Third Wave Reports First-Quarter Financial Results

Third Wave Technologies Inc. (NASDAQ: TWTI) today announced its financial results for the quarter ended March 31, 2008. Third Wave reported clinical molecular diagnostic revenue of $7.4 million for the first quarter of 2008, an increase of 24% from the same period of 2007. The company reported research revenue of $1.0 million for the quarter ended March 31, 2008. Third Wave’s total revenue for the first quarter of 2008 was $8.4 million, compared to $6.7 million for the same period of last year. Third Wave reported a net loss of $7.6 million, or ($0.17) a share, for the quarter ended March 31, 2008, compared to net income of $4.8 million, or $0.11 a share, for the same period of 2007. The prior-year quarter included a one-time, $10.75-million settlement payment from the former Stratagene Corp. Without the inclusion of the settlement payment, the company’s pro-forma net loss for the first quarter of 2007 was $6.0 million, or ($0.14) a share. Third Wave reported gross margins of 74% for the quarter ended March 31, 2008, compared to gross margins of 70% and 74% for the prior-year quarter and previous quarter, respectively. Total operating expenses for the first quarter of 2008 were $15.4 million, compared to $13.0 million for the same period of 2007. The year-over year increase in operating expenses was due to expenditures on the company’s HPV clinical trial. Third Wave ended the first quarter of 2008 with cash, cash equivalents and short-term investments of $28.9 million, compared to $35.7 million at Dec. 31, 2007. The company also has in place a $25-million line of credit. "We were very pleased to announce earlier this week that Third Wave made its two HPV product submissions to the FDA,” said Kevin T. Conroy, president and chief executive of Third Wave. "Our submissions were based on the strong data generated by the company’s HPV clinical trial, which achieved all primary clinical endpoints for those tests. Third Wave will continue to invest in creating a sustainable competitive advantage through unique HPV products and our automated HPV instrument offering.” The company announced that it plans to present data from its HPV clinical trial during the annual American Association of Clinical Chemistry meeting being held July 27-31 in Washington, D.C. "We also continue to be pleased with the ongoing growth in our clinical business,” Mr. Conroy said. "This quarter marked the tenth consecutive quarter of clinical revenue growth and our clinical customer base has grown to 223 from 185 a year ago. A key driver of Third Wave’s growth has been our InPlex™ CF reagents, which are now the most widely reported method in use. With the FDA’s clearance of our InPlex™ CF Molecular Test during the first quarter, we anticipate that our ability to market the InPlex format’s differentiated performance and ease of use will continue to drive increased market share and revenue growth.” 2008 Outlook Update Third Wave reaffirms its previously announced guidance for 2008 of total revenues of $36-37.5 million. The company continues to expect clinical molecular diagnostic revenue to grow to $33-34.5 million during 2008. Research revenue for 2008 will be at least $3 million. Conference Call & Webcast with PowerPoint Presentation Company management will host a conference call and webcast on Thursday, May 1, 2008, at 10 a.m. EDT to discuss first-quarter 2008 results. The webcast will include a PowerPoint slide presentation highlighting the company’s third-quarter accomplishments and ongoing corporate activities. The webcast will be available at www.twt.com. Domestic callers should dial (800) 295-4740 and international callers should dial (617) 614- 3925. The access code for both domestic and international callers is 65993745. Please dial in five to 10 minutes prior to the start of conference call. A replay of the conference call will be available at the company’s website. The conference call, webcast and replay are open to all interested parties. About Third Wave Technologies Third Wave develops and markets molecular diagnostic reagents for a variety of DNA and RNA analysis applications to meet the needs of our customers. The company offers a number of products based on its Invader® chemistry for clinical testing. Third Wave offers in vitro diagnostic kits, and analyte specific, general purpose, and research use only reagents for nucleic acid analysis. For more information about Third Wave and its products, please visit the company's website at www.twt.com. All statements in this news release that are not historical are forward- looking statements within the meaning of the Securities Exchange Act of 1934 as amended. Such forward-looking statements are subject to factors that could cause actual results to differ materially for Third Wave from those projected. Those factors include risks and uncertainties relating to technological approaches of Third Wave and its competitors, product development, manufacturing, market acceptance, cost and pricing of Third Wave products, dependence on collaborative partners and commercial customers, successful performance under collaborative and commercial agreements, competition, the strength of the Third Wave intellectual property, the intellectual property of others and other risk factors identified in the documents Third Wave has filed, or will file, with the Securities and Exchange Commission. Copies of the Third Wave filings with the SEC may be obtained from the SEC Internet site at http://www.sec.gov . Third Wave expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Third Wave's expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based. Third Wave Technologies, Invader and the Third Wave logo are trademarks of Third Wave Technologies, Inc. Third Wave Technologies, Inc Statements of Operations (In thousands, except for per share amounts) (Unaudited)           Three Months Ended March 31, 2008 2007   Adjustments (1)   2007 Pro forma (2) Revenues: Clinical Product $7,387 $5,973 $0 $5,973 Research Product 955 569 0 569 License & royalty 57   171     0     171   8,399   6,713     0     6,713     Operating expenses: Cost of goods sold 2,203 2,017 0 2,017 Research and development 6,205 5,109 0 5,109 Selling and marketing 3,461 2,603 0 2,603 General and administrative 3,737 2,886 0 2,886 Litigation 330 406 0 406 Restructuring (487 ) 0     0     0     Total operating expenses 15,449   13,021     0     13,021     Loss from operations (7,050 ) (6,308 ) 0 (6,308 )   Other income (expense): Interest income 251 531 0 531 Interest expense (976 ) (301 ) 0 (301 ) Other (26 ) 10,748     (10,750 )   (2 ) (751 )   10,978     (10,750 )   228     Net income (loss) before minority interest ($7,801 ) $4,670     ($10,750 )   ($6,080 )   Minority interest in subsidiary 196   96     -     96     Net income (loss) ($7,605 ) $4,766     ($10,750 )   ($5,984 )     Net income (loss) per share, basic ($0.17 ) $0.11 ($0.26 ) ($0.14 ) Net income (loss) per share, diluted ($0.17 ) $0.11 ($0.24 ) ($0.14 )   Weighted average shares outstanding, basic 43,780 42,025 42,025 42,025 Weighted average shares outstanding, diluted 43,780 43,884 43,884 42,025   (1) Represents amount received from the former Stratagene Corp. as part of the settlement of patent litigation (2) 2007 Pro-forma figures reflect the net loss that would have been recognized if the proceeds from the settlement of patent litigation had not been received. The Company presents these non-GAAP financial measures to provide comparability to 2008. Third Wave Technologies, Inc Balance Sheets (In thousands)         March 31, December 31, 2008 2007 Assets: Cash, cash equivalents, and short-term investments $28,933 $ 35,739 Other current assets 11,779 11,877 Equipment and leasehold improvements, net 4,675 4,913 Intangible assets, net of amortization 873 898 Goodwill and indefinite lived intangible assets 490 490 Other assets 16,887 15,084 Total assets $63,637 $69,001   Liabilities and shareholders' equity Accounts payable, accrued expenses and other liabilities $23,337 $ 23,284 Deferred revenue 42 - Debt 16,168 15,913 Minority interest in subsidiary 211 226 Shareholders' equity 23,879 29,578 Total liabilities and shareholders' equity $63,637 $69,001