT4%

6% GX-16 Placements

30% GX-16 Placements

© 2008 Cepheid

Women’s Health

Healthcare Associated Infections

Critical Infectious Disease

Immuno-Compromised

Oncology

Genetics

GBS

MRSAMRSA/SA/mecA BCMRSA/SA/mecA SSTIMRSA Nasal Improved

EV

HemosI FII, FV

GC-CTHPV

C. diff CLIA WaivedMRSA/VRE Combo

MDR-TB

Quant CMVQuant EBV

Bladder RDLung

GC-CT Panel II CLIA WaivedGC-CT (510K) CLIA Waived Vaginitis Panel CLIA WaivedHSV typing– lesion CLIA WaivedHSV typing CSF

Norovirus

Microbial ID G+/G- BCBHIV Quant.Sepsis Gram (+)Sepsis Gram (-)Sepsis FungalBacterial meningitis

VZV

Bladder – Early Detection Symptomatic

Bladder – Early Detection High Risk

BCL2Jak2 kinasePML/RARA

Broad Pipeline Strategy: 2008-20132009 2012-20132010-20112008

MRSA/SA/mecA NasalMRSA Nasal CLIA-WaivedC. diffVRE

BCR-ABL II

Product availability based on timing of FDA clearance

© 2008 Cepheid

Universal Sample Prep

Multiplexing & Nested PCR

TaqmanScorpions

Primers

Probes

Quenchers

Dyes

Modified Bases

GeneXpert® System & Test Cartridge

Vertically IntegratedBiologics

DevelopmentExpertise

Unique Ability to Deliver Test Pipeline

© 2008 Cepheid

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2008 Value 2012 Value

Rapidly Growing Worldwide HAI Opportunity

VRE CAGR = 120%

Diagnostic MRSA CAGR = 37%

Presurgical MRSA CAGR = 67%

Surveillance MRSA CAGR = 62%

C. Diff. CAGR = 18%

© 2008 Cepheid

Drivers of Market Growth Intensifying

Financial - Hospital Costs Public Awareness

Best PracticePublic Policy

• Bed management• CMS• Private Payers

• Legislation• Guidelines

• Marketing• Patient Competition

Increasing Virulence

• Medical Journals• Experience

© 2008 Cepheid

U.S HAI Legislation: Current State Laws

Mandatory HAI Reporting• 30 states require reporting • 1 State has voluntary reporting • 11 States mandatory HAI reporting bills in 2008 legislative session

Mandatory MRSA Screening/Surveillance• 4 States require MRSA screening/surveillance of patient admissions

Illinois, Minnesota, New Jersey, Pennsylvania • 6 States MRSA patient screening/surveillance bills in ‘08 legislative session

California, District of Columbia, Iowa, Kentucky, Missouri and New YorkCA and DC bills remain active (as of August 19, 2008)

Mandatory HAI Reporting• 30 states require reporting • 1 State has voluntary reporting • 11 States mandatory HAI reporting bills in 2008 legislative session

Mandatory MRSA Screening/Surveillance• 4 States require MRSA screening/surveillance of patient admissions

Illinois, Minnesota, New Jersey, Pennsylvania • 6 States MRSA patient screening/surveillance bills in ‘08 legislative session

California, District of Columbia, Iowa, Kentucky, Missouri and New YorkCA and DC bills remain active (as of August 19, 2008)

Source: Association of Professional Infection Control & Epidemiology, Inc.** Some states that have enacted mandatory HAI Reporting have introduced additional legislation

© 2008 Cepheid

U.S HAI Legislative Update: State Activity

Prevention and Control Programs– Connecticut, Arizona & Massachusetts require hospitals to

establish HAI prevention/control programs– New York requires medical students to receive infection

control/prevention training

Public Awareness– Louisiana requires HAI reporting to a central web site for

public access– Maryland designated funds for MRSA public awareness

Prevention and Control Programs– Connecticut, Arizona & Massachusetts require hospitals to

establish HAI prevention/control programs– New York requires medical students to receive infection

control/prevention training

Public Awareness– Louisiana requires HAI reporting to a central web site for

public access– Maryland designated funds for MRSA public awareness

Source: Association of Professional Infection Control & Epidemiology, Inc.** Some states that have enacted mandatory HAI Reporting have introduced additional legislation

© 2008 Cepheid

Cepheid: Today’s Molecular HAI Leader

• Rapid Market Adoption of GeneXpert® System

– Flexibility and ease-of-use

– Fastest time-to-result with Cepheid on-demand capability

– Tests available with CLIA moderate complexity

– Unique system scalability

• Leading Portfolio of Tests

– Addressing all HAI market aspects

• Surveillance, diagnostics, pre-surgical testing

– Short MRSA time-to-result, maximizing bed utilization

• Rapid Market Adoption of GeneXpert® System

– Flexibility and ease-of-use

– Fastest time-to-result with Cepheid on-demand capability

– Tests available with CLIA moderate complexity

– Unique system scalability

• Leading Portfolio of Tests

– Addressing all HAI market aspects

• Surveillance, diagnostics, pre-surgical testing

– Short MRSA time-to-result, maximizing bed utilization

© 2008 Cepheid

MRSA Surveillance: U.S. Market Development

*Analysis derived from APIC, CAP and Cepheid Internal Data

Active Surveillance

Active Surveillance

35%

Molecular Molecular 7%7%

Culture Culture 10%10%

Rapid Rapid Culture Culture

18%18%

Active SurveillanceActive Surveillance

Routine Passive Surveillance

Routine Passive Surveillance

42%

NoneNone

23%

© 2008 Cepheid

Q2 MRSA Update• Current Total VA: Cepheid

– 90 Hospitals– 98 GeneXpert® Systems– 1,025 Modules

• Moving testing to all admissions, some discharges and transfers

– VA wide potential on Admissions: 780,000 tests/year

– Fiscal 2009 Potential: 1.67MM Tests– Additional Accounts moving to

“molecular”

• Current Total VA: Cepheid– 90 Hospitals– 98 GeneXpert® Systems– 1,025 Modules

• Moving testing to all admissions, some discharges and transfers

– VA wide potential on Admissions: 780,000 tests/year

– Fiscal 2009 Potential: 1.67MM Tests– Additional Accounts moving to

“molecular”

• The VA added 4 new systems – Two GX16-8 – One GX16-4 – One GX16-16

• VA added 56 modules for Q2

• The VA added 4 new systems – Two GX16-8 – One GX16-4 – One GX16-16

• VA added 56 modules for Q2

ALL VA HOSPITALSALL VA BEDS VA MOLECULAR BEDS

Culture/CA 31%

BD-GeneOhm 7% Cepheid 62%

VA MOLECULAR HOSPITALS

BD-GeneOhm 10%

Cepheid 90%

BD-GeneOhm 11%

Culture/CA 8%

Cepheid 81%

BD-GeneOhm 12%

Cepheid 88%

© 2008 Cepheid

HAI Product PortfolioAvailability

Surveillance Europe USMRSA: Nasal Now NowMRSA: Nasal - CLIA Waiver ‘09 ‘09VRE: Rectal ‘08 ‘09

DiagnosticMRSA/SA/MEC A: SSTI Now ‘08MRSA/SA/MEC A: BC Now ‘08C. Diff: Diarrhea ‘08 ‘09

Pre-surgical TestingMRSA/SA/MEC A: Nasal ‘08 ‘09

© 2008 Cepheid

Q2 ’08 Financial Results• Revenue of $42.1 million

– Solid growth in core clinical; 1H08 revenue up 261% vs. 1H07 – Xpert™ MRSA test revenue ~$11 mn vs. ~$8 mn in Q1 ’08– 37 U.S. GeneXpert System placements– 71 European GeneXpert System placements– Non-core Clinical partner sales unexpectedly low– NG indication that USPS fiscal 2009 purchases will be 1M tests

• Lowered 2008 guidance* driven by non-core partner & biothreat sales– Total revenue: $173 to $177 million – Total product sales: $164 to $167 million– MRSA test sales: $52 to $55 million– GAAP net loss: $20 to $22 million, or $(0.35) to $(0.38) per share– Non-GAAP net loss: $4 to $6 million, or $(0.07) to $(0.10) per share

• Revenue of $42.1 million– Solid growth in core clinical; 1H08 revenue up 261% vs. 1H07 – Xpert™ MRSA test revenue ~$11 mn vs. ~$8 mn in Q1 ’08– 37 U.S. GeneXpert System placements– 71 European GeneXpert System placements– Non-core Clinical partner sales unexpectedly low– NG indication that USPS fiscal 2009 purchases will be 1M tests

• Lowered 2008 guidance* driven by non-core partner & biothreat sales– Total revenue: $173 to $177 million – Total product sales: $164 to $167 million– MRSA test sales: $52 to $55 million– GAAP net loss: $20 to $22 million, or $(0.35) to $(0.38) per share– Non-GAAP net loss: $4 to $6 million, or $(0.07) to $(0.10) per share

*Last updated July 24, 2008

© 2008 Cepheid28

261%238%288%178%-Core Clinical Yr/Yr Growth

39.020.818.243.415.6Core Clinical Sales

2006 2007Q1

2008Q2

20081H

2008

Product Sales $82.4 $116.5 $41.9 $39.0 $80.9

Other Revenue 5.0 13.0 2.9 3.1 6.0

Total Revenues 87.4 129.5 44.8 42.1 86.9

Product Gross Margin* 41% 42% 47% 43% 45%Collaboration Profit Sharing 15.0 12.3 3.7 2.8 6.5

Research & Development 21.2 27.1 8.6 9.5 18.1Sales & Marketing 12.7 20.5 6.1 6.5 12.6

General & Administrative 9.9 14.5 3.9 4.4 8.3Operating Income (Loss) (22.9) (12.4) 0.1 (3.5) (3.4)Net Income (Loss) (18.6) (9.3) 1.7 (3.5) (1.8)

Non-GAAP Income Statement HighlightsIn $mm, except percentages

* Product gross margin equals non-GAAP gross margin as % of product salesA reconciliation of our non-GAAP results to our GAAP results in included in our Q208 Press Release, and as an appendix to this presentation

© 2008 Cepheid

Portfolio Analysis

$-

$5

$10

$15

$20

$25

$30

$35

$40

$45

Q107 Q207 Q307 Q407 Q108 Q208

Rev

enue

(in

Mill

ions

)

Biothreat

Industrial

Partner Clinical

Core Clinical

Core Clinical Driving Growth

© 2008 Cepheid30

Margin Improvement Drivers: 2008 - 2012

• Product gross margins

– As of Q1 ‘08: 47%*

– Projected 2012: mid-60’s*

• Strategic shift to higher margin clinical products

• Volume driven overhead absorption

• Reduction of royalty load

• ROBAL automated cartridge manufacturing line

– Dry: implemented

– Wet: projected 2009 implementation

• Product gross margins

– As of Q1 ‘08: 47%*

– Projected 2012: mid-60’s*

• Strategic shift to higher margin clinical products

• Volume driven overhead absorption

• Reduction of royalty load

• ROBAL automated cartridge manufacturing line

– Dry: implemented

– Wet: projected 2009 implementation

*Non-GAAP

© 2008 Cepheid

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Current 2012

COGSRoyaltiesGross Margin

Non-GAAP Gross Margin Improvement

Phase Out of PCR Royalties

~36% ~28%

~47% ~65%

Target

~17%

~7%

© 2008 Cepheid

2012 Non-GAAP Target Business Model

* Expected quarterly non-GAAP business model – end of FY08

Current* 2012 Target Model Comment

Gross Margin, Product Sales ~47% ~65%

• Royalty reduction• Manufacturing efficiencies

Operating Margin ~0 to 1% ~24%

R&D ~21% ~15% • Volatility in some years driven by Clinical trials

S&M ~16% ~18%• Distribution to direct

• Offset by GM improvements

G&A ~9% ~7%

Collaborative Profit Sharing ~4% ~1%

© 2008 Cepheid

Financial ChecklistWhat to expect …

• Gross Margin back to Q1’08 levels in Q3’08

• Non-GAAP profitability

• Positive cash flow from operations

• Maintain DSOs below 55 days

• Dilution from employee option plans less than 3.5%

– 5.0% in ’06, 3.8% in ’07, target 3.5% in ’08

• Gross Margin back to Q1’08 levels in Q3’08

• Non-GAAP profitability

• Positive cash flow from operations

• Maintain DSOs below 55 days

• Dilution from employee option plans less than 3.5%

– 5.0% in ’06, 3.8% in ’07, target 3.5% in ’08

2H08

FY09

© 2008 Cepheid

Summary Corporate Strategy

7,000 Highly Complex Labs7,000 Highly Complex Labs

159,173 Waived Sites159,173 Waived Sites

20,561 Moderately Complex Labs

20,561 Moderately Complex Labs

Infectious Disease Oncology Genetic Disease

Pipeline Market Reach

Platform Reach

Opportunity Unique to Cepheid

© 2008 Cepheid

2008 Expected Milestones• Market shipment of GX-I• Market shipment GX 6 color system• Market shipment of LIS software for GeneXpert® Systems• Implementation of direct sales organization in the U.K.• European release of Xpert™ HemosIL (FII/FV) test• Signed contract with Premier GPO• European release of Xpert™ MRSA/SA nasal• FDA Clearance of Xpert™ MRSA/SA test for SSTI• FDA Clearance of Xpert™ MRSA/SA test for Blood Culture• FDA Clearance of Xpert™ HemosIL (FII/FV) test • European release of Xpert™ VRE test• European release of Xpert™ C. difficile test• Market shipment of GeneXpert® Infinity-48 System

• Market shipment of GX-I• Market shipment GX 6 color system• Market shipment of LIS software for GeneXpert® Systems• Implementation of direct sales organization in the U.K.• European release of Xpert™ HemosIL (FII/FV) test• Signed contract with Premier GPO• European release of Xpert™ MRSA/SA nasal• FDA Clearance of Xpert™ MRSA/SA test for SSTI• FDA Clearance of Xpert™ MRSA/SA test for Blood Culture• FDA Clearance of Xpert™ HemosIL (FII/FV) test • European release of Xpert™ VRE test• European release of Xpert™ C. difficile test• Market shipment of GeneXpert® Infinity-48 System

CompletedExpected

NASDAQ: CPHDNASDAQ: CPHD

September 10, 2008September 10, 2008

© 2008 Cepheid

Non-GAAP Reconciliation to GAAP2008 2007 2008 2007

Cost of product sales 22,870$ 13,879$ 45,856$ 27,756$ Stock compensation expense (247) (36) (597) (302) Amortization of acquired inventory step-up in basis - (106) - (170) Amortization of purchased intangible assets (241) (122) (482) (297) Non-GAAP measure of cost of product sales 22,382$ 13,615$ 44,777$ 26,987$

Gross margin on product sales per GAAP 41% 41% 43% 39%Gross margin on product sales per Non-GAAP 43% 42% 45% 41%

Research and development 10,964$ 7,439$ 20,862$ 14,361$ Amortization of purchased intangible assets (24) (24) (48) (48) Stock compensation expense (1,414) (1,047) (2,677) (1,791) Non-GAAP measure of cost of research and development 9,526$ 6,368$ 18,137$ 12,522$

Sales and marketing 7,434$ 5,067$ 14,375$ 9,560$ Amortization of purchased intangible assets (21) (18) (42) (23) Stock compensation expense (909) (424) (1,754) (795) Non-GAAP measure of cost of sales and marketing 6,504$ 4,625$ 12,579$ 8,742$

General and administrative 5,518$ 4,038$ 10,265$ 7,973$ Stock compensation expense (1,137) (791) (1,940) (1,411) Non-GAAP measure of cost of general and administrative 4,381$ 3,247$ 8,325$ 6,562$

Income (Loss) from Operations (7,513)$ (5,981)$ (10,985)$ (13,161)$ Stock compensation expense 3,707 2,298 6,968 4,299 Amortization of acquired inventory step-up in basis - 106 - 170 Amortization of purchased intangible assets 286 164 572 368 Non-GAAP measure of Income (Loss) from Operations (3,520)$ (3,413)$ (3,445)$ (8,324)$

Net Income (Loss) (7,526)$ (5,241)$ (9,376)$ (11,394)$ Stock compensation expense 3,707 2,298 6,968 4,299 Amortization of acquired inventory step-up in basis - 106 - 170 Amortization of purchased intangible assets 286 164 572 368 Non-GAAP measure of Net Income (Loss) (3,533)$ (2,673)$ (1,836)$ (6,557)$

Basic and Diluted net income (loss) per share (0.13)$ (0.10)$ (0.17)$ (0.21)$ Stock compensation expense 0.07$ 0.05$ 0.13$ 0.08$ Amortization of acquired inventory step-up in basis -$ -$ -$ -$ Amortization of purchased intangible assets -$ -$ 0.01$ 0.01$ Non-GAAP measure of Net Income (Loss) (0.06)$ (0.05)$ (0.03)$ (0.12)$

Shares used in computing basic and diluted net income (loss) per share 57,054 55,149 56,603 55,081

Three Months EndedJune 30,

Six Months EndedJune 30,