Exhibit 99.1
[LOGO]
THIRD WAVE
Technologies
Contact:
Rod Hise
Third Wave Technologies
(608) 663-4010
For Immediate Release
Third Wave Reports Fourth-Quarter and Full-Year 2005 Financial Results
MADISON, Wis., Feb. 28, 2006--Third Wave Technologies Inc. (Nasdaq: TWTI) today
reported financial results for the fourth quarter and year ended Dec. 31, 2005.
Third Wave reported total revenues of $23.9 million and a net loss of
$22.3 million, or ($0.54) per diluted share, for the year ended Dec. 31, 2005,
compared to total revenues of $46.5 million and a net loss of $1.9 million, or
($0.05) per diluted share, for the prior year. The company reported total
revenues of $5.8 million and a net loss of $5.0 million, or ($0.12) per diluted
share, for the fourth quarter ended Dec. 31, 2005, compared to total revenues of
$8.1 million and a net loss of $4.7 million, or ($0.12) per diluted share, for
the same period of 2004.
The year-over-year variances in the company's financial results were due
largely to the previously announced and anticipated decline in non-recurring
research revenue, which decreased by $23.7 million in 2005, and to the $6.9
million in litigation expense incurred in 2005 to defend the company's core
patents.
Third Wave reported total clinical molecular diagnostic revenue of $15.7
million for the year ended Dec. 31, 2005, an increase from $15.0 million for the
prior year. U.S. clinical molecular diagnostic revenue increased to $14.5
million, or 18%, during 2005.
The company reported gross margins of 70% for both the quarter and year
ended Dec. 31, 2005, compared to 72% and 73% for the same periods of 2004,
respectively. Total operating expenses were $11.1 million and $47.1 million for
the quarter and year ended Dec. 31, 2005, respectively, compared to $13.1
million and $48.9 million for the same periods of 2004.
Third Wave incurred significant litigation expenses during 2005. For the
second time in two years, the company successfully enforced its patented
nucleic-acid detection methods. A federal jury last fall found that that
Stratagene Corp. infringed two key Third Wave patents covering its proprietary
molecular methods. Stratagene recently posted a
$21-million bond with the court in Third Wave's name that secures the damages
and attorneys' fees awarded to Third Wave in the successful suit. The court
issued its decision last week awarding all of Third Wave's requested $4.2
million in attorneys' fees and costs. The company has announced that, with the
exception of its dispute with Stratagene, it has resolved its patent-related
lawsuits and anticipates significantly lower litigation expenses during 2006 as
a result.
The savings in litigation expenses will enable Third Wave to invest
heavily during 2006 in research and development, and in the clinical trials for
its human papilloma virus, or HPV, and pharmacogenetic products that are
necessary for the anticipated submissions of those products to the U.S. Food and
Drug Administration (FDA). The current global HPV market is approximately $150
million and is growing at 30-35% a year. The total global market opportunity is
approximately $1 billion a year. The potential market opportunity in the United
States alone is more than $500 million.
The company in late December 2005 paid off a $9.5-million bank note. Third
Wave ended 2005 with cash, cash equivalents and short-term investments of $38.7
million, compared to $66.7 million at Dec. 31, 2004.
"Third Wave will continue to focus on the growth of the company's U.S.
clinical molecular diagnostic revenue during 2006 and we believe 2005 is a
strong foundation for that growth," said Kevin T. Conroy, president and chief
executive of Third Wave. "During 2005, we increased our recurring clinical
customer base to more than 140, and launched new clinical products, including
our FDA-cleared UGT1A1 pharmacogenetic test. Our Invader chemistry also enables
us to capture recurring-revenue opportunities in the research and agricultural
markets and we will continue to do so in 2006.
"Third Wave's Invader chemistry and outstanding people give us unique
advantages in the growing nucleic acid testing market," Mr. Conroy said. "We are
committed to making solid progress on both revenues and new product delivery
during 2006 to maximize shareholder value, which is our top priority."
2006 Outlook
Third Wave anticipates total revenues of $23-25 million, which includes
increases in clinical molecular diagnostic and Agbio revenue and a decline in
research revenue. The company expects U.S. clinical molecular diagnostic revenue
of $15.5-17.5 million and total clinical molecular diagnostic revenue of $16-18
million. Agbio revenue, which is a component of research revenue, will continue
to grow, but total research revenue will decline to approximately $7 million,
due to the completion of research projects that has been anticipated and
previously announced.
Conference Call & Webcast
Company management will host a conference call on Tuesday, Feb. 28, 2006,
at 10 a.m. EST to discuss fourth-quarter and full-year 2005 results and ongoing
corporate
activities. Domestic callers should dial (866) 510-0705 and international
callers should dial (617) 597-5363. The access code for both domestic and
international callers is 40955902. 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 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(R) 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 http://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 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 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 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 Year Ended
December 31, December 31,
2005 2004 2005 2004
-------- -------- -------- --------
Revenues:
Clinical Product $ 4,259 $ 4,667 $ 15,666 $ 14,951
Research Product 1,353 3,281 7,505 31,065
License & royalty 89 68 362 235
Grant 85 90 373 242
-------- -------- -------- --------
5,786 8,106 23,906 46,493
-------- -------- -------- --------
Operating expenses:
Cost of goods sold
Product cost of goods sold 1,241 1,797 5,201 10,363
Intangible and long-term asset amortization 475 495 1,903 2,129
-------- -------- -------- --------
Total cost of goods sold 1,716 2,292 7,104 12,492
Research and development 1,820 2,910 8,389 11,637
Selling and marketing 2,564 3,112 12,772 10,803
General and administrative 3,298 4,600 11,788 12,913
Litigation 1,730 229 6,887 349
Impairment 0 36 203 795
Restructuring 0 (98) 0 (98)
-------- -------- -------- --------
9,412 10,789 40,039 36,399
-------- -------- -------- --------
Total operating expenses 11,128 13,081 47,143 48,891
-------- -------- -------- --------
Income (loss) from operations (5,342) (4,975) (23,237) (2,398)
Other income (expense):
Interest income 514 295 1,714 776
Interest expense (143) (93) (457) (283)
Other (60) 121 (366) 20
-------- -------- -------- --------
311 323 891 513
-------- -------- -------- --------
Loss from operations ($ 5,031) ($ 4,652) ($22,346) ($ 1,885)
-------- -------- -------- --------
Provision for income tax 0 57 0 57
-------- -------- -------- --------
Net loss ($ 5,031) ($ 4,709) ($22,346) ($ 1,942)
======== ======== ======== ========
Net income (loss) per diluted share ($0.12) ($0.12) ($0.54) ($0.05)
Weighted average diluted shares outstanding 41,217 40,919 41,125 40,463
Third Wave Technologies, Inc
Balance Sheets
December 31 December 31
2005 2004
----------- -------
Assets:
Cash, cash equivalents, and short-term investments $38,717 $66,690
Other current assets 6,249 7,281
Equipment and leasehold improvements, net 4,717 5,971
Intangible assets, net of amortization 2,642 4,146
Goodwill and indefinite lived intangible assets 1,497 1,497
Other assets 4,583 2,483
------- -------
Total assets $58,405 $88,068
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Liabilities and shareholders' equity
Accounts payable, accrued expenses and other $16,739 $14,781
liabilities
Deferred revenue 267 384
Debt 1,325 10,168
Shareholders' equity 40,074 62,735
------- -------
Total liabilities and shareholders' equity $58,405 $88,068
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