Exhibit 99.1
Contact:
Rod Hise
Third Wave Technologies
(608) 663-4010
For Immediate Release
THIRD WAVE REPORTS THIRD-QUARTER FINANCIAL RESULTS
Updated molecular diagnostic pipeline reflects expanding opportunities
MADISON, Wis., Nov. 2, 2005--Third Wave Technologies Inc. (Nasdaq: TWTI)
today reported financial results for the third quarter ended Sept. 30, 2005.
Third Wave reported total revenue of $5.2 million and a net loss of $7.4
million, or ($0.18) a diluted share, for the quarter ended Sept. 30, 2005,
compared to total revenue of $10.5 million and net income of $24,000, or $0.00 a
diluted share, for the same period of 2004. The company reported clinical
molecular diagnostic revenue of $4.0 million for the third quarter, an increase
of 5% from the same period of 2004 and a decrease of 6% from the prior quarter.
Total revenue for the third quarter ended Sept. 30, 2005, was down
primarily due to the reduction in non-recurring research revenue from Japan,
which was expected as the company previously disclosed. U.S. clinical molecular
diagnostic revenue was essentially flat primarily due to the length of time for
customers who have accepted new products to complete their validations and bring
these products on-line. As validations are completed, the company expects
continued growth from these accounts. As a step to extend the company's growth
opportunities and to eliminate any ambiguity about the company's freedom to
operate in the areas of HCV and HPV, the company announced recently that it has
filed suit against Chiron Corp., Bayer Healthcare LLC and Digene Corp. seeking
court rulings supporting its right to market those products.
Third Wave reported gross margins of 70% for the quarter ended Sept. 30,
2005. Gross margins were approximately 70% for the seventh consecutive quarter
despite a $5.5-million decline in research revenue during the quarter. Total
operating expenses were $12.9 million for the third quarter of 2005, compared to
$10.6 million for the same period of 2004. General and administrative costs were
higher due to litigation and other patent-related costs. The company plans to
make select investments in research and development, but does not otherwise
anticipate a significant increase in its cost structure.
The company ended the third quarter of 2005 with cash, cash equivalents,
and short-term investments of $54.3 million.
"Third Wave is focused on its long-term vision of being a top player in
the emerging field of molecular diagnostics, which is a key driver of
personalized medicine," said John Puisis, president and chief executive officer
of Third Wave. "We have made significant progress in enhancing our base
chemistry, intellectual property portfolio,
product pipeline and customer network--all of which are critical for anyone
wishing to be a player in this valuable market. We have been emphasizing the
change from our historical research tools business and the build-out of a new
business in a growth-oriented, high-value market. We believe we are creating
value in that new business, which will become more apparent as we enter 2006 and
our product pipeline and distribution strategies kick in."
Molecular Diagnostic Product Pipeline Update
Third Wave also detailed its molecular diagnostic product plans for the
near term. Because of its competitive position and freedom to operate, the
company will continue its efforts in the genetics and infectious disease markets
over the short run. The company believes that the pharmacogenetics and oncology
markets hold the most significant opportunities for it over the long term and
they will drive the company's leadership in personalized medicine. These
markets, while only beginning to emerge, are expected to be defined during the
next three to five years and the company believes it is well positioned to
capture these opportunities.
As part of its positioning as a leader in personalized medicine, the
company achieved a major milestone during the third quarter with the clearance
by the U.S. Food and Drug Administration (FDA) of its Invader UGT1A1
pharmacogenetic test. Additionally, Third Wave and Genzyme Corp. last week
announced that they will be marketing partners to expand market awareness
education and presence of this novel test. Genzyme will undertake a
direct-to-oncologists education, marketing and sales initiative, and will launch
the test as a significant addition to its diagnostic testing menu. Third Wave's
UGT1A1 product is designed to detect select polymorphisms associated with
adverse reactions to Pfizer's chemotherapy drug, Camptosar. Pfizer recently
relabeled Camptosar to include dosage recommendations based on a patient's
pharmacogenetic profile.
The UGT1A1 product is the first of many anticipated molecular
diagnostic-drug therapy pairings and is a part of the company's strategic plan
to capture valuable opportunities as the pharmacogenetics market emerges. The
company is developing other new products, including the following initiatives.
o Third Wave expects to submit a pharmacogenetic test that will be
used as a companion diagnostic to blood-thinning agents, including
warfarin, to the FDA, most likely in 2006. The FDA has said that
warfarin is the most probable next candidate for re-labeling to
include new dosing recommendations based on a patient's genetic
profile. Third Wave has developed a prototype of a companion
diagnostic and will proceed with the steps necessary to bring the
product to market as the FDA's re-labeling effort progresses.
Warfarin is prescribed to approximately 22 million patients a year
in the United States and represents a significant testing
opportunity.
o The company anticipates submitting an HPV test to the FDA by the end
of 2006. It also expects to bring a CE-marked HPV product to the
European
market by the end of the second half of 2006. The company also has a
number of other HPV products under development to be used in
conjunction with the new vaccines coming to market and to directly
detect the onset of cervical cancer.
o The company plans to broadly launch reagents for HCV qualitative and
quantitative testing during 2006. These products will complement
Third Wave's HCV genotyping reagents and will enable the company to
offer its customers a full line of HCV testing products.
o Third Wave also expects during the first quarter of 2006 to begin
launching other products for pathogen detection and quantitation, as
well as oncology. The company believes the trend of decentralization
of molecular testing is continuing and the need for quicker test
turnaround times in hospitals and other non-core laboratory
facilities is growing with it. The company plans to develop a broad
menu of pathogen detection products that can be used with a standard
protocol on the existing installed base of the most commonly used
laboratory equipment. The company also anticipates working with
various collaborators on select cancer applications during 2006.
o The company plans to submit a chlamydia and gonorrhea test to the
FDA by the end of 2006 to complement its HPV offering in this vital
market.
o Third Wave remains on track to submit its CFTR InPlex, and Factor V
Leiden/Factor II (prothrombin) products to the FDA by the end of
2005 and the first quarter of 2006, respectively. Both CFTR and
coagulation testing present market opportunities that are
significantly larger than they are today. The FDA submissions are
planned in anticipation of that market growth, to help educate
physicians, and to help shorten customer validation times.
"The infectious disease market is the most significant opportunity for the
company in the near term," Mr. Puisis said. "In addition to infectious disease,
we believe the company is particularly well positioned to capture the large
opportunities that are anticipated in pharmacogenetics and oncology. While those
markets are only now beginning to emerge, we are positioning the company through
our product pipeline, and distribution and thought-leader networks to be among
the leaders in these valuable markets. We believe Third Wave is developing one
of the most robust molecular diagnostic pipelines in the industry, which will
create significant value for our shareholders.
"We continue to receive positive feedback from our customers about our
Invader products and expect to see recurring growth in 2006. Those products
represent large opportunities for Third Wave and our shareholders. As part of
our transition to molecular diagnostics, and to support the investments we have
made, we are working aggressively to ensure that certain products are open to us
to market without interference," Mr. Puisis said.
Distribution
Third Wave has essentially completed its investment in its U.S.
distribution network and believes it has built a market-leading organization.
The company has made solid progress in developing its distribution options in
Japan and Europe. It has established Third Wave Japan, with the plan to include
a strategic partner or partners that would own a minority stake of the new
entity. The creation of Third Wave Japan will help to drive the company's entry
into the Japanese clinical market, facilitate IVD submissions and approvals,
secure new key clinical customers and collaborators, and leverage other Asian
markets.
Third Wave believes there are several options that could bring the
company's molecular diagnostic pipeline to market in Europe in 2006. It is
actively pursuing all options in Europe, with the focus on the companies that
have strong distribution in the handful of countries that comprise most of the
molecular diagnostic market there. The company anticipates having distribution
in place for the introduction of its CFTR InPlex product during the first half
of 2006 and an HPV product during the second half of 2006.
Intellectual Property Portfolio
Third Wave successfully prosecuted a patent infringement suit against
Stratagene Corp. A federal jury found Stratagene guilty of infringing two key
Third Wave patents. The jury also has found Stratagene liable for willful patent
infringement and awarded Third Wave $5.3 million in damages. The court's final
determination of damages and fees to be awarded to the company is expected
before the end of 2005. A permanent injunction also was entered against
Stratagene that prohibits it from making, selling or offering to sell the
infringing products. This event underscores the value of the Third Wave's
intellectual property, and the company's dedication to and confidence in
protecting it.
Guidance
Because of the early stage of most of its product releases and the related
unpredictability of revenue quarter to quarter, Third Wave has decided to
refrain from reaffirming or providing guidance until recurring revenue in its
molecular diagnostic business is more mature and predictable. The company's
transition to molecular diagnostics is ongoing and that business is young. The
company has brought and will continue to bring a number of new molecular
diagnostic products to market, but there is wide variability in the time
required for laboratories to review and validate those new tests. The company
has been focused on the creation of long-term shareholder value through the
development of its molecular diagnostic pipeline, the strengthening of its
intellectual property, and the build-out of its distribution network.
Outstanding progress has been made in each of those areas and it should not be
overshadowed by the short-term variability in revenue that is common for young
companies.
Conference Call & Webcast
Company management will host a conference call on Wednesday, Nov. 2, 2005,
at 10 a.m. EDT to discuss third-quarter 2005 results and ongoing corporate
activities. Domestic callers should dial (866) 510-0710 and international
callers should dial (617) 597-5378. The access code for both domestic and
international callers is 25828291. Please dial in five to 10 minutes prior to
the start of conference call. A live webcast and a replay of the conference call
will be available at www.twt.com. The conference call, webcast and replay are
open to all interested parties.
About Third Wave Technologies
Third Wave Technologies is a leader in the development and marketing of
molecular diagnostics for a variety of DNA and RNA analysis applications,
providing physicians and researchers with superior tools to diagnose and treat
disease. Third Wave's Invader(R) chemistry provides the company's customers with
exceptional performance, scalability, and ease of use. The company offers a
number of clinical products based on its Invader(R) chemistry for genetic
testing related to multiple disease areas. For more information about Third Wave
and its products, please visit the company's website at www.twt.com.
This news release contains statements that may be forward-looking within the
meaning of applicable securities laws. Such forward-looking statements may
include expectations of future programs, collaborations, strategies, and
financial performance, and are based upon Third Wave's current forecasts,
expectations and assumptions, and are subject to a number of factors that could
cause actual results to differ materially from those projected. Those factors
include risks and uncertainties relating to the company's ability to bring new
products to market as anticipated, the current regulatory environment in which
the company sells its products, the market acceptance of those products,
dependence on partners and customers, successful performance under collaborative
and commercial agreements, competition, the strength of Third Wave's
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 Third Wave's filings with the SEC
may be obtained from the SEC Internet site at 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.
--Financial Tables Follow--
Third Wave Technologies, Inc
Statement of Operations
(In thousands, except for per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
-------- -------- -------- --------
Revenues:
Clinical Product $4,032 $3,829 $11,407 $10,284
Research Product 1,039 6,496 6,152 27,784
License & royalty 90 71 273 167
Grant 61 83 288 152
-------- -------- -------- --------
5,222 10,479 18,120 38,387
-------- -------- -------- --------
Operating expenses:
Cost of goods sold
Product cost of goods sold 1,108 1,814 3,960 8,566
Intangible and long-term asset amortization 468 521 1,428 1,634
-------- -------- -------- --------
Total cost of goods sold 1,576 2,335 5,388 10,200
Research and development 2,064 3,027 6,569 8,727
Selling and marketing 3,662 2,370 10,208 7,691
General and administrative 5,601 2,864 13,647 8,433
Impairment 0 0 203 759
-------- -------- -------- --------
11,327 8,261 30,627 25,610
-------- -------- -------- --------
Total operating expenses 12,903 10,596 36,015 35,810
-------- -------- -------- --------
Income (loss) from operations (7,681) (117) (17,895) 2,577
Other income (expense):
Interest income 460 211 1,200 481
Interest expense (128) (74) (313) (190)
Other (31) 4 (306) (101)
-------- -------- -------- --------
301 141 581 190
-------- -------- -------- --------
Net income (loss) ($7,380) $24 ($17,314) $2,767
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Net income (loss) per diluted share ($0.18) $0.00 ($0.42) $0.07
Weighted average diluted shares outstanding 41,074 42,509 41,095 42,070
Third Wave Technologies, Inc
Balance Sheets
(Unaudited)
September 30 December 31
2005 2004
------------ -----------
Assets:
Cash, cash equivalents, and short-term
investments $54,266 $66,690
Other current assets 6,527 7,281
Equipment and leasehold improvements, net 5,008 5,971
Intangible assets, net of amortization 3,018 4,146
Goodwill and indefinite lived
intangible assets 1,497 1,497
Other assets 1,858 2,483
------- -------
Total assets $72,174 $88,068
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Liabilities and shareholders' equity
Accounts payable, accrued expenses
and other liabilities $15,973 $14,781
Deferred revenue 386 384
Debt 10,937 10,168
Shareholders' equity 44,878 62,735
------- -------
Total liabilities and shareholders'
equity $72,174 $88,068
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