TWTI reports its quarter and on its transition to a molecular diagnostics company:
>>MADISON, Wis., Feb. 24 /PRNewswire-FirstCall/ -- Third Wave Technologies Inc. (Nasdaq: TWTI - News) today reported financial results for the fourth quarter and year ended Dec. 31, 2003.
Third Wave reported total revenues of $9.7 million and a net loss of $1.6 million, or ($0.04) per diluted share, for the fourth quarter ended Dec. 31, 2003, compared to total revenue of $7.6 million and a net loss of $486,000, or ($0.01) per diluted share, for the same period of 2002. Fourth-quarter revenues from product sales increased 67% to $9.5 million, compared to $5.7 million in the fourth quarter of 2002. The company's pro forma net loss for the fourth quarter ended Dec. 31, 2002, was $3.7 million, or ($0.09) per diluted share, which excludes a $3.2 million credit to adjust the predominantly non-cash restructuring charge recorded in the third quarter of 2002.
Third Wave reported total revenues of $36.3 million and a net loss of $8.1 million, or ($0.20) per diluted share, for the year ended Dec. 31, 2003, compared to total revenues of $32.4 million and a net loss of $40.9 million, or ($1.04) per diluted share, for the prior year. Year-end revenues from product sales increased 22% to $35.1 million, compared to $28.9 million for the year ended Dec. 31, 2002.
The company reported positive cash flow from operations in the fourth quarter ended Dec. 31, 2003, making it the first in which the company was operating cash-flow positive and marking the accomplishment of a major stated milestone for 2003. The company ended with cash, cash equivalents and short- term investments of $57.8 million at Dec. 31, 2003, up $1.9 million from the prior quarter.
Third Wave's gross margins improved to 68% and 65% for the quarter and year ended Dec. 31, 2003, respectively, compared to 66% and 34% for the same periods of 2002. The fourth quarter of 2003 marked the fifth consecutive quarter for which the company has reported a gross margin of more than 60% and represents the achievement of another major milestone the company identified for 2003: sustained gross margins of approximately 60%.
Total operating expenses were $11.0 million and $44.1 million for the quarter and year ended Dec. 31, 2003, respectively, compared to $8.0 million and $72.7 million for the same periods of 2002, respectively. The company's pro forma operating expenses for the quarter and year ended Dec. 31, 2002, were $11.2 million and $55.7 million, respectively.
2003 Objectives
-- Increased clinical molecular diagnostic market traction
-- Sustained gross margins of approximately 60%
-- Ongoing improvements in cash burn with a target of achieving operating
cash-flow break-even by year-end
-- Continued improvements in operating performance
"2003 was a pivotal year for Third Wave and, while the company continues to transition towards molecular diagnostics, it was one of solid achievement," said John Puisis, president and chief operating officer of Third Wave. "Third Wave demonstrated increasing traction in the clinical molecular diagnostic market during 2003 and achieved significant improvements in gross margin, cash burn and operating performance, all of which were 2003 goals. During the fourth quarter, Third Wave delivered on another major milestone for the year by showing positive cash flow from operations."
2003 in Review
2003 was a transitional year for Third Wave. The company refocused its research and marketing efforts, as well as its financial resources, away from the genomic tools market and towards the clinical molecular diagnostic market. Such efforts proved successful as evidenced by the following full-year 2003 results compared to the prior year:
-- Total molecular diagnostic revenue up 41%, with U.S. molecular
diagnostic revenue up 77%
-- Operating performance improved by $32.6 million
-- Gross margin improvement from 34% to 65%
-- Net decrease in cash, cash equivalents and short-term investments of
only $2.5 million
-- Strong customer penetration in clinical diagnostic market
-- High-value, differentiated product pipeline
Continued research revenue
"We believe Third Wave is well on the way to achieving our primary objective: to be a leader in the molecular analysis market by converting our powerful and proprietary Invader® chemistry-based technology into a superior pipeline of molecular diagnostic and research products," Puisis said.
2003 Customer Adoptions
A primary objective in 2003 was to develop a core pipeline of valuable molecular diagnostic products, and to confirm that those products could meet the most pressing unmet needs within the industry. Third Wave successfully pursued new clinical molecular diagnostic customers in 2003. As a result, we are pleased to report that at the end of 2003, Third Wave had more than 110 clinical customers nationwide, including the top three U.S. labs and leading regional labs.
Key customer adoptions to date include:
-- Quest Laboratories - Cardiovascular/coagulation marker testing
-- Mayo Medical Laboratories - Cardiovascular/coagulation marker testing
-- LabCorp - Pharmacogenetic testing for clinical trials
-- Armed Forces Institute of Pathology - Genetic screening for cystic
fibrosis
-- University of California, Los Angeles - Prenatal chromosomal analysis
While Third Wave remains focused on its transition plan, the company is pleased to continue to service its valuable research customers. Research- related revenues continue to be significant and strategic, providing important support for the expansion of the molecular diagnostic business.
"Our goals in 2003 were fourfold: continue to build credibility with well recognized and highly regarded laboratories that the Invader® technology is a superior molecular platform; transition the company by building a baseline of superior molecular diagnostic products; continue to serve key research leaders in the quest for new molecular discoveries; and, demonstrate that our business model underscores financial and strategic discipline," Puisis said. "Third Wave made great strides towards all these goals in 2003."
2004 Strategic Plan and Product Objectives
In 2004, Third Wave plans to build on its 2003 product development and commercialization successes in an effort to achieve the following objectives:
-- Establish ourselves as a leader by continuing to build and maintain
strong relationships with leading clinical laboratories
-- Develop a robust product pipeline to support that leadership position
-- Leverage a fast-response product development capability to capture
emerging opportunities
-- Partner where necessary to optimize Third Wave opportunities
As part of this strategy, Third Wave highlights current product goals for 2004:
-- Launch new products in each of the following areas:
* Genetics
- Release a cystic fibrosis diagnostic to meet high-volume
customers (Q1 2004)
* Infectious Disease
- Launch HCV genotyping assay (Q2 2004)
- Establish clinical trials program with key customers for an HCV
viral load prototype assay (2004)
* Chromosomal Analysis
- Broad release of a prenatal chromosomal analysis product (Q4 2004)
* Women's Health
- Release HPV detection (2H 2004)
* Pharmacogenetics
- Introduce various CYP450 products for the identification of drug
response variability to minimize adverse drug reactions and
optimize therapy (2004)
-- Further expand product pipeline opportunities based on customer
response and input
-- Continue to service strategic research relationships
2004 Financial Guidance
Third Wave offers the following financial guidance for 2004:
-- Product Sales: Third Wave anticipates total product revenue of
approximately $39 million. The company expects clinical molecular
diagnostic revenue of approximately $15 million.
-- Gross Margins: Third Wave anticipates that gross margins for 2004
will continue in the high-60% range.
-- Cash: At present, Third Wave expects to be cash flow positive for the
entire year of 2004. However, should future market opportunities
arise, the company may make additional investments in research and
product development. Under this increased investment scenario, cash
burn is not expected to exceed the low single digits (millions).
"Our accomplishments in 2003, complemented by increasing interest from key customers, confirm that Third Wave can leverage the Invader® chemistry to be a leader in molecular diagnostics," continued Mr. Puisis. "We are hearing from customers and key thought leaders that the Invader® technology is powerful and capable of spanning several markets. Our goal now is to further convert the technology into valuable products for these customers. The progress to date is very promising."
Conference Call
Company management will host a conference call on Tuesday, Feb. 24, 2004, at 10 a.m. EST to discuss fourth-quarter and full-year results and the company's 2004 plan. Domestic callers should dial (800) 299-8538 and international callers should dial (617) 786-2902. The access code for both domestic and international callers is 69781125. Please dial in five to 10 minutes prior to the start of the conference call. A live webcast and replay
of the conference call will be available at www.twt.com. The conference call,
webcast and replay are open to all interested parties.<<
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Cheers, Tuck |
