a one-time, $10.75-million settlement payment from the former Stratagene Corp. during the first quarter of 2007. The company’s pro-forma net loss for the first six months of 2007, which excludes the settlement payment, was $13.2 million, or ($0.31) a share. The increase in Third Wave’s net loss for the second quarter and pro-forma net loss for the six months ended June 30, 2007, is due to the company’s investment in the clinical trial for its HPV products.
Third Wave reported gross margins of 74% for the quarter ended June 30, 2007, compared to gross margins of 72% and 70% for the prior-year quarter and previous quarter, respectively. Total operating expenses for the second quarter of 2007 were $14.9 million, compared to $11.9 million for the same period of 2006. Total operating expenses for the first six months of 2007 were $27.9 million, compared to $24.4 million for the same period of 2006.
Third Wave ended the second quarter of 2007 with cash, cash equivalents and short-term investments of $47.8 million, compared to $44.2 million at Dec. 31, 2006. During the second quarter, the company received additional investments in Third Wave Japan totaling approximately $5 million from its Japanese partners.
“During the second quarter, Third Wave continued to focus on advancing our HPV clinical trial, and growing our clinical revenue and customer base. We are pleased to report good progress on both fronts during the quarter,” said Kevin T. Conroy, president and chief executive of Third Wave. “Our HPV clinical trial is on track and patient enrollment continues to progress well. Clinical molecular diagnostic revenue grew for the seventh consecutive quarter and we continue to close increasingly valuable clinical laboratory accounts.
“Revenue growth from our current molecular diagnostic product menu forms a strong foundation for the significant value we anticipate creating for our shareholders with our HPV products,” Mr. Conroy said.
Third Wave also announced that it will host an analyst day on Sept. 20, 2007, in New York. Additional details will be announced at a later date.
2007 Outlook Update
Third Wave reaffirms its previously announced guidance for 2007 of $26-28 million in clinical molecular diagnostic revenue and $31-33 million in total revenue.
Conference Call & Webcast with PowerPoint Presentation
Company management will host a conference call and webcast on Thursday, July 26, 2007, at 10 a.m. EDT to discuss second-quarter 2007 results. The webcast will include a PowerPoint slide presentation highlighting the company’s second-quarter accomplishments and ongoing corporate activities. The webcast will be available at http://www.twt.com/. Domestic callers should dial (800) 659-2056 and international callers should dial (617) 614-2714. The access code for both domestic and international callers is 83255808. 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/.
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
June 30,
2007 2006
Revenues:
Clinical Product $6,256 $5,059
Research Product 1,064 1,632
License & royalty 41 27
Grant 0 41
7,361 6,759Operating expenses:
Cost of goods sold
Product cost of goods sold 1,266 1,210
Intangible and long-term asset amortization 675 688
Total cost of goods sold 1,941 1,898Research and development 5,214 3,033
Selling and marketing 3,208 2,892
General and administrative 3,304 3,885
Litigation 1,243 181
12,969 9,991Total operating expenses 14,910 11,889
Loss from operations (7,549) (5,130)
Other income (expense):
Interest income 550 374
Interest expense (295) (51)
Other (77) 39
178 362
Net loss before taxes and minority interest ($7,371) ($4,768)Minority interest in subsidiary 123 41
Net loss ($7,248) ($4,727)
Net loss per share, basic and diluted ($0.17) ($0.11)
Weighted average shares outstanding,
basic and diluted 42,399 41,460Third Wave Technologies, Inc
Statements of Operations
(In thousands, except for per share amounts)
(Unaudited)Six Months Ended
June 30,
Adjustments 2007 Pro
2007 (1) forma(2) 2006
Revenues:
Clinical Product $12,229 $12,229 $9,768
Research Product 1,633 1,633 4,628
License & royalty 212 212 55
Grant 0 0 183
14,074 0 14,074 14,634Operating expenses:
Cost of goods sold
Product cost of goods sold 2,577 2,577 2,680
Intangible and long-term asset
amortization 1,380 1,380 1,381
Total cost of goods sold 3,957 0 3,957 4,061Research and development 10,324 10,324 5,335
Selling and marketing 5,811 5,811 5,921
General and administrative 6,190 6,190 7,946
Litigation 1,649 1,649 1,183
23,974 0 23,974 20,385Total operating expenses 27,931 0 27,931 24,446
Loss from operations (13,857) 0 (13,857) (9,812)
Other income (expense):
Interest income 1,081 1,081 747
Interest expense (596) (596) (106)
Other 10,671 (10,750) (79) 20
11,156 (10,750) 406 661Net loss before taxes and minority
interest ($2,701) ($10,750) ($13,451) ($9,151)Minority interest in subsidiary 219 219 41
Net loss ($2,482) ($10,750) ($13,232) ($9,110)
Net loss per share, basic and
diluted ($0.06) ($0.25) ($0.31) ($0.22)Weighted average shares outstanding,
basic and diluted 42,178 42,178 42,178 41,384(1) Represents amount received from Stratagene Corporation 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 2006.Third Wave Technologies, Inc
Balance Sheets
(In thousands)June 30, December 31,
2007 2006
Assets:
Cash, cash equivalents, and short-
term investments $47,825 $44,199
Other current assets 10,625 8,734
Equipment and leasehold improvements, net 4,533 4,222
Intangible assets, net of amortization 1,333 2,136
Goodwill and indefinite lived
intangible assets 490 490
Other assets 4,773 4,453
Total assets $69,579 $64,234Liabilities and shareholders’ equity
Accounts payable, accrued expenses
and other liabilities $16,471 $17,177
Deferred revenue 0 145
Debt 15,955 15,774
Minority interest in subsidiary 428 465
Shareholders’ equity 36,725 30,673
Total liabilities and
shareholders’ equity $69,579 $64,234
