Good afternoon and thank you for standing by. Welcome to the Third Quarter Earnings 2006 Financial Results Conference Call. Today's conference is being recorded. If anyone has any objections you may disconnect at this time. All participants are going to be in a listen-only throughout the duration of the conference call. We will have a question-and-answer portion at the end of today's call. I would like to introduce your first speaker for today's call Mr. Mike Watts. Sir, you may begin.

Thank you Julian and good afternoon everyone. This is Mike Watts, Gen-Probe's Senior Director of Investor Relations. On behalf of Hank Nordhoff, Gen-Probe's Chairman, President and CEO; and Herm Rosenman, our Vice President of Finance and CFO, and the rest of the Gen-Probe team, I am pleased to welcome you to this conference call to discuss our third quarter 2006 business results. The press release announcing our results was issued today just after 4 PM Eastern Time and is posted on our website at www.gen-probe.com. In our call today, Hank will first provide an overview of our top line performance in the quarter and discuss progress we've made on future growth drivers. Herm will then review our detailed results and updated 2006 guidance, and we will take your questions. Before we begin, let me first review our Safe Harbor policy. Forward-looking guidance, financial or otherwise is only provided on conference calls or in our press releases. Any statements in this conference call about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often but not always made through the use of words and phrases such as believe, will, expect, anticipate, estimate, intend, plan and would. For example, statements concerning 2006 financial guidance, financial condition, regulatory approvals and timelines, possible or assumed future results of operations, growth opportunities, industry rankings, and plans and objectives of management are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied. Factors that might cause such differences include but are not limited to those discussed in our SEC filings including our report on Form 10-K for the year ended December 31, 2005, and all subsequent periodic reports. Copies are available on our website at www.sec.gov and on request from our IR department. Gen-Probe assumes no obligation and expressly disclaims any duty to update any forward-looking statements to reflect events or circumstances after the date of this call or to reflect the occurrence of unanticipated events. With that administrative detail out of the way, I will turn the call over to Hank Nordhoff, Gen-Probe's CEO.

Thank you Mike, and good afternoon everyone. As described in our press release, Gen-Probe had an excellent quarter with robust increases in product sales and total revenues leading to high quality earnings growth. At the same time, we made important progress on our regulatory front, progress that we believe will bolster our already strong competitive positions. In my remarks today, I'll cover our record third quarter results and discuss how our recent product approvals have us nicely positioned for future growth. We have a lot to discuss in our base businesses, so I will focus my comment there and allow time to provide additional color on our new business initiatives in the Q&A. Let's begin with the quarterly revenue picture, which was highlighted by new records for both product sales and total revenues. In fact, both clinical diagnostics and blood screening product sales grew by more than 20% compared to the prior year period. We believe this balance growth off an increasingly large sales space reflects the sustainable value that our products and our people deliver to customers and also enables us to continue investing heavily for the future. Product sales were $83.5 million in the quarter, a new all time high and 21% higher than last year. This strong growth in product sales helped drive total revenues in the third quarter up 21% versus last year to $92.2 million, a new record. Profits also grew nicely in the third quarter. Excluding the effects of share-based compensation under FAS 123R, earnings per share were $0.36 in the quarter, up 16% versus the prior year. We also maintained a net after-tax profit margin of roughly 21% on a non-GAAP basis which is impressive considering our hefty investment in research and development. On a GAAP basis earnings per share were $0.28, slightly…

Thank you Hank, and good afternoon everyone. As described in our press release, Gen-Probe once again had a very strong third quarter. Both clinical diagnostic and blood screen sales grew impressively establishing another quarterly record for overall product sales. Total revenues also hit a new high and earnings per share exceeded expectations as well. Hank already covered the dynamics of product sales. So, let me begin by discussing collaborative research revenues which were $1.5 million for the third quarter of 2006, a significant decrease compared to $6.3 million in the prior-year period. As we explained in our press release, this decrease resulted almost entirely from the removal of roughly $4.4 million of West Nile virus cost recovery revenue from this line of the income statement. Instead of showing up in collaborative research revenues, all sales of our approved West Nile virus assay are now being recorded in product sales. And, obviously this contributed to our strong product sales growth in the quarter. We expect collaborative research revenue to approximate $1.5 million in the fourth quarter as well, principally representing shared funding from Chiron and Millipore. Royalty and license revenues were $7.3 million in the third quarter, a big increase compared to $1 million in the prior year period. As you know, we recorded $5 million of license revenue from Bayer in the third quarter, which reflects their first payment to us under the settlement of our patent infringement litigation. In addition, we recorded another $1 million from Tosoh under our 2004 cross-licensing. That agreement called for Tosoh to pay us an addition of one-time license fee if their rights were expanded to include TMA assays or targets that were previously assigned exclusively to Bayer. Looking ahead to the fourth quarter, we expect royalty and license revenue of around $3.5 million.…

Thank you Herm. We are happy to take your questions now. For Q&A we are joined by Larry Mimms, Executive Vice President of R&D; Bill Bowen, Vice President and General Counsel; Steve Kondor, Vice President of Sales and Marketing; and Lynda Merrill, Vice President of Investor Relationships. In order to ensure broad participation in the Q&A section please be courteous and limit your questions to one plus a follow up then jump back into the queue. Operator we're ready to take the first question.

Thank you. At this time, we are ready to begin the question-and-answer session. (Operator Instructions). Our first question comes from Quintin Lai from Robert W. Baird.

Good afternoon. Congratulations on a nice quarter.

Thanks Quin.

Thanks Quin.

With respect to the post-marketing study that you and Chiron will be conducting, do you anticipate doing that on pools of eight or will you being doing around IDT?

Larry Mimms will address that question Quin.

We have been discussing this with our customers and we are hoping to get some time with the FDA in the very near future to discuss the new answers to that trial, but you are right, we'll be looking at 1 to 8 and also IET as a part of that trial.

And then as a follow up to that question, the R&D general guidance that you gave in 2007, does that include all the post-marketing studies that you need to do for ULTRIO?

Yes, it does Quintin.

Thank you.

And your next question comes from Lee Brown from Merrill Lynch.

Good evening everyone, how are you?

Hello Lee, how are you?

Good, thank you. Just a quick question on West Nile virus, could you give us an approximate figure for what it contributed to product sales in the quarter?

Well, as you know we don’t break product sales down that finely. What we do know however and we've said is that in collaborative research revenue under cost recovery pricing was about 4.5 million.

Just gross up there.

Well, I'll leave that you.

Okay, now that’s fair enough, and well that’s sort of limits any growth potential there, do you expect that to increase going forward?

Actually it doesn’t Lee because as we’ve said before, a large portion of the increased pricing is revised for increased cost recovery pricing. So for those customers that have a TIGRIS as a part of their system, we are not yet charging -- the Chiron's not yet charging full commercial pricing. So there is growth left in West Nile Virus that full commercial pricing kicks in post approval.

I guess, I was just giving you a high time on volume time, Herm. Fair enough, just one another question. The completed application for CE mark with the PCA3 expected to be launched later this month, any sort of ballpark figures for what you're expecting for that product in '07.

No.

Fair enough, gentlemen. Thank you so much, I get off and I'll get back in the queue.

Thank you, Lee.

Our next question comes from Bill Quirk, Piper Jaffray.

Thanks, good afternoon and I would like to add my congratulations as well.

Thank you.

Hanks, first off I am seeing some really nice robust growth year to date in Chlamydia and gonorrhea side of the business in particular last two quarters. We certainly have our own theories hereon on what's driving that but we would love to hear your take there and I then I guess as a follow up, what do you see in terms of sustainability of these particular trends?

I'll do better than giving my take, Bill I'll give you Steve Kondor, head of sales and marketing.

Perfect, very well.

Hi, Bill. Let me answer your questions. There are a variety of factors are have lead to our strong performance thus far. First is the OPT claim that we got some Cytyc last year that's helping fuel our growth. TIGRIS certainly is a big driver for us as well in the STD side, but perhaps most importantly there is an overwhelming amount of published data out there showing the superior performance of our tests and we used that data very effectively and we've done a good job with it this year. As far as sustainability, I can tell you that little more than 70% of our STD]revenue comes APTIMA and however 50% of our units are split between APTIMA and PACE, and we still have a significant amount of opportunity therefore, conversions and growth coming from the PACE conversion.

Understood, thanks for the color and I can sneak one additional one in here, Larry can you walk us through the clinical pathway for HPV, will this be a three-year follow-up trial and then, when should we think about this beginning?

I am sorry, a three-year follow-up, I didn't quite get the question, could you repeat it?

Yes, I am just trying to get a little more color on the clinical trial for HPV, what we have seen at least from the market leader is that they ended up doing a three-year follow-up. I believe that Roche is also, it's just finished actually their three-year follow up as well. I am just trying to get a sense as to re-look at those clinical trials as kind of a benchmark for you are going have to go through as well or do you think perhaps that we can actually get this test in the US market with some type of abbreviated clinical trial?

I think right now we are in the midst of discussion with the FDA on the clinical trials design, so I would like to get some further clarification from the FDA before we comment on that. Certainly we want to go as expeditiously as possible and we will pursue it as approaches with the FDA.

Okay, thank you very much.

The next question comes from Bruce Cranna from Leerink Swann.

Hi, good afternoon guys.

Hi Bruce.

Just some color on the clinical number, where there TIGRIS sale in that whatever it was the 43 million number.

Yes.

Can you quantify that a lot for us?

You know we don’t break it down that finely, Bruce.

Just trying.

I know you were.

Okay, and then I am sure you don’t want to dwell publicly about some business leaving Quest and going to LabCorp, the Universal Health, or United Health, but can you give us some sense, we have been thinking about LabCorp in STD testing, do you guys have any sense there as to, I mean is that really amplified shop that is things that you sell after the (inaudible) has been converted and then, do you know broadly in the STD business what percent, you are currently vile, I know it's early, but I'll be interested in any commentary there?

Oka. Steve?

Okay, let me a crack, there are a few questions in there. First off, I will say that we've said this in the past that we don’t comment on specific accounts that we have in terms of what's going on, but I can tell you that we have a very good relationship with Quest, they are important customers of ours and we expect that relationship will continue. With regard the LabCorp, they are also obviously very important customer of ours. They are not just an APTIMA amplified shop, but they still do a fair amount of PACE well. I'm trying to think of your other questions in there, can you repeat if I missed something?

I was wondering just if you had any idea at this already stage about percent of CTGC out of the vile looking at your whole business -- all you wrap in a business, what percent -- do you think it is even at the point where it's ascertainable what percent of that testing are out of vile?

I don’t have that figure exactly, but what I can tell you is and maybe this will give you a little bit more color that about 10% of our volume today comes from LPT in terms of revenues and we expect that’s going to continue.

Okay. Last question from me, Hank, just quickly on APTIMA HIV. Should we be thinking about this assay making it on the TIGRIS at some point?

Possibility. We don’t expect to gain a huge amount of revenue from this. We expect an awful lot will be in the public health sector. If the demand exceeds our expectations, there is always that possibility.

Do you have any idea how big the confirmatory market is today?

I was -- suppose it's fairly small relatively speaking to the rest of our sales.

Okay. No, I just -- I don’t know how big that market is so I was kind of curious.

Yeah. I wouldn’t increase your numbers because of that one person.

Alright. Fair enough. Thank you.

Thanks.

And your next question comes from Peter Larson from Thomas Weisel Partners. Mr. Larson your line is open.

Good afternoon.

Hi Peter.

First question around the future growth for PACE what are the drivers for that growth?

PACE?

PACE is not growing --

No. You mentioned it was going to be growing in the future?

No. The convergence would be going to APTIMA and PACE will be declining

May be if they [figure the LPT].

Yes. Peter if I can clarify that a little bit, what we meant to say there is I think the PACE in the quarter was down year-over-year about 15% or 16%, I think 16%; and we actually said that because we have been successful with converting some of the PACE business to APTIMA that that rate of decline would actually accelerate going forward for PACE.

Okay. Thank you for clarifying that. And I wonder if you give us some more color on the industrial applications with GE and Millipore projects of any timelines?

I'll put Lynda Merrill on who manages that business for us.

We are unable to actually give you timeline at this specific point, but I will say that both are progressing well. We just recently Millipore [extension] alpha testing with their product and although it's still early, they've been very, very pleased; they've all been very pleased with the results and feedbacks from that alpha testing.

Okay, thank you. And then finally the rollout of West Nile virus, is that going to continue into Canada or other countries?

As far as I'm aware we are doing an evaluation in Canada, but in terms of the rate of acceptance remains to be seen. There is a feeling Peter that if you were to [dispatch] for West Nile virus, many, not all of all the Mediterranean countries and others you would probably find it. Currently except for Canada and I guess some test that we shift to Australia in the event of a "outbreak" there. It's limited to almost exclusively to the US market.

Okay, thank you so much.

Welcome.

Your next question comes from Spencer Nam from Summer Street Research.

[Technical Difficultly] about the guidance given the strength of the Clinical Diagnostics segment and also the blood screening business seems to be doing well. How should we think about this sort of sequentially flat guidance right now? Should we consider that as a more of conservative approach or how do you guys take a look at that?

Well Spencer, as we mentioned, the spares and also the TIGRIS instruments will be declining as we go out into the future. So that kind of takes care of the revenue line. As far as the EPS line where we did tighten that up a little bit on a positive basis, again we have got bits and pieces, our expense guidance was pretty consistent with the past, but we are running off of a big revenue base and we say 10% to 11% throughout the 13% even if there is a few hundred thousand in each of those lines and I am particularly thinking of research and development expense that would definitely tighten up our ability to increase EPS. So I wouldn't see this particularly the answer to your question, particularly conservative and certainly not aggressive.

Okay. Great, thanks. And then just a one quick question, I was wondering if you had any additional docs or details on the current blood business where the Novartis is -- kind of what stage Novartis might be in evaluating that business, do you see any sort of a signal that Novartis may want to part with that, I realized I probably should throw out this question to Novartis but I was just curious if you guys were seeing anything?

We can probably give you the same answer that Novartis will. I think they are still evaluating it. We may expect some sort of an indication at the end of this calendar year and it may take later.

So you expect something -- some sort of a decision by the end of this calendar year?

We may receive something at the end of the calendar year that was an indication we got from them very early this year.

I see.

But it may take longer.

Okay, great. I appreciate it thanks.

Thank you sir.

Our next question comes from Sara Michelmore from Cowen and Company.

Hey, good evening everybody.

Hi Sara.

I would like to get an update on the Panther instrument, you guys haven't talked about that recently and I wanted to know what kind of progress you were making with that instrument?

We are making nice progress Sara, it is still early, things are looking good. We expect that will play a very important role in clinical diagnostics and quite obviously also in blood screening in the smaller blood banks in Europe and we try to give you more color on that and at the analyst day which is coming up in December.

Okay and as a follow-up to that, does the timeline of the Panther effect any of the timeline of the new assays, so in terms of some other formats that are going after for some of these more complicated assays, is the Panther going be required still to commercialize those products, things like PCA3 and HPV?

No the Panther will not be required.

Okay. And in terms of that the PCA3 commercial program, I know that you have also been evaluating not only that assay as a single marker, but also in combination with other markers in an effort to improve the sensitivity and/or specificity of the assay, could you just comment on your latest thoughts in terms of PCA3 standalone assay versus a combine products for the US market?

Well, I think we have to realize that currently PCA3 is the best assay out there and it's going to remain I think that way for period of time. We have more than TMPRSS2, we have Amicar, we have rights also to [PC Gen 1] to ERG, and we are going through the evaluation of -- and we have to evaluate each one independently and then try to deposit what it will be like in combination with another one, it's going to take some time. I don’t think as much we can tell you more on the analyst day, but as we learn more about them, we will certainly mention that to you. I should say that we went out to the Prostate Cancer Foundation's Technical Day in Phoenix and Arul Chinnaiyan, the inventor if you know, the discoverer of TMPRSS2 gave a talk and several people talked about Nobel Prize. So that's a very interesting one for us and getting an awful lot of interest and probably would be the best guess from people outside the company to be combined with PCA3, but we haven’t yet made that determination.

Okay, and you have not made a determination at this point that you would forgo a single marker launch of PCA3 in the US in favor of a combine launch since the timelines are not so close that you would be required to make that type of decision at this point?

We haven’t made a decision on that one way or the other.

Okay. And lastly is there any update on and I assume this might be when since Panther timeline on quantitative HIV, HPV products that you got some rights back to from Bayer arbitration?

We only got rights back from Bayer for the qualitative.

The qualitative.

And there is work that’s proceeding PACE on the quantization of our instruments.

Okay. Thank you.

Thank you.

The next question comes from [Kenneth Levin] from UBS.

Hey guys good afternoon.

Kenneth, how are you.

I was wondering whether you could close in on anything about you have been hearing about Abbott's M200 platform, had any success in placing instrument in US so far?

Steve will address that Kenneth.

Well, Kenneth, as you may know that they are not approved in the US for CTGC on M200, we don’t have an additional information on that, you'll have to ask Abbott, as far as outside the United States, they did launch the M200 with CTGC. We have very little information about the product performance on the [M2000]. We'll keep our eyes and ears on lookout for information. What we do know is very early preliminary data that we've seen needs to be validated is that the performance suggests that it's probably no better than what is available in the marketplace today in terms of our competitors.

Thanks, that was helpful. Also can you anticipate providing guidance for '07?

We do. Just not now. We expect to do it in February when we have our call on 2006 results.

Alright, great. Thank you.

Thanks Ken. Operator, I think we have time for one more question and then we've got some closing remarks.

At this time, we have no further questions standing by, sir. I'm sorry, we do have one. Mr. Tycho Peterson from J.P. Morgan.

Hi, thanks for taking the call. Congratulations.

I'll try to show you out there, Tycho.

Yeah, I appreciate that. Don't worry, I'll give you few soft balls here. First, I guess, do you have anymore visibility on the size of the surveillance study that needs to be done for ULTRIO and eSAS, and is it fair to kind of think that that’s two to four months in terms of how long that will take?

Where is the soft ball Tycho?

Well, the guidance that we have is that we need to find yield comparable to that found by Roche in their trials and so in their trials they found two yield samples. So that’s more or less the target we believe for those studies.

Okay. One thing we noticed out at AABB was there were a couple of posters talking about West Nile kind of migrating towards seasonal IDT versus Minipool, I guess, migrating to seasonal Minipool in the off season. Is that something that you've kind of factored in, in terms of how you look at the market overall and how prevalent you think that might become?

Our indication is that there is talk but it's only talk and we anticipate that there will continue to be year around testing for West Nile.

Okay. I mean are you assuming year around in IDT when you say that?

No. The IDT gets triggered when there is a certain incidence rate or [problem] rate in a limited population, but in general the pooling will continue as far as we know into the future.

Okay. And then finally Hank, I know you have been spending a fair amount of time in Washington, how do you or what do you say to I guess in terms of Head of Regulatory Affairs and how much of a priority is that by now?

We have gotten some really impressive candidates. It is a priority because right now it is reporting to me and it's kind of a learning process for me. But we expect -- I think you can see that our relationship with the FDA has improved and I think that will only continue with the addition of a professional and we expect to have someone in place probably by the end of this year.

Okay, thank you.

Thank you Tycho and thank you for all your questions. To ramp up Gen-Probe had a strong third quarter with excellent underlying growth from both clinical diagnostics and blood screening. Both product sales and total revenues grew by 21% and established new records. We maintain our healthy net profit margins and EPS grew by a solid 16% on a non-GAAP basis, once again ahead of expectations. Not only was our financial performance solid on the third quarter, we believe that five new product approvals we have recently received have helped us improve our track record with the FDA, solidify our already strong competitive positions and enhance our future growth prospects. Before we sign off Mike has asked to remind you that our Annual Analyst Day is planned for the afternoon of Tuesday December 12 at the Grand Hyatt in New York. Please watch your email for more information and we look forward to see many of you there. Thank you for your time and attention today, and please contact us if you have any follow-up questions.

Thank you for joining today's conference call. All parties may disconnect at this time. Thank you.