MADISON, Wis., Nov. 2 /PRNewswire-FirstCall/ — Third Wave Technologies Inc. (NASDAQ:TWTI) today reported its financial results for the third quarter ended Sept. 30, 2006.
Third Wave reported clinical molecular diagnostic revenue of $5.4 million for the third quarter of 2006, an increase of 33% and 6% from the prior-year quarter and the previous quarter, respectively. The company reported $1.2 million of research revenue during the third quarter, nearly all of which was generated by its Agbio business. Total revenues for the quarter ended Sept. 30, 2006, were $6.6 million, an increase of more than 26% from $5.2 million during the same period of 2005.
Clinical molecular diagnostic revenue for the nine-month period ended Sept. 30, 2006, increased 33% to $15.1 million, compared to $11.4 million during the same period of 2005. Total revenue for the nine-month period ended Sept. 30, 2006, increased 17% to $21.2 million, compared to total revenue of $18.1 million for the same period of 2005.
Third Wave reported a net loss of $5.2 million, or ($0.12) a share, for the quarter ended Sept. 30, 2006, compared to a net loss of $7.4 million, or ($0.18) a share, for the same period of 2005. The company’s third-quarter 2006 net loss improved 37% from its pro forma net loss of $8.2 million or ($0.20) a share, for the comparable period of 2005, with FAS No. 123(R) stock compensation costs included in both periods.
The company’s net loss for the nine-month period ended Sept. 30, 2006, was $14.3 million, or ($0.34) a share, compared to a net loss of $17.3 million, or ($0.42) a share for the same period of 2005. Including FAS No. 123(R) stock compensation costs, the company’s pro forma net loss for that nine-month period of 2005 was $21.3 million, or ($0.52) a share.
Third Wave reported gross margins of 66% for the quarter ended Sept. 30, 2006, compared to 70% for the same period of 2005. The decline in gross margins was driven by a one-time write-off of defective inventory due to a supplier relocation. Total operating expenses were $12.0 million for the third quarter, compared to $12.9 million for the same period of 2005. The company’s pro forma total operating expenses for the third quarter of 2005, including FAS No. 123(R) stock compensation costs, were $13.7 million.
The company’s third-quarter operating expenses include a one-time, non- cash charge of $176,000 associated with past stock option grants. The company’s audit committee conducted a voluntary investigation with the assistance of outside legal counsel that covered the timing, pricing and authorization of all the company’s stock option grants made since its initial public offering in February 2001. Based on this review, the company determined that it used incorrect measurement dates for the accounting of some previously granted stock options, primarily during the years 2002 through 2004. The audit committee concluded that the deficiencies were due to administrative errors and misunderstanding of applicable accounting rules and were not attributable to any fraud or intentional misconduct. The company has since adopted new option granting practices that it believes will ensure that measurement-date errors do not occur in the future.
Based on the company’s determination that some of its historic stock option grants had intrinsic value on the grant date, the company had unrecorded non-cash stock compensation expense. The company concluded that the additional unrecorded non-cash stock compensation expense was not material to its financial statements in any of the periods to which these charges would have related, and therefore has not recorded such charges and will not amend its previously filed financial statements. Additionally, the company expects to record a reclassification within the equity section of the balance sheet of $731,000 to be included in its annual report on Form 10-K for the year ending Dec. 31, 2006. This reclassification represents the adjustment for non-cash charges related to past stock option grants for fiscal 2005 and prior years.
Total operating expenses for the nine-month period ended Sept. 30, 2006, were $36.5 million, compared to $36.0 million for the same period of 2005. The company’s pro forma total operating expenses for the nine-month period ended Sept. 30, 2005, including FAS No. 123(R) stock compensation costs, were $40.0 million.
Third Wave ended the third quarter of 2006 with cash, cash equivalents and short-term investments of $33.0 million, compared to $38.7 million at Dec. 31, 2005.
“The third quarter was another quarter of outstanding accomplishment and solid progress for Third Wave,” said Kevin T. Conroy, the company’s president and chief executive. “It is the third consecutive quarter of both year-over- year and quarter-over-quarter growth in our core business, clinical molecular diagnostics. We also continued to lay the foundation for Third Wave’s future growth, as we continued to make good progress in product development and in our HPV clinical trial, in particular.”
2006 Outlook Update
Third Wave reaffirms its previously issued revenue guidance.Conference Call & Webcast with PowerPoint Presentation
Company management will host a conference call and webcast on Thursday, November 2, 2006, at 10 a.m. EST to discuss third-quarter results. The webcast will include a PowerPoint slide presentation highlighting the company’s year- to-date 2006 accomplishments and ongoing corporate activities. The webcast will be available at http://www.twt.com/. Domestic callers should dial (800) 237-9752 and international callers should dial (617) 847-8706. The access code for both domestic and international callers is 48479515. 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(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/.
Contact:
Rod Hise
Third Wave Technologies
608 663-4010Third Wave Technologies, Inc
Statements of Operations
(In thousands, except for per share amounts)
(Unaudited)Three Months Ended
September 30,2006 2005 Adjustments(1) 2005 Pro-forma(2)
Revenues:
Clinical Product $5,369 $4,032 $0 $4,032
Research Product 1,181 1,039 0 1,039
License & royalty 51 90 0 90
Grant 0 61 0 61
6,601 5,222 0 5,222Operating expenses:
Cost of goods sold
Product cost of
goods sold 1,550 1,108 10 1,118
Intangible and
long-term asset
amortization 687 468 0 468
Total cost of
goods sold 2,237 1,576 10 1,586Research
and development 3,451 2,063 169 2,232
Selling and marketing 2,713 3,662 334 3,996
General and
administrative 3,537 2,923 282 3,205
Litigation 256 2,678 0 2,678
Restructuring (180) 0 0 0
9,777 11,326 785 12,111Total operating
expenses 12,014 12,902 795 13,697Loss from operations (5,413) (7,680) (795) (8,475)
Other income (expense):
Interest income 369 460 0 460
Interest expense (55) (129) 0 (129)
Other (119) (31) 0 (31)
195 300 0 300Net loss before taxes
and minority
interest ($5,218) ($7,380) ($795) ($8,175)Minority interest
in subsidiary 65 – – –Net loss ($5,153) ($7,380) ($795) ($8,175)
Net loss per share ($0.12) ($0.18) ($0.02) ($0.20)
Weighted average
shares outstanding 41,515 41,074 41,074 41,074(1) Represents additional stock based compensation expense that would
have been recorded if FAS 123(R) had been applied.
(2) 2005 Pro-forma figures reflect the additional stock based compensation
expense that would have been recorded if FAS 123(R) had been applied.
The Company presents these non-GAAP financial measures to provide
comparability with pre-2006 periods when FAS 123( R) was not applied.Third Wave Technologies, Inc
Statements of Operations
(In thousands, except for per share amounts)
(Unaudited)Nine Months Ended
September 30,2006 2005 Adjustments(1) 2005 Pro-forma(2)
Revenues:
Clinical Product $15,137 $11,407 $0 $11,407
Research Product 5,809 6,152 0 6,152
License & royalty 106 273 0 273
Grant 183 288 0 288
21,235 18,120 0 18,120Operating expenses:
Cost of goods sold
Product cost of
goods sold 4,229 3,960 120 4,080
Intangible and
long-term asset
amortization 2,069 1,428 0 1,428
Total cost of
goods sold 6,298 5,388 120 5,508Research
and development 8,785 6,569 1,026 7,595
Selling and marketing 8,634 10,208 1,076 11,284
General and
administrative 11,483 8,490 1,786 10,276
Litigation 1,439 5,157 0 5,157
Impairment 0 203 0 203
Restructuring (180) 0 0 0
30,161 30,627 3,888 34,515Total operating
expenses 36,459 36,015 4,008 40,023Loss from operations (15,224) (17,895) (4,008) (21,903)
Other income (expense):
Interest income 1,115 1,200 0 1,200
Interest expense (161) (313) 0 (313)
Other (99) (306) 0 (306)
855 581 0 581Net loss before taxes
and minority
interest ($14,369)($17,314) ($4,008) ($21,322)Minority interest
in subsidiary 106 – – –Net loss ($14,263)($17,314) ($4,008) ($21,322)
Net loss per share ($0.34) ($0.42) ($0.10) ($0.52)
Weighted average
shares outstanding 41,428 41,095 41,095 41,095(1) Represents additional stock based compensation expense that would
have been recorded if FAS 123(R) had been applied.
(2) 2005 Pro-forma figures reflect the additional stock based
compensation expense that would have been recorded if FAS 123(R) had
been applied.
The Company presents these non-GAAP financial measures to provide
comparability with pre-2006 periods when FAS 123(R) was not applied.Third Wave Technologies, Inc
Balance Sheets
(In thousands)(Unaudited)
September 30, December 31,
2006 2005
Assets:
Cash, cash equivalents, and short-term
investments $32,996 $38,717
Other current assets 8,283 6,249
Equipment and leasehold improvements, net 4,088 4,717
Intangible assets, net of amortization 1,513 2,642
Goodwill and indefinite lived intangible assets 1,497 1,497
Other assets 3,897 4,583
Total assets $52,274 $58,405Liabilities and shareholders’ equity
Accounts payable, accrued expenses and other
liabilities $17,011 $16,739
Deferred revenue 178 267
Debt 995 1,325
Minority interest in subsidiary 598 0
Shareholders’ equity 33,492 40,074
Total liabilities and shareholders’ equity $52,274 $58,405
