Welcome and thank you for standing by. At this time, all participants are in a listen-only mode. (Operator Instructions). I would like to advise all participants today's conference is now being recorded. If you have any objections you may disconnect at this time. Now, I would like to turn this meeting over to your host Mr. Michael Watts, Vice President of Investor Relations and Corporate Communications. Mr. Walts, you may begin.

Thank you, Cathy, and good afternoon everyone. On behalf of our management team, I am pleased to welcome you to this conference call to discuss our Fourth Quarter 2008 Business Results. A 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 give an update on several strategic priorities. Carl will review our quarterly financial results, then Herm will discuss our 2009 guidance. We will take your questions before wrapping up within an hour. Immediately after that, we will post our prepared remarks on our website for your convenience and reference. 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, foresee, could, should and would. For example, statements concerning 2009 financial guidance, financial condition, regulatory approvals and timelines, possible or assumed future results of operations, growth opportunities, our proposed acquisition of Tepnel, industry rankings, plans and objectives of management and future economic conditions 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, 2007, 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'll turn the call over to Hank Nordhoff, Gen-Probe's CEO.

Thank you, Mike, and good afternoon everyone. As you saw in our press release, our fourth quarter results capped off an excellent year of Gen-Probe. With both revenue and earnings growth exceeding our long term goals. Moreover we are off to a fast start in 2009, and have already made significant progress on several strategic priorities. At our analyst day in November we outlined six of the strategic priorities for the next couple of years. And we have pursued them diligently. Our first strategic priority is to profitably grow our STD business and maximize the reach of our fully automated TIGRIS instrument by adding human papillomavirus or HPV to its menu. As you will hear from Carl our STD business remains strong driven by the continuing success of TIGRIS. In addition our HPV program remains on track as highlighted by the nine oral presentations and two scientific posters discussed in November at the major European HPV meeting called Eurogen. Another strategic priority is to complete the development of our PANTHER Instrument and establish it as the platform of choice for molecular diagnostics. This is a longer-term initiative, and the development program is progressing according to plan. A third goal we discussed in November is to maximize the potential of our prostate cancer franchise. Our PROGENSA PCA3 test continues to grow robustly in Europe driven by numerous articles in the peer-reviewed scientific literature and by highly targeted marketing efforts. In the United States, we are encouraged by very recent conversations with FDA and opinion leaders and are considering moving ahead with the clinical trial that could lead FDA approval of our current test on our semi-automated instrument platform within three years. So on these three strategic priorities, the (inaudible) business, PANTHER and prostate cancer, we are pleased with our accomplishments to-date,…

Thanks Hank. Gen-Probe's financial results for the fourth quarter should not come as a surprise since we essentially provided quarterly guidance on our last call and since we reiterated that guidance at the JP Morgan Conference in mid January. Our fourth quarter results were predictable in another way as well. They reflect what the company has consistently done since 2002. Execute on our financial commitments and deliver top line and bottom line growth regardless of macro economic conditions and independent of settlements surrounding stock. With that brief preface let’s review our results. Gen-Probe had a very solid fourth quarter. Product sales were $105.8 million up nearly 15% compared to the prior year period. Total revenues increased 10% and EPS grew 5% on a GAAP basis. Earnings growth would have been much higher if not for the exceptionally low tax we have enjoyed in the prior year period. Turning to the components of product revenue, clinical diagnostics sales grew a healthy 16% in the quarter and established a new record, once again led by our amplified APTIMA franchise for Chlamydia and gonorrhoeae testing. In the fourth quarter customers continue to upgrade the APTIMA assays from our older non-amplified pace product line. Pace sales declined 26% in the quarter inline with our expectations. Pace generated only 11% of our STD revenue in the quarter it still represented about 25% of our volume. So we anticipate the positive mixed shift to continue although perhaps not at the same rate as in recent years. We estimate that our total dollars share of the domestic STD market exceeded 61% in 2008 up about three percentage points compared to the full year of 2007. We continue to gain share based on the superior sensitivity and specificity of our assays, combined with a throughput and automation of…

Thank you, Carl, and good afternoon, everyone. I would like to provide more color on the 2009 guidance that we first announced the couple of weeks ago on January 27th. We expect this year to be characterized by solid top line growth, leverage throughout the income statement, even as we invest fully in key R&D and strategic initiatives, healthy net profit margins in excess of 20% on a GAAP basis and robust cash flows in a difficult macro economic environment. As we said in our press release, we are not including in our current financial guidance any revenue or expense associate with our pending acquisition of Tepnel. We will incorporate these effects when the deal closes probably in the second quarter. So excluding Tepnel, we expect total revenues of $460 million to $490 million in 2009. This includes a little less than $10 million of aggregate non-product revenues significantly lower than the $43.5 million of non-product revenue we recorded in 2008. As you know most of our non product revenue in 2008 came from two non-recurring payments. We recorded $16.4 million of royalty and license revenue from Bayer in the first quarter, which represented their third and final payment under our patent infringement settlement. And we recorded a $10 million milestone from Novartis in the third quarter following the full FDA approval of the PROCLEIX ULTRIO assay on the TIGRIS system. In addition, we booked $2.7 million of previously differed collaborative research revenue in the second quarter following the termination of our 3M collaboration around healthcare associated infections. And finally, we recorded $2.6 million of non-recurring product sales in the second quarter to correct some past errors in our blood screening collaboration with Novartis. All in all, these non-recurring items added about $32 million of revenue to our 2008 financial…

Thanks Herm. We are happy to take your questions now. For the Q&A, we are joined by Dan Kacian, Executive Vice President and Chief Scientist; Bill Bowen, Senior Vice President and General Counsel; Steve Kondor, our Senior Vice President of Sales and Marketing; Paul Gargan, Senior Vice President and Business Development; and Kevin Herde, Vice President and Corporate Controller. In order to ensure broad participation in the Q&A session, 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 questions.

(Operator Instructions) First question comes from Imron Zafar from Deutsche Bank. Your line is open.

Hey, good afternoon and thanks for taking my question. My first question is on guidance. Can you just talk about the relative growth rates you are assuming by segment for 2009 and how much of that is can be driven by share gains versus end market growth?

Imron, you can see what we are implying is about 11% growth.

Right.

We haven't historically passed that out into diagnostics versus blood screening at this juncture and don’t intend to do it today. But I think you can tell that we are looking for a good year, a very good year in 2009. Condition of course as we said on some very vital foreign exchange rates.

Okay. And then maybe a big picture question. You have talk in the past about the electro diagnostic market growing sort of in the 12% to 15% range over the next few years. And maybe looking at your 2009 guidance, you sort of add little bit a lot of depending on FX I guess, can you just comment, given your comment Hank about the unlikely how you are going to do any meaningful M&A in the foreseeable future, what do you see your long-term growth rate relative to the market that 12% to 15% range? Thanks.

I think last year at this time Imron we guided to about 11% growth and it came out to be, much higher than that. We did not say we were not going to do any acquisitions. We said that, that was probably unlikely that we would acquire a company larger than Tepnel. I think the upside will be ULTRIO in the US and we have been little bit cautious about talking about this adoption in the US I think I went on inline and I expected the first sales to be in the first half of this year but we have not quantitated that. I think overall as see the growth rate in diagnostic to be just about double in Europe what it is in the US you can see that we are investing over there to try to capitalize on that best.

Okay. Thank you very much.

You welcome.

Thank you. Our next question comes from Bill Quirk with Piper Jaffray. You may ask your question.

Thanks. Good afternoon.

Hey Bill.

I know you guys didn’t want to include ULTRIO in the US in the guidance, but how should we think about the pacing of negotiations right now? Obviously there is one very large customer out there, and there is number of smaller ones. I think you said in the past you expect smaller deals to likely come through first.

I don't know if we have any more information to change that goal. That's probably the way it will be. There is a BPAC meeting coming up. It may be discussed then, we are not really sure.

Understood, and then Herm just a quick and picky accounting question if I can. On the cost of goods sharing with Novartis, I understand this can booked as product revenue. In past deals where you had these R&D sharing you booked it as collaborative research revenue. How come we are not going to book these [cards], since I guess change the title, if you will, to collaborative revenue.

Well, because it really is product revenue. It's the way the split is calculated. We could have even picked out another item to add to whatever our gross revenue split is, but we wanted to align the company. So our actual revenue split as a percentage a number and also 50% of another number.

Okay, understood. And then one last one if I can speak in, what is the TIGRIS contribution for blood bank revenue this quarter?

I don't know, we do have that.

It is about 4.5 seconds where Kevin is looking at.

Bill this is Kevin Herde. It was approximately $2 million.

Perfect. Thanks very much guys.

Thank you, Bill.

Dan Leonard with First Analysis. You may ask your question.

Hi Good afternoon.

Good afternoon.

Hank, you mentioned in your comments that your discussions with the FDA, on the prostate cancer tests are proceeding favorably, could you provide some detail on the discussions please?

Only in gross term [Len], we have been, I don’t want to use the word harass, but some of the opinion leaders, Dan had said that, (Inaudible), but the fact is not IBD approved has cut into the sales potential. So we took that and went to the FDA to see what we can do to speed things up. And I think they, we are will not scarifies the anything at all had given us a lot of encouragement that leaves me to say that once we begin the clinical studies, we should have it on the market within three years.

Okay. And then for Herm, Herm, how would an favorable outcome with the FDA and the prostate cancer discussions impact your R&D forecast for this year?

Well, they would probably require us to shift with other projects and gating of other projects, but we are not quite at that point yet. So I can't provide an off a lot of cover on it.

Okay. Thank you.

Thank you, David Lewis with Morgan Stanley. You may ask your question.

Good afternoon.

Hi, David.

Hi, Hank. I wonder just given the very significant growth we saw on the core business last year, if you could just sort of re-update us on what do you think is a reasonable new multiyear top line target for Gen-Probe? And then maybe Herm, can you kind of provide us how long the business could generate 20% type bottom line growth if that top line growth rate begins to slip below 10%.

David our goals that we have been talking about for six years, since we have been a public company, is top line 15% and product sales hopefully better than that and the bottom line and we are sticking to that. We will have years, when it’s going to be well over 15% and some years when it's going to be under. This year is going to be bit of challenge, but don’t forget we have not included any sales of the Tepnel products into our guidance, so we are sticking with a 15 and 15.

Okay, and that still looks pretty good for your target?

Yeah, I think it looks very good.

Great, and then Herm just to give a product status, you said a 11%, did that a 11% include that step up from Novartis?

Yes, it did.

Okay, so in that piece is something around $10 million for 2009?

We haven’t given that specifically David but in the ballpark.

Okay, that’s very helpful. And then maybe Hank you talked about R&D privatization you gave some granularity , do you talk maybe more specifically about thing is that had been reprioritize in 2009, or maybe this is sort of a 2009 and 2010 question?

Let me ask Carl to talking about that, David.

Sure, David. I think the major focus is making sure that we have enough resources of the right types on the tough programs, being obviously defined those PANTHER in HPV at all times, so that can move the programs forward as fastest we can. That will requires a lot of balancing with other programs in house, because as you might imagine. On an instrument system for example, we are putting multiple assays on it simultaneously, so we need expertise from different parts of the organization at different times as those flux went to the instrument program, we have run with them for awhile, and then they complete their task related to that and than they move back to other program. So I would say first its just the, the consistent adequacy and top priority of those two programs into everything else that we do. And then after that I don’t think we have pulled our horns and intentionally on other major programs where we see commercial opportunities we just recognized that we will have a certain number that we can undertake and we are trying to balance a few long-term strategic priorities with shorter terms paybacks or say claim extensions on existing products where new applications in different geographic areas, where we have them up until now sold and so, that’s kind of how we do the process.

Okay, then one last question, I will jump back in queue, and thank you, Carl, it's very helpful. Herm just looking at the middle income statement obviously there is often has been opportunities for upside to the bottom-line, but specifically on tax rate what is, if you are comfortable with that 34% number kind of seems that percentage of that number could be not materially lower but certainly lower here for 2009. Are there are certain factors that could drive that number lower.

Well certainly the acquisition of Tepnel completing that one, have been cancelled that out and integrated debt but would have the effective lower income tax rate.

Okay. Thanks.

Thank you, David.

Thank you. [Joy Thomas], Needham & Company. You may ask your question.

Hi. This is Sameer Harish from Needham.

Hello Sameer, how are you?

Good. I wanted to just ask a couple of questions on pricing, outside of the impact of FX can you give us a sense on what you saw across the movement in pricing, directionally, internationally both on the blood and clinical science.

Steve?

Yes, I will speak to the clinical diagnostic side, pricing is more aggressive outside the United States, we have got a number of more competitors, however, we have been fortunate that with TIGRIS selling the value in the automation outside this as well as the value of our APTIMA Combo product we have been able to keep our pricing premium as we have in United States.

Okay. And as far as the US markets for the clinical, if that market starts to mature, when do you think you might start to see price increases from Gen-Probe, that in near-term seeing or more long-term.

I am sorry, price increases?

Yes.

Price increases in United States, I am sorry I didn’t understand the question; we have competitors coming into the United States, so prices will continue to be put under pressure because of competition coming in.

Okay, got it. Just wanted to switch gears a little bit into the PCA3 can you give us any sense of what the cost of the US SK trial would be and any details on the structure of the trial.

It’s going to be fewer numbers than we thought and the cost is going to be lower than we thought, but we can't give you any numbers on it at this point.

Okay, fair enough. Thank you guys.

You’re welcome.

Thank you Tycho Peterson, JP Morgan. You may ask your question.

Hi. This is [Sam Jin] for Tycho. Thanks for taking the questions. We saw an article today written on this paper regarding rising unemployment rate impacting the volume of blood donations and we are wondering if you are seeing that type of trend nationally and how that might impact on the blood screening business?

Good question very timely. We haven’t seen any impact as alluded to in that article. I think it’s something to be mindful of, but we keep a close eye and have improved visibility in our new relationship with Novartis to the underlying terms, but we don’t seen anything that would suggest donation rate in the United States is taking any kind of significant hit. Clearly some of the things they were talking about would mix how much it comes from blood mobiles or corporate donations versus other locations those may well be going on but in the micro sense have an effect in the business.

Great. And also in terms of going back to the R&D priorities, as far as [MRSA] and water testing are concerned, are they pretty much in the back burner currently and also if you could comment on your development with Millipore.

Yes, so we have certainly have communicated that we ave taken a look at the MRSA market after the termination of relationship with 3M and don’t feel that there is an independent path we are going to pursue right now. We continue to monitor the market space, we think particularly the dynamic of where that testing will be done whether it will be done closer to the patient, morning unit-dose setting or in a more traditional batch laboratory setting is the key market development factor and as those conditions evolve and becomes clear we can always reexamine that. With respect to our industrial work we continue the collaborations with our partners with GE and Millipore. But we certainly don’t see any material revenue impact from them in the current year?

I should add that we are making nice progress in both relationships and have some nice news recently in the Millipore collaboration. And as it confirms itself we are going to talk about in a few months.

Thank you.

You're welcome.

Thank you. Zarak Khurshid, Caris & Company. You may ask your question.

Yes, Zarak Khurshid of Caris. Thanks guys for taking the question. Could you provide a little more color on the R&D expense guidance? It seem like if we take the high end of the ranges versus the high low, variances is almost 60 million bucks, so what happened in those two different scenarios and specifically how does the HPV trial cost play into that?

I think I understand the question Zarak and that's a function of wide, wide range because of FX which will not affect R&D expenses than real expense almost all of them were done here in the US. One way to look at it will be the midpoint, then to go 20% to 22% off the mid point and ignores the ends. The ends are really more revenue, a revenue wish all does drive the expenses.

Got you. And then Carl, I think I heard you say that the non-US STD business was growing on the order 50% is that right? How sustainable is that level and then if you kind of qualitatively talk about the European growth in that segment that will be great?

Let Steve comment on it.

Yes, Rick, the numbers are smaller, number sort of percentage of necessarily become bigger, but having said that we have added the sales people in countries towards the backend of last year. Actually middle of the last year until now, and we are seeing a very nice return on that investment sale force in countries that we have not sold into.

So we think that we’ll probably continue in the near term.

Especially with regard to launch of PANTHER and to continue to pursue with HPV in Europe.

Great. Thank you.

Thank you.

Our next question comes from Quintin Lai of Robert W. Baird. Your line is open.

Hi, guys this is Jeff for Quin. Just quick on the cash which is assuming that Tepnel closes in Q1, Q2 as you guys were talking about what are your thoughts on buybacks versus for the M&A?

Our position Jeff is basically the same as always been. We are committed to the buyback program, but because we generated so much cash, that does not include looking around and being opportunistic.

Alright, thanks. And then, quickly just housekeeping HPV enrollment in clinical trial has anything changed since the Q3 call in that?

Well certainly number have increased, so that’s a good thing. We are tracking well with our overall objectives in the program and are endeavoring to find ways, to actually enrollment rates above the current levels. To accelerate the study we have investigators meeting at this weekend here in San Diego where we are pulling in majority of our investigators to talk about ways to do just that.

All right thanks, one last question the 3.6% FX headwind assuming rates stay as they are. Is that on product revenue or overall revenue. And what's the EPS impact to that.

Both on total revenue.

Okay and EPS impact?

3.6% rate.

Is it just flow through?

Right real flow through.

Jeff we do have some hedge there that hedges us against the portion of that exposure on the bottom line based on our international operations and some other banks. But it is a minority of that exposure that's hedged.

All right thanks a lot.

You are welcome.

Thank you, Spencer Nam with Summer Street Research. Your line is open.

Thanks for taking my questions. Just couple of questions on, one on acquisition and another one on HPV. The Tepnel acquisition related in terms of long term when you guys think about opportunities outside of the current pipeline. What kind of areas you guys interested in right now thinking seriously about potentially looking at the outside opportunities. And also in terms of 2009 and may be only 2010 you talked about not really at this point no major or sort of top process in terms of M&A you guys in terms of Tepnel what kind of role will it play in your long term strategic growth trajectory and kind of what is going to drive the long term value of that acquisition?

Well Tepnel brings us some new product categories where we did currently do not have the entries HLA, it’s a relatively small market but they probably are in the number two position. And we think by combining some of our technologies with theirs and maybe looking for additional complimentary technologies. We can do very well in that field. They also put us in genetics and also through their pharmaceutical services business gives us relationships with pharmaceutical companies and our ultimate goal is to do something in a large way in pharmacogenomics. Again we think that phases and other ballistic question of not so much that is not going to happen, question is when its going to happen. So we expect that company and its products will provide a nice source growth in the coming years.

Appreciate that, on the HPV side, we have been hearing some feedback, rounded about the FDA that, they have some thoughts on the number of sample sizes with respect to ongoing HPV trials that have ended. Do you guys feel that your current target sample sizes, sufficient enough to, be dealt with through the FDA process?

We do, Carl is going to comment on that further. I was going to say we do that we are summing for me, I think you are absolutely correct, the agencies views here are critical both about the size physical power of what we are trying to accomplish and how that products to claims, you are going to after for your product, we believe its been great deal of time in the early and recent stages of the project testing and retesting our assumptions validating them through the appropriate IDA and other meetings with the agency to confirm the validity of our design and then in that context we are always for ways to exceed those design wins. So that we have a comfortable margin of safety. But its certainly completely fare to say that the most important part of the program is convincing the FDA of the statistical power of the results that you have generated and we are comfortable with our approaches.

Right, thanks very much.

You are welcome.

Thank you our next question comes from Eric Criscuolo with Thomas Weisel Partners. Your line is open, Sir.

Hi guys just filling in for Peter tonight.

How are you?

I am doing well, thank you.

Good.

I guess just quickly on the recall, you said that you expect that you are pretty much through it, but are there any other I guess product lines that roll off that manufacturing line that could be possibility affected down the growth from the same issue?

No, Eric. We don't believe, so we have thoroughly investigated and isolated the answer, and we understand that and we found (inaudible) it.

Okay, great. And then just as for I guess the hedging those, I assume that sStephen kind of a new policy put into place. Could you maybe just dive a little deeper into that and say you maybe when its going to maybe taking effect and maybe some little more on the basic mechanics of it?

Yeah, it's in effect, Eric, and it’s been in effect for now roughly a month or so. And it's really buying forward foreign currencies on a monthly bases to edge receivable balances, and protect the income statement. You may have some small cash differences when we close out the contract and enter into a new contract minimal cost, far less expensive less than bigger one necked hedge to the future, so we think it will do the job for us.

Okay, great. Thanks a lot guys.

Yeah, I think we have time for one more.

Thank you. And our last question comes from Bruce Cranna with Leerink Swann. Your line is open.

Good afternoon, guys.

Hi, Bruce.

It's better than never.

Well, we will see.

So Carl, I know we have kind of been over this, but just so I'm clear on the AccuProbe thing. When you say it's behind you, it's behind you as in 4Q nothing sort of moved into 1Q?

We would have had expenses in, both the fourth quarter and the first quarter of this year. But I think the majority of it was taken in the first quarter, and there will be slight odds in size in the fourth quarter.

May be just some slight residual in Q1.

Yeah, very slight.

Okay. And one point, I think it was a few quarters ago. You guys were actually nice enough to give us (inaudible) in better term in installed base of TIGRIS in clinical segment. I am wondering if you could perhaps comment on that again.

Yeah, we do. We have about 160 TIGRIS systems worldwide on the clinical diagnostic side.

I am sorry 160.

160

Yeah, on the both side?

And about 200 in blood screening.

350 in total.

Got it, okay. And then lastly Herm, I know Tepnel is not in your guidance one way or the other. But just our curiosity if it were to close in 2Q, is there any change to the way you think about FX on the year, is it potentially a net positive from the operational hedging standpoint?

Yeah, it's a fairly small net positive though.

Okay.

Their revenues are also somewhat exposed aggressively, do business in different countries and a lot business in US.

Yeah, got it. All right, thank you guys.

Thank you, Bruce. And thank you all for your questions. To wrap up Gen-Probe's performance in the fourth quarter of 2008 capped off an outstanding year for the company. For the year we grew the top line 17%, the bottom line 23% and made significant progress on several of our strategic priorities. We believe our 2008 performance combined with our new blood screening contract, and our anticipated Tepnel acquisition have us well positioned for a successful year of profitable underlying growth in 2009. Thank you for time and attention today, and please contact us and Mike if you any follow-up questions.

Thank you. This concludes today's conference call. And at this time everyone may disconnect.