Transgenomic Declares Q4 2008 Results

Gross profit from continuing operations was $3.4 million or 55% during the fourth quarter of 2008 compared to $3.9 million or 60% during the comparable period of 2007. Operating expenses from continuing operations were $3.4 million during the fourth quarter of 2008 compared to $3.7 million during the same period of 2007. The $3.4 million in operating expenses included a $638,000 goodwill impairment charge and income from foreign currency revaluation of $0.5 million. Cash and cash equivalents totaled $4.8 million at December 31, 2008.

Year Ended December 31, 2008

The Company reported a net loss of $495,000 or $0.01 per share for the year ended December 31, 2008, compared to a net loss of $2.1 million or $0.04 per share for the year ended December 31, 2007. The 2007 net loss was comprised of a loss from continuing operations of $2.2 million or $0.04 per share and an income from discontinued operations of $67,000.

Net sales from continuing operations were $24.0 million for the year ended December 31, 2008, compared to $23.2 million for the year ended December 31, 2007. Gross profit from continuing operations was $13.6 million or 57% for the year ended December 31, 2008 compared to $12.7 million or 55% for the year ended December 31, 2007. Operating expenses from continuing operations were $14.0 million for the year ended December 31, 2008 which included a $638,000 goodwill impairment and income from foreign currency revaluation of $1.0 million. Operating expenses from continuing operations for the year ended December 31, 2007 were $16.0 million, which included $1.5 million in restructuring charges for the year ended December 31, 2007. The Company used cash flows in operations of $413,000 for the year ended December 31, 2008 compared to cash flows used in operations of $2.9 million for the year ended December 31, 2007.

Comment and Outlook

Craig Tuttle, the company’s president and chief executive officer, noted “We are quite pleased with the overall results of the year. Our Molecular Reference Lab grew 70% in the year and we continued to make gains in our Pharmacogenomics services business by adding several key new pharma customers. With this growth in our services business, our previous significant effort in cost reduction and investment in our sales organization, we have achieved close to breakeven performance for the year.”

“We continued to improve our operations efforts for our Molecular Reference Laboratory business as well as our WAVE system and reagent manufacturing activities. These efforts resulted in our lab gaining accreditation by the College of American Pathologists (CAP) and our manufacturing site attaining ISO9001:2000 accreditation during the fourth quarter.”

“Most importantly, we embarked on an aggressive pursuit of new assay technology to drive both short and long-term growth for our laboratory businesses. Key licensing efforts during the year included our exclusive licenses with the Clayton Foundation for Medical Research for their patent on mitochondrial DNA damage and our license with Power3 Medical for their proteomic assay technology for Alzheimer’s and Parkinson’s disease. The Clayton Medical license has allowed us to develop a mitochondrial damage assay which we hope will serve as a very important assessment tool for a variety of key medical problems including assays for cardiac disease, neurodegenerative diseases, diabetes and cancer as well as aging and wellness testing. We have active clinical validation efforts beginning or on-going for each of these assay targets and hope to bring these products to the market as quickly as possible.”

“We are also developing a full product line of key cancer pathway gene mutation kits to complement our WAVE and Surveyor products ability to find cancer treatment and assessment impacting gene mutations. The ability of our products to surpass typical sequencing in finding these key cancer gene mutations is well known. However, we believe that clinical use of the WAVE and Surveyor product combo will be enhanced with specific gene mutation kits based on our experience in clinical trial assessments of these gene mutations that we are providing through our Pharmacogenomics Services Lab.”