GEN PROBE INC 10-K (Annual Reports) 2009-02-25

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
Form 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
(Mark One)
˛ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-31279
Gen-Probe Incorporated
(Exact nam e of registrant as specified in its charter)
Delaware 33-0044608
(State or other jurisdiction of (I.R.S. Em ployer
incorporation or organization) Identification Num ber)
10210 Genetic Center Drive, San Diego, CA 92121-4362

(Address of principal executive office) (Zip Code)
Registrant’s telephone number, including area code:
(858) 410-8000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each C lass Nam e of Each Exch an ge on W h ich Re giste re d
Common, par value $0.0001 per share Nasdaq Global Select
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ˛ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ˛
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ˛ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ˛
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer ˛ Accelerated filer o Non-accelerated filer o Smaller reporting company o
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ˛
As of June 30, 2008, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the
registrant’s common stock held by non-affiliates of the registrant was approximately $2.2 billion, based on the closing price of the registrant’s
common stock on the Nasdaq Global Select M arket on that date. Shares of common stock held by each officer and director and by each person who
owns 10 percent or more of the outstanding common stock have been excluded because these persons may be considered affiliates. The
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determination of affiliate status for purposes of this calculation is not necessarily a conclusive determination for other purposes.
As of February 13, 2009, 52,336,758 shares of registrant’s common stock, $0.0001 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s definitive Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after the close
of the fiscal year are incorporated by reference into Part III of this report.
GEN-PROBE INCORPORATED
TABLE OF CONTENTS
FORM 10-K
For the Year Ended December 31, 2008
INDEX
Page
PART I
Item 1. Business 1
Item 1A. Risk Factors 37
Item 1B. Unresolved Staff Comments 54
Item 2. Properties 54
Item 3. Legal Proceedings 54
Item 4. Submission of Matters to a Vote of Security Holders 55
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities 56
Item 6. Selected Financial Data 57
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 58
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 77
Item 8. Financial Statements and Supplementary Data 78
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 78
Item 9A. Controls and Procedures 78
Item 9B. Other Information 81
PART III
Item 10. Directors, Executive Officers and Corporate Governance 81
Item 11. Executive Compensation 81
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters 81
Item 13. Certain Relationships and Related Transactions, and Director Independence 81
Item 14. Principal Accountant Fees and Services 81
PART IV
Item 15. Exhibits and Financial Statement Schedules 82
EX-10.12
EX-10.14
EX-10.25
EX-10.30
EX-10.75
EX-10.79
EX-10.82
EX-10.86
EX-10.93
EX-10.94
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
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PART I
TRADEMARKS AND TRADE NAMES
ACCUPROBE, AMPLIFIED MTD, APTIMA, APTIMA COMBO 2, DTS, GASDIRECT, GEN-PROBE, LEADER, PACE,
PANTHER, PROGENSA, SB100, TIGRIS and our other logos and trademarks are the property of Gen-Probe Incorporated.
PROCLEIX and ULTRIO are trademarks of Novartis Vaccines & Diagnostics, Inc., or Novartis. VERSANT is a trademark of
Siemens Healthcare Diagnostics, Inc., or Siemens. All other brand names or trademarks appearing in this Annual Report on
Form 10-K are the property of their respective holders. Use or display by us of other parties’ trademarks, trade dress or
products in this Annual Report does not imply a relationship with, or endorsement or sponsorship of, us by the trademark
or trade dress owners.
FORWARD-LOOKING STATEMENTS
This Annual Report and the information incorporated herein by reference contain forward-looking statements that
involve a number of risks and uncertainties, as well as assumptions that, if they never materialize or if they prove incorrect,
could cause our results to differ materially from those expressed or implied by such forward-looking statements. Although
our forward-looking statements reflect the good faith judgment of our management, these statements can only be based on
facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and
uncertainties, and actual results and outcomes may differ materially from results and outcomes discussed in the forward-
looking statements.
Forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,”
“hopes,” “may,” “will,” “plans,” “intends,” “estimates,” “could,” “should,” “would,” “continue,” “seeks” or “anticipates,”
or other similar words (including their use in the negative), or by discussions of future matters, such as the development of
new products, technology enhancements, possible changes in legislation and other statements that are not historical.
These statements include, but are not limited to, statements under the captions “Business,” “Risk Factors,” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as other sections in
this Annual Report. You should be aware that the occurrence of any of the events discussed under the heading
“Item 1A — Risk Factors” and elsewhere in this Annual Report could substantially harm our business, results of operations
and financial condition. If any of these events occurs, the trading price of our common stock could decline and you could
lose all or a part of the value of your shares of our common stock.
The cautionary statements made in this Annual Report are intended to be applicable to all related forward-looking
statements wherever they may appear in this Annual Report. We urge you not to place undue reliance on these forward-
looking statements, which speak only as of the date of this Annual Report.
ABOUT THIS ANNUAL REPORT

This Annual Report includes market share and industry data and forecasts that we obtained from industry publications
and surveys. Industry publications, surveys and forecasts generally state that the information contained therein has been
obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included
information. We have not independently verified any of the data from third-party sources nor have we ascertained the
underlying economic assumptions relied upon therein. While we are not aware of any misstatements regarding the industry
and market data presented herein, the data involve risks and uncertainties and are subject to change based on various
factors.
Item 1. Business
Overview
We are a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective nucleic acid
probe-based products used for the clinical diagnosis of human diseases and for screening donated human blood. We also
develop and manufacture nucleic acid probe-based products for the detection of harmful organisms in the environment and
in industrial processes. We market and sell our clinical diagnostic products in the
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United States directly and outside the United States primarily through distributors, as well as through our direct sales force,
and we also market and sell our other products through collaborative partners.
Founded in 1983, we pioneered the scientific and commercial development of nucleic acid testing, or NAT. By utilizing
nucleic acid probes that specifically bind to nucleic acid sequences known to be unique to target organisms, NAT enables
detection of microorganisms that are difficult or time-consuming to detect with traditional laboratory methods. We have
received United States Food and Drug Administration, or FDA, approvals or clearances for a broad portfolio of products
that use our patented technologies to detect a variety of infectious microorganisms, including those causing sexually
transmitted diseases, tuberculosis, strep throat, pneumonia and fungal infections. We estimate that currently our FDA-
approved Procleix assay for human immunodeficiency virus (type 1), or HIV-1, and for hepatitis C virus, or HCV, and
Procleix West Nile virus, or WNV, assay are utilized to screen over 80% of the United States donated blood supply for HIV-
1, HCV and WNV. We have 26 years of nucleic acid detection research and product development experience, and our
products are used daily in clinical laboratories and blood collection centers throughout the world. We were awarded a 2004
National Medal of Technology, the nation’s highest honor for technological innovation, in recognition of our pioneering
work in developing NAT tests to safeguard the nation’s blood supply.
We generate revenues primarily from sales of clinical diagnostic and blood screening assays that we have developed
with our proprietary technologies. We have also designed and developed, often with outside vendors, a range of
instruments for use with our assays that we sell to or place with customers. Our clinical diagnostic products are marketed to
clinical laboratories, public health institutions and hospitals in the United States, Canada and certain countries in Europe
through our direct sales force of 39 employees. Our blood screening products are marketed and distributed worldwide by
Novartis. In addition, we have agreements with Siemens (as assignee of Bayer Corporation), bioMérieux, Inc., or
bioMérieux, and Fujirebio, Inc., through its subsidiary Rebio Gen, Inc., or Rebio Gen, to market products in various overseas
markets. We also generate revenues through collaborations with various companies and through licensing of our patented
NAT technologies.
We are developing NAT assays and instruments for the detection of harmful pathogens in the environment and
biopharmaceutical and beverage manufacturing processes. We have entered into collaboration agreements with GE
Infrastructure Water and Process Technologies, or GEI, a unit of General Electric Company, and Millipore Corporation, or
Millipore, under which we will be primarily responsible for developing and manufacturing assays for exclusive use or sale
by our collaborative partners in specified fields within the industrial testing market. Millipore launched the first product
under our collaboration in January 2008.
We were incorporated under the laws of the state of Delaware in 1987. In September 2002, we were spun off from
Chugai Pharmaceutical Co., Ltd., our former indirect parent, as a separate, stand-alone company. Our common stock began
trading on The Nasdaq Global Select Market on September 16, 2002.
We make available free of charge on or through our Internet website our annual reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after
such material is electronically filed with or furnished to the Securities and Exchange Commission. Our Internet address is
http://www.gen-probe.com. The information contained in, or that can be accessed through, our website is not part of this
Annual Report.
Product Development; Recent Events

We have developed and commercialized what we believe to be the world’s first fully automated, integrated, high-
throughput, NAT instrument system, the TIGRIS instrument. The TIGRIS instrument can significantly reduce labor costs
and contamination risks in high-volume diagnostic testing environments and it also enables large blood collection centers
to individually test donors’ blood. In December 2003, we received marketing clearance from the FDA for sexually transmitted
disease, or STD, testing on the TIGRIS instrument using our APTIMA Combo 2 assay that detects chlamydia and
gonorrhea. The Procleix Ultrio assay for use on the TIGRIS instrument received approval to apply the Conformite
Europeene, or CE, mark in December 2004, which permitted Novartis to begin commercialization of the Procleix TIGRIS
instrument in the European Economic Area. In March 2007, the FDA approved the Procleix TIGRIS system to screen
donated blood, organs and tissues for WNV using the Procleix WNV assay. In May 2007, the FDA approved the Procleix
TIGRIS system for use with the Procleix Ultrio assay to
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screen donated blood, plasma, organs and tissues for HIV-1 and HCV in individual blood donations or in pools of up to 16
blood samples. In August 2008, the FDA approved the Procleix Ultrio assay to also screen donated blood, plasma, organs
and tissues for hepatitis B virus, or HBV, in individual blood donations or in pools of up to 16 blood samples on the
enhanced semi-automated system, or eSAS, and on the TIGRIS instrument.
In January 2008, Millipore commenced commercialization of the first MilliPROBE assay developed under our
collaboration, which targets the bacterium Pseudomonas aeruginosa and is designed as an in-process, early warning
system to provide faster, more effective detection of Pseudomonas aeruginosa in purified water used during drug
production. The assay was designed to ensure a higher degree of water quality throughout manufacturing processes where
the contaminant can be a serious quality and safety concern. We believe faster detection will enable biopharmaceutical
manufacturers to reduce downstream processing risks, optimize product yields and improve final product quality.
In March 2008, we started U.S. clinical trials for our investigational APTIMA HPV assay. The investigational APTIMA
HPV assay is an amplified nucleic acid test that is designed to detect 14 types of high-risk human papillomavirus, or HPV,
that are associated with cervical cancer. More specifically, the assay is designed to detect two messenger ribonucleic acids,
or mRNAs, that are made in higher amounts when HPV infections progress toward cervical cancer. We believe that
targeting these mRNAs may more accurately identify women at higher risk of having, or developing, cervical cancer than
competing assays that target HPV deoxyribonucleic acid, or DNA. We expect to enroll approximately 7,000 women in the
trial. Actual enrollment, however, may vary based on the prevalence of cervical disease among women in the trial. Trial
enrollment and testing are expected to take approximately two years. The APTIMA HPV assay is designed to run on our
TIGRIS instrument system and on our future medium-throughput instrument platforms.
In May 2008, we launched our APTIMA HPV assay in Europe. The APTIMA HPV assay has been CE-marked for use
on the TIGRIS system and our semi-automated Direct Tube Sampling, or DTS, system.
In June 2008, 3M Corporation, or 3M, discontinued our collaboration to develop rapid, molecular tests for healthcare-
associated infections, or HCAIs, due to technical incompatibilities between our NAT technologies and 3M’s proprietary
microfluidics instrument platform. Under the terms of the discontinued agreement, we were responsible for assay
development, which 3M funded. 3M had also agreed to pay us milestones based on technical and commercial progress. We
earned the first of these milestones, related to assay feasibility, in the fourth quarter of 2007. Based on the termination of the
agreement, in June 2008 we recorded $2.7 million in collaborative research revenue that was previously deferred. In addition,
we received $370,000 in wind-down costs in December 2008 as part of the termination of the collaboration. We are currently
exploring other opportunities to commercialize our prototype assays in the HCAI field.
In January 2009, we extended the term of our blood screening collaboration with Novartis until June 30, 2025. The
parties also agreed to customize our Panther instrument, a fully automated molecular testing platform now in development,
for use in the blood screening market. In addition, the parties agreed to evaluate, using our technologies, the development
of companion diagnostics for current or future Novartis medicines. For additional information regarding our recently revised
blood screening collaboration with Novartis, see “Corporate Collaborations and Strategic Arrangements — Agreement with
Novartis (formerly Chiron Corporation)” below.
In January 2009, we made a recommended cash offer to acquire Tepnel Life Sciences Plc, or Tepnel, a company
registered in England and Wales, for approximately $132.2 million (based on the exchange rate described in the offer). Our
offer is subject to certain conditions, including approval of the offer by a majority in number representing 75% or more in
value of Tepnel’s shareholders entitled to vote with respect to the proposed transaction. If we are successful in our
acquisition of Tepnel, we believe the acquisition will provide us access to growth opportunities in transplant diagnostics,
genetic testing and pharmaceutical services, as well as accelerate our ongoing strategic efforts to strengthen our marketing
and sales, distribution and manufacturing capabilities in the European molecular diagnostics market.
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Technology
Nucleic acid testing technology is based on detection of sequences of nucleic acids, which store and transfer genetic
information in living organisms. The two main types of nucleic acids are DNA and ribonucleic acid, or RNA. DNA functions
as a stable repository of genetic information, while RNA typically serves to transfer the information stored within DNA to
the cell’s machinery for making proteins.
DNA and RNA are both composed of chains of chemical subunits called nucleotides. There are four types of
nucleotides in DNA, which differ in one chemical part called a base. The four different bases are: adenine, thymine, guanine
and cytosine (abbreviated A, T, G and C). These four nucleotides form the building blocks of all DNA. The sequence of the
individual A, T, G and C nucleotides in a DNA molecule encodes the genetic information that instructs the cell how to make
particular proteins. Because DNA sequences determine which proteins a cell will make, the differences in a cell’s DNA
sequences make the cells of one organism differ from the cells of another.
Most DNA in cells exists in the form of a double-stranded structure that resembles a twisted ladder. In double-stranded
DNA, the nucleotides on opposite sides of the ladder are always paired in a precise way. An “A” nucleotide binds only to a
“T” nucleotide on the opposite strand, and vice versa. Likewise, a “G” nucleotide binds only to a “C” nucleotide, and vice
versa. Each combination of an “A” nucleotide with a “T” nucleotide (or a “C” with a “G”) is referred to as a “base pair.” The
way in which each type of nucleotide binds only to one other type of nucleotide is called “complementary base pairing.” As
a result of complementary base pairing, the sequence of nucleotides on one strand of a DNA molecule necessarily
determines the sequence of nucleotides on the opposite strand.
The “attraction” of a nucleotide sequence to its complementary sequence enables the use of pieces of nucleic acid as
probes to detect the presence of a target nucleic acid in a test sample. If two complementary pieces of DNA (or RNA) are
present in a solution under the right conditions, the complementary bases will come together and bind to form a double
strand. This method is commonly known as “nucleic acid hybridization.” Nucleic acid hybridization techniques can be
applied in a diagnostic test to detect an infectious organism (the target organism) by the use of a suitably labeled short
nucleotide sequence or probe that is designed to bind specifically to a complementary nucleic acid sequence known to be
unique to the target organism. The sample suspected of containing the infectious organism is treated to break open the
organism, release its nucleic acids into the solution, and render them single-stranded, if necessary. The specific probe is
then added, and conditions conducive to hybridization are established.
If the target organism is present in the sample, the probe should bind to the target organism’s nucleic acids because
the sequence of the probe has been designed to be complementary to them. By attaching a detectable label to a probe, it is
possible to determine how much, if any, of that probe has bound to sequences from the target organism.
In order to facilitate detection of the target, it is desirable in many instances to increase the amount of target nucleic
acid present in a sample by a process known as amplification. The goal of target amplification technologies such as our
patented Transcription-Mediated Amplification, or TMA, method is to produce millions of copies of the target nucleic
acids, which can then be detected using DNA or RNA probes.
Current Market Opportunity

Overview
The NAT market developed in response to a need for more rapid, sensitive and specific diagnostic tests for the
detection of infectious microorganisms than were previously available using traditional laboratory procedures, such as
culture and immunoassays. Culture methods require the growth of a microorganism in a controlled medium and can take
several days or longer to yield a definitive diagnostic result. By contrast, nucleic acid probes, which specifically bind to
nucleic acid sequences that are known to be unique to the target organisms, can generally deliver a diagnostic result in just
hours. For example, culture tests for Mycobacterium tuberculosis can take four to eight weeks for a traditional culture-
based diagnosis, compared to only a few hours for NAT. The greater sensitivity and increased specificity of NAT relative
to immunoassays allows for the detection of the presence of a lower concentration of the target organism and helps
clinicians distinguish between harmful and benign microorganisms, even when the organisms are closely related, reducing
the potential for “false negative” results and thus the number of undiagnosed individuals or individuals who are incorrectly
diagnosed as having the disease. For example, the
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greater sensitivity of amplified NAT allows for the rapid, direct detection of a target organism like Chlamydia trachomatis in
urine, even when it is present in low concentrations.
We have focused our business on market opportunities in three segments of the NAT market, clinical diagnostics,
blood screening and industrial testing. The clinical diagnostic market has historically accounted for the majority of our NAT
sales. According to Sannes and Associates, Inc., our products represented approximately 60% of the total chlamydia and
gonorrhea tests sold in the United States in 2008. In blood screening, we estimate that currently the Procleix HIV-1/HCV
assay and WNV assay are utilized to screen over 80% of the United States donated blood supply for HIV-1, HCV and WNV.
In order to address the emerging NAT market for industrial testing, in July 2005, we entered into a collaboration
agreement with GEI to develop, manufacture and commercialize NAT products designed to detect the unique genetic
sequences of microorganisms for GEI’s exclusive use or sale in selected water testing applications. In August 2005, we
entered into a collaboration agreement with Millipore to develop, manufacture and commercialize NAT products for rapid
microbiological and viral monitoring for Millipore’s exclusive use or sale in process monitoring in the biotechnology and
pharmaceutical manufacturing industries. Finally, in November 2006, we entered into a collaboration with 3M to develop,
manufacture and commercialize NAT products to enhance food safety. This agreement with 3M was terminated in December
2007 and we are seeking other opportunities to commercialize our prototype assays in the food testing field.
In January 2009, we made a recommended cash offer to acquire Tepnel for approximately $132.2 million (based on the
exchange rate described in the offer). Our offer is subject to certain conditions, including approval of the offer by a majority
in number representing 75% or more in value of Tepnel’s shareholders entitled to vote with respect to the proposed
transaction. If we are successful in our acquisition of Tepnel, we believe the acquisition will, among other things, provide us
access to growth opportunities in the transplant diagnostics and genetic testing markets. Tepnel’s human leukocyte
antigens, or HLA, testing products are used to match donors and recipients in anticipation of transplant surgeries, as well
as in the ongoing management of transplant recipients. Tepnel also sells genetic tests for cystic fibrosis, Down Syndrome
and familial hypercholesterolemia, among others.
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The diagram below illustrates our understanding of the existing and emerging worldwide NAT markets, with some
examples of our product targets and those of others within each category.
(FLOW CHART)
The Product Categories in Which We Compete
Clinical Diagnostics for the Detection of Non-Viral Microorganisms. NAT assays are currently used to detect the
microorganisms causing various STDs, including chlamydia and gonorrhea, as well as those causing various other
infectious diseases, such as Mycobacterium tuberculosis, Group A Streptococcus, Group B Streptococcus and
Staphylococcus aureus.
Chlamydia, the common name for the bacterium Chlamydia trachomatis, causes the most prevalent bacterial sexually
transmitted infection in the United States, with an estimated 2.8 million new cases in the United States each year according
to the Centers for Disease Control, or CDC. The clinical consequences of undiagnosed and untreated chlamydia infections
include pelvic inflammatory disease, ectopic pregnancy and infertility. Gonorrhea, the disease caused by the bacterium
Neisseria gonorrhoeae, is the second most frequently reported bacterial STD in the United States, according to the CDC.
The CDC estimates that each year approximately 700,000 people in the United States contract gonorrhea. Untreated
gonorrhea is also a major cause of pelvic inflammatory disease, which may lead to infertility or abnormal pregnancies. In
addition, recent data suggest that gonorrhea facilitates HIV transmission. Chlamydia and gonorrhea infections frequently
co-exist, complicating the clinical differential diagnosis. Because chlamydia and gonorrhea infections are often
asymptomatic, screening programs are important in high-risk populations, such as sexually active men and women between
the ages of 15 and 25.
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Tuberculosis, or TB, the disease caused by the microorganism Mycobacterium tuberculosis, remains one of the
deadliest diseases in the world. Group B Streptococcus, or GBS, represents a major infectious cause of illness and death in
newborns in the United States and can cause epilepsy, cerebral palsy, visual impairment, permanent brain damage and
retardation. Group A Streptococcus, or GAS, is the cause of “strep” throat, which if left untreated may cause serious
complications, such as rheumatic fever and rheumatic heart disease.
Healthcare associated infections, or HCAIs, are a growing problem worldwide. According to the CDC, in American
hospitals alone, HCAIs account for an estimated 1.7 million infections and approximately 100,000 deaths annually. Two of
the major causes of HCAIs are Staphylococcus aureus and an antibiotic resistant strain of Staphylococcus aureus known
as methicillin-resistant Staphylococcus aureus, or MRSA.
Clinical Diagnostics for the Detection of Viral Microorganisms. NAT assays can be used to detect viral DNA or
RNA in a patient sample. These tests can be qualitative, meaning that the tests simply provide a “yes-no” answer for the
presence or absence of the virus, or quantitative, meaning that the quantity of virus is determined in the patient sample.
HIV is the virus responsible for acquired immune deficiency syndrome, or AIDS. Individuals with AIDS show
progressive deterioration of their immune systems and become increasingly susceptible to various diseases, including many
that rarely pose a threat to healthy individuals.
HCV is a blood-borne pathogen posing one of the greatest health threats in developing countries. According to the
World Health Organization, or WHO, approximately 80% of newly infected patients progress to develop chronic infection,
which can lead to both cirrhosis and liver cancer. The WHO reports that approximately 170 million people are infected
worldwide with HCV. According to the National Cancer Institute, an estimated 4.1 million people in the United States have
been infected with HCV, of whom 3.2 million are chronically infected according to the CDC. Most people with chronic HCV
infection are asymptomatic.
HBV remains a major public health problem worldwide, though new HBV infections per year in the United States have
declined significantly since the 1980s. Chronic HBV infection can lead to the development of severe and potentially fatal
complications, such as cirrhosis of the liver.
Clinical Diagnostics for the Detection of Markers for Cancer. The field of NAT-based cancer diagnostics is an
emerging market as new markers that correlate to the presence of cancer continue to be discovered. We have developed
diagnostic tests designed to detect markers for prostate cancer. According to the Prostate Cancer Foundation, prostate
cancer is the most common non-skin cancer in the United States, affecting an estimated one in six men.
In addition, we have also commenced a U.S. clinical trial for our investigational APTIMA HPV assay, which is
designed to detect 14 types of high-risk HPV associated with cervical cancer. According to the National Cancer Institute,
cancer of the cervix affects more than 500,000 women worldwide each year.
Blood Screening. According to the WHO, each year more than 80 million units of blood are donated worldwide.
Before being used for transfusion, blood must be screened to ensure that it does not contain infectious agents such as
viruses. The most serious viral threats to recipients of donated blood include HIV, HCV, WNV and HBV. In the United
States, most blood collection centers perform NAT screening of donated blood by taking samples from donors of blood and
then combining these samples into pools of 16 samples. These pooled samples are then tested to determine whether a virus
is present. If the presence of a virus is detected, additional testing is then conducted to determine which sample in the pool
contains the virus. Some blood collection centers, such as the United States military, test blood donor samples individually
rather than in pools. In addition, individual donor testing, or IDT, may be used during epidemic peaks.
Prior to the introduction of NAT for blood screening, blood collection centers primarily used immunoassays to
determine the presence of blood-borne pathogens through the detection of virus-specific antibodies and viral antigens.
These tests either directly detect the viral antigens or detect antibodies formed by the body in response to the virus.
However, this response may take some time. Consequently, if the donor has not developed detectable antibodies or
detectable amounts of viral antigens as of the time of the donation, recipients of that blood may be unwittingly exposed to
serious disease. In the case of HIV-1, antibodies are detectable in the blood approximately
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22 days after infection. With HCV, the “window period” between the time of infection and the detection of the antibodies is
much longer, approximately 70 days or more. NAT technology can narrow both window periods significantly through
amplification and detection of the nucleic acid material of the viruses themselves rather than requiring the development of
detectable levels of antibodies or viral antigens. According to the CDC, NAT reduces the window period for HIV-1
detection from 22 days for tests relying on HIV-1 antibodies to 12 days. We believe that NAT reduces the window period
for HCV detection by approximately 50%, compared to tests relying on HCV antibodies. We believe that with IDT, NAT
assays may reduce the window period for HBV detection by up to 42%, compared to HBV antibody tests for detection of
HBV surface antigen. We also believe that the only practical means of accomplishing IDT for HBV detection will be through
the use of a fully automated instrument, such as our TIGRIS instrument.
Industry Growth Trends
Adoption of amplified screening technology. We believe that the market for NAT-based clinical diagnostic products
for the detection of non-viral microorganisms, particularly STDs, will expand due to the adoption of amplified screening
technology. Amplification is particularly advantageous when screening for the presence of a microorganism when the level
of that microorganism in clinical samples might be insufficient to permit detection with other methods. While potential
carriers of STDs may forego diagnosis if faced with invasive methods of testing, we believe amplified NAT technology,
which can use samples collected non-invasively, such as urine, will expand screening of high-risk populations and
asymptomatic individuals.
Advances in automated testing. We believe that use of automated instrumentation, such as our TIGRIS instrument
designed for high-throughput customers and our development-stage Panther instrument designed for low to mid-volume
customers, will facilitate growth in both the clinical diagnostics and blood screening segments of the NAT market. Non-
automated NAT testing generally requires highly-skilled laboratory technologists and we believe it is becoming
increasingly difficult for clinical laboratories to recruit and retain these employees. We anticipate that demand for automated
testing will increase as the technology is applied to diagnose new target microorganisms, including HPV. We believe the
rate of market growth for testing additional microorganisms will depend heavily upon automation, as well as continuing
advances in testing methodologies that address the issues of specificity, sensitivity, contamination, ease of use, time to
results and overall cost effectiveness.
Increased focus on safety of blood supply. We believe blood collection centers will continue to focus on improving
the safety of donated blood by adopting the most advanced blood screening technologies available. In addition, we believe
that certain blood screening markets are trending from pooled testing of large numbers of donor samples to smaller pool
sizes. We have already observed this trend with respect to certain sales internationally. In addition, certain blood collection
centers may seek to adopt IDT for some or all organisms under certain conditions, rather than the testing of pooled samples,
as automated instrumentation technologies make such testing feasible. During the peak period of the WNV season in 2007,
for example, various blood collection centers used our technology and WNV assay for IDT.
Demand for improved diagnostic tests for cancer. New markers that correlate to the presence of cancer cells continue
to be discovered, and we believe that once these markers have been clinically validated, there will be a large market for
NAT-based cancer diagnostic products. In November 2006, we launched our CE-marked PROGENSA PCA3 assay, a
prostate-cancer specific molecular diagnostic test, in the European Economic Area. Analyte specific reagents, or ASRs, for
detection of the PCA3 gene are also available in the United States. ASRs comprise a category of individual reagents utilized
by clinical laboratories to develop and validate their own diagnostic tests. We acquired exclusive worldwide diagnostic
rights to the PCA3 gene from DiagnoCure, Inc., or DiagnoCure, in November 2003. In addition, in May 2006, we entered into
a license agreement with the University of Michigan for exclusive worldwide rights to develop diagnostic tests for genetic
translocations that have been shown in preliminary studies to be highly specific for prostate cancer tissue. In 2007, we
received an aggregate of $3.6 million in awards for the development of improved cancer diagnostic assays from the
U.S. Army Medical Research and Material Command, which actively manages research programs for the Department of
Defense.
HPV assay is an amplified nucleic acid test that is designed to detect 14 types of high-risk HPV that are
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associated with cervical cancer. More specifically, the assay is designed to detect two mRNAs that are made in higher
amounts when HPV infections progress toward cervical cancer. We believe that targeting these mRNAs may more
accurately identify women at higher risk of having, or developing, cervical cancer than competing assays that target HPV
DNA. In addition, in May 2008, we launched our APTIMA HPV assay in Europe. The APTIMA HPV assay has been CE-
marked for use on the TIGRIS system and our DTS system.
Emerging opportunities in industrial testing market for rapid molecular methods. We believe that significant new
opportunities are emerging for NAT-based products in various industrial market segments, including quality control testing
in biopharmaceutical and beverage manufacturing processes and testing for harmful contaminants in the environment and
industrial water. We believe the move to rapid molecular methods is being driven by economic factors, as well as regulatory
factors such as the FDA’s Process Analytical Technology initiative, to encourage pharmaceutical companies to adopt rapid
methods to test their manufacturing processes for the presence of objectionable organisms. We believe our collaborations
with GEI and Millipore will facilitate our development of new products for, and access to, these new markets. Millipore
launched the first such product under our collaboration in January 2008.
We believe additional emerging non-clinical markets for NAT include food testing, personal care products
manufacturing processes and bioterrorism detection testing. Today, these markets predominately use traditional methods
for microbiological testing, such as culture. However, we believe NAT testing has the potential to provide more rapid and
efficient tests in these markets. Here again, we believe regulatory factors will play a role in shifting to molecular testing
methods. In November 2007, for example, the FDA released a Food Protection Plan that advocates the validation and
implementation of real-time diagnostic methods that allow for rapid, on-site analysis of food samples. We are currently
seeking opportunities to commercialize our prototype assays in the food testing field that were developed under our
collaboration with 3M, which terminated in December 2007.
Development of other emerging markets for NAT technology. We believe markets will continue to develop for new
applications of NAT technology in other clinical and non-clinical fields. Among clinical fields, we believe NAT technology
will be utilized in new applications such as genetic predisposition testing and pharmacogenomics, which involves the study
of the relationship between nucleic acid sequence variations in an individual’s genome and the individual’s response to a
particular drug.
We expect that nucleic acid assays will be used in the field of pharmacogenomics to screen patients prior to
administering new drugs. Many genetic variations are caused by a single mutation in nucleic acid sequence, a so-called
“single nucleotide polymorphism,” or SNP. Individuals with a specific SNP in a drug metabolism gene may not respond to a
drug or may have an adverse reaction to that drug because the body may not metabolize the drug in a normal fashion. We
believe the emergence of pharmacogenomics and individually targeted therapeutics will create opportunities for diagnostic
companies to develop tests to detect genetic variations that affect responses to drug therapies.
Genetic testing to identify individuals at risk of certain diseases and pathological syndromes is emerging as an
additional market for NAT technology. Nucleic-acid based testing for SNPs and other genetic anomalies can be used to
determine an individual’s predisposition to such conditions as thrombosis or bloodclotting. Our license of bioMérieux’s
intellectual property rights for the factor V and prothrombin mutation tests could allow us to access this market.
Improvements in detection technologies. Many current amplified nucleic acid tests provide an “end point” result,
requiring that the amplification and detection processes be completed before a result is obtained. New technology permits
kinetic or “real-time” detection of target analytes as amplification proceeds, permitting conclusions to be drawn before the
amplification process is complete, and thereby reducing the time to result. Real-time detection methods are also capable of
providing both a qualitative and quantitative result from a single test. Several companies have introduced initial real-time
products. For example, Abbott Laboratories has been approved to apply the CE mark to a real-time test for the simultaneous
detection of Chlamydia trachomatis and Neisseria gonorrhoeae, allowing the test to be marketed in the European
Economic Area. In April 2005, Roche was approved to apply the CE mark to its real-time COBAS AmpliPrep/COBAS
TaqMan tests for HIV-1, HCV, and HBV. Roche was also approved to apply the CE mark to a real-time test for Chlamydia
trachomatis. We intend to develop assays for our collaborations with GEI and Millipore using real-time technology.
Millipore launched the first such product under our collaboration in January 2008. In addition, our prototype assays in the
food testing and HCAI fields developed under our former collaborations with 3M incorporate real-time technology.
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Our Competitive Strengths

Our competitive strengths form the foundation for our business and we believe position us to compete effectively
within the NAT market.
Proprietary Core Technologies
We believe that we have developed one of the broadest portfolios of NAT technologies in the industry. Our products
incorporate these technologies, which, in combination, have significantly advanced our NAT assays, and we believe can
make them more specific, more sensitive, easier to use and faster to result than products based on competing NAT
technologies. For example, our proprietary TMA technology offers some significant advantages over other available
amplification methods, including Polymerase Chain Reaction, or PCR. We believe TMA technology allows our products to
offer a higher degree of sensitivity, less risk of contamination and greater ease of use than our competitors’ amplified
products. We believe our target capture technology, which is used to extract either molecules with specific target
sequences or all genetic material from a complex clinical specimen, can remove inhibitory substances that interfere with
amplification, can be easily automated, and can be performed quickly. In the past, we have leveraged our core technologies
to develop products that have achieved leading positions in new NAT markets, such as blood screening and STD testing.
We plan to continue to use our core NAT technologies, and technologies that we may acquire, as a platform for the
development of additional products addressing opportunities in existing and emerging segments of the NAT market.
Extensive Range of FDA-Approved Products and Intellectual Property Portfolio
We believe that we are unique in offering our customers a broad range of both non-amplified and amplified NAT
assays, as well as multiple instruments on which to perform these assays. Our expertise in NAT products has enabled us to
develop FDA-approved products for the detection of microorganisms causing infectious diseases. In February 2002, we
received FDA approval for the Procleix HIV-1/HCV assay. In December 2005, the FDA approved our WNV assay for use on
eSAS to screen donated human blood for WNV, and in March 2007 we received approval of our WNV assay for use on the
TIGRIS instrument. In October 2006 and May 2007, the FDA granted marketing approval for use of the Procleix Ultrio assay
on eSAS and TIGRIS, respectively, to screen donated blood, plasma, organs and tissue for HIV-1 and HCV in individual
blood donations or in pools of up to 16 blood samples. In August 2008, the FDA approved the Procleix Ultrio assay to also
screen donated blood, plasma, organs and tissues for HBV in individual blood donations or in pools of up to 16 blood
samples on eSAS and on the TIGRIS system. Our FDA-approved NAT assays are currently performed on our proprietary
luminometers and DTS and TIGRIS (in the case of our APTIMA Combo 2 and WNV assay) instruments. As of December 31,
2008, we had more than 470 United States and foreign patents covering our products and technologies, and we proactively
pursue an aggressive patent strategy designed to protect both existing products and new innovations.
Innovative Product Research and Development
As of December 31, 2008, our research and development group consisted of 227 full-time employees, 97 of whom hold
advanced degrees. From our PACE family of products to our amplified APTIMA Combo 2 assay, which are sufficiently
sensitive to be able to detect both chlamydia infections and gonorrhea in urine samples from symptomatic or asymptomatic
patients, the Procleix Ultrio assay that detects HIV-1, HCV and HBV in donated blood, and our CE-marked APTIMA HPV
assay that is designed to detect 14 types of high-risk HPV that are associated with cervical cancer, our scientists have
developed proprietary assays that have brought significant innovation to the market for clinical diagnostics and blood
screening. To complement these products, we have developed and continue to develop automated instrumentation
technologies that enable our customers to increase throughput while improving accuracy in a cost-effective manner. We
have developed, and launched in 2004, what we believe to be the world’s first fully automated, integrated, high-throughput,
NAT instrument system, known as the TIGRIS instrument. We are currently developing a new automated instrument
platform, called the Panther instrument system, designed for low to mid-volume customers. In addition, under our license
agreement with Qualigen, Inc., or Qualigen, we have conducted feasibility research and development for a closed unit dose
assay, or CUDA, instrument and an associated reagent pouch, which we believe may offer potential advantages in
industrial testing and other applications. We were awarded a 2004 National Medal of Technology, the nation’s highest
honor
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for technological innovation, in recognition of our pioneering work in developing NAT tests to safeguard the nation’s
blood supply.
Brand Recognition
We believe that we benefit from significant brand name recognition and customer loyalty among laboratories, blood
collection agencies and physicians in the market for NAT assays. We believe our history of technological innovation,
quality manufacturing, comprehensive sales capabilities and commitment to customer support has resulted in customer
satisfaction and retention. We estimate that greater than 95% of our STD product sales during 2008 were to repeat
customers. We believe that our brand name also facilitates market acceptance of our new products, providing us with
opportunities for growth. Based on information we receive from Novartis, we believe that since 1998 the Gen-Probe/Novartis
collaboration has been the sole supplier of NAT assays for blood screening to the American Red Cross, which we believe
exemplifies our standing in the industry.
Sales and Technical Support Capabilities
As of December 31, 2008, our direct sales force consisted of 39 employees and a 47 member technical field support
group. Our direct sales force targets the United States, Canada and certain countries in Europe. We believe that these
individuals comprise one of the most knowledgeable and effective sales and support organizations in the molecular
diagnostics industry. Our sales representatives have an average of approximately 17 years of overall sales experience, with
an average of approximately 11 years focused on sales of NAT products. We view our long-standing relationships with
laboratory customers and the value-added services that our sales force and technical field specialist group offer, including
technical product assistance, customer support and new product training, as central to our success in the United States
clinical diagnostics market. We complement our sales force with leading international distributors and the direct sales
organizations of our collaborative partners.
Regulatory and Quality Assurance Experience
Our products, design control and manufacturing processes are regulated by numerous third parties, including the
FDA, foreign governments, independent standards auditors and customers. Our team of 139 regulatory, clinical and quality
assurance professionals has successfully led us through multiple quality and compliance inspections and audits. We began
production in our blood screening product manufacturing facility in 1999. This facility meets the strict standards set by the
FDA’s Center for Biologics Evaluation and Research, or CBER, for the production of blood screening products. In addition,
we have obtained EN 13485 certification from TÜV Rheinland of North America, a leader in independent testing and
assessment services. In addition, our regulatory and quality assurance departments have coordinated audits by Lloyds
Register Quality Assurance leading to EN ISO 13485, EN ISO 9001, EN ISO 14001 and OHSAS 18001 certifications for our
wholly owned U.K. subsidiary, Molecular Light Technology Research Limited. We believe our expertise in regulatory and
quality assurance and our manufacturing facilities enable us to efficiently and effectively design, manufacture and secure
approval for new products and technologies that meet the standards set by governing bodies and our customers.
Our Growth Strategy

We have successfully created and maintained a leadership position in a number of segments of the NAT testing
market. From this strong position, we plan to grow our business through the following strategies:
Establish Leadership Positions in New Markets by Leveraging Our Core Technologies
We have had a successful track record in identifying new product and market opportunities and becoming the market
leader in a number of NAT testing segments by providing innovative product solutions based on our proprietary
technology base. In the past, we have utilized our patented technology portfolio, innovation and market development
expertise to establish leadership positions in areas such as chlamydia and gonorrhea testing. Our ability to strategically
identify and assume leadership roles in new markets was evidenced by our entrance into the blood screening market. We
successfully developed the first FDA-approved NAT assay for HIV-1/HCV detection, the Procleix HIV-1/HCV assay, which
we estimate is currently being used to screen more than 80% of the United States blood supply.
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We are exploring opportunities to develop new products for emerging NAT markets. We acquired exclusive worldwide
diagnostic rights to the PCA3 gene from DiagnoCure in November 2003. In addition, in May 2006, we entered into a license
agreement with the University of Michigan for exclusive worldwide rights to develop diagnostic tests for genetic
translocations that have been shown in preliminary studies to be highly specific for prostate cancer tissue. In November
2006, we CE marked our PROGENSA PCA3 assay, a prostate-cancer specific molecular diagnostic test, allowing it to be
marketed in the European Economic Area. Our ASRs for detection of the PCA3 gene are also available in the United States.
We also have two collaborations in the industrial testing market. We believe our collaborations with GEI and Millipore,
pursuant to which each will manage worldwide commercialization of any products resulting from the respective
collaboration, will enable us to access large customer bases in the markets for industrial-water and biopharmaceutical
process testing, respectively. In January 2008, Millipore commenced commercialization of the first MilliPROBE assay under
our collaboration, which targets the bacterium Pseudomonas aeruginosa and is designed as an in-process, early warning
system to provide faster, more effective detection of Pseudomonas aeruginosa in purified water used during drug
production.
In November 2007 and June 2008, 3M discontinued our collaborations for the development and commercialization of
NAT products to enhance food safety and for HCAIs, respectively. Prior to the termination of these collaborations, we
achieved certain technical milestones with our prototype assays, entitling us to payments from 3M of $2.0 million relating to
our prototype assays to enhance food safety and $2.7 million relating to our prototype HCAI assays. We are currently
exploring other opportunities to commercialize our prototype assays in these fields.
Deliver Proprietary Automated and Fully Integrated Systems for NAT Assays
We intend to continue to develop instruments that complement our existing and anticipated product lines for use in
clinical diagnostics, blood screening and industrial testing. The TIGRIS instrument is designed to significantly reduce the
time, labor costs, risk of contamination and complexity associated with performing NAT assays. The automation and
increased throughput of the TIGRIS instrument enables blood collection centers to process the large testing volumes
necessary to screen each individual unit of donated blood for the presence of life-threatening viruses. In addition to the
TIGRIS instrument, we are currently developing our Panther instrument system, a new automated instrument platform
designed for low to mid-volume customers. We believe this approach of providing our customers with the latest generation
of systems solutions will allow us to reinforce our market position and brand recognition and to penetrate new markets.
Expand Our Clinical Diagnostics and Blood Screening Businesses with New Products
We intend to continue to broaden our product offerings through the introduction of new products to serve the clinical
diagnostics and blood screening markets. With an aim to expand our offerings in the clinical diagnostics field, we started
U.S. clinical trials for our investigational APTIMA HPV assay in March 2008. The investigational APTIMA HPV assay is an
amplified nucleic acid test that is designed to detect 14 types of high-risk HPV that are associated with cervical cancer and
is designed to run on our TIGRIS instrument system and on our future medium-throughput instrument platforms. In May
2008, we launched our APTIMA HPV assay in Europe, which has been CE-marked for use on the TIGRIS system and our
DTS system.
We use a systems approach to product development, which involves combining elements of our core proprietary
technologies to create products that best meet our customers’ needs. For example, the Procleix Ultrio assay, which we
developed in collaboration with Novartis, adds an assay for HBV to the previously approved Procleix HIV-1/HCV assay and
is designed to detect the presence of all known HIV-1 groups and subtypes and HCV and HBV genotypes in human plasma
during the very early stages of infection, when those agents are present but cannot be detected by immunoassays. The
Procleix Ultrio assay uses our target capture, TMA and Dual Kinetic Assay, or DKA, technologies.
By understanding how our technologies complement one another and by combining reagents in our new products, we
expect to capitalize on the substantial product development work that we invested in existing products. We believe that this
approach and our experience in bringing FDA-cleared products to market will reduce
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development cycle times for new products, which, in turn, will help us expand our menu of clinical diagnostic and blood
screening products.
Pursue Future Licensing and Acquisition Opportunities
We continually evaluate technology and other acquisition opportunities, and have historically supplemented our
internal research and development efforts by obtaining licenses to new technologies. To maintain our leadership position in
NAT testing, we intend to selectively obtain rights to complementary technologies through licenses and pursue corporate
acquisitions. For us to enter emerging NAT markets such as cancer testing, genetics, pharmacogenomics and industrial
testing, we may need to obtain rights both to new technologies and to disease markers that are discovered and clinically
validated by third parties. For example, in 2003, we signed a license and collaboration agreement with DiagnoCure to
develop an innovative urine test to detect the PCA3 gene marker for prostate cancer. In May 2006, we entered into a license
agreement with the University of Michigan for exclusive worldwide rights to develop diagnostic tests for genetic
translocations that have been shown in preliminary studies to be highly specific for prostate cancer tissue.
In June 2008, following a bid by Solvay Pharmaceuticals, we launched a conditional counterbid to acquire Innogenetics
NV, a Belgian molecular diagnostics company. We subsequently withdrew our counterbid to acquire Innogenetics in July
2008, following the submission by Solvay Pharmaceuticals of a higher bid.
In January 2009, we made a recommended cash offer to acquire Tepnel for approximately $132.2 million (based on the
transaction. If we are successful in our acquisition of Tepnel, we believe the acquisition will provide us access to growth
opportunities in transplant diagnostics, genetic testing and pharmaceutical services, as well as accelerate our ongoing
strategic efforts to strengthen our marketing and sales, distribution and manufacturing capabilities in the European
molecular diagnostics market.
Pursue Collaborative Relationships to Accelerate New Product Development and Enhance Our Global Marketing
Capabilities
We will pursue collaborative relationships that enable us to implement our strategies, particularly with respect to the
development of new products and entry into new markets. We seek to partner with industry leaders who can offer access to
intellectual property or who can complement our commercialization capabilities by distributing co-developed products
through their sales organizations. For example, our collaboration with Novartis for the blood screening market has allowed
us to combine our NAT technology with Novartis’ patent portfolio relating to HIV and HCV and to leverage Novartis’
distribution and sales resources. Further, we believe our collaborations with GEI and Millipore, pursuant to which each will
manage worldwide commercialization of any products resulting from the respective collaboration, will enable us to access
large customer bases in the markets for industrial-water and biopharmaceutical processes testing, respectively. In addition,
we are currently exploring other opportunities to commercialize our HCAI and food testing prototype assays that were
developed under our former collaborations with 3M.
Our Proprietary NAT Technologies

We have developed technologies that make NAT assays practical and effective for commercial use, thereby
overcoming many of the limitations of previous DNA probe assays that restricted their use to research laboratories. Our
products incorporate a combination of patented technologies that have significantly advanced NAT assays, and can make
them more specific, more sensitive, easier to use and faster to result than products based on competing technologies. These
technologies include the following:
• targeting of ribosomal RNA, or rRNA;
• target capture/nucleic acid extraction technology;
• Transcription-Mediated Amplification technology, or TMA;
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• chemiluminescent detection using Hybridization Protection Assay and DKA technologies;

• fluorescent real-time detection technology; and
• APTIMA technology.
Together, these technologies have allowed us to commercialize new diagnostic tools that provide results in hours
instead of days or weeks. This has led to quicker time to result and diagnosis, thereby making a difference in patient
treatment and outcome.
Targeting Ribosomal RNA. We have developed and patented a technique that detects and identifies organisms by
targeting their rRNA. The major benefits in targeting rRNA include the following:
• Each bacterial cell contains up to 10,000 copies of rRNA, as compared with only a few copies of DNA. Most of our
competitors’ NAT assays target DNA, which is present in only one or two copies in each target organism cell.
Therefore, by using a probe that hybridizes to rRNA, the sensitivity of the test is increased thousands of times. This
has allowed us to develop indirect and direct probe tests that are used with cultured samples or samples drawn
directly from the patient;
• The high number of rRNA targets also offers significant advantages when target-amplified assays are used. When
very small numbers of organisms are present in a sample, they may not be present in the portion of the sample used
for the assay, despite being present in the sample. This would result in a negative test result. By breaking open the
organism prior to sampling, the multiple copies of rRNA targets are dispersed throughout the sample volume and the
likelihood of detecting them is increased many fold. Thus, the likelihood of obtaining a false negative result is
significantly less than is the case when DNA is targeted;
• rRNA molecules naturally exist as single strands that can directly hybridize with our chemiluminescent; and labeled
DNA probes. This is in contrast to most DNA targets, which exist as double strands that must be separated before a
probe can bind. These separated DNA strands tend to hybridize to each other rather than to the DNA probe, thus
limiting the amount of DNA probe that can bind and the overall sensitivity of the test; and
• rRNA molecules unique to the organism are present in all bacteria, fungi and parasites. This gives us the ability to
design diagnostic products for emerging infectious diseases caused by these pathogens.
Target Capture/Nucleic Acid Extraction Technology. Detection of target organisms that are present in small numbers
in a large-volume clinical sample requires that target organisms be concentrated to a detectable level. One way to
accomplish this is to isolate the particular nucleic acid of interest by binding it to a solid support, which allows the support,
with the target bound to it, to be separated from the original sample. We refer to such techniques as “target capture.”
We have developed target capture techniques to immobilize nucleic acids on magnetic beads by the use of a “capture
probe” that attaches to the bead and to the target nucleic acid. We use a magnetic separation device to concentrate the
target by drawing the magnetic beads to the sides of the sample tube, while the remainder of the sample is washed away and
removed. When used in conjunction with our patented amplification methods, target capture techniques concentrate the
nucleic acid target(s) and also remove materials in the sample that might otherwise interfere with amplification.
Target capture offers the following benefits:
• concentration of nucleic acid target(s) from large volume samples, without the need for centrifugation steps;
• elimination of potential inhibitors of amplification;
• increased ability to test a variety of clinical samples, including urine and blood;
• capture of multiple targets by using capture probes that hybridize to one or more specific nucleic acid
sequences; and
• enhanced specificity through selective capture of target and removal of contaminants that may produce a false
positive signal.
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Transcription-Mediated Amplification. The goal of amplification technologies is to produce millions of copies of the
target nucleic acid sequences that are present in samples in small numbers, which can then be detected using DNA probes.
Amplification technologies can yield results in only a few hours versus the several days or weeks required for traditional
culture methods.
Many amplification-based NAT assays used routinely in clinical laboratories utilize a technology known as PCR to
amplify DNA. With additional steps, PCR also can be used to amplify RNA. Since most organisms contain only one or two
copies of DNA, there are fewer target molecules to initiate amplification when DNA targets are used, and sometimes
amplification does not begin at all. In such cases, assays using PCR can fail to produce results. PCR also uses repeated
heating and cooling steps, requiring complex and expensive thermocyclers. Because PCR produces large amounts of DNA,
which, unlike RNA, is a stable molecule, there is an increased risk of cross-contamination from one PCR assay to another,
potentially leading to a high number of false positive results.
Our patented TMA technology is designed to overcome problems faced by other target amplification methods such as
PCR. TMA is a transcription-based amplification system that uses two different enzymes to drive the process. The first
enzyme is a reverse transcriptase that creates a double-stranded DNA copy from an RNA or DNA template. The second
enzyme, an RNA polymerase, makes thousands of copies of the complementary RNA sequence, known as the “RNA
amplicon,” from the double-stranded DNA template. Each RNA amplicon serves as a new target for the reverse
transcriptase and the process repeats automatically, resulting in an exponential amplification of the original target that can
produce over a billion copies of amplicon in less than 30 minutes.
TMA offers the following benefits:
• The TMA process takes place in one tube at one temperature without the need of thermocyclers required by PCR.
All reagents are added to the tube and nothing is removed. This makes the test simpler to use and suitable for
automation, and it minimizes the possibility of carry-over contamination and false positive test results;
• The RNA nucleic acid that is synthesized in the TMA reaction, or amplicon, is much more unstable when outside the
reaction tube than the DNA that is produced in the PCR method. This instability of the TMA amplicon in the general
laboratory environment reduces the possibility of carry-over contamination;
• TMA is able to amplify RNA and DNA targets, whereas PCR requires additional reagents and steps to amplify
RNA; and
• TMA can be used in end-point chemiluminescent assays as well as “real-time” qualitative and quantitative
fluorescent assays.
Chemiluminescent Technologies and Hybridization Protection Assay. Most of our current DNA probe products use
chemiluminescent acridinium ester, or AE molecules, to generate light as a label for detection. When AE-labeled DNA
probes are mixed with chemical activators, a light signal is produced. Various competitors’ DNA probe assays and
immunoassays use enzyme or radioisotope labels. Assays that use enzyme-labeled DNA probes are complex and can be
inhibited by contaminants present in the sample. Radioisotopes offer a strong signal but are difficult to handle, difficult to
dispose of and dangerous because they give off harmful radiation.
We have simplified testing, further increased test sensitivity and specificity, and increased convenience with our
patented Hybridization Protection Assay, or HPA, technology. With HPA, we introduced the first NAT assay that did not
require the cumbersome wash steps needed with conventional probe tests and immunoassays. In the HPA process, the AE
molecule is protected within the double-stranded helix that is formed when the probe binds to its specific target. Prior to
activating the AE molecule, known as “lighting off,” a chemical is added that destroys the AE molecule on any
unhybridized probes, leaving the label on the hybridized probes largely unaffected. When the “light off” reagent is added to
the specimen, only the label attached to the hybridized probe is left to produce a signal indicating the target organism’s
DNA or RNA is present. All of these steps occur in a single container and without any wash steps.
Our DKA technology uses two types of AE molecules — one that “flashes” and another one that “glows.” By using
DKA, we have created NAT assays that can detect two separate targets simultaneously.
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Fluorescent Real-Time Detection Technology. In addition to HPA chemiluminescent detection assays, we have
developed a series of real-time fluorescent assay systems. These assays couple TMA, or versions of TMA, with
fluorescent probe detection that gives reduced times of appearance of fluorescent outputs with increasing amounts of input
amplified target nucleic acid. In these assay formats, amplification and detection take place simultaneously. As a result, the
total time necessary to obtain a result can be reduced significantly. We have several types of probes for these assays,
including probes that we have patented and probes that we have licensed from third parties.
APTIMA Technology. We have combined target capture, TMA and HPA together into an integrated family of
technologies known as APTIMA. APTIMA assays are highly refined amplification assays, simplifying sample handling,
minimizing contamination and allowing for the simultaneous detection of two analytes in one tube. APTIMA assays offer
clinical laboratories the significant advantage of carrying out all steps of the assay in a single tube. We believe APTIMA
thereby increases assay performance, reduces laboratory costs and improves laboratory efficiency. APTIMA technology
combined with automation such as the TIGRIS instrument supports true walk-away automation, allowing hundreds of
specimens to be tested by an individual technician in a single run.
Our Products
We have applied our core technologies to develop multiple product lines, all of which utilize our expertise in NAT
probes, sample collection and processing. We currently categorize our products into clinical diagnostic products and blood
screening products. In January 2008, Millipore launched our first product in the industrial market.
Clinical Diagnostic Products
Within our clinical diagnostic product group, we have developed products for the detection of non-viral and viral
microorganisms and for the detection of markers for cancer.
Clinical Diagnostic Products for the Detection of Non-Viral Microorganisms

We have developed FDA-approved amplified and non-amplified NAT assays that detect non-viral micro-organisms
primarily for use in clinical diagnostics. We have established a market-leading position in non-amplified NAT assays,
particularly with respect to assays for the detection of chlamydia and gonorrhea, and we have obtained FDA approvals for
amplified STD tests to compete in that market segment. Our principal products for the detection of non-viral microorganisms
include our non-amplified AccuProbe and PACE family of products and our amplified Mycobacterium Tuberculosis Direct
Test and amplified APTIMA products, as set forth below.
FDA C om m e rcial
Produ ct Line Prin cipal Te ch n ologie s Targe t Microorganism C le aran ce /Approval Distribution
AccuProbe Culture Non-amplified detection Blastom yces derm atitidis September 1990 Gen-P robe —
Identification of organisms from culture Cam pylobacter November 1989 North America
isolates by using rRNA as Coccidioides im m itis October 1990
the target and Enterococcus November 1989 bioMérieux,
Hybridization Protection Histoplasm a capsulatum February 1990 Rebio Gen
Assay Haem ophilus influenzae March 1990 and other
Group B Streptococcus November 1989 distributors —
Group A Streptococcus November 1990 Rest of World
Mycobacterium avium May 1990
Complex
Mycobacterium avium August 1990
Mycobacterium gordonae April 1990
Mycobacterium intracellulare August 1990
Mycobacterium kansasii November 1990
Mycobacterium tuberculosis April 1990
Neisseria gonorrhoeae November 1989
Streptococcus pneum oniae August 1990
Staphylococcus aureus August 1990
Listeria m onocytogenes June 1990
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FDA C om m e rcial
Produ ct Line Prin cipal Te ch n ologie s Targe t Microorganism C le aran ce /Approval Distribution
GASDirect Non-amplified detection Group A Streptococcus March 1994 Gen-P robe —
of rRNA from a swab North America
sample by Hybridization
P rotection Assay bioMérieux,
Rebio Gen
and other
distributors —
Rest of World
P ACE Non-amplified detection Chlam ydia trachom atis and P ACE — Gen-P robe —
P roduct Family of rRNA from patient Neisseria gonorrhoeae, including December 1987 North America
sample by Hybridization combined detection P ACE 2 — April 1992
P rotection Assay P ACE 2C — bioMérieux,
October 1994 Rebio Gen
and other
distributors —
Rest of World
Mycobacterium T ranscription-Mediated Mycobacterium tuberculosis December 1995 Gen-P robe —
T uberculosis Direct Amplification of rRNA North America
T est (or MT D) in patient sample and
detection by bioMérieux,
Hybridization Protection Rebio Gen
Assay and other
distributors —
Rest of World
AP T IMA T arget Capture, Chlam ydia trachom atis and May 2001 Gen-P robe —
Combo 2 T ranscription-Mediated Neisseria gonorrhoeae North America
Amplification of rRNA Europe
and detection by Dual
Kinetic Assay Rebio Gen —
Japan
AP T IMA CT T arget Capture, Chlam ydia trachom atis and December 2004 Gen-P robe —
T ranscription-Mediated Neisseria gonorrhoeae North America
AP T IMA GC Amplification of rRNA March 2005 Europe
and detection by Dual
Kinetic Assay
AP T IMA T arget Capture, Trichom onas vaginalis Not required Gen-P robe — U.S.
T richomonas ASR T ranscription-Mediated
Amplification of rRNA
AccuProbe Products. Our AccuProbe Culture Identification products are powerful tools for the identification of
mycobacterial, fungal and bacterial pathogens, with sensitivities and specificities approaching 100% in most cases. These
products allow for the detection of target organisms from primary cultures, eliminating the additional labor of purifying
secondary cultures. All AccuProbe Culture Identification assays are based on our HPA technology. All of our AccuProbe
Culture Identification tests follow a standard format, use common reagents and do not require highly trained technical
personnel. Results are obtained utilizing our luminometers, which are easy to use and offer precise readings. In addition, the
convenient packaging provides extended stability and shelf life. As part of our AccuProbe Culture Identification product
line, we have also developed a procedure to detect GBS from broth culture. The assay demonstrates near 100% sensitivity
and specificity when testing broth samples after 24 hours of incubation. Our products address the market need for a more
rapid, direct test procedure for GBS that can be used to effectively screen women during pregnancy and to provide prompt
results when testing is performed just before delivery.
Group A Streptococcus Direct. The Group A Streptococcus Direct Test, or GASDirect assay, is a rapid NAT assay for
the direct detection of Streptococcus pyogenes in one hour from a throat swab. Sensitivity and specificity are equivalent to
culture methods taking 72 hours to complete and are higher than the rapid membrane antigen tests often used in physician
offices. The test provides fast and accurate results, eliminates subjective interpretation by the laboratory technician, and
aids physicians in making more informed treatment decisions. The product’s ease of
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use enables efficient batch testing. An automatic pipetting option offers greater workflow economies and laboratory
productivity.
PACE Product Family. Our PACE 2C was the first advanced NAT product to offer the convenience of testing for both
chlamydia infections and gonorrhea from a single patient specimen. This feature eliminates the need to collect separate
specimens and the need to transport the specimens under different conditions. The PACE 2C continues to meet the needs
of clinical laboratories that prefer a cost-effective, non-amplified NAT assay for routine screening for chlamydia infections
and gonorrhea. Other products in the PACE 2 product line include individual tests to separately detect and confirm both
chlamydia infections and gonorrhea. The PACE product family also includes the PACE Specimen Collection kits for
endocervical and urethral swab specimens. Sales of our PACE family of assays have declined in recent years as we are
actively working to convert our PACE 2C customers to our amplified APTIMA Combo 2 product line which, while partially
decreasing PACE family revenues, ultimately contributes to total clinical diagnostic product sales growth.
Mycobacterium Tuberculosis Direct Test. Amplification is particularly important when detecting pathogens present at
low levels, as is often the case with tuberculosis. Culture tests for TB can take four to eight weeks for a preliminary result.
Our amplified Mycobacterium Tuberculosis Direct, or MTD, test has sensitivity similar to a culture test but can detect the
TB pathogen within a few hours. The test is performed directly on a patient sample, and can be used to quickly differentiate
between TB and other mycobacteria, resulting in reduced isolation time and treatment of an infected patient. Our MTD test
was the first amplified NAT assay for obtaining same day results from sputum samples.
APTIMA Combo 2. To meet market demand for amplified STD assays, we developed our APTIMA Combo 2 assay,
which received FDA clearance in May 2001 and was launched commercially in August 2001. Acceptance of first generation
amplified tests was adversely affected by the complexity of the methodology and the lack of a format suitable for use in the
average laboratory. APTIMA Combo 2, which uses second generation amplification technologies, allows us to overcome
these barriers. The test offers superior performance and ease of use, including the use of a penetrable cap that eliminates
the need to uncap samples prior to testing and a sample transport medium that preserves the integrity of the sample for
several weeks at room temperature.
We believe the assay is ideally suited to test specimens from both symptomatic and asymptomatic individuals.
Symptomatic individuals typically have large amounts of the microorganism present at the infection site, while patients who
are asymptomatic typically have much lower levels of the microorganism present at the infection site.
In addition to amplification technology, our APTIMA Combo 2 assay utilizes our target capture HPA and DKA
technologies. APTIMA Combo 2 will qualitatively detect and differentiate rRNA from Chlamydia trachomatis and
Neisseria gonorrhoeae bacteria. This continues the “one test, two results” advantage we first provided with our PACE 2C
non-amplified assay for chlamydia infections and gonorrhea. We believe we are in a unique position to provide both
amplified and non-amplified NAT assays for these infections. This allows us to compete effectively in the STD testing
market and to provide the appropriate NAT solution to meet the needs of many different customers.
Our APTIMA Combo 2 assay is the first clinical diagnostic assay approved for use on the fully automated TIGRIS
instrument. Our APTIMA Combo 2 assay is also performed on our semi-automated DTS instruments. In January 2004, we
received FDA clearance to use the APTIMA Combo 2 assay with the APTIMA Vaginal Swab Specimen Collection Kit, the
first kit that enables patients to self-collect vaginal swab specimens.
In August 2005, the FDA granted marketing clearance to use the APTIMA Combo 2 assay to test for Chlamydia
trachomatis and Neisseria gonorrhoeae from liquid Pap specimens collected and processed with Cytyc Corporation’s
ThinPrep® 2000 system. This new use provides physicians the convenience of intercepting chlamydia and gonorrhea from
the same sample collected for the ThinPrep ® Pap Test. The Pap test remains the most widely used screening test in the
United States for the early detection of cervical cancer. Approximately 50 million Pap tests are performed annually in the
United States, approximately 90% of which are from liquid PAP specimens.
Other APTIMA Products — APTIMA CT, APTIMA GC and APTIMA Trichomonas ASR. To provide our customers
with greater flexibility for their STD testing needs, we also have developed individual APTIMA assays to separately detect
the presence of Chlamydia trachomatis and Neisseria gonorrhoeae, which received FDA approval in December 2004 and
March 2005, respectively. In October 2006, the FDA granted marketing clearance to run our
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stand-alone APTIMA assays for Chlamydia trachomatis and Neisseria gonorrhoeae on the TIGRIS instrument. We have
also developed ASRs to detect the parasite Trichomonas vaginalis. Trichomoniasis is one of the most common sexually
transmitted diseases in the United States that mainly affects sexually active women. It is estimated by the CDC that
7.4 million new cases occur annually in the United States.
Clinical Diagnostic Products for the Detection of Viral Microorganisms

We produce qualitative diagnostic tests that can determine whether the virus is present, and quantitative tests that can
determine the amount of the virus. These viral diagnostic assays include a qualitative HCV test, a qualitative HIV-1 RNA
assay and an ASR for quantitative HCV testing, as set forth below, and currently are run on our semi-automated
instruments incorporating components of our DTS instrument.
Targe t FDA C om m e rcial

Produ ct Line Prin cipal Te ch n ologie s Microorgan ism C le aran ce /Approval Distribution
Qualitative HCV Assay Target Capture, HCV November 2002 Siemens —
Transcription-M ediated October 2006 Worldwide
Amplification of viral
RNA, detection by Dual Gen-Probe — U.S.
Kinetic Assay
Qualitative HIV-1 RNA Target Capture, HIV-1 October 2006 Gen-Probe —
Assay Transcription-M ediated Worldwide
RNA, detection by Dual
Kinetic Assay
ASR for Target Capture, HCV Not required Siemens — U.S.
Quantitative HCV Testing Transcription-M ediated
RNA, detection by
Hybridization
Protection Assay
Qualitative HCV Assay. We developed an amplified TMA assay for the qualitative detection of HCV based on the
same technology used in our FDA-approved Procleix HIV-1/HCV assay for screening donated blood. Siemens currently
distributes this assay under the trademark VERSANT in the United States and international markets under our collaboration
agreement. We commenced distribution of this assay under our own APTIMA trademark in 2006.
Qualitative HIV-1 RNA Assay. In October 2006, the FDA approved our APTIMA HIV-1 RNA qualitative assay. The
assay may be used as an aid in the diagnosis of HIV-1 infection, including acute and primary HIV-1 infection, and to confirm
HIV-1 infection in individuals who repeatedly test positive for HIV-1 antibodies. The assay is the first FDA-approved
qualitative nucleic acid test for these intended uses. We commenced distribution of this assay in December 2006.
ASR for Quantitative HCV Testing. We have also developed, through our collaboration with Siemens, ASRs to
quantitatively determine the amount of HCV present in a sample. These ASRs and general purpose reagents currently are
provided by Siemens to Quest Diagnostics Incorporated, a leading national diagnostics company.
Clinical Diagnostic Products for the Detection of Markers for Cancer

PROGENSA PCA3 Assay and ASRs. In November 2006, we CE-marked our PROGENSA PCA3 assay, allowing it to be
marketed in the European Economic Area. This gene-based test is designed to detect the over expression of PCA3 mRNA in
urine. Studies have shown that, in greater than 90 percent of prostate cancer cases, PCA3 is extremely over-expressed (65-
fold on average) in prostate cancer cells compared to normal cells, indicating that PCA3 may be a useful biomarker for
prostate cancer. DiagnoCure is the exclusive worldwide
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licensee for all diagnostic and therapeutic applications of the gene. We acquired exclusive worldwide diagnostic rights to
the PCA3 gene from DiagnoCure in November 2003. We currently plan to modify our existing PCA3 assay for use with our
investigational Panther instrument system. As of December 31, 2008, five clinical laboratory customers in the United States
had completed validation of TMA assays for PCA3 and PSA using our ASRs and general purpose reagents.
APTIMA HPV Assay. We have developed an APTIMA HPV assay that is designed to detect 14 types of high-risk HPV
associated with cervical cancer. More specifically, the assay is designed to detect two messenger RNAs that are made in
higher amounts when HPV infections progress toward cervical cancer. According to the National Cancer Institute, cancer of
the cervix affects more than 500,000 women worldwide each year. In March 2008, we commenced our U.S. clinical trials for
our APTIMA HPV assay. In addition, in May 2008 we launched our APTIMA HPV assay in Europe.
Blood Screening Products
In 1996, the National Heart, Lung and Blood Institute of the NIH selected us to develop reagents and instrumentation
for the blood donor screening market based on our core technologies. We completed our development of the NAT assays
for HIV-1 and HCV for blood screening contemplated by the NIH contract in February 2002 incorporating our core
technologies of target capture, TMA and DKA. The principal blood screening products that we have developed are set
forth below.
Blood Screening Products
Targe t FDA C om m e rcial

Produ ct Line Prin cipal Te ch n ologie s Microorgan ism (s) C le aran ce /Approval Distribution
P rocleix HIV-1/ HCV Assay T arget Capture, HIV-1 and HCV in February 2002 Novartis —
T ranscription-Mediated donated blood, plasma, Worldwide
Amplification of viral organs and tissues
RNAs, detection by Dual
Kinetic Assay
P rocleix WNV Assay T arget Capture, WNV in donated blood, December 2005 Novartis — U.S.
T ranscription-Mediated plasma, organs and
Amplification of viral tissues
RNAs, detection by Dual
Kinetic Assay
P rocleix Ultrio Assay T arget Capture, HIV-1, HCV and HBV October 2006 (without Novartis — Worldwide
T ranscription-Mediated in donated blood, blood screening claim
Amplification of viral plasma, organs and for HBV)
RNAs, detection by Dual tissues
Kinetic Assay August 2008 (with
blood screening claim
for HBV)
In 1998, in collaboration with Chiron (now Novartis), we were selected by The American Red Cross to provide an HIV-
1/HCV assay for testing pooled blood samples under an Investigational New Drug application, or IND, filed with the FDA.
The American Red Cross is the largest supplier of blood, plasma and tissue products in the United States. The Gen-
Probe/Novartis collaboration subsequently entered into similar arrangements with America’s Blood Centers and American
Independent Blood Centers. As a result of these and other implementations, we estimate that the Procleix HIV-1/HCV assay
is currently utilized to screen over 80% of the United States donated blood supply.
The FDA approved our Biologic License Application, or BLA, for the Procleix HIV-1/HCV assay in February 2002. As a
result of FDA approval, in the second quarter of 2002 Novartis began to sell the assay at commercial prices to United States
customers, which resulted in our recognizing increased revenues. Regulations adopted by the European Union, or EU,
require all imported in vitro diagnostic products, including our existing blood screening assays, to be registered and contain
the “CE” mark. We received CE mark approval for our initial Procleix HIV-1/HCV blood screening assay in February 2003.
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As noted above, most blood collection centers currently screen donated blood by taking samples from individual
donors and then conducting a nucleic acid test on the pooled samples. The Procleix HIV-1/HCV assay is performed on the
eSAS instrument system, which provides sufficient throughput for screening pooled samples of donated blood.
In collaboration with Novartis, we have developed the Procleix Ultrio assay for the simultaneous detection of HIV-1,
HCV and HBV, which we believe will further drive demand for our blood screening products. The test is distributed and
marketed by Novartis. The Procleix Ultrio assay is designed to detect the presence of all known HIV-1 groups and subtypes
and HCV and HBV genotypes in human plasma during the very early stages of infection, when those agents are present but
cannot be detected by immunoassays. The HBV component of the assay has the potential to reduce the window period
between infection and detection of HBV by up to 42% from the window period associated with new generation surface
antigen tests. The Procleix Ultrio assay for use on our semi-automated instrument for export was CE marked in January 2004.
In December 2004, the Procleix Ultrio assay on TIGRIS was CE marked, enabling us to begin commercialization of the
Procleix Ultrio assay for use on the TIGRIS instrument in the European Economic Area, as well as in other parts of the world
that accept the CE mark.
In October 2006 and May 2007, the FDA granted marketing approval for use of the Procleix Ultrio assay on eSAS and
TIGRIS, respectively. The Procleix Ultrio assay was approved to screen donated blood, plasma, organs and tissue for HIV-1
and HCV in individual blood donations or in pools of up to 16 blood samples. The systems and assay also detect HBV in
blood donations that are HBV-positive based on serology tests for HBV surface antigen and core antibodies. In August
2008, the FDA approved the Procleix Ultrio assay to also screen donated blood, plasma, organs and tissues for HBV in
individual blood donations or in pools of up to 16 blood samples on eSAS and on the TIGRIS system.
On December 1, 2005, the FDA granted marketing approval for the Procleix WNV assay on eSAS to screen donated
human blood. The 510(k) clearance of eSAS for use with the WNV assay was granted prior to the assay’s approval. In
March 2007, the FDA approved the Procleix TIGRIS system to screen donated blood, organs and tissues for WNV using the
Procleix WNV assay.
Products for Emerging Diagnostic and Industrial Testing Applications
With an aim to expand our offerings in the industrial testing market, we entered into an exclusive collaboration
agreement with 3M in November 2006 to develop rapid molecular assays for the food testing industry. In addition, with an
aim to expand our offerings in the clinical diagnostics market, we entered into a separate exclusive collaboration agreement
with 3M in April 2007 to develop and commercialize rapid nucleic acid tests to detect certain dangerous HCAIs, such as
methicillin-resistant Staphylococcus aureus. In November 2007, 3M informed us that it no longer intended to fund our
collaboration to develop rapid molecular assays for the food testing industry. In June 2008, 3M discontinued our
collaboration to develop rapid, molecular tests for HCAIs due to technical incompatibilities between our NAT technologies
and 3M’s proprietary microfluidics instrument platform. Prior to the termination of these collaborations, we achieved certain
technical milestones with our prototype assays, entitling us to payments from 3M of $2.0 million relating to our prototype
assays to enhance food safety and $2.7 million relating to our prototype assays for HCAIs. We are currently exploring other
opportunities to commercialize our prototype assays in these fields.
In January 2008, Millipore commenced commercialization of the first MilliPROBE assay under our collaboration, which
targets the bacterium Pseudomonas aeruginosa and is designed as an in-process, early warning system to provide faster,
more effective detection of Pseudomonas aeruginosa in purified water used during drug production. The assay is designed
to ensure a higher degree of water quality throughout manufacturing processes where the contaminant can be a serious
quality and safety concern. We believe faster detection will enable biopharmaceutical manufacturers to reduce downstream
processing risks, optimize product yields and improve final product quality.
Instrumentation
We have developed and continue to develop instrumentation and software designed specifically for performing our
NAT assays. We also provide technical support and instrument service to maintain these systems in the field.
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Historically, we have provided our instrumentation to laboratories and hospitals without requiring them to purchase the
equipment or enter into an equipment lease. Instead, we recover the cost of providing the instrumentation in the amounts
we charge for our diagnostic assays. We have implemented multi-year sales contracts that have an equipment factor
included in them. By placing our proprietary instrumentation in laboratories and hospitals, we can establish a platform for
future sales of our assays. We also sell instruments to Novartis for sale in the blood-screening market.
TIGRIS Instrument System
We have developed the TIGRIS instrument system, or TIGRIS instrument, which we believe is the first high-
throughput instrument to automate NAT testing, for use in both the clinical diagnostic and blood screening markets. The
TIGRIS instrument integrates and automates all of the steps associated with our latest amplified NAT assays, including
sample preparation, sample processing, amplification and detection. It has the ability to process approximately 500 samples
in an eight-hour shift and up to 1,000 samples in about 14 hours. In addition, two TIGRIS instruments can be operated under
the supervision of a single lab technician.
The TIGRIS instrument is designed to reduce the time, labor costs, risk of contamination and complexity associated
with performing NAT assays and blood screening. The throughput of the TIGRIS instrument is sufficient to allow high
volume testing of individual blood donations, rather than pooled donor samples. The TIGRIS instrument is being utilized in
numerous blood banks, as well as clinical diagnostic laboratories, which we believe is helping to drive our growth in the
STD testing market. We intend to develop additional NAT assays that can be performed on the TIGRIS instrument.
DTS 400, 800 and 1600 Instruments
Laboratories need nucleic acid testing solutions that are accurate, efficient and economical. To meet this demand, we
have developed the family of DTS instruments. The DTS family of instruments uses direct tube sampling (DTS) technology
and an exclusive penetrable cap on the sample collection tube to minimize contamination and achieve safer, more
convenient, sample removal. DTS simplifies sample transport, minimizes handling and greatly reduces laboratory cross-
contamination. These instruments include the DTS 400, DTS 800 and DTS 1600. This is a full line of semi-automated
solutions for low, medium and high-volume laboratories to be used with our latest generation of NAT assays, including the
APTIMA Combo 2 assay. The instrument platforms can also be adapted to perform the PACE family of assays, GASDirect
Test, and AccuProbe Group B Strep assay.
Novartis markets a version of the DTS 1600 instruments, also known as the Procleix System or eSAS, for use in blood
screening under the Procleix trademark. The version of the DTS instruments that Novartis markets has received FDA
approval and foreign governmental approval in the countries where our blood screening products are sold. Siemens markets
systems comprised of components of the DTS instruments for HCV clinical diagnostic assays.
Luminometers
Our LEADER series of luminometers, designed in conjunction with MGM Instruments, Inc., are used with our PACE,
AccuProbe and APTIMA products. Utilizing advanced chemiluminescent detection, our luminometers provide high
sensitivity, speed, accuracy and ease-of-use. Currently, there is an installed base of over 2,100 of our luminometers
worldwide. The LEADER series can accommodate the throughput needs of low-volume testing laboratories. We have no
firm, long-term commitments from MGM Instruments to supply products to us for any specific period, or in any specific
quantity, except as may be provided in a particular purchase order. No FDA or foreign governmental approval is required to
sell our current LEADER series of luminometers in the clinical diagnostic market.
Panther Instrument System
We are currently developing a new automated instrument platform, called the Panther instrument system, designed to
bring the benefits of full automation and a broad molecular diagnostics menu to low to mid-volume customers. In July 2007,
we authorized Stratec Biomedical Systems AG, or Stratec, to commence its Phase 2
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development activities pursuant to our development agreement. Stratec is providing services for the design and
development of the Panther instrument system, as well as the production of prototype, validation, pre-production and
production instruments.
CUDA Instrument System
Under our license agreement with Qualigen, we have conducted feasibility research and development for a closed unit
dose assay, or CUDA, instrument and an associated reagent pouch. We believe that a point-of-sample-collection
instrument, such as the CUDA instrument, may offer potential advantages in industrial testing and other applications. We
are currently evaluating market opportunities, customer requirements and instrument performance based on our research
and development activities to date.
Marketing and Sales

We market our products for the clinical diagnostics market to laboratories in the United States and Canada through our
direct sales force. We also market our APTIMA and PROGENSA PCA3 products in certain European countries through our
direct sales force. In other countries outside the United States, we rely on distributors for our clinical diagnostic products.
As of December 31, 2008, our direct sales force consisted of a staff of 39 sales employees. We also support our sales efforts
through a staff of 47 field technical employees. Our sales representatives have an average of approximately 17 years of
overall sales experience, with an average of approximately 11 years focused on sales of NAT products. Sales
representatives principally focus on large accounts, including reference laboratories, public health institutions and
hospitals throughout North America and certain European countries. We educate our sales representatives on the
technical, clinical and economic merits of our products. We use sales meetings, technical on-line sales training and in-the-
field training to ensure our sales representatives are properly informed about all areas of our product lines and selling
processes. Our blood screening products are marketed and distributed by Novartis.
Marketing Strategy
The focus of our marketing strategy is to solidify awareness of the superiority of our technology, illustrate the cost
effectiveness of this technology and continue to differentiate our products from those of our competitors. We target our
marketing efforts to various levels of laboratory and hospital management through research publications, print
advertisements, conferences and the Internet. We attend various national and regional industry conferences throughout
the year. Our web site is used to educate existing and potential customers about our assays and contains our entire
directory of products, on-line technical materials and links to related medical sites.
Sales Strategy
We concentrate our selling efforts on the management teams of laboratories and hospitals. Our sales representatives
are able to recommend the appropriate business solution to meet the needs of our customers by presenting multiple NAT
technology and instrumentation options. Sales representatives are trained to find new product opportunities, offer
diagnostic solutions to address unmet customer needs, and provide comprehensive after-sale product support. In addition,
our field technical support group provides training and ongoing technical support for all of our NAT products.
Distributors
We have an agreement with bioMérieux for distribution of certain of our microbial non-viral diagnostic products in
Europe and various countries in Asia (other than Japan), Australia, South America and Mexico. We have an agreement for
distribution of our microbial non-viral diagnostic products in Japan with Rebio Gen. In other countries, we utilize
independent distributors with experience and expertise in clinical diagnostic products.
The blood screening products we manufacture under our collaboration agreement with Novartis are marketed and
distributed solely by Novartis. Under our collaboration agreement with Siemens, we and Siemens market our qualitative
assays for HCV and Siemens distributes ASRs for the quantitative detection of the amount of HCV present in a sample.
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Customers
The primary customers for our clinical diagnostic products include large reference laboratories, public health
institutions and hospitals. Our blood screening collaboration with Novartis accounted for 48% of our total revenues in 2008
and 45% of our total revenues in 2007. Our blood screening collaboration with Novartis is largely dependent on two large
customers in the United States, The American Red Cross and America’s Blood Centers, but we do not receive any revenues
directly from these entities. Novartis was our only customer that accounted for greater than 10% of our total revenues in
2008. Various state and city public health agencies accounted for an aggregate of 8% and 9%, respectively, of our total
revenues in 2008 and 2007. Although state and city public health agencies are legally independent of each other, we believe
they tend to act similarly with respect to their purchasing decisions.
Corporate Collaborations and Strategic Arrangements

Agreement with Novartis (formerly Chiron Corporation)
In June 1998, we entered into a collaboration agreement with Chiron Corporation (now Novartis), or the 1998
Agreement, to develop and market NAT-based products for the blood screening and clinical diagnostic markets. Chiron
subsequently assigned the clinical diagnostics portion of the agreement to Bayer (which, in turn, assigned the clinical
diagnostics portion of the agreement to Siemens). The Gen-Probe/Novartis alliance initially developed and is manufacturing
and marketing the combination HIV-1/HCV assay for qualitative screening of blood and blood products under the Procleix
name. Additional blood screening assays, such as the Procleix Ultrio assay and the WNV assay, have been developed
through the collaboration and are discussed elsewhere in this Annual Report. In the event that any third-party technology
is needed to continue development under the collaboration agreement, costs for obtaining such third-party technology will
be allocated between the parties.
In January 2009, we entered into an agreement with Novartis to amend the 1998 Agreement, effective as of January 1,
2009, which we refer to herein as Amendment No. 11. Amendment No. 11 extends to June 30, 2025 the term of the parties’
blood screening collaboration under the 1998 Agreement. The 1998 Agreement was previously scheduled to expire by its
terms in 2013. The collaboration agreement can be terminated by either party prior to the expiration of its term if the other
party materially breaches the collaboration agreement and does not cure the breach following 90 days’ notice, or if the other
party becomes insolvent or declares bankruptcy.
The 1998 Agreement provided that we were solely responsible for manufacturing costs incurred in connection with the
collaboration, while Novartis was responsible for sales and marketing expenses associated with the collaboration.
Amendment No. 11 provides that, effective January 1, 2009, we will recover 50% of our costs of goods sold incurred in
connection with the collaboration. In addition, we will receive a percentage of the blood screening assay revenue generated
under the collaboration, as described in the next paragraph.
The 1998 Agreement provided that the parties share revenue from the sale of blood screening assays under the
collaboration. Under the terms of the 1998 Agreement, as previously amended, our share of revenue from any assay that
included a test for HCV was 45.75%. Amendment No. 11 modifies our share of such revenue, initially reducing it to 44% for
2009. Our share of blood screening assay revenue increases in subsequent years as follows: 2010-2011, 46%; 2012-2013,
47%; 2014, 48%; and 2015, 50%. Our share of blood screening assay revenue is fixed at 50% from January 1, 2015 though the
remainder of the amended term of the agreement. Under Amendment No. 11, our share of blood screening assay revenue
from any assay that does not test for HCV remains at 50%. As discussed above, we are entitled to our designated
percentage of revenue from the sale of blood screening assays as well as the recovery of 50% of our costs of goods sold.
Amendment No. 11 also provides that Novartis will reduce the amount of time between product sales and payment of our
share of blood screening assay revenue from 45 days to 30 days.
As part of Amendment No. 11, the parties have agreed, and Novartis has agreed to provide certain funding, to
customize our Panther instrument, a fully automated molecular testing platform now in development, for use in the blood
screening market. Novartis has also agreed to pay us a milestone payment upon the first commercial sale of the Panther
instrument. The parties will equally share any profit attributable to Novartis’ sale or lease of Panther instruments under the
collaboration. The parties have also agreed to evaluate, using our technologies, the development of companion diagnostics
for current or future Novartis medicines. Novartis has agreed to provide certain funding to us in support of initial research
and development in this area.
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All rights and title to inventions discovered under the collaboration agreement belong to the party who developed the
invention, or to both parties, if both parties developed the invention. However, if one party uses confidential information
relating to the core technology of the other party to develop an invention that improves on, and whose use would infringe
on, the core technology of the other party, then the other party will have the exclusive option to acquire all rights and title
to the invention on commercially reasonable terms, except in certain situations where the invention will be jointly owned.
In January 2004, we began United States clinical trials of the Procleix Ultrio assay on the TIGRIS instrument, triggering
a $6.5 million contract milestone payment from Novartis that we recorded during the first quarter of 2004. During January
2004, the Procleix Ultrio assay, with our semi-automated instrument, was CE marked, which permitted Novartis to launch the
product in the European Economic Area. In December 2004, the Procleix Ultrio assay on TIGRIS was CE marked enabling the
commercialization of the Procleix TIGRIS system in the European Economic Area, as well as in other parts of the world that
accept the CE mark. In October 2006 and May 2007, the FDA granted marketing approval for use of the Procleix Ultrio assay
on eSAS and TIGRIS, respectively, to screen donated blood, plasma, organs and tissue for HIV-1 and HCV in individual
blood donations or in pools of up to 16 blood samples. In August 2008, the FDA approved the Procleix Ultrio assay to
screen donated blood, plasma, organs and tissues for HBV in addition to HCV and HIV-1 and, as a result, we received from
Novartis a $10.0 million milestone payment in the third quarter of 2008.
From inception through December 31, 2008, we recognized a total of $1.1 billion in revenue under this collaboration
agreement and had recorded $3.0 million in deferred license revenues as of December 31, 2008.
Agreement with Siemens Healthcare Diagnostics, Inc. (formerly Bayer Corporation)
In 1998, following the execution of our collaboration agreement with Chiron Corporation (now Novartis), Chiron
assigned the clinical diagnostic portion of the agreement to Bayer. On December 31, 2006, Bayer completed the sale of its
diagnostics division to Siemens AG and assigned the clinical diagnostics portion of the agreement to Siemens Healthcare
Diagnostics, Inc. As a result of the settlement agreement we entered into with Bayer in August 2006, or the Settlement
Agreement, which has also been assigned to Siemens and is discussed below, the collaboration agreement has been
terminated, except as to quantitative ASRs and qualitative assays for HCV as discussed below.
Under the terms of the 1998 Agreement, Siemens is obligated to pay us a combination of transfer prices and royalties
on product sales with respect to the quantitative ASRs and qualitative assays for HCV. From inception through
December 31, 2008, we recognized a total of $49.1 million in revenue under our collaboration agreement with Siemens,
including $18.4 million in revenue during 2008, $16.4 million of which as a one-time royalty payment we received in January
2008 under the Settlement Agreement described below.
In November 2002, we initiated an arbitration proceeding against Bayer in connection with our collaboration. In August
2006, we entered into the Settlement Agreement with Bayer, resolving all litigation and arbitration proceedings between the
parties. As part of the Settlement Agreement, the parties submitted a stipulated final award in the original November 2002
arbitration proceeding we filed against Bayer, adopting the arbitrator’s prior interim and supplemental awards, except that
Bayer was no longer obligated to reimburse us $2.0 million for legal expenses. The arbitrator’s June 5, 2005 Interim Award
determined that we are entitled to a co-exclusive right to distribute qualitative TMA assays to detect HCV and HIV-1 for the
remaining term of the collaboration agreement between the parties on our DTS 400, 800, and 1600 instrument systems. The
arbitrator also determined that the collaboration agreement should be terminated, as we requested, except as to the
qualitative HCV assays and as to quantitative ASRs for HCV. Siemens retains the co-exclusive right to distribute the
qualitative HCV tests and the exclusive right to distribute the quantitative HCV ASR. As a result of the termination of the
agreement other than for these HCV tests, we re-acquired the right to develop and market future viral assays that had been
previously reserved for Siemens. The arbitrator’s March 3, 2006 supplemental award determined that we are not obligated to
pay an initial license fee in connection with the sale of the qualitative HIV-1 and HCV assays and that we will be required to
pay running sales royalties, at rates we believe are generally consistent with rates paid by other licensees of the relevant
patents. Pursuant to the Settlement Agreement, Bayer paid us an initial license fee of $5.0 million in August 2006, an
additional $10.3 million as a one-time royalty in January 2007 and a final one-time royalty
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payment of $16.4 million in January 2008. As a result of these payments, Bayer’s rights to the patents subject to the
Settlement Agreement are fully paid-up and royalty free.
Pursuant to the Settlement Agreement, we have an option to extend the term of the license granted in the arbitration for
qualitative HIV-1 and HCV assays, so that the license would run through the life of the relevant HIV-1 and HCV patents.
The option also permits us to elect to extend the license to future instrument systems (but not to the TIGRIS instrument).
We are required to exercise the option prior to expiration of the existing license in October 2010 and, if exercised, pay a
$1.0 million fee.
Supply and Purchase Agreement with Roche
In February 2005, we entered into a supply and purchase agreement with F. Hoffman-La Roche Ltd. and its affiliate
Roche Molecular Systems, Inc., which we refer to collectively as Roche. Under this agreement, Roche agreed to
manufacture and supply us with oligonucleotides for HPV. We plan to use these oligonucleotides in molecular diagnostic
assays. Pursuant to the agreement, we paid Roche manufacturing access fees of $20.0 million in May 2005 and $10.0 million
in May 2008, upon the first commercial sale of our CE-marked APTIMA HPV assay in Europe. We also agreed to pay Roche
transfer fees for the HPV oligonucleotides we purchase. The agreement terminates upon the expiration of Roche patent
rights relevant to the agreement and may be terminated by either party upon a material breach of the agreement by the other
party that is not cured following 60 days’ written notice and in certain other limited circumstances.
In December 2006, Digene Corporation, or Digene, filed a demand for binding arbitration against Roche with the
International Centre for Dispute Resolution of the American Arbitration Association in New York, or ICDR. Digene’s
demand asserts, among other things, that Roche materially breached a cross-license agreement between Roche and Digene
by granting us an improper sublicense and seeks a determination that the supply and purchase agreement is null and void.
On July 13, 2007, the ICDR arbitrators granted our petition to join the arbitration. On August 27, 2007, Digene filed an
amended arbitration demand and asserted a claim against us for tortious interference with the cross-license agreement. The
arbitration hearing in this matter commenced October 27, 2008 and the presentation of evidence concluded November 10,
2008. In December 2008 and January 2009, the parties filed post-hearing briefs and closing arguments were presented on
January 30, 2009.
Research Agreement with GSK
In June 2005, we entered into a research agreement with SmithKline Beecham Corporation, doing business as
GlaxoSmithKline, and SmithKline Beecham (Cork) Ltd., together referred to as GSK. Under the terms of the agreement, we
agreed to provide GSK our investigational PCA3 assay to test up to 6,800 clinical samples obtained from patients enrolled in
GSK’s REDUCETM (REduction by DUtasteride of prostate Cancer Events) clinical trial, which is designed to determine the
efficacy and safety of GSK’s drug dutasteride (AVODART®) in reducing the risk of prostate cancer in men at increased risk
of this disease. We agreed to reimburse GSK for expenses that GSK incurs for sample collection and related processes
during the four-year prospective clinical trial. We also agreed to provide the PCA3 assay without charge and to pay third
party clinical laboratory expenses for using the assay to test the samples. The agreement terminates on the earlier of six
years from the commencement date or two years after certain clinical data is unblinded. GSK may terminate the agreement
upon notice to us and we may terminate the agreement on specific dates provided certain conditions are met. Each party
may also terminate the agreement for material breaches and in certain other limited circumstances. The agreement was
amended in 2007 to expand its scope and include testing with our investigational assay for the TMPRSS gene fusion.
Collaboration Agreement with GEI
In July 2005, we entered into a collaboration agreement with GEI to develop, manufacture and commercialize NAT
products designed to detect the unique genetic sequences of microorganisms for GEI’s exclusive use or sale in selected
water testing applications. Under the terms of the agreement, we will be primarily responsible for assay development and
manufacturing, while GEI will manage worldwide commercialization of any products resulting from the collaboration. The
agreement terminates on the later of the date that is 10 years after the first commercial
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sale or use of the first assay developed under the agreement and five years after the first commercial sale or use of the last
assay launched prior to the 10 year period specified above. In addition, either party may terminate the agreement upon a
breach of a material provision of the agreement by the other party that is not cured following 90 days’ written notice and in
certain other limited circumstances.
Collaboration Agreement with Millipore
In August 2005, we entered into a collaboration agreement with Millipore to develop, manufacture and commercialize
NAT products for rapid microbiological and viral monitoring for Millipore’s exclusive use or sale in process monitoring in
the biotechnology and pharmaceutical manufacturing industries. Under the terms of the agreement, we will be primarily
responsible for assay development and manufacturing, while Millipore will manage worldwide commercialization of any
products resulting from the collaboration. The agreement terminates upon the expiration of any two-year period during
which there has been no development work conducted under the agreement or no first commercial sale of a product
developed under the agreement. In addition, either party may terminate the agreement upon a material breach of the
agreement by the other party that is not cured following 120 days’ written notice and in certain other limited circumstances.
Millipore launched the first product under our collaboration in January 2008.
Agreements with Molecular Profiling Institute, Inc.
In October 2005, we entered into agreements with Molecular Profiling Institute, Inc., or Molecular Profiling, to
accelerate market development for our cancer diagnostics. Under the terms of the agreements, Molecular Profiling has
agreed to validate, commercialize and undertake market development activities for up to four of our products, starting with
our ASRs to detect PCA3. The agreements may be terminated, with required notice, upon a material breach and in certain
other limited circumstances. In addition, we purchased $2.5 million of Series B Preferred Stock of Molecular Profiling.
Molecular Profiling was acquired in January 2008 and we received approximately $4.1 million in cash for our shares and as a
result realized approximately $1.6 million in gain for our investment. Our commercial agreements with Molecular Profiling
(now Caris MPI, Inc.) remain in effect.
Agreements with Stratec
In November 2006, we entered into a development agreement and supply agreement with Stratec relating to our Panther
instrument system. The development agreement provides for the development of a fully automated, mid-volume molecular
diagnostic instrument by Stratec. Stratec is providing services for the design and development of the Panther instrument
system at a fixed price of $9.4 million, to be paid in installments due upon achievement of specified technical milestones. In
addition, we will purchase prototype, validation, pre-production and production instruments, at specified fixed transfer
prices, that will cost approximately $10.2 million in the aggregate if we elect to purchase the number of each instrument type
we currently expect to purchase. We will also purchase production tooling from Stratec at a cost of approximately
$1.2 million.
The development agreement provides that until 90 days following our acceptance of prototype Panther instruments,
we have the right to terminate the agreement on limited, specified conditions, upon 30 days written notice and payment of
specified termination compensation. Both parties have the right to terminate the development agreement for insolvency of
the other party or for a material breach that is not cured within 80 days of written notice. Each of our rights and obligations
under the supply agreement are contingent upon successful completion of the parties’ activities under the development
agreement. The supply agreement has an initial term of 10 years. Both parties have the right to terminate the supply
agreement for insolvency of the other party or for a material breach that is not cured within 80 days of written notice.
Technology Licenses
Licenses of Our Technology We Have Granted to Other Companies
Agreements with bioMérieux. In May 1997, we entered into collaborative research agreements with bioMérieux, which
created a worldwide relationship between bioMérieux and us.
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In August 2000, we entered into amended agreements with bioMérieux that transitioned the relationship from a
collaborative arrangement to two royalty-bearing license agreements covering a semi-automated instrument and associated
probe assays and an advanced fully-automated instrument and probe assays, both for the diagnosis of infectious diseases
and detection of food pathogens. In September 2004, we entered into a termination agreement with bioMérieux, which
terminated one of the August 2000 license agreements. Pursuant to the termination agreement, bioMérieux paid us an
aggregate of approximately $1.6 million to conclude certain outstanding royalty and other obligations under the terminated
license agreement. Further, we paid $1.0 million to bioMérieux to gain access to bioMérieux’s intellectual property for
detecting genetic mutations that predispose people to blood clotting disorders. In February 2006, bioMérieux terminated the
second of the two August 2000 license agreements. In December 2006, bioMérieux paid us $0.4 million in settlement of a
minimum annual royalty obligation under this agreement, thereby fulfilling its final obligations under the terminated license.
In September 2004, at the same time we entered into the first termination agreement referenced above, we also entered
into non-exclusive licensing agreements with bioMérieux and its affiliates that provide bioMérieux’s affiliates with options
to access our rRNA technologies for certain uses. We refer to these agreements as the Easy Q agreement and the
GeneXpert agreement. Pursuant to the terms of these agreements, bioMérieux’s affiliates paid us an aggregate of $0.3 million
for limited non-exclusive, non-transferable, research licenses, without the right to grant sublicenses except to affiliates, and
non-exclusive, non-transferable options for licenses to develop diagnostic products for certain disease targets using our
patented ribosomal RNA technologies. The first of these options was exercised by bioMérieux’s affiliates’ payment to us of
$4.5 million in January 2005. In December 2005, bioMérieux’s affiliates exercised a second option and paid us $2.1 million.
We recognized an aggregate of $3.9 million as license revenue in 2005 as a result of these payments. bioMérieux’s affiliates
had an option to pay $1.0 million by December 31, 2006 for access to additional targets, but did not exercise this option. As
a result of the expiration of this option period, we recognized a total of $3.0 million as revenue in 2006 for amounts
previously paid by bioMérieux but deferred.
Under each license, we will receive royalties on the net sale of any products bioMérieux and its affiliates develop using
our intellectual property. The resulting license agreements terminate upon the expiration of the last to expire patent covered
by the agreement. In the event of a change in control with respect to bioMérieux or its affiliates, we have the right to
terminate these agreements, and the respective licenses granted to bioMérieux’s affiliates thereunder, upon 60 days prior
written notice to bioMérieux delivered within six months of the date of the change in control. The respective obligations of
bioMérieux’s affiliates under the agreements is guaranteed by bioMérieux SA, the parent company of the bioMérieux
affiliates that are parties to the agreements.
License Agreement with Rebio Gen. In July 2001, we entered into a license agreement with Chugai Diagnostics
Science Co., Ltd., a subsidiary of our parent corporation at that time. In September 2002, Chugai Diagnostics Science Co.,
Ltd. was acquired by Fujirebio, which re-named the company Rebio Gen, Inc. The license agreement has an initial term of
10 years, with automatic renewal for consecutive one year terms unless one party gives the other party notice 90 days prior
to the end of the current term. Under the terms of this agreement, Rebio Gen has a non-exclusive license for Japan in the
field of human clinical diagnostics to various of our proprietary technologies, including TMA and HPA technology. All
rights and title to any discovery, invention or improvement made by Rebio Gen as a result of access to our patent rights
licensed under the agreement belong solely to Rebio Gen. We received a license fee and a royalty payment for sales made
prior to the effective date of the agreement and will receive royalty payments from products incorporating the licensed
technology, including those developed and commercialized by Rebio Gen, until the expiration of our patents incorporated in
these products, which is expected to occur in December 2020. From inception through December 31, 2008, we recognized a
total of $3.9 million in revenue under this agreement, including $0.4 million in revenue during 2008. This agreement may be
terminated by either party upon breach of the agreement that is not cured following 60 days’ written notice. We also
received rights to distribute outside of Japan any products that may be developed by Rebio Gen under the license.
Non-Exclusive License with Becton Dickinson and Company. In September 1995, we granted Becton Dickinson a
non-exclusive worldwide license to make, have made, use, sell and import products that utilize rRNA for the diagnosis of
vaginosis and vaginitis in humans. Becton Dickinson paid us an up-front license fee and has agreed to pay us royalties for
the life of the licensed patents. From inception through December 31, 2008, we recognized a total of $8.3 million in revenue
under this agreement, including $1.7 million in revenue during 2008.
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Becton Dickinson’s obligations to make royalty payments under this agreement terminate when the patents that are the
subject of this agreement expire, which is expected to occur in March 2015. Becton Dickinson can terminate the agreement at
any time on 30-days prior written notice.
Cross Licensing Agreements with Tosoh. In December 2003, we entered into agreements with Tosoh Corporation to
cross-license intellectual property covering certain NAT technologies. The licenses, which were effective January 1, 2004,
cover products in clinical diagnostics and other related fields. Under the agreements, Tosoh received non-exclusive rights
to our proprietary TMA and rRNA technologies in exchange for two payments to us totaling $7.0 million in 2004. We also
received a $1.0 million payment from Tosoh in 2006 as the terms of our license agreement were expanded in connection with
the Bayer settlement. Additionally, Tosoh will pay us royalties on worldwide sales of any products that employ our
technologies licensed by Tosoh. We will gain access, in exchange for royalty payments to Tosoh, to Tosoh’s patented TRC
amplification and INAF detection technologies for use with our real time TMA. The agreements terminate at various times
commencing in July 2010 through the expiration of the last to expire patents subject to the agreements and may be
terminated by either party upon material breach of the agreement by the other party that is not cured following 60 days’
written notice.
Licenses We Have Obtained to Third-Party Technology
Co-Exclusive License from Stanford University. In August 1988, we obtained a license from Stanford University
granting us rights under specified patent applications covering certain nucleic acid amplification methods related to TMA.
This license was amended in April 1997. Under the amended license agreement, we are the co-exclusive worldwide licensee
of the Stanford amplification technology, with Organon Teknika as the only other permitted Stanford licensee. We paid a
license fee and are obligated to make royalty payments to Stanford based on net sales of products incorporating the
licensed technology, subject to a minimum annual royalty payment. From inception through December 31, 2008, we incurred
a total of $11.7 million in expenses under this agreement, including $3.0 million in expenses during 2008. Our obligation to
make royalty payments under this agreement terminates when the patents constituting the Stanford amplification
technology expire, which is expected to occur in July 2017. This agreement may be terminated by Stanford upon a material
breach of the agreement by us that is not cured following 60 days’ written notice.
Non-Assertion Agreement with Organon Teknika B.V. In February 1997, we entered into a non-assertion agreement
with Organon Teknika. Both parties possessed certain rights regarding transcription-based amplification methods. The
agreement allows both parties to practice their respective amplification methods with immunity from legal action from the
other party for actually or allegedly infringing each other’s patent rights. The agreement terminates upon the expiration of
the last of the patent rights that are subject to the agreement, which is expected to occur in July 2017. This agreement also
may be terminated by Organon Teknika upon a material breach of the agreement by us that is not cured following 90 days’
written notice. In July 2001, Organon Teknika merged with bioMérieux.
Non-Exclusive License from Vysis, Inc. In June 1999, we obtained a non-exclusive license from Vysis granting us
rights under certain patents covering methods that combine target capture technology with certain nucleic acid
amplification methods. We paid a license fee and became obligated to make royalty payments to Vysis based on sales of
products incorporating the licensed technology. The agreement terminates upon the expiration of the last of the patent
rights that are subject to the agreement, which is expected to occur in July 2015. In December 2001, Vysis was acquired by
Abbott Laboratories, Inc., one of our principal competitors.
In September 2004, following litigation between the parties concerning the scope, validity and enforceability of the
licensed patents, we entered into a settlement agreement and an amendment to the non-exclusive license agreement. Under
the settlement agreement, we agreed to terminate the litigation and pay Abbott an aggregate of $22.5 million. This aggregate
amount included $20.5 million for a fully paid up license to eliminate all of our future royalty obligations under the license,
and $2.0 million for a fully paid-up, royalty-free license in additional fields under the licensed patents. The paid-up license
now covers current and future products in the field of infectious diseases and all other fields. Novartis reimbursed us
$5.5 million of the $20.5 million allocated to the cost of the fully paid-up license for the current field, commensurate with its
obligation to reimburse us for a portion of the royalties due on the sale of blood screening products.
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Non-Exclusive License with the Public Health Research Institute of The City of New York, Inc. In June 1997, we
entered into a royalty bearing non-exclusive license with the Public Health Research Institute of The City of New York, or
PHRI, to utilize PHRI’s fluorescently labeled NAT technology. Under this agreement, which was amended in February 2006,
we have worldwide rights to develop, use and market kits in the field of human in vitro diagnostics, food testing,
environmental testing and industrial microbiology testing. We paid a license fee and agreed to make milestone payments
and annual license fee payments, and to pay royalties on the net sales price of products incorporating the licensed
technology, subject to a minimum annual royalty fee and a reduction in the royalties based on the quantity of sales. From
inception through December 31, 2008, we incurred a total of $2.2 million in license fees and $0.4 million in milestone
payments under this agreement. We anticipate that we will pay up to an additional $1.0 million in milestone payments over
the remaining term of the agreement. The agreement terminates upon the expiration of the last of the patent rights that are
subject to this agreement, which is expected to occur in April 2017. The agreement may be terminated by PHRI upon a
material breach of the agreement that is not cured following 30 days’ written notice, or by us for any reason following
30 days’ written notice.
Exclusive License with DiagnoCure. In November 2003, we entered into a license and collaboration agreement with
DiagnoCure under which we agreed to develop in collaboration with DiagnoCure, and we agreed to market, a test to detect a
new gene marker for prostate cancer. The diagnostic test is directed at a gene called PCA3 that has been shown by studies
to be over expressed in malignant prostate tissue. Under the terms of the agreement, we paid DiagnoCure an upfront fee of
$3.0 million and paid additional fees and contract development payments of $7.5 million over the three years following
execution of the contract. We received exclusive worldwide distribution rights under the agreement to any products
developed by the parties under the agreement for the diagnosis of prostate cancer, and agreed to pay DiagnoCure royalties
on any such products of 8% on cumulative net product sales of up to $50.0 million, and royalties of 16% on cumulative net
sales above $50.0 million. We commenced paying these royalties in 2006.
The agreement provides that we may lose exclusivity with respect to the licensed PCA3 marker if we fail to diligently
develop the collaborative diagnostic test. This agreement expires, on a country-by-country basis, on the expiration of our
obligation to pay royalties to DiagnoCure, which obligation remains in effect as long as the licensed products are covered
by a valid claim of the licensed patent rights. We may terminate the agreement for any reason following 30 days’ written
notice to DiagnoCure, or following 30 days’ written notice to DiagnoCure in the event a licensed product fails to produce a
certain level of results in any clinical trial.
In May 2006, we amended our license and collaboration agreement with DiagnoCure. Pursuant to the terms of the
amendment (i) we granted exclusive rights to DiagnoCure to develop in vivo products for the detection or measurement of
PCA3 as a marker for the diagnosis, monitoring or prognosis of prostate cancer, (ii) we granted co-exclusive rights to
DiagnoCure to develop fluorescence in situ hybridization products for the detection or measurement of PCA3 as a marker
for the diagnosis, monitoring or prognosis of prostate cancer, (iii) DiagnoCure agreed to undertake over a twelve-month
period the validation of genetic markers that we acquired under our license agreement with Corixa Corporation, or Corixa,
and we agreed to make monthly payments to DiagnoCure for these services, and (iv) we agreed to a new regulatory timeline
regarding our development obligations for an in vitro diagnostic assay for PCA3. We currently plan to modify our existing
PCA3 assay for use with our investigational Panther instrument system.
Exclusive License Option Agreement with Qualigen, Inc. In November 2004, we entered into an agreement with
Qualigen under which we had an exclusive option to develop and commercialize a NAT instrument designed for use at the
point of sample collection based on Qualigen’s FDA-approved FastPack immunoassay system. If successfully developed,
the portable instrument would use our NAT technology to detect, at the point of sample collection, the presence of harmful
microorganisms, genetic mutations and other markers of diseases. Under the terms of the agreement, we paid Qualigen
$1.0 million for an 18-month option to license, on an exclusive worldwide basis, Qualigen’s technology to develop NAT
assays for the clinical diagnostics, blood screening and industrial fields. We exercised the option in April 2006 and in
conjunction therewith purchased shares of Qualigen preferred stock convertible into approximately 19.5% of Qualigen’s
then outstanding fully diluted common shares. The cost of acquiring this equity interest was $7.0 million. In addition, we
may pay Qualigen up to $3.0 million in license fees based on development milestones, as well as royalties on any eventual
product sales. Either party may
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terminate the agreement for cause by written notice to the other party of an uncured material breach by the other party or
upon certain insolvency events.
Exclusive License from AdnaGen AG. In December 2004, we entered into a license agreement with AdnaGen AG to
license from AdnaGen cell capture technology for use in our molecular diagnostic tests to detect prostate and other
cancers. Under the terms of the agreement, we recorded license fees of $1.75 million ($0.75 million in 2006 and $1.0 million in
2004). We also agreed to pay AdnaGen up to three milestone payments totaling an additional $2.25 million based on the
occurrence of certain clinical, regulatory and/or commercial events. Further, we agreed to pay AdnaGen royalties on net
sales of any products developed by us using AdnaGen’s technology. Additionally, we were granted options through
June 30, 2006, which term was later extended, to obtain exclusive licenses to use AdnaGen’s technology in molecular
diagnostic tests for kidney, ovarian and cervical cancers. We did not exercise these options. We retain a three-year right of
first negotiation to negotiate with AdnaGen on exclusive rights to molecular diagnostic tests for breast, colon and lung
cancers in the event that AdnaGen proposes to grant to any third party a license to AdnaGen technology for use to detect
any of these cancers. The agreement will expire on the expiration of our obligation to pay royalties to AdnaGen under the
agreement, which obligation remains in effect as long as the licensed products are covered by a valid claim of the licensed
technology. We may terminate the agreement in our sole discretion upon 30 days prior written notice to AdnaGen, provided
we have made any outstanding payments required under the agreement. Either party may terminate the agreement for cause
by written notice to the other party of an uncured material breach by the other party or if the other party is unable to pay its
debts or enters into compulsory or voluntary liquidation.
License Agreement with Corixa Corporation. In January 2005, we entered into a license agreement with Corixa, which
was later acquired by GSK, pursuant to which we received the right to develop and commercialize molecular diagnostic tests
for multiple potential genetic markers in the areas of prostate, ovarian, cervical, kidney, lung and colon cancer. Pursuant to
the terms of the agreement, we paid Corixa an initial access license fee of $1.6 million, and an additional $1.6 million in each
of February 2006 and January 2007. Pursuant to the agreement, we also agreed to pay Corixa milestone payments totaling an
additional $2.0 million on a product-by-product basis based on the occurrence of certain regulatory and/or commercial
events. We also agreed to pay Corixa additional milestone payments and royalties on net sales of any products developed
by us using Corixa’s technology. The agreement will expire on the expiration of our obligation to pay royalties to Corixa
under the agreement, which obligation remains in effect as long as the licensed products are covered by a valid claim of the
licensed patent rights. We may terminate the agreement in our sole discretion upon 30 days’ prior written notice to Corixa,
provided we have made any outstanding payments due under the agreement. Either party may terminate the agreement for
cause by written notice to the other party of an uncured material breach by the other party or if the other party is unable to
pay its debts or enters into compulsory or voluntary liquidation.
License Agreement with University of Michigan. In April 2006, we entered into a license agreement with the
University of Michigan for exclusive worldwide rights to develop and commercialize diagnostic tests for recently discovered
genetic translocations that have been shown in preliminary studies to be highly specific for prostate cancer tissue. In May
2006, pursuant to the terms of this agreement, we paid a license fee of $0.5 million to the University. We also agreed to pay
royalties on eventual product sales, as well as development milestones. In addition, we will fund certain research at the
University to discover other potential prostate cancer translocations. The agreement will terminate upon the expiration or
abandonment of the last to expire of the licensed patent rights. The University has the right to terminate the agreement
upon written notice to us if we materially breach the agreement. We may terminate the agreement upon 45 days’ written
notice to the University, provided we have paid all amounts owed to the University and delivered reports and other data
due and owing under the agreement.
Patents and Proprietary Rights

To establish and protect our proprietary technologies and products, we rely on a combination of patent, copyright,
trademark and trade secrets laws, as well as confidentiality provisions in our contracts.
We have implemented a patent strategy designed to maximize our intellectual property rights. We have obtained and
are currently pursuing patent coverage in the United States and those foreign countries that are home to
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the majority of our anticipated customer base. As of December 31, 2008, we owned more than 470 issued United States and
foreign patents. In addition, our patent portfolio includes pending patent applications in the United States and
corresponding international filings in major industrial nations.
United States utility patents issued from applications filed prior to June 8, 1995 have a term of the longer of 20 years
from the earliest priority date or 17 years from issue. United States utility patents issued from applications filed on or after
June 8, 1995 have a term of 20 years from the earlier of the application filing date or earlier claimed priority date of a regular
application. 108 of our current United States utility patents issued from applications filed prior to June 8, 1995. 135 of our
United States utility patents issued from applications filed on or after June 8, 1995. We have four United States design
patents that issued from applications filed on or after June 8, 1995 and have a term of 14 years from the date of issue.
Patents in most foreign countries have a term of 20 years from the date of filing of the patent application. Because the time
from filing to issuance of patent applications is often several years, this process may result in a shortened period of patent
protection, which may adversely affect our ability to exclude competitors from our markets. The last of our currently issued
patents will expire by December 8, 2025. Our continued success will depend to a significant degree upon our ability to
develop proprietary products and technologies and to obtain patent coverage for those products and technologies. We
intend to continue to file patent applications covering any novel and newly developed products and technologies.
On January 9, 2004, our basic patents covering detection of organisms using probes to ribosomal nucleic acid (the
Kohne patents) expired in countries outside North America. While we have additional patents relating to ribosomal nucleic
acid detection that remain in effect outside North America, these patents may not provide sufficiently broad protection to
prevent competitors from selling products based on ribosomal nucleic acid detection in markets outside North America. In
the United States, the last-to-expire of the Kohne patents remains in effect until March 3, 2015.
We also rely in part on trade secret protection for our intellectual property. We attempt to protect our trade secrets by
entering into confidentiality agreements with third parties, employees and consultants. The source code for our proprietary
software is protected both as a trade secret and as copyrighted work. Our employees also sign agreements requiring that
they assign to us their interests in inventions and original expressions and any corresponding patents and copyrights
arising from their work for us. However, it is possible that these agreements may be breached, invalidated or rendered
unenforceable, and if so, there may not be an adequate corrective remedy available.
Competition
The medical diagnostics and biotechnology industries are subject to intense competition. Our competitors in the
United States and abroad are numerous and include, among others, diagnostic, health care, pharmaceutical and
biotechnology companies. Our major competitors in the NAT market include Roche, Abbott Laboratories, through its
subsidiary Abbott Molecular Inc. or, collectively, Abbott, Becton Dickinson, Siemens and bioMérieux. All of these
companies are manufacturers of laboratory-based tests and instruments for the NAT market, and we believe that many of
these companies are developing automated systems similar to our TIGRIS instrument.
Many of our competitors have substantially greater financial, technical, research and other resources and larger, more
established marketing, sales, distribution and service organizations than we do. Moreover, many of our competitors offer
broader product lines and have greater brand recognition than we do, and offer price discounts as a competitive tactic. In
addition, our competitors, many of which have made substantial investments in competing technologies, may limit or
interfere with our ability to make, use or sell our products either in the United States or in international markets.
In the markets for clinical diagnostic products, a number of competitors, including Roche, Abbott, Becton Dickinson,
Siemens and bioMérieux, compete with us for product sales, primarily on the basis of technology, quality, reputation,
accuracy, ease of use, price, reliability, the timing of new product introductions and product line offerings. Our competitors
may be in better position to respond quickly to new or emerging technologies, may be able to undertake more extensive
marketing campaigns, may adopt more aggressive pricing policies and may be more successful in attracting potential
customers, employees and strategic partners than we are. In the areas of NAT diagnostics for STDs, Roche and Becton
Dickinson currently have FDA-approved tests for chlamydia infections
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and gonorrhea utilizing amplification technology. Although we believe that the APTIMA Combo 2 test has commercial
advantages over the competing tests from Roche, Becton Dickinson and others, these competitors and potential
competitors may be able to develop technologies that are as effective as, or more effective, or easier to interpret or less
expensive than, those offered by us, which would render our products uncompetitive or obsolete.
Competitors may make rapid technological developments that may result in our technologies and products becoming
obsolete before we recover the expenses incurred to develop them or before they generate significant revenue or market
acceptance. Some of our competitors have developed “real time” or kinetic nucleic acid assays and semi-automated
instrument systems for those assays. Additionally, some of our competitors are developing assays that permit the
quantitative detection of multiple analytes, or quantitative multiplexing. Although we are evaluating and/or developing such
technologies, we believe some of our competitors are further along in the development process than we are with respect to
such assays and instrumentation.
In the market for blood screening products, our primary competitor is Roche, which received FDA approval of its PCR-
based NAT tests for blood screening in December 2002. We also compete with assays developed internally by blood
collection centers and laboratories based on PCR technology, an HCV antigen assay marketed by Ortho Clinical
Diagnostics, a subsidiary of Johnson & Johnson, and immunoassay products from Abbott and Siemens. In the future, our
blood screening products may compete with viral inactivation or reduction technologies and blood substitutes.
Novartis, with whom we have a collaboration agreement for our blood screening products, retains certain rights to
grant licenses of the patents related to HCV and HIV to third parties in blood screening using NAT. Prior to its merger with
Novartis, Chiron granted HIV and HCV licenses to Roche in the blood screening and clinical diagnostics fields. Chiron also
granted HIV and HCV licenses in the clinical diagnostics field to Bayer Healthcare LLC (now Siemens), together with the
right to grant certain additional HIV and HCV sublicenses in the field to third parties. We believe that Bayer’s rights have
now been assigned to Siemens as part of Bayer’s December 2006 sale of its diagnostics business. Chiron also granted an
HCV license to Abbott and an HIV license to Organon Teknika (now bioMérieux) in the clinical diagnostics field. If Novartis
grants additional licenses in blood screening or Siemens grants additional licenses in clinical diagnostics, further
competition will be created for sales of HCV and HIV assays and these licenses could affect the prices that can be charged
for our products.
Government Regulation
Our clinical diagnostic products generally are classified in the United States as “devices” and are regulated by the
FDA’s Center for Devices and Radiological Health. Our blood screening products generally are classified in the United
States as “biologics” and are regulated by the FDA’s Center for Biologics Evaluation and Research.
For us to market our clinical diagnostic product kits as medical devices in the United States, we generally must first
obtain clearance from the FDA pursuant to Section 510(k) of the Federal Food, Drug, and Cosmetic Act, or FFDCA. If we
modify our products that already have received FDA clearance, the FDA may require us to submit a separate 510(k), a
“special” 510(k) or a premarket approval application, or PMA, for the modified product before we are permitted to market it
in the United States. In addition, if we develop products in the future that are not considered to be substantially equivalent
to a legally marketed device, we will be required to obtain FDA approval by submitting a PMA.
By regulation, the FDA is required to respond to a 510(k) within 90 days of submission of the application. As a
practical matter, final clearance often takes longer. The FDA may require further information, including additional clinical
data, to make a determination regarding substantial equivalence. If the FDA determines that the device, or its intended use,
is not “substantially equivalent,” the device sponsor must then fulfill much more rigorous premarketing requirements or re-
submit a new 510(k) with additional data.
The PMA process is more demanding than the 510(k) premarket notification process. A PMA application, which is
intended to demonstrate that the device is safe and effective, must be supported by extensive data, including data from
preclinical studies, human clinical trials and existing research material, and must contain a full description of the device and
its components, a full description of the methods, facilities and controls used for manufacturing, and proposed labeling. The
FDA has 180 days to review a filed PMA application, although the
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review of an application more often occurs over a significantly longer period of time, up to several years. In approving a
PMA application or clearing a 510(k) application, the FDA also may require some form of post-market surveillance, whereby
the manufacturer follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical
status of those patients when necessary to protect the public health or to provide additional safety and effectiveness data
for the device. Our diagnostic assays for HCV and tuberculosis are examples of successful PMA applications.
When FDA approval of a clinical diagnostic device requires human clinical trials, and if the device presents a
“significant risk” (as defined by the FDA) to human health, the device sponsor is required to file an investigational device
exemption, or IDE, application with the FDA and obtain IDE approval prior to commencing the human clinical trial. If the
device is considered a “non-significant” risk, IDE submission to the FDA is not required. Instead, only approval from the
Institutional Review Board overseeing the clinical trial is required.
Clinical trials must be conducted in accordance with Good Clinical Practice under protocols generally submitted to the
FDA. Our clinical department has comprehensive experience with clinical trials of NAT products.
After the FDA permits a device to enter commercial distribution, numerous regulatory requirements apply. In addition
to potential product specific post-approval requirements, all devices are subject to:
• the Quality System Regulation, which requires manufacturers to follow comprehensive design, testing, control,
documentation and other quality assurance procedures during the manufacturing process;
• labeling regulations;
• the FDA’s general prohibition against promoting products for unapproved or “off-label” uses; and
• the Medical Device Reporting regulation, which requires that manufacturers report to the FDA if their device may
have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or
contribute to a death or serious injury if it were to reoccur.
Failure to comply with the applicable United States medical device regulatory requirements could result in, among other
things, warning letters, fines, injunctions, civil penalties, repairs, replacements, refunds, recalls or seizures of products, total
or partial suspension of production, the FDA’s refusal to grant future premarket clearances or approvals, withdrawals or
suspensions of current product applications, suspension of export certificates and criminal prosecution.
Our blood screening products also are subject to extensive pre- and post-market regulation as biologics by the FDA,
including regulations that govern the testing, manufacturing, safety, efficacy, labeling, storage, record keeping, advertising
and promotion of the products under the FFDCA and the Public Health Services Act, and by comparable agencies in most
foreign countries. The process required by the FDA before a biologic may be marketed in the United States generally
involves the following:
• completion of preclinical testing;
• submission of an IND, which must become effective before clinical trials may begin; and
• performance of adequate and well controlled human clinical trials to establish the safety and effectiveness of the
proposed biologic’s intended use.
The FDA requires approval of a BLA before a licensed biologic may be legally marketed in the United States. Product
approvals may be withdrawn or suspended if compliance with regulatory standards is not maintained or if problems occur
following initial marketing. With respect to patented products or technologies, delays imposed by the governmental
approval process may materially reduce the period during which we will have exclusive rights to exploit them.
The results of product development and human studies are submitted to the FDA as part of each BLA. The BLA also
must contain extensive manufacturing information. The FDA may approve or disapprove a BLA if applicable FDA
regulatory criteria are not satisfied or it may require additional clinical data. If approved, the FDA may withdraw a product
approval if compliance with post-market regulatory standards is not maintained or if problems occur after the product
reaches the marketplace. In addition, the FDA may require post-marketing studies
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to monitor the effect of approved products, and may limit further marketing of the product based on the results of these
post-market studies. The FDA has broad post-market regulatory and enforcement powers.
Satisfaction of FDA pre-market approval requirements for biologics can take several years and the actual time required
may vary substantially based on the type, complexity and novelty of the product or disease. In general, government
regulation may delay or prevent marketing of potential products for a considerable period of time and impose costly
procedures upon our activities. Success in early stage clinical trials does not assure success in later stage clinical trials.
Data obtained from clinical activities is not always conclusive and may be susceptible to varying interpretations that could
delay, limit or prevent regulatory approval. Even if a product receives regulatory approval, later discovery of previously
unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from
the market.
With respect to post-market product advertising and promotion, the FDA imposes a number of complex regulations on
entities that advertise and promote biologics, which include, among others, standards and regulations for direct-to-
consumer advertising, off-label promotion, industry sponsored scientific and educational activities, and promotional
activities involving the Internet. The FDA has broad enforcement authority under the FFDCA, and failure to abide by
applicable FDA regulations can result in penalties including the issuance of a warning letter directing the entity to correct
deviations from FDA standards, a requirement that future advertising and promotional materials be pre-cleared by the FDA,
and state and federal civil and criminal investigations and prosecutions.
We and our contract medical product manufacturers are subject to periodic inspection by the FDA and other
authorities where applicable, and are required to comply with the applicable FDA current Good Manufacturing Practice
regulations. Good Manufacturing Practice regulations include requirements relating to quality control and quality
assurance, as well as the corresponding maintenance of records and documentation, and provide for manufacturing
facilities to be inspected by the FDA. Manufacturers of biologics also must comply with the FDA’s general biological
product regulations. These regulations often include lot release testing by the FDA.
Certain assay reagents may be sold as ASRs without 510(k) clearance or PMA approval. However, ASR products are
subject to significant restrictions. The manufacturer may not make performance claims for the product and may only sell the
product to clinical laboratories that are qualified to run high complexity tests under the Clinical Laboratory Improvement
Amendments of 1988, or CLIA. Each laboratory must validate the ASR product for use in diagnostic procedures as a
laboratory validated assay. We currently offer ASRs for use in the detection of the PCA3 gene and for use in the detection
of the parasite Trichomonas vaginalis. In September 2007, the FDA published guidance for ASRs that define the types of
products that can be sold as ASRs. Under the terms of this guidance and the “ASR Manufacturer Letter” issued in June
2008 by the Office of In Vitro Diagnostic Device Evaluation and Safety at the FDA, it may be more challenging for us to
market some of our ASR products and we may be required to terminate those ASR product sales, conduct clinical studies
and make submissions of our products to the FDA for clearance or approval.
Outside the United States, our ability to market our products is contingent upon maintaining our International
Standards Organization (ISO) certification, and in some cases receiving specific marketing authorization from the
appropriate foreign regulatory authorities. The requirements governing the conduct of clinical trials, marketing
authorization, pricing and reimbursement vary widely from country to country. Our EU product registrations cover all
member states. Foreign registration is an ongoing process as we register additional products and/or product modifications.
We are also subject to various state and local laws and regulations in the United States relating to laboratory practices
and the protection of the environment. In each of these areas, as above, regulatory agencies have broad regulatory and
enforcement powers, including the ability to levy fines and civil and criminal penalties, suspend or delay issuance of
approvals, seize or recall products, and withdraw approvals, any one or more of which could have a material adverse effect
upon us. In addition, in the course of our business, we handle, store and dispose of chemicals. The environmental laws and
regulations applicable to our operations include provisions that regulate the discharge of materials in the environment.
Usually these environmental laws and regulations impose “strict liability,” rendering a person liable without regard to
negligence or fault on the part of, or conditions caused by, others. We have not been required to expend material amounts
in connection with our efforts to comply with environmental requirements. Because the requirements imposed by these laws
and regulations frequently change,
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we are unable to predict the cost of compliance with these requirements in the future, or the effect of these laws on our
capital expenditures, results of operations or competitive positions.
Manufacturing and Raw Materials

We have two state-of-the-art manufacturing facilities in the United States. Our Mira Mesa manufacturing facility in
San Diego, California is dedicated to producing our clinical diagnostic products. In 1999, we completed our manufacturing
facility in Rancho Bernardo for the manufacture of our blood screening products. This facility meets the strict standards set
by the FDA’s Center for Biologics Evaluation and Research for the production of blood screening products. We built this
facility with the capability to expand its operations to include production of additional assays for the blood screening
market. We believe this facility has the capacity to produce sufficient tests to satisfy current and foreseeable demand for
these blood screening assays. On February 1, 2008, we completed the purchase of this facility for $15.7 million. We also
have a manufacturing facility in Cardiff, United Kingdom. We believe that our existing manufacturing facilities provide us
with capacity to meet the needs of our currently anticipated growth.
We store our finished products at our warehouses in our manufacturing facilities. Some of our products must be stored
in industrial refrigeration or freezer units that are on site. We ship our products under ambient, refrigerated or frozen
conditions, as necessary, through third-party service providers.
We rely on one contract manufacturer for the production of each of our instrument product lines. For example, KMC
Systems is the only manufacturer of our TIGRIS instrument, and MGM Instruments is the only manufacturer of our
LEADER series of luminometers. We have no firm long-term commitments from KMC Systems, MGM Instruments or any of
our other manufacturers to supply products to us for any specific period, or in any specific quantity, except as may be
provided in a particular purchase order.
We use a diverse and broad range of raw materials in the design, development and manufacture of our products.
Although we produce some of our materials on site at our manufacturing facilities, we purchase most of the materials and
components used to manufacture our products from external suppliers. In addition, we purchase many key raw materials
from single source suppliers. For example, our current supplier of key raw materials for our amplified NAT assays, pursuant
to a fixed-price contract, is the Roche Molecular Biochemicals Division of Roche Diagnostics GmbH, an affiliate of Roche
Molecular Diagnostics, which is one of our primary competitors. In addition, we have entered into a supply and purchase
agreement with F. Hoffmann-La Roche Ltd. and its affiliate Roche Molecular Systems, Inc. for the manufacture and supply
of probes for HPV. We work closely with our suppliers to assure continuity of supply while maintaining high quality and
reliability. Although we generally consider and identify alternative suppliers, we do not typically pursue alternative sources
due to the strength of our existing supplier relationships.
Quality Systems
We have implemented modern quality systems and concepts throughout our organization. Our regulatory and quality
assurance departments supervise our quality systems and are responsible for assuring compliance with all applicable
regulations, standards and internal policies. Our senior management team is actively involved in setting quality policies,
managing regulatory matters and monitoring external quality performance.
Our regulatory and quality assurance departments have successfully led us through multiple quality and compliance
audits by the FDA, foreign governments and customers. These departments also coordinated an audit by TÜV Rheinland of
North America, leading to our European Standard, EN 13485, certification. TÜV Rheinland of North America also functions
as our “notified body,” performing dossier reviews for some of our blood screening and diagnostic products prior to
obtaining the CE mark. In addition, our regulatory and quality assurance departments have coordinated audits by Lloyds
Register Quality Assurance leading to EN ISO 13485, EN ISO 9001, EN ISO 14001 and OHSAS 18001 certifications for our
wholly owned U.K. subsidiary, Molecular Light Technology Research Limited.
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Research and Development

As of December 31, 2008, we had 243 full-time and temporary employees in research and development. Our research
and development expenses were $101.1 million in 2008, $97.1 million in 2007 and $84.5 million in 2006.
Employees
As of December 31, 2008, we had 991 full-time employees, of whom 208 hold advanced degrees. Of those employees,
227 were in research and development, 139 were in regulatory, clinical and quality systems, 177 were in sales and marketing,
169 were in general and administrative and 279 were in operations. None of our employees is covered by a collective
bargaining agreement, and we consider our relationship with our employees to be good. In addition, as of December 31,
2008, we had 46 temporary employees.
Geographic Information
For geographic information regarding our revenues, see Note 12 to the Consolidated Financial Statements included in
Part II, Item 8 of this Annual Report.
Item 1A. Risk Factors
Our quarterly revenue and operating results may vary significantly in future periods and our stock price may decline.
Our operating results have fluctuated in the past and are likely to continue to do so in the future. Our revenues are
unpredictable and may fluctuate due to changes in demand for our products, the timing of the execution of customer
contracts, the timing of milestone payments, or the failure to achieve and receive the same, and the initiation or termination
of corporate collaboration agreements. A significant portion of our costs also can vary substantially between quarterly or
annual reporting periods. For example, the total amount of research and development costs in a period often depends on the
amount of costs we incur in connection with manufacturing developmental lots and clinical trial lots. Moreover, a variety of
factors may affect our ability to make accurate forecasts regarding our operating results. For example, our new blood
screening products, oncology and industrial products, as well as some of our clinical diagnostic products, have a relatively
limited sales history, which limits our ability to project future sales, prices and the sales cycles accurately. In addition, we
base our internal projections of blood screening product sales and international sales of various diagnostic products on
projections prepared by our distributors of these products and therefore we are dependent upon the accuracy of those
projections. We expect continuing fluctuations in our manufacture and shipment of blood screening products to Novartis,
which vary each period based on Novartis’ inventory levels and supply chain needs. Because of all of these factors, our
operating results in one or more future quarters may fail to meet or exceed financial guidance we may provide from time to
time and the expectations of securities analysts or investors, which could cause our stock price to decline. In addition, the
trading market for our common stock will be influenced by the research and reports that industry or securities analysts
publish about our business and that of our competitors. Furthermore, failure to achieve our operational goals may inhibit
our targeted growth plans and the successful implementation of our strategic objectives.
Our financial performance may be adversely affected by current global economic conditions.
Our business depends on the overall demand for our products and on the economic health of our current and
prospective customers. Our projected revenues and operating results are based on assumptions concerning certain levels
of customer demand. We have not experienced recent declines in overall blood screening or clinical diagnostics customer
purchases as a result of current economic conditions, however, a continued weakening of the global and domestic
economy, or a reduction in customer spending or credit availability, could result in downward pricing pressures, delayed or
decreased purchases of our products and longer sales cycles. Furthermore, during challenging economic times our
customers may face issues gaining timely access to sufficient credit, which could result in an impairment of their ability to
make timely payments to us. If that were to occur, we may be required to increase our allowance for doubtful accounts. If
economic and market conditions in the United States or other key
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markets persist, spread, or deteriorate further, we may experience adverse effects on our business, operating results and
financial condition.
We are dependent on Novartis and other third parties for the distribution of some of our products. If any of our
distributors terminates its relationship with us or fails to adequately perform, our product sales will suffer.
We rely on Novartis to distribute blood screening products we manufacture. Commercial product sales to Novartis
accounted for 44% of our total revenues for 2008 and 43% of total revenues for 2007. As described above, Amendment
No. 11 extends to June 30, 2025 the term of our blood screening collaboration with Novartis under the 1998 Agreement. The
1998 Agreement was previously scheduled to expire by its terms in 2013. The collaboration agreement can be terminated by
either party prior to the expiration of its term if the other party materially breaches the collaboration agreement and does not
cure the breach following 90 days’ notice, or if the other party becomes insolvent or declares bankruptcy.
In July 2008, we were notified that certain blood screening assays manufactured by us for Novartis and sold outside of
the United States might have been improperly stored at a Novartis third-party warehouse in Singapore. Following our
established quality system, an investigation for product performance was initiated. in August 2008, we determined that,
based on the results of our investigation to date, we could not fully assess the potential impact of these improper storage
conditions on the ultimate performance of the product without conducting additional stability testing. As a result, we and
Novartis agreed that products previously delivered to customers from this warehousing facility should be replaced and the
appropriate field actions were initiated with customers and the regulatory authorities in the affected countries. While we do
not expect to incur charges in connection with this event, we devoted considerable time and attention to rectifying the
issues resulting from the improper storage conditions and events such as this may harm our commercial reputation.
Our agreement with Siemens, as assignee of Bayer, for the distribution of certain of our products will terminate in 2010.
In November 2002, we initiated an arbitration proceeding against Bayer in connection with our clinical diagnostic
collaboration. In August 2006, we entered into a settlement agreement with Bayer regarding this arbitration and the patent
litigation between the parties. Under the terms of the settlement agreement, the parties submitted a stipulated final award
adopting the arbitrator’s prior interim and supplemental awards, except that Bayer was no longer obligated to reimburse us
$2.0 million for legal expenses previously awarded in the arbitrator’s June 5, 2005 Interim Award. The arbitrator determined
that the collaboration agreement should be terminated, as we requested, except as to the qualitative HCV assays and as to
quantitative Analyte Specific Reagents, or ASRs, for HCV. As Bayer’s assignee, Siemens retains the co-exclusive right to
distribute the qualitative HCV tests and the exclusive right to distribute the quantitative HCV ASR. As a result of a
termination of the collaboration agreement, we re-acquired the right to develop and market future viral assays that had been
previously reserved for Siemens. The arbitrator’s March 3, 2006 supplemental award determined that we are not obligated to
pay an initial license fee in connection with the sale of the qualitative HIV-1 and HCV assays and that we will be required to
pay running sales royalties, at rates we believe are generally consistent with rates paid by other licensees of the relevant
patents.
We rely upon bioMérieux for distribution of certain of our products in most of Europe and Australia, Rebio Gen for
distribution of certain of our products in Japan, and various independent distributors for distribution of our products in
other regions. Distribution rights revert back to us upon termination of the distribution agreements. Our distribution
agreement with Rebio Gen terminates on December 31, 2010, although it may terminate earlier under certain circumstances.
Our distribution agreement with bioMérieux terminates on May 2, 2009, although it may terminate earlier under certain
circumstances.
If any of our distribution or marketing agreements is terminated, particularly our collaboration agreement with Novartis,
or if we elect to distribute new products directly, we will have to invest in additional sales and marketing resources,
including additional field sales personnel, which would significantly increase future selling, general and administrative
expenses. We may not be able to enter into new distribution or marketing agreements on satisfactory terms, or at all. If we
fail to enter into acceptable distribution or marketing agreements or fail to successfully market our products, our product
sales will decrease.
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If we cannot maintain our current corporate collaborations and enter into new corporate collaborations, our product
development could be delayed. In particular, any failure by us to maintain our collaboration with Novartis with
respect to blood screening would have a material adverse effect on our business.
We rely, to a significant extent, on our corporate collaborators for funding development and for marketing many of our
products. In addition, we expect to rely on our corporate collaborators for the commercialization of those products. If any of
our corporate collaborators were to breach or terminate its agreement with us or otherwise fail to conduct its collaborative
activities successfully and in a timely manner, the development or commercialization and subsequent marketing of the
products contemplated by the collaboration could be delayed or terminated. We cannot control the amount and timing of
resources our corporate collaborators devote to our programs or potential products. In November 2007, for example, 3M
informed us that it no longer intended to fund our collaboration to develop rapid molecular assays for the food testing
industry. We and 3M subsequently terminated this agreement. In June 2008, 3M discontinued our collaboration to develop
assays for healthcare-associated infections. While we are currently seeking other opportunities to commercialize our
prototype assays in these fields, there is no guarantee we will be successful in these efforts.
The continuation of any of our collaboration agreements depends on their periodic renewal by us and our
collaborators. For example, we recently entered into Amendment No. 11 with Novartis which extends to June 30, 2025 the
term of our blood screening collaboration with Novartis under the 1998 Agreement. The 1998 Agreement was previously
scheduled to expire by its terms in 2013. The collaboration agreement can be terminated by either party prior to the
expiration of its term if the other party materially breaches the collaboration agreement and does not cure the breach
following 90 days’ notice, or if the other party becomes insolvent or declares bankruptcy.
If any of our current collaboration agreements is terminated, or if we are unable to renew those collaborations on
acceptable terms, we would be required to devote additional internal resources to product development or marketing or to
terminate some development programs or seek alternative corporate collaborations. We may not be able to negotiate
additional corporate collaborations on acceptable terms, if at all, and these collaborations may not be successful. In
addition, in the event of a dispute under our current or any future collaboration agreements, such as those under our
agreements with Novartis and Siemens, a court or arbitrator may not rule in our favor and our rights or obligations under an
agreement subject to a dispute may be adversely affected, which may have an adverse impact on our business or operating
results.
We may acquire other businesses or form collaborations, strategic alliances and joint ventures that could decrease
our profitability, result in dilution to stockholders or cause us to incur debt or significant expense, and acquired
companies or technologies could be difficult to integrate and could disrupt our business.
As part of our business strategy, we intend to pursue acquisitions of complementary businesses and enter into
technology licensing arrangements. We also intend to pursue strategic alliances that leverage our core technology and
industry experience to expand our product offerings and geographic presence. We have limited experience with respect to
acquiring other companies. Any future acquisitions by us could result in large and immediate write-offs or the incurrence of
debt and contingent liabilities, any of which could harm our operating results. Integration of an acquired company also may
require management resources that otherwise would be available for ongoing development of our existing business. We
may not identify or complete these transactions in a timely manner, on a cost-effective basis, or at all. For example, in July
2008 we withdrew our counterbid to acquire Innogenetics NV as a result of a higher offer made by Solvay Pharmaceuticals.
Prior to withdrawing our bid, our management devoted substantial time and attention to the proposed transaction. Further,
we nonetheless incurred related transaction costs, including legal, accounting and other fees.
In addition, in January 2009, we announced that we had made an approximately $132.2 million cash offer (based on the
exchange rate described in the offer) for the acquisition of Tepnel Life Sciences Plc, a company registered in England and
Wales, or Tepnel, pursuant to a court-sanctioned scheme of arrangement under United Kingdom law. If successful, we
believe the acquisition will provide us access to growth opportunities in transplant diagnostics, genetic testing and
pharmaceutical services, as well as accelerate our ongoing strategic efforts to strengthen our marketing and sales,
distribution and manufacturing capabilities in the European molecular diagnostics market. These expectations are based
upon numerous assumptions that are subject to risks and
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uncertainties that could deviate materially from our estimates, and could adversely affect our operating results. Some of
these risks and uncertainties include, but are not limited to, our anticipated financial performance as a result of the
acquisition of Tepnel and estimated cost savings and other synergies as a result of the acquisition of Tepnel. Also, our
offer to acquire Tepnel is subject to numerous conditions, including the scheme becoming effective no later than four
months form the posting of the scheme document to Tepnel shareholders or such later date as we and Tepnel may agree
and the court may approve. It is also possible that Tepnel could receive a competing acquisition offer and its shareholders
could decline to support the transaction.
Managing the proposed acquisition of Tepnel and any other future acquisitions will entail numerous operational and
financial risks, including:
• the inability to retain or replace key employees of any acquired businesses or hire enough qualified personnel to
staff any new or expanded operations;
• the impairment of relationships with key customers of acquired businesses due to changes in management and
ownership of the acquired businesses;
• the exposure to federal, state, local and foreign tax liabilities in connection with any acquisition or the integration of
any acquired businesses;
• the exposure to unknown liabilities;
• higher than expected acquisition and integration costs that could cause our quarterly and annual operating results
to fluctuate;
• increased amortization expenses if an acquisition includes significant intangible assets;
• combining the operations and personnel of acquired businesses with our own, which could be difficult and costly;
• the risk of entering new markets; and
• integrating, or completing the development and application of, any acquired technologies and personnel with
diverse business and cultural backgrounds, which could disrupt our business and divert our management’s time and
attention.
To finance any acquisitions, we may choose to issue shares of our common stock as consideration, which would result
in dilution to our stockholders. If the price of our equity is low or volatile, we may not be able to use our common stock as
consideration to acquire other companies. Alternatively, it may be necessary for us to raise additional funds through public
or private financings. Additional funds may not be available on terms that are favorable to us, especially in light of current
economic conditions.
Our future success will depend in part upon our ability to enhance existing products and to develop, introduce and
commercialize new products.
The markets for our products are characterized by rapidly changing technology, evolving industry standards and new
product introductions, which may make our existing products obsolete. Our future success will depend in part upon our
ability to enhance existing products and to develop and introduce new products. We believe that we will need to continue
to provide new products that can detect and quantify a greater number of organisms from a single sample. We also believe
that we must develop new assays that can be performed on automated instrument platforms. The development of new
instrument platforms, if any, in turn may require the modification of existing assays for use with the new instrument, and
additional time-consuming and costly regulatory approvals. For example, our failure to successfully develop and
commercialize our development-stage Panther instrument system on a timely basis could have a negative impact on our
financial performance.
The development of new or enhanced products is a complex and uncertain process requiring the accurate anticipation
of technological, market and medical practice trends, as well as precise technological execution. In addition, the successful
development of new products will depend on the development of new technologies. We may be required to undertake time-
consuming and costly development activities and to seek regulatory approval for
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these new products. We may experience difficulties that could delay or prevent the successful development, introduction
and marketing of these new products. We have experienced delays in receiving FDA clearance in the past. Regulatory
clearance or approval of any new products we may develop may not be granted by the FDA or foreign regulatory
authorities on a timely basis, or at all, and these and other new products may not be successfully commercialized. Failure to
timely achieve regulatory approval for our products and introduce products to market could negatively impact our growth
objectives and financial performance.
In October 2006 and May 2007, the FDA granted marketing approval for use of the Procleix Ultrio assay on eSAS and
TIGRIS, respectively, to screen donated blood, plasma, organs and tissue for HIV-1 and HCV in individual blood donations
or in pools of up to 16 blood samples. In August 2008, the FDA approved the Procleix Ultrio assay to also screen donated
blood, plasma, organs and tissues for HBV in individual blood donations or in pools of up to 16 blood samples on eSAS
and the TIGRIS system. Since August 2008, existing customers have not transitioned from the use of the Procleix HIV-
1/HCV blood screening assay to the use of the Procleix Ultrio assay at the levels we anticipated. We believe this is
attributable in part to the FDA’s current requirements for testing blood donations, which do not currently mandate testing
for HBV. Nevertheless, we believe blood collection centers will continue to focus on improving the safety of donated blood
by adopting the most advanced blood screening technologies available. If customers do not transition to the use of the
Procleix Ultrio assay at expected levels for any of these or other reasons, our financial performance may be adversely
affected.
We face intense competition, and our failure to compete effectively could decrease our revenues and harm our
profitability and results of operations.
The clinical diagnostics industry is highly competitive. Currently, the majority of diagnostic tests used by physicians
and other health care providers are performed by large reference, public health and hospital laboratories. We expect that
these laboratories will compete vigorously to maintain their dominance in the diagnostic testing market. In order to achieve
market acceptance of our products, we will be required to demonstrate that our products provide accurate, cost-effective
and time saving alternatives to tests performed by traditional laboratory procedures and products made by our competitors.
In the markets for clinical diagnostic products, a number of competitors, including Roche, Abbott, Becton Dickinson,
Siemens and bioMérieux, currently compete with us for product sales, primarily on the basis of technology, quality,
reputation, accuracy, ease of use, price, reliability, the timing of new product introductions and product line offerings. Our
existing competitors or new market entrants may be in better position than we are to respond quickly to new or emerging
technologies, may be able to undertake more extensive marketing campaigns, may adopt more aggressive pricing policies
and may be more successful in attracting potential customers, employees and strategic partners. Many of our competitors
have, and in the future these and other competitors may have, significantly greater financial, marketing, sales,
manufacturing, distribution and technological resources than we do. Moreover, these companies may have substantially
greater expertise in conducting clinical trials and research and development, greater ability to obtain necessary intellectual
property licenses and greater brand recognition than we do, any of which may adversely impact our customer retention and
market share.
Competitors may make rapid technological developments that may result in our technologies and products becoming
obsolete before we recover the expenses incurred to develop them or before they generate significant revenue or market
acceptance. Some of our competitors have developed “real time” or kinetic nucleic acid assays and semi-automated
instrument systems for those assays. Additionally, some of our competitors are developing assays that permit the
quantitative detection of multiple analytes (or quantitative multiplexing). Although we are evaluating and/or developing
such technologies, we believe some of our competitors are further along in the development process than we are with
respect to such assays and instrumentation.
In the market for blood screening products, the primary competitor to our collaboration with Novartis is Roche, which
received FDA approval of its PCR-based NAT tests for blood screening in December 2002. Our collaboration with Novartis
also competes with blood banks and laboratories that have internally developed assays based on PCR technology, Ortho
Clinical Diagnostics, a subsidiary of Johnson & Johnson, that markets an HCV antigen assay, and
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Abbott and Siemens with respect to immunoassay products. In the future, our collaboration blood screening products also
may compete with viral inactivation or reduction technologies and blood substitutes.
Novartis, with whom we have a collaboration agreement for blood screening products, retains certain rights to grant
licenses of the patents related to HCV and HIV to third parties in blood screening using NAT. Prior to its merger with
Novartis, Chiron granted HIV and HCV licenses to Roche in the blood screening and clinical diagnostics fields. Chiron also
granted HIV and HCV licenses in the clinical diagnostics field to Bayer Healthcare LLC (now Siemens), together with the
right to grant certain additional HIV and HCV sublicenses in the field to third parties. We believe Bayer’s rights have now
been assigned to Siemens as part of Bayer’s December 2006 sale of its diagnostics business. Chiron also granted an HCV
license to Abbott and an HIV license to Organon Teknika (now bioMérieux) in the clinical diagnostics field. If Novartis
grants additional licenses in blood screening or Siemens grants additional licenses in clinical diagnostics, further
competition will be created for sales of HCV and HIV assays and these licenses could affect the prices that can be charged
for our products.
We have collaboration agreements to develop NAT products for industrial testing applications. We have limited
experience operating in these markets and may not successfully develop commercially viable products.
We have collaboration agreements to develop NAT products for detecting microorganisms in selected water
applications, and for microbiological and virus monitoring in the biotechnology and pharmaceutical manufacturing
industries. We have limited experience applying our technologies and operating in industrial testing markets. The process
of successfully developing products for application in these markets is expensive, time-consuming and unpredictable.
Research and development programs to create new products require a substantial amount of our scientific, technical,
financial and human resources and there is no guarantee that new products will be successfully developed. We will need to
design and execute specific product development plans in conjunction with our collaborative partners and make significant
investments to ensure that any products we develop perform properly, are cost-effective and adequately address customer
needs.
Even if we develop products for commercial use in these markets, any products we develop may not be accepted in
these markets, may be subject to competition and may be subject to other risks and uncertainties associated with these
markets. For example, most pharmaceutical manufacturers rely on culture testing of their manufacturing systems, and may be
unwilling to switch to molecular testing like that used in our recently launched MilliPROBE product to detect Pseudomonas
aeruginosa. We have no experience with customer and customer support requirements, sales cycles, and other industry-
specific requirements or dynamics applicable to these new markets and we and our collaborators may not be able to
successfully convert customers to tests using our NAT technologies, which we expect will be more costly than existing
methods. We will be reliant on our collaborators in these markets. Our interests may be different from those of our
collaborators and conflicts may arise in these collaboration arrangements that have an adverse impact on our ability to
develop new products. As a result of these risks and other uncertainties, we may not be able to successfully develop
commercially viable products for application in industrial testing or any other new markets.
Failure to manufacture our products in accordance with product specifications could result in increased costs, lost
revenues, customer dissatisfaction or voluntary product recalls, any of which could harm our profitability and
commercial reputation.
Properly manufacturing our complex nucleic acid products requires precise technological execution and strict
compliance with regulatory requirements. We may experience problems in the manufacturing process for a number of
reasons, such as equipment malfunction or failure to follow specific protocols. If problems arise during the production of a
particular product lot, that product lot may need to be discarded or destroyed. This could, among other things, result in
increased costs, lost revenues and customer dissatisfaction. If problems are not discovered before the product lot is
released to the market, we may incur recall and product liability costs. In the past, we have voluntarily recalled certain
product lots for failure to meet product specifications. Any failure to manufacture our products in accordance with product
specifications could have a material adverse effect on our revenues, profitability and commercial reputation.
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Disruptions in the supply of raw materials and consumable goods or issues associated with the quality thereof from
our single source suppliers, including Roche Molecular Biochemicals, which is an affiliate of one of our primary
competitors, could result in a significant disruption in sales and profitability.
We purchase some key raw materials and consumable goods used in the manufacture of our products from single-
source suppliers. We believe certain of our key suppliers may be experiencing difficulties due to current economic
conditions. If we cannot obtain sufficient raw materials from our key suppliers, production of our own products may be
delayed or disrupted. In addition, we may not be able to obtain supplies from replacement suppliers on a timely or cost-
effective basis, or at all. A reduction or stoppage in supply while we seek a replacement supplier would limit our ability to
manufacture our products, which could result in a significant reduction in sales and profitability. For example, there is
currently a worldwide shortage of acetonitrile, which we use in the production of many of our products. We believe this
shortage results from decreased worldwide production as demand falls for acetonitrile’s co-product, acrylonitrile (a building
block in the formulation of resins used in cars, electronic housings, and small appliances), largely attributed to the global
economic slowdown. As a result, our supply of acetonitrile has been restricted along with many other companies
worldwide. We are seeking to implement mitigation measures to address supply shortages, however, there can be no
assurance that such measures will be successful.
In addition, an impurity or variation from specification in any raw material we receive could significantly delay our
ability to manufacture products. Our inventories may not be adequate to meet our production needs during any prolonged
interruption of supply. We also have single source suppliers for proposed future products. Failure to maintain existing
supply relationships or to obtain suppliers for our future products, if any, on commercially reasonable terms would prevent
us from manufacturing our products and limit our growth.
Our current supplier of certain key raw materials for our amplified NAT assays, pursuant to a fixed-price contract, is
Roche Molecular Biochemicals. We have a supply and purchase agreement for oligonucleotides for HPV with Roche
Molecular Systems. Each of these entities is an affiliate of Roche Diagnostics GmbH, one of our primary competitors. We
currently are involved in proceedings with Digene regarding our supply and purchase agreement with Roche Molecular
Systems. Digene has filed a demand for binding arbitration against Roche that challenges the validity of the supply and
purchase agreement. Digene’s demand asserts, among other things, that Roche materially breached a cross-license
agreement between Roche and Digene by granting us an improper sublicense and seeks a determination that the supply and
purchase agreement is null and void. The arbitration hearing in this matter commenced October 27, 2008 and the
presentation of evidence concluded November 10, 2008. In December 2008 and January 2009, the parties filed post-hearing
briefs and closing arguments were presented on January 30, 2009. There can be no assurance that these matters will be
resolved in our favor.
We have only one third-party manufacturer for each of our instrument product lines, which exposes us to increased
risks associated with production delays, delivery schedules, manufacturing capability, quality control, quality
assurance and costs.
We have one third-party manufacturer for each of our instrument product lines. KMC Systems is the only manufacturer
of our TIGRIS instrument. MGM Instruments, Inc. is the only manufacturer of our LEADER series of luminometers. We are
dependent on these third-party manufacturers, and this dependence exposes us to increased risks associated with
production delays, delivery schedules, manufacturing capability, quality control, quality assurance and costs. We have no
firm long-term commitments from KMC Systems, MGM Instruments or any of our other manufacturers to supply products
to us for any specific period, or in any specific quantity, except as may be provided in a particular purchase order. If KMC
Systems, MGM Instruments or any of our other third-party manufacturers experiences delays, disruptions, capacity
constraints or quality control problems in its manufacturing operations or becomes insolvent, then instrument shipments to
our customers could be delayed, which would decrease our revenues and harm our competitive position and reputation.
Further, because we place orders with our manufacturers based on forecasts of expected demand for our instruments, if we
inaccurately forecast demand, we may be unable to obtain adequate manufacturing capacity or adequate quantities of
components to meet our customers’ delivery requirements, or we may accumulate excess inventories.
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We may in the future need to find new contract manufacturers to increase our volumes or to reduce our costs. We may
not be able to find contract manufacturers that meet our needs, and even if we do, qualifying a new contract manufacturer
and commencing volume production is expensive and time consuming. For example, we believe qualifying a new
manufacturer of our TIGRIS instrument would take approximately 12 months. If we are required or elect to change contract
manufacturers, we may lose revenues and our customer relationships may suffer.
We and our customers are subject to various governmental regulations, and we may incur significant expenses to
comply with, and experience delays in our product commercialization as a result of, these regulations.
The clinical diagnostic and blood screening products we design, develop, manufacture and market are subject to
rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities. We generally are
prohibited from marketing our clinical diagnostic products in the United States unless we obtain either 510(k) clearance or
premarket approval from the FDA. Delays in receipt of, or failure to obtain, clearances or approvals for future products
could result in delayed, or no, realization of product revenues from new products or in substantial additional costs which
could decrease our profitability.
The process of seeking and obtaining regulatory approvals, particularly from the FDA and some foreign governmental
authorities, to market our products can be costly and time consuming, and approvals might not be granted for future
products on a timely basis, if at all. In March 2008, we started U.S. clinical trials for our investigational APTIMA HPV assay.
We expect that trial enrollment of approximately 7,000 women and trial testing will take approximately two years. However,
actual trial enrollment may vary based on the prevalence of cervical disease among women in the trial or other factors. If we
experience unexpected complications in conducting the trial, we may incur additional costs or experience delays or
difficulties in receiving FDA approval. In addition, we cannot guarantee that the FDA will ultimately approve the use of our
APTIMA HPV assay upon completion of the trial. Failure to obtain FDA approval of our APTIMA HPV assay, or delays or
difficulties experienced during the clinical trial, could have a material adverse effect on our financial performance.
We are also required to continue to comply with applicable FDA and other regulatory requirements once we have
obtained clearance or approval for a product. These requirements include, among other things, the Quality System
Regulation, labeling requirements, the FDA’s general prohibition against promoting products for unapproved or “off-label”
uses and adverse event reporting regulations. Failure to comply with applicable FDA product regulatory requirements could
result in, among other things, warning letters, fines, injunctions, civil penalties, repairs, replacements, refunds, recalls or
seizures of products, total or partial suspension of production, the FDA’s refusal to grant future premarket clearances or
approvals, withdrawals or suspensions of current product applications and criminal prosecution. Any of these actions, in
combination or alone, could prevent us from selling our products and harm our business.
We currently offer ASRs for use in the detection of PCA3 mRNA and for use in the detection of the parasite
Trichomonas vaginalis. We also have developed an ASR for quantitative HCV testing that Siemens provides to Quest
Diagnostics. The FDA restricts the sale of these products to clinical laboratories certified under the Clinical Laboratory
Improvement Amendments of 1988, or CLIA, to perform high complexity testing and also restricts the types of products that
can be sold as ASRs. In September 2007, the FDA published guidance for ASRs that define the types of products that can
be sold as ASRs. Under the terms of this guidance and the “ASR Manufacturer Letter” issued in June 2008 by the Office of
In Vitro Diagnostic Device Evaluation and Safety at the FDA, it may be more challenging for us to market some of our ASR
products and we may be required to terminate those ASR product sales, conduct clinical studies and make submissions of
our ASR products to the FDA for clearance or approval.
Outside the United States, our ability to market our products is contingent upon maintaining our certification with the
International Organization for Standardization, and in some cases receiving specific marketing authorization from the
appropriate foreign regulatory authorities. The requirements governing the conduct of clinical trials, marketing
authorization, pricing and reimbursement vary widely from country to country. Our EU foreign
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marketing authorizations cover all member states. Foreign registration is an ongoing process as we register additional
products and/or product modifications.
The use of our diagnostic products is also affected by CLIA, and related federal and state regulations that provide for
regulation of laboratory testing. CLIA is intended to ensure the quality and reliability of clinical laboratories in the United
States by mandating specific standards in the areas of personnel qualifications, administration, participation in proficiency
testing, patient test management, quality and inspections. Current or future CLIA requirements or the promulgation of
additional regulations affecting laboratory testing may prevent some clinical laboratories from using some or all of our
diagnostic products.
Certain of the industrial testing products that we intend to develop may be subject to government regulation, and
market acceptance may be subject to the receipt of certification from independent agencies. We will be reliant on our
industrial collaborators in these markets to obtain any necessary approvals. There can be no assurance that these
approvals will be received.
As both the FDA and foreign government regulators have become increasingly stringent, we may be subject to more
rigorous regulation by governmental authorities in the future. Complying with these rules and regulations could cause us to
incur significant additional expenses and delays in launching products, which would harm our operating results.
Our products are subject to recalls even after receiving FDA approval or clearance.
The FDA and governmental bodies in other countries have the authority to require the recall of our products if we fail
to comply with relevant regulations pertaining to product manufacturing, quality, labeling, advertising, or promotional
activities, or if new information is obtained concerning the safety of a product. Our assay products incorporate complex
biochemical reagents and our instruments comprise complex hardware and software. We have in the past voluntarily
recalled products, which, in each case, required us to identify a problem and correct it. In December 2008, we recalled certain
AccuProbe Group B Streptococcus Test kits and AccuProbe Mycobacterium tuberculosis Culture Identification Test kits,
after receiving a customer complaint indicating the customer had received a Group B Strep kit containing a probe reagent
tube that appeared upon visual inspection to be empty. We confirmed that a manufacturing error had occurred, corrected
the problem, recalled all potentially affected products, provided replacements and notified the FDA and other appropriate
authorities.
Although none of our past product recalls had a material adverse effect on our business, our products may be subject
to a future government-mandated recall or a voluntary recall by us, and any such recall could divert managerial and financial
resources, could be more difficult and costly to correct, could result in the suspension of sales of our products and could
harm our financial results and our reputation.
Our gross profit margin percentage on the sale of blood screening assays will decrease upon the implementation of
smaller pool size testing.
We currently receive revenues from the sale of blood screening assays primarily for use with pooled donor samples. In
pooled testing, multiple donor samples are initially screened by a single test. Since Novartis sells blood screening assays
under our collaboration to blood collection centers on a per donation basis, our profit margins are greater when a single test
can be used to screen multiple donor samples.
We believe certain blood screening markets are trending from pooled testing of large numbers of donor samples to
smaller pool sizes. A greater number of tests will be required in markets where smaller pool sizes are required. Under our
recently revised collaboration agreement with Novartis, we bear half of the cost of manufacturing blood screening assays.
The greater number of tests required for smaller pool sizes will increase our variable manufacturing costs, including costs of
raw materials and labor. If the price per donor or total sales volume does not increase in line with the increase in our total
variable manufacturing costs, our gross profit margin percentage from sales of blood screening assays will decrease upon
adoption of smaller pool sizes. We have already observed this trend with respect to certain sales internationally. We are not
able to predict accurately the ultimate extent to which our gross profit margin percentage will be negatively affected as a
result of smaller pool sizes,
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because we do not know the ultimate selling price that Novartis would charge to the end user or the degree to which smaller
pool size testing will be adopted across the markets in which our products are sold.
Because we depend on a small number of customers for a significant portion of our total revenues, the loss of any of
these customers or any cancellation or delay of a large purchase by any of these customers could significantly reduce
our revenues.
Historically, a limited number of customers has accounted for a significant portion of our total revenues, and we do not
have any long-term commitments with these customers, other than our collaboration agreement with Novartis. Revenues
from our blood screening collaboration with Novartis accounted for 48% of our total revenues for 2008 and 45% of our total
revenues for 2007. Our blood screening collaboration with Novartis is largely dependent on two large customers in the
United States, The American Red Cross and America’s Blood Centers, although we did not receive any revenues directly
from those entities. Novartis was our only customer that accounted for greater than 10% of our total revenues for 2008.
Various state and city public health agencies accounted for an aggregate of 8% of our total revenues for 2008 and 9% of
total revenues for 2007. Although state and city public health agencies are legally independent of each other, we believe
they tend to act similarly with respect to their product purchasing decisions. We anticipate that our operating results will
continue to depend to a significant extent upon revenues from a small number of customers. The loss of any of our key
customers, or a significant reduction in sales volume or pricing to those customers, could significantly reduce our revenues.
Intellectual property rights on which we rely to protect the technologies underlying our products may be inadequate
to prevent third parties from using our technologies or developing competing products.
Our success will depend in part on our ability to obtain patent protection for, or maintain the secrecy of, our
proprietary products, processes and other technologies for development of blood screening and clinical diagnostic
products and instruments. Although we had more than 470 United States and foreign patents covering our products and
technologies as of December 31, 2008, these patents, or any patents that we may own or license in the future, may not afford
meaningful protection for our technology and products. The pursuit and assertion of a patent right, particularly in areas like
nucleic acid diagnostics and biotechnology, involve complex determinations and, therefore, are characterized by substantial
uncertainty. In addition, the laws governing patentability and the scope of patent coverage continue to evolve, particularly
in biotechnology. As a result, patents might not issue from certain of our patent applications or from applications licensed
to us. Our existing patents will expire by December 8, 2025 and the patents we may obtain in the future also will expire over
time.
The scope of any of our issued patents may not be broad enough to offer meaningful protection. In addition, others
may challenge our current patents or patents we may obtain in the future and, as a result, these patents could be narrowed,
invalidated or rendered unenforceable, or we may be forced to stop using the technology covered by these patents or to
license technology from third parties.
The laws of some foreign countries may not protect our proprietary rights to the same extent as do the laws of the
United States. Any patents issued to us or our partners may not provide us with any competitive advantages, and the
patents held by other parties may limit our freedom to conduct our business or use our technologies. Our efforts to enforce
and maintain our intellectual property rights may not be successful and may result in substantial costs and diversion of
management time. Even if our rights are valid, enforceable and broad in scope, third parties may develop competing
products based on technology that is not covered by our patents.
In addition to patent protection, we also rely on copyright and trademark protection, trade secrets, know-how,
continued technological innovation and licensing opportunities. In an effort to maintain the confidentiality and ownership
of our trade secrets and proprietary information, we require our employees, consultants, advisors and others to whom we
disclose confidential information to execute confidentiality and proprietary information and inventions agreements.
However, it is possible that these agreements may be breached, invalidated or rendered unenforceable, and if so, there may
not be an adequate corrective remedy available. Furthermore, like many companies in our industry, we may from time to time
hire scientific personnel formerly employed by other companies involved in one or more areas similar to the activities we
conduct. In some situations, our confidentiality and proprietary information and inventions agreements may conflict with, or
be subject to, the rights of third parties
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with whom our employees, consultants or advisors have prior employment or consulting relationships. Although we require
our employees and consultants to maintain the confidentiality of all confidential information of previous employers, we or
these individuals may be subject to allegations of trade secret misappropriation or other similar claims as a result of their
prior affiliations. Finally, others may independently develop substantially equivalent proprietary information and
techniques, or otherwise gain access to our trade secrets. Our failure to protect our proprietary information and techniques
may inhibit or limit our ability to exclude certain competitors from the market and execute our business strategies.
The diagnostic products industry has a history of patent and other intellectual property litigation, and we have been
and may continue to be involved in costly intellectual property lawsuits.
The diagnostic products industry has a history of patent and other intellectual property litigation, and these lawsuits
likely will continue. From time-to-time in the ordinary course of business we receive communications from third parties
calling our attention to patents or other intellectual property rights owned by them, with the implicit or explicit suggestion
that we may need to acquire a license of such rights. We have faced in the past, and may face in the future, patent
infringement lawsuits by companies that control patents for products and services similar to ours or other lawsuits alleging
infringement by us of their intellectual property rights. In order to protect or enforce our intellectual property rights, we may
have to initiate legal proceedings against third parties. Legal proceedings relating to intellectual property typically are
expensive, take significant time and divert management’s attention from other business concerns. The cost of this litigation
could adversely affect our results of operations, making us less profitable. Further, if we do not prevail in an infringement
lawsuit brought against us, we might have to pay substantial damages, including treble damages, and we could be required
to stop the infringing activity or obtain a license to use the patented technology.
Recently, we have been involved in a number of patent-related disputes with third parties. In December 2006, Digene
Corporation filed a demand for binding arbitration against Roche with the International Centre for Dispute Resolution, or the
IDCR, of the American Arbitration Association in New York. Digene’s demand asserts, among other things, that Roche
materially breached a cross-license agreement between Roche and Digene by granting us an improper sublicense and seeks
a determination that our supply and purchase agreement with Roche is null and void. On July 13, 2007, the ICDR arbitrators
granted our petition to join the arbitration. On August 27, 2007, Digene filed an amended arbitration demand and asserted a
claim against us for tortious interference with the cross-license agreement. The arbitration hearing commenced October 27,
2008 and the presentation of evidence concluded November 10, 2008. In December 2008 and January 2009 the parties filed
post-hearing briefs and closing arguments were presented on January 30, 2009. There can be no assurance that the matter
will be resolved in our favor.
Pursuant to our June 1998 collaboration agreement with Novartis, we hold certain rights in the blood screening and
clinical diagnostics fields under patents originally issued to Novartis covering the detection of HIV. We sell a qualitative
HIV test in the clinical diagnostics field and we manufacture tests for HIV for use in the blood screening field, which
Novartis sells under Novartis’ brands and name. In February 2005, the U.S. Patent and Trademark Office declared two
interferences related to U.S. Patent No. 6,531,276 (“Methods For Detecting Human Immunodeficiency Virus Nucleic Acid”),
originally issued to Novartis. The first interference was between Novartis and the National Institutes of Health, or NIH, and
pertained to U.S. Patent Application No. 06/693,866 (“Cloning and Expression of HTLV-III DNA”). The second interference
was between Novartis and Institut Pasteur, and pertained to Institut Pasteur’s U.S. Patent Application No. 07/999,410
(“Cloned DNA Sequences, Hybridizable with Genomic RNA of Lymphadenopathy-Associated Virus (LAV)”). We are
informed that the Patent and Trademark Office determined that Institut Pasteur invented the subject matter at issue prior to
NIH and Novartis. We are also informed that Novartis and NIH subsequently filed actions in the United States District
Court for the District of Columbia challenging the decisions of the Patent and Trademark Office in the patent interference
cases. From November 2007 through June 2008, the parties engaged in settlement negotiations and then notified the court
that they had signed a memorandum of understanding prior to the negotiation of final, definitive settlement documents. On
May 16, 2008, we signed a license agreement with Institut Pasteur concerning Institut Pasteur’s intellectual property for the
molecular detection of HIV, covering products manufactured and sold through, and under, our brands or name. On June 27,
2008, the parties to the pending litigation in the United States District Court for the District of Columbia
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informed the court that they were unable to reach a final, definitive agreement and intended to proceed with litigation. There
can be no assurances as to the ultimate outcome of the interference litigation and no assurances as to how the outcome of
the interference litigation may affect the patent rights licensed from Institut Pasteur, or Novartis’ right to sell the HIV blood
screening tests.
We may be subject to future product liability claims that may exceed the scope and amount of our insurance
coverage, which would expose us to liability for uninsured claims.
While there is a federal preemption defense against product liability claims for medical products that receive premarket
approval from the FDA, we believe that no such defense is available for our products that we market under a 510(k)
clearance. As such, we are subject to potential product liability claims as a result of the design, development, manufacture
and marketing of our clinical diagnostic products. Any product liability claim brought against us, with or without merit,
could result in the increase of our product liability insurance rates. In addition, our insurance policies have various
exclusions, and thus we may be subject to a product liability claim for which we have no insurance coverage, in which case,
we may have to pay the entire amount of any award. In addition, insurance varies in cost and can be difficult to obtain, and
we may not be able to obtain insurance in the future on terms acceptable to us, or at all. A successful product liability claim
brought against us in excess of our insurance coverage may require us to pay substantial amounts, which could harm our
business and results of operations.
We are exposed to risks associated with acquisitions and other long-lived and intangible assets that may become
impaired and result in an impairment charge.
As of December 31, 2008, we had approximately $230.6 million of long-lived assets, including $13.4 million of capitalized
software, net of accumulated amortization, relating to our TIGRIS instrument, goodwill of $18.6 million, a $5.4 million
investment in Qualigen, Inc., and $51.2 million of capitalized license and manufacturing access fees, patents, purchased
intangibles and other long term assets. Additionally, we had $74.3 million of land and buildings, $16.5 million of building
improvements, and $51.2 million of equipment and furniture and fixtures. The substantial majority of our long-lived assets
are located in the United States. The carrying amounts of long-lived and intangible assets are affected whenever events or
changes in circumstances indicate that the carrying amount of any asset may not be recoverable.
These events or changes might include a significant decline in market share, a significant decline in profits, rapid
changes in technology, significant litigation, an inability to successfully deliver an instrument to the marketplace and attain
customer acceptance or other matters. Adverse events or changes in circumstances may affect the estimated undiscounted
future operating cash flows expected to be derived from long-lived and intangible assets. If at any time we determine that an
impairment has occurred, we will be required to reflect the impaired value as a charge, resulting in a reduction in earnings in
the quarter such impairment is identified and a corresponding reduction in our net asset value. A material reduction in
earnings resulting from such a charge could cause us to fail to be profitable in the period in which the charge is taken or
otherwise fail to meet the expectations of investors and securities analysts, which could cause the price of our stock to
decline.
In June 2008, we recorded an impairment charge for the net capitalized balance of $3.5 million under our license
agreement with Corixa. In the second quarter of 2008, a series of events indicated that future alternative uses of the
capitalized intangible asset were unlikely and that recoverability of the asset through future cash flows was not considered
likely enough to support continued capitalization. These second quarter 2008 indicators of impairment included decisions
on our planned commercial approach for oncology diagnostic products, the completion of a detailed review of the
intellectual property suite acquired from Corixa, including our assessment of the proven clinical utility for a majority of the
related markers, and the potential for near term sublicense income that could be generated from the intellectual property
acquired.
In the quarter ended September 30, 2008, we recorded a $1.6 million other-than-temporary loss relating to our
investment in Qualigen. In making this determination, we considered a number of factors, including, among others, the share
price from the company’s latest financing round, the performance of the company in relation to its own operating targets
and business plan, the company’s revenue and cost trends, the company’s liquidity and cash position, including its cash
burn rate, market acceptance of the company’s products and services, new products
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and/or services that the company may have forthcoming, any significant news specific to the company, the company’s
competitors and industry, the outlook of the overall industry in which the company operates and a third party valuation
report.
Future changes in financial accounting standards or practices, or existing taxation rules or practices, may cause
adverse unexpected revenue or expense fluctuations and affect our reported results of operations.
A change in accounting standards or practices, or a change in existing taxation rules or practices, can have a
significant effect on our reported results and may even affect our reporting of transactions completed before the change is
effective. New accounting pronouncements and taxation rules and varying interpretations of accounting pronouncements
and taxation practice have occurred and may occur in the future. Changes to existing rules or the questioning of current
practices may adversely affect our reported financial results or the way we conduct our business. Our effective tax rate can
also be impacted by changes in estimates of prior years’ items, past and future levels of research and development
spending, the outcome of audits by federal, state and foreign jurisdictions and changes in overall levels of income before
tax.
We expect to continue to incur significant research and development expenses, which may make it difficult for us to
maintain profitability.
In recent years, we have incurred significant costs in connection with the development of blood screening and clinical
diagnostic products, as well as our TIGRIS and Panther instrument systems. We expect our expense levels to remain high in
connection with our research and development as we seek to continue to expand our product offerings and continue to
develop products and technologies in collaboration with our partners. As a result, we will need to continue to generate
significant revenues to maintain profitability. Although we expect our research and development expenses as a percentage
of revenue to decrease in future periods, we may not be able to generate sufficient revenues to maintain profitability in the
future. Our failure to maintain profitability in the future could cause the market price of our common stock to decline.
Our short term investments are subject to market and investment risks which may result in a loss of value.
We engage one or more third parties to manage some of our cash consistent with an investment policy that restricts
investments to securities of high credit quality, with requirements placed on maturities and concentration by security type
and issue. These investments are intended to preserve principal while providing liquidity adequate to meet our projected
cash requirements. Risks of principal loss are intended to be minimized through diversified short and medium term
investments of high quality, but these investments are not, in every case, guaranteed or fully insured. In light of recent
changes in the credit market, some high quality short term investment securities, similar to the types of securities that we
invest in, have suffered illiquidity, events of default or deterioration in credit quality. If our short term investment portfolio
becomes affected by any of the foregoing or other adverse events, we may incur losses relating to these investments.
We may not have financing for future capital requirements, which may prevent us from addressing gaps in our
product offerings or improving our technology.
Although historically our cash flow from operations has been sufficient to satisfy working capital, capital expenditure
and research and development requirements, we may in the future need to incur debt or issue equity in order to fund these
requirements, as well as to make acquisitions and other investments. If we cannot obtain debt or equity financing on
acceptable terms or are limited with respect to incurring debt or issuing equity, including as a result of current economic
conditions, we may be unable to address gaps in our product offerings or improve our technology, particularly through
acquisitions or investments.
If we raise funds through the issuance of debt or equity, any debt securities or preferred stock issued will have rights,
preferences and privileges senior to those of holders of our common stock in the event of a liquidation and may contain
other provisions that adversely affect the rights of the holders of our common stock. The terms of any
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debt securities may impose restrictions on our operations. If we raise funds through the issuance of equity or debt
convertible into equity, this issuance would result in dilution to our stockholders.
If we or our contract manufacturers are unable to manufacture our products in sufficient quantities, on a timely basis,
at acceptable costs and in compliance with regulatory requirements, our ability to sell our products will be harmed.
Our products must be manufactured in sufficient quantities and on a timely basis, while maintaining product quality
and acceptable manufacturing costs and complying with regulatory requirements. In determining the required quantities of
our products and the manufacturing schedule, we must make significant judgments and estimates based on historical
experience, inventory levels, current market trends and other related factors. Because of the inherent nature of estimates,
there could be significant differences between our estimates and the actual amounts of products we and our distributors
require, which could harm our business and results of operations.
Significant additional work will be required for scaling-up manufacturing of each new product prior to
commercialization, and we may not successfully complete this work. Manufacturing and quality control problems have
arisen and may arise in the future as we attempt to scale-up our manufacturing of a new product, and we may not achieve
scale-up in a timely manner or at a commercially reasonable cost, or at all. In addition, although we expect some of our newer
products and products under development to share production attributes with our existing products, production of these
newer products may require the development of new manufacturing technologies and expertise. We may be unable to
develop the required technologies or expertise.
The amplified NAT tests that we produce are significantly more expensive to manufacture than our non-amplified
products. As we continue to develop new amplified NAT tests in response to market demands for greater sensitivity, our
product costs will increase significantly and our margins may decline. We sell our products in a number of cost-sensitive
market segments, and we may not be able to manufacture these more complex amplified tests at costs that would allow us to
maintain our historical gross margin percentages. In addition, new products that detect or quantify more than one target
organism will contain significantly more complex reagents, which will increase the cost of our manufacturing processes and
quality control testing. We or other parties we engage to help us may not be able to manufacture these products at a cost or
in quantities that would make these products commercially viable. If we are unable to develop or contract for manufacturing
capabilities on acceptable terms for our products under development, we will not be able to conduct pre-clinical, clinical and
validation testing on these product candidates, which will prevent or delay regulatory clearance or approval of these
product candidates.
Blood screening and clinical diagnostic products are regulated by the FDA as well as other foreign medical regulatory
bodies. In some cases, such as in the United States and the European Union, certain products may also require individual
lot release testing. Maintaining compliance with multiple regulators, and multiple centers within the FDA, adds complexity
and cost to our overall manufacturing processes. In addition, our manufacturing facilities and those of our contract
manufacturers are subject to periodic regulatory inspections by the FDA and other federal and state regulatory agencies,
and these facilities are subject to Quality System Regulations requirements of the FDA. We or our contractors may fail to
satisfy these regulatory requirements in the future, and any failure to do so may prevent us from selling our products.
Our sales to international markets are subject to additional risks.
Sales of our products outside the United States accounted for 23% of our total revenues for 2008 and 20% of our total
revenues for 2007. Sales by Novartis of collaboration blood screening products outside of the United States accounted for
78% of our international revenues in 2008 and 77% in 2007. Novartis has responsibility for the international distribution of
collaboration blood screening products.
We encounter risks inherent in international operations. We expect a significant portion of our sales growth, especially
with respect to blood screening products, to come from expansion in international markets. If the value of
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the United States dollar increases relative to foreign currencies, our products could become less competitive in international
markets. Our international sales also may be limited or disrupted by:
• the imposition of government controls;
• export license requirements;
• economic and political instability;
• price controls;
• trade restrictions and tariffs;
• differing local product preferences and product requirements; and
• changes in foreign medical reimbursement and coverage policies and programs.
In addition, we anticipate that requirements for smaller pool sizes of blood samples will result in lower gross margin
percentages, as additional tests are required to deliver the sample results. We have already observed this trend with respect
to certain sales in Europe. In general, international pool sizes are smaller than domestic pool sizes and, therefore, growth in
blood screening revenues attributed to international expansion has led and will lead to lower gross margin percentages.
If third-party payors do not reimburse our customers for the use of our clinical diagnostic products or if they reduce
reimbursement levels, our ability to sell our products will be harmed.
We sell our clinical diagnostic products primarily to large reference laboratories, public health institutions and
hospitals, substantially all of which receive reimbursement for the health care services they provide to their patients from
third-party payors, such as Medicare, Medicaid and other government programs, private insurance plans and managed care
programs. Most of these third-party payors may deny reimbursement if they determine that a medical product was not used
in accordance with cost-effective treatment methods, as determined by the third-party payor, or was used for an
unapproved indication. Third-party payors may also refuse to reimburse for experimental procedures and devices.
Third-party payors’ reimbursement policies may affect sales of our products that screen for more than one pathogen at
the same time, such as our APTIMA Combo 2 product for screening for the causative agents of chlamydial infections and
gonorrhea in the same sample. Third-party payors may choose to reimburse our customers on a per test basis, rather than
on the basis of the number of results given by the test. This may result in reference laboratories, public health institutions
and hospitals electing to use separate tests to screen for each disease so that they can receive reimbursement for each test
they conduct. In that event, these entities likely would purchase separate tests for each disease, rather than products that
test for more than one microorganism.
In addition, third-party payors are increasingly attempting to contain health care costs by limiting both coverage and
the level of reimbursement for medical products and services. Levels of reimbursement may decrease in the future, and
future legislation, regulation or reimbursement policies of third-party payors may adversely affect the demand for and price
levels of our products. If our customers are not reimbursed for our products, they may reduce or discontinue purchases of
our products, which would cause our revenues to decline.
We are dependent on technologies we license, and if we fail to maintain our licenses or license new technologies and
rights to particular nucleic acid sequences for targeted diseases in the future, we may be limited in our ability to
develop new products.
We are dependent on licenses from third parties for some of our key technologies. For example, our patented
Transcription-Mediated Amplification technology is based on technology we have licensed from Stanford University. We
enter into new licensing arrangements in the ordinary course of business to expand our product portfolio and access new
technologies to enhance our products and develop new products. Many of these licenses provide us with exclusive rights
to the subject technology or disease marker. If our license with respect to any of these technologies or markers is terminated
for any reason, we may not be able to sell products that incorporate the technology. In addition, we may lose competitive
advantages if we fail to maintain exclusivity under an exclusive
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license. DiagnoCure, from whom we have an exclusive license to the PCA3 gene marker for prostate cancer, has asserted
that we may have lost market exclusivity because of a failure to meet a milestone under our license and collaboration
agreement. We disagree with DiagnoCure’s assertion and discussions are ongoing with DiagnoCure on the issue, but we
can give no assurance that this matter will be resolved in our favor.
Our ability to develop additional diagnostic tests for diseases may depend on the ability of third parties to discover
particular sequences or markers and correlate them with disease, as well as the rate at which such discoveries are made. Our
ability to design products that target these diseases may depend on our ability to obtain the necessary rights from the third
parties that make any of these discoveries. In addition, there are a finite number of diseases and conditions for which our
NAT assays may be economically viable. If we are unable to access new technologies or the rights to particular sequences
or markers necessary for additional diagnostic products on commercially reasonable terms, we may be limited in our ability
to develop new diagnostic products.
Our products and manufacturing processes require access to technologies and materials that may be subject to patents
or other intellectual property rights held by third parties. We may discover that we need to obtain additional intellectual
property rights in order to commercialize our products. We may be unable to obtain such rights on commercially reasonable
terms or at all, which could adversely affect our ability to grow our business.
If we fail to attract, hire and retain qualified personnel, we may not be able to design, develop, market or sell our
products or successfully manage our business.
Competition for top management personnel is intense and we may not be able to recruit and retain the personnel we
need. The loss of any one of our management personnel or our inability to identify, attract, retain and integrate additional
qualified management personnel could make it difficult for us to manage our business successfully, attract new customers,
retain existing customers and pursue our strategic objectives. Although we have employment agreements with our
executive officers, we may be unable to retain our existing management. We do not maintain key person life insurance for
any of our executive officers.
Competition for skilled sales, marketing, research, product development, engineering, and technical personnel is
intense and we may not be able to recruit and retain the personnel we need. The loss of the services of key personnel, or
our inability to hire new personnel with the requisite skills, could restrict our ability to develop new products or enhance
existing products in a timely manner, sell products to our customers or manage our business effectively.
If a natural or man-made disaster strikes our manufacturing facilities, we will be unable to manufacture our products
for a substantial amount of time and our sales will decline.
We manufacture substantially all of our products in our two manufacturing facilities located in San Diego, California.
These facilities and the manufacturing equipment we use would be costly to replace and could require substantial lead time
to repair or replace. Our facilities may be harmed by natural or man-made disasters, including, without limitation,
earthquakes and fires, and in the event they are affected by a disaster, we would be forced to rely on third-party
manufacturers. The wildfires in San Diego in October 2007 required that we temporarily shut down our facility for the
manufacture of blood screening products. In the event of a disaster, we may lose customers and we may be unable to regain
those customers thereafter. Although we possess insurance for damage to our property and the disruption of our business
from casualties, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available
to us on acceptable terms, or at all.
If we use biological and hazardous materials in a manner that causes injury or violates laws, we may be liable for
damages.
Our research and development activities and our manufacturing activities involve the controlled use of infectious
diseases, potentially harmful biological materials, as well as hazardous materials, chemicals and various radioactive
compounds. We cannot completely eliminate the risk of accidental contamination or injury, and we could be held liable for
damages that result from any contamination or injury. In addition, we are subject to federal, state and local laws and
regulations governing the use, storage, handling and disposal of these materials and
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specified waste products. The damages resulting from any accidental contamination and the cost of compliance with
environmental laws and regulations could be significant.
The anti-takeover provisions of our certificate of incorporation and by-laws, and provisions of Delaware law, could
delay or prevent a change of control that our stockholders may favor.
Provisions of our amended and restated certificate of incorporation and amended and restated bylaws may discourage,
delay or prevent a merger or other change of control that our stockholders may consider favorable or may impede the ability
of the holders of our common stock to change our management. The provisions of our amended and restated certificate of
incorporation and amended and restated bylaws, among other things:
• divide our board of directors into three classes, with members of each class to be elected for staggered three-year
terms;
• limit the right of stockholders to remove directors;
• regulate how stockholders may present proposals or nominate directors for election at annual meetings of
stockholders; and
• authorize our board of directors to issue preferred stock in one or more series, without stockholder approval.
In addition, because we have not chosen to be exempt from Section 203 of the Delaware General Corporation Law, this
provision could also delay or prevent a change of control that our stockholders may favor. Section 203 provides that,
subject to limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15 percent of the
outstanding voting stock of a Delaware corporation shall not engage in any business combination with that corporation,
including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which
that person or its affiliate crosses the 15 percent stock ownership threshold.
If we do not effectively manage our growth, it could affect our ability to pursue opportunities and expand our
business.
Growth in our business has placed and may continue to place a significant strain on our personnel, facilities,
management systems and resources. We will need to continue to improve our operational and financial systems and
managerial controls and procedures and train and manage our workforce. We will have to maintain close coordination
among our various departments. If we fail to effectively manage our growth, it could adversely affect our ability to pursue
business opportunities and expand our business.
Information technology systems implementation issues could disrupt our internal operations and adversely affect our
financial results.
Portions of our information technology infrastructure may experience interruptions, delays or cessations of service or
produce errors in connection with ongoing systems implementation work. In particular, we implemented a new enterprise
resource planning software system to replace our various legacy systems. To more fully realize the potential of this system,
we are continually reassessing and upgrading processes and this may be more expensive, time consuming and resource
intensive than planned. Any disruptions that may occur in the operation of this system or any future systems could
increase our expenses and adversely affect our ability to report in an accurate and timely manner the results of our
consolidated operations, our financial position and cash flow and to otherwise operate our business, which could adversely
affect our financial results, stock price and reputation.
Our forecasts and other forward looking statements are based upon various assumptions that are subject to
significant uncertainties that may result in our failure to achieve our forecasted results.
From time to time in press releases, conference calls and otherwise, we may publish or make forecasts or other forward
looking statements regarding our future results, including estimated earnings per share and other operating and financial
metrics. Our forecasts are based upon various assumptions that are subject to significant uncertainties and any number of
them may prove incorrect. For example, our revenue forecasts are based in large part on data and
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estimates we receive from our collaboration partners and distributors. Our achievement of any forecasts depends upon
numerous factors, many of which are beyond our control. Consequently, our performance may not be consistent with
management forecasts. Variations from forecasts and other forward looking statements may be material and could adversely
affect our stock price and reputation.
Compliance with changing corporate governance and public disclosure regulations may result in additional
expenses.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the
Sarbanes-Oxley Act of 2002, new SEC regulations and Nasdaq Global Select Market rules, are creating uncertainty for
companies such as ours. To maintain high standards of corporate governance and public disclosure, we have invested, and
intend to invest, in all reasonably necessary resources to comply with evolving standards. These investments have resulted
in increased general and administrative expenses and a diversion of management time and attention from revenue-
generating activities and may continue to do so in the future.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our worldwide headquarters are located in our two adjacent facilities located on Genetic Center Drive in San Diego,
California. We own each of the facilities and the underlying land. The first facility is 262,000 square feet. The second facility
consists of a 292,000 square foot shell, with approximately 214,000 square feet built-out with interior improvements in the
first phase. The remaining expansion space can be used to accommodate future growth. Construction costs as of
December 31, 2008 were approximately $46.3 million for this facility. These costs were capitalized as incurred and
depreciation commenced upon our move-in during May 2006. Our subsidiary Molecular Light Technology Limited owns a
23,000 square-foot facility in Cardiff, United Kingdom.
In February 2008, we completed the purchase of the facility where we manufacture our blood screening products. We
had previously leased this facility, which consists of 93,646 square feet, located in San Diego, California, since November
1997. The purchase price was $15.7 million.
We also lease the following facility:
Leased Facility
Location S iz e Te rm of Le ase
Rehco Facility 6,438 square feet Lease currently set to expire in August 2009 with no
San Diego, California renewal options.
Item 3. Legal Proceedings
We are a party to the following litigation and are currently participating in other litigation in the ordinary course of
business. We intend to vigorously defend our interests in these matters. We expect that the resolution of these matters will
not have a material adverse effect on our business, financial condition or results of operations. However, due to the
uncertainties inherent in litigation, no assurance can be given as to the outcome of these proceedings.
Digene Corporation
In December 2006, Digene Corporation, or Digene, filed a demand for binding arbitration against F. Hoffman-La Roche
Ltd. and Roche Molecular Systems, Inc., collectively referred to as Roche, with the International Centre for Dispute
Resolution of the American Arbitration Association in New York, or ICDR. Digene’s arbitration demand challenges the
validity of the February 2005 supply and purchase agreement between us and Roche. Under the supply and purchase
agreement, Roche manufactures and supplies us with human papillomavirus, or HPV,
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oligonucleotide products. Digene’s demand asserts, among other things, that Roche materially breached a cross-license
agreement between Roche and Digene by granting us an improper sublicense and seeks a determination that the supply and
purchase agreement is null and void.
On July 13, 2007, the ICDR arbitrators granted our petition to join the arbitration. On August 27, 2007, Digene filed an
amended arbitration demand and asserted a claim against us for tortious interference with the cross-license agreement. The
arbitration hearing in this matter commenced October 27, 2008 and the presentation of evidence concluded November 10,
2008. In December 2008 and January 2009, the parties filed post-hearing briefs and closing arguments were presented on
January 30, 2009.
We believe that the supply and purchase agreement is valid and that our purchases of HPV oligonucleotide products
under the supply and purchase agreement are and will be in accordance with applicable law. However, there can be no
assurance that the matter will be resolved in our favor.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the quarter ended December 31, 2008.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
Our common stock has been traded on The Nasdaq Global Select Market since September 16, 2002 under the symbol
GPRO. Prior to that time, there was no public market for our common stock. The following table sets forth the high and low
sale prices for our common stock as reported on The Nasdaq Global Select Market for the periods indicated:
2007 High Low

First Quarter $52.86 $46.22
Second Quarter $60.50 $46.61
Third Quarter $67.67 $57.92
Fourth Quarter $71.84 $60.81
2008 High Low

First Quarter $64.68 $44.82
Second Quarter $58.71 $46.84
Third Quarter $62.39 $46.58
Fourth Quarter $54.86 $30.01
As of February 13, 2009, there were 7,084 stockholders of record of our common stock. We have not paid any cash
dividends to date and do not anticipate any being paid in the foreseeable future.
Issuer Purchases of Equity Securities
Total Number Approximate

of Shares Dollar Value
Purchased as of Shares
Part of that May Yet
Total Publicly Be Purchased
Number Average Announced Under the
of Shares Price Paid Plans or Plans or
Purchased Per Share Programs Programs
October 1-31, 2008 Repurchase Program(1) 518,100 $ 48.22 518,100 $ 215,000,000
October 1-31, 2008 Employee Transactions(2) 937 44.32 — —
November 1-30, 2008 Repurchase Program(1) 1,007,200 39.71 1,007,200 175,000,000
November 1-30, 2008 Employee Transactions(2) 3,655 46.89 — —
December 1-31, 2008 Repurchase Program(1) — — — 175,000,000
December 1-31, 2008 Employee Transactions(2) 82 37.01 — —
Repurchase Program Total(1) 1,525,300 42.60 1,525,300 —
Employee Transactions Total(2) 4,674 $ 46.20 — $ —
(1) In August 2008, our Board of Directors authorized the repurchase of up to $250.0 million of our common stock over the
two years following adoption of the program, through negotiated or open market transactions. There is no minimum or
maximum number of shares to be repurchased under the program.
(2) During the fourth quarter of 2008, we repurchased and retired 4,674 shares of our common stock, at an average price of
$46.20, withheld by us to satisfy employee tax obligations upon vesting of restricted stock granted under our 2003
Incentive Award Plan. We may make similar repurchases in the future to satisfy employee tax obligations upon vesting
of restricted stock. As of December 31, 2008, we had an aggregate of 251,731 shares of restricted stock and
80,000 shares of Deferred Issuance Restricted Stock Awards outstanding.
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Item 6. Selected Financial Data
SELECTED FINANCIAL INFORMATION

The selected financial data set forth below with respect to our consolidated statements of income for each of the three
years in the period ended December 31, 2008 and, with respect to our consolidated balance sheets, at December 31, 2008 and
2007 are derived from our consolidated financial statements that have been audited by Ernst & Young LLP, independent
registered public accounting firm, which are included elsewhere in this report. The statement of income data for the years
ended December 31, 2005 and 2004 and the balance sheet data as of December 31, 2006, 2005, and 2004 are derived from our
audited consolidated financial statements that are not included in this report. The selected financial information set forth
below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and our consolidated financial statements and related notes appearing elsewhere in this report.
2008 2007 2006 2005 2004

(In thousands, except per share data)
Statement of income data for the years ended
December 31:
Revenues:
Product sales $429,220 $370,877 $325,307 $271,650 $222,560
Collaborative research revenue 20,581 16,619 15,937 25,843 27,122
Royalty and license revenue 22,894 15,518 13,520 8,472 20,025
Total revenues 472,695 403,014 354,764 305,965 269,707
Operating expenses:
Cost of product sales 128,029 119,641 103,882 83,900 59,908
Research and development 101,099 97,144 84,545 71,846 68,482
Marketing and sales 45,850 39,928 37,096 31,145 27,191
General and administrative 52,322 47,007 44,936 32,107 31,628
Total operating expenses 327,300 303,720 270,459 218,998 187,209
Income from operations 145,395 99,294 84,305 86,967 82,498
Net income(1) $106,954 $ 86,140 $ 59,498 $ 60,089 $ 54,575
Net income per share:
Basic $ 1.99 $ 1.63 $ 1.15 $ 1.19 $ 1.10
Diluted $ 1.95 $ 1.58 $ 1.12 $ 1.15 $ 1.06
Weighted average shares outstanding:
Basic 53,708 52,975 51,538 50,617 49,429
Diluted 54,796 54,522 53,101 52,445 51,403
Balance sheet data as of December 31:
Cash, cash equivalents and short-term investments $505,178 $433,494 $289,913 $220,288 $193,826
Working capital 580,237 518,408 342,062 262,375 234,202
Total assets 869,531 789,053 623,839 510,236 411,082
Stockholders’ equity(2)(3) 813,760 738,040 570,208 447,373 361,029
(1) We adopted Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment,” on January 1, 2006. For
2005 and 2004, net income including pro forma stock-based compensation expense was $45.3 million ($0.86 per diluted
share) and $41.9 million ($0.82 per diluted share), respectively.
(2) Effective January 1, 2006, we adopted Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
Misstatements When Quantifying Misstatements in Current Year Financial Statements,” which resulted in an increase
to beginning retained earnings of $3.9 million.
(3) Effective January 1, 2007, we adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes,” which resulted in a reduction in beginning retained earnings of approximately
$1.0 million.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This report contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act
of 1995, which provides a “safe harbor” for these types of statements. To the extent statements in this report involve,
without limitation, our expectations for growth, estimates of future revenue, expenses, profit, cash flow, balance sheet items
or any other guidance on future periods, these statements are forward-looking statements. Forward-looking statements can
be identified by the use of forward-looking words such as “believes,” “expects,” “hopes,” “may,” “will,” “plans,” “intends,”
“estimates,” “could,” “should,” “would,” “continue,” “seeks,” or “anticipates,” or other similar words, including their use in
the negative. Forward-looking statements are not guarantees of performance. They involve known and unknown risks,
uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ
materially from any results, level of activity, performance or achievements expressed or implied by any forward-looking
statement. These risks and uncertainties include those under the caption “Item 1A — Risk Factors.” We assume no
obligation to update any forward-looking statements. The audited consolidated financial statements and this
Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction
with the Consolidated Financial Statements and Notes thereto for the years ended December 31, 2008, 2007 and 2006,
included elsewhere in this Annual Report on Form 10-K.
Overview
We are a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective nucleic acid
probe-based products used for the clinical diagnosis of human diseases and for screening donated human blood. We also
develop and manufacture nucleic acid probe-based products for the detection of harmful organisms in the environment and
in industrial processes. We have 26 years of research and development experience in nucleic acid detection, and our
products, which are based on our patented nucleic acid testing, or NAT, technology, are used daily in clinical laboratories
and blood collection centers throughout the world.
We have achieved strong growth since 2002 in both revenues and earnings, primarily due to the success of our clinical
diagnostic products for sexually transmitted diseases, or STDs, and blood screening products that are used to detect the
presence of human immunodeficiency virus (type 1), or HIV-1, hepatitis C virus, or HCV, hepatitis B virus, or HBV, and
West Nile Virus, or WNV. Under our collaboration agreement with Novartis Vaccines and Diagnostics, Inc., or Novartis,
formerly known as Chiron Corporation, or Chiron, we manufacture blood screening products, while Novartis is responsible
for marketing, sales and service of those products, which Novartis sells under its trademarks.
Recent Events
Financial Results
Product sales for 2008 were $429.2 million, compared to $370.9 million in 2007, an increase of 16%. Total revenues for
2008 were $472.7 million, compared to $403.0 million in 2007, an increase of 17%. Net income for 2008 was $107.0 million
($1.95 per diluted share), compared to $86.1 million ($1.58 per diluted share) in 2007, an increase of 24%.
Offer to Acquire Tepnel Life Sciences
In January 2009, we made a recommended cash offer to acquire Tepnel Life Sciences Plc, or Tepnel, a company
registered in England and Wales, for approximately $132.2 million (based on the exchange rate described in the offer). Our
offer is subject to certain conditions, including approval of the offer by a majority in number representing 75% or more in
value of Tepnel’s shareholders entitled to vote with respect to the proposed transaction. If we are successful in our
acquisition of Tepnel, we believe the acquisition will provide us access to growth opportunities in transplant diagnostics,
genetic testing and pharmaceutical services, as well as accelerate our ongoing strategic efforts to strengthen our marketing
and sales, distribution and manufacturing capabilities in the European molecular diagnostics market.
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Stock Repurchase Program
In August 2008, our Board of Directors authorized the repurchase of up to $250.0 million of our common stock over the
two years following adoption of the program, through negotiated or open market transactions. There is no minimum or
maximum number of shares to be repurchased under the program. During 2008, we repurchased and retired approximately
1,705,400 shares under this program at an average price of $43.96, or approximately $75.0 million in total.
Voluntary Counterbid to Acquire Innogenetics
In June 2008, following a bid by Solvay Pharmaceuticals, we launched a conditional counterbid to acquire 100% of the
outstanding shares, warrants and convertible bonds of Innogenetics NV, a Belgian molecular diagnostics company, for
approximately €215 million. On July 9, 2008, Solvay Pharmaceuticals submitted a higher bid to acquire Innogenetics and we
formally withdrew our counterbid. Included in our general and administrative expenses for 2008 are approximately
$2.0 million of costs associated with our counterbid to acquire Innogenetics.
Corporate Collaborations
Novartis
In January 2009, we entered into an agreement, referred to herein as Amendment No. 11, with Novartis to amend the
June 11, 1998 collaboration agreement, or the 1998 Agreement, between the parties. The effective date of Amendment No. 11
is January 1, 2009. Amendment No. 11 extends to June 30, 2025 the term of our blood screening collaboration with Novartis
under the 1998 Agreement. The 1998 Agreement was scheduled to expire by its terms in 2013.
The 1998 Agreement provided that we were solely responsible for manufacturing costs incurred in connection with the
collaboration, while Novartis was responsible for sales and marketing expenses associated with the collaboration.
Amendment No. 11 provides that, effective January 1, 2009, we will recover 50% of our costs of goods sold incurred in
connection with the collaboration. In addition, we will receive a percentage of the blood screening assay revenue generated
under the collaboration, as described in the next paragraph.
The 1998 Agreement provided that we share revenue from the sale of blood screening assays under the collaboration
with Novartis. Under the terms of the 1998 Agreement, as previously amended, our share of revenue from any assay that
included a test for HCV was 45.75%. Amendment No. 11 modifies our share of such revenues, initially reducing it to 44% in
2009. Our share of blood screening assay revenue increases in subsequent years as follows: 2010-2011, 46%; 2012-2013,
47%; 2014, 48%; and 2015, 50%. Our share of blood screening assay revenue is fixed at 50% from January 1, 2015 though the
remainder of the amended term of the agreement. Under Amendment No. 11, our share of blood screening assay revenue
from any assay that does not test for HCV remains at 50%. As discussed above, we are entitled to our designated
percentage of revenue from the sale of blood screening assays as well as the recovery of 50% of our costs of goods sold.
Amendment No. 11 also provides that Novartis will reduce the amount of time between product sales and payment of our
share of blood screening assay revenue from 45 days to 30 days.
customize our Panther instrument, a fully automated molecular testing platform now in development, for use in the blood
screening market. Novartis has also agreed to pay us a milestone payment upon the first commercial sale of the Panther
instrument. The parties will equally share any profit attributable to Novartis’ sale or lease of Panther instruments under the
collaboration. The parties have also agreed to evaluate, using our technologies, the development of companion diagnostics
for current or future Novartis medicines. Novartis has agreed to provide us with certain funding in support of initial research
and development.
3M Corporation
In June 2008, 3M Corporation, or 3M, discontinued our collaboration to develop rapid, molecular tests for healthcare-
associated infections, or HCAIs, due to technical incompatibilities between our NAT technologies and
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3M’s proprietary microfluidics instrument platform. Under the terms of the discontinued agreement, we were responsible for
assay development, which 3M funded. 3M had also agreed to pay us milestones based on technical and commercial
progress. We earned the first of these milestones, related to assay feasibility, in the fourth quarter of 2007. Based on the
termination of the agreement, in June 2008 we recorded $2.7 million in collaborative research revenue that was previously
deferred. In December 2008, we received an additional $0.4 million from 3M for costs incurred to wind down the
collaboration. We are currently exploring other opportunities to commercialize our prototype assays in the HCAI field.
Millipore Corporation
In January 2008, Millipore Corporation commenced commercialization of the first MilliPROBE assay, developed under
our industrial testing collaboration, which targets the bacterium Pseudomonas aeruginosa and is designed as an in-
process, early warning system to provide faster, more effective detection of Pseudomonas aeruginosa in purified water
used during drug production. The assay was designed to ensure a higher degree of water quality throughout manufacturing
processes where the contaminant can be a serious quality and safety concern. We believe faster detection will enable
biopharmaceutical manufacturers to reduce downstream processing risks, optimize product yields and improve final product
quality.
Product Development
In August 2008, the Food and Drug Administration, or FDA, approved the Procleix Ultrio assay to screen donated
blood, plasma, organs and tissues for HBV in individual blood donations or in pools of up to 16 blood samples on the
enhanced semi-automated system, or eSAS, and on the fully automated, high-throughput TIGRIS system. The FDA had
previously approved the assay to screen donated blood for HIV-1 and HCV.
In May 2008, we launched our APTIMA HPV assay in Europe. The APTIMA HPV assay has been CE-marked for use
on the fully automated, high-throughput TIGRIS system and our semi-automated Direct Tube Sampling, or DTS, system.
HPV assay is an amplified nucleic acid test that is designed to detect 14 types of high-risk human papillomavirus, or HPV,
that are associated with cervical cancer. More specifically, the assay is designed to detect two messenger ribonucleic acids,
or mRNAs, that are made in higher amounts when HPV infections progress toward cervical cancer. We believe that
targeting these mRNAs may more accurately identify women at higher risk of having, or developing, cervical cancer than
competing assays that target HPV deoxyribonucleic acids, or DNA. We expect to enroll approximately 7,000 women in the
trial. Actual enrollment, however, may vary based on the prevalence of cervical disease among women in the trial. The trial
enrollment and testing are expected to take approximately two years. The APTIMA HPV assay is designed to run on our
fully automated, high-throughput TIGRIS instrument system and on our future medium-throughput instrument platforms.
Final Payment Received in Litigation Settlement
In June 2006, we entered into a Short Form Settlement Agreement with Bayer HealthCare LLC and Bayer Corp.,
collectively Bayer, to resolve patent litigation we filed against Bayer in the United States District Court for the Southern
District of California and to resolve separate commercial arbitration proceedings between the parties. On August 1, 2006, the
parties signed final, definitive settlement documentation, referred to herein as the Settlement Agreement. All litigation and
arbitration proceedings between us and Bayer were terminated pursuant to the Settlement Agreement.
Pursuant to the terms of the Settlement Agreement, Bayer paid us an initial license fee of $5.0 million in August 2006.
Siemens, as assignee of Bayer, paid us $10.3 million as a one-time royalty on January 31, 2007 and $16.4 million as a one-time
royalty on January 31, 2008. As a result of these royalty payments, Siemens’ rights to the patents subject to the Settlement
Agreement are fully paid-up and royalty free.
Pursuant to the Settlement Agreement, we obtained certain contract and patent rights to distribute qualitative HIV-1
and HCV tests through October 2010. We also obtained an option to extend our rights through the life of
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certain HIV-1 and HCV patents. The option also permits us to elect to extend our rights to future instrument systems (but
not to the TIGRIS instrument). We are required to exercise the option prior to the expiration of the existing rights in October
2010 and, if exercised, pay a $1.0 million fee.
Critical accounting policies and estimates

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial
statements, which have been prepared in accordance with United States generally accepted accounting principles, or
U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, the collectability
of accounts receivable, valuation of inventories and long-lived assets, including license and manufacturing access fees,
patent costs and capitalized software, equity investments in privately held companies, income tax and the valuation of
stock-based compensation. We base our estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, which form the basis for making judgments about the carrying values of
assets and liabilities. Senior management has discussed the development, selection and disclosure of these estimates with
the Audit Committee of our Board of Directors. Actual results may differ from these estimates.
The following critical accounting policies affect the significant judgments and estimates used in the preparation of our
consolidated financial statements.
Revenue recognition
We record shipments of our clinical diagnostic products as product sales when the product is shipped and title and
risk of loss has passed and when collection of the resulting receivable is reasonably assured.
We manufacture our blood screening products according to demand specifications of our collaboration partner,
Novartis. Upon shipment to Novartis, we recognize blood screening product sales at an agreed upon transfer price and
record the related cost of products sold. Based on the terms of our collaboration agreement with Novartis, our ultimate
share of the net revenue from sales to the end user is not known until reported to us by Novartis. We then adjust blood
screening product sales upon receipt of customer revenue reports and a net payment from Novartis of amounts reflecting
our ultimate share of net sales by Novartis of these products, less the transfer price revenues previously recognized.
Product sales also include the sales or rental revenue associated with the delivery of our proprietary integrated
instrument platforms that perform our diagnostic assays. Generally, we provide our instrumentation to clinical laboratories
and hospitals without requiring them to purchase the equipment or enter into an equipment lease. Instead, we recover the
cost of providing the instrumentation in the amounts we charge for our diagnostic assays. The depreciation costs
associated with an instrument are charged to cost of product sales on a straight-line basis over the estimated life of the
instrument. The costs to maintain these instruments in the field are charged to cost of product sales as incurred.
We sell our instruments to Novartis for use in blood screening and record these instrument sales upon delivery since
Novartis is responsible for the placement, maintenance and repair of the units with their customers. We also sell instruments
to our clinical diagnostics customers and record sales of these instruments upon delivery and receipt of customer
acceptance. Prior to delivery, each instrument is tested to meet our and FDA specifications, and is shipped fully assembled.
Customer acceptance of our clinical diagnostic instrument systems requires installation and training by our technical
service personnel. Generally, installation is a standard process consisting principally of uncrating, calibrating, and testing
the instrumentation.
Shipments of our blood screening products in the United States and other countries in which the products have not
received regulatory approval are recorded as collaborative research revenue. This is done because price restrictions apply
to these products prior to FDA marketing approval in the United States and similar approvals in foreign countries. Upon
shipment of FDA-approved and labeled products following commercial approval, we classify sales of these products as
product sales in our consolidated financial statements.
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We follow the provisions of Emerging Issues Task Force, or EITF, Issue No. 00-21, “Revenue Arrangements with
Multiple Deliverables,” for multiple element revenue arrangements. EITF Issue No. 00-21 provides guidance on how to
determine when an arrangement that involves multiple revenue-generating activities or deliverables should be divided into
separate units of accounting for revenue recognition purposes, and if this division is required, how the arrangement
consideration should be allocated among the separate units of accounting. If the deliverables in a revenue arrangement
constitute separate units of accounting according to the EITF Issue No. 00-21 separation criteria, the revenue-recognition
policy must be determined for each identified unit. If the arrangement is a single unit of accounting, the revenue-recognition
policy must be determined for the entire arrangement, and all non-refundable upfront license fees are deferred and
recognized as revenues on a straight-line basis over the expected term of our continued involvement in the collaborations.
We recognize collaborative research revenue over the term of various collaboration agreements, as negotiated monthly
contracted amounts are earned or reimbursable costs are incurred related to those agreements. Negotiated monthly
contracted amounts are earned in relative proportion to the performance required under the contracts. Non-refundable
license fees are recognized over the related performance period or at the time that we have satisfied all performance
obligations. Milestone payments are recognized as revenue upon the achievement of specified milestones when (i) we have
earned the milestone payment, (ii) the milestone is substantive in nature and the achievement of the milestone is not
reasonably assured at the inception of the agreement, (iii) the fees are non-refundable, and (iv) performance obligations
after the milestone achievement will continue to be funded by the collaborator at a level comparable to the level before the
milestone achievement. Any amounts received prior to satisfying our revenue recognition criteria are recorded as deferred
revenue on the consolidated balance sheet.
Royalty revenue is recognized related to the sale or use of our products or technologies under license agreements with
third parties. For those arrangements where royalties are reasonably estimable, we recognize revenue based on estimates of
royalties earned during the applicable period and adjust for differences between the estimated and actual royalties in the
following period. Historically, these adjustments have not been material. For those arrangements where royalties are not
reasonably estimable, we recognize revenue upon receipt of royalty statements from the applicable licensee. Non-refundable
license fees are recognized over the related performance period or at the time we have satisfied all performance obligations.
Valuation of inventories
We record valuation adjustments to our inventories balances for estimated excess and obsolete inventories equal to
the difference between the cost of such inventories and its usage which is based upon assumptions about future product
demand and the shelf-life and expiration dates for finished goods and materials used in the manufacturing process. We
operate in an environment that is regulated by the FDA and other governmental agencies that may place restrictions on our
ability to sell our products in the marketplace if certain compliance requirements are not met. We have made assumptions
that are reflected in arriving at our net inventories value based on information currently available to us. If future product
demand, regulatory constraints or other market conditions are less favorable than those projected by management,
additional inventories valuation reserves may be required.
We also manufacture products to conduct developmental evaluations and clinical trials, and to validate our
manufacturing practices prior to receiving regulatory clearance for commercial sale of our products. In these circumstances,
uncertainty exists regarding our ability to sell these products until the FDA or other governing bodies commercially
approve them. Accordingly, the manufacturing costs of these items in inventories are recorded as research and
development, or R&D, expense. In cases where we maintain current approved products for further development evaluations,
we may also provide valuation allowances for these inventories due to the historical uncertainties associated with regulated
product introductions into other markets. To the extent any of these products are sold to end users, we record revenues and
reduce inventories reserves that are directly applicable to such products.
For 2008, 2007 and 2006, total gross charges to our inventories reserves have not impacted gross margin, as a
percentage of sales, by more than 1.8%. We believe that similar charges to estimated inventories reserves, and the related
effect on gross margins, are reasonably likely in the future. Historically, changes to inventories valuation reserves in
subsequent periods have not materially affected cost of product sales.
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Valuation of goodwill and long-lived assets
We assess the impairment of goodwill and long-lived assets whenever events or changes in circumstances indicate
that the carrying value may not be recoverable. Impairment is reviewed at least annually, generally in the fourth quarter of
each year.
Factors we consider important that could trigger an impairment, include the following:
• Significant underperformance relative to historical or projected future operating results;
• Significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
• Significant negative industry or economic trends;
• Significant declines in our stock price for a sustained period; and
• Decreased market capitalization relative to net book value.
When there is an indication that the carrying value of goodwill or a long-lived asset may not be recoverable based
upon the existence of one or more of the above indicators, an impairment loss is recognized if the carrying amount exceeds
its fair value.
Our impairment analyses require management to make assumptions and to apply judgment to estimate future cash
flows and asset fair values, including estimating the profitability of future business strategies. We have not made any
material changes in our impairment assessment methodology during the past three fiscal years. We do not believe there is a
reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived
asset impairment losses. However, if actual results are not consistent with our estimates and assumptions used in
estimating future cash flows and asset fair values, we may be exposed to losses that could be material.
Capitalized software costs
We capitalize costs incurred in the development of computer software related to products under development after
establishment of technological feasibility in accordance with Statement of Financial Accounting Standards, or SFAS,
No. 86, “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed.” These capitalized
costs are recorded at the lower of unamortized cost or net realizable value and are amortized over the estimated life of the
related product.
At December 31, 2008, capitalized software development costs related to products for use on our TIGRIS instrument
totaled $13.4 million, net of accumulated amortization. We began amortizing the capitalized software costs on a straight-line
basis over 120 months in May 2004, coinciding with the general release of TIGRIS instruments to our customers.
Income taxes
Our income tax returns are based on calculations and assumptions that are subject to examination by various tax
authorities. While we believe we have appropriate support for the positions taken on our tax returns, we regularly assess
the potential outcomes of these examinations and any future examinations in determining the adequacy of our provision for
income taxes. As part of our assessment of potential adjustments to our tax returns, we increase our current tax liability to
the extent an adjustment would result in a cash tax payment or decrease our deferred tax assets to the extent an adjustment
would not result in a cash tax payment. We review, at least quarterly, the likelihood and amount of potential adjustments
and adjust the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise
to a revision become probable and estimable. Although we believe that the estimates and assumptions supporting our
assessments are reasonable, adjustments could be materially different from those that are reflected in historical income tax
provisions and recorded assets and liabilities.
We regularly review our deferred tax assets for recoverability and establish a valuation allowance based on historical
taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and
the implementation of tax-planning strategies.
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Stock-based compensation
We grant options to purchase our common stock to our employees and directors under our equity compensation
plans. Eligible employees can also purchase shares of our common stock at 85% of the lower of the fair market value on the
first or the last day of each six-month offering period under our Employee Stock Purchase Plan, or ESPP. The benefits
provided under these plans are share-based payments subject to the provisions of revised SFAS No. 123(R), “Share-Based
Payment.” Under SFAS No. 123(R), stock-based compensation cost is measured at the grant date, based on the estimated
fair value of the award, and is recognized as expense over the employee’s requisite service period. We have no awards with
market or performance conditions. We adopted the provisions of SFAS No. 123(R) on January 1, 2006, using a modified
prospective application. Accordingly, prior periods have not been revised for comparative purposes. Stock-based
compensation expense recognized is based on the value of share-based payment awards that are ultimately expected to
vest, which coincides with the award holder’s requisite service period.
We estimate the value of our share-based payment awards using the Black-Scholes-Merton option-pricing model, and
amortize all new grants as expense on a straight-line basis over the vesting period. Also, a portion of these costs are
capitalized into inventories on our balance sheet, and are recognized as expense when the related products are sold.
Our stock options and the option component of our ESPP shares have characteristics significantly different from those
of traded options, and changes in the assumptions can materially affect the fair value estimates. Because valuation model
assumptions are subjective, in our opinion, existing valuation models, including the Black-Scholes-Merton model, may not
provide reliable measures of the fair values of our share-based payment awards. There is not currently a generally accepted
market-based mechanism or other practical application to verify the reliability and accuracy of the estimates stemming from
these valuation models. Although we estimate the fair value of employee share-based payment awards in accordance with
SFAS No. 123(R) and the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107, or SAB No. 107, the
option-pricing model we use may not produce a value that is indicative of the fair value achieved in a willing buyer/willing
seller market transaction.
The determination of fair value of share-based payment awards on the date of grant using the Black-Scholes-Merton
model is affected by our stock price and the implied volatility on our traded options, as well as the input of other subjective
assumptions. These assumptions include, but are not limited to, the expected term of stock options and our expected stock
price volatility over the term of the awards. We use a blend of historical and implied volatility for the expected volatility
assumption. We believe this not only takes into account past experience, but also expectations of how future volatility will
differ from historical volatility. For purposes of estimating the fair value of stock options granted to employees during the
year ended December 31, 2008, we used a weighted average stock price volatility of 34%. If our stock price volatility
assumptions were to increase 25% to 42%, the weighted average estimated fair value of stock options granted during the
year ended December 31, 2008 would increase by $3.45 per share, or 19%.
The expected term of stock options granted represents the period of time that they are expected to be outstanding. We
use a midpoint scenario method, which assumes that all vested, outstanding options are settled halfway between the date
of measurement and their expiration date. The calculation also leverages the history of actual exercises and post-vesting
cancellations. For purposes of estimating the fair value of stock options granted to employees during the year ended
December 31, 2008 we used an expected term of 4.2 years. If our expected term were to increase by one year to 5.2 years, the
weighted average estimated fair value of stock options granted during the year ended December 31, 2008 would increase by
$2.29 per share, or 12%.
SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent
periods if actual forfeitures differ from those estimates. We assess the forfeiture rate on a quarterly basis and revise the rate
when deemed necessary.
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Adoption of recent accounting pronouncements
SFAS No. 157

Effective January 1, 2008, we adopted SFAS No. 157, “Fair Value Measurements,” for financial assets and liabilities
measured at fair value. SFAS No. 157 defines fair value, expands disclosure requirements around fair value and specifies a
hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or
unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect
our market assumptions. These two types of inputs create the following fair value hierarchy:
• Level 1 — Quoted prices for identical instruments in active markets.
• Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments
in markets that are not active; and model-derived valuations in which all significant inputs and significant value
drivers are observable in active markets.
• Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value
drivers are unobservable.
This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable
inputs when determining fair value. A financial instrument’s categorization within the valuation hierarchy is based upon the
lowest level of input that is significant to the fair value measurement.
Following is a description of our valuation methodologies used for instruments measured at fair value. Where
appropriate, the description includes details of the valuation models, the key inputs to those models, as well as any
significant assumptions.
Available-for-sale securities
Our available-for-sale securities are comprised of tax advantaged municipal securities and money market funds. When
available, we generally use quoted market prices to determine fair value, and classify such items as Level 1. If quoted market
prices are not available, prices are determined using prices for recently traded financial instruments with similar underlying
terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at
commonly quoted intervals. We classify such items as Level 2. At December 31, 2008, we reported $15.5 million and
$449.7 million of assets measured at fair value on a recurring basis as Level 1 and 2, respectively.
Equity investment in private company

In 2006, we invested in Qualigen, Inc., or Qualigen, a private company. The valuation of investments in non-public
companies requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity
and the long-term nature of such assets. Our equity investments in private companies are valued initially based upon the
transaction price under the cost method of accounting. Such instruments are not measured at fair value on an ongoing basis
but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). At
December 31, 2008, we reported $5.4 million, or 1.1%, of assets measured at fair value on a non-recurring basis as Level 3 in
the fair value hierarchy.
We record impairment charges when we believe an investment has experienced a decline that is other-than-temporary.
The determination that a decline is other-than-temporary is, in part, subjective and influenced by many factors. Future
adverse changes in market conditions or poor operating results of investees could result in losses or an inability to recover
the carrying value of the investments, thereby possibly requiring impairment charges in the future. When assessing
investments in private companies for an other-than-temporary decline in value, we consider many factors including, but not
limited to, the following: the share price from the investee’s latest financing round, the performance of the investee in
relation to its own operating targets and its business plan, the investee’s revenue and cost trends, the investee’s liquidity
and cash position, including its cash burn rate, and market acceptance of the investee’s products and services. From time to
time, we may consider third party evaluations or valuation reports. We also consider new products and/or services that the
investee may have forthcoming, any significant news
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specific to the investee, the investee’s competitors and/or industry and the outlook of the overall industry in which the
investee operates. In the event our judgments change as to other-than temporary declines in value, we may record an
impairment loss, which could have an adverse impact on our results of operations.
During the third quarter of 2008, we received financial statements from Qualigen that indicated potential issues towards
the execution of their long-term sales plans. As a result, with the consultation and assistance of a third party valuation
company, and the support of Qualigen management, we performed a valuation of Qualigen. The valuation of our investment
was based upon several factors and included both a market approach and an income (discounted cash flow method)
approach. The range of these two approaches resulted in a potential value of our investment between $4.2 million and
$6.6 million. We concluded that an equal weighting of the market and income methods was appropriate and as a result of
this valuation our ownership of Qualigen was valued at approximately $5.4 million. We believe that the decline in the value
of this investment from our initial cost basis was an other-than-temporary impairment of our investment and thus we
recorded an impairment charge of $1.6 million to write down the carrying value of our equity interest. This amount is
included in “Other income/(expense)” on the consolidated statements of income.
SFAS No. 159

Effective January 1, 2008, we adopted SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities — Including an amendment of FASB Statement No. 115,” which expands the use of fair value accounting but
does not affect existing standards that require assets or liabilities to be carried at fair value. Under SFAS No. 159, a company
may elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities,
equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm commitments
for financial instruments that otherwise would not be recognized at inception and non-cash warranty obligations where a
warrantor is permitted to pay a third party to provide the warranty goods or services. If the use of fair value is elected, any
upfront costs and fees related to the item must be recognized in earnings and cannot be deferred (e.g., debt issue costs).
The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has
similar instruments that it elects not to measure based on fair value. At the adoption date, unrealized gains and losses on
existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings.
Subsequent to the adoption of SFAS No. 159, changes in fair value are recognized in earnings. During 2008, we did not elect
fair value as an alternative measurement for any financial instruments not previously carried at fair value.
EITF Issue No. 07-3

Effective January 1, 2008, we adopted EITF Issue No. 07-3, “Accounting for Non-Refundable Payments for Goods or
Services Received for Use in Future Research and Development Activities.” EITF Issue No. 07-3 requires that non-
refundable advance payments for goods or services that will be used or rendered for future research and development
activities be deferred and capitalized and recognized as an expense as the goods are delivered or the related services are
performed. There was no material financial statement impact as a result of adoption.
Pending adoption of recent accounting pronouncements
SFAS No. 141(R)

In December 2007, the Financial Accounting Standards Board, or FASB, issued SFAS No. 141(R), “Business
Combinations.” SFAS No. 141(R) changes the requirements for an acquirer’s recognition and measurement of the assets
acquired and liabilities assumed in a business combination, including the treatment of contingent consideration, pre-
acquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition,
under SFAS No. 141(R), changes in an acquired entity’s deferred tax assets and uncertain tax positions after the
measurement period will impact income tax expense. This statement is effective with respect to business combination
transactions for which the acquisition date is after December 31, 2008.
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SFAS No. 160

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements (an
amendment of Accounting Research Bulletin, or ARB, No. 51).” SFAS No. 160 requires that noncontrolling (minority)
interests be reported as a component of equity, that net income attributable to the parent and to the non-controlling interest
be separately identified in the income statement, that changes in a parent’s ownership interest while the parent retains its
controlling interest be accounted for as equity transactions, and that any retained noncontrolling equity investment upon
the deconsolidation of a subsidiary be initially measured at fair value. This statement is effective for fiscal years beginning
after December 31, 2008, and shall be applied prospectively. However, the presentation and disclosure requirements of
SFAS No. 160 are required to be applied retrospectively for all periods presented. The retrospective presentation and
disclosure requirements of this statement will be applied to any prior periods presented in financial statements for the fiscal
year ending December 31, 2009, and later periods during which we have a consolidated subsidiary with a noncontrolling
interest. As of December 31, 2008, we do not have any consolidated subsidiaries in which there is a noncontrolling interest.
EITF Issue No. 07-1

In November 2007, the FASB ratified EITF Issue No. 07-1, “Accounting for Collaborative Agreements Related to the
Development and Commercialization of Intellectual Property.” EITF Issue No. 07-1 defines collaborative agreements as a
contractual arrangement in which the parties are active participants to the arrangement and are exposed to the significant
risks and rewards that are dependent on the ultimate commercial success of the endeavor. Additionally, it requires that
revenue generated and costs incurred on sales to third parties as it relates to a collaborative agreement be recognized as
gross or net based on EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent.” Essentially,
this requires the party that is identified as the principal participant in a transaction to record the transaction on a gross basis
in its financial statements. It also requires payments between participants to be accounted for in accordance with already
existing generally accepted accounting principles, unless none exist, in which case a reasonable, rational, consistent method
should be used. We will adopt this guidance effective January 1, 2009 for all collaboration agreements existing as of that
date. We do not believe that the adoption of EITF Issue No. 07-1 will have a material impact on our financial statements, as
we believe all collaboration agreements are currently in compliance with this standard.
Results of Operations
Amounts and percentages in the following tables and throughout our discussion and analysis of financial conditions
and results of operations may reflect rounding adjustments. Percentages have been rounded to the nearest whole
percentage.
Years Ended December 31, % Change

(Dollars in millions) 2008 2007 2006 2008/2007 2007/2006
Product Sales $429.2 $370.9 $325.3 16% 14%
As a percent of total revenues 91% 92% 92%
Our primary source of revenue comes from product sales, which consist primarily of the sale of clinical diagnostic and
blood screening products in the United States. Our clinical diagnostic products include our APTIMA, PACE, AccuProbe
and Amplified Mycobacterium Tuberculosis Direct Test product lines. The principal customers for our clinical diagnostics
products include large reference laboratories, public health institutions and hospitals. The blood screening assays and
instruments we manufacture are marketed worldwide through our collaboration with Novartis under the Procleix and Ultrio
trademarks.
We recognize product sales from the manufacture and shipment of tests for screening donated blood at the contractual
transfer prices specified in our collaboration agreement with Novartis for sales to end-user blood bank facilities located in
countries where our products have obtained governmental approvals. Blood screening product
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sales are then adjusted monthly corresponding to Novartis’ payment to us of amounts reflecting our ultimate share of net
revenue from sales by Novartis to the end user, less the transfer price revenues previously recorded. Net sales are
ultimately equal to the sales of the assays by Novartis to third parties, less freight, duty and certain other adjustments
specified in our collaboration agreement with Novartis multiplied by our share of the net revenue.
Product sales increased 16% in 2008 from 2007. The $58.3 million increase was primarily attributed to $31.9 million in
higher blood screening assay sales and $29.6 million in higher APTIMA assay sales, partially offset by a $6.6 million
decrease in PACE product sales as customers continue to convert to the more sensitive amplified APTIMA product line.
Diagnostic product sales, including assay, instrument, and ancillary sales, represented $222.9 million, or 52% of
product sales in 2008, compared to $199.2 million, or 54% of product sales in 2007. This $23.7 million increase was primarily
driven by volume gains in our APTIMA product line as the result of PACE conversions, market share gains we attribute to
the superior clinical performance of our assay and the availability of our fully automated TIGRIS instrument. Overall
APTIMA growth was partially offset by a $6.6 million decrease in PACE product sales as customers continue to convert to
the more sensitive amplified APTIMA product line. In 2008, APTIMA sales were approximately 87% of our STD product
sales versus PACE sales of 13%. In 2007, APTIMA represented 82% of STD product sales, and PACE 18%. Average pricing
in 2008 related to our APTIMA products decreased approximately 3% from 2007 primarily related to strong unit growth in
our corporate account sector. Approximately $20.3 million of our diagnostic product sales are denominated in currencies
other than the U.S. dollar. In 2008, we estimate that the growth of our diagnostic product sales over 2007 was negatively
affected by $0.3 million as the result of a stronger average U.S. dollar versus foreign currencies.
Blood screening related sales, including assay, instrument, and ancillary sales, represented $206.3 million, or 48% of
product sales in 2008, compared to $171.7 million, or 46% of product sales in 2007. This $34.6 million increase was principally
attributed to the March 2007 approval and commercial pricing of our WNV assay for use on the TIGRIS instrument, as well
as international expansion of Procleix Ultrio sales by Novartis. In 2008, United States blood donation volumes screened
using the Procleix blood screening family of assays increased 4% over 2007 levels, while the related pricing increased 6%.
International revenues increased as the Procleix Ultrio product further penetrated international markets. Included in the
blood screening results for 2008 was a one-time $2.6 million benefit related to an adjustment to service costs previously
deducted by Novartis prior to arriving at our net share of revenue under the collaboration. In addition, we estimate that
$5.0 million of the growth in 2008 over 2007 was related to foreign currency gains associated with favorable exchange rates,
primarily the weaker U.S. dollar versus the Euro, on revenues collected under our collaboration with Novartis.
Product sales increased 14% in 2007 from 2006. The $45.6 million increase was primarily attributed to $32.3 million in
higher APTIMA assay sales and $21.8 million in higher blood screening assay sales, partially offset by a $10.6 million
decrease in PACE product sales.
Diagnostic product sales, including assay, instrument, and ancillary sales, represented $199.2 million, or 54% of
product sales in 2007, compared to $171.2 million, or 53% of product sales in 2006. This $28.0 million increase was primarily
driven by volume gains in our APTIMA product line as the result of PACE conversions, and market share gains attributed
to the assays’ clinical performance and the availability of our fully automated TIGRIS instrument. The remaining growth in
diagnostics was primarily the result of an increase in diagnostic instrumentation sales, which increased by $5.9 million from
2006 levels. Overall APTIMA growth was partially offset by a related $10.6 million decrease in PACE product sales as
customers converted to the more sensitive amplified APTIMA product line. In general, the price of our amplified APTIMA
test is twice that of our non-amplified PACE product, thus the conversion from PACE to APTIMA drives an overall increase
in product sales even if underlying testing volumes remain the same. In 2007, APTIMA sales were approximately 82% of our
STD product sales versus PACE sales of 18%. In 2006, APTIMA represented 72% of STD product sales, and PACE 28%.
Average pricing in 2007 related to our primary APTIMA products remained consistent with 2006 levels.
In 2006, our WNV assay was approved on our semi-automated instrument system. As a result, revenues from the sale
of our WNV assay began to be recorded as product sales at higher commercial prices. Prior to approval,
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revenues were recorded as collaborative research revenues, which were solely based upon cost recovery pricing. In 2006,
we recorded approximately $9.2 million of WNV sales as collaborative research revenue. In 2007, the increase in WNV
product sales was $14.8 million over 2006 levels as a result of a full year of recognizing revenue as product sales and higher
pricing associated with post-approval commercial pricing. In addition, in 2007, aggregate product sales related to sales of
our Procleix HIV-1/HCV assay and our Ultrio assay, which includes an assay for HBV that is combined in one test with the
HIV-1/HCV assay, increased by $7.0 million over 2006 levels, primarily attributable to an increase in international testing
volumes and higher world wide shipment volumes.
Blood screening related sales, including assay, instrument, and ancillary sales, represented $171.7 million, or 46% of
product sales in 2007, compared to $154.1 million, or 47% of product sales in 2006. The $17.6 million increase in blood
screening sales during 2007 was principally attributed to the approval and commercial launch of our WNV assay for use on
the TIGRIS instrument, as well as international expansion of Procleix Ultrio sales. Our share of blood screening revenues is
based upon sales of assays by Novartis, on blood donation levels and the related price per donation. In 2007, United States
blood donation volumes screened using the Procleix HIV-1/HCV assay were relatively consistent with 2006 levels, as was
the related pricing. International revenues increased as blood donations screened using either the Procleix HIV-1/HCV
assay or the Procleix Ultrio assay grew approximately 7% from 2006 levels, as the Procleix Ultrio product further penetrated
international markets. Partially offsetting the growth of WNV and the Procleix and Ultrio products in 2007 was a reduction in
the sales of blood screening instrumentation, which declined by $4.2 million from 2006 levels. The decline in the sale of
blood screening instrumentation was primarily driven by a decrease in the sales of spare parts and components for the
TIGRIS system, as Novartis began to acquire these parts and components directly from the manufacturer of the TIGRIS
instrument in early 2007.

Collaborative Research Revenue $20.6 $16.6 $16.0 24% 4%
We recognize collaborative research revenue over the term of various collaboration agreements, as negotiated monthly
contracted amounts are earned or reimbursable costs are incurred related to those agreements. Negotiated monthly
contracted amounts are earned in relative proportion to the performance required under the contracts. Non-refundable
license fees are recognized over the related performance period or at the time that we have satisfied all performance
obligations. Milestone payments are recognized as revenue upon the achievement of specified milestones. In addition, we
record as collaborative research revenue shipments of blood screening products in the United States and other countries in
which the products have not received regulatory approval. This is done because restrictions apply to these products prior
to FDA marketing approval in the United States and similar approvals in foreign countries.
The costs associated with collaborative research revenue are based on fully burdened full time equivalent rates and are
reflected in our consolidated statements of income under the captions “Research and development,” “Marketing and sales”
and “General and administrative,” based on the nature of the costs. We do not separately track all of the costs applicable to
collaborations and, therefore, are not able to quantify all of the direct costs associated with collaborative research revenue.
Collaborative research revenue increased 24% in 2008 from 2007. The $4.0 million increase was primarily due to the
$10.0 million milestone payment received from Novartis based on the FDA’s approval of our TIGRIS instrument system for
use with our Ultrio assay, and an increase of $3.6 million from 3M for the development of rapid nucleic acid tests to detect
certain dangerous healthcare-associated infections. This collaboration with 3M was discontinued in June 2008. These
increases were partially offset by $3.6 million in lower funding revenues from the United States Army Medical Research and
Material Command for the development of improved cancer diagnostic assays, as that contract expired in the fourth quarter
of 2007, a $1.5 million decrease in funding revenues from Novartis for Ultrio assay development as that program nears
completion, and a $3.9 million decrease in funding from 3M related to our food testing program that was discontinued in
November 2007.
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Collaborative research revenue increased 4% in 2007 from 2006. The $0.6 million increase from the prior year was
primarily the result of a $4.1 million increase in reimbursement from Novartis for blood screening development programs, a
$3.9 million increase from 3M for work on the food testing and healthcare-associated infection programs, and a $3.6 million
increase from the United States Army Medical Research and Material Command for work on the development of improved
cancer diagnostic assays. These increases were partially offset by a $9.2 million decrease in revenue from Novartis related
to deliveries of WNV tests on a “cost recovery” basis until May 2006 (now recorded as product sales) and a $1.4 million
decrease in reimbursement from one of our industrial partners for certain assay development costs.
Collaborative research revenue tends to fluctuate based on the amount of research services performed, the status of
projects under collaboration and the achievement of milestones. Due to the nature of our collaborative research revenues,
results in any one period are not necessarily indicative of results to be achieved in the future. Our ability to generate
additional collaborative research revenues depends, in part, on our ability to initiate and maintain relationships with
potential and current collaborative partners and the advancement of related collaborative research and development. These
relationships may not be established or maintained and current collaborative research revenue may decline.

Royalty and License Revenue $22.9 $15.5 $13.5 48% 15%
We recognize revenue for royalties due to us upon the manufacture, sale or use of our products or technologies under
license agreements with third parties. For those arrangements where royalties are reasonably estimable, we recognize
revenue based on estimates of royalties earned during the applicable period and adjust for differences between the
estimated and actual royalties in the following period. Historically, these adjustments have not been material. For those
arrangements where royalties are not reasonably estimable, we recognize revenue upon receipt of royalty statements from
the applicable licensee. Non-refundable license fees are recognized over the related performance period or at the time that
we have satisfied all performance obligations.
Our royalty and license revenue during 2008 and 2007 consisted primarily of settlement payments received from
Siemens, as an assignee of Bayer ($16.4 million in 2008 and $10.3 million in 2007). Siemens has now paid all amounts due to
us under the Settlement Agreement, and thus these payments will not recur in future periods. The $7.4 million increase in
royalty and license revenue during 2008 from 2007 was primarily the result of $6.1 million in higher amounts received from
Bayer under the Settlement Agreement, $0.6 million in higher blood plasma royalties from Novartis, and $0.5 million in higher
royalties from Becton Dickinson.
Royalty and license revenue increased 15% in 2007 from 2006. The $2.0 million increase in royalty and license revenue
in 2007 was principally attributed to a $5.3 million increase in license fee revenue from Bayer pursuant to the terms of our
settlement agreement, partially offset by a decrease of $3.3 million, the amount received from bioMérieux in 2006 for out-
licensing of RNA technology for which options on additional targets were not exercised in 2007.
Royalty and license revenue may fluctuate based on the nature of the related agreements and the timing of receipt of
license fees. Results in any one period are not necessarily indicative of results to be achieved in the future. In addition, our
ability to generate additional royalty and license revenue will depend, in part, on our ability to
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market and capitalize on our technologies. We may not be able to do so and future royalty and license revenue may decline.

Cost of Product Sales $128.0 $119.6 $103.9 7% 15%
Gross profit margin as a percent of product sales 70% 68% 68%
Cost of product sales includes direct material, direct labor, and manufacturing overhead associated with the production
of inventories. Other components of cost of product sales include royalties, warranty costs, instrument and software
amortization and allowances for scrap.
In addition, we manufacture significant quantities of materials, development lots, and clinical trial lots of product prior
to receiving FDA approval for commercial sale. The majority of costs associated with development lots are classified as
R&D expense. The portion of a development lot that is manufactured for commercial sale outside the United States is
capitalized to inventory and classified as cost of product sales upon shipment.
Our blood screening manufacturing facility has operated, and will continue to operate, below its potential capacity for
the foreseeable future. A portion of this available capacity is utilized for R&D activities as new product offerings are
developed for commercialization. As a result, certain operating costs of our blood screening manufacturing facility, together
with other manufacturing costs for the production of pre-commercial development lot assays that are delivered under the
terms of an Investigational New Drug, or IND, application, are classified as R&D expense prior to FDA approval.
Cost of sales increased 7% in 2008 from 2007. Of this $8.4 million increase, $7.3 million was attributed to increased
shipments of blood screening products, $6.2 million was attributed to increased APTIMA sales, $1.8 million was attributed
to increased amortization of capitalized intangible assets, $1.5 million was attributed to higher instrument sales and
instrument related costs, and $0.7 million was attributed to increased viral sales. These 2008 increases were partially offset
by a $9.3 million benefit versus 2007 as a result of higher production volumes.
Cost of product sales increased 15% in 2007 from 2006. The $15.7 million increase in cost of product sales was primarily
due to $5.9 million in higher Procleix Ultrio assay shipments, $5.1 million in higher APTIMA shipments, $2.0 million in higher
WNV assay shipments, and $1.7 million in higher instrument amortization costs associated with a higher installed base of
instruments.
Our gross profit margin as a percentage of product sales increased to 70% in 2008 from 68% in 2007 and 2006. The
increase in gross profit margin percentage was principally attributed to increased sales of blood screening assays by
Novartis and increased APTIMA sales, which have higher margins, and favorable changes in production volumes, partially
offset by increased instrument sales, which have lower margins, and instrument related costs and increased amortization of
capitalized intangible assets.
Cost of product sales may fluctuate significantly in future periods based on changes in production volumes for both
commercially approved products and products under development or in clinical trials. Cost of product sales are also
affected by manufacturing efficiencies, allowances for scrap or expired materials, additional costs related to initial
production quantities of new products after achieving FDA approval, and contractual adjustments, such as instrumentation
costs, instrument service costs and royalties.
A portion of our blood screening revenues is from sales of TIGRIS instruments to Novartis, which totaled $12.4 million,
$9.4 million, and $9.7 million during 2008, 2007 and 2006, respectively. Under our collaboration agreement with Novartis, we
sell TIGRIS instruments to them at prices that approximate cost. These instrument sales, therefore, negatively impact our
gross margin percentage in the periods when they occur, but are a necessary precursor to increased sales of blood
screening assays in the future.
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Certain blood screening markets are trending from pooled testing of large numbers of donor samples to smaller pool
sizes. A greater number of tests will be required in markets where smaller pool sizes are required. The greater number of tests
required for smaller pool sizes will increase our variable manufacturing costs, including costs of raw materials and labor. In
2008, we were responsible for 100% of the cost of goods sold pursuant to our collaboration agreement with Novartis.
Effective January 1, 2009, our amended collaboration agreement with Novartis provides that we will recover 50% of our
costs of goods sold incurred in connection with the collaboration. If the price per donor or total sales volume does not
increase in line with the increase in our total variable manufacturing costs, our gross profit margin percentage from sales of
blood screening assays will decrease upon adoption of smaller pool sizes. We have already observed this trend with
respect to certain sales internationally. We are not able to predict accurately the ultimate extent to which our gross profit
margin percentage will be negatively affected as a result of smaller pool sizes, because we do not know the ultimate selling
price that Novartis will charge to the end user or the degree to which smaller pool size testing will be adopted across the
markets in which we sell our products.

Research and Development $101.1 $97.2 $84.6 4% 15%
We invest significantly in R&D as part of our ongoing efforts to develop new products and technologies. Our R&D
expenses include the development of proprietary products and instrument platforms, as well as expenses related to the
development of new products and technologies in collaboration with our partners. R&D spending is dependent on the
status of projects under development and may vary substantially between quarterly or annual reporting periods. We expect
to incur additional costs associated with our research and development activities. The additional costs include the
development and validation activities for our PCA3 and HPV assays, development of Panther, our fully automated system
for low and mid-volume laboratories, assay integration activities for Panther, development and validation of assays for
blood screening and industrial applications, and on-going research and early stage development activities. Although total
R&D dollars may increase over time, we expect our R&D expenses as a percentage of total revenues to decline in future
years.
R&D expenses increased 4% in 2008 from 2007. The $3.9 million increase was primarily due to a $4.8 million increase in
clinical evaluations and outside services associated with our Procleix Ultrio yield studies, for which we received blood
screening approval in August 2008, HPV trials which began in March 2008, as well as our license agreement with Xceed,
$2.7 million in higher amortization charges due in part to an impairment charge associated with our Corixa license agreement,
and an increase of $1.3 million in salaries and personnel-related expenses. These increases were partially offset by a
$3.0 million decrease in development lot activity, primarily related to timing of our HPV diagnostic product, and a $0.8 million
decrease in professional fees for consultant services no longer utilized in 2008.
R&D expenses increased 15% in 2007 from 2006. The $12.6 million increase in R&D spending was primarily due to
$4.1 million in oligonucleotide purchases for development lot builds, $2.9 million in higher allocations of facilities and
information systems, $2.4 million in higher outside services to support development projects such as industrial applications,
a $1.6 million increase in salaries and personnel-related expenses due to higher staffing levels, a $1.4 million increase in
depreciation and amortization due to replacement of equipment in 2007 and a $1.3 million increase in professional fees.
These increases were partially offset by a $3.0 million decrease in stock-based compensation expense due to increased
forfeitures related to employee turnover.

Marketing and Sales $45.9 $39.9 $37.1 15% 8%
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Our marketing and sales expenses include salaries and other personnel-related expenses, promotional expenses, and
outside services.
Marketing and sales expenses increased 15% in 2008 from 2007. The $6.0 million increase was primarily due to a
$3.3 million increase in salaries and personnel-related expenses resulting from the hiring of additional employees, a
$1.3 million increase in spending for marketing studies and promotional activities, and a $0.6 million increase in travel
expenses, all of which were a result of our increased international market development efforts and PCA3 and HPV market
development.
Marketing and sales expenses increased 8% in 2007 from 2006. The $2.8 million increase in marketing and sales
expenses was primarily due to a $1.6 million increase in spending for marketing research and materials related to
international expansion and $1.2 million in higher salaries and personnel-related expenses to support product sales growth,
partially offset by a $0.5 million decrease in stock-based compensation expense due to increased forfeitures related to
employee turnover.

General and Administrative $52.3 $47.0 $44.9 11% 5%
Our general and administrative, or G&A, expenses include expenses for finance, legal, strategic planning and business
development, public relations and human resources.
G&A expenses increased 11% in 2008 from 2007. The $5.3 million increase was primarily the result of a $3.6 million
increase in professional fees, primarily legal and business development expenses, a $2.1 million increase in salaries and
personnel-related expenses and a $1.3 million increase in commercial and investment banking charges, primarily attributable
to our counterbid to acquire Innogenetics. These increases were partially offset by a $1.2 million decrease in relocation
expenses associated with senior level personnel hired in the prior year.
G&A expenses increased 5% in 2007 from 2006. The $2.1 million increase in G&A expenses was primarily the result of a
$5.3 million increase in salaries and personnel-related expenses due principally to increased personnel and a $0.7 million
increase in service contracts due principally to software and equipment upgrades. These increases were offset by a
$2.4 million decrease in legal fees, as 2006 included fees associated with our two patent infringement lawsuits against Bayer,
including a $2.0 million payment to our outside litigation counsel in connection with the Bayer settlement, as well as a
$1.3 million decrease in stock-based compensation expense due to increased forfeitures related to employee turnover.

Interest income $16.8 $12.8 $ 8.3 31% 54%
Interest expense — — (0.1) N/M N/M
Other income / (expense) (1.3) (0.5) 0.5 160% N/M
Total other income, net $15.5 $12.3 $ 8.7 26% 41%
The $4.0 million increase in interest income in 2008 from 2007 was primarily a result of higher average balances of our
short-term investments, which on average increased by $158.1 million, or 54%. Included in the $0.8 million net increase in
other expense was a $1.6 million gain resulting from the sale of our equity interest in Molecular Profiling Institute, Inc.,
which was offset by an impairment charge of $1.6 million related to our investment in Qualigen. The remaining $0.8 million
was from realized foreign currency exchange losses.
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The $3.6 million net increase total other income, net in 2007 from 2006 was primarily due to an increase of $4.5 million in
interest income resulting from higher average balances of our short-term investments, offset by $0.9 million in realized
foreign currency exchange losses.

Income Tax Expense $ 53.9 $ 25.5 $ 33.5 111% (24)%
As a percentage of income before tax 34% 23% 36%
Income tax expense, as a percentage of pre-tax income, increased in 2008 from 2007. This increase was principally
attributed to the 2007 completion of federal and state audits of our tax returns through 2004, which resulted in $11.1 million
of net tax benefits for reserves in excess of audit adjustments.
Income tax expense decreased 24% in 2007 from 2006 and our effective tax rate decreased to 23% of 2007 pretax income,
compared to 36% of 2006 pretax income. The decrease was principally attributed to the 2007 completion of federal and state
audits noted above, and higher tax-exempt interest.
Liquidity and capital resources
Amount
Change
From 2007
2008 2007 2006 to 2008
(In thousands)
As of December 31:
Cash, cash equivalents and short-term investments $505,178 $433,494 $289,913 $ 71,684
Working capital 580,237 518,408 342,062 61,829
Current ratio 13:1 14:1 8:1 —
The primary objectives of our investment policy are liquidity and safety of principal. Consistent with these objectives,
investments are made with the goal of achieving the highest rate of return. The policy places emphasis on securities of high
credit quality, with restrictions placed on maturities and concentration by security type and issue.
Our short-term investments include tax advantaged municipal securities with a minimum Moody’s credit rating of A3
and a minimum Standard & Poor’s credit rating of A-. As of December 31, 2008, we did not hold auction rate securities. Our
investment policy limits the effective maturity on individual securities to six years and an average portfolio maturity to three
years. At December 31, 2008, our portfolios had an average term of three years and an average credit quality of AA3 as
defined by Moody’s.
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Our working capital at December 31, 2008 increased $61.8 million from December 31, 2007, primarily due to increased
cash balances generated from operations. Days’ sales outstanding, or DSO, for the year ended December 31, 2008 was flat
compared to the prior year at 28 days. Days’ sales in inventory decreased slightly to 147 days at December 31, 2008 from
153 days at December 31, 2007 due to increased sales volume and cost of product sales.
Amount
Change
From 2007
2008 2007 2006 to 2008
(In thousands)
Year Ended December 31:
Cash provided by (used in):
Operating activities $ 178,253 $ 109,584 $101,020 $ 68,669
Investing activities (139,888) (183,424) (79,208) 43,536
Financing activities (53,534) 61,812 33,153 (115,346)
Purchases of property, plant and equipment (included in
investing activities above) (39,348) (23,096) (50,760) (16,252)
Our primary source of liquidity has been cash from operations, which includes the collection of accounts and other
receivables related to product sales, collaborative research agreements, and royalty and license fees. Our primary short-term
cash needs, which are subject to change, include continued R&D spending to support new products, costs related to
commercialization of products and purchases of instrument systems, primarily TIGRIS, for placement with our customers. In
addition, we may use cash to continue the repurchase of our common stock under our stock repurchase program, as well as
for strategic purchases which may include businesses and/or technologies complimentary to our business. Certain R&D
costs may be funded under collaboration agreements with partners.
The $68.7 million increase in net cash provided by operating activities during 2008 compared to 2007 was primarily due
to $20.8 million in higher net income, a $23.6 million decrease in accounts receivable due to collections from our customers
and decreases in collaborative partner funding, a $12.1 million reduction in tax benefits from stock-based compensation, a
$9.0 million increase in inventories, an $8.5 million decrease in prepaid expenses related to higher upfront fees paid in 2007
for the purchase of TIGRIS instruments, a $6.7 million reduction of deferred revenue related to the termination of our
collaboration agreement with 3M, a $6.2 million increase in accounts payable balances related to increased cost of sales and
timing of payments, a $4.8 million increase in deferred tax assets for impairments not yet tax deductible and the excess of
current year stock-based compensation expense over the related tax deductions, a $3.5 million impairment charge associated
with our Corixa license agreement and a $2.3 million increase in amortization of premiums on investments.
The $43.5 million decrease in net cash used in investing activities during 2008 compared to 2007 was principally
attributed to a $16.3 million increase in capital expenditures and a payment of $10.0 million to Roche associated with
commercialization of our CE-marked HPV product. These increases were offset by a $65.1 million net decrease in purchases
(net of sales) of short-term investments. Capital spending increased from 2007 levels due primarily to the purchase of our
blood screening facility, which closed in the first quarter of 2008.
The $115.3 million decrease in net cash provided by financing activities during 2008 compared to 2007 was principally
attributed to $75.0 million used in 2008 to repurchase and retire 1,705,400 shares of our common stock under our stock
repurchase program and a $28.4 million decrease in proceeds from the exercise of stock options and the associated
$12.1 million decrease in excess tax benefits. We receive cash from the exercise of employee stock options and proceeds
from the sale of common stock pursuant to the ESPP. We expect fluctuations to occur throughout the year, as the amount
and frequency of stock-related transactions are dependent upon the market performance of our common stock, along with
other factors.
We have an unsecured bank line of credit agreement with Wells Fargo Bank, N.A., which expires in July 2009, under
which we may borrow up to $10.0 million, subject to a “borrowing base formula,” at the bank’s prime rate, or
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at LIBOR plus 1.0%. At December 31, 2008, we did not have any amounts outstanding under the bank line and we have not
taken advances against the line since inception.
We believe that our available cash balances, anticipated cash flows from operations, proceeds from stock option
exercises and available line of credit will be sufficient to satisfy our operating needs for the foreseeable future. However, we
operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of
expected future cash receipts and expenditures. Accordingly, we may in the future be required to raise additional funds
through the sale of equity or debt securities or from additional credit facilities. Additional capital, if needed, may not be
available on satisfactory terms, if at all. Further, debt financing may subject us to covenants restricting our operations.
We may from time to time consider the acquisition of businesses and/or technologies complementary to our business.
We could require additional equity or debt financing if we were to engage in a material acquisition in the future. For example,
in January 2009, we made a recommended cash offer to acquire Tepnel for approximately $132.2 million (based on the
transaction. If we are successful in our acquisition of Tepnel, we believe the acquisition will provide us access to growth
opportunities in transplant diagnostics, genetic testing and pharmaceutical services, as well as accelerate our ongoing
strategic efforts to strengthen our marketing and sales, distribution and manufacturing capabilities in the European
molecular diagnostics market.
Contractual obligations and commercial commitments
Our contractual obligations due for purchase commitments, collaborative agreements and minimum royalties as of
December 31, 2008 were as follows (in thousands):
Less than More than

Total 1 Year 1-3 Years 3-5 Years 5 Years
Material purchase commitments(1) $24,822 $ 24,822 $ — $ — $ —
Collaborative commitments(2) 5,005 1,416 1,961 250 1,378
Minimum royalty commitments(3) 1,400 175 525 350 350
Total(4) $31,227 $ 26,413 $ 2,486 $ 600 $ 1,728
(1) Amounts represent our minimum purchase commitments from key vendors for the TIGRIS and Panther instruments, as
well as raw materials used in manufacturing. Of the $24.8 million total, $15.9 million is expected to be used to purchase
TIGRIS instruments, of which we anticipate that approximately $7.0 million of instruments will be sold to Novartis. Not
included in the $24.8 million is $9.6 million expected to be used to purchase validation, pre-production and production
instruments, and associated tooling, pursuant to our development agreement with Stratec for the Panther instrument
and potential minimum purchase commitments under our supply agreement. Our obligations under the supply
agreement are contingent on successful completion of all activities under the development agreement.
(2) In addition to the minimum payments due under our collaborative agreements, we may be required to pay up to
$12.2 million in milestone payments, plus royalties on net sales of any products using specified technology. We may
also be required to pay up to $6.1 million in future development costs in the form of milestone payments.
(3) Amounts represent our minimum royalties due on the net sales of products incorporating licensed technology and
subject to a minimum annual royalty payment. During 2008, we recorded $5.2 million in royalty costs related to our
various license agreements.
(4) Does not include amounts relating to our obligations under our collaboration with Novartis, pursuant to which both
parties have obligations to each other. We are obligated to manufacture and supply blood screening assays to
Novartis, and Novartis is obligated to purchase all of the assay quantities specified on a 90-day demand forecast, due
90 days prior to the date Novartis intends to take delivery, and certain quantities specified on a rolling 12-month
forecast.
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Liabilities associated with uncertain tax positions, currently estimated at $6.2 million (including interest), are not
included in the table above as we cannot reasonably estimate when, if ever, an amount would be paid to a government
agency. Ultimate settlement of these liabilities is dependent on factors outside of our control, such as examinations by each
agency and expiration of statutes of limitation for assessment of additional taxes.
Additionally, we have liabilities for deferred employee compensation which totaled $3.7 million at December 31, 2008.
The payments related to the deferred compensation are not included in the table above because they are typically
dependent upon when certain key employees retire or otherwise leave the Company. At this time, we cannot reasonably
predict when these events may occur. Liabilities for deferred employee compensation are offset by deferred compensation
assets, which totaled $3.5 million at December 31, 2008.
We do not currently have and have never had any relationships with unconsolidated entities or financial partnerships,
such as entities often referred to as structured finance or special purpose entities, which would have been established for
the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we
do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any
financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Our exposure to market risk for changes in interest rates relates primarily to the increase or decrease in the amount of
interest income we can earn on our investment portfolio. Our risk associated with fluctuating interest income is limited to
our investments in interest rate sensitive financial instruments. Under our current policies, we do not use interest rate
derivative instruments to manage this exposure to interest rate changes. We seek to ensure the safety and preservation of
our invested principal by limiting default risk, market risk, and reinvestment risk. We mitigate default risk by investing in
short-term investment grade securities. A 100 basis point increase or decrease in interest rates would increase or decrease
our current investment balance by approximately $9.0 million. While changes in our interest rates may affect the fair value of
our investment portfolio, any gains or losses are not recognized in our statement of income until the investment is sold or if
a reduction in fair value is determined to be a permanent impairment.
Foreign Currency Exchange Risk
Although the majority of our revenue is realized in United States dollars, some portions of our revenue are realized in
foreign currencies. As a result, our financial results could be affected by factors such as changes in foreign currency
exchange rates or weak economic conditions in foreign markets. The functional currency of our wholly owned subsidiaries
Gen-Probe UK Limited and Molecular Light Technology Limited and its subsidiaries is the British pound. The functional
currency of Gen-Probe Italia S.r.l. and Gen-Probe Deutschland GmbH is the Euro. Accordingly, the balance sheet accounts
of these subsidiaries are translated into United States dollars using the exchange rate in effect at the balance sheet date and
revenue and expenses are translated using the average exchange rates in effect during the period. The gains and losses
from foreign currency translation of the financial statements of these subsidiaries are recorded directly as a separate
component of stockholders’ equity under the caption “Accumulated other comprehensive income.”
Our total payables denominated in foreign currencies as of December 31, 2008 were not material. Our receivables by
foreign currency as of December 31, 2008 reflected in U.S. dollar equivalents were as follows (in thousands):
Swiss Franc $ 16
Canadian dollars 654
Euro 1,042
British pounds 1,235
U.S. dollars 31,150
Total gross trade accounts receivable $34,097
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Under our collaboration agreement with Novartis, a growing portion of blood screening product sales is from western
European countries. As a result, our international blood screening product sales are affected by changes in the foreign
currency exchange rates of those countries where Novartis’ business is conducted in Euros or other local currencies.
Beginning in 2009, we began foreign currency hedging transactions to partially mitigate our exposure to foreign currency
exchange risks. Based on international blood screening product sales during 2008, a 10% movement of currency exchange
rates would result in a blood screening product sales increase or decrease of approximately $6.4 million annually. Similarly, a
10% movement of currency exchange rates would result in a diagnostic product sales increase or decrease of approximately
$2.2 million annually. Our exposure for both blood screening and diagnostic product sales is primarily in the United States
dollar versus the Euro, British pound, Australian dollar, and Canadian dollar. We believe that our business operations are
not significantly exposed to market risk relating to commodity prices.
Item 8. Financial Statements and Supplementary Data
Our consolidated financial statements and the Reports of Ernst & Young LLP, our Independent Registered Public
Accounting Firm, are included in this Annual Report on Form 10-K on pages F-1 through F-35.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed
in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s
rules and forms, and that such information is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of
achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required
to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design
of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over
time, a control may become inadequate because of changes in conditions, or the degree of compliance with policies or
procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to
error or fraud may occur and not be detected.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of 2008.
Changes in Internal Control Over Financial Reporting

An evaluation was also performed under the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of any change in our internal control over financial reporting that
occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting. That evaluation did not identify any change in our internal control over financial reporting
that occurred during our latest fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
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Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as
such term is defined in Exchange Act Rules 13a-15(f). All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting as of December 31, 2008 based on the framework in Internal
Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on our evaluation under the framework in Internal Control — Integrated Framework, our management
concluded that our internal control over financial reporting was effective as of December 31, 2008.
Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on the
effectiveness of our internal control over financial reporting as of December 31, 2008. This report, which expressed an
unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2008, is included
elsewhere herein.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of

Gen-Probe Incorporated:
We have audited Gen-Probe Incorporated’s internal control over financial reporting as of December 31, 2008, based on
criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria). Gen-Probe Incorporated’s management is responsible for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
In our opinion, Gen-Probe Incorporated maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2008, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of Gen-Probe Incorporated as of December 31, 2008 and 2007, and the related
consolidated statements of income, cash flows and stockholders’ equity for each of the three years in the period ended
December 31, 2008 and our report dated February 17, 2009 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
San Diego, California

February 17, 2009
80
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Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item is incorporated in this report by reference from our Proxy Statement to be filed in
connection with our 2009 Annual Meeting of Stockholders (the “Proxy Statement”).
We have adopted a code of ethics for directors, officers (including our principal executive officer, principal financial
officer and principal accounting officer) and employees, known as the Code of Ethics. The Code of Ethics is available on our
website at http://www.gen-probe.com. Stockholders may request a free copy of the Code of Ethics from:
Attention: Investor Relations
10210 Genetic Center Drive
San Diego, CA 92121-4362
(858) 410-8000
http://www.gen-probe.com
Item 11. Executive Compensation
The information required by this Item is incorporated in this report by reference from our Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information regarding our equity compensation plans is incorporated in this report by reference from our Proxy
Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
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PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Documents filed as part of this report.

1. The following financial statements of Gen-Probe Incorporated and Report of Ernst & Young LLP, Independent
Registered Public Accounting Firm, are included in this report:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets at December 31, 2008 and 2007
Consolidated Statements of Income for each of the three years in the period ended December 31, 2008
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2008
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended
December 31, 2008
Notes to Consolidated Financial Statements
2. Schedule II — Valuation and Qualifying Accounts and Reserves for each of the three years in the period ended
December 31, 2008
Financial Statement schedules. All other schedules are omitted because they are not applicable or the
required information is shown in the Financial Statements or notes thereto.
3. List of Exhibits required by Item 601 of Regulation S-K.
(b) Exhibits. See the Exhibit Index and Exhibits filed as part of this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
By: /s/ HENRY L. NORDHOFF

Henry L. Nordhoff
Chairman and Chief Executive Officer
Date: February 25, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ HENRY L. NORDHOFF Chairman and Chief Executive Officer February 25, 2009
(Principal Executive Officer)
Henry L. Nordhoff
/s/ HERM ROSENMAN Senior Vice President — Finance and Chief February 25, 2009
Financial Officer
Herm Rosenman (Principal Financial Officer and
Principal Accounting Officer)
/s/ JOHN W. BROWN Director February 25, 2009
John W. Brown
/s/ RAYMOND V. DITTAMORE Director February 25, 2009
Raymond V. Dittamore
/s/ ARMIN M. KESSLER Director February 25, 2009
Armin M. Kessler
/s/ JOHN C. MARTIN Director February 25, 2009
John C. Martin, Ph.D
/s/ PHILLIP M. SCHNEIDER Director February 25, 2009
Phillip M. Schneider
/s/ LUCY SHAPIRO Director February 25, 2009
Lucy Shapiro, Ph.D.
/s/ ABRAHAM D. SOFAER Director February 25, 2009
Abraham D. Sofaer
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CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
Page
Report of Independent Registered Public Accounting Firm F-2
Consolidated Balance Sheets at December 31, 2008 and 2007 F-3
Consolidated Statements of Income for each of the three years in the period ended December 31, 2008 F-4
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2008 F-5
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended December 31, 2008 F-6
Notes to Consolidated Financial Statements F-7
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of

Gen-Probe Incorporated:
We have audited the accompanying consolidated balance sheets of Gen-Probe Incorporated as of December 31, 2008
and 2007, and the related consolidated statements of income, cash flows and stockholders’ equity for each of the three
years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the Index at
Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Gen-Probe Incorporated at December 31, 2008 and 2007, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), Gen-Probe Incorporated’s internal control over financial reporting as of December 31, 2008, based on criteria
established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 17, 2009 expressed an unqualified opinion thereon.

February 17, 2009
F-2
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CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31,
2008 2007
AS S ETS
Current assets:
Cash and cash equivalents $ 60,122 $ 75,963
Short-term investments 445,056 357,531
Trade accounts receivable, net of allowance for doubtful accounts of $700 and $719 at
December 31, 2008 and 2007, respectively 33,397 32,678
Accounts receivable — other 2,900 11,044
Inventories 54,406 48,540
Deferred income tax — short term 7,269 8,825
Prepaid income tax 2,306 2,390
Prepaid expenses 15,094 17,505
Other current assets 6,135 4,402
Total current assets 626,685 558,878
Property, plant and equipment, net 141,922 129,493
Capitalized software, net 13,409 15,923
Goodwill 18,621 18,621
Deferred income tax — long term 12,286 7,942
License, manufacturing access fees and other assets, net 56,608 58,196
Total assets $869,531 $789,053
LIABILITIES AND S TOCKHOLDERS ’ EQUITY

Current liabilities:
Accounts payable $ 16,050 $ 11,777
Accrued salaries and employee benefits 25,093 20,997
Other accrued expenses 4,027 4,024
Income tax payable — 846
Deferred revenue — short term 1,278 2,836
Total current liabilities 46,448 40,480
Non-current income tax payable 4,773 3,958
Deferred income tax — long term 55 75
Deferred revenue — long term 2,333 4,607
Deferred compensation plan liabilities 2,162 1,893
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value per share; 20,000,000 shares authorized, none issued and outstanding — —
Common stock, $0.0001 par value per share; 200,000,000 shares authorized, 52,920,971 and
53,916,298 shares issued and outstanding at December 31, 2008 and 2007, respectively 5 5
Additional paid-in capital 382,544 415,229
Accumulated other comprehensive income 3,055 1,604
Retained earnings 428,156 321,202
Total stockholders’ equity 813,760 738,040
Total liabilities and stockholders’ equity $869,531 $789,053
F-3
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CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,

2008 2007 2006
Revenues:
Product sales $429,220 $370,877 $325,307
Collaborative research revenue 20,581 16,619 15,937
Royalty and license revenue 22,894 15,518 13,520
Total revenues 472,695 403,014 354,764
Operating expenses:
Cost of product sales 128,029 119,641 103,882
Research and development 101,099 97,144 84,545
Marketing and sales 45,850 39,928 37,096
General and administrative 52,322 47,007 44,936
Total operating expenses 327,300 303,720 270,459
Income from operations 145,395 99,294 84,305
Other income/(expense):
Interest income 16,801 12,772 8,301
Other income/(expense) (1,333) (469) 388
Total other income, net 15,468 12,303 8,689
Income before income tax 160,863 111,597 92,994
Income tax expense 53,909 25,457 33,496
Net income $106,954 $ 86,140 $ 59,498
Basic $ 1.99 $ 1.63 $ 1.15
Diluted $ 1.95 $ 1.58 $ 1.12
Weighted average shares outstanding:
Basic 53,708 52,975 51,538
Diluted 54,796 54,522 53,101
F-4
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

2008 2007 2006
Operating activities
Net income $ 106,954 $ 86,140 $ 59,498
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 34,715 34,159 27,496
Amortization of premiums on investments, net of accretion of discounts 6,908 4,576 3,204
Stock-based compensation charges 20,663 19,651 23,723
Stock option income tax benefits 3,276 2,596 191
Excess tax benefit from employee stock options (2,493) (14,606) (9,187)
Gain on sale of investment in MPI (1,600) — —
Loss on property and equipment dispositions and other 55 703 99
Impairment of long-lived assets 5,086 — —
Changes in assets and liabilities:
Trade and other accounts receivable 7,421 (16,180) 6,544
Inventories (5,367) 3,588 (7,798)
Prepaid expenses 2,325 (6,141) (595)
Other current assets (1,260) (2,307) 1,683
Other long term assets (173) (1,131) (2,147)
Accounts payable 4,377 (1,818) (471)
Accrued salaries and employee benefits 4,125 4,273 2,063
Other accrued expenses 101 679 (27)
Income tax payable (499) (397) 9,970
Deferred revenue (3,831) 2,855 (7,516)
Deferred income tax (2,788) (7,621) (6,559)
Deferred rent (10) (118) (112)
Deferred compensation plan liabilities 268 683 961
Net cash provided by operating activities 178,253 109,584 101,020
Investing activities
Proceeds from sales and maturities of short-term investments 105,994 140,988 132,657
Purchases of short-term investments (198,691) (298,824) (149,012)
Purchases of property, plant and equipment (39,348) (23,096) (50,760)
Purchase of intangible assets, including license and manufacturing access fees (11,970) (2,213) (11,460)
Proceeds from sale of investment in MPI 4,100 — —
Other assets 27 (279) (633)
Net cash used in investing activities (139,888) (183,424) (79,208)
Financing activities
Excess tax benefit from employee stock options 2,493 14,606 9,187
Repurchase and retirement of restricted stock for payment of taxes (1,529) (1,474) (429)
Repurchases of common stock (74,970) — —
Proceeds from issuance of common stock 20,472 48,680 24,395
Net cash (used in) / provided by financing activities (53,534) 61,812 33,153
Effect of exchange rate changes on cash and cash equivalents (672) 86 612
Net (decrease) increase in cash and cash equivalents (15,841) (11,942) 55,577
Cash and cash equivalents at the beginning of year 75,963 87,905 32,328
Cash and cash equivalents at the end of year $ 60,122 $ 75,963 $ 87,905
Supplemental disclosure of cash flow information:
Cash paid for interest $ 3 $ — $ 63
Cash paid for taxes $ 54,783 $ 32,208 $ 29,958
F-5
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
Accumulated
Other
Additional Comprehensive Total
Common Stock Paid-In Deferred (Loss) Retained Stockholders’
Shares Amount Capital Compensation Income Earnings Equity
Balance at December 31, 2005 51,138 $ 5 $281,907 $ (5,951) $ (1,231) $172,643 $ 447,373
Deferred compensation related to adoption of
SFAS No. 123(R) — — (5,951) 5,951 — — —
Cumulative effect adjustment, net of income taxes of
$2,583, upon adoption of SAB No. 108 — — — — — 3,883 3,883
Common shares issued from exercise of stock
options 913 — 20,909 — — — 20,909
P urchase of common shares through employee stock
purchase plan 81 — 3,486 — — — 3,486
P urchase of common shares by board members 3 — 139 — — — 139
Issuance of restricted stock awards 123 — — — — — —
Cancellation of restricted stock awards (15) — (59) — — — (59)
Repurchase and retirement of restricted stock for
employee taxes (9) — (429) — — — (429)
Stock-based compensation expense — restricted
stock — — 2,382 — — — 2,382
Stock-based compensation expense — all other — — 21,261 — — — 21,261
Stock-based compensation, net capitalized to
inventory — — 1,161 — — — 1,161
Stock option income tax benefits — — 9,378 — — — 9,378
Comprehensive income:
Net income — — — — — 59,498 59,498
Unrealized gains on short-term investments, net of
income taxes of $111 — — — — 251 — 251
Foreign currency translation adjustment — — — — 975 — 975
Comprehensive income 60,724
Balance at December 31, 2006 52,234 $ 5 $334,184 $ — $ (5) $236,024 $ 570,208
Cumulative effect adjustment upon the adoption of
FIN No. 48 — — — — — (962) (962)
options 1,539 — 45,129 — — — 45,129
purchase plan 74 — 3,550 — — — 3,550
Issuance of deferred issuance restricted stock awards 20 — — — — — —
Repurchase and retirement of restricted shares for
employee taxes (24) — (1,474) — — — (1,474)
Stock-based compensation expense — — 19,455 — — — 19,455
Net income — — — — — 86,140 86,140
income taxes of $1,196 — — — — 2,175 — 2,175
Foreign currency translation adjustment — — — — (566) — (566)
Balance at December 31, 2007 53,916 $ 5 $415,229 $ — $ 1,604 $321,202 $ 738,040
options 525 — 16,771 — — — 16,771
Repurchase and retirement of common shares (1,705) — (74,970) — — — (74,970)
purchase plan 98 — 3,701 — — — 3,701
Issuance of deferred issuance restricted stock awards 20 — — — — — —
Cancellation and retirement of restricted shares for
employee taxes (27) — (1,529) — — — (1,529)
Stock-based compensation expense — — 20,998 — — — 20,998
Net income — — — — — 106,954 106,954
income tax benefits of $935 — — — — 1,735 — 1,735
Foreign currency translation adjustment — — — — (284) — (284)
Balance at December 31, 2008 52,921 $ 5 $382,544 $ — $ 3,055 $428,156 $ 813,760
F-6
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Organization and summary of significant accounting policies

Organization and basis of presentation
Gen-Probe Incorporated (“Gen-Probe” or the “Company”) is engaged in the development, manufacture and marketing
of rapid, accurate and cost-effective nucleic acid probe-based products used for the clinical diagnosis of human diseases
and for screening donated human blood. The Company also develops and manufactures nucleic acid probe-based products
for the detection of harmful organisms in the environment and in industrial processes. The Company has 26 years of
research and development experience in nucleic acid detection, and its products, which are based on the Company’s
patented nucleic acid testing (“NAT”) technologies, are used daily in clinical laboratories and blood collection centers
throughout the world.
Principles of consolidation
The consolidated financial statements of the Company include the accounts of the Company and its subsidiaries, Gen-
Probe Sales & Service, Inc., Gen-Probe International, Inc., Gen-Probe UK Limited (“GP UK Limited”), Gen-Probe Italia S.r.l.,
Gen-Probe Deutschland GmbH and Molecular Light Technology Limited (“MLT”) and MLT’s subsidiaries. All
intercompany transactions and balances have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles
(“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements. These estimates include assessing the collectability of accounts receivable, the valuation
of stock-based compensation, recognition of revenues, the valuation of inventories and long-lived assets, including patent
costs, capitalized software and license and manufacturing access fees, equity investments in privately held companies,
income tax, and liabilities associated with employee benefit costs. Actual results could differ from those estimates.
Foreign currencies
The functional currency for the Company’s wholly owned subsidiaries GP UK Limited and MLT and its subsidiaries is
the British pound. The functional currency of Gen-Probe Italia SRL and Gen-Probe Deutschland GmbH is the Euro.
Accordingly, balance sheet accounts of these subsidiaries are translated into United States dollars using the exchange rate
in effect at the balance sheet date, and revenues and expenses are translated using the average exchange rates in effect
during the period. The gains and losses from foreign currency translation of the financial statements of these subsidiaries
are recorded directly as a separate component of stockholders’ equity under the caption “Accumulated other
comprehensive income.”
Cash and cash equivalents
Cash and cash equivalents consist primarily of highly liquid cash investment funds with original maturities of three
months or less when acquired.
Short-term investments
Short-term investments are carried at fair value, with unrealized gains and losses, net of tax, reported as a separate
component of stockholders’ equity under the caption “Accumulated other comprehensive income.” The amortized cost of
debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is
included in “Interest income.”
F-7
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Realized gains and losses, and declines in value judged to be other-than-temporary on short-term investments, are
included in “Interest income.” The cost of securities sold is based on the specific identification method. Interest and
dividends on securities classified as available-for-sale are included in “Interest income.”
Segment information
The Company identifies its operating segments based on business activities, management responsibility and
geographical location. For all periods presented, the Company operated in a single business segment. Revenue by
geographic location is presented in Note 12.
Concentration of credit risk
The Company sells its diagnostic products primarily to established large reference laboratories, public health
institutions and hospitals. Credit is extended based on an evaluation of the customer’s financial condition and generally
collateral is not required.
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash,
cash equivalents, and short-term investments. The Company limits its exposure to credit loss by placing its cash with high
credit quality financial institutions. The Company generally invests its excess cash in investment grade municipal securities.
The Company’s short-term investments are detailed in Note 4.
Fair value of financial instruments
The carrying value of cash equivalents, short-term investments, accounts receivable, accounts payable and accrued
liabilities approximates fair value. See Note 5 for further discussion of fair value.
Accounts receivable
Accounts receivable are recorded at the invoiced amount and are non-interest bearing. The Company maintains an
allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required
payments. Credit losses historically have been minimal and within management’s expectations. If the financial condition of
the Company’s customers were to deteriorate, resulting in an impairment of the customer’s ability to make payments,
additional allowances would be required.
Stock-based compensation
In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment,” stock-
based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as
expense over the employee’s requisite service period. The Company has no awards with market or performance conditions.
Stock-based compensation expense recognized is based on the value of share-based payment awards that are ultimately
expected to vest, which coincides with the award holder’s requisite service period. Certain of these costs are capitalized into
inventory on the Company’s balance sheet, and are recognized as an expense when the related products are sold.
Net income per share
The Company computes net income per share in accordance with SFAS No. 128, “Earnings Per Share,” and
SFAS No. 123(R). Basic net income per share is computed by dividing the net income for the period by the weighted
average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the
net income for the period by the weighted average number of common and common equivalent shares outstanding during
the period. The Company excludes stock options when the combined exercise price, average unamortized fair values and
assumed tax benefits upon exercise, are greater than the average market price for the Company’s common stock from the
calculation of diluted net income per share because their effect is anti-dilutive.
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The following table sets forth the computation of net income per share (in thousands, except per share amounts):

2008 2007 2006
Net income $106,954 $86,140 $59,498
Weighted average shares outstanding — Basic 53,708 52,975 51,538
Effect of dilutive common stock options outstanding 1,088 1,547 1,563
Weighted average shares outstanding — Diluted 54,796 54,522 53,101
Basic $ 1.99 $ 1.63 $ 1.15
Diluted $ 1.95 $ 1.58 $ 1.12
Dilutive securities include stock options and restricted stock subject to vesting. Potentially dilutive securities totaling
approximately 2,448,000, 1,556,000, and 1,339,000 for the years ended December 31, 2008, 2007 and 2006, respectively, were
excluded from the calculation of diluted earnings per share because of their anti-dilutive effect.
Revenue recognition
The Company records shipments of its clinical diagnostic products as product sales when the product is shipped and
title and risk of loss has passed and when collection of the resulting receivable is reasonably assured.
The Company manufactures blood screening products according to demand specifications of its collaboration partner,
Novartis. Upon shipment to Novartis, the Company recognizes blood screening product sales at an agreed upon transfer
price and records the related cost of products sold. Based on the terms of the Company’s collaboration agreement with
Novartis, the Company’s ultimate share of the net revenue from sales to the end user is not known until reported to the
Company by Novartis. The Company then adjusts blood screening product sales upon receipt of customer revenue reports
and a net payment from Novartis of amounts reflecting its ultimate share of net sales by Novartis of these products, less the
transfer price revenues previously recognized.
Product sales also include the sales or rental revenue associated with the delivery of the Company’s proprietary
integrated instrument platforms that perform its diagnostic assays. Generally, the Company provides its instrumentation to
clinical laboratories and hospitals without requiring them to purchase the equipment or enter into an equipment lease.
Instead, the Company recovers the cost of providing the instrumentation in the amount it charges for its diagnostic assays.
The depreciation costs associated with an instrument are charged to cost of product sales on a straight-line basis over the
estimated life of the instrument. The costs to maintain these instruments in the field are charged to cost of product sales as
incurred.
The Company sells its instruments to Novartis for use in blood screening and records these instrument sales upon
delivery since Novartis is responsible for the placement, maintenance and repair of the units with its customers. The
Company also sells instruments to its clinical diagnostics customers and records sales of these instruments upon delivery
and receipt of customer acceptance. Prior to delivery, each instrument is tested to meet Company and Food and Drug
Administration (“FDA”) specifications, and is shipped fully assembled. Customer acceptance of the Company’s clinical
diagnostic instrument systems requires installation and training by the Company’s technical service personnel. Generally,
installation is a standard process consisting principally of uncrating, calibrating, and testing the instrumentation.
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The Company records as collaborative research revenue shipments of its blood screening products in the United
States and other countries in which the products have not received regulatory approval. This is done because price
restrictions apply to these products prior to FDA marketing approval in the United States and similar approvals in foreign
countries. Upon shipment of FDA-approved and labeled products following commercial approval, the Company classifies
sales of these products as product sales in its consolidated financial statements.
The Company follows the provisions of Emerging Issues Task Force (“EITF”) Issue No. 00-21, “Revenue
Arrangements with Multiple Deliverables,” for multiple element revenue arrangements. EITF Issue No. 00-21 provides
guidance on how to determine when an arrangement that involves multiple revenue-generating activities or deliverables
should be divided into separate units of accounting for revenue recognition purposes, and if this division is required, how
the arrangement consideration should be allocated among the separate units of accounting. If the deliverables in a revenue
arrangement constitute separate units of accounting according to the EITF Issue No. 00-21 separation criteria, the revenue-
recognition policy must be determined for each identified unit. If the arrangement is a single unit of accounting, the
revenue-recognition policy must be determined for the entire arrangement, and all non-refundable upfront license fees are
deferred and recognized as revenues on a straight-line basis over the expected term of the Company’s continued
involvement in the collaborations.
The Company recognizes collaborative research revenue over the term of various collaboration agreements, as
negotiated monthly contracted amounts are earned or reimbursable costs are incurred related to those agreements.
Negotiated monthly contracted amounts are earned in relative proportion to the performance required under the contracts.
Non-refundable license fees are recognized over the related performance period or at the time that the Company has
satisfied all performance obligations. Milestone payments are recognized as revenue upon the achievement of specified
milestones when (i) the Company has earned the milestone payment, (ii) the milestone is substantive in nature and the
achievement of the milestone is not reasonably assured at the inception of the agreement, (iii) the fees are non-refundable,
and (iv) performance obligations after the milestone achievement will continue to be funded by the collaborator at a level
comparable to the level before the milestone achievement. Any amounts received prior to satisfying the Company’s revenue
recognition criteria are recorded as deferred revenue on the consolidated balance sheet.
Royalty revenue is recognized related to the sale or use of the Company’s products or technologies under license
agreements with third parties. For those arrangements where royalties are reasonably estimable, the Company recognizes
revenue based on estimates of royalties earned during the applicable period and adjusts for differences between the
estimated and actual royalties in the following period. Historically, these adjustments have not been material. For those
arrangements where royalties are not reasonably estimable, the Company recognizes revenue upon receipt of royalty
statements from the applicable licensee. Non-refundable license fees are recognized over the related performance period or
at the time the Company has satisfied all performance obligations.
Cost of revenues
Cost of product sales reflects the costs applicable to products shipped for which product sales revenue is recognized
in accordance with the Company’s revenue recognition policy. The Company manufactures products for commercial sale as
well as development stage products for internal use or clinical evaluation. The Company follows SFAS No. 2, “Accounting
for Research and Development Costs,” in classifying costs between cost of product sales and research and development
costs.
The Company does not separately track all of the costs applicable to collaborative research revenue, as there is not a
distinction between the Company’s internal development activities and the development efforts made pursuant to
agreements with third parties. The costs associated with collaborative research revenue are based on fully burdened full
time equivalent rates and are reflected in the Company’s consolidated statements of income under the captions “Research
and development,” “Marketing and sales,” and “General and administrative,” based on the nature of the costs.
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Shipping and handling expenses
Shipping and handling expenses included in cost of product sales totaled approximately $6,721,000, $5,607,000, and
$4,951,000 for the years ended December 31, 2008, 2007 and 2006, respectively.
Contingencies
Contingent gains are not recorded in the Company’s consolidated financial statements since this accounting treatment
could result in the recognition of gains that might never be realized. Contingent losses are only recorded in the Company’s
consolidated financial statements if it is probable that a loss will result from a contingency and the amount can be
reasonably estimated.
Inventories
Inventories are stated at the lower of cost or market. Cost, which includes amounts related to materials and labor and
overhead, is determined in a manner which approximates the first-in, first-out method. The estimated reserve is based on
management’s review of inventories on hand, compared to estimated future usage and sales, shelf-life and assumptions
about the likelihood of obsolescence.
Patent costs
The Company capitalizes the costs incurred to file and prosecute patent applications. The Company amortizes these
costs on a straight-line basis over the lesser of the remaining useful life of the related technology or eight years. Capitalized
patent costs are included in “License, manufacturing access fees and other assets, net” on the consolidated balance sheets.
All costs related to abandoned patent applications are recorded as “General and administrative” expenses.
Capitalized software costs
The Company capitalizes costs incurred in the development of computer software related to products under
development after establishment of technological feasibility in accordance with SFAS No. 86, “Accounting for the Costs of
Computer Software to Be Sold, Leased, or Otherwise Marketed.” These capitalized costs are recorded at the lower of
unamortized cost or net realizable value and are amortized over the estimated life of the related product or ten years.
Long-lived assets
Property, plant and equipment and intangible assets with definite useful lives are stated at cost. Depreciation of
property, plant and equipment and intangible assets is provided using the straight-line method over the estimated useful
lives of the assets as follows:
Years
Building 10-39
Machinery and equipment 3-8
Furniture and fixtures 3
Depreciation expense was $26,528,000, $26,592,000, and $21,190,000 for the years ended December 31, 2008, 2007 and
2006, respectively. Amortization of building improvements is provided over the shorter of the remaining life of the lease or
estimated useful life of the asset. The costs of purchased intangibles are amortized over their estimated useful lives. See
Note 6 for further details of the Company’s intangible assets and related amortization expense.
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Intangible assets
The Company capitalizes license fee payments that relate to acquired intangibles with alternative future uses in
accordance with SFAS No. 2 and SFAS No. 142, “Goodwill and Other Intangible Assets.”
Consistent with Statement of Financial Accounting Concepts No. 6, “Elements of Financial Statements,” the Company
capitalizes manufacturing access fees that it pays when (i) the fee embodies a probable future benefit that involves a
capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflows, (ii) the
Company can obtain the benefit and control others’ access to it, and (iii) the transaction or other event giving rise to the
entity’s right to or control of the benefit has already occurred.
In accordance with SFAS No. 142, intangible assets that the Company acquires are initially recognized and measured
based on their fair value. The Company uses the present value technique of estimated future cash flows to measure the fair
value of assets at the date of acquisition. Those cash flow estimates incorporate assumptions based on historical
experience with selling similar products in the marketplace. In accordance with SFAS No. 142, the useful life of an intangible
asset to an entity is the period over which the asset is expected to contribute directly or indirectly to the future cash flows
of that entity. The Company amortizes the capitalized intangible assets over the remaining economic life of the relevant
technology using the straight-line method, which currently ranges from 1 to 20 years.
Impairment of long-lived assets
In accordance with SFAS No. 142, the Company does not amortize its goodwill and intangible assets with indefinite
useful lives. SFAS No. 142 requires that these assets be reviewed for impairment at least annually. The Company completed
its impairment test in the fourth quarter of 2008 and determined that no impairment loss was necessary. If the assets were
considered to be impaired, the impairment charge would be the amount by which the carrying value of the assets exceeds
the fair value of the assets.
In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” periodically
and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, the
Company performs an impairment analysis to determine if it expects to recover the costs through the subsequent sales of
applicable products. If impairment is indicated, the Company measures the amount of such impairment by comparing the fair
value to the carrying value.
During the year ended December 31, 2008, due to certain indicators of impairment, the Company recorded impairment
charges totaling $5,086,000 related to its equity investment in Qualigen, Inc. and its license agreement with Corixa
Corporation. Please see Notes 5 and 6, respectively, for a complete discussion of the impairment analysis.
Self-insurance reserves
The Company’s consolidated balance sheets at December 31, 2008 and 2007 include approximately $1,858,000 and
$1,965,000, respectively, of liabilities associated with employee benefit costs that are retained by the Company, including
medical costs and workers’ compensation claims. The Company estimates the required liability of such claims on an
undiscounted basis based upon various assumptions which include, but are not limited to, the Company’s historical loss
experience and projected loss development factors. The required liability is also subject to adjustment in the future based
upon changes in claims experience, including changes in the number of incidents (frequency) and change in the ultimate
cost per incident (severity).
Accumulated other comprehensive income
In accordance with SFAS No. 130, “Reporting Comprehensive Income,” all components of comprehensive income,
including net income, are reported in the financial statements in the period in which they are recognized.
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Comprehensive income is defined as the change in equity during a period from transactions and other events and
circumstances from non-owner sources. Net income and other comprehensive income, which includes certain changes in
stockholders’ equity such as foreign currency translation of the Company’s wholly owned subsidiaries’ financial
statements and unrealized gains and losses on its available-for-sale securities, are reported, net of their related tax effect, to
arrive at comprehensive income.
Research and development
Research and development (“R&D”) costs are accounted for in accordance with SFAS No. 2.
Income tax
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The impact
of tax law and rate changes is reflected in income in the period such changes are enacted. As needed, the Company records
a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized based on
expected future taxable income.
The Company’s income tax returns are based on calculations and assumptions that are subject to examination by
various tax authorities. While the Company believes it has appropriate support for the positions taken on its tax returns, the
Company regularly assesses the potential outcomes of these examinations and any future examinations in determining the
adequacy of its provision for income taxes. As part of its assessment of potential adjustments to its tax returns, the
Company increases its current tax liability to the extent an adjustment would result in a cash tax payment or decreases its
deferred tax assets to the extent an adjustment would not result in a cash tax payment. The Company reviews, at least
quarterly, the likelihood and amount of potential adjustments and adjusts the income tax provision, the current tax liability
and deferred taxes in the period in which the facts that give rise to a revision become probable and estimable.
Adoption of recent accounting pronouncements
SFAS No. 157

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value
Measurements.” SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. It also responds to
investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair
value, the information used to measure fair value, and the effect of fair valued measurements on earnings. SFAS No. 157
applies whenever standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use
of fair value in any new circumstances. SFAS No. 157 is effective for financial assets and liabilities in financial statements
issued for the Company’s fiscal year beginning January 1, 2008. There was no material financial statement impact as a result
of adoption.
In accordance with the guidance of FASB Staff Position (“FSP”) No. 157-2, “Effective Date of FASB Statement
No. 157,” the Company has postponed adoption of the standard for non-financial assets and liabilities that are measured at
fair value on a non-recurring basis, until the fiscal year beginning January 1, 2009. The Company does not anticipate
adoption will have a material impact on its consolidated financial position, results of operations or liquidity.
In October 2008, the FASB issued FSP No. 157-3, “Determining the Fair Value of a Financial Asset When the Market
for That Asset Is Not Active.” FSP No. 157-3 clarifies the application of SFAS No. 157 in a market that is not active, and is
effective as of the issue date, including application to prior periods for which financial statements have not been issued.
The Company adopted this statement effective October 10, 2008. There was no material financial statement impact as a
result of adoption. See Note 5 for more information.
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SFAS No. 159

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities — Including an amendment of FASB Statement No. 115.” SFAS No. 159 expands the use of fair value accounting
but does not affect existing standards that require assets or liabilities to be carried at fair value. Under SFAS No. 159, a
company may elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity
securities, equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm
commitments for financial instruments that otherwise would not be recognized at inception and non-cash warranty
obligations where a warrantor is permitted to pay a third party to provide the warranty goods or services. If the use of fair
value is elected, any upfront costs and fees related to the item must be recognized in earnings and cannot be deferred (e.g.,
debt issue costs). The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a
company has similar instruments that it elects not to measure based on fair value. At the adoption date, unrealized gains
and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning
retained earnings. Subsequent to the adoption of SFAS No. 159, changes in fair value are recognized in earnings.
SFAS No. 159 is effective for fiscal years beginning after November 15, 2007.
The Company adopted this statement effective January 1, 2008. During 2008, the Company did not elect fair value as an
alternative measurement for any financial instruments not previously carried at fair value.
EITF Issue No. 07-3

In June 2007, the FASB ratified EITF Issue No. 07-3, “Accounting for Non-Refundable Payments for Goods or Services
Received for Use in Future Research and Development Activities.” EITF Issue No. 07-3 requires that non-refundable
advance payments for goods or services that will be used or rendered for future research and development activities be
deferred and capitalized and recognized as an expense as the goods are delivered or the related services are performed. EITF
Issue No. 07-3 is effective, on a prospective basis, for fiscal years beginning after December 15, 2007.
The Company adopted this statement effective January 1, 2008. There was no material financial statement impact as a
result of adoption.
Pending adoption of recent accounting pronouncements
SFAS No. 141(R)

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” SFAS No. 141(R) changes the
requirements for an acquirer’s recognition and measurement of the assets acquired and liabilities assumed in a business
combination, including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, in-
process research and development and restructuring costs. In addition, under SFAS No. 141(R), changes in an acquired
entity’s deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. This
statement is effective with respect to business combination transactions for which the acquisition date is after December 31,
2008.
SFAS No. 160

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements
(an amendment of Accounting Research Bulletin No. 51).” SFAS No. 160 requires that non-controlling (minority) interests
be reported as a component of equity, that net income attributable to the parent and to the non-controlling interest be
separately identified in the income statement, that changes in a parent’s ownership interest while the parent retains its
controlling interest be accounted for as equity transactions, and that any retained non-controlling equity investment upon
the deconsolidation of a subsidiary be initially measured at fair value. This statement is effective for fiscal years beginning
after December 31, 2008, and shall be applied prospectively.
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However, the presentation and disclosure requirements of SFAS No. 160 are required to be applied retrospectively for all
periods presented. The retrospective presentation and disclosure requirements of this statement will be applied to any prior
periods presented in financial statements for the fiscal year ending December 31, 2009, and later periods during which we
have a consolidated subsidiary with a non-controlling interest. As of December 31, 2008, the Company does not have any
consolidated subsidiaries in which there is a non-controlling interest.
EITF Issue No. 07-1

In November 2007, the FASB ratified EITF Issue No. 07-1, “Accounting for Collaborative Agreements Related to the
Development and Commercialization of Intellectual Property.” EITF Issue No. 07-1 defines collaborative agreements as a
contractual arrangement in which the parties are active participants to the arrangement and are exposed to the significant
risks and rewards that are dependent on the ultimate commercial success of the endeavor. Additionally, it requires that
revenue generated and costs incurred on sales to third parties as it relates to a collaborative agreement be recognized as
gross or net based on EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent.” Essentially,
this requires the party that is identified as the principal participant in a transaction to record the transaction on a gross basis
in its financial statements. It also requires payments between participants to be accounted for in accordance with already
existing generally accepted accounting principles, unless none exist, in which case a reasonable, rational, consistent method
should be used. The Company will adopt this guidance effective January 1, 2009 for all collaboration agreements existing as
of that date. The Company does not believe adoption will have a material impact on its financial statements, as it believes all
agreements are currently in compliance with this standard.
Note 2 — Stock-based compensation

In accordance with SFAS No. 123(R), “Share-Based Payment,” stock-based compensation expense is measured at the
grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite
service period. The Company has no awards with market or performance conditions. Stock-based compensation expense
recognized is based on the value of share-based payment awards that are ultimately expected to vest, which coincides with
the award holder’s requisite service period. A portion of these costs are capitalized into inventory on the Company’s
balance sheet, and are recognized as an expense when the related products are sold.
The Company uses the Black-Scholes-Merton option pricing model to value options granted. The determination of fair
value of share-based payment awards on the date of grant using the Black-Scholes-Merton model is affected by the
Company’s stock price and the implied volatility on its traded options, as well as the input of other subjective assumptions.
These assumptions include, but are not limited to, the expected term of stock options and the Company’s expected stock
price volatility over the term of the awards.
The Company used the following weighted average assumptions (annualized percentages) to estimate the fair value of
options granted and the shares purchasable under the Company’s stock option plans and Employee Stock Purchase Plan
(“ESPP”):
Stock Option Plans ESPP

2008 2007 2006 2008 2007 2006
Risk-free interest rate 3.0% 4.6% 4.8% 3.3% 5.0% 4.4%
Volatility 34% 36% 42% 34% 29% 40%
Dividend yield — — — — — —
Expected term (years) 4.2 4.2 4.5 0.5 0.5 0.5
Resulting average fair value $18.36 $21.44 $20.75 $13.31 $12.88 $12.76
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The risk-free interest rate assumption is based upon observed interest rates appropriate for the terms of the Company’s
employee stock options. The Company uses a blend of historical and implied volatility for the expected volatility
assumption. The selection of a blend of historical and implied volatility data to estimate expected volatility was based upon
the availability of actively traded options on the Company’s stock and the Company’s assessment that a blend is more
representative of future stock price trends than either one individually. The Company historically has not made dividend
payments, but is required to assume a dividend yield as an input to the Black-Scholes-Merton model. The dividend yield is
based on the Company’s expectation of future dividend payouts. The expected term of employee stock options represents
the weighted-average period the stock options are expected to remain outstanding. The Company uses a midpoint scenario
method, which assumes that all vested, outstanding options are settled halfway between the date of measurement and their
expiration date. The calculation also leverages the history of actual exercises and post-vesting cancellations.
SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if
actual forfeitures differ from those estimates. The Company assesses the forfeiture rate on a quarterly basis and revises the
rate when deemed necessary.
The Company’s unrecognized stock-based compensation expense, before income taxes and adjusted for estimated
forfeitures, related to outstanding unvested share-based payment awards was approximately as follows (in thousands,
except number of years):
Weighted Average Unrecognized

Remaining Expense as of
Expense December 31,
Awards Life (Years) 2008
Options 1.4 $ 37,381
ESPP 0.2 91
Restricted Stock 1.9 12,798
Deferred Issuance Restricted Stock 1.5 2,349
$ 52,619
The following table summarizes the stock-based compensation expense that the Company recorded in its consolidated
statements of income in accordance with SFAS No. 123(R) (in thousands):

2008 2007 2006
Cost of product sales $ 2,495 $ 3,144 $ 2,337
Research and development 6,101 5,020 8,048
Marketing and sales 2,854 2,404 2,905
General and administrative 9,213 9,083 10,433
Total $20,663 $19,651 $23,723
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Note 3 — Balance sheet information

The following tables provide details of selected balance sheet items (in thousands):
Inventories
December 31,
2008 2007
Raw materials and supplies $ 8,529 $ 7,774
Work in process 24,945 23,829
Finished goods 20,932 16,937
$54,406 $48,540
Property, plant and equipment
December 31,
2008 2007
Land $ 18,804 $ 13,862
Building 80,426 69,946
Machinery and equipment 153,211 139,871
Building improvements 34,592 32,614
Furniture and fixtures 16,270 16,146
Construction in-progress 19 181
Property, plant and equipment (at cost) 303,322 272,620
Less accumulated depreciation and amortization (161,400) (143,127)
Property, plant and equipment (net) $ 141,922 $ 129,493
Other accrued expenses
December 31,
2008 2007
Royalties $ 985 $ 563
Professional fees 1,494 1,145
Warranty 923 2,296
Other 625 20
$4,027 $4,024
Note 4 — Short-term investments

The Company’s short-term investments include tax advantaged municipal securities with a minimum Moody’s credit
rating of A3 and a minimum Standard & Poor’s credit rating of A-. As of December 31, 2008, the Company did not hold
auction rate securities. The Company’s investment policy limits the effective maturity on individual securities to six years
and an average portfolio maturity to three years. At December 31, 2008, the Company’s portfolios had an average term of
three years and an average credit quality of AA3 as defined by Moody’s.
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The following is a summary of short-term investments as of December 31, 2008 and 2007 (in thousands):
Gross Gross Estimated

Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
December 31, 2008
Municipal securities $ 440,070 $ 6,779 $ (1,793) $ 445,056
December 31, 2007
Municipal securities $ 355,216 $ 2,448 $ (133) $ 357,531
The amortized cost and estimated fair value of available-for-sale marketable securities as of December 31, 2008, by
contractual maturity, are as follows (in thousands):
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
Maturities
Within one year $ 91,598 $ 770 $ — $ 92,368
After one year through five years 338,766 5,807 (1,793) 342,780
After five through ten years 9,706 202 — 9,908
Ten years and thereafter — — — —
Total short-term investments $ 440,070 $ 6,779 $ (1,793) $ 445,056
The following table shows the estimated fair values and gross unrealized losses for the Company’s investments in
individual securities that have been in a continuous unrealized loss position deemed to be temporary for less than
12 months and for more than 12 months (in thousands):
Less than 12 Months More than 12 Months

Estimated Unrealized Estimated Unrealized
Fair Value Losses Fair Value Losses
December 31, 2008
Municipal securities $ 56,174 $ (628) $ 17,606 $ (1,165)
December 31, 2007
Municipal securities $ 26,199 $ (52) $ 29,439 $ (81)
The net unrealized losses on the Company’s investments in municipal securities were primarily caused by market
forces resulting from a recent and significant sell off of securities by large holders, such as insurance companies and
financial institutions, as they were forced to increase their cash reserve positions. Yields for high-quality short-term
municipal paper have risen, which have negatively impacted the Company’s portfolios, which have an average term of three
years. The Company’s current valuation is related to this liquidity impact and is not based on the credit worthiness of the
securities held by the Company. The contractual terms of those investments do not permit the issuer to settle the securities
at a price less than the amortized cost of the investment. The Company does not consider its investments in municipal
securities with a current unrealized loss position to be other-than-temporarily impaired at December 31, 2008 since the
Company has the ability and intent to hold those investments until a recovery of fair value, which may be at maturity. Gross
realized gains from the sale of short-term investments were $1,142,000, $0, and $260,000 for the years ended December 31,
2008, 2007 and 2006, respectively. Gross
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realized losses from the sale of short-term investments were $133,000, $274,000, and $130,000 for the years ended
December 31, 2008, 2007 and 2006, respectively.
Note 5 — Fair value measurements

The Company adopted SFAS No. 157 effective January 1, 2008 for financial assets and liabilities measured at fair value.
SFAS No. 157 defines fair value, expands disclosure requirements around fair value and specifies a hierarchy of valuation
techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs
reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market
assumptions. These two types of inputs create the following fair value hierarchy:
• Level 1 — Quoted prices for identical instruments in active markets.
• Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments
in markets that are not active; and model-derived valuations in which all significant inputs and significant value
drivers are observable in active markets.
• Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value
drivers are unobservable.
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of
unobservable inputs when determining fair value. A financial instrument’s categorization within the valuation hierarchy is
based upon the lowest level of input that is significant to the fair value measurement.
Following is a description of the Company’s valuation methodologies used for instruments measured at fair value, as
well as the general classification of such instruments pursuant to the valuation hierarchy. Where appropriate, the
description includes details of the valuation models, the key inputs to those models, as well as any significant assumptions.
Assets and liabilities measured at fair value on a recurring basis:
The Company’s available-for-sale securities are comprised of tax advantaged municipal securities and money market
funds. When available, the Company generally uses quoted market prices to determine fair value, and classifies such items
as Level 1. If quoted market prices are not available, prices are determined using prices for recently traded financial
instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield
curves that are observable at commonly quoted intervals. The Company classifies such items as Level 2.
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The following table presents the financial instruments carried at fair value, by caption on the consolidated balance
sheets and by SFAS No. 157 valuation hierarchy (as described above) as of December 31, 2008 (in thousands):
Fair Value Measurements at December 31, 2008

Quoted prices in Total carrying
active markets for Significant other Significant value in the
identical assets observable inputs unobservable inputs consolidated
(Level 1) (Level 2) (Level 3) balance sheet
Cash and cash equivalents $ 15,476 $ 4,602 $ — $ 20,078
Short-term investments — 445,056 — 445,056
Total assets at fair value $ 15,476 $ 449,658 $ — $ 465,134
Assets and liabilities measured at fair value on a non-recurring basis:
Certain assets and liabilities are measured at fair value on a non-recurring basis and therefore are not included in the
table above. Items valued using such internally generated valuation techniques are classified according to the lowest level
input or value driver that is significant to the valuation. Thus, an item may be classified as Level 3 even though there may
be some significant inputs that are readily observable. Such instruments are not measured at fair value on an ongoing basis
but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).
Equity investment in private company
In 2006, the Company invested in Qualigen, Inc. (“Qualigen”), a private company. The valuation of investments in non-
public companies requires significant management judgment due to the absence of quoted market prices, inherent lack of
liquidity and the long-term nature of such assets. The Company’s equity investments in private companies are valued
initially based upon the transaction price under the cost method of accounting. Equity investments in non-public
companies are classified as Level 3 in the fair value hierarchy. The Company’s investment in Qualigen, which totaled
approximately $5,404,000 as of December 31, 2008, is included in “License, manufacturing access fees and other assets, net”
on the consolidated balance sheets.
The Company records impairment charges when an investment has experienced a decline that is deemed to be other-
than-temporary. The determination that a decline is other-than-temporary is, in part, subjective and influenced by many
factors. Future adverse changes in market conditions or poor operating results of investees could result in losses or an
inability to recover the carrying value of the investments, thereby possibly requiring impairment charges in the future.
When assessing investments in private companies for an other-than-temporary decline in value, the Company considers
many factors including, but not limited to, the following: the share price from the investee’s latest financing round, the
performance of the investee in relation to its own operating targets and its business plan, the investee’s revenue and cost
trends, the investee’s liquidity and cash position, including its cash burn rate, and market acceptance of the investee’s
products and services. From time to time, the Company may consider third party evaluations or valuation reports. The
Company also considers new products and/or services that the investee may have forthcoming, any significant news
specific to the investee, the investee’s competitors and/or industry and the outlook of the overall industry in which the
investee operates. In the event the Company’s judgments change as to other-than temporary declines in value, the
Company may record an impairment loss, which could have an adverse impact on its results of operations.
During the third quarter of 2008, the Company received financial statements from Qualigen that indicated potential
issues towards the execution of their long-term sales plans. As a result, with the consultation and assistance of a third party
valuation company, and the support of Qualigen management, the Company performed a valuation
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of Qualigen. The valuation of the Company’s investment was based upon several factors and included both a market
approach and an income (discounted cash flow method) approach. The range of these two approaches resulted in a
potential value of the Company’s investment between $4,172,000 and $6,609,000. The company concluded that an equal
weighting of the market and income methods was appropriate and as a result of this valuation the Company’s ownership of
Qualigen was valued at approximately $5,404,000. The Company believes that the decline in the value of this investment
from its initial cost basis was an other-than-temporary impairment of our investment and thus it recorded an impairment
charge of $1,589,000 to write down the carrying value of its equity interest. This amount is included in “Other
income/(expense)” on the consolidated statements of income.
Note 6 — Intangible and other assets by asset class and related accumulated amortization
Intangible assets are recorded at cost, less accumulated amortization. Amortization of intangible assets is provided
over their estimated useful lives ranging from 1 to 20 years on a straight-line basis (weighted average amortization period of
6 years at December 31, 2008). The Company’s intangible and other assets and related accumulated amortization consisted
of the following (in thousands, except number of years):
Weighted December 31,

Average 2008 2007
Amortization Accumulated Accumulated
P eriod (Years) Gross Amortization Net Gross Amortization Net
Intangible and other assets:
Capitalized software 10 $ 25,142 $ 11,733 $13,409 $ 25,142 $ 9,219 $15,923
Goodwill(1) N/A $ 26,298 $ 7,677 $18,621 $ 26,298 $ 7,677 $18,621
License, manufacturing access fees and other
assets:
Investment in Molecular P rofiling Institute,
Inc. N/A — — — 2,500 — 2,500
Investment in Qualigen, Inc. (2) N/A 5,404 — 5,404 6,993 — 6,993
P atents 8 18,093 16,817 1,276 17,304 16,286 1,018
P urchased intangible assets 20 33,636 33,338 298 33,636 33,002 634
License and manufacturing access fees(3) 10 64,507 18,488 46,019 53,326 10,186 43,140
Other assets N/A 3,611 — 3,611 3,911 — 3,911
$125,251 $ 68,643 $56,608 $117,670 $ 59,474 $58,196
(1) In accordance with SFAS No. 142, goodwill is no longer amortized.

(2) The change in the Company’s investment in Qualigen is due to an impairment charge of $1,589,000 recorded during the
year ended December 31, 2008. See Note 5 for a complete discussion of the impairment analysis.
(3) The Company recorded an impairment charge for the net capitalized balance of $3,496,000 under its license agreement
with Corixa Corporation. See complete discussion below.
In January 2008, Caris Diagnostics completed the acquisition of Molecular Profiling Institute, Inc. Pursuant to this sale
transaction, the Company’s equity interest in Molecular Profiling was converted into approximately $4,400,000 of cash
proceeds, of which $4,100,000 was received in January 2008 and the remaining $300,000 was placed into an escrow fund
established to satisfy the Company’s pro-rata share of indemnification obligations under the Caris/Molecular Profiling
merger agreement. The Company recorded a $1,600,000 gain associated with the initial $4,100,000 received in January 2008,
and will record the remaining gain if and when any funds are released to the Company from escrow.
In May 2008, pursuant to the Company’s supply and purchase agreement with F. Hoffman-La Roche Ltd. and its
affiliate Roche Molecular Systems, Inc. (together referred to as “Roche”), upon the first commercial sale of its
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CE-marked APTIMA HPV assay in Europe, the Company paid Roche $10,000,000 in manufacturing access fees. Prior to and
including May 2008, the Company’s original payment to Roche of $20,000,000 was being amortized to R&D expense.
Beginning in June 2008, the additional payment of $10,000,000 and any unamortized amounts remaining from the original
payment are amortized to cost of product sales.
In June 2008, the Company recorded an impairment charge for the net capitalized balance of $3,496,000 under its license
agreement with Corixa Corporation. This charge is included in R&D expense on the consolidated statements of income.
Under the license agreement, the Company was granted exclusive rights to several licenses and pending patents, including
AMACR, to develop, manufacture and sell in-vitro, nucleic acid and antibody-based assays for the prostate cancer market.
The amount of license fees paid to Corixa was initially capitalized based on the Company’s assessment at that time of the
alternative future uses of the assets, including the Company’s initial intent to commercialize the AMACR marker. The
Company retains the right to sublicense any of the markers acquired. The Corixa intellectual property was being amortized
to R&D expense based upon the estimated life of the underlying patents acquired. In the second quarter of 2008, a series of
events indicated that future alternative uses of the capitalized intangible asset were unlikely and that recoverability of the
asset through future cash flows was not considered likely enough to support continued capitalization. These second
quarter 2008 indicators of impairment included decisions on the Company’s planned commercial approach for oncology
diagnostic products, the completion of a detailed review of the intellectual property suite acquired from Corixa, including the
Company’s assessment of the proven clinical utility for a majority of the related markers, and the potential for near term
sublicense income that could be generated from the intellectual property acquired.
As of December 31, 2008, the Company had capitalized $13,409,000, net, in software costs associated with development
of the TIGRIS instrument.
The Company had aggregate amortization expense of $8,187,000, $7,567,000, and $6,272,000 for the years ended
December 31, 2008, 2007 and 2006, respectively, including $2,514,000 relating to capitalized software in each of those years.
The expected future annual amortization expense of the Company’s intangible assets is as follows (in thousands):
Amortization
Years Ended December 31, Expense
2009 $ 8,061
2010 7,610
2011 7,563
2012 7,475
2013 7,407
Thereafter 22,886
Total $ 61,002
Note 7 — Long-term debt

The Company has an unsecured bank line of credit agreement with Wells Fargo Bank, N.A., which expires in July 2009,
under which the Company may borrow up to $10,000,000, subject to a “borrowing base formula,” at the bank’s prime rate, or
at LIBOR plus 1.0%. At December 31, 2008, the Company did not have any amounts outstanding under the bank line and
the Company has not taken advances against the line of credit since its inception. The Company was in compliance with all
of the financial and restrictive covenants required by the line of credit agreement at December 31, 2008.
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Note 8 — Income tax

The components of earnings before income tax were (in thousands):

2008 2007 2006
United States $160,509 $109,431 $91,297
Rest of World 354 2,166 1,697
$160,863 $111,597 $92,994
The provision for income tax consists of the following (in thousands):

2008 2007 2006
Current:
Federal $48,758 $31,243 $37,225
Rest of World (6) 541 300
State 9,941 1,826 1,999
58,693 33,610 39,524
Deferred:
Federal (4,831) (7,816) (7,821)
Rest of World 79 (26) (58)
State (32) (311) 1,851
(4,784) (8,153) (6,028)
$53,909 $25,457 $33,496
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Significant components of the Company’s deferred tax assets and liabilities for federal and state income taxes are as
follows (in thousands):
December 31,
2008 2007
Deferred tax assets:
Research and other tax credit carry-forwards $ 1,808 $ 3,092
Other intangibles 1,433 —
Inventory reserves and capitalization 1,964 3,501
Deferred revenue 1,408 2,881
Deferred compensation 1,754 1,577
Stock compensation 16,529 12,061
Accrued vacation 2,372 2,121
Other accruals and reserves (net) 2,143 1,217
Total deferred tax assets 29,411 26,450
Valuation allowance (95) —
Total net deferred tax assets $29,316 $26,450
Deferred tax liabilities:
Other intangibles $ — $ (1,123)
Capitalized costs expensed for tax purposes (5,681) (6,901)
Depreciation (2,390) (924)
Unrealized gains on short-term investments (1,745) (810)
Total deferred tax liabilities (9,816) (9,758)
Net deferred tax assets $19,500 $16,692
At December 31, 2008, the Company also had California research and development credit carry-forwards of
approximately $2,782,000, which do not expire. In accordance with applicable state rules, the Company’s use of its credit
carry-forwards could be limited in the event of certain cumulative changes in the Company’s stock ownership.
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The provision for income tax reconciles to the amount computed by applying the federal statutory rate to income
before tax as follows (in thousands):

2008 2007 2006
Expected income tax provision at federal statutory rate $56,302 35% $ 39,059 35% $32,548 35%
State income tax provision, net of federal benefit 7,275 5% 4,628 4% 3,850 4%
Tax exempt interest income (5,210) (3)% (3,453) (3)% (1,981) (2)%
Domestic manufacturing tax benefits (2,920) (2)% (1,521) (1)% (788) (1)%
Research tax credits (1,591) (1)% (1,911) (2)% (1,319) (2)%
Settlements with tax authorities (979) (1)% (11,145) (10)% — 0%
Other, net 1,032 1% (200) 0% 1,186 2%
Actual income tax provision $53,909 34% $ 25,457 23% $33,496 36%
Effective January 1, 2007, the Company adopted FASB Interpretation No. 48 (“FIN 48”). The following is a
reconciliation of the cumulative unrecognized tax benefits:
Unrecognized tax benefits as of January 1, 2007 (including the cumulative effect increase) $ 17,512
Decrease in unrecognized tax benefits for years prior to 2007 (289)
Increase in unrecognized tax benefits for 2007 1,189
Decrease in unrecognized tax benefits for settlements with tax authorities during 2007 (13,766)
Decrease in unrecognized tax benefits for lapse of statute of limitations (43)
Unrecognized tax benefits as of December 31, 2007 (including the cumulative effect increase) 4,603
Increase in unrecognized tax benefits for years prior to 2008 719
Increase in unrecognized tax benefits for 2008 1,326
Decrease in unrecognized tax benefits for settlements with tax authorities during 2008 (858)
Decrease in unrecognized tax benefits for lapse of statute of limitations (37)
Unrecognized tax benefits as of December 31, 2008 $ 5,753
All of the unrecognized tax benefits, if recognized, would affect the Company’s effective tax rate. The Company does
not anticipate there will be a significant change in the unrecognized tax benefits within the next twelve months.
It is the Company’s practice to include interest and penalties that related to income tax matters as a component of
income tax expense. Including the cumulative effect of adopting FIN 48, $397,000 of interest and $0 of penalties were
accrued as of January 1, 2008. As of December 31, 2008, the accrued interest balance was $455,000.
Material filings subject to future examination are the Company’s federal tax returns for the 2006 and 2007 tax years and
its California tax returns for the 2005, 2006 and 2007 tax years.
Tax benefits of $2,493,000, $14,606,000, and $9,378,000 for the years ended December 31, 2008, 2007 and 2006,
respectively, related to employee stock compensation programs were credited to stockholders’ equity.
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Note 9 — Stockholders’ equity

Stock options and restricted stock awards
The Company’s stock option program is a broad-based, long-term retention program that is intended to attract and
retain talented employees and to align stockholder and employee interests. Substantially all of the Company’s full-time
employees have historically participated in the Company’s stock option program.
In May 2003, the Company adopted, and the Company’s stockholders subsequently approved, The 2003 Incentive
Award Plan (the “2003 Plan”). The 2003 Plan provides for equity incentives for officers, directors, employees and
consultants through the granting of incentive and non-statutory stock options, restricted stock and stock appreciation
rights. The exercise price of each stock option granted under the 2003 Plan must be equal to or greater than the fair market
value of the Company’s common stock on the date of grant. Stock options granted under the 2003 Plan are generally subject
to vesting at the rate of 25% one year from the grant date and 1/48 each month thereafter until the options are fully vested.
Annual grants to non-employee directors of the Company vest over one year at the rate of 1/12 of the shares vesting
monthly.
In May 2006, the Company’s stockholders approved an amendment and restatement of the 2003 Plan that increased the
aggregate number of shares of common stock authorized for issuance under the 2003 Plan by 3,000,000 shares, from
5,000,000 shares to 8,000,000 shares. Pursuant to the amended 2003 Plan, the Board of Directors or Compensation
Committee, as applicable, may continue to determine the terms and vesting of all options and other awards granted under
the 2003 Plan; however, in no event may the award term exceed seven years (in lieu of ten years under the 2003 Plan prior to
its amendment). Further, the number of shares available for issuance under the amended 2003 Plan are reduced by two
shares for each share of restricted stock granted under the 2003 Plan after May 17, 2006 (in lieu of a reduction of one share
under the 2003 Plan prior to its amendment).
In November 2002, the Company adopted The 2002 New Hire Stock Option Plan (the “2002 Plan”) that authorized the
issuance of up to 400,000 shares of common stock for grants under the 2002 Plan. The 2002 Plan provides for the grant of
non-statutory stock options only, with exercise price, option term and vesting terms generally the same as those under the
2000 Plan described below. Options may only be granted under the 2002 Plan to newly hired employees of the Company.
In August 2000, the Company adopted, and the Company’s sole stockholder subsequently approved, The 2000 Equity
Participation Plan (the “2000 Plan”) that authorized the issuance of up to 4,827,946 shares of common stock for grants under
the 2000 Plan. The 2000 Plan provides for the grant of incentive and non-statutory stock options to employees, directors
and consultants of the Company. The exercise price of each option granted under the 2000 Plan must be equal to or greater
than the fair market value of the Company’s stock on the date of grant. Generally, options vest 25% one year from the grant
date and 1/48 each month thereafter until the options are fully vested.
A summary of the Company’s stock option activity for all option plans is as follows (in thousands, except per share
data and number of years):
Weighted
Average
Weighted Remaining Aggregate
Number of Average Contractual Intrinsic
Shares Exercise Price Life (Years) Value
Outstanding at December 31, 2007 5,518 $ 40.86
Granted 950 58.30
Exercised (525) 31.95
Cancelled (286) 50.32
Outstanding at December 31, 2008 5,657 $ 44.12 5.4 $ 32,961
Exercisable at December 31, 2008 3,568 $ 37.05 5.0 $ 32,654
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The Company defines in-the-money options at December 31, 2008 as options that had exercise prices that were lower
than the $42.84 closing market price of its common stock at that date. The aggregate intrinsic value of options outstanding
at December 31, 2008 is calculated as the difference between the exercise price of the underlying options and the market
price of the Company’s common stock for the approximately 2,317,000 shares that were in-the-money at that date. The total
intrinsic value of options exercised during the years ended December 31, 2008, 2007 and 2006 was $12,264,000, $45,717,000,
and $26,651,000, respectively, determined as of the exercise dates.
A summary of the Company’s restricted stock award activity is as follows (in thousands, except per share data):
Weighted
Average
Number of Grant-Date
Shares Fair Value
Unvested at December 31, 2007 262 $ 53.36
Granted 146 59.86
Vested and exercised (82) 50.46
Forfeited (32) 53.94
Unvested at December 31, 2008 294 $ 57.51
The fair value of the 82,019, 69,846, and 47,013 restricted stock and Deferred Issuance Restricted Stock awards that
vested during the years ended December 31, 2008, 2007 and 2006, respectively, was approximately $4,269,000, $3,187,000 and
$1,964,000, respectively.
Additional information about stock options outstanding at December 31, 2008 with exercise prices less than or above
$42.84 per share, the closing price as of December 31, 2008 is as follows (in thousands, except per share data):
Exercisable Unexercisable Total

Weighted Weighted Weighted
Number Average Number Average Number Average
of Exercise of Exercise of Exercise
As of December 31, 2008 Shares Price Shares Price Shares Price
In-the-money 2,208 $ 28.05 109 $ 40.04 2,317 $ 28.62
Out-of-the-money 1,360 51.68 1,980 57.08 3,340 54.88
Total options outstanding 3,568 2,089 5,657
Shares of common stock available for future grants under all stock option plans were 548,960 at December 31, 2008.
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The weighted-average grant-date fair value per share of options granted during the periods were as follows:

2008 2007 2006
Exercise price equal to the fair value of common stock on the grant date:
Weighted-average exercise price $58.30 $59.11 $50.08
Weighted-average option fair value $18.36 $21.44 $20.54
Exercise price greater than fair value of common stock on the grant date:
Weighted-average exercise price $ — $ — $ —
Weighted-average option fair value $ — $ — $ —
Employee Stock Purchase Plan
In May 2003, the Company adopted, and the Company’s stockholders subsequently approved, the ESPP that
authorized the issuance of up to 1,000,000 shares of the Company’s common stock. The ESPP is intended to qualify under
Section 423 of the Internal Revenue Code of 1986, as amended, and is for the benefit of qualifying employees as designated
by the Board of Directors. Under the terms of the ESPP, purchases are made semiannually. Participating employees may
elect to have a maximum of 15% of their compensation, up to a maximum of $10,625 per six month period, withheld through
payroll deductions to purchase shares of common stock under the ESPP. The purchase price of the common stock
purchased under the ESPP is equal to 85% of the fair market value of the common stock on the offering or “Grant Date” or
the exercise or purchase date, whichever is lower. During the years ended December 31, 2008, 2007 and 2006, employees
purchased 97,618, 74,337, and 81,356 shares at an average price of $37.91, $47.76, and $42.85 per share, respectively. As of
December 31, 2008, a total of 482,978 shares were available for future issuance under the ESPP.
Stock Repurchase Program
In August 2008, the Company’s Board of Directors authorized the repurchase of up to $250,000,000 of the Company’s
common stock over the two years following adoption of the program, through negotiated or open market transactions.
There is no minimum or maximum number of shares to be repurchased under the program. As of December 31, 2008, the
Company repurchased and retired approximately 1,705,400 shares under this program at an average price of $43.96 or
$75,000,000 in total. When stock is repurchased and retired, the amount paid in excess of par value is recorded to additional
paid-in capital.
Note 10 —Commitments and contingencies

Lease commitments
The Company leases certain facilities under operating leases that expire at various dates through August 31, 2009.
Future minimum payments under these operating leases were $70,000 as of December 31, 2008. In February 2008, the
Company completed the acquisition of the facility where it manufactures its blood screening products, which was
previously leased.
Rent expense was $486,000, $1,022,000, and $2,172,000 for the years ended December 31, 2008, 2007 and 2006,
respectively.
Purchase commitments
The Company is currently developing a new instrument platform, called the Panther instrument system, designed to
bring the benefits of full automation and a broad molecular diagnostics menu to low to mid-volume customers. In July 2007,
the Company authorized Stratec Biomedical Systems AG (“Stratec”), to commence its
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Phase 2 development activities pursuant to its Development Agreement for the Panther instrument system. Stratec is
providing services for the design and development of the Panther Instrument System at a fixed price of $9,400,000, to be
paid in installments due upon achievement of specified technical milestones, of which the Company expects $4,190,000 to be
paid in 2009. As of December 31, 2008, the Company had $712,000 in outstanding purchase orders for the remaining
prototype instruments to be purchased in connection with the Development Agreement. In addition, the Company will
purchase validation, pre-production and production instruments, at specified fixed transfer prices, that will cost
approximately $8,400,000 in the aggregate if it elects to purchase the number of each instrument type it currently expects to
purchase. Of the $8,400,000, the Company expects to purchase $3,606,000 in validation and pre-production instruments
during 2009. The Company will also purchase production tooling from Stratec at a cost of approximately $1,200,000, $800,000
of which is expected to be spent in 2009.
The Company is obligated to purchase TIGRIS instruments and raw materials used in manufacturing from two key
vendors. The minimum combined purchase commitment was approximately $24,110,000 as of December 31, 2008. Of the
$24,110,000, $15,910,000 is expected to be used to purchase TIGRIS instruments, of which the Company anticipates that
approximately $6,988,000 will be sold to Novartis.
The Company has one third-party manufacturer for each of its instrument product lines. It is dependent on this third-
party manufacturer, and this dependence exposes the Company to increased risks associated with production delays,
delivery schedules, manufacturing capability, quality control, quality assurance and costs. The Company has no firm long-
term commitments from any of its manufacturers to supply products for any specific period, or in any specific quantity,
except as may be provided in a particular purchase order.
Royalty commitments
In connection with its R&D efforts, the Company has various license agreements with unrelated parties that provide
the Company with rights to develop and market products using certain technology and patent rights maintained by the
parties. Terms of the various license agreements require the Company to pay royalties ranging from 1% up to 16% of future
sales on products using the specified technology. Such agreements generally provide for a term that commences upon
execution and continues until expiration of the last patent covering the licensed technology. Under various license
agreements the Company is required to pay minimum annual royalty payments totaling $175,000. During 2008, 2007 and
2006, the Company recorded to cost of products sold $5,198,000, $5,020,000, and $3,598,000, respectively, in royalty costs
related to its various license agreements.
Litigation
The Company is a party to the following litigation and may be involved in other litigation in the ordinary course of
business. The Company intends to vigorously defend its interests in these matters. The Company expects that the
resolution of these matters will not have a material adverse effect on its business, financial condition or results of
operations. However, due to the uncertainties inherent in litigation, no assurance can be given as to the outcome of these
proceedings.
Digene Corporation
In December 2006, Digene Corporation (“Digene”) filed a demand for binding arbitration against Roche with the
International Centre for Dispute Resolution of the American Arbitration Association in New York (“ICDR”). Digene’s
arbitration demand challenges the validity of the February 2005 supply and purchase agreement between us and Roche.
Under the supply and purchase agreement, Roche manufactures and supplies us with human papillomavirus (“HPV”)
oligonucleotide products. Digene’s demand asserts, among other things, that Roche materially breached a cross-license
agreement between Roche and Digene by granting the Company an improper sublicense and seeks a determination that the
supply and purchase agreement is null and void.
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On July 13, 2007, the ICDR arbitrators granted the Company’s petition to join the arbitration. On August 27, 2007,
Digene filed an amended arbitration demand and asserted a claim against the Company for tortious interference with the
cross-license agreement. The arbitration hearing in this matter commenced on October 27, 2008 and the presentation of
evidence concluded November 10, 2008. In December 2008 and January 2009, the parties filed post-hearing briefs and
closing arguments were presented on January 30, 2009.
The Company believes that the supply and purchase agreement is valid and that its purchases of HPV oligonucleotide
products under the supply and purchase agreement are and will be in accordance with applicable law. However, there can
be no assurance that the matters will be resolved in favor of the Company.
Note 11 —Collaborative and license agreements

Novartis (formerly Chiron Corporation)
In June 1998, the Company entered into a collaboration agreement with Chiron (now Novartis) to develop, manufacture
and market nucleic acid probe assay systems for the blood screening and clinical diagnostic markets. Under the terms of the
collaboration agreement, Novartis or a third party will market and sell products that utilize Novartis’ intellectual property
relating to hepatitis C virus (“HCV”) and human immunodeficiency virus (type 1) (“HIV-1”) and the Company’s patented
technologies. The Company received an up-front license fee of $10,000,000 under the collaboration agreement in 1998. In
September 1998, Chiron assigned the clinical diagnostic portion of the collaboration agreement to Bayer (which, in turn,
assigned the clinical diagnostics portion of the collaboration agreement to Siemens Healthcare Diagnostics, Inc.).
Under the collaboration agreement, as amended, both Novartis and the Company provide certain access to their
intellectual property. The Company has responsibility for research, development and manufacturing of the blood screening
products, while Novartis has responsibility for marketing, distribution and service of the blood screening products
worldwide. The agreement, as amended, contains the following deliverables from the Company: (i) initial license of the
Company’s technology, (ii) R&D, and (iii) manufacturing.
The Company determined that the technology license, R&D, and manufacturing were not separate units of accounting,
in accordance with EITF Issue No. 00-21. The R&D and manufacturing do not have stand-alone value to Novartis since the
related efforts are based on unique technology that could not be obtained from other vendors. Accordingly, the Company
has accounted for the elements as follows: (i) initial license payment of the Company’s technology is being recognized over
the expected development and commercialization term (15 years); (ii) amounts paid to the Company for R&D efforts,
representing the reimbursement of costs incurred by the Company, are shared 50/50 with Novartis and are recorded as
collaborative research revenue (there is no required minimum obligation for the Company to provide services); and (iii) the
Company manufactures the products under the collaboration agreement and shares net revenues of approximately 50/50
(ranging from 45.75% to 50.0%) with Novartis, which support a reasonable margin related to costs of manufacturing.
Novartis is obligated to purchase all of the quantities of these assays specified on a 90-day demand forecast, due 90 days
prior to the date Novartis intends to take delivery, and certain quantities specified on a rolling 12-month forecast.
In January 2009, the Company entered into an agreement (“Amendment No. 11”) with Novartis to amend the June 11,
1998 collaboration agreement (the “1998 Agreement”) between the parties. The effective date of Amendment No. 11 is
January 1, 2009. Amendment No. 11 extends to June 30, 2025 the term of the parties’ blood screening collaboration under the
1998 Agreement. The 1998 Agreement was scheduled to expire by its terms in 2013. See Note 16 for further discussion of
Amendment No. 11.
U.S. blood centers began using the Procleix WNV assay to screen donated blood under an Investigational New Drug
(“IND”) application in June 2003. The Company submitted a Biologics License Application (“BLA”) for the West Nile virus
(“WNV”) assay to the FDA in February 2005. For the years ended December 31, 2008, 2007 and 2006, the Company
recognized $0, $0, and $9,205,000, respectively, in collaborative research revenue through its collaboration with Novartis
from deliveries of WNV tests on a “cost recovery” basis. For the years ended
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December 31, 2008, 2007 and 2006, the Company recognized $0, $355,000, and $1,009,000, respectively in reimbursements for
expenses incurred for WNV development research as collaborative research revenue. In early 2006, the Company
discontinued recognizing these sales as collaborative research revenue upon first shipment of FDA-approved and labeled
product and now records them as product sales.
In March 2003, the Company signed an amendment to the collaboration agreement with Chiron (now Novartis) for the
development and commercialization of the Procleix Ultrio assay. During the years ended December 31, 2008, 2007 and 2006,
the Company received $13,924,000, $5,525,000, and $1,591,000, respectively, in non-refundable reimbursements for expenses
incurred related to the development of the Procleix Ultrio assay from Novartis.
From inception through December 31, 2008, the Company recognized a total of $1,054,000,000 in revenue under this
collaboration agreement and has $3,000,000 in deferred license revenues as of December 31, 2008.
bioMérieux Vitek, Inc.
Effective May 2, 1997, the Company entered into collaborative research agreements with bioMérieux Vitek, Inc.
(“bMx”), which created a worldwide relationship between Gen-Probe and bMx. In August 2000, the Company entered into
amended agreements with bMx that transitioned the relationship from a collaborative arrangement to two royalty-bearing
license agreements covering a semi-automated instrument and associated probe assays and an advanced fully-automated
instrument and probe assays, both for the diagnosis of infectious diseases and detection of food pathogens. In September
2004, the Company entered into a termination agreement with bMx, which terminated one of the August 2000 license
agreements. Pursuant to the termination agreement, bMx paid the Company an aggregate of approximately $1,600,000 to
conclude certain outstanding royalty and other obligations under the terminated license agreement. Further, the Company
paid $1,000,000 to bMx to gain access to bMx’s intellectual property for detecting genetic mutations that predispose people
to blood clotting disorders. In February 2006, bMx terminated the second of the two August 2000 license agreements. In
December 2006, bMx paid the Company $350,000 in settlement of a minimum annual royalty obligation under this agreement,
thereby fulfilling its final obligations under the terminated license.
In September 2004, at the same time the Company entered into the first termination agreement referenced above, the
Company also entered into non-exclusive licensing agreements with bMx and its affiliates that provide bMx’s affiliates
options to access the Company’s ribosomal RNA technologies for certain uses. The Company refers to these agreements as
the Easy Q agreement and the GeneXpert agreement. Pursuant to the terms of these agreements, bMx’s affiliates paid the
Company an aggregate of $250,000 for limited non-exclusive, non-transferable, research licenses, without the right to grant
sublicenses except to affiliates, and non-exclusive, non-transferable options for licenses to develop diagnostic products for
certain disease targets using the Company’s patented ribosomal RNA technologies. The first of these options was
exercised by bMx’s affiliates’ payment to the Company of $4,500,000 in January 2005. In December 2005, bMx’s affiliates
exercised a second option and paid the Company $2,100,000. The Company recognized an aggregate of $3,877,000 as license
revenue in 2005 as a result of these payments. bMx’s affiliates had an option to pay $1,000,000 by December 31, 2006 for
access to additional targets, but did not exercise this option. As a result of the expiration of this option period, the Company
recognized a total of $2,973,000 as revenue in 2006 for amounts previously paid by bMx but deferred.
Under each license, the Company will receive royalties on the net sale of any products bMx and its affiliates develop
using the Company’s intellectual property. The resulting license agreements terminate upon the expiration of the last to
expire patent covered by the agreement. In the event of a change in control with respect to bMx or its affiliates, the
Company has the right to terminate these agreements, and the respective licenses granted to bMx’s affiliates thereunder,
upon 60 days prior written notice to bMx delivered within six months of the date of the change in control. The respective
obligations of bMx’s affiliates under the agreements is guaranteed by bMx SA, the parent company of the bMx affiliates
that are parties to the agreements.
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Note 12 —Significant customers and geographic information

During the years ended December 31, 2008, 2007 and 2006, 48%, 45%, and 48%, respectively, of total revenues were
from Novartis. No other customer accounted for more than 10% of revenues in any fiscal year. As of December 31, 2008 and
2007, the portions of trade accounts receivable related to Novartis were 25% and 36%, respectively.
During the years ended December 31, 2008, 2007 and 2006, 48%, 46%, and 47%, respectively, of product sales were
from the sale of commercially approved blood screening products. Other revenues related to the development of blood
screening products prior to commercial approval are recorded in collaborative research revenue as disclosed in Note 11.
During the years ended December 31, 2008, 2007 and 2006, 52%, 54%, and 53%, respectively, of product sales were from the
sale of clinical diagnostic products and instruments.
Total revenues by geographic region were as follows (in thousands):

2008 2007 2006
Total revenue:
North America $363,225 $322,907 $273,606
Rest of World 109,470 80,107 81,158
$472,695 $403,014 $354,764
Note 13 — Employee benefit plan

Effective May 1, 1990, Gen-Probe established a Defined Contribution Plan covering substantially all employees of Gen-
Probe beginning the month after they are hired. Employees may contribute up to 20% of their compensation per year
(subject to a maximum limit imposed by federal tax law). Gen-Probe is obligated to make matching contributions equal to a
maximum of 50% of the first 6% of compensation contributed by the employee. The contributions charged to operations
related to Gen-Probe employees totaled $1,753,000, $1,614,000, and $1,636,000, for the years ended December 31, 2008, 2007
and 2006, respectively.
Note 14 — Deferred compensation plan

In May 2005, the Company’s Board of Directors approved the adoption of a Deferred Compensation Plan (the “Plan”),
which became effective as of June 30, 2005. The Plan allows certain highly compensated management, key employees and
directors of the Company to defer up to 80% of annual base salary or director fees and up to 80% of annual bonus
compensation. Deferred amounts are credited with gains and losses based on the performance of deemed investment
options selected by a committee appointed by the Board of Directors to administer the Plan. The Plan also allows for
discretionary contributions to be made by the Company. Participants may receive distributions upon (i) a pre-set date or
schedule that is elected during an appropriate election period, (ii) the occurrence of unforeseeable financial emergencies,
(iii) termination of employment (including retirement), (iv) death, (v) disability, or (vi) a change in control of the Company, as
defined in the Plan. Certain key participants must wait six months following termination of employment to receive
distributions. The Plan is subject to Internal Revenue Code Section 409A.
The Company may terminate the Plan at any time with respect to participants providing services to the Company. Upon
termination of the Plan, participants will be paid out in accordance with their prior distribution elections and otherwise in
accordance with the Plan. Upon and for twelve (12) months following a change of control, the Company has the right to
terminate the Plan and, notwithstanding any elections made by participants, to pay out all benefits in a lump sum, subject to
the provisions of the Code. As of December 31, 2008, the Company had approximately $3,715,000 of accrued deferred
compensation under the Plan. Of that amount, $1,553,000 and
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$2,162,000 have been classified as current and long term liabilities within “Accrued salaries and employee benefits” and
“Deferred compensation plan liabilities,” respectively.
Note 15 — Quarterly information (unaudited)

The following tables set forth the quarterly results of operations for each quarter within the two-year period ended
December 31, 2008. The information for each of these quarters is unaudited and has been prepared on the same basis as the
Company’s audited consolidated financial statements. In the opinion of management, all necessary adjustments, consisting
only of normal recurring accruals, have been included to fairly present the unaudited quarterly results when read in
conjunction with the Company’s audited consolidated financial statements and related notes. The operating results of any
quarter are not necessarily indicative of results for any future period.
Quarter Ended
March 31 June 30 September 30 December 31
2008
Total product sales $ 101,507 $113,701 $ 108,253 $ 105,759
Total revenues 122,563 119,814 121,177 109,141
Cost of product sales 32,636 32,510 30,681 32,202
Gross profit 68,871 81,191 77,572 73,557
Total operating expenses 79,547 87,002 78,805 81,946
Net income 31,945 24,791 29,078 21,140
Basic $ 0.59 $ 0.46 $ 0.54 $ 0.40
Diluted(1) $ 0.58 $ 0.45 $ 0.53 $ 0.39
Quarter Ended
March 31 June 30 September 30 December 31
2007
Total product sales $ 87,152 $ 93,897 $ 97,402 $ 92,426
Total revenues 101,051 101,281 101,733 98,949
Cost of product sales 29,160 30,178 31,810 28,493
Gross profit 57,992 63,719 65,592 63,933
Total operating expenses 70,235 76,625 80,423 76,437
Net income 21,475 27,002 17,251 20,412
Basic $ 0.41 $ 0.51 $ 0.32 $ 0.39
Diluted $ 0.40 $ 0.50 $ 0.31 $ 0.37
(1) Amounts shown may reflect rounding adjustments.
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Note 16 —Subsequent events

Amendment to Novartis Agreement
In January 2009, the Company entered into Amendment No. 11 with Novartis to amend the 1998 Agreement between
the parties. The effective date of Amendment No. 11 is January 1, 2009. Amendment No. 11 extends to June 30, 2025 the term
of the parties’ blood screening collaboration under the 1998 Agreement. The 1998 Agreement was scheduled to expire by its
terms in 2013.
The 1998 Agreement provided that the Company was solely responsible for manufacturing costs incurred in
connection with the collaboration, while Novartis was responsible for sales and marketing expenses associated with the
collaboration. Amendment No. 11 provides that, effective January 1, 2009, the Company will recover 50% of its costs of
goods sold incurred in connection with the collaboration. In addition, the Company will receive a percentage of the blood
screening assay revenue generated under the collaboration, as described in the next paragraph.
The 1998 Agreement provided that the companies share revenue from the sale of blood screening assays under the
collaboration. Under the terms of the 1998 Agreement, as previously amended, the Company’s share of revenue from any
assay that included a test for HCV was 45.75%. Amendment No. 11 modifies the Company’s share of such revenues, initially
reducing it to 44% in 2009. The Company’s share of blood screening assay revenue increases in subsequent years as
follows: 2010-2011, 46%; 2012-2013, 47%; 2014, 48%; and 2015, 50%. The Company’s share of blood screening assay
revenue is fixed at 50% from January 1, 2015 though the remainder of the amended term of the agreement. Under
Amendment No. 11, the Company’s share of blood screening assay revenue from any assay that does not test for HCV
remains at 50%. As discussed above, the Company is entitled to its designated percentage of revenue from the sale of
blood screening assays as well as the recovery of 50% of its costs of goods sold. Amendment No. 11 also provides that
Novartis will reduce the amount of time between product sales and payment of the Company’s share of blood screening
assay revenue from 45 days to 30 days.
customize the Company’s Panther instrument, a fully automated molecular testing platform now in development, for use in
the blood screening market. Novartis has also agreed to pay the Company a milestone payment upon the first commercial
sale of the Panther instrument. The parties will equally share any profit attributable to Novartis’ sale or lease of Panther
instruments under the collaboration.
The companies also have agreed to evaluate, using the Company’s technologies, the development of companion
diagnostics for current or future Novartis medicines. Novartis has agreed to provide certain funding to the Company in
support of initial research and development.
Offer to Acquire Tepnel Life Sciences
In January 2009, the Company made a recommended cash offer to acquire Tepnel Life Sciences, Plc (“Tepnel”), a
company registered in England and Wales, for approximately $132,200,000 (based on the exchange rate described in the
offer). The Company’s offer is subject to certain conditions, including approval of the offer by a majority in number
representing 75% or more in value of Tepnel’s shareholders entitled to vote with respect to the proposed transaction.
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SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

For The Three Years Ended December 31, 2008
(In thousands)
Addition
Balance at Charged to Balance at
Beginning Cost and End of
of Period Expenses Deductions(1) Period
Allowance for doubtful accounts:
Year Ended December 31, 2008: $ 719 $ 9 $ (28) $ 700
Inventory reserves:
Year Ended December 31, 2008: $ 6,661 $ 1,493 $ (2,460) $ 5,694
Year Ended December 31, 2007: $ 5,802 $ 1,043 $ (184) $ 6,661
Year Ended December 31, 2006: $ 6,175 $ 5,151 $ (5,524) $ 5,802
(1) Represents amounts written off against the allowance or reserves, or credited to earnings.
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INDEX TO EXHIBITS
Exh ibit
Nu m be r De scription
2.1(2) Separation and Distribution Agreement, dated May 24, 2002, and amended and restated as of August 6,
2002, between Gen-Probe Incorporated and Chugai Pharmaceutical Co., Ltd. (now Rebio Gen, Inc.).
2.2(27) Rule 2.5 Announcement issued on January 30, 2009 by Gen-Probe Incorporated and Tepnel Life Sciences,
Plc.
2.3(28) Implementation Agreement dated January 30, 2009 by and between Gen-Probe Incorporated and Tepnel
Life Sciences Plc.
3.1(2) Form of Amended and Restated Certificate of Incorporation of Gen-Probe Incorporated.
3.2(7) Certificate of Amendment of Amended and Restated Certificate of Incorporation of Gen-Probe
Incorporated.
3.3(32) Amended and Restated Bylaws of Gen-Probe Incorporated.
3.4(21) Certificate of Elimination of the Series A Junior Participating Preferred Stock of Gen-Probe Incorporated.
4.1(2) Specimen Common Stock Certificate.
10.1(21)‡ The 2000 Equity Participation Plan of Gen-Probe Incorporated (as last amended on November 16, 2006).
10.2(21)‡ The 2000 Equity Participation Plan Form of Agreement and Grant Notice for Non-Employee Directors (as
last amended on November 16, 2006).
10.3(21)‡ The 2002 New Hire Stock Option Plan of Gen-Probe Incorporated (as last amended on November 16, 2006).
10.4(21)‡ The 2002 New Hire Stock Option Plan Form of Agreement and Grant Notice (as last amended on
November 16, 2006).
10.5(21)‡ The 2003 Incentive Award Plan of Gen-Probe Incorporated (as last amended on February 8, 2007).
10.6(21)‡ The 2003 Incentive Award Plan Form of Agreements and Grant Notices (as last amended on February 8,
2007).
10.7(13)‡ The 2003 Incentive Award Plan Form of Restricted Stock Award Agreement and Grant Notice, as amended.
10.8(7)‡ Employee Stock Purchase Plan of Gen-Probe Incorporated, as amended.
10.9(22)‡ Gen-Probe Incorporated 2007 Executive Bonus Plan.
10.10(19)‡ 2007 Gen-Probe Employee Bonus Plan.
10.11(16)‡ 2008 Gen-Probe Employee Bonus Plan.
10.12†‡ Amended and Restated Gen-Probe Incorporated Deferred Compensation Plan, effective January 1, 2008.
10.13(4)‡ Gen-Probe Incorporated Change-In-Control Severance Compensation Plan for Employees.
10.14†‡ Amendment to Gen-Probe Incorporated Change-in-Control Severance Compensation Plan, dated
October 2, 2008.
10.15(3) Agreement dated June 11, 1998 between Gen-Probe Incorporated and Chiron Corporation (now Novartis
Vaccines and Diagnostics, Inc.).*
10.16(3) Amendment dated December 7, 1999 to Agreement dated June 11, 1998 between Gen-Probe Incorporated
and Chiron Corporation (now Novartis Vaccines and Diagnostics, Inc.).
10.17(1) Amendment No. 2 dated February 1, 2000 to Agreement dated June 11, 1998 between Gen-Probe
Incorporated and Chiron Corporation (now Novartis Vaccines and Diagnostics, Inc.).
10.18(3) Amendment No. 3 effective April 1, 2002 to Agreement dated June 11, 1998 between Gen-Probe
Incorporated and Chiron Corporation (now Novartis Vaccines and Diagnostics, Inc.).*
10.19(5) Amendment No. 4 effective March 5, 2003 to Agreement dated June 11, 1998 between Gen-Probe
10.20(6) Amendment No. 5 effective January 1, 2004 to Agreement dated June 11, 1998 between Gen-Probe
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Exh ibit
10.21(10) Amendment No. 6 effective January 1, 2004 to Agreement dated as of June 11, 1998 between Gen-Probe
Incorporation and Chiron Corporation (now Novartis Vaccines and Diagnostics, Inc.).*
10.22(21) Amendment No. 7 effective May 20, 2005 to the Agreement dated as of June 11, 1998 between Gen-Probe
10.23(15) Amendment No. 8 effective February 8, 2006 to Agreement dated June 11, 1998 between Gen-Probe
Incorporation and Chiron Corporation (now Novartis Vaccines and Diagnostics, Inc.).
10.24(17) Amendment No. 9 effective July 1, 2006 to the Agreement dated June 11, 1998 between Gen-Probe
10.25† Amendment No. 10 effective September 30, 2007 to the Agreement dated June 11, 1998 between Gen-Probe
Incorporated and Chiron Corporation (now Novartis Vaccines and Diagnostics, Inc.).**
10.26(3) Addendum dated June 11, 1998 to Agreement dated June 11, 1998 between Gen-Probe Incorporated and
Chiron Corporation (now Novartis Vaccines and Diagnostics, Inc.).*
10.27(6) Future Blood Screening Assay — Ultrio Addendum effective January 1, 2001 to the Agreement dated
June 11, 1998 between Gen-Probe Incorporated and Chiron Corporation (now Novartis Vaccines and
Diagnostics, Inc.).*
10.28(10) Modified Blood Screening Instrument — eSAS 2 Addendum effective January 1, 2002 to the Agreement
dated June 11, 1998 between Gen-Probe Incorporated and Chiron Corporation (now Novartis Vaccines and
10.29(6) Future Blood Screening Assay — West Nile Virus Addendum effective June 1, 2003 to the Agreement
dated June 11, 1998 between Gen-Probe Incorporated and Chiron Corporation (now Novartis Vaccines and
10.30† Future Blood Screening Assay — Ultrio 2 Addendum effective October 1, 2008 to the Agreement dated as
of June 11, 1998 between Gen-Probe Incorporated and Chiron Corporation (now Novartis Vaccines and
Diagnostics, Inc.).**
10.31(14) Letter Agreement dated June 11, 1998 between Gen-Probe Incorporated and Chiron Corporation (now
Novartis Vaccines and Diagnostics, Inc.).*
10.32(1) Supplemental Agreement dated April 2, 2001 to the Agreement dated June 11, 1998 for Development,
Distribution and Licensing of TMA Products between Gen-Probe Incorporated and Bayer Corporation.*
10.33(18) Settlement Agreement dated August 1, 2006 among Gen-Probe Incorporated, Bayer HealthCare LLC and
Bayer Corporation.*
10.34(1) Distribution Agreement dated May 2, 1997 between Gen-Probe Incorporated and bioMérieux S.A.*
10.35(3) Distributorship Arrangements Agreement dated May 2, 1997 between Gen-Probe Incorporated and
bioMérieux S.A.*
10.36(1) Renewal Amendment dated November 2, 1999 to the Distribution Agreement and the Distributorship
Arrangements Agreement dated May 2, 1997 between Gen-Probe Incorporated and bioMérieux S.A.
10.37(1) First Amendment dated August 4, 2000 to the Renewed Distribution Agreement and the Distributorship
Arrangements Agreement dated May 2, 1997 between Gen-Probe Incorporated and bioMérieux S.A.*
10.38(7) 2003 Amendment dated May 2, 2003 to the Renewed Distribution Agreement and the Distributorship
Arrangements Agreement dated May 2, 1997 between Gen-Probe Incorporated and bioMérieux, S.A.*
10.39(15) 2006 Amendment dated May 1, 2006 to the Renewed Distributorship Agreement and the Distributorship
Arrangements Agreement dated May 2, 1997 between Gen-Probe Incorporated and bioMérieux, S.A.
10.40(8) Ribosomal Nucleic Acid License and Option Agreement (for Easy Q Instrument) dated September 30, 2004
between Gen-Probe Incorporated and bioMérieux B.V.*
10.41(8) Guarantee Agreement dated September 30, 2004 by bioMérieux S.A., on behalf of its subsidiary bioMérieux,
Inc. in favor of Gen-Probe Incorporated.
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Exh ibit
10.42(8) Ribosomal Nucleic Acid License and Option Agreement (for GeneXpert Instrument) dated September 30,
2004 by and between Gen-Probe Incorporated and bioMérieux, Inc.*
10.43(8) Guarantee Agreement dated September 30, 2004, by bioMérieux S.A., on behalf of its subsidiary bioMérieux
B.V. in favor of Gen-Probe Incorporated.
10.44(8) Side Letter dated October 1, 2004 by and between Gen-Probe Incorporated, bioMérieux B.V., and
bioMérieux, Inc.*
10.45(8) License Agreement entered into September 30, 2004 by and between Gen-Probe Incorporated and
bioMérieux B.V.*
10.46(3) License Agreement dated July 1, 2001 between Gen-Probe Incorporated and Chugai Diagnostics Science
Co., Ltd. (now Rebio Gen, Inc.).
10.47(3) Distribution Agreement effective as of September 1, 1998 between Gen-Probe Incorporated and Chugai
Diagnostics Science Co., Ltd. (now Rebio Gen, Inc.).
10.48(3) First Amendment dated June 30, 2002 to September 1, 1998 Distribution Agreement between Gen-Probe
Incorporated and Chugai Diagnostics Science Co., Ltd. (now Rebio Gen, Inc.).
10.49(3) Co-Exclusive Agreement effective April 23, 1997 between Gen-Probe Incorporated and The Board of
Trustees of the Leland Stanford Junior University.*
10.50(1) Amendment No. 1 effective April, 1998 to the License Agreement effective April 23, 1997 between Stanford
University and Gen-Probe Incorporated.*
10.51(3) Non-Assertion Agreement dated February 7, 1997 between Gen-Probe Incorporated and Organon Teknika
B.V.*
10.52(3) Non-exclusive License Agreement under Vysis’ Collins Patents dated June 22, 1999 between Gen-Probe
Incorporated and Vysis, Inc.*
10.53(8) Settlement Agreement under Vysis’ Collins Patents effective September 17, 2004 by and between Gen-Probe
Incorporated and Vysis, Inc.*
10.54(8) Amendment to Nonexclusive License Agreement under Vysis’ Collins Patents dated September 17, 2004 by
and between Gen-Probe Incorporated and Vysis, Inc.*
10.55(3) Amended and Restated License Agreement effective July 19, 2002 between Gen-Probe Incorporated and
The Public Health Research Institute of The City of New York, Inc.*
10.56(3) Development, License and Supply Agreement effective October 16, 2000 between Gen-Probe Incorporated
and KMC Systems, Inc.*
10.57(1) First Amendment made as of September, 2001 to Agreement entered into as of October 16, 2000 between
Gen-Probe Incorporated and KMC Systems, Inc.*
10.58(3) Supply Agreement effective March 5, 1998 between Gen-Probe Incorporated and Boehringer Mannheim
GmbH.*
10.59(1) First Amendment effective February 21, 2001 between Gen-Probe Incorporated and Roche Diagnostics
GmbH (the successor-in-interest to Boehringer Mannheim GmbH) to the Supply Agreement effective as of
March 5, 1998 between Gen-Probe Incorporated and Boehringer Mannheim GmbH.*
10.60(9) Second Amendment dated August 31, 2004 between Gen-Probe Incorporated and Roche Diagnostics (the
successor-in-interest to Boehringer Mannheim GmbH) to the Supply Agreement effective as of March 5,
1998 between Gen-Probe Incorporated and Boehringer Mannheim GmbH.*
10.61(30) Third Amendment effective January 1, 2007 between Gen-Probe Incorporated and Roche Diagnostics (the
successor-in-interest to Boehringer Mannheim GmbH) to the Supply Agreement effective as of March 5,
1998 between Gen-Probe Incorporated and Boehringer Mannheim GmbH.*
10.62(6) License, Development and Cooperation Agreement dated November 19, 2003 between Gen-Probe
Incorporated and DiagnoCure Inc.*
10.63(17) Amendment No. 1 to License, Development and Cooperation Agreement effective May 24, 2006 between
Gen-Probe Incorporated and DiagnoCure, Inc.*
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Exh ibit
10.64(6) Target License Agreement dated January 1, 2004 between Gen-Probe Incorporated and Tosoh
Corporation.*
10.65(6) TRC License Agreement dated January 1, 2004 between Gen-Probe Incorporated and Tosoh Corporation.*
10.66(6) TMA License Agreement dated January 1, 2004 between Gen-Probe Incorporated and Tosoh
Corporation.*
10.67(6) Supply Agreement dated January 1, 2002 between Gen-Probe Incorporated and MGM Instruments, Inc.*
10.68(7) Supply Agreement Amendment Number One dated June 4, 2004 between Gen-Probe Incorporated and
MGM Instruments, Inc.*
10.69(9) License Agreement effective as of December 30, 2004 between Gen-Probe Incorporated and AdnaGen
AG.*
10.70(9) License Agreement effective as of December 31, 2004 between Gen-Probe Incorporated and Corixa
Corporation.*
10.71(10) Supply and Purchase Agreement effective February 15, 2005 between Gen-Probe Incorporated, F. Hoffman-
La Roche Ltd. and Roche Molecular Systems, Inc.*
10.72(23) Development Agreement for Panther Instrument System effective November 22, 2006 between Gen-Probe
Incorporated and STRATEC Biomedical Systems AG.*
10.73(23) Supply Agreement for Panther Instrument System effective November 22, 2006 between Gen-Probe
Incorporated and STRATEC Biomedical Systems AG.*
10.74(23) Letter Agreement regarding Development Agreement for Panther Instrument System dated July 17, 2007
between Gen-Probe Incorporated and STRATEC Biomedical Systems AG.*
10.75†‡ Amended and Restated Employment Agreement effective November 18, 2008 by and between Gen-Probe
Incorporated and Henry L. Nordhoff.
10.76(8)‡ Deferred Issuance Restricted Stock Conversion Agreement, Deferred Issuance Award Agreement and
Election Agreement effective September 10, 2004 between Gen-Probe Incorporated and Henry L. Nordhoff.
10.77(10)‡ Amendment effective February 1, 2005 to Deferred Issuance Restricted Stock Conversion Agreement,
Deferred Issuance Award Agreement and Election Agreement effective September 10, 2004 between Gen-
Probe Incorporated and Henry L. Nordhoff.
10.78(12)‡ Deferred Issuance Restricted Stock Award Grant Notice and Agreement effective May 20, 2005 between
Gen-Probe Incorporated and Henry L. Nordhoff.
10.79†‡ Second Amendment dated October 31, 2008 to Deferred Issuance Restricted Stock Conversion Agreement
and Deferred Issuance Restricted Stock Election Agreement between Gen-Probe Incorporated and Henry
L. Nordhoff.
10.80(20)‡ Employment Offer Letter dated February 7, 2007 between Gen-Probe Incorporated and Carl W. Hull.
10.81(29)‡ Amended and Restated Employment Agreement effective March 1, 2008 between Gen-Probe Incorporated
and Carl W. Hull.
10.82†‡ Amendment to Employment Agreement effective October 31, 2008, between Gen-Probe Incorporated and
Carl W. Hull.
10.83(22)‡ Agreement dated April 16, 2007 between Gen-Probe Incorporated and Larry T. Mimms.
10.84(11)‡ Employment Offer Letter effective July 15, 2005 between Gen-Probe Incorporated and Stephen J. Kondor.
10.85(24)‡ Employment Offer Letter between Gen-Probe Incorporated and Christina Yang.
10.86†‡ Amendment to Offer Letter Agreement effective October 31, 2008, between Gen-Probe Incorporated and
Christina Yang.
10.87(26)‡ Employment Offer Letter effective October 30, 2007 between Gen-Probe Incorporated and Jorgine
Ellerbrock.
10.88(22)‡ Form of Employment Agreement — Executive Team (executed by the following executive officers: D.
Kacian, R. Bowen, S. Kondor, H. Rosenman, D. De Walt, J. Ellerbrock and C. Yang).
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Exh ibit
10.89(22)‡ Form of Employment Agreement — Vice Presidents (executed by the following officers: L. Arnold, P.
Gargan, R. Blake, T. Brach, F. Eibel and B. Hansen).
10.90(22)‡ Form of First Amendment to Employment Agreement for Executive Vice Presidents and Vice Presidents,
effective March 1, 2007 (executed by the following officers: L. Arnold, R. Bowen, D. De Walt, P. Gargan, D.
Kacian, S. Kondor, H. Rosenman).
10.91(31)‡ Form of Employment Agreement — Executive Team as approved in September 2008 (executed by the
following executive officers: E. Tardif and E. Lai).
10.92(31)‡ Form of Employment Agreement — Vice Presidents as approved in September 2008 (executed by the
following officers: C. Giachetti and B. Phillips).
10.93†‡ Form of First Amendment to Employment Agreement effective October 2008 (executed by the following
officers: R. Blake, T. Brach, F. Eibel, B. Hansen, J. Ellerbrock and C. Yang)
10.94†‡ Form of Second Amendment to Employment Agreement effective October 2008 (executed by the following
officers: L. Arnold, P. Gargan, R. Bowen, D. De Walt, D. Kacian, S. Kondor and H. Rosenman)
10.95(2)‡ Form of Indemnification Agreement between Gen-Probe Incorporated and its Executive Officers and
Directors.
21.1† List of subsidiaries of Gen-Probe Incorporated.
23.1† Consent of Independent Registered Public Accounting Firm.
31.1† Certification dated February 25, 2009, of Principal Executive Officer required pursuant to 18 USC.
Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2† Certification dated February 25, 2009, of Principal Financial Officer required pursuant to 18 USC.
32.1† Certification dated February 25, 2009, of Principal Executive Officer required pursuant to 18 USC.
32.2† Certification dated February 25, 2009, of Principal Financial Officer required pursuant to 18 USC.
Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
† Filed herewith.
‡ Indicates management contract or compensatory plan, contract or arrangement.
* Gen-Probe has been granted confidential treatment with respect to certain portions of this exhibit.
** Gen-Probe has requested confidential treatment with respect to certain portions of this exhibit.
(1) Incorporated by reference to Gen-Probe’s Registration Statement on Form 10 filed with the SEC on May 24, 2002.
(2) Incorporated by reference to Gen-Probe’s Amendment No. 2 to Registration Statement on Form 10 filed with the SEC
on August 14, 2002.
(3) Incorporated by reference to Gen-Probe’s Amendment No. 3 to Registration Statement on Form 10 filed with the SEC
on September 5, 2002.
(4) Incorporated by reference to Gen-Probe’s Annual Report on Form 10-K filed with the SEC on March 24, 2003.
(5) Incorporated by reference to Gen-Probe’s Quarterly Report on Form 10-Q filed with the SEC on May 9, 2003.
(7) Incorporated by reference to Gen-Probe’s Quarterly Report on Form 10-Q filed with the SEC on August 9, 2004.
(8) Incorporated by reference to Gen-Probe’s Quarterly Report on Form 10-Q filed with the SEC on November 9, 2004.
(11) Incorporated by reference to Gen-Probe’s Report on Form 8-K filed with the SEC on August 1, 2005.
Table of Contents
(13) Incorporated by reference to Gen-Probe’s Report on Form 8-K filed with the SEC on December 6, 2005.
(14) Incorporated by reference to Gen-Probe’s Report on Form 8-K filed with the SEC on December 8, 2005.
(16) Incorporated by reference to Gen-Probe’s Report on Form 8-K filed with the SEC on April 2, 2008.
(19) Incorporated by reference to Gen-Probe’s Report on Form 8-K filed with the SEC on February 14, 2007.
(21) Incorporated by reference to Gen-Probe’s Annual Report on Form 10-K filed with the SEC on February 23, 2007.
(24) Incorporated by reference to Gen-Probe’s Report on Form 8-K filed with the SEC on May 2, 2007.
(25) Incorporated by reference to Gen-Probe’s Report on Form 8-K filed with the SEC on May 24, 2007.
(26) Incorporated by reference to Gen-Probe’s Report on Form 8-K filed with the SEC on November 19, 2007.
(27) Incorporated by reference to Gen-Probe’s Report on Form 8-K filed with the SEC on January 30, 2009.
(29) Incorporated by reference to Gen-Probe’s Report on Form 8-K filed with the SEC on March 18, 2008.
(30) Incorporated by reference to Gen-Probe’s Quarterly Report on Form 10-K filed with the SEC on February 25, 2008.
(31) Incorporated by reference to Gen-Probe’s Quarterly Report on Form 10-Q filed on October 31, 2008.
Exhibit 10.12
DEFERRED COMPENSATION PLAN
EFFECTIVE JUNE 30, 2005
AMENDED AND RESTATED JANUARY 1, 2008
TABLE OF CONTENTS
P age
ARTICLE I.
Establishment and Purpose 1
ARTICLE II.
Definitions 1
ARTICLE III.
Eligibility and Participation 8
ARTICLE IV.
Deferral Elections 9
ARTICLE V.
Company Contributions 13
ARTICLE VI.
Valuation of Accounts; Deemed Investments 15
ARTICLE VII.
Distribution and Withdrawals 16
ARTICLE VIII.
Administration 19
ARTICLE IX.
Amendment and Termination 21
ARTICLE X.
Informal Funding 22
ARTICLE XI.
Claims 23
ARTICLE XII.
Beneficiary Designation 26
ARTICLE XIII.
General Conditions 27
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ARTICLE I.
Establishment and Purpose
The purpose of this Plan is to provide a select group of management or highly compensated employees and non-employee members of the
Board of Gen-Probe Incorporated, a Delaware corporation and its affiliates or subsidiaries, if any, with the opportunity to defer a portion of
their compensation and to receive contributions from their employers. The Plan is not intended to meet the qualification requirements of
Section 401(a) of the Code, but is intended to meet the requirements of Section 409A of the Code, and to be an unfunded arrangement
providing deferred compensation to eligible employees who are part of a select group of management or highly compensated employees of
Participating Employers within the meaning of Sections 201, 301 and 401 of ERISA. The Plan is intended to be exempt from the requirements of
Parts 2, 3 and 4 of Title I of ERISA as a “top hat” plan, and to be eligible for the alternative method of compliance for reporting and disclosure
available for unfunded “top hat” plans.
ARTICLE II.
Definitions
2.1 Account. Account means a bookkeeping account maintained by the Plan Administrator to record deferrals allocated to it by the
Participant, Company Contributions (if any), Deemed Investments, distributions, and such other transactions, if any, that may be
required to properly administer the Plan. An Account shall be utilized solely as a device for the measurement of the value of the Account
Balance to be paid by a Participating Employer to a Participant under the Plan. The Plan Administrator shall maintain appropriate sub-
Accounts to reflect amounts payable at different times and in different forms, in accordance with the terms of the Plan. The Account
shall not constitute or be treated as an escrow, trust fund, or any other type of funded account for the Code or ERISA purposes and
amounts credited thereto shall not be considered “plan assets” for federal income tax or ERISA purposes.
2.2 Account Balance. Account Balance means, with respect to the Deferred Compensation Account or any component Account, the value
of such Account as of the most recent Valuation Date.
2.3 Allocation Election. Allocation Election means a choice by a Participant of one or more Investment Options, and the allocation among
them, in which future Participant deferrals and/or existing Account Balances are Deemed Invested for purposes of determining earnings
in a particular Account.
2.4 Beneficiary. Beneficiary means one or more persons, trusts, estates or other entities, designated in accordance with Article XII, that are
entitled to receive benefits under the Plan upon the death of a Participant.
2.5 Beneficiary Designation Form. Beneficiary Designation Form means the form established from time to time by the Committee that a
Participant completes, signs, and returns to the Committee (or its designated agent) to designate one or more Beneficiaries.
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2.6 Business Day. A Business Day is each day on which the New York Stock Exchange is open for business.
2.7 Change in Control. A Change in Control occurs on the date on which there is (a) a change in the ownership of the Company, (b) a
change in the effective control of the Company or (c) a change in the ownership of a substantial portion of the Company’s assets, in
each case, as described herein, provided that the transaction will constitute a change in the ownership or effective control or a change in
the ownership of a substantial portion of the assets, as described in Treasury Regulation Section 1.409A-3(i)(5). For purposes of this
Section, a change in ownership of the Company occurs on the date on which any one person or more than one person acting as a group
acquires ownership of stock of the Company that, together with stock held by such person or group constitutes more than 50% of the
total fair market value or total voting power of the stock of the Company. A change in the effective control of the Company occurs on
the date on which either (i) a person or more than one person acting as a group acquires ownership of stock of the Company possessing
51% or more of the total voting power of the stock of the Company or (ii) a majority of members of the Company’s board of directors is
replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the
Company’s board of directors prior to the date of the appointment or election. A change in the ownership of a substantial portion of
assets of the Company occurs on the date on which any one person or more than one person acting as a group acquires assets from the
Company that have a total gross fair market value equal to or more than 51% of the total gross fair market value of all of the assets of the
Company immediately prior to such acquisition or acquisitions. With respect to a Participating Employer other than the Company, a
Change in Control shall occur on the date that the Company or its affiliates (or any combination of the foregoing) shall cease to be the
beneficial owners of at least 50% of the total fair market value or total voting power of the outstanding voting securities of the
Participating Employer or a sale of substantially all of the assets of a Participating Employer to a party other than the Company or one of
its affiliates, provided that in either case, the transaction will constitute a change in the ownership or effective control or a change in the
ownership of a substantial portion of the assets, as described in Treasury Regulation Section 1.409A-3(i)(5).
2.8 Code. Code means the Internal Revenue Code of 1986, as amended from time to time.
2.9 Committee. Committee means the Compensation Committee of the Board of Directors of the Company, or such individuals appointed by
the Board of Directors to act as the Committee with duties and responsibilities to administer the Plan and to make such other
discretionary decisions as are relegated to the Committee herein.
2.10 Company. Company means Gen-Probe Incorporated, a Delaware corporation.
2.11 Company Discretionary Contribution. Company Discretionary Contribution means a Company Contribution made in the sole discretion
of a Participating Employer in accordance with Section 5.1 or 5.2 of the Plan.
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2.12 Company Contribution Account. Company Contribution Account means the Participant’s share of (a) Discretionary Company Matching
Contributions (as described in Section 5.1(a)) plus (b) Discretionary Matching Make-Up Contributions (as described in Section 5.1(b)
plus (c) changes in value of the Deemed Investments hereon credited (or debited) in accordance with Section 2.16, net of all distributions
from such account.
2.13 Compensation. Compensation means, for purposes of this Plan, base salary (including any deferred salary under a Code Section 401(k)
or 125 plan), bonus, commission, Directors’ Fees and such other cash compensation (if any) approved by the Plan Administrator as
Compensation for purposes of this Plan. Compensation shall not include payroll deductions pursuant to any other employee benefit plan
or any contract or arrangement between the Participant and the Participating Employer or any deduction required by law or court order.
2.14 Compensation Deferral Agreement. Compensation Deferral Agreement means an agreement submitted to the Plan Administrator in which
a Participant makes an initial deferral election, which election shall comply with the applicable requirements of Code Section 409A,
including: (a) making an election to defer Compensation in accordance with Article IV, (b) designating a payment date(s) or event(s)
which is/are permissible under the applicable requirements of Code Section 409A and the terms of the Plan and (c) specifying a Payment
Schedule with respect to distributions from the Plan. In the discretion of the Plan Administrator, a Compensation Deferral Agreement
may also be used to make an Allocation Election and/or to make subsequent deferral elections in accordance with the applicable
requirements of Code Section 409A. Unless otherwise provided in Section 4.2 hereof, a Compensation Deferral Agreement remains in
effect from Plan Year to Plan Year until modified in accordance with the Plan. Notwithstanding the foregoing, and subject to the
provisions of Section 3.3, the Plan Administrator may modify a Participant’s Compensation Deferral Agreement at any time as necessary
(and only as necessary and permitted under the applicable requirements of Code Section 409A) to conform the Compensation Deferral
Agreement and the Plan to applicable law.
2.15 Death Benefit. Death Benefit shall mean a distribution of the total amount of the Participant’s Deferred Compensation Account Balance,
including any remaining unpaid In Service Account balances, to the Participant’s Beneficiary(ies) in accordance with Article VII of the
Plan.
2.16 Deemed Investment. A Deemed Investment means the conversion of a dollar amount of deferred Compensation and Company
Contributions (if any) credited to a Participant’s Deferred Compensation Account into notional shares or units or ownership (or a
fraction of such measures of ownership, if applicable) of a security (e.g. mutual fund, company stock, or other investment) which is
referred to by the Investment Option(s) selected by the Participant. The conversion shall occur as if shares (or units) of the designated
investment were being purchased (or sold, in the case of a distribution) at the purchase price as of the close of business of the day on
which the Deemed Investment occurs. At no time shall a Participant have any real or beneficial ownership in the actual security to which
the Investment Option refers, irrespective of whether such a Deemed Investment is
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mirrored by an actual identical investment by the Company or a trustee acting on behalf of the Company.
2.17 Deferred Compensation Account. Deferred Compensation Account means the Account maintained by the Plan Administrator that
records the total amount of liability of a Participating Employer to a Participant at any point in time, and includes all unpaid In Service
Accounts, the Retirement/Termination Account, and any other Account maintained by the Plan Administrator (e.g. a separate Company
Contribution Account) to properly administer the Plan.
2.18 Directors. Directors means non-employee members of the Board of Directors of the Company.
2.19 Directors’ Fees. Directors’ Fees means retainers, meeting fees, chairperson fees and any other cash remuneration paid by the Company
for services as a member of the Board of Directors.
2.20 Disability. Disability means that a Participant (a) is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of
not less than 12 months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result
in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period
of not less than 3 months under an accident and health plan covering employees of the Participant’s employer. The determination of the
existence of a Disability shall be made by the Plan Administrator in accordance with Section 409A of the Code and the regulations and
guidance promulgated thereunder.
2.21 Disability Benefit. Disability Benefit means payment by a Participating Employer to a Participant of the Deferred Compensation Account
Balance, including any remaining unpaid In Service Account balances, due to the Participant’s Disability.
2.22 Effective Date. Effective Date means January 1, 2008.
2.23 Eligible Employee. Eligible Employee means an Employee who is part of a select group of management or highly compensated employees
of the Company or a Participating Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and who is selected
by the Committee to participate in the Plan.
2.24 Employee. Employee means a full-time salaried employee of a Participating Employer.
2.25 ERISA. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.
2.26 In Service Account. In Service Account means each Account established pursuant to Section 4.6 to identify the portion of a
Participant’s Deferred Compensation Account to be paid on each In Service Distribution Date. Each In Service Account shall be credited
with deferrals as specified in the Participant’s Compensation Deferral Agreements, plus
4
earnings on Deemed Investments in accordance with such Participant’s Allocation Election. Unless otherwise specified by the Plan
Administrator on the Compensation Deferral Agreement, a Participant may have a maximum of five (5) In Service Accounts with balances
greater than zero at any given time (or such other maximum amount as determined by the Plan Administrator). A single In Service
Account shall be maintained with respect to each In Service Distribution Date and all elections with respect thereto shall apply to the
entire In Service Account Balance.
2.27 In Service Distribution. In Service Distribution means a payment by a Participating Employer to a Participant from an In Service Account
on or after the In Service Distribution Date.
2.28 In Service Distribution Date. In Service Distribution Date means the date on which payment of an In Service Account Balance will
commence in accordance with a Payment Schedule.
2.29 Investment Option. Investment Option means a notional security such as a mutual fund, life insurance policy separate account, company
stock, or other investment approved by the Plan Administrator for use as part of an Investment Option menu, which a Participant may
elect as a measuring device to determine Deemed Investment earnings (positive or negative) to be valued in the Participant’s
Account(s). The Participant has no real or beneficial ownership in the security or other investment represented by the Investment
Option.
2.30 Participant. Participant means a Director or an Eligible Employee employed by a Participating Employer who: (a) has elected to defer
Compensation in accordance with the Plan; (b) has received a Company Contribution; or (c) has a Deferred Compensation Account
Balance greater than zero, regardless of whether the Participant is employed by a Participating Employer or continues to provide services
as a Director. A Participant’s continued participation in the Plan shall be governed by Section 3.2 of the Plan.
2.31 Participating Employer. Participating Employer means the Company and any subsidiary or affiliate of the Company that has adopted the
Plan and that assumes exclusive responsibility for payment of benefits to its employees and Directors who are Participants in accordance
with the terms of the Plan. A Participating Employer’s liabilities under this Plan shall be limited to the benefit obligations owed to its
employees and Directors and shall not extend to the obligations owed to employees or Directors of any other Participating Employer
arising hereunder.
2.32 Payment Schedule. Payment Schedule means the form of payment for a distribution under the Plan. Unless otherwise indicated by the
Plan Administrator on the Compensation Deferral Agreement, the Retirement Benefit of a Participant may be paid (a) in a lump sum
between 0% and 100% of the Participant’s Deferred Compensation Account and (b) the balance, if any, in annual installments from two
(2) to fifteen (15) years. In the event a Participant elects a lump sum payment less than 100% of the Deferred Compensation Account
Balance (a “partial lump sum”), the “partial lump sum” shall at all times with respect to the amounts deferred be treated as a separate
payment,
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and the installment payments for the balance of the Deferred Compensation Account Balance shall, at all times with respect to the
amounts deferred, be treated as a single separate payment. An In Service Account may be paid in a lump sum equal to 100% of the In
Service Account Balance or in annual installments from two (2) to five (5) years.
2.33 Performance-Based Compensation. Performance-Based Compensation means Compensation based on services performed over a period
of not less than twelve months and which meets the following requirements: (a) the payment of the Compensation or the amount of the
Compensation is contingent upon the satisfaction of pre-established organizational or individual performance criteria and (b) the
performance criteria are not substantially certain to be met at the time a Compensation Deferral Agreement is submitted to the Plan
Administrator. For purposes hereof and beginning on and after January 1, 2007, “pre-established organizational or individual
performance criteria” shall mean criteria which are established in writing by not later than ninety (90) days after the commencement of the
period of service to which the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are established.
Performance criteria may be subjective but must relate to the performance of the Participant, a group of Employees that includes the
Participant or a business unit (which may include the Company) for which the Participant provides services. The determination that any
subjective performance criteria have been met shall not be made by the Participant or by a family member of the Participant. Performance-
Based Compensation does not include any amount or portion of any amount that will be paid regardless of performance or which is
based on a level of performance that is substantially certain to be met at the time the criteria is established.
2.34 Plan. Plan means the Gen-Probe Incorporated Deferred Compensation Plan as amended and restated herein, and as it may be amended
from time to time hereafter.
2.35 Plan Administrator. Except as provided in Article VIII hereof, Plan Administrator means the individual or individuals appointed by the
Committee. The Plan Administrator is responsible for such recordkeeping and other administrative responsibilities delegated to it by the
Committee and as are specified under the Plan.
2.36 Plan Year. Plan Year means January 1 through December 31 starting with 2005. The first Plan Year shall be a short Plan Year beginning
June 30, 2005.
2.37 Retirement. Retirement, with respect to a Participant who was an Eligible Employee, shall mean the Separation from Service with a
Participating Employer after reaching age 55 with at least five (5) Years of Service with the Company (including all Participating
Employers). Retirement shall also mean, with respect to a Director, a Separation from Service. Any determination of whether a Separation
from Service constitutes Retirement for purposes of this Plan shall be made in the sole discretion of the Committee.
2.38 Retirement Benefit. Retirement Benefit shall mean a payment by the Company of a Participant’s Deferred Compensation Account Balance
(including all unpaid In Service Account Balances) to the Participant upon such Participant’s Retirement, in accordance
6
with the Participant’s Payment Schedule election or as otherwise specified in Article V of the Plan.
2.39 Retirement/Termination Account. Retirement/Termination Account shall mean, prior to the payment of a Retirement or Termination
Benefit, that portion of the Deferred Compensation Account not allocated to In Service Accounts. Unless otherwise provided by the
Plan Administrator, the Retirement/Termination Account shall be maintained as a single Account and all elections with respect thereto
(other than an Allocation Election) shall apply to the entire Retirement/Termination Account Balance.
2.40 Separation from Service. Separation from Service shall mean the termination of a Participant’s employment or service with a Participating
Employer for any reason which constitutes a “separation from service” within the meaning of Section 409A of the Code and the
regulations promulgated thereunder, including Treasury Regulation Section 1.409A-1(h).
2.41 Specified Employee. Specified Employee shall mean any Participant who is determined to be a “key employee” (as defined under Code
Section 416(i) without regard to paragraph (5) thereof) for the applicable period, as determined annually by the Committee in accordance
with Treasury Regulation Section 1.409A-1(i).
2.42 Termination Benefit. Termination Benefit shall mean a payment by the appropriate Participating Employer of a Participant’s Deferred
Compensation Account Balance (including all unpaid In Service Account Balances) upon Separation from Service with a Participating
Employer for a reason other than Retirement or death, as specified in Article V of the Plan.
2.43 Unforeseeable Emergency. An unforeseeable emergency is a severe financial hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or of a dependent (as defined in Code Section 152(a)) of the Participant, loss of the
Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, as defined in Treasury Reg. Section 1.409A-3(i)(3)(i). The Plan Administrator, in its sole discretion
and subject to the requirements of Section 409A of the Code and the regulations thereunder, shall determine whether a Participant has
experienced an Unforeseeable Emergency.
2.44 Valuation Date. Valuation Date shall mean each Business Day except as specified below.
(a) The Valuation Date for a Retirement Benefit and for a Termination Benefit shall be the last day of the month in which the
Participant’s Separation from Service occurs. In the case of a Retirement Benefit or Termination Benefit payable to a Specified
Employee, the Valuation Date shall be the last day of the month following the date which is six months following such Participant’s
Separation from Service.
(b) The Valuation Date for an In Service Distribution shall be the last day of the month in which the In Service Distribution Date
occurs.
7
(c) The Valuation Date for a Disability Benefit shall be the last Business Day of the month in which the Plan Administrator determines
that the Participant is Disabled.
(d) The Valuation Date for a Death Benefit is the last day of the month in which the Participant’s death occurs.
For purposes of calculating the amount of an installment payment, the Valuation Date is the anniversary of the Valuation Date on which
such installment payments commenced.
2.45 Year of Service. Year of Service shall be computed in the same manner as provided under the Company’s tax-qualified profit sharing or
401(k) arrangement. If more than one such arrangement exists, the Committee shall identify the appropriate plan document or documents
for the determination of Years of Service. If there is no such arrangement or the arrangement does not provide a definition of Year of
Service, a Year of Service shall be based on a methodology adopted by the Plan Administrator, applied consistently to all Participants.
ARTICLE III.
Eligibility and Participation
3.1 Eligibility and Participation. Each Director and Eligible Employee shall be eligible to participate in this Plan. A Director or an Eligible
Employee becomes a Participant upon submission of a Compensation Deferral Agreement to the Plan Administrator (or, if earlier, the
date on which a credit of Company Contributions is made to such individual’s Account).
3.2 Duration. A Participant shall be eligible to defer Compensation and receive allocations of Company Contributions subject to the terms of
the Plan as long as such Participant is an Eligible Employee or a Director. A Participant who is no longer an Eligible Employee but
continues to be employed by a Participating Employer may not defer Compensation but may otherwise exercise all of the rights of a
Participant under the Plan with respect to his or her Deferred Compensation Account. On and after a Separation from Service, a
Participant shall remain a Participant as long as his or her Deferred Compensation Account is greater than zero and during such time may
continue to make Allocation Elections. An individual shall cease participation in the Plan when all benefits under the Plan to which he or
she is entitled have been paid.
3.3 Revocation of Future Participation. Notwithstanding the provisions of Section 3.2, the Committee may, in its discretion, revoke such
Participant’s eligibility to make future deferrals under this Plan. Such revocation will not affect in any manner a Participant’s Deferred
Compensation Account or other terms of this Plan.
3.4 Notification. Each newly eligible Director and each newly Eligible Employee shall be notified by the Plan Administrator, in writing, of his
or her eligibility to participate in this Plan.
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3.5 Leave of Absence.

(a) Paid Leave of Absence. If a Participant is authorized by his or her Participating Employer for any reason to take a paid leave of
absence from the employment or service of the Participating Employer, and such leave of absence does not constitute a Separation
from Service, the Participant shall continue to be considered actively employed by or in the service of the Participating Employer
for purposes hereof and the Compensation Deferral Agreement continue to apply to any Compensation paid during such leave of
absence.
(b) Unpaid Leave of Absence. If a Participant is authorized by the his or her Participating Employer for any reason to take an unpaid
leave of absence from the employment of or service with the Participating Employer, the Participant shall continue to be considered
actively employed by the Participating Employer for purposes hereof. Upon the earlier of the date the leave of absence expires or
the date the Participant returns to paid employment or service, deferrals shall resume for the remaining portion of the Plan Year in
which the expiration or return occurs, based on the Compensation Deferral Agreement, if any, in effect for that Plan Year. If no
deferral election was made for that Plan Year, no Plan deferrals shall be withheld from Compensation for the remainder of the Plan
Year.
ARTICLE IV.
Deferral Elections
4.1 Deferral Elections. A Participant shall make deferral elections by completing and submitting to the Plan Administrator the Compensation
Deferral Agreement which shall specify the deferral, investment and distribution information as described in this Article IV.
4.2 Time of Election.
(a) Initial Eligibility. In the case of the Plan Year in which an individual first becomes a Director eligible to participate in the Plan or an
Employee first becomes an Eligible Employee, a Compensation Deferral Agreement that defers Compensation with respect to
services to be performed in such Plan Year and subsequent to the election must be submitted to the Plan Administrator within
thirty (30) days after such individual first becomes eligible to participate in the Plan. In the case of compensation that is earned
based upon a specified performance period (for example, an annual bonus), where a deferral election is made in the first year of
eligibility but after the beginning of the service period, the election will apply to the portion of the compensation equal to the total
amount of the compensation for the service period multiplied by the ratio of the number of days remaining in the performance
period after the election over the total number of days in the performance period. A Compensation Deferral Agreement submitted
pursuant to this Section 4.2(a) shall become irrevocable no later than the end of the thirty (30) day period described herein.
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(b) Subsequent Plan Years. Any changes to a Compensation Deferral Agreement for any subsequent Plan Year shall be made in
accordance with Section 4.4 and any such Compensation Deferral Agreement containing the election to defer Compensation for
services performed during such Plan Year must be submitted to the Plan Administrator no later than the close of the preceding Plan
Year (except with respect to a deferral of Performance-Based Compensation made in accordance with Section 4.2(c)). A
Compensation Deferral Agreement submitted pursuant to this Section 4.2(b) shall become irrevocable no later than the first day of
the Plan Year to which it first applies.
(c) Performance-Based Compensation. A Compensation Deferral Agreement containing an election to defer Performance-Based
Compensation must be submitted to the Plan Administrator no later than six (6) months prior to the end of the period in which the
services are performed and in accordance with the Section 409A of the Code and Treasury Regulation Section 1.409A-2(a)(8). A
Compensation Deferral Agreement submitted pursuant to this Section 4.2(c) shall become irrevocable as of the day immediately
following the latest date for filing such election.
4.3 Amount of Deferral. The deferral election under a Compensation Deferral Agreement shall designate a dollar amount or whole percentage
of Compensation to be deferred. The Plan Administrator may establish a minimum or maximum deferral amount for each component of
Compensation and may permit separate elections for each component of Compensation. Unless otherwise specified by the Plan
Administrator in the Compensation Deferral Agreement, Participants may defer up to 80% of their base salary, bonus or Directors’ Fees
and up to 100% of all other Compensation for a Plan Year.
4.4 Changes To A Deferral Election.
(a) Right to Modify Prospectively. Unless otherwise specified by the Committee, an election to defer Compensation applies to the Plan
Year specified in the Compensation Deferral Agreement and remains in effect for each subsequent Plan Year until modified or
revoked. A Participant may modify or revoke an election to defer Compensation during any enrollment period or other time
designated by the Plan Administrator. A modification or revocation of an election to defer Compensation will be effective
beginning on the first day of the Plan Year following the Plan Year during which the modification or revocation of the deferral
election was made. Notwithstanding the foregoing, the Committee, in its discretion, may provide that for a subsequent Plan Year, a
Compensation Deferral Agreement will be effective for a single Plan Year and that a new Compensation Deferral Agreement must
be made in order to defer Compensation during the following Plan Year.
(b) Performance-Based Compensation. An election to defer Performance-Based Compensation applies to the service period specified
in the Compensation Deferral Agreement and remains in effect for future Performance-Based Compensation which is based upon
the same service period in subsequent Plan
10
Years (or fiscal years, if appropriate) until modified or revoked during an enrollment period designated by the Plan Administrator. A
modification or revocation will apply prospectively to the Performance-Based Compensation described in the enrollment materials.
(c) Unforeseeable Emergency. A Participant’s election to defer Compensation during the Plan Year in which such Compensation is
earned (or, in the case of Performance-Based Compensation, after the deadline specified in the enrollment materials) shall be
canceled following a distribution as a result of an Unforeseeable Emergency as described in Section 7.6.
4.5 Allocation Elections. A Participant’s Deferred Compensation Agreement may also specify the Investment Options in which deferrals will
be deemed to be invested in accordance with Section 6.2.
4.6 In Service Distributions.
(a) Initial Election. A Participant’s Compensation Deferral Agreement may designate an In Service Distribution Date. The Plan
Administrator shall create an In Service Account for the In Service Distribution Date to be credited with the deferred Compensation
designated under the Compensation Deferral Agreement. In order for a deferral to be credited to an In Service Account, the In
Service Distribution Date must be specified no later than the applicable submission deadline described in Section 4.2 for the
Compensation Deferral Agreement under which the deferral is made. Any portion of a deferral not designated for an In Service
Distribution will be credited to the Retirement/Termination Account. Unless otherwise specified by the Plan Administrator on the
Compensation Deferral Agreement, a newly established In Service Distribution Date may be no earlier than three (3) years
following the end of the Plan Year during which Compensation will first be credited to the newly created In Service Account.
(b) Modification. The Participant may modify an In Service Distribution Date provided: (i) the request to modify is submitted to the
Plan Administrator at least twelve (12) months prior to the existing In Service Distribution Date; and (ii) the modified In Service
Distribution Date occurs no earlier than five (5) years following the In Service Distribution Date which is being modified. In Service
Distribution Dates may not be accelerated. The election to modify an In Service Distribution Date is specific to the In Service
Account to which it refers, and shall not affect other In Service Accounts (except to the extent the change results in two In Service
Accounts with the same In Service Distribution Date, in which case the Accounts are merged) or the ability of the Participant to
designate new In Service Distribution Dates with respect to future Compensation deferrals. The modification of an In Service
Distribution Date shall be made in compliance with Code Section 409A and any applicable guidance and Treasury regulations
promulgated thereunder.
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4.7 Payment Schedule. A Compensation Deferral Agreement may specify the Payment Schedule for a Participant’s In Service Distribution(s)
and Retirement Benefit. If no designation is in effect, a distribution will be made in a single lump sum.
(a) Modification-Retirement Benefit. A Participant may modify his or her Retirement Benefit Payment Schedule, provided (i) such
election is made at least twelve (12) months prior to the date the Participant Retires and the date the first payment is scheduled to
be made and (ii) the first payment with respect to which such election is made must be deferred for a period of not less than (5) five
years from the date such payment would otherwise have been made. Any modification of a Payment Schedule made within twelve
(12) months of a Retirement shall be null and void, and the most recent Payment Schedule dated at least twelve (12) months prior to
the Retirement shall be deemed to be in effect.
(b) Modification-In Service Distribution. A Participant shall be permitted to change each In Service Payment Schedule, provided
(i) such election is made at least twelve (12) months prior to the In Service Distribution Date and (ii) the first payment with respect
to which such election is made must be deferred for a period of not less than five years from the date such payment would
otherwise have been made. Any modification of a Payment Schedule made within twelve (12) months of the In Service Distribution
Date shall be null and void, and the most recent Payment Schedule dated at least twelve (12) months prior to the In Service
Distribution Date shall be deemed to be in effect.
(c) Opportunity to Make New (or Revise Existing) Distribution Elections. Notwithstanding the foregoing required deadlines for the
submission of a Compensation Deferral Agreement with respect to a distribution election, the Committee may, to the extent
permitted by Notice 2007-86, provide a limited period in which Participants may make new distribution elections, or revise existing
distribution elections, with respect to amounts subject to the terms of the Plan, by submitting a Compensation Deferral Agreement
on or before the deadline established by the Committee, which in no event shall be later than December 31, 2008. Any distribution
election(s) made by a Participant, and accepted by the Committee, in accordance with this Section shall not be treated as a change
in either the form or timing of a Participant’s benefit payment for purposes of Code Section 409A or the Plan. If any distribution
election submitted by a Participant in accordance with this Section either (i) relates to an amount that would otherwise be paid to
the Participant in 2008, or (ii) would cause an amount to be paid to the Participant in 2008 which would have been paid in a
subsequent year, such election shall not be effective.
4.8 Company’s Right to Modification for Section 409A of the Code. The Plan Administrator may modify a Payment Schedule election as
necessary (and only as necessary) to conform the Payment Schedule to applicable law, to the extent that such modification is permissible
pursuant to Section 409A of the Code and the regulations and other guidance promulgated thereunder.
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ARTICLE V.
Company Contributions
5.1 Company Discretionary Contributions.
(a) Discretionary Company Matching Contribution. If a Participant is contributing the maximum deferral contribution limit specified
under the plan sponsored by the Company which is qualified under Section 401(a) of the Code and contains a Code Section 401(k)
cash or deferred arrangement (the “401(k) Plan”) for a Plan Year, the Company may, in its sole discretion, but it is not required to,
cause to be credited to a Participant’s Company Contribution Account for such Plan Year an amount equal to the Company
contributions (including matching and discretionary contributions) that would have been made on the Participant’s behalf and
allocated to his account under the 401(k) Plan for such Plan Year, but which could not be made because of limitations imposed by
the 401(k) Plan pursuant to the Code, including, but not limited to, (a) any reduction in matching contributions under the 401(k)
Plan attributable either to a limitation on the Participant’s 401(k) contributions under the 401(k) Plan pursuant to Section 401(k) of
the Code or limitations imposed on the matching contributions under the 401(k) Plan pursuant to Section 401(m) of the Code,
(b) the limitations contained in Section 402(g) of the Code, (c) any reduction that occurs as a result of the application of the
compensation limitations contained in Section 401(a)(17) of the Code, and (d) any reduction that occurs as a result of the
application of the limitations contained in Section 415 of the Code. All such amounts shall be credited to a Participant’s Company
Contribution Account as of the date or dates such amounts would have been credited to the Participant’s account(s) in the 401(k)
Plan if such amounts had in fact been credited to his account(s) in the 401(k) Plan.
(b) Discretionary Matching Make-Up Contributions. Each Plan Year, the Company may make, in its discretion, a Company
Discretionary Matching Contribution on behalf of each eligible active Participant who had deferral contributions attributable to the
maximum deferral contribution limit made on his or her behalf during the contribution period to the 401(k) Plan and deferred an
amount to the Plan. All Discretionary Matching Make Up Contributions will be computed by the Company based on the
Participant’s compensation during the relevant contribution period.
The amount of the Discretionary Matching Make Up Contribution shall be determined to be any amount necessary to satisfy or replace
any lost benefit due to the Participant’s participation in the Plan. The calculation for the Discretionary Matching Make Up Contribution,
if any, shall be determined as follows:
Step 1. Calculate the maximum Company matching contribution of the 401(k) Plan as if this Plan did not exist.
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Step 2. Calculate the maximum Company matching contribution of the 401(k) Plan taking into account the existence of this Plan.
Step 3. Determine the amount of any potential lost benefit to the Participant of maintaining the Plan by subtracting the amount calculated
in Step 2 from the amount calculated in Step 1.
The Company may designate all or a portion of any matching contributions for a Plan Year and allocate such amounts to the Company
Contribution Account.
The following is an example of the determination process outlined in Steps 1 through 3:
Assumptions:
• Employee’s total compensation is $150,000
• The Company matching contribution for the 401(k) Plan is 50% of the first 6% of compensation
• Employee defers 10% into the Plan and 10% into the 401(k) Plan:
Gross Compensation $150,000.00
Plan Employee Deferral $(15,000.00)
Net Compensation before 401(k) Plan Employee Deferral $135,000.00
401(k) Plan Employee Deferral $(13,500.00)
Net Compensation $121,500.00

Step 1:
• Total Compensation is multiplied by the Company matching contribution for the 401(k) Plan
• $150,000.00 x 6% x 50% = $4,500.00
• The maximum 401(k) match if the Plan did not exist is $4,500.00
Step 2:
• Net Compensation before 401(k) Plan Employee Deferral is multiplied by the Company matching contribution for the 401(k)
Plan
• $135,000.00 x 6% x 50% = $4,050.00
• The maximum 401(k) match with the Plan is $4,050.00
Step 3:
• The maximum 401(k) match in Step 2 is subtracted from the 401(k) match in Step 1
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• $4,500.00 — $4,050.00 = $450.00

• The Discretionary Matching Make Up Contribution Amount for the Plan is $450.00
The Company, in its discretion, may change the formula used to determine the discretionary Company Matching Contributions or the
Discretionary Matching Make Up Contributions.
5.2 Other Company Discretionary Contributions. Each Participating Employer may, in its sole and absolute discretion, make other Company
Discretionary Contributions to one, some, or all of the Participant(s) it employs by crediting to such Participants’ Retirement/Termination
Accounts an amount determined in the sole and absolute discretion of such Participating Employer. A Company Discretionary
Contribution may be made at any time during the Plan Year. A Participating Employer shall be under no obligation to make Company
Discretionary Contributions unless it so obligates itself under an employment agreement or other agreement.
5.3 Vesting.
(a) The Discretionary Company Matching Contribution and Other Company Discretionary Contributions in Section 5.1 and 5.2 above,
and the Deemed Investment earnings thereon, shall vest in accordance with the vesting schedule determined and communicated
by the Company with respect to each Company Discretionary Contribution.
(b) The foregoing provisions concerning vesting of Company Discretionary Contributions notwithstanding, and subject to the
requirements of Treasury regulations promulgated under Section 409A of the Code, all Company Discretionary Contributions shall
become 100% vested upon the occurrence of the earliest of: (i) Retirement; (ii) death of the Participant; (iii) Disability of the
Participant; and (iv) Change in Control of the Company (or with respect to a Participant who is employed by a Participating
Employer, a Change in Control of such Participating Employer). The Participating Employer may, at any time, in its sole discretion,
increase a Participant vested interest in Company Discretionary Contributions.
ARTICLE VI.
Valuation of Accounts; Deemed Investments
6.1 Valuation. The valuation of a Participant’s Accounts will be adjusted as of each Valuation Date to reflect deferrals, earnings on Deemed
Investments and distributions since the previous Valuation Date. Valuation of Accounts shall be performed under procedures approved
by the Plan Administrator. Deferrals pertaining to base salary shall be deducted on a proportionate basis from each paycheck the
Participant receives during the Plan Year and credited to the Participant’s Accounts as of the date such Compensation would have
otherwise been paid. Deferrals pertaining to other forms of
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Compensation shall be credited to the Participant’s Accounts as of the day such Compensation otherwise would have been paid.
6.2 Allocation Elections. Participants may make an Allocation Election pursuant to which their Accounts will be credited with earnings on
Deemed Investments. A Participant may make a new Allocation Election with respect to future deferrals or current Account Balances (or
both), provided that such new allocations shall be in increments of one percent (1%) and apply to the entire Account Balance. Subject to
restrictions on the timing and number of permitted changes to Allocation Elections within certain time periods (if any) established by the
Plan Administrator, new Allocation Elections may be made on any Business Day, and will become effective on the same Business Day
or, in the case of Allocation Elections received after a cut-off time established by the Plan Administrator, the following Business Day. All
deferrals shall be credited to the appropriate Account and a Deemed Investment shall be made in the investment(s) represented by the
Investment Option(s) elected by the Participant as of the close of business on the deferral date or as otherwise provided by the Plan
Administrator.
6.3 Investment Options. Deemed Investments shall consist of a menu of Investment Options provided by the Committee. Investment
Options do not represent actual ownership of, or ownership rights in or to, the securities or other investments to which the Investment
Options refer. The Committee, in its sole discretion, shall be permitted to add or remove Investment Options provided that any such
additions or removals of Investment Options shall not be effective with respect to any period prior to the effective date of such change.
Any portion of an Account or new deferrals which has not been allocated or which cannot be allocated under a Participant’s Allocation
Election shall be deemed to be invested in a default Investment Option specified by the Plan Administrator. Such Investment Option
shall have, as its primary objective, the preservation of capital.
6.4 Notional Investments. Notwithstanding anything in this section to the contrary, the Committee shall have the sole and exclusive
authority to invest any or all amounts deferred in any manner, regardless of any Allocation Elections by any Participant. A Participant’s
Allocation Election and Deemed Investments shall be used solely for purposes of determining the value of such Participant’s Account
Balances and the amount of the corresponding liability of the participating Employer in accordance with this Plan.
ARTICLE VII.
Distribution and Withdrawals
7.1 Retirement Benefit Distribution. The Retirement Benefit will be paid (or the first payment will be made) by the appropriate Participating
Employer as soon as administratively practicable following the Valuation Date (but in no event later than sixty (60) days following such
date).
7.2 Termination Benefit. The Termination Benefit shall be paid by the appropriate Participating Employer in a single lump sum as soon as
administratively practicable following the Valuation Date (but in no event later than sixty (60) days following such date).
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7.3 In Service Distributions. Each in Service Distribution shall be paid in accordance with the Payment Schedule election made with respect
thereto, beginning as soon as administratively practicable following the Valuation Date (but in no event later than sixty (60) days
following such date). In the event a Participant has elected installment payments for an In Service Distribution, the installment payments
shall be determined as set forth in Section 7.9 of the Plan.
7.4 Death Benefit. In the event of a Participant’s death before the complete distribution of his or her Deferred Compensation Account, such
Participant’s Beneficiary, named on the most recently filed Beneficiary Designation Form, shall be paid a Death Benefit in the amount of
the remaining Deferred Compensation Account Balance as of the Valuation Date in a single lump sum as soon as practicable following
the end of the month in which the Participant’s death occurred (but in no event later than sixty (60) days following such date). A Death
Benefit shall conform to the requirements of the Section 409A of the Code and the regulations and guidance promulgated thereunder in
order to avoid an “acceleration” of a payment.
7.5 Disability Benefit. In the event that a Participant incurs a Disability, the appropriate Participating Employer shall pay the Disability
Benefit in a single lump sum as soon as administratively practicable following the Valuation Date (but in no event later than sixty
(60) days following such date).
7.6 Unforeseeable Emergency. A Participant may request, in writing to the Plan Administrator, a withdrawal from his or her Deferred
Compensation Account if the Participant experiences an Unforeseeable Emergency. Withdrawals of amounts because of an
Unforeseeable Emergency are limited to the extent reasonably needed to satisfy the emergency need, which cannot be met with other
resources of the Participant (as determined in accordance with Treasury Regulation 1.409A-3(i)(3)(i), including any cessation of deferrals
under the Plan) plus amounts necessary to pay federal, state, or local income taxes or penalties reasonably anticipated as a result of the
distribution. The amount of such withdrawal shall be subtracted first from the vested portion of the Participant’s Retirement/Termination
Account until depleted and then from the In Service Distribution Accounts (if any) beginning with the Account with the latest In Service
Distribution Date. Values for purposes of determining the source of the withdrawal under this Section shall be determined on the date
the Plan Administrator approves the amount of the Unforeseeable Emergency withdrawal, or such other date determined by the Plan
Administrator. In addition, in the event of such approval of a withdrawal due to an Unforeseeable Emergency, the Participant’s
outstanding deferral elections under the Plan shall be cancelled.
7.7 Domestic Relations Order. Notwithstanding the Payment Schedule(s) and In Service Distribution Dates selected by a Participant and any
other provision of this Plan, the Plan Administrator shall divide such Participant’s Accounts with and distribute a portion of such
Participant’s Accounts to one or more “alternate payees” at the time and in the manner specified in a court order described in
Section 414(p)(1)(B) of the Code.
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7.8 Installment Payments. If the Participant has elected installment payments for such Participant’s Retirement/Termination Benefit
distribution or an In Service Distribution, annual cash payments will be made beginning as soon as administratively practicable following
the applicable Valuation Date, or, in the event of a partial lump sum election, following the first anniversary of the partial lump sum
payment made following Separation from Service (or scheduled payment date, if any such payment is subject to delay pursuant to
Section 7.10 or 7.11). Such payments shall continue annually on or about the anniversary of the previous installment payment until the
number of installment payments elected has been paid. The installment payment amount shall be determined annually as the result of a
calculation, performed on the Valuation Date, where (a) is divided by (b):
(a) equals the value of the applicable Account on the Valuation Date; and
(b) equals the remaining number of installment payments.
7.9 Small Account Balance Lump Sum Payment. Anything to the contrary in this Plan notwithstanding, in the event that a Participant’s
Retirement/Termination Account Balance is less than $10,000 on the applicable Valuation Date, the Retirement Benefit shall be paid in a
single lump sum and any form of payment election to the contrary shall be null and void.
7.10 Six-Month Delay. Notwithstanding the preceding or any other provision of the Plan to the contrary, if a distribution of a Retirement
Benefit or Termination Benefit is to be made as a result of a Separation from Service of a Participant who is a Specified Employee on the
date his Separation from Service occurs, to the extent delayed commencement of any portion of the benefits to which the Participant is
entitled hereunder is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i), such portion of the
Participant’s benefits shall not be provided prior to the earlier of six (6) months and one (1) day following the date of his Separation from
Service (or if earlier, upon his death), and upon the first business day following the applicable date, all payments deferred pursuant to
this sentence shall be paid in a lump sum, and any remaining payments due under the Plan shall be paid as otherwise provided herein.
For purposes of Section 409A of the Code, a Participant’s right to receive more than one payment pursuant to the Plan shall be treated as
a right to receive a series of separate payments and accordingly, each payment shall at all times be considered a separate and distinct
payment.
7.11 Deduction Limitation on Benefit Payments. Notwithstanding the foregoing, if a Participating Employer reasonably anticipates that the
Participating Employer’s deduction with respect to any distribution from the Plan would be limited or eliminated by application of Code
Section 162(m), then to the extent permitted by Treasury Regulation Section 1.409A-2(b)(7)(i), payment shall be delayed as deemed
necessary to ensure that the entire amount of any distribution from this Plan is deductible. Any amounts for which distribution is
delayed pursuant to this Section shall continue to be credited/debited with additional amounts in accordance with Article VI. The
delayed amounts (and any amounts credited thereon) shall be distributed to the Participant (or his
18
or her Beneficiary in the event of the Participant’s death) at the earliest date the Participating Employer reasonably anticipates that the
deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m). In the event that such
date is determined to be after a Participant’s Separation from Service and the Participant to whom the payment relates is determined to be
a Specified Employee, then to the extent deemed necessary to comply with Section 7.10 and Treasury Regulation Section 1.409A-3(i)(2),
the delayed payment shall not made before the end of the six-month period following such Participant’s Separation from Service.
ARTICLE VIII.
Administration
8.1 Plan Administration. Except as provided in Section 8.2, this Plan shall be administered by the Plan Administrator, which shall have
discretionary authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and
to utilize its discretion to decide or resolve any and all questions, including but not limited to eligibility for benefits and interpretations of
this Plan and its terms, as may arise in connection with the Plan. Claims for benefits shall be filed with the Plan Administrator and
resolved in accordance with the claims procedures in Article XII.
8.2 Plan Administration after a Change in Control.
(a) Replacement of Plan Administrator. Upon a Change in Control, the individual who, immediately prior to the Change in Control, was
the Chief Executive Officer of the Company or, in the event there was no person with the title of Chief Executive Officer prior to the
Change in Control, then the highest ranking officer of the Company prior to the Change in Control (“Ex-CEO”), shall have the
power to appoint an independent third party as the Plan Administrator to replace the Plan Administrator under this Plan. The
previous Plan Administrator shall relinquish responsibility for administration of the Plan as soon as the newly appointed Plan
Administrator accepts responsibility for administration of the Plan in writing addressed to the previous Plan Administrator. The
newly appointed Plan Administrator shall have all powers and duties of the previous Plan Administrator, as set forth in this Plan,
except that the newly appointed Plan Administrator shall have no power to direct the investment of Trust assets or to select any
investment manager or custodial firm for the Trust. After a change in Control, the Company shall: (1) pay all reasonable
administrative expenses and fees of the newly appointed Plan Administrator; (2) indemnify the newly appointed Plan Administrator
against any costs, expenses, and liabilities including, without limitation, attorney’s fees and expenses arising in connection with
the performance of the newly appointed Plan Administrator hereunder, except with respect to matters resulting from the gross
negligence or willful misconduct of the administrator or its employees or agents; and (3) supply full and timely information to the
newly appointed Plan Administrator on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the
Account Balances of the Participants, the date and circumstances of the Disability, death or Separation from Service of the
Participants, and such other pertinent information
19
as the newly appointed Plan Administrator may reasonably require. After a Change in Control, the newly appointed Plan
Administrator may only be terminated (and a replacement appointed) by the Ex-CEO or, in the event the ex-CEO is no longer a Plan
Participant, his or her appointee who is a Plan Participant, and the Company shall have no right nor power to terminate or replace
the newly appointed Plan Administrator.
(b) Review of Denied Claims. After a Change in Control, the Committee, as constituted immediately prior to the Change in Control,
shall continue to review denied claims as provided in Article XI of the Plan. In the event any member of the Committee resigns or is
unable to perform the duties of a member of the Committee, successors to such members shall be selected by the Ex-CEO. After a
Change in Control, the Committee shall have the discretionary power and authority to determine all questions arising in connection
with the review of a denied claim as provided in Section 11.2 of the Plan. After a Change in Control, the Company shall: (1) pay all
reasonable administrative expenses and fees of the Committee; (2) indemnify the Committee against any costs, expenses and
liabilities including, with limitation, attorney’s fees and expenses arising in connection with the performance of the Committee
hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the Committee or its
employees or agents; and (3) supply full and timely information to the Committee on all matters relating to the Plan, the Trust, the
Participants and their Beneficiaries, the Account Balances of the Participants, the date and circumstances of the Disability, death or
Separation from Service of the Participants, and such other pertinent information as the Committee may reasonably require. After a
Change in Control, a member of the Committee may not be removed by the Company, and may only be removed (and a replacement
appointed) by the Ex-CEO.
8.3 Withholding. The Participating Employer shall have the right to withhold from any payment made under the Plan (or any amount
deferred into the Plan) any taxes required by law to be withheld in respect of such payment (or deferral).
8.4 Indemnification. The Company shall indemnify and hold harmless each employee, officer, director, agent or organization, to whom or to
which is delegated duties, responsibilities, and authority under the Plan or otherwise with respect to administration of the Plan,
including, without limitation, the Plan Administrator, the Committee and their agents, against all claims, liabilities, fines and penalties, and
all expenses reasonably incurred by or imposed upon him or it (including but not limited to reasonable attorney fees) which arise as a
result of his or its actions or failure to act in connection with the operation and administration of the Plan to the extent lawfully allowable
and to the extent that such claim, liability, fine, penalty, or expense is not paid for by liability insurance purchased or paid for by the
Company. Notwithstanding the foregoing, the Company shall not indemnify any person or organization if his or its actions or failure to
act are due to gross negligence or willful misconduct or for any such amount incurred through any settlement or compromise of any
action unless the Company consents in writing to such settlement or compromise.
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8.5 Expenses. The expenses of administering the Plan shall be paid by the Company.
8.6 Delegation of Authority. In the administration of this Plan, the Plan Administrator may, from time to time, employ agents and delegate to
them such administrative duties as it sees fit, and may from time to time consult with legal counsel who may be legal counsel to the
Company.
8.7 Binding Decisions or Actions. The decision or action of the Plan Administrator in respect of any question arising out of or in connection
with the administration, interpretation and application of the Plan and the rules and regulations thereunder shall be final and conclusive
and binding upon all persons having any interest in the Plan.
ARTICLE IX.
Amendment and Termination
9.1 Termination. Although each Participating Employer anticipates that it will continue the Plan for an indefinite period of time, there is no
guarantee that any Participating Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each
Participating Employer reserves the right to discontinue its sponsorship of the Plan and/or to terminate the Plan at any time with respect
to any or all of its participating Eligible Employees (and Directors, with respect to the Company), by action of its Board of Directors or
other similar governing body. Upon the termination of the Plan with respect to any Participating Employer, the participation of the
affected Participants who are employed by that Participating Employer shall terminate. However, after the Plan termination the Account
Balances of such Participants shall continue to be credited with Compensation deferrals attributable to a deferral election that was in
effect prior to the Plan termination to the extent deemed necessary to comply with Code Section 409A and related Treasury Regulations,
and additional amounts shall continue to credited or debited to such Participants’ Account Balances pursuant to Article VI. To the
extent permitted in regulations promulgated under Section 409A of the Code, including Treasury Regulation Section 1.409A-(3)(j)(4)(ix),
the Committee may provide for the distribution of all Account Balances to such Participants following a termination of the Plan, subject
to and in accordance with any rules established by the Committee and any requirements of Treasury Regulation Section 1.409A-
(3)(j)(4)(ix). Unless distributions are otherwise permissible under such regulations, payments to Participants shall be made at the times
specified in a Participant’s Compensation Deferral Agreements and the terms of the Plan applicable to such Agreements prior to the
Plan’s termination.
9.2 Amendment.
(a) A Participating Employer, by action taken by its Board of Directors or similar governing body, may amend the Plan at any time and
for any reason, provided that any such amendment shall not reduce the vested Account Balances of any Participant accrued as of
the date of any such amendment or restatement (as if the Participant had incurred a voluntary Separation from Service on such
date) or reduce any rights of a Participant under the Plan or other Plan features with respect to his or her Account Balance as of the
date of any such amendment or
21
restatement without the consent of the Participant. The Committee shall have the authority to amend the Plan without the consent
of the Board of Directors (or other similar governing body) of the Company or any Participating Employer for the purpose of
(i) conforming the Plan to the requirements of law (which amendments, notwithstanding any provisions in this Section 9.2 to the
contrary, may also be made without the consent of any Participant), (ii) facilitating the administration of the Plan, (iii) clarifying
provisions based on the Committee’s interpretation of the document and (iv) making such other amendments as the Company’s
Board of Directors may authorize.
(b) Notwithstanding anything to the contrary in the Plan, if and to the extent the Committee shall determine that the terms of the Plan
may result in the failure of the Plan, or amounts deferred by or for any Participant under the Plan, to comply with the requirements
of Code Section 409A, or any applicable regulations or guidance promulgated by the Secretary of the Treasury in connection
therewith, the Committee shall have authority to take such action to amend, modify, cancel or terminate the Plan (effective with
respect to all Participating Employers) or distribute any or all of the amounts deferred by or for a Participant, as it deems necessary
or advisable, including without limitation:
(i) Any amendment or modification of the Plan to conform the Plan to the requirements of Code Section 409A or any regulations
or other guidance thereunder (including, without limitation, any amendment or modification of the terms of any applicable to
any Participant’s Accounts regarding the timing or form of payment).
(ii) Any cancellation or termination of any unvested interest in a Participant’s Accounts without any payment to the Participant.
(iii) Any cancellation or termination of any vested interest in any Participant’s Accounts, with immediate payment to the
Participant of the amount otherwise payable to such Participant.
(iv) Any such amendment, modification, cancellation, or termination of the Plan that may adversely affect the rights of a
Participant without the Participant’s consent.
ARTICLE X.
Informal Funding
10.1 General Assets. All benefits in respect of a Participant under this Plan shall be paid directly from the general funds of the applicable
Participating Employer or a Rabbi Trust created for the purpose of informally funding the Plan, and other than such Rabbi Trust, if
created, no special or separate fund shall be established and no other segregation of assets shall be made to assure payment. No
Participant, spouse or Beneficiary shall have any right, title or interest whatever in or to any investments that the Company or a
Participating Employer may make to aid the Participating Employer in meeting its
22
obligation hereunder. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship, between the Company, a Participating Employer or any if its subsidiaries or affiliated
companies and any Employee, spouse, or Beneficiary. To the extent that any person acquires a right to receive payments from a
Participating Employer hereunder, such rights are no greater than the right of an unsecured general creditor of the Participating
Employer.
10.2 Rabbi Trust. The Company and/or Participating Employer may, at its sole discretion, establish a grantor trust, commonly known as a
Rabbi Trust, as a vehicle for accumulating the assets needed to pay the promised benefit, but the Company or Participating Employer
shall be under no obligation to establish any such trust or any other informal funding vehicle.
ARTICLE XI.
Claims
11.1 Filing a Claim. Any controversy or claim arising out of or relating to the Plan shall be filed with the Plan Administrator which shall make
all determinations concerning such claim. Any decision by the Plan Administrator denying such claim shall be in writing and shall be
delivered to the Participant or Beneficiary filing the claim (‘Claimant’).
(a) In General. Notice of a denial of benefits (other than Disability benefits) will be provided within 90 days of the Plan Administrator’s
receipt of the Claimant’s claim for benefits. If the Plan Administrator determines that it needs additional time to review the claim, the
Plan Administrator will provide the Claimant with a notice of the extension before the end of the initial 90-day period. The extension
will not be more than 90 days from the end of the initial 90-day period and the notice of extension will explain the special
circumstances that require the extension and the date by which the Plan Administrator expects to make a decision.
(b) Disability Benefits. Notice of denial of Disability benefits will be provided within forty-five (45) days of the Plan Administrator’s
receipt of the Claimant’s claim for Disability benefits. If the Plan Administrator determines that it needs additional time to review the
Disability claim, the Plan Administrator will provide the Claimant with a notice of the extension before the end of the initial 45-day
period. If the Plan Administrator determines that a decision cannot be made within the first extension period due to matters beyond
the control of the Plan Administrator, the time period for making a determination may be further extended for an additional 30 days.
If such an additional extension is necessary, the Plan Administrator shall notify the Claimant prior to the expiration of the initial 30-
day extension. Any notice of extension shall indicate the circumstances necessitating the extension of time, the date by which the
Plan Administrator expects to furnish a notice of decision, the specific standards on which such entitlement to a benefit is based,
the unresolved issues that prevent a decision on the claim and any additional information needed to resolve those issues. A
23
Claimant will be provided a minimum of 45 days to submit any necessary additional information to the Plan Administrator. In the
event that a 30-day extension is necessary due to a Claimant’s failure to submit information necessary to decide a claim, the period
for furnishing a notice of decision shall be tolled from the date on which the notice of the extension is sent to the Claimant until the
earlier of the date the Claimant responds to the request for additional information or the response deadline.
(c) Contents of Notice. If a claim for benefits is completely or partially denied, notice of such denial shall be in writing and shall set
forth the reasons for denial in plain language. The notice shall (1) cite the pertinent provisions of the Plan document and
(2) explain, where appropriate, how the Claimant can perfect the claim, including a description of any additional material or
information necessary to complete the claim and why such material or information is necessary. The claim denial also shall include
an explanation of the claims review procedures and the time limits applicable to such procedures, including a statement of the
Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse decision on review. In the case of a
complete or partial denial of a Disability benefit claim, the notice shall provide a statement that the Plan Administrator will provide
to the Claimant, upon request and free of charge, a copy of any internal rule, guideline, protocol, or other similar criterion that was
relied upon in making the decision.
11.2 Appeal of Denied Claims. A Claimant whose claim has been completely or partially denied shall be entitled to appeal the claim denial by
filing a written appeal with the Committee. A Claimant who timely requests a review of the denied claim (or his or her authorized
representative) may review, upon request and free of charge, copies of all documents, records and other information relevant to the
denial and may submit written comments, documents, records and other information relevant to the claim to the Committee. All written
comments, documents, records, and other information shall be considered “relevant” if the information (1) was relied upon in making a
benefits determination, (2) was submitted, considered or generated in the course of making a benefits decision regardless of whether it
was relied upon to make the decision, or (3) demonstrates compliance with administrative processes and safeguards established for
making benefit decisions. The Committee may, in its sole discretion and if it deems appropriate or necessary, decide to hold a hearing
with respect to the claim appeal.
(a) In General. Appeal of a denied benefits claim (other than a Disability benefits claim) must be filed in writing with the Committee no
later than sixty (60) days after receipt of the written notification of such claim denial. The Committee shall make its decision
regarding the merits of the denied claim within sixty (60) days following receipt of the appeal (or within one hundred and twenty
(120) days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed
claim). If an extension of time for reviewing the appeal is required because of special circumstances, written notice of the extension
shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the special circumstances
requiring the
24
extension of time and the date by which the Committee expects to render the determination on review. The review will take into
account comments, documents, records and other information submitted by the Claimant relating to the claim without regard to
whether such information was submitted or considered in the initial benefit determination.
(b) Disability Benefits. Appeal of a denied Disability benefits claim must be filed in writing with the Committee no later than one
hundred eighty (180) days after receipt of the written notification of such claim denial. The review shall be conducted by the
Committee (exclusive of the person who made the initial adverse decision or such person’s subordinate). In reviewing the appeal,
the Committee shall (1) not afford deference to the initial denial of the claim, (2) consult a medical professional who has appropriate
training and experience in the field of medicine relating to the Claimant’s disability and who was neither consulted as part of the
initial denial nor is the subordinate of such individual and (3) identify the medical or vocational experts whose advice was obtained
with respect to the initial benefit denial, without regard to whether the advice was relied upon in making the decision. The
Committee shall make its decision regarding the merits of the denied claim within forty-five (45) days following receipt of the appeal
(or within ninety (90) days after such receipt, in a case where there are special circumstances requiring extension of time for
reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written
notice of the extension shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the
special circumstances requiring the extension of time and the date by which the Committee expects to render the determination on
review. Following its review of any additional information submitted by the Claimant, the Committee shall render a decision on its
review of the denied claim.
(c) Contents of Notice. If a benefits claim is completely or partially denied on review, notice of such denial shall be in writing and shall
set forth the reasons for denial in plain language.
(i) The decision on review shall set forth (a) the specific reason or reasons for the denial, (b) specific references to the pertinent
Plan provisions on which the denial is based, (c) a statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to and copies of all documents, records, or other information relevant (as defined above) to the
Claimant’s claim, and (d) a statement describing any voluntary appeal procedures offered by the plan and a statement of the
Claimant’s right to bring an action under Section 502(a) of ERISA.
(ii) For the denial of a Disability benefit, the notice will also include a statement that the Committee will provide, upon request
and free of charge, (a) any internal rule, guideline, protocol or other similar criterion relied upon in making the decision,
(b) any medical opinion relied upon to
25
make the decision and (c) the required statement under Section 2560.503-1(j)(5)(iii) of the Department of Labor regulations.
11.3 Legal Action. A Claimant may not bring any legal action relating to a claim for benefits under the Plan unless and until the Claimant has
followed the claims procedures under the Plan and exhausted his or her administrative remedies under such claims procedures.
11.4 Discretion of Committee. All interpretations, determinations and decisions of the Committee with respect to any claim shall be made in its
sole discretion, and shall be final and conclusive.
ARTICLE XII.
Beneficiary Designation
12.1 Beneficiary. Each Participant shall have the right, at any time, to designate his or her Beneficiary (both primary as well as contingent) to
receive any benefits payable under the Plan to a Beneficiary upon the death of a Participant. The Beneficiary designated under this Plan
may be the same as or different from the Beneficiary designation under any other benefit plan of a Participating Employer in which the
Participant participates.
12.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing, and otherwise complying with the terms of the Beneficiary Designation Form and the Committee’s
rules and procedures, as in effect from time to time. Where required by law or by the Committee, in its sole and absolute discretion, if the
Participant names someone other than his or her spouse as a Beneficiary, a spousal consent, in the form designated by the Committee,
must be signed by that Participant’s spouse and returned to the Committee. Upon the acceptance by the Committee of a new Beneficiary
Designation Form, all Beneficiary designations previously filed shall be canceled. The Committee shall be entitled to rely on the last
Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death.
12.3 Acknowledgement. No designation or change in designation of a Beneficiary shall be effective until received, accepted and
acknowledged in writing by the Committee or its designated agent.
12.4 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided in Sections 12.1, 12.2, and 12.3 above, or, if all
designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the
Participant’s designated Beneficiary shall be his or her surviving spouse. If the Participant has no surviving spouse, the benefits
remaining under the Plan shall be paid to the Participant’s issue upon the principle of representation and if there is no such issue, to the
Participant’s estate.
26
12.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the
Committee shall have the right, exercisable in its sole and absolute discretion, to cause the Participating Employer to withhold such
payments until this matter is resolved to the Committee’s satisfaction.
12.6 Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Participating
Employers and the Committee from all further obligations under this Plan with respect to the Participant, and that Participant’s interest in
the Plan shall terminate upon such full payment of benefits.
ARTICLE XIII.
General Conditions
13.1 Anti-assignment Rule. No interest of any Participant, spouse or Beneficiary under this Plan and no benefit payable hereunder shall be
assigned as security for a loan, and any such purported assignment shall be null, void and of no effect, nor shall any such interest or
any such benefit be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance
by or through any Participant, spouse or Beneficiary.
13.2 No Legal or Equitable Rights or Interest. No Participant or other person shall have any legal or equitable rights or interest in this Plan
that are not expressly granted in this Plan. Participation in this Plan does not give any person any right to be retained in the service of
the Company or any of its subsidiaries or affiliated companies. The right and power of the Company to dismiss or discharge an Employee
is expressly reserved. Notwithstanding the provisions of Section 9.2, the Company makes no representations or warranties as to the tax
consequences to a Participant or a Participant’s beneficiaries resulting from a deferral of income pursuant to the Plan or that the Plan
complies in form or operation with Section 409A of the Code and regulations issued thereunder.
13.3 No Employment Contract. Nothing contained herein shall be construed to constitute a contract of employment between an Employee
and the Company or any of its subsidiaries or affiliated companies.
13.4 Headings. The headings of Sections are included solely for convenience of reference, and if there is any conflict between such headings
and the text of this Plan, the text shall control.
13.5 Invalid or Unenforceable Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof and the Plan Administrator may elect in its sole discretion to construe such
invalid or unenforceable provisions in a manner that conforms to applicable law or as if such provisions, to the extent invalid or
unenforceable, had not been included.
13.6 Governing Law. To the extent not preempted by ERISA, the laws of the State of California shall govern the construction and
administration of the Plan.
27
IN WITNESS WHEREOF, the undersigned executed this Plan as of the 14th day of November 2008 to be effective as of the Effective Date.
a Delaware Corporation
By: /s/ Diana De Walt
Its: Senior Vice President, Human Resources
28
Exhibit 10.14
AMENDMENT TO
CHANGE-IN-CONTROL SEVERANCE COMPENSATION PLAN
Gen-Probe Incorporated hereby amends the Gen-Probe Incorporated Change-in-Control Severance Compensation Plan (the “Plan”),
pursuant to its authority under Section 4.2 of the Plan.
1. The first sentence of Section 1.1 is amended in its entirety to read as follows:
“An Employee who is not an officer of the Company shall be entitled to participate in this Plan upon the termination of his or her
employment within 12 months following a Change in Control by the Company without Cause, provided in any case that (a) the termination
occurs within the period set forth in Section 4.1, and (b) such termination constitutes a “separation from service” within the meaning of
Treasury Regulation Section 1.409A-1(h) (a “Separation from Service”).”
2. Section 2.2 is amended in its entirety to read as follows:
“In lieu of any further salary payment to the Employee for periods subsequent to the Date of Termination, provided the Employee has
executed a release of claims against the Company in a form acceptable to the Company on or prior to the fiftieth (50th ) day following the
Employee’s Date of Termination, and does not revoke such release within any applicable period required by law, the Company shall pay, in
accordance with the provisions of Section 2.3 below, as severance pay to him after the Date of Termination, Weekly Salary calculated as set
forth in Sections 1.2 and 1.3.”
“The Company shall pay the full amount of the aggregate Weekly Salary determined under Section 1.3 in a single lump sum payment within
sixty (60) days following the Date of Termination.”
“The Company shall also pay to the Employee all reasonable legal fees and expenses incurred by the Employee within ten years following
the Date of Termination in successfully seeking to obtain or enforce any right provided by this Plan. To the extent that any such
reimbursements are subject to the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), (a) any
reimbursements payable to the Employee pursuant to this Section 2.4 shall be paid to the Employee no later than December 31 of the year
following the year in which the cost was incurred, (b) the amount of expenses reimbursed in one year shall not affect the amount eligible for
reimbursement in any subsequent year, and (c) the Employee’s right to reimbursement under this Section 2.4 will not be subject to liquidation
or exchange for another benefit.”
-1-
5. The following shall be added to the Plan as a new Section 2.8:

“Notwithstanding any provision to the contrary herein, if the Employee is deemed by the Company on the Date of Termination to be a
“specified employee” for purposes of the Code, to the extent delayed commencement of any portion of the benefits to which the Employee is
entitled under the Plan is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of the
Employee’s benefits shall not be provided to the Employee prior to the earlier of (a) the expiration of the six-month period measured from the
Date of Termination or (b) the date of the Employee’s death. Upon the first business day following the expiration of the applicable Code
Section 409A(a)(2)(B)(i) deferral period, all payments deferred pursuant to this Section shall be paid in a lump sum to the Employee, and any
remaining payments due under the Plan shall be paid as otherwise provided herein.”
““Date of Termination” means if the Employee’s employment is terminated by the Company (or any successor to the Company) for any
reason, the date of the Employee’s Separation from Service from the Company (or any successor to the Company).”
IN WITNESS WHEREOF, Gen-Probe Incorporated, by its authorized officer, has caused this Amendment to the Gen-Probe Incorporated
Change-in-Control Severance Compensation Plan to be executed this 2nd day of October 2008.
Exhibit 10.25
***Text Omitted and Filed Separately

with the Securities and Exchange Commission.
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4)
and 240.24b-2.
AMENDMENT NO. 10 TO AGREEMENT
(Tigris Warranty Resolution)

This Amendment No. 10 (“Amendment No. 10”) is entered into effective as of September 30, 2007 (the “Amendment Effective Date”),
pursuant to and amending that certain Agreement between Gen-Probe Incorporated, a Delaware corporation (“Gen-Probe”) and Novartis
Vaccines and Diagnostics, Inc., a Delaware corporation (“Novartis V&D”). Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement.
Recitals
A. Prior to April 19, 2006, the legal name of Novartis V&D was Chiron Corporation.
B. The parties entered into the Agreement as of June 11, 1998 pursuant to which, among other things, the parties described their respective
rights and obligations with respect to the development, manufacture, marketing and distribution of Products in the Blood Screening and
Clinical Diagnostic Fields.
C. The Agreement has been previously amended and supplemented by further written agreements of the parties.
D. Section 3.3.1(b) of the Agreement provides in part as follows: “Gen-Probe shall develop each of the Blood Screening Instruments in
accordance with the applicable specifications and the applicable Development Program documents and shall conduct such clinical trials and
apply for and endeavor to obtain such regulatory approvals as necessary or appropriate to make and sell each of the Blood Screening
Instruments in the Territory for use in the Blood Screening Field.”
E. Section 3.3.4(3) of the Agreement provides in part as follows: “Chiron shall have the right, and the obligation, at its sole expense, to
maintain and service all Blood Screening Instruments placed in the Territory for use in the Blood Screening Field.”
F. Section 6.6 of the Agreement provides as follows: “Gen-Probe warrants that all the Products delivered to Chiron pursuant to this
Agreement shall conform with the applicable specifications, shall be free from defects in material and workmanship, and shall be manufactured
in compliance with applicable laws and regulations.”
Agreement
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth in this Amendment No. 10, the parties agree
as follows:
1. Definitions. Unless otherwise stated herein, all capitalized terms shall have the meaning set forth in the Collaboration Agreement.
1
As used herein, “Incremental Service Costs” shall mean all additional service costs (including but not limited to parts, labor, and travel)
[...***...].
2. Resolution of Incremental Service Costs. This Amendment No. 10 is intended to record the agreement of the parties with respect to any
and all Incremental Service Costs, past, present, and/or future, associated with any TIGRIS instrument. Notwithstanding anything in the
Agreement to the contrary, this Amendment No. 10 shall govern the parties’ rights and obligations with respect to Incremental Service Costs.
3. Payment by Gen-Probe. Upon execution of this Amendment No. 10 by both parties, Gen-Probe will make a single payment to Novartis
V&D of [...***...] for all TIGRIS Incremental Service Costs incurred or to be incurred by Novartis V&D.
4. Termination of Dispute. Novartis V&D hereby waives and release any and all claims it may have against Gen-Probe [...***...], including
but not limited to the Incremental Service Costs. [...***...] Future reliability improvements shall mean replacement of or changes to TIGRIS
instruments that are not a result of an unscheduled failure, safety or compliance issue, part obsolescence, or a marketing enhancement.
5. Waiver of Section 1542, Cal. Civil Code. Novartis V&D understands that California Civil Code Section 1542 provides as follows:
A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with the debtor.
The provisions of California Civil Code section 1542 are hereby expressly waived by Novartis V&D to the fullest extent that they may waive all
such rights and benefits, if any, of such provisions pertaining to the specific claims released herein. In addition, Novartis V&D hereby waives,
to the same extent set forth in the immediately preceding sentence, any provision comparable to California Civil Code Section 1542 in any other
jurisdiction, if in any way applicable, and hereby acknowledge that these waivers are an essential and material term of this agreement.
6. Warranty From KMC Systems, Inc. Nothing in this Agreement shall limit or waive the rights of Novartis V&D with respect to warranties
provided by KMC Instruments, Inc. or any other contractor or subcontractor for the TIGRIS Instrument. Any and all warranties by
subcontract manufacturers of TIGRIS Instruments shall continue to inure to the benefit of
*** Confidential Treatment Requested
2
Novartis V&D, to the extent permitted by such contract or subcontract manufacturer, as provided in Section 6.6 of the Agreement.
7. Disputes. Any dispute arising between Novartis V&D and Gen-Probe arising out of this Amendment No. 10 shall be resolved through the
Mediation and Arbitration provisions set forth in Article 13 of the Agreement.
8. Except as is expressly set forth in this Amendment No. 10, all other terms and conditions of the Agreement shall continue in full force and
effect.
9. This Amendment No. 10 may be executed in counterparts, each of which shall be an original, and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 10 to be executed and the persons signing below warrant that they
are duly authorized to sign for and on behalf of the respective parties.
GEN-PROBE INCORPORATED, NOVARTIS VACCINES AND

a Delaware corporation DIAGNOSTICS, INC.,
a Delaware corporation
By: /s/ Carl W. Hull By: /s/ Paul Manners

Its: President & Chief Operating Officer Its: VP Finance, Diagnostics
Date: March 26, 2008 Date: April 21, 2008
Exhibit 10.30
***Text Omitted and Filed Separately

with the Securities and Exchange Commission.
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4)
and 240.24b-2.
FUTURE BLOOD SCREENING ASSAY-
ULTRIO 2 ADDENDUM
AMENDING
AGREEMENT ENTERED INTO AS OF JUNE 11, 1998
BY AND BETWEEN
AND
NOVARTIS VACCINES & DIAGNOSTICS, INC.
1. Definitions 1
1.1 Agreement 1
1.2 Binder 1
1.3 Budget 2
1.4 Completion Date 2
1.5 FTE Labor Rate 2
1.6 Interim Events 2
1.7 Marketing Evaluation 2
1.8 Material Modification 2
1.9 Non-material Modification 2
1.10 Product Requirements Document (or “PRD”) 2
1.11 Project Management 2
1.12 Resource Plan 3
1.13 Software Requirements Specifications (or “SRS”) 3
1.14 Timeline 3
1.15 Ultrio 2 Assay Product 3
1.16 Ultrio 2 Development Costs 3
1.17 Ultrio 2 Development Program 3
2. Ultrio 2 Development Program 3
2.1 Objective 3
2.2 General Conduct of Development 3
2.3 No Guarantee 4
2.4 Project Management 4
2.4.1 Principles of Project Management 4
2.4.2 Project Manager 4
i
2.4.3 Gen-Probe Project Manager’s Responsibilities 5
2.4.4 Meetings of the Supervisory Board 5
2.5 Development Responsibilities 6
2.5.1 Principal Responsibility; General Statement 6
2.5.2 Shared Responsibility 6
2.5.3 Principal and Shared Responsibility; Specific Allocation 6
2.5.4 Regulatory/Licensure 7
2.5.5 Disagreements 7
3. Modifications 7
3.1 Ultrio 2 Development Program Definition 7
3.2 Modifications 8
3.2.1 Request for Modifications 8
3.2.2 Non-Material Modifications 8
3.3 Material Modifications 8
3.3.1 Request for Material Modifications 8
3.3.2 Initial Analysis of Impact of Proposed Material Modification 8
3.3.3 Preparation of Modified Ultrio 2 Development Program 9
3.3.4 Acceptance of Modified Ultrio 2 Development Program 9
3.3.5 Effective Date of Modified Ultrio 2 Development Program 9
3.4 Notice of Significant Changes 10
4. Changes to Ultrio 2 Assay Product after Completion Date 10
4.1 Process 10
4.2 Additional Work under Addendum 10
5. Ultrio 2 Development Costs 10
5.1 [...***...] Ultrio 2 Development Costs 10
5.2 Definition and Calculation of Ultrio 2 Development Costs 11
5.2.1 Ultrio 2 Development Costs; FTE Labor Rate 11
ii
5.2.2 Comparison with Resource Plan 12
5.2.3 Methodology 12
5.3 Payment of Ultrio 2 Development Costs 13
5.3.1 Accrued Ultrio 2 Development Costs 13
5.3.2 [...***...] Budgeted Payments 13
5.3.3 [...***...] True-Up Payments 13
5.3.4 Invoices 13
5.4 Dispute 14
5.5 Right to Audit and Verify 14
6. Manufacturing and Commercialization 14
6.1 Definitions Relevant to Manufacturing and Commercialization Obligation 14
6.1.1 Applicable Purchase Price 14
6.1.2 Transfer Price 14
6.1.3 Manufacturing Cost 14
6.1.4 Rare Reagents 14
6.2 Right to Audit and Verify 14
6.3 Quality Arrangements 14
6.4 Non-Commercial Products 15
6.5 Commercialization Budget 15
7. License Grants 16
8. Addendum Effective Date; Term; Termination 16
8.1 Term of Ultrio 2 Addendum 16
8.2 Termination for Breach 16
8.2.1 Default 16
8.2.2 Right to Cure Event of Default 17
iii
8.2.3 Effect of Termination for Breach 17
8.3 Termination by Both Parties 18
8.3.1 Vote to Terminate 18
8.3.2 Effect of Notice Period on Termination by Both Parties 18
8.3.3 Effect of Termination by Both Parties 18
8.4 Termination by Either Party; Unilateral Withdrawal from Ultrio 2 Development Program 18
8.5 Continuance of Ultrio 2 Development Program following Unilateral Withdrawal or Termination 19
8.5.1 Election 19
8.5.2 Funding and Conduct of Development 19
8.5.3 Reimbursement of Development Costs 19
8.5.4 Control of the Program upon Unilateral Funding 21
8.5.5 Rights under Agreement 21
9. Escalation 21
9.1 Escalation Process 21
9.2 Remedies in Event of Default 21
9.3 Survival 21
10. No Other Amendment 22
11. Counterparts 22
iv
Future Blood Screening Assay-

ULTRIO 2 ADDENDUM
This Future Blood Screening Assay — Ultrio 2 Addendum (the “Ultrio 2 Addendum”) is entered into, effective as of October 1, 2008 (the
“Addendum Effective Date”) pursuant to and amending that certain Agreement entered into as of June 11, 1998 (the “Agreement”) by and
between Gen-Probe Incorporated, a Delaware corporation (“Gen-Probe”) with a principal place of business at 10210 Genetic Center Drive, San
Diego CA 92121, and Novartis Vaccines & Diagnostics, Inc., a Delaware corporation (“Novartis”; and collectively with Gen-Probe, the
“parties”) with a place of business at 4560 Horton Street, Emeryville, CA 94608.
Recitals
A. Prior to April 19, 2006, the legal name of Novartis Vaccines and Diagnostics, Inc. was Chiron Corporation.
B. In the Agreement, the parties agreed to discuss, during the term thereof, the selection and establishment of one or more Development
Programs for one or more Future Blood Screening Assays to be conducted by the Blood Screening Instruments.
C. The parties have discussed the proposed development of an enhanced triplex TMA assay for the detection of human immunodeficiency
virus Type 1 (HIV), hepatitis C virus (HCV), and/or hepatitis B virus (HBV), on both the enhanced semi-automated instrument system
(“eSAS”) (referred to in the Agreement as the Leader/Magnetic Separation Instrument) and on the fully-automated TIGRIS instrument, which
assay would fall within the definition of a “Future Blood Screening Assay” set forth in Section 1.30 of the Agreement (the “Ultrio 2 Assay”).
E. By this Ultrio 2 Addendum, the parties desire to include the Ultrio 2 Assay to be conducted by one or more of the Blood Screening
Instruments within the scope of the provisions of the Agreement, as clarified and amended by the terms and conditions more particularly
described in this Ultrio 2 Addendum.
Agreement
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth in this Ultrio 2 Addendum, the parties agree
as follows:
1. Definitions. All capitalized terms used but not defined in this Ultrio 2 Addendum shall have the meanings set forth in the Agreement.
1.1 Agreement shall mean the June 11, 1998 Collaboration Agreement, as amended in the manner described in Recital A.
1.2 Binder means that certain three-ring binder, with one or more volumes, entitled “Ultrio 2 Development Program for the Ultrio 2 Assay
Product (Gen-Probe/Novartis Ultrio 2 Development Addendum, dated as of xxx) Binder,” in which certain documents, materials or other items
incorporated into this Ultrio 2 Addendum by reference are kept. The original Binder and an additional volume of the Binder, labeled
“Amendments to Ultrio 2 Development Program” and reflecting any changes,
1
modifications or amendments to the Binder, are maintained by and located at the premises of Gen-Probe. A copy of the original Binder, and a
copy of the additional volume of the Binder, each signed by both parties, shall be maintained by and located at the premises of Novartis.
1.3 Budget means the budgeted Ultrio 2 Development Costs of the Ultrio 2 Development Program. The Budget shall include the estimated
cost of the Ultrio 2 Development Program on a monthly basis through the end of the Ultrio 2 Development Program. The approved Budget is
described in the Binder under the heading “Budget”, and may be amended from time to time under the provisions of Section 3 below.
1.4 Completion Date means [...***...].
1.5 FTE Labor Rate is defined in Section 5.2.1.
1.6 Interim Events means such events of material significance to the Ultrio 2 Development Program as are mutually agreed to by both parties
and set forth with specificity and identified as an “Interim Event” on the Timeline, as such Interim Events may be modified, pursuant to the
change procedures set forth in Section 3 of this Ultrio 2 Addendum.
1.7 Marketing Evaluation means a limited-duration evaluation of the performance of the Ultrio 2 Assay Product in a customer’s or potential
customer’s laboratory setting, primarily for the purposes of customer familiarization and on-site demonstration of assay performance. Data
generated in the course of a Market Evaluation is not required for and will not be used for any regulatory submission, or for the release of any
blood product or diagnostic purpose.
1.8 Material Modification means a change or amendment to the Ultrio 2 Development Program that materially affects the requirements set
forth in the then-current Product Requirements Document, Software Requirement Specifications, Resource Plan or Budget, or that materially
modifies an Interim Event set forth in the Timeline.
1.9 Non-material Modification means a change or amendment to the Ultrio 2 Development Program other than a Material Modification.
Written agreement among members of Project Management that a modification is a “Non-material Modification” hereunder as described in
Section 3.2 below shall be conclusive.
1.10 Product Requirements Document (or “PRD”) means the requirement specifications for the Ultrio 2 Assay Product, and includes as a
component thereof the Software Requirements Specifications. The initial Product Requirements Document is described in the Binder, under the
heading “Product Requirements Document (PRD, Revision 2007-05-25)“and may be amended from time to time under the provisions of
Section 3 below. Novartis shall have primary responsibility for obtaining customer input for use in drafting requirements, communicating that
Input, and ensuring that customer requirements are addressed in the PRD.
1.11 Project Management is defined in Section 2.4.1.
2
1.12 Resource Plan means the description of (i) a party’s personnel to be allocated to the Ultrio 2 Development Program, including the name
of the specific personnel or the qualification or grade of unidentified personnel, and dedicated amount of time and periods for the commitment
of such personnel required for the Ultrio 2 Development Program, and (ii) equipment, tools, software, or other special items, the purchase,
license or leasing of which is specifically required for use by such personnel to support the Ultrio 2 Development Program. The initial
Resource Plan is described in the Binder, under the heading “Resource Plan,” and may be amended from time to time under the provisions of
Section 3 below.
1.13 Software Requirements Specifications (or “SRS”) means the specifications for the software component of the Ultrio 2 Development
Program. The initial Software Requirements Specifications are described in the Binder, under the heading “Software Requirements
Specifications (SRS, Revision C, dated xxx),” and may be amended from time to time under the provisions of Section 3 below.
1.14 Timeline means the overall development timeline as developed and maintained by the Program Manager.
1.15 Ultrio 2 Assay Product is defined on Schedule 1.16 and expressly excludes any products or instruments in the Clinical Diagnostic Field.
1.16 Ultrio 2 Development Costs means, with respect to this Ultrio 2 Addendum only, the development costs defined in Section 5 hereof.
1.17 Ultrio 2 Development Program means the statement of work for the development of the Ultrio 2 Assay Product, including any required
instrument modifications or validations, under the terms of this Ultrio 2 Addendum, as such development program is described in the Binder,
and consists of (i) the Product Requirements Document, (ii) the Software Requirements Specifications, (iv) the Resource Plan included within
the Budget, and (v) the Budget.
2. Ultrio 2 Development Program.

2.1 Objective. Subject to the terms of the Agreement, as amended by this Ultrio 2 Addendum, the parties each shall conduct their respective
obligations under the Ultrio 2 Development Program as established in accordance with the terms hereof, and shall conduct such clinical trials
and apply for and endeavor to obtain such regulatory approvals as necessary or appropriate to make and sell the Ultrio 2 Assay Product for
use in the Blood Screening Field. The Development Program will be limited to development of the Ultrio 2 Assay Product for sale outside the
United States, unless and until the Supervisory Board approves a specific development plan and budget for the United States and a written
amendment reflecting such agreement is signed by the parties.
2.2 General Conduct of Development. The parties shall conduct their respective obligations under the Ultrio 2 Development Program in
compliance in all material respects with all requirements of applicable laws and regulations and all applicable good laboratory, clinical and
manufacturing practices. In addition, the parties each shall proceed diligently with their respective obligations under the Ultrio 2 Development
Program and shall use their respective Commercially Reasonable Efforts to achieve the objectives of the Ultrio 2 Development Program
efficiently and expeditiously. The parties each shall allocate such personnel, equipment, facilities and other resources to the Ultrio 2
Development Program to carry out their respective obligations and to accomplish the objectives thereof, all as is more particularly described in
the Ultrio 2 Development Program, as amended from time to time during the term of this
3
Ultrio 2 Addendum (in accordance with the provisions of Section 3). Each party shall have the right to consult with the other party regarding
the Ultrio 2 Development Program and the obligation to reasonably consider the other party’s advice.
2.3 No Guarantee. While each party agrees to use Commercially Reasonable Efforts to achieve the objectives described in the Ultrio 2
Development Program (as amended from time to time during the term of this Ultrio 2 Addendum (in accordance with the provisions of
Section 3) efficiently and expeditiously, the parties understand that they have embarked on a development program whose outcome is
uncertain. The parties further understand that the Ultrio 2 Development Program is subject to a number of variables that are inherent to the
development process and that there is a possibility that the parties may fail to successfully complete the development of the Ultrio 2 Assay
Product, even though each party exercises Commercially Reasonable Efforts and commits the resources described in the Ultrio 2 Development
Program. Neither party will be in breach of its obligations to the other hereunder and such party shall be deemed to have exercised
Commercially Reasonable Efforts, so long as such party shall have committed the resources described in the Ultrio 2 Development Program,
even if such resources fail to successfully complete the development of the Ultrio 2 Assay Product, or to complete the development of the
Ultrio 2 Assay Product in accordance with the Timeline or for the amounts described in the Budget or to the specifications set forth in the PRD
or the SRS. The payment of Ultrio 2 Development Costs between the parties shall be due and payable without respect to the achievement of
any particular deliverable specified in the Ultrio 2 Development Program.
2.4 Project Management.
2.4.1 Principles of Project Management. The parties agree that in the process of exercising their responsibilities, the Project Team (led by
the Gen-Probe Project Manager as set forth herein) should have routine access to such information needed to assess progress under and
costs of the Ultrio 2 Development Program and that team members from each party shall be invited to participate in team meetings, and have
access to team meeting minutes, except to the extent the Gen-Probe Project Manager determines in their reasonable discretion that any such
meetings or minutes contain confidential, proprietary information of Gen-Probe. In such cases, the Gen-Probe Project Manager shall
(i) determine whether the Novartis team members can attend all or a portion of such meeting, (ii) provide a copy of the meeting minutes to
Novartis team members for the activity with such confidential, proprietary information redacted, and (iii) to the extent that such minutes had
proprietary or confidential information redacted, inform the appropriate Novartis team members of the general nature of any decisions made at
such meeting which affect the Timeline, Budget or Interim Events; provided, however that the Gen-Probe Project Manager may only redact
information comprising Gen-Probe intellectual property and know how or confidential business issues. Team members will have access to non-
confidential and non-proprietary information of the other party necessary to perform their responsibilities under the Ultrio 2 Development
Program, including those listed under Section 2.4.4. Confidentiality will be maintained in accordance with Section 8.1 of the Agreement, and
disclosure of any information under this Section 2.4.1 shall be governed by that certain Confidentiality and Joint Interest Agreement, by and
between the parties, dated as of October 30, 2001.
2.4.2 Project Manager. The project associated with development of the Ultrio 2 Assay Product will be managed under a Project Manager
appointed by Gen-Probe, whose responsibilities are described in Section 2.4.3. The Ultrio 2 Development Program will be managed by a Project
Manager appointed by Gen-Probe. As of the Addendum Effective Date, the Project Manager shall be [...***...]. Any change by Gen-Probe of
the Project Manager must be approved by the Supervisory Board, which approval shall not be unreasonably withheld.
4
2.4.3 Gen-Probe Project Manager’s Responsibilities. The Gen-Probe Project Manager shall be responsible for the following activities,
together with such other activities as the parties may agree:
(a) Managing all matters relating to the Ultrio 2 Development Program under this Ultrio 2 Addendum, including each party’s
respective responsibilities and contributions and receiving reports from the project team;
(b) Providing written monthly progress reports to the parties and presenting status reports to the Supervisory Board in accordance
with Section 2.4.4 below;
(c) Submitting and receiving the reports, materials and documents required to be delivered under this Ultrio 2 Addendum;
(d) Overseeing the process of proposing, and submitting to the parties, any proposed modifications to the Product Requirements
Document, Software Requirement Specifications, Resource Plan or Budget, and in the event the parties cannot agree, presenting the same to
the Supervisory Board in an objective and neutral manner; Project Manager has responsibility for documenting changes to scope — all
requests to Supervisory Board must include impact to latest business case, as well as impact to current timeline and budget.
(e) Arranging any meetings to be held between the parties and participating, to the extent the Project Manager deems appropriate, in
meetings of the project team;
(f) Maintaining, for record keeping purposes, a log book or notes containing summaries and dates of all material communications and
deliveries between the parties of which the Project Manager is aware, consistent with the parties’ protocol for such sharing of confidential
information set forth in that certain Confidentiality and Joint Interest Agreement, by and between the parties, dated as of xxx;
(g) Implementing appropriate practices and procedures to manage the progress under this Ultrio 2 Addendum;
(h) Fostering good communication among the project team and between the parties. It is intended by the parties that both parties
share in the information concerning the progress made in the Ultrio 2 Development Program and the cause of any delays. It is expected that
Novartis will make recommendations to the Gen-Probe Project Manager for preferred paths when substantial delays are identified and multiple
paths forward are identified. Understanding that it takes time for information to flow up the chain of command, the Gen-Probe Project Manager
will inform Novartis of delays and progress on resolution as soon as it becomes available to him/her; and
(i) It is understood that both companies hold proprietary trade secret know-how and processes regarding their respective
technologies that are not necessarily shared as part of this Agreement. On occasion it may occur that a full understanding of difficulties in the
progress of development may require a detailed understanding of this proprietary know-how and processes. Each party will endeavor to
appraise the other of the outcomes and consequences of these difficulties, while protecting the confidentiality of the information.
2.4.4 Meetings of the Supervisory Board. The Supervisory Board shall meet from time to time during the term of this Ultrio 2 Addendum,
but not less frequently than once each calendar
5
quarter during the term hereof. Not less frequently than quarterly, a regular agenda item at the regularly scheduled Supervisory Board meeting
shall be to receive a report from the Project Manager and conduct a review of the Ultrio 2 Development Program to assess progress of the
development and the potential for commercialization of the Ultrio 2 Assay Product.
2.5 Development Responsibilities.
2.5.1 Principal Responsibility; General Statement. The parties’ intention is the smooth and efficient conduct of development, and the
parties desire by this Section 2.5 to provide guiding principles by which day-to-day decisions may be made by the responsible party and by
which the approval process more particularly described in Section 3 below shall be governed. The parties intend that the Ultrio 2 Assay
Product development will be conducted primarily and principally by Gen-Probe. Section 2.5.3 below specifies the development activities that
will be the primary responsibility of Novartis. The party to whom principal responsibility is allocated in this Section 2.5 has the power to make
day-to-day decisions regarding matters within the area of such responsibility, consistent with the overall Ultrio 2 Development Program. The
parties’ obligations with respect to certain warehousing and shipping are subject to Amendment No. 3.
2.5.2 Shared Responsibility. Gen-Probe and Novartis have entered into that certain Definitive Written Settlement Agreement, dated
December 5, 2001. Section 2(a) of the Definitive Written Settlement Agreement incorporates by reference the provisions of the Short
Form Agreement (attached as Exhibit A to the Definitive Written Settlement Agreement). The parties hereby expressly incorporate the
provisions of Sections F.5 and F.6 of the Short Form Agreement between the parties, dated, into this Ultrio 2 Addendum, and agree that the
provisions of Sections F.5 and F.6 of the Short Form Agreement will govern the relationship between the parties for the purpose of the Ultrio 2
Assay Product in connection with the subject matters addressed in those provisions.
2.5.3 Principal and Shared Responsibility; Specific Allocation. Without limiting the general statements set forth in Sections 2.5.1 and
2.5.2, the parties agree to allocate specific responsibility as follows:
Fu n ction Prin cipal Re spon sibility S h are d Re spon sibility

[...***...] Novartis
[...***...] Gen-Probe
[...***...] Gen-Probe
[...***...] Gen-Probe
[...***...] Gen-Probe
[...***...] Gen-Probe
[...***...] Gen-Probe*
[...***...] Gen-Probe*
[...***...] Gen-Probe*
[...***...] Gen-Probe/Novartis
[...***...] Gen-Probe/Novartis
[...***...] Gen-Probe
[...***...] Gen-Probe
[...***...] Gen-Probe
6
Fu n ction Prin cipal Re spon sibility S h are d Re spon sibility

[...***...] Gen-Probe
[...***...] Gen-Probe
[...***...] Gen-Probe
[...***...] Gen-Probe
[...***...] Novartis for tiers 1 and 2; Gen-Probe for tier 3 Gen-Probe/Novartis
* Novartis shall have reasonable input into [...***...].

2.5.4 Regulatory/Licensure. Pursuant to [...***...]. All disagreements on regulatory/licensure issues shall be addressed by the
Supervisory Board and, if necessary, by implementation of the escalation procedure described in Article 13 of the Agreement, excluding
arbitration. For issues that cannot be resolved through such procedures, Gen-Probe’s Chief Executive Officer shall have the right to make a
final decision.
2.5.5 Disagreements. It is recognized that the project team may disagree on approaches for aspects of the project. Even though one party
has the principal responsibility for development in the functional area described in Section 2.5, disagreements that cannot be resolved by the
Gen-Probe Project Manager may be brought to the Supervisory Board. However, work will proceed in accordance with the choice of the
principally responsible party, while being discussed at the Supervisory Board. In the event that the parties do not agree at the Supervisory
Board level, the party with principal responsibility may continue to proceed per its best judgment. If a disagreement arises in a functional area
for which responsibility is shared and resolution cannot be achieved at the Supervisory Board, except as to Regulatory/Licensure Strategy
which shall be governed by Section 2.5.4 above, work shall be suspended in such functional area until a resolution is reached through
Article 13 of the Agreement, including arbitration.
3. Modifications.
3.1 Ultrio 2 Development Program Definition. The parties have prepared and agreed upon an Ultrio 2 Development Program, as described in
the Binder. The Ultrio 2 Development Program, as described in the Binder, will govern the rights and responsibilities of the parties until
changed in accordance with the provisions hereof. The parties recognize and anticipate that additional clarification and refinement of the Ultrio
2 Development Program, including changes, if any, necessary to reflect accepted delays in, or increases in costs of, development, will be
required as development proceeds. The parties intend that this Ultrio 2 Addendum establish a process by which the parties will amend the
Ultrio 2 Development Program, in accordance with the terms described in this Section 3.
7
3.2 Modifications.
3.2.1 Request for Modifications. Either party may propose either Material or Non-material Modifications to any part of the Ultrio 2
Development Program from time to time during the term of this Ultrio 2 Addendum, including without limitation a request for a change to the
FTE Labor Rate, as defined in Section 5.2.1. The process applicable to any such proposed modifications shall be as described in this Section 3.
Changes, modifications or improvements to the Ultrio 2 Assay Product, after the Completion Date, and the parties’ obligations and rights with
respect thereto, are governed by the provisions of Section 4 below. The Project Manager, and under his or her supervision, the project team,
will review any proposed modification to the Ultrio 2 Development Program. Any modification which (i) reflects an increase in the actual Ultrio
2 Development Costs incurred that, when aggregated with all previously authorized modifications, of greater than [...***...] over the
Development Costs reflected in the original Budget approved in effect as of the date this Ultrio 2 Addendum was executed by the parties, or
(ii) contains a proposal to alter any Interim Event as compared to the most recently approved Timeline shall be deemed to be a Material
Modification. The Supervisory Board shall review requested changes and make a determination with respect to whether such requested
modifications are Material or Non-material Modifications. If the Supervisory Board has met and consulted without resolution, then either party
may, in its discretion, determine that the parties have reached an impasse with respect thereto and implement the escalation procedure
described in Article 13 of the Agreement to resolve such impasse.
3.2.2 Non-Material Modifications. Unless changes to the specifications described in Section 3.2.1 constitute a Material Modification, any
Non-Material Modifications shall be reported in the monthly summary progress reports pursuant to Section 2.4.4 and shall not be subject to
the approval process described in Section 3.3.
3.3 Material Modifications.
3.3.1 Request for Material Modifications. In the event that one party desires to request a Material Modification to the Ultrio 2
Development Program from time to time during the term hereof, such party (the “requesting party”) shall submit to the other party such
request in writing, in sufficient detail to enable the other party (the “receiving party”) to evaluate the request. Without limiting the foregoing,
the requesting party shall prepare a revised draft version of the Budget, reflecting any changes necessary to fully implement the requested
Material Modification to the Ultrio 2 Development Program. Requests for Material Modification shall include an analysis of the probable
impact to the latest business case for the Ultrio 2 Assay Product, as well as an analysis of the impact to current timeline and budget.
3.3.2 Initial Analysis of Impact of Proposed Material Modification. Promptly upon receipt of such request, but in any event not more than
[...***...] thereafter, the parties shall conduct a preliminary analysis of the impact that the requested Material Modification would have,
including without limitation the impact any such proposed Material Modification would have on the Budget and/or the Timeline, and shall
meet and conduct an analysis of the impact of such Material Modification on the potential profitability of the Ultrio 2 Assay Product. Should
either party conclude, in its reasonable discretion, that the potential [...***...] by any proposed change to the Ultrio 2 Development Program
requested in accordance with this Section 3.3, such party may elect to terminate participation in the Ultrio 2 Development Program under the
provisions of Section 8.4.
8
3.3.3 Preparation of Modified Ultrio 2 Development Program. Unless the parties terminate the Ultrio 2 Development Program for
convenience under Section 8.3 below or a party terminates on unilateral withdrawal under Section 8.4 below, promptly upon completion of the
review and analysis under Section 3.3.2, Gen-Probe and Novartis shall complete and deliver to the Supervisory Board revisions to the Product
Requirements Document, Software Requirements Specification, Resource Plan or Budget, as applicable, responsive to the request for
acceptance by the parties under Section 3.3.5 below. Costs incurred by Gen-Probe and Novartis to prepare such response to the request shall
be included in Ultrio 2 Development Costs hereunder.
3.3.4 Acceptance of Modified Ultrio 2 Development Program.
(a) Unless the parties terminate the Ultrio 2 Development Program for convenience under Section 8.3 below or a party terminates on
unilateral withdrawal under Section 8.4 below, the parties shall promptly, but not later than [...***...] after preparation by the parties of a
modified Ultrio 2 Development Program under Section 3.3.3 meet and consult with respect to the proposed modified Ultrio 2 Development
Program. No modified Ultrio 2 Development Program shall be effective unless approved by the Supervisory Board.
(b) If the Supervisory Board approves a modified Ultrio 2 Development Program, then the parties shall thereafter finalize such modified
Ultrio 2 Development Program, using the provisions of this Section 3.3.5(b), as follows:
(i) Each party shall, within [...***...] following completion of the consultation and review under paragraph (a), deliver to the other
party either a written approval of the proposed modified Ultrio 2 Development Program or a detailed written statement specifying the basis for
rejection. Approval shall not be unreasonably withheld. The requesting party may, in response to a rejection, revise the proposed modified
Ultrio 2 Development Program to reflect the discussions of the parties, and redeliver the revised proposed modified Ultrio 2 Development
Program for further review, until the parties agree upon the Material Modification. Either party may, in its discretion and with notice to the
other party, determine that the parties have reached an impasse with respect to any proposed Material Modification and deliver the request to
the Supervisory Board for determination.
(ii) If a party delivers the request to the Supervisory Board for determination, the Supervisory Board shall promptly, but not later
than the later of (i) [...***...] after receipt of a requested modified Ultrio 2 Development Program, or (ii) [...***...], meet and discuss the
proposed Material Modification to Ultrio 2 Development Program.
(iii) If the Supervisory Board has met and consulted without resolution, then either party may, in its discretion, determine that the
parties have reached an impasse with respect to any proposed modification and implement the escalation procedure described in Article 13 of
the Agreement to resolve such impasse. Notwithstanding anything to the contrary in this Ultrio 2 Addendum or the Agreement, all Material
Modifications, whether agreed or determined through arbitration, shall be finally determined and documented in accordance with this
Section 3.3. Where one party has rejected a proposed modified Ultrio 2 Development Program, the sole question to be presented in any
arbitration is whether that party unreasonably withheld its approval.
3.3.5 Effective Date of Modified Ultrio 2 Development Program. At such time as the parties (or, if applicable, the Supervisory Board) shall
have accepted a modified Ultrio 2 Development Program incorporating a Material Modification, or any portion thereof, the parties shall
evidence such
9
agreement by initialing the revised Product Requirements Document, Software Requirements Specification, Resource Plan or Budget, as
applicable. The Ultrio 2 Development Program as so modified and approved shall constitute the Ultrio 2 Development Program hereunder and
be incorporated by reference into this Ultrio 2 Addendum, and shall supersede the preceding Ultrio 2 Development Program, or applicable
portions thereof, for all purposes. In order to evidence their agreement to the revised Ultrio 2 Development Program, the parties shall include it
in an additional volume of the Binder, labeled “Amendments to Ultrio 2 Development Program,” in which all amendments and modifications to
the Ultrio 2 Development Program will be kept.
3.4 Notice of Significant Changes. Each party will give [...***...] notice to the other party prior to any proposal of a significant reduction or
increase in resources from the then-current Resource Plan in order to allow the parties time to divert resources either to or from the Ultrio 2
Development Program. Any significant changes to the Budget or the Resource Plan shall be effective only upon the expiration of [...***...]
from the delivery of such notice, unless the parties both agree to a shorter period of time in writing.
4. Changes to Ultrio 2 Assay Product after Completion Date.

4.1 Process. Notwithstanding the provisions of Section 3, the parties recognize that from time to time during the term hereof the market may
demand or regulatory changes may require that special enhancements or modifications be made to the Ultrio 2 Assay Product, and that either
party may desire to adopt such changes. From and after the Completion Date, each party will notify the Supervisory Board promptly upon
receipt of a request from a customer, or upon identification of regulatory changes that may require the parties to implement any enhancement,
modification or other change to the Ultrio 2 Assay Product. The Supervisory Board shall promptly, but not later than the latter of (i) [...***...]
after receipt from a party of such request for such changes to the Ultrio 2 Assay Product, or (ii) [...***...], meet and consult with respect to
such requested change. The Supervisory Board shall decide (i) whether the requested changes should be implemented; and (ii) whether the
requested changes can be implemented under the terms of this Ultrio 2 Addendum or are significant enough to warrant a new Development
Program under the terms of Article 3 of the Agreement, in which case the parties shall use the process more particularly described in Section
3.2 of the Agreement.
4.2 Additional Work under Addendum. If the Supervisory Board determines that the changes are sufficiently minor that they can be
implemented under this Ultrio 2 Addendum, then the parties shall implement the process more particularly described in Section 3.3 above, and
the Supervisory Board may approve a new Ultrio 2 Development Program, consisting of a new modified Product Requirements Document,
Software Requirements Specifications, Resource Plan and Budget, for the purpose of developing such changes. Notwithstanding the
foregoing, nothing herein shall obligate either party to conduct development work after the Completion Date with respect to the Ultrio 2 Assay
Product, without regard to whether the other party indicates a willingness to pay some portion or the entire costs of such development.
5. Ultrio 2 Development Costs.

5.1 [...***...] Ultrio 2 Development Costs. [...***...] Ultrio 2 Development Costs, as defined in and subject to Section 5.2 below. Such costs
shall be payable as described in Section 5.3 herein. The Budget has been prepared for the purpose of permitting the parties to plan for Ultrio 2
Development Program expenditures related to Ultrio 2 Development Costs hereunder and represents the parties’ best estimate of such Ultrio 2
10
Development Costs, but does not represent a “fixed price maximum” or other guaranteed maximum cost of the development required for the
Ultrio 2 Development Program. Marketing Evaluations are outside the scope of Development Costs [...***...], Gen-Probe will not unreasonably
withhold support of Marketing Evaluations.
5.2 Definition and Calculation of Ultrio 2 Development Costs: “Ultrio 2 Development Cost” with respect to the Ultrio 2 Development
Program means the fully-burdened cost of conducting the research and development (including clinical trials and domestic and international
regulatory submissions) of the Ultrio 2 Assay Product, and shall include (i) the reasonable cost of all quantities of raw materials, intermediates
and finished goods necessary for the manufacture of such quantities of the Ultrio 2 Assay Product utilized during the Ultrio 2 Development
Program, and (ii) the reasonable cost of such quantities of the Ultrio 2 Assay Product that are manufactured for, but not utilized during, the
Ultrio 2 Development Program, that are not sold nor retained for research and/or development or other internal purpose and are scrapped due
to product expiration; provided, however that internal costs and costs payable to Third Parties for clinical trials shall not be included within
“Ultrio 2 Development Costs” until such internal costs and costs payable to Third Parties exceed the Duplex/eSAS Clinical Trial Costs, as set
forth in Sections F.1 and F.4 of the Short Form Agreement. “Ultrio 2 Development Costs” shall include any direct costs incurred in
modification of the eSAS and Tigris instruments hardware and software as required for purposes of enabling the instruments to perform the
Ultrio 2 Assay Product. In the event the modified TIGRIS instrument does not meet PRD requirements for MTBF, if both parties agree to
proceed with the development program then the Supervisory Board will decide how to address the burden of instrument costs attributable to
the Ultrio 2 modifications. Costs will be calculated in accordance with United States generally accepted accounting principles, consistently
applied (“U.S. GAAP”), or as otherwise mutually agreed in writing between the parties.
5.2.1 Ultrio 2 Development Costs; FTE Labor Rate.
(a) In lieu of accounting specifically for and receiving direct reimbursement for certain Ultrio 2 Development Costs, the parties have
agreed to include reimbursement for those certain categories of Ultrio 2 Development Costs within an agreed-upon labor rate for full time
equivalent personnel (the “FTE Labor Rate”). Those categories of “Ultrio 2 Development Costs” included within the FTE Labor Rate are those
costs more particularly described on Schedule 5, in paragraph 2 entitled “Ultrio 2 Development Costs included within FTE Labor Rate”. Neither
party shall be reimbursed separately for Ultrio 2 Development Costs included within FTE Labor Rate. Those categories of “Ultrio 2
Development Costs” not included within the FTE Labor Rate are those costs more particularly described on Schedule 5, in paragraph 3 entitled
“Ultrio 2 Development Costs not included within FTE Labor Rate”. Each party shall be reimbursed separately for Ultrio 2 Development Costs
not included within FTE Labor Rate.
(b) The FTE Labor Rate in effect as of the Addendum Effective Date is set forth in paragraph 1 on the attached Schedule 5, and is
included in the Resource Plan and reflected in the Budget. Each year the parties will evaluate and re-set a FTE Labor Rate for the Budget for
the new calendar year based on the parties’ budgets for the then-current calendar year and consistent with the requirements of Section 5.2.1(d)
below. In the event the parties shall not have agreed upon a new FTE Labor Rate before commencement of a calendar year, the parties shall
use the rate in effect during the immediately preceding calendar year for billing purposes, subject to “true-up” (using the same methodology as
described in Section 5.2.1(e) below) at such time as the FTE Labor Rate for the then-current calendar year has been agreed.
11
(c) In addition to the annual reset described in Section 5.2.1(b) above, either party shall have the right to request a change in the FTE
Labor Rate reflected on the attached Schedule 5 to be applied on a prospective basis under the approval process set forth in Section 3.
Acceptance of such request for modification shall be governed by Section 3.3.4 of this Ultrio 2 Addendum.
(d) In addition to the foregoing, throughout the term of this Ultrio 2 Addendum:
(i) each party shall have the same FTE Labor Rate applicable to it as is applied to the other party, subject to any agreed
modifications; and
(ii) in the event either party requests a modification to the FTE Labor Rate hereunder, the modified FTE Labor Rate shall be
calculated using the same methodology as that used to calculate the FTE Labor Rate in effect as of the Addendum Effective Date. The
methodology used to calculate the FTE Labor Rate in effect as of the Addendum Effective Date is described on the attached Schedule 5.2.3,
entitled “Ultrio 2 Development Costs Calculation Methodology”.
(e) In the event aggregate actual Ultrio 2 Development Costs that are reimbursed through the FTE Labor Rate exceeded, or fell short
of, the agreed FTE Labor Rate reflected in the Budget (as agreed to in accordance with the provisions of Section 5.2.1(b) above) for such
calendar year, the parties will “true-up” such reimbursement annually in accordance with this Section 5.2.1(e). On or before [...***...] of each
year during the term hereof, each Gen-Probe will calculate and deliver to Novartis an accounting of the actual expenditures made by Gen-Probe
for those costs more particularly described on Schedule 5, in paragraph 2 entitled “Ultrio 2 Development Costs included within FTE Labor
Rate” and compare them to the amounts reimbursed through the FTE Labor Rate in such year. Each party will have until [...***...] in which to
meet and agree upon a final FTE Labor Rate for such year (the “Final FTE Labor Rate”) which more closely approximates the actual labor rate
experienced by each party. If necessary Novartis will travel to Gen-Probe in order to complete the review in these timeframes. Each party shall
have the same Final FTE Labor Rate applicable to it as is applied to the other party, subject to any agreed modifications. If the parties disagree
on a Final FTE Labor Rate, such disagreement shall be addressed by the Supervisory Board and, if necessary, by implementation of the
escalation procedure described in Article 13 of the Agreement, excluding arbitration. In the event that one party received less than the Final
FTE Labor Rate, such party shall be entitled to receive from the other party an amount equal to [...***...] of the difference between the actual
Ultrio 2 Development Costs included within the FTE Labor Rate and the reimbursed Ultrio 2 Development Costs included within the FTE Labor
Rate; similarly, in the event that one party received more than the Final FTE Labor Rate, such party shall be required to reimburse the other
party in an amount equal to [...***...] of the difference between the actual Ultrio 2 Development Costs included within the FTE Labor Rate and
the reimbursed Ultrio 2 Development Costs included within the FTE Labor Rate.
(f) Ultrio 2 Development Costs not included within the FTE Labor Rate shall be budgeted and trued-up under the same terms as the
FTE Labor Rate. This includes all scrap (for example: finished goods, sub-assemblies, TIGRIS parts and ancillaries) manufactured/procured for
the Ultrio 2 program but not consumed. Translation costs will be paid by Novartis and then applied to the Monthly True Up Payment per 5.3.3.
5.2.2 Comparison with Resource Plan. The planned resources, and the associated costs, will be broken out on a monthly basis and
analyzed against the Resource Plan and reflected in the Budget.
5.2.3 Methodology. Attached hereto as Schedule 5.2.3 is a detailed methodology for the calculation of the Ultrio 2 Development Costs,
including costs reimbursed through the FTE Labor rate
12
and significant external costs, as defined in this Section 5.2. The parties shall use such methodology for the purpose of invoicing and payment
more particularly described in Section 5.3 below.
5.3 Payment of Ultrio 2 Development Costs. In addition to the provisions of Article 7 of the Agreement, the parties agree as follows:
5.3.1 Accrued Ultrio 2 Development Costs. Each party has already incurred, prior to the date of execution of this Ultrio 2 Addendum,
certain Ultrio 2 Development Costs. To the extent that one party has paid more than its [...***...] share of the aggregate Ultrio 2 Development
Costs incurred prior to and until the date of execution of this Ultrio 2 Addendum, the other party will reimburse such party for [...***...] the
difference between the Ultrio 2 Development Costs paid by that party and [...***...] of the aggregate Ultrio 2 Development Costs incurred prior
to and until the date of execution of this Ultrio 2 Addendum. Attached to this Ultrio 2 Addendum as Schedule 5.3.1 is a summary of the Ultrio 2
Development Costs incurred by the parties prior to the execution of this Ultrio 2 Addendum.
5.3.2 [...***...] Budgeted Payments. Each party’s [...***...] share of Ultrio 2 Development Costs will be [...***...] in an amount equal to the
amount reflected in Budget [...***...]. The Budget sets forth the parties’ anticipated expenditures and FTE Labor amounts for Ultrio 2
Development Costs [...***...] during the term of the Ultrio 2 Development Program in the line item entitled “Total Project Gen-Probe” and
“Total Project Novartis,” respectively. The line items entitled “Gen-Probe Payment to Novartis” and “Novartis Payment to Gen-Probe” in the
Budget identify (i) the amount by which Novartis and Gen-Probe, respectively, are anticipated to incur Ultrio 2 Development Costs in excess of
their respective [...***...] share (the “negative delta”), and (ii) the party who is required to make the reimbursement payment. [...***...] during
the term of the Ultrio 2 Development Program, Gen-Probe will invoice Novartis the amount of such negative delta net of any credits or
additional charges against amounts previously paid that have been agreed to by the Project Management prior to the date on which Gen-
Probe rendered the invoice. Attached hereto as Schedule 5.3.2 is an example of this payment methodology.
5.3.3 [...***...] True-Up Payments. At the end of [...***...], each party will calculate the actual FTE Labor hours expended on the Ultrio 2
development Program during [...***...]. The Project Manager will review these actual FTE Labor hours compare them to the Budget for the
applicable [...***...]. In the event that one party expended more than [...***...] of actual FTE Labor hours or Ultrio 2 Development Costs not
included in the FTE Labor hours during [...***...], taking into account all payments made under Section 5.3.2, the parties shall calculate the
cost of such negative delta using the agreed FTE Labor Rate and Gen-Probe will adjust the next invoice issued to Novartis in the amount of
such credit or additional charge on or before the expiration of [...***...] after the end of the applicable [...***...]. Attached hereto as Schedule
5.3.3 is an example of this true-up methodology.
5.3.4 Invoices. Each party will invoice the other for the amounts described in this Section 5.3 and all invoices will be due and payable
[...***...] from the date of the invoice. In the event payment is not received within such period, the delinquent party shall pay a service charge
if billed, equal to the amount overdue multiplied by [...***...], but not exceeding the maximum allowable rate.
13
5.4 Dispute. Neither party shall unilaterally invoice the other in advance for more than the amount reflected in the then-current Budget in a
given period nor withhold payments of the amount reflected in the then-current Budget. Either party may, in its discretion, determine that the
parties have reached an impasse with respect to a particular Budget item, the invoicing or payment of same, and implement the escalation
procedure described in Article 13 of the Agreement to resolve such impasse. Notwithstanding the foregoing, neither party may withhold
payment of [...***...] budgeted payments under Section 5.3.2, cease development work or otherwise impede the progress of the Ultrio 2
Development Program by reason of such dispute.
5.5 Right to Audit and Verify. Each party is entitled to review, evaluate, and in its discretion independently verify the basis of and actual
expenditures incurred by the other party for which such party requests reimbursement as Ultrio 2 Development Costs hereunder, in
accordance with the provisions of Section 7.3 of the Agreement, including without limitation actual expenditures after the Addendum Effective
Date but prior to the execution of this Ultrio 2 Addendum.
6. Manufacturing and Commercialization.

6.1 Definitions Relevant to Manufacturing and Commercialization Obligation. The parties intend that the Ultrio 2 Assay Product falls within
the following provisions of the Agreement:
6.1.1 Applicable Purchase Price. As used in the Agreement, the “Applicable Purchase Price” applicable to the Ultrio 2 Assay Product is
as set forth in Section 1.2.1 of the Agreement. The parties acknowledge that the Ultrio 2 Assay Product is a Future Blood Screening Assay
which includes as a constituent element an assay for HCV (other than those sold pursuant to Sections 3.1.4(b) or 3.6 of the Agreement), for
which the provisions of Section 1.2.1 of the Agreement describes the “Applicable Purchase Price”, as determined from time to time during the
term of the Agreement. Notwithstanding section 3.2.7(b) of the Agreement, the Applicable Purchase Price for the Ultrio 2 Assay Product in the
territory will never be less than [...***...].
6.1.2 Transfer Price. The “Transfer Price” applicable to the Ultrio 2 Assay Product is set forth in Section 1.58.2 of the Agreement except
that the Transfer Price for Ultrio 2 Assay Product from conformance or development lots that is transferred to Third Parties in the Territory for
use in the Blood Screening Field shall reflect and be adjusted if and to the extent that the costs of manufacture of such conformance or
development lots is included as part of the Ultrio 2 Development Costs. The Transfer Price will never be less than the Manufacturing Cost for
the Ultrio 2 Assay Product. The second sentence of Section 1.58.2 is deleted in its entirety, and replaced with the following:
“The Transfer Price, based on this objective, shall never be less than [...***...].”
6.1.3 Manufacturing Cost. The “Manufacturing Cost” for the Ultrio 2 Assay Product shall be calculated as defined in Schedule 6.1.3.
6.1.4 Rare Reagents. The Ultrio 2 Assay Product is a Future Blood Screening Assay which incorporates substantial Rare Reagents, as
defined in Section 1.51 of the Agreement.
6.2 Right to Audit and Verify. Novartis is entitled to review, evaluate, and in its discretion independently verify the basis of Gen-Probe’s
Manufacturing Cost using an independent third party, in accordance with the provisions of Section 7.3 of the Agreement
6.3 Quality Arrangements. The parties have previously adopted Amended and Restated Supplemental Agreement No. 1 (Quality
Agreement), effective as of March 1, 2006 (the “Quality
14
Agreement”). The Quality Agreement shall govern the parties’ quality roles and responsibilities with respect to the Ultrio 2 Assay Product.
6.4 Non-Commercial Products.
6.4.1 If any portion of the notebook, development, clinical or conformance lots of the Ultrio 2 Assay Product manufactured for the Ultrio
2 Development Program is sold to a Third Party for use outside the United States or utilized by Novartis or Gen-Probe in a research or
development program other than the Ultrio 2 Development Program, including without limitation research studies or marketing studies
performed in support of commercialization of the Ultrio 2 Assay Product, or the development and clinical trials for the Tigris instrument, the
party selling or utilizing such Ultrio 2 Assay Product shall reimburse the Ultrio 2 Development Program to the extent that the program was
charged for the materials.
6.4.2 Section 6.10 of the Original Agreement is amended to add the following as new subsection (b), applicable to the Ultrio 2 Assay
Product only:
“(b) Gen-Probe agrees to provide to Novartis reasonable quantities of the Ultrio 2 Assay Product manufactured by Gen-Probe for uses
other than sale to customers, including without limitation research studies, marketing studies, internal research and development, and
troubleshooting (all for Novartis’s use only in direct furtherance of the express purposes of this Agreement and without any implied license
for any purpose other than such express purposes), to the extent such Products are specifically ordered by Novartis for such purposes
(“Non-commercial Ultrio 2 Assay Products”). The entire compensation to Gen-Probe for Non-commercial Products shall be not greater
[...***...], as determined by reference to Gen-Probe’s customary and ordinary accounting practices. The quantities of Non-commercial Ultrio
2 Assay Products ordered by Novartis as well as quantities of Ultrio 2 Assay Products consumed by Gen-Probe for all purposes other than
the Ultrio 2 Assay Development Program shall be subject to review by the Supervisory Board.”
6.5 Commercialization Budget.
(a) For the purpose of determining “commercialization costs” (to be reimbursed to Novartis as permitted in Section 8.5 of the
Agreement), Novartis shall submit to Gen-Probe a commercialization budget, promptly following any termination of this Ultrio 2 Addendum for
breach in accordance with Section 8.2 or an unilateral withdrawal by a party in accordance with Section 8.4, and the timely election by a
Continuing Party to continue the Ultrio 2 Development Program, as described in this Section 6.4.
(b) Novartis shall submit to Gen-Probe a commercialization budget, setting forth the programs and anticipated costs, including
applicable costs and overhead for internal sales, marketing, distribution, training, technical support, instrument service and field service
engineering, product support, quality assurance, regulatory affairs and clinical affairs all as required to commercialize the Ultrio 2 Assay. Such
commercialization budget shall also include out-of pocket costs associated with each such program and initiative plus costs associated with
any third party support and allocated costs of instrumentation on a per unit or other reasonable allocation method applicable to the
commercialization of the Ultrio 2 Assay Product. The detail and basis provided in the proposed budget shall be commensurate with the
information supplied by Gen-Probe to support Gen-Probe’s calculation of Manufacturing Cost.
(c) Gen-Probe will deliver to Novartis either a written acceptance of the proposed commercialization budget or a detailed written
statement specifying the basis for rejection.
15
Novartis may, in response to a rejection, revise the proposed commercialization budget to reflect the discussions of the parties, and redeliver
the revised commercialization budget for further review, until the parties agree upon the final commercialization budget. Either party may, in its
discretion and with notice to the other party, determine that the parties have reached an impasse with respect to the proposed
commercialization budget and deliver a request to the Supervisory Board for determination.
(d) If a party delivers the request to the Supervisory Board for determination of the commercialization budget, the Supervisory Board
shall promptly, but not later than the later of (i) [...***...] after receipt of the request, or (ii) [...***...], meet and discuss the proposed
commercialization budget.
(e) If the Supervisory Board has met and consulted without resolution, then either party may, in its discretion, determine that the
parties have reached an impasse with respect to the proposed commercialization budget and implement the escalation procedure described in
Article 13 of the Agreement to resolve such impasse.
(f) Labeling: Labeling will indicate that the Product was “Developed by Gen-Probe, in collaboration with Chiron a Novartis business”
7. License Grants.
The grant of licenses for the purpose of conducting the Ultrio 2 Development Program shall be governed by Sections 3.2.6 and Section 9 of the
Agreement. Novartis agrees that Gen-Probe shall be [...***...].
8. Addendum Effective Date; Term; Termination.

8.1 Term of Ultrio 2 Addendum. This Ultrio 2 Addendum shall become effective on the Addendum Effective Date and shall continue in
effect through the Blood Screening Term (as determined without consideration of this Addendum), unless sooner terminated in accordance
with the provisions hereof. Neither execution of this Addendum nor development and sale of the Ultrio 2 Assay Product for any market
(including the United States, if agreed by the parties in accordance with Section 2.1) shall extend the Blood Screening Term as otherwise
computed under Section 1.7 of the Agreement without consideration of such Ultrio 2 Assay Product, and subsection (b) of Section 1.7 shall
not apply to the Ultrio 2 Assay Product. Termination of this Ultrio 2 Addendum shall be governed by the terms of this Section 8 and
termination of the Agreement is governed by Section 11.2 of the Agreement.
8.2 Termination for Breach.
8.2.1 Default. Either party (the “nondefaulting party”) has the right, upon written notice to the other party (the “defaulting party”), to
terminate the Ultrio 2 Development Program, upon
16
the occurrence of any of the following events of default and the expiration of any applicable period of time for cure:
(a) if a party fails to make a payment required under Sections 5.3.2 or 5.3.3 hereunder;
(b) if a party invoices for amounts using expenditures not falling within the definition of Ultrio 2 Development Costs or not included
within the Budget.
(c) if a party fails to exercise Commercially Reasonable Efforts to commit the resources described in the Ultrio 2 Development Program
or to exercise Commercially Reasonable Efforts achieve the objectives of the Ultrio 2 Development Program; provided, however, that the failure
to successfully complete the development of the Ultrio 2 Assay Product, or to complete the development of the Ultrio 2 Assay Product on the
Timeline or for the amounts described in the Budget or to the specifications set forth in the PRD or the SRS shall not be deemed to be a breach
of this Ultrio 2 Addendum; and
(d) if a party defaults under the Agreement which default results in the termination of the Agreement.
8.2.2 Right to Cure Event of Default. Upon the occurrence of any event of default entitling a party to terminate this Ultrio 2 Addendum,
the non-defaulting party may send notice of event of default, specifying in reasonable detail the nature of the default, to the defaulting party.
The defaulting party will have [...***...] following the date of receipt of such notice within which to cure the breach or event of default. Failure
to cure the default within such time period will result in termination of the Ultrio 2 Development Program without further notice by the non-
defaulting party, unless such non-defaulting party extends the cure period by written notice or withdraws the default notice. (The expiration of
the period for such right to cure without cure, extension or withdrawal of the default notice is referred to as the “effective date of termination”.)
8.2.3 Effect of Termination for Breach. Upon a termination of this Ultrio 2 Addendum for default under this Section 8.2:
(a) Subject to the rights of the parties under Section 9.3, the Ultrio 2 Development Program shall be terminated.
(b) The non-defaulting party’s rights under the Agreement shall remain in full force and effect unchanged.
(c) The defaulting party’s rights under the Agreement with respect to all Products, other than the Ultrio 2 Assay Product, shall remain
in full force and effect unchanged.
(d) The defaulting party’s rights under the Agreement with respect to the Ultrio 2 Assay Product shall terminate and be of no further
force and effect. The defaulting party may not undertake a development substantially similar to the Ultrio 2 Development Program with any
other party for a period of [...***...] from the date of termination.
(e) The defaulting party shall pay, to the other party, in addition to any other rights or remedies available to the nondefaulting party at
law or equity, promptly upon receipt of an invoice therefore, an amount equal to (i) [...***...],
17
(ii) [...***...], and (iii) [...***...].

8.3 Termination by Both Parties.
8.3.1 Vote to Terminate. The Supervisory Board, by unanimous vote, has the right, upon three (3) months written notice to both parties,
to terminate the Ultrio 2 Development Program and by extension this Ultrio 2 Addendum.
8.3.2 Effect of Notice Period on Termination by Both Parties. During the notice period as set forth in Section 8.3.1, the provisions for
reimbursement of a party’s development efforts in accordance with the then-current Budget continue in force and effect, unless the party
faced with reduction agrees that it can displace employees to other activities in a shorter time. The parties agree that each party shall attempt
to minimize costs during the notice period. During the notice period, the parties shall continue to perform their respective obligations under the
Ultrio 2 Development Program, unless otherwise agreed by the parties in writing. Upon the expiration of the notice period (and the effective
date of termination under Section 8.2 or the effective date of withdrawal under Section 8.4 of the Ultrio 2 Development Program), each party
shall pay, promptly upon receipt of an invoice therefor, to the other party an amount equal to (i) all Ultrio 2 Development Costs accrued to date
in the terminated Ultrio 2 Development Program for which an invoice has been rendered and (ii) all Ultrio 2 Development Costs not yet
invoiced but incurred in the terminated Ultrio 2 Development Program, whether or not disputed, as set forth in the approved Budget.
8.3.3 Effect of Termination by Both Parties. Upon any termination of the Ultrio 2 Development Program under this Section 8.3, the parties
shall have such rights on termination as shall be unanimously agreed by the Supervisory Board as part of the decision to terminate for
convenience.
8.4 Termination by Either Party; Unilateral Withdrawal from Ultrio 2 Development Program. Either party (referred to for convenience as the
“withdrawing party”) may elect to terminate this Ultrio 2 Addendum under this Section 8.4 on the following basis without further cause:
(a) The withdrawing party concludes in its reasonable discretion that the potential for [...***...] by any proposed change to the Ultrio
2 Development Program requested in accordance with Section 3.3 above; or
(b) The withdrawing party receives a request for a Material Modification of the Ultrio 2 Development Program as determined in
accordance with Section 3.2.1; or
(c) The parties have failed to achieve one or more of the Interim Events.
The withdrawing party may terminate this Ultrio 2 Addendum under this Section 8.4 upon the provision to the other party (referred to for
convenience as the “non-withdrawing party”) of [...***...] prior written notice, specifying in reasonable detail the basis on which the
withdrawing party is unilaterally terminating this Ultrio 2 Addendum. (The notice of intent to withdraw described in this Section 8.4 is referred
to for convenience as the “withdrawal notice”; and a date which is [...***...] later is referred to for convenience as the “effective date of
withdrawal”).
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8.5 Continuance of Ultrio 2 Development Program following Unilateral Withdrawal or Termination.

8.5.1 Election. Following any termination of this Ultrio 2 Addendum for breach in accordance with Section 8.2 or an unilateral withdrawal
by a party in accordance with Section 8.4, the non-defaulting party (under Section 8.2) or the non-withdrawing party (under Section 8.4)
(referred to for convenience as the “Continuing Party”) may elect to continue the Ultrio 2 Development Program by providing written notice to
the other party on or before the effective date of termination under Section 8.2 or the effective date of withdrawal under Section 8.4.
8.5.2 Funding and Conduct of Development.
(a) If a Continuing Party elects pursuant to this Section 8.5 to continue funding the Ultrio 2 Development Program, such Continuing
Party shall be solely responsible for the current funding of all Ultrio 2 Development Costs from and after the effective date of termination under
Section 8.2 or the effective date of withdrawal under Section 8.4, subject to the right to reimbursement more particularly described below.
(b) In addition to Section 8.5.2(a), if the Continuing Party is Novartis, Novartis shall pay Gen-Probe [...***...]. Such amount shall be
payable in accordance with the provisions of Section 5.3, including without limitation monthly payment against Budget and monthly true-up
payments. Novartis shall be entitled to reimbursement of such amounts paid in accordance with the provisions of Section 8.5.3 below. In the
event, however, that Novartis shall elect to cease the development, marketing and sale of the Ultrio 2 Assay Product prior to the effective
commercialization thereof, then Novartis shall pay Gen-Probe an additional amount equal to [...***...] of the total aggregate Ultrio 2
Development Costs (meeting the definition and calculated as described in Section 5.2) incurred by Gen-Probe from and after the effective date
of termination for breach under Section 8.2 or the date of receipt from Gen-Probe of the withdrawal notice delivered pursuant to Section 8.4 of
the Ultrio 2 Addendum, which additional amount the parties agree will compensate Gen-Probe for the resources committed by Gen-Probe to the
Ultrio 2 Development Program which did not result in an effectively commercialized Ultrio 2 Assay Product. Novartis shall pay such additional
amount promptly upon ceasing such development, as permitted under Section 3.2.1(c) of the Agreement.
(c) In addition to Section 8.5.2(a), if the Continuing Party is Gen-Probe, in the event that Gen-Probe shall elect to cease the
development, marketing and sale of the Ultrio 2 Assay Product prior to the effective commercialization thereof, then Gen-Probe shall pay
Novartis an additional amount equal to [...***...] of the total aggregate commercialization costs incurred by Novartis as approved in the
commercialization budget under Section 6.4 to be incurred prior to the effective commercialization of the Ultrio 2 Assay Product. Gen-Probe
shall pay such additional amount promptly upon ceasing such development, as permitted under Section 3.2.1(c) of the Agreement.
8.5.3 Reimbursement of Development Costs. The party electing to continue development under the terms of Section 8.5 shall be deemed to
be the party who “wishes to develop the Future Blood Screening Assay” described in Section 3.2.1(c) of the Agreement. The provisions of
Section 3.2.1(c) and the provisions of Section 3.2.3(b)(i) of the Agreement shall govern the rights and obligations of the parties from and after
the effective date of termination under Section 8.2 or the
19
effective date of withdrawal under Section 8.4 of the Ultrio 2 Development Program as a joint development program under this Ultrio 2
Addendum, except Section 3.2.1(b) of the Agreement shall be deleted in its entirety, and replaced with the following.
“b. In the case of a Future Blood Screening Product which is funded by one party pursuant to Section 3.2.1(c) of the Agreement and
Section 8.5 of the Ultrio 2 Addendum, such party shall be solely responsible for all Development Costs of such Future Blood Screening
Assay and be entitled to reimbursement of the portion of the total Development Costs incurred after the effective date of termination under
Section 8.2 or the effective date of withdrawal under Section 8.4, as the case may be (the “Post-Withdrawal Development Costs”), as
follows:
i. If the funding party is Gen-Probe, Novartis shall (A) [...***...]; (B) [...***...]; (C) [...***...]; (D) [...***...]; and (F) [...***...]. Thereafter,
Net Sales shall be paid as provided under Section 3.2.7 of the Agreement.
ii. If the funding party is Novartis, Novartis shall pay to Gen-Probe the [...***...], then Novartis shall (A) first, [...***...]; (B) second,
[...***...]; (C) third, [...***...]; (D) fourth, [...***...]; and (E) fifth, [...***...].
20
[...***...]. Thereafter, Net Sales shall be paid as provided under Section 3.2.7 of the Agreement.
iii. The parties agree that the funding party is entitled to a preferential return on the Post-Withdrawal Development Costs incurred by
the funding party, as a reasonable return for the additional risk incurred by the funding party, in an amount equal [...***...] on the Post-
Withdrawal Development Costs actually incurred by the funding party from the date incurred until the date on which such Post-Withdrawal
Development Costs are reimbursed from Ultrio 2 Assay Product revenues pursuant to Section 3.2.1(b)(i) above or Section 3.2.1(b)(ii) above,
as applicable.”
8.5.4 Control of the Program upon Unilateral Funding. The Continuing Party shall have the right to appoint the Project Manager from and
after the effective date of termination under Section 8.2 or the effective date of withdrawal under Section 8.4. The Continuing Party shall have
the right to make such Material Modifications to the Ultrio 2 Development Program that it deems necessary or prudent in its reasonable
discretion, without the acceptance of the other party as otherwise required under Section 3.3.4 of this Ultrio 2 Addendum. Notwithstanding the
above, the Continuing Party shall remain obligated to provide the other party with a copy of the Ultrio 2 Development Program, and all notice
and reporting obligations set forth herein shall remain in full force and effect.
8.5.5 Rights under Agreement. Except as expressly modified by this Section 8.5, the parties shall retain all rights and obligations allocated
pursuant to Section 3.2 of the Agreement. Without limiting the foregoing, without respect to which party is the Continuing Party, Gen-Probe
shall have the exclusive right and obligation to conduct the development work and to manufacture the Ultrio 2 Assay Product; Novartis shall
have the exclusive right to promote, market and sell the Ultrio 2 Assay Product and the parties shall have their respective rights under
Section 3.2.8 of the Agreement, all as is more particularly described in the Agreement unaffected in any way by the withdrawal from the Ultrio 2
Development Program.
9. Escalation.
9.1 Escalation Process. Prior to implementing the arbitration process more particularly described in Article 13 of the Agreement, the parties
agree to escalate any dispute first to a discussion between responsible managers, and if they cannot agree, then to the Supervisory Board.
However the parties explicitly acknowledge that in the event of the need for an urgent decision the party with primary responsibility will
proceed to make the decision, and implement. It is agreed that the party with primary responsibility will make all reasonable and timely efforts
to inform the other party of the issue requiring decision, particularly where the issue is one of some consequence.
9.2 Remedies in Event of Default. Neither party shall be entitled to exercise any remedy otherwise available to it at law or in equity unless
and until such party shall have provided the other party with notice of such event of default, reasonably specifying the nature of the default,
and any applicable period of time for cure thereof shall have expired without cure, and the procedures defined in Article 13 of the Agreement
shall have been first exhausted.
9.3 Survival. Upon a termination of this Ultrio 2 Addendum, the following provisions of this Ultrio 2 Addendum shall survive such
termination: Sections 2.3, 2.4.1, 8, 9, and 10 and all rights under Section 5.3.3 that have accrued as of the date of termination.
21
10. No Other Amendment. Except as expressly set forth in this Ultrio 2 Addendum, all other terms and conditions of the Agreement, the
parties’ Definitive Written Settlement Agreement, dated December 5, 2001, and the Short Form Agreement, dated November 16, 2001, are
hereby ratified and shall continue in full force and effect. In the event of a conflict between the terms of this Ultrio 2 Addendum and the
Agreement, the terms of this Ultrio 2 Addendum shall control. The provisions of this Ultrio 2 Addendum are intended to, and hereby,
supersede any provisions in the Definitive Written Settlement Agreement entered into by and between the parties, dated December 5, 2001,
and the Short Form Agreement entered into by and between the parties, dated November 16, 2001, on the same subject matter.
11. Counterparts. This Ultrio 2 Addendum may be executed in counterparts, each of such shall be deemed an original, and all of which together
shall constitute one and same instrument.
IN WITNESS WHEREOF, the parties have caused this Ultrio 2 Addendum to be executed and the persons signing below warrant that they
are duly authorized to sign for and on behalf of the respective parties.
GEN-PROBE INCORPORATED, NOVARTIS VACCINES & DIAGNOSTICS, INC.,

a Delaware corporation a Delaware corporation
By: /s/ Henry L. Nordhoff By: /s/ Gene W. Walther

Henry L. Nordhoff Gene W. Walther
Its: Chief Executive Officer Its: Head, Diagnostics
Date: October 15, 2008 Date: October 17, 2008
By: /s/ Joerg Reinhardt

Joerg Reinhardt
Its: Chief Executive Officer
Date: October 20, 2008
22
Schedule 1.16.
Description of Ultrio 2 Assay Product
The Ultrio 2 triplex assay is an in-vitro nucleic acid amplification test for the qualitative detection of human immunodeficiency virus Type 1
(HIV-1) RNA, hepatitis B virus (HBV) DNA, and/or hepatitis C virus (HCV) RNA in human plasma for use in the Blood Screening Field. The
Ultrio 2 triplex assay will not discriminate between HIV-1, HBV and HCV infection. The Ultrio 2 assay is to be developed to run initially on both
the enhanced semi-automated instrument (eSAS) and the Tigris instrument.
HIV-1, HBV and HCV discriminatory Probe reagents are in -vitro nucleic acid amplification tests for the qualitative detection of the specified
virus and are provided with the Ultrio 2 triplex assay as part of the Ultrio 2 Assay Product for use in discriminating between HIV-1, HBV and
HCV in plasma following a positive result from the Ultrio 2 triplex assay.
For purposes of the foregoing Addendum, all of the Ultrio 2 triplex assay and the associated discriminatory probe reagents are included within
the definition of the “Ultrio 2 Assay Product.”
[...***...]
23
Schedule 5
Ultrio 2 Development Costs
1. Reimbursable FTE Rate. Budget rates for future years will be based on [...***...] per FTE per calendar year until finalized each year per
section 5.2.1. Future calendar year FTE billing rates will be agreed to based on future annual budgets. In the absence of agreement, the FTE
billing rate will be the then current billing rate subject to true-up once new rates have been agreed.
2. Ultrio 2 Development Costs included within FTE Labor Rate. Ultrio 2 Development Costs included within FTE Labor Rate consist of all
attributable costs associated with the development of the Ultrio 2 Assay Product and modifications to associated instrument system platforms
(but excluding Tigris instruments) that may be required for such Ultrio 2 Assay Product (calculated in accordance with United States generally
accepted accounting principles, or as otherwise mutually agreed in writing between the parties) incurred prior to the Completion Date and
includes pilot development; validation studies necessary for product and process licensure; clinical studies; licensing activities; and the
manufacture and ultimate disposition of conformance lots of material, calculated as follows:
(a) Shared development costs include: research and development associated with the Ultrio 2 Development Program; clinical studies;
validation exclusively associated with the particular analyte; development lots; document preparation specific to the development;
modifications to the enhanced semi-automated instrument (eSAS) or the TIGRIS instrument and/or its ancillaries.
(b) The planned resources, and the associated costs, will be broken out on a [...***...] basis and analyzed against the Resource Plan
and reflected in the Budget;
(c) Salaried staff costs included within the Budget will be adjusted to reflect actual staff costs. Salary information may be aggregated
to protect the identity of individuals. This salary information will be verifiable on a need to know basis to a select number of personnel from
each company;
(d) Cost for wage laborers plus the applicable overhead charge for such labor (calculated at the rates and charges described in
Section 5.2.1) paid to personnel described in the Resource Plan, including the Ultrio 2 Development Program project manager and personnel
engaged to perform QA testing for the Ultrio 2 Development Program;
(e) Costs for engineering prototypes and manufacturing pilot modules required for the Ultrio 2 Development Program;
(f) Costs of inventory consumed in the Ultrio 2 Development Program, including raw material, intermediates and finished goods, and
conformance lots, whether reject or not, that arise from the Ultrio 2 Development Program or are necessary to support the Ultrio 2 Development
Program, and scrap material, including raw materials and development materials that arise from the Ultrio 2 Development Program but excluding
Ultrio 2 Assay Product and scrap materials used strictly for internal research purposes or consumed in development programs other than the
Ultrio 2 Development Program; Material such as finished goods, sub-assemblies, ancillaries and TIGRIS parts not used during development
but created as part of the program are classified as scrap not included in FTE rate but to be split during true up process.
(g) Costs for conformance product documentation;

(h) Costs for courier and mail service fees for delivery of items between Gen-Probe and Novartis;
(i) Costs of travel, lodging and reasonable per diem expenses for employee and consultants of Gen-Probe or Novartis incurred in
furtherance of their activities hereunder, providing training or participating on the Supervisory Board to the extent such costs are not included
within the overhead charge applicable to labor costs;
(j) Costs of foreign registrations, marketing studies to support registration, and market research costs necessary to better define
requirements or to support national decision-making;
(k) Such other categories as the parties may agree from time to time using the approval process described in Section 0.
(l) All budgeted expenses of Departments directly involved with the Ultrio 2 Development Program
(m) Appropriate portions of budgeted costs of departments indirectly involved in the Ultrio 2 Development Program.
3. Ultrio 2 Development Costs not included within FTE Labor Rate.

(a) Cost of conformance lot materials consumed in performance of Ultrio 2 Development Product or clinical trials.
(b) Significant Third Party consultant charges (i.e. CRO, regulatory expertise, etc.) to the extent not captured within the FTE rates in
Item 2 above.
(c) Tooling changes required to support enhanced semi-automated instrument (eSAS) or TIGRIS modifications are not included in
FTE rate and will be split during the true up process.
Schedule 5.2.3
Ultrio 2 Development Costs Calculation Methodology
[...***...]

[...***...]

[...***...]

[...***...]

Schedule 5.3.1
Accrued Ultrio 2 Development Costs
The parties acknowledge and agree that development costs for the calendar years 2006 and 2007 have previously been trued-up between the
parties and that no payment is due from either party to the other in connection with the development program conducted during those years
not withstanding both parties right to audit and verify pursuant to Section 5.5.
The parties further acknowledge and agree that they will meet and negotiate in good faith with respect to development costs incurred during
calendar year 2008 prior to execution of the foregoing agreement and any payment due from one party to the other pursuant to Section 5.3.1
shall be made promptly.
Schedule 5.3.2
[...***...] Budgeted Payments
The party with the negative delta shall submit to the other party, on or before the end of the [...***...] during the term of the Ultrio 2
Development Program, an invoice setting forth the amount of the delta. In addition, any party owed by other an excess adjustment shall submit
to the other party, on or before the end of the [...***...] during the term of the Ultrio 2 Development Program, an invoice setting forth the
amount of the excess adjustment, providing reasonable detail for any Ultrio 2 Development Costs not previously invoiced and requesting
payment of [...***...] of the total amount. Ultrio 2 Development Costs by the invoicing party incurred to date and not yet reimbursed as
provided herein, providing reasonable detail for any Ultrio 2 Development Costs not previously invoiced and requesting payment of 50% of
the total amount. Each party shall pay on or before the date specified therefore in the invoice an amount equal to the lesser of (i) the Ultrio 2
Development Costs reflected on the invoice submitted to such party on account of such payment (together with amounts reflected on earlier
invoices not previously reimbursed) or (ii) the amount of the payment described on the attached budget. To the extent that a reimbursement
payment is inadequate to cover the total Ultrio 2 Development Costs incurred to date by a party, then each party shall carry over the balance
to the next subsequent payment(s) until finally reimbursed in full.
By way of example, and using hypothetical dollars for actual expenditures, the calculation would operate as follows:
[...***...]

Schedule 5.3.3
[...***...] True-Up Payments
(sample methodology)
By way of example, and using hypothetical dollars for actual expenditures, the calculation would operate as follows: (true-up payment due
to Novartis in this case):
[...***...]
Exhibit 10.75
AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Originally Effective March 12, 2003
First Amendment Effective January 1, 2004
Amendment and Restatement Effective May 17, 2006
Second Amendment and Restatement Effective March 1, 2007
Third Amendment and Restatement Effective November 18, 2008
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made by and between Gen-Probe Incorporated, a Delaware corporation with
offices at 10210 Genetic Center Drive, San Diego, California 92121 (“Gen-Probe”), and Henry L. Nordhoff (the “Executive”).
The parties hereto agree as follows:
1. Amendment and Restatement of Employment Agreement. The Employment Agreement between Gen-Probe and Executive dated March 12,
2003, as previously amended as of January 1, 2004, May 17, 2006 and March 1, 2007, is hereby amended and restated as set forth herein as
of November 18, 2008 (the “Amendment Effective Date”).
2. Term of Employment. This Agreement shall be immediately effective. This Agreement, and Executive’s employment hereunder, shall be for
a term of three years from May 17, 2006, provided, however, that Gen-Probe’s obligations pursuant to Sections 8(c) and 9 of this Agreement
shall be for an indefinite term. At any time during the term of this Agreement, either party may terminate this Agreement, and Executive’s
employment, in accordance with the provision of Sections 7 and 8 of this Agreement.
3. Position and Duties. The Executive shall serve as President and Chief Executive Officer of Gen-Probe, and shall have commensurate
responsibilities and authority. The Board of Directors may from time to time particularly specify the Executive’s duties and authority. The
Executive shall not engage in or perform duties for any other persons or entities that interfere with the performance of his duties hereunder,
provided that the Executive may continue to serve on the boards of directors and boards of trustees on which he served on March 12, 2003.
Any outside board of director positions accepted by the Executive after March 12, 2003 will be subject to approval by the Board of
Directors of Gen-Probe.
4. Salary, Bonus and Benefits.
(a) Salary. During the period of Executive’s employment, Gen-Probe shall pay Executive an annual base salary of $645,000.00. This base
salary may be increased by the Compensation Committee of the Board, subject to the terms of this Agreement and consistent with the
Executive’s performance and Gen-Probe’s policy regarding adjustments in officer compensation established from time to time by the
Compensation Committee. The base salary shall not be decreased during the term of this Agreement.
(b) Bonus. In addition, at the discretion of the Compensation Committee, the Executive will be awarded incentive compensation, in the
form of a cash bonus for each fiscal year during his employment, based upon performance. Executive’s target bonus shall be seventy-
five percent (75%) of his base salary; however, the actual bonus shall be set at the discretion of the Compensation Committee.
(c) Stock Options/Restricted Stock. In addition, Executive may be awarded stock options, restricted stock awards and other equity
compensation awards by Gen-Probe’s Compensation Committee, with such terms and conditions as the Compensation Committee
may determine in its sole discretion.
(d) Life Insurance. Gen-Probe will obtain and pay for a term life insurance policy providing for payment of $1,000,000 in benefits to the
Executive’s designated beneficiaries should the Executive die during the term of this Agreement. (This policy shall be in addition to
any coverage provide by Gen-Probe’s group life insurance plan pursuant to subsection (g), below.)
(e) Disability Insurance. Gen-Probe will obtain and pay for a long-term disability insurance policy providing for payment at a rate of no
less than $200,000 per annum to Executive should Executive suffer a long-term disability during the term of this Agreement. (This
policy shall be in addition to any coverage provide by Gen-Probe’s group disability insurance plan pursuant to subsection (g),
below.)
(f) AD& D Insurance. Gen-Probe will obtain and pay for an AD&D insurance policy providing for a benefit to Executive (or his
beneficiaries) of $400,000 (airplane) or $200,000 (automobile or walking) should Executive suffer accidental death or accidental
disability during the term of this Agreement.
(g) Other Benefits. The Executive shall be entitled to participate in the employee benefit programs (including but not limited to medical,
dental, life and disability insurance, 401K retirement plan, and vacation program), as adopted and maintained by Gen-Probe. The
Executive may receive such other and additional benefits as the Compensation Committee or Board may determine from time to time in
its sole discretion.
5. Expense Reimbursement. The Executive shall be entitled to receive prompt reimbursement for all reasonable and customary expenses
incurred by him in performing services hereunder, including all expenses of travel and living expenses while away from home on business
or at the request of, and in the service of Gen-Probe; provided, that such expenses are incurred and accounted for in accordance with the
policies and procedures established by Gen-Probe. To the extent that reimbursements made pursuant to this Agreement, including under
Section 8(c) and Section 9, are subject to the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
(a) the reimbursement shall be made in the no later than December 31 of the calendar year following the year in which the expense was
incurred, (b) the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in
2
any subsequent year, and (c) the Executive’s right to reimbursement under this Section 4 will not be subject to liquidation or exchange for
another benefit.
6. Indemnification. Gen-Probe shall indemnify the Executive to the maximum extent permitted by law, by the by-laws of Gen-Probe and by the
Indemnification Agreement dated August 19, 2002, between the Executive and Gen-Probe, as it may be amended (the “Indemnification
Agreement”), if the Executive is made a party, or threatened to be made a party, to any threatened or pending legal action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the Executive is or was an officer, director or
employee of Gen-Probe or any subsidiary or affiliate thereof, in which capacity the Executive is or was serving at Gen-Probe’s request,
against reasonable expenses (including reasonable attorneys’ fees), judgments, fines and settlement payments incurred by him in
connection with such action, suit or proceeding.
7. Termination. The Executive may terminate his employment hereunder at any time, with or without Good Reason (as defined below) upon
written notice to Gen-Probe. If Executive contends that Good Reason exists for his termination, such notice shall specifically and expressly
state the grounds which he contends constitute Good Reason. Gen-Probe may terminate the Executive’s employment hereunder at any
time, subject to the terms of this Agreement, with or without Cause (as defined below) upon written notice to the Executive. If this
Agreement is terminated, all compensation and benefits other than severance benefits described in Section 8 below, to the extent
applicable, shall immediately cease, except that the Executive will be entitled, through the date of termination, to payment of his salary and
benefits under Gen-Probe benefit programs and plans in accordance with their terms.
As used in this Agreement, “Good Reason” shall mean any of the following events that are not consented to by the Executive: (i) the
removal of the Executive from his position as the Chief Executive Officer of Gen-Probe; (ii) a substantial and material diminution in the
Executive’s duties and responsibilities hereunder; (iii) a reduction of the Executive’s base salary or target bonus percentage; (iv) the
location of the Executive’s assignment on behalf of Gen-Probe is moved to a location more than 30 miles from its present location; (v) the
failure of Gen-Probe to obtain a satisfactory agreement from any successor to Gen-Probe to assume and agree to perform this Agreement;
or (vi) a material breach by Gen-Probe of its obligations under this Agreement after notice in writing from the Executive and a reasonable
opportunity for Gen-Probe to cure or substantially mitigate any material adverse effect of such breach. The Executive’s consent to any
event which would otherwise constitute Good Reason shall be conclusively presumed if the Executive does not exercise his rights to
terminate this Agreement for Good Reason under this section within six (6) months of notice of the event.
As used in this Agreement, “Cause” shall mean any of the following events: (i) any act of gross or willful misconduct, fraud,
misappropriation, dishonesty, embezzlement or similar conduct on the part of Executive; (ii) the Executive’s conviction of a felony or any
crime involving moral turpitude (which conviction, due to the passage of time or otherwise, is not subject to further appeal); (iii) the
Executive’s misuse or abuse of alcohol, drugs or controlled substances and failure to seek and comply with appropriate
3
treatment; (iv) willful and continued failure by the Executive to substantially perform his duties under this Agreement (other than any
failure resulting from disability or from termination by the Executive for Good Reason) as determined by a majority of the Board after written
demand from the Board of Directors for substantial performance is delivered to the Executive, and the Executive fails to resume substantial
performance of his duties on a continuous basis within 30 days of such notice; (v) the death of the Executive; or (vi) the Executive
becoming disabled such that he is not able to perform his usual duties for Gen-Probe for a period in excess of six (6) consecutive calendar
months.
8. Severance Benefits in Certain Events. If Gen-Probe terminates the Executive’s employment for reasons other than Cause, or if the
Executive terminates his employment for Good Reason, and such termination constitutes a “separation from service” within the meaning of
Treasury Regulation Section 1.409A-1(h) (a “Separation from Service”), the Executive shall be entitled to receive the following severance
benefits:
(a) Salary.
(i) Unless the Executive’s termination under this Section 8 occurs within eighteen (18) months after a Change in Control, the Executive
shall continue to receive his base salary, at the rate in effect at the time of his termination of employment, in monthly installments
following termination and continuing for an aggregate period of twenty-four (24) months (the “Salary Continuation Period”), except
that any payments that would otherwise have been made before the sixtieth (60th) day after the date of termination of the Executive’s
employment (the “First Payment Date”) shall be made on the First Payment Date.
(ii) If the Executive’s termination under this Section 8 occurs in connection with a Change in Control, then the Executive shall receive
a lump sum payment as described in this Section 8(a)(ii). For purposes of this Agreement, “Change in Control” shall have the meaning
set forth on Attachment “1” to this Agreement (hereby incorporated by reference). A termination shall be “in connection with” a
Change in Control if the termination occurs within the period six (6) months prior to or eighteen (18) months after a Change in Control
(and in the event that the termination occurs during the six (6) months prior to a Change in Control, subject to the consummation of
the Change in Control and the transaction constituting a change in the ownership or effective control of Gen-Probe or a change in the
ownership of a substantial portion of the assets of Gen-Probe, as described in Treasury Regulation Section 1.409A-3(i)(5)). The lump
sum payment will be payable on the later of (A) five (5) days after the Change in Control, or (B) sixty (60) days after the date of the
termination of employment. If the termination occurred within the six (6) months prior to a Change in Control, the amount of the lump
sum payment pursuant to this Section 8(a)(ii) shall be equal to twelve (12) months’ base salary (and shall be in addition to the
installment payments described in Section 8(a)(i)); if the termination occurs within eighteen (18) months after a Change in Control, the
amount of the lump sum payment pursuant to this Section 8(a)(ii) shall be equal to thirty-six (36) months’ base salary.
4
(b) Bonus. The Executive shall be entitled to receive a pro rata portion of the target bonus provided in Section 4(b) for the year in which
his employment terminates and this amount shall be paid in a lump sum on the First Payment Date. Unless the Executive’s termination
under this Section 8 occurs within eighteen (18) months after a Change in Control, the Executive shall be entitled to receive, in
addition to the salary payments described in Section 8(a)(i) above, an amount equal to two times the Executive’s targeted level bonus
in the year of the termination (which shall be paid in the same manner as and on the same schedule as the salary compensation paid
under subsection (a)(i) above). If the termination under this Section 8 occurs in connection with a Change in Control, then the
Executive shall be entitled to receive, in addition to the salary payments described in Section 8(a) above, an amount equal to three
times the Executive’s targeted level bonus in the year of the termination (or one times the Executive’s targeted level bonus in the year
of the termination if the termination occurred within the six (6) months prior to a Change in Control, which shall be in addition to the
installment payments described in the second sentence of this Section 8(b)); the bonus payment pursuant to this sentence shall be
paid in a lump sum at the same time as the salary compensation paid under subsection (a)(ii) above.
(c) Health Care Insurance. Continued health care coverage under Gen-Probe’s medical plan will be provided, without charge, to the
Executive and his eligible dependents until the earlier of (i) Executive’s sixty-fifth (65th ) birthday or (ii) the first date that the Executive
is covered under another employer’s health benefit program providing substantially the same or better benefit options to the
Executive without exclusion for any pre-existing medical condition. The period of time medical coverage continues under this
Agreement will be counted as coverage time under COBRA. Such coverage may be provided at Gen-Probe’s option either by payment
directly to Gen-Probe’s health insurance carrier, through Gen-Probe’s own employee medical expense plan if Gen-Probe is self-
insured, or through reimbursement of Executive’s COBRA premiums upon submission of reasonable substantiation. After Executive
reaches age 65, Gen-Probe will provide up to $10,000.00 per year in medical reimbursement to cover medical expenses incurred but not
covered by either Medicare Part A and B or Medicare Supplemental Insurance. The Executive is expected to carry Supplemental
Medicare Insurance and to comply with the Insurance Plan restrictions to maximize coverage.
No reimbursement payments shall be made unless the Executive provides a professional bill, receipt or other written documentation
acceptable to Gen-Probe that sets forth the charge for the service rendered and the date of service.
(d) Life Insurance. During the Salary Continuation Period, Gen-Probe will pay the premium for continued life insurance coverage, if any,
that the Executive may have elected under Gen-Probe’s Life Insurance and Supplemental Life Insurance plan, subject to payment by
the Executive of the portion of such premium not contributed by Gen-Probe under such plan.
5
(e) [Intentionally Omitted.]

(f) Outplacement Services. Gen-Probe agrees to provide Executive with outplacement services during the first six months of the Salary
Continuation Period at a level not lower than the services provided to senior officers of Gen-Probe prior to the March 12, 2003.
(g) Tax Matters. All compensation described in this Agreement will be subject to Gen-Probe’s collection of all applicable federal, state
and local income and employment withholding taxes.
(h) Release of Claims. Gen-Probe’s obligation to make the payments and provide the benefits hereunder shall be conditioned upon
(i) Executive’s execution of a release of all claims that he then may have other than claims under Section 6 or the Indemnification
Agreement, in standard form and content, within fifty (50) days following the Executive’s termination of employment and (ii) such
release shall not have been revoked by the Executive within any period permitted under applicable law. The release shall be mutual
and shall also be signed on behalf of Gen-Probe.
(i) Section 409A of the Internal Revenue Code and Specified Employees. Notwithstanding any provision to the contrary in this
Agreement, if Executive is deemed by Gen-Probe at the time of his Separation from Service to be a “specified employee” for purposes
of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the benefits to which Executive is
entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such
portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period
measured from the date of the Executive’s Separation from Service or (ii) the date of Executive’s death. Upon the first business day
following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section 8(i) shall
be paid in a lump sum to Executive (or the Executive’s estate or beneficiaries), and any remaining payments due under the Agreement
shall be paid as otherwise provided herein. For purposes of Section 409A of the Code, Executive’s right to receive the payments of
compensation pursuant to the Agreement shall be treated as a right to receive a series of separate payments and accordingly, each
payment shall at all times be considered a separate and distinct payment.
9. Health Care Cost Reimbursement After Retirement. After Executive (i) ceases full time employment with Gen-Probe and (ii) reaches age
65, Gen-Probe will provide up to $10,000.00 per year in medical reimbursement to cover medical expenses incurred but not covered by either
Medicare Part A and B or Medicare Supplemental Insurance. The Executive is expected to carry Supplemental Medicare Insurance and to
comply with the Insurance Plan restrictions to maximize coverage.
6
No reimbursement payments shall be made unless the Executive provides a professional bill, receipt or other written documentation
acceptable to Gen-Probe that sets forth the charge for the service rendered and the date of service.
10. Excise Tax on Parachute Payments.
(a) Gross-Up Payment. If it is determined that any payment or distribution of any type to the Executive or for his benefit by Gen-Probe,
any of its affiliates, any person who acquires ownership or effective control of Gen-Probe or ownership of a substantial portion of
Gen-Probe’s assets (within the meaning of section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and the
regulations thereunder) or any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax and any such interest or penalties are collectively referred to as
the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
calculated to ensure that after the Executive pays all taxes (and any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Total Payments. The Gross-Up Payment shall be paid to the Executive on, or as soon as practicable
following, the date on which the Executive remits the Excise Tax (and in no event later than December 31 of the calendar year
following the calendar year in which the Executive remits the Excise Tax).
(b) Determination by Accountant. All determinations and calculations required to be made under this Section 10 shall be made by an
independent accounting firm selected by the Executive from among the largest four (4) accounting firms in the United States (the
“Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting
calculations regarding the amount of any Gross-Up Payment and any other relevant matter, to the Executive and Gen-Probe within five
(5) days after the Executive or Gen-Probe made a request (if the Executive reasonably believes that any of the Total Payments may be
subject to the Excise Tax). If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written statement that it has concluded that no Excise Tax is payable (including the reasons therefor) and that the
Executive has substantial authority not to report any Excise Tax on his federal income tax return. If a Gross-Up Payment is determined
to be payable, it shall be paid to the Executive within five (5) days after the Determination has been delivered to him or Gen-Probe.
Any determination by the Accounting Firm shall be binding upon Gen-Probe and the Executive, absent manifest error.
(c) Over- and Underpayments. As a result of uncertainty in the application of section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments not made by
7
Gen-Probe should have been made (“Underpayment”) or that Gross-Up Payments will have been made by Gen-Probe that should not
have been made (“Overpayment”). In either event, the Accounting Firm shall determine the amount of the Underpayment or
Overpayment that has occurred. In the case of an Underpayment, Gen-Probe shall promptly pay the amount of such Underpayment to
the Executive or for his benefit. The Underpayment shall be paid to the Executive on, or as soon as practicable following, the date on
which the Executive remits the Excise Tax (and in no event later than December 31 of the calendar year following the calendar year in
which the Executive remits the Excise Tax). In the case of an Overpayment, the Executive shall, at the direction and expense of Gen-
Probe, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by, Gen-Probe, and otherwise reasonably cooperate with Gen-Probe to correct such
Overpayment, provided, however, that (i) the Executive shall in no event be obligated to return to Gen-Probe an amount greater than
the net after-tax portion of the Overpayment that the Executive has retained or has recovered as a refund from the applicable taxing
authorities and (ii) this provision shall be interpreted in a manner consistent with the intent of Subsection (a) above, which is to make
the Executive whole, on an after-tax basis, from the application of the Excise Tax, it being understood that the correction of an
Overpayment may result in the Executive’s repaying to Gen-Probe an amount that is less than the Overpayment.
(d) Limitation on Parachute Payments. Any other provision of this Section 10 notwithstanding, if the Excise Tax could be avoided by
reducing the Total Payments by $10,000 or less, then the Total Payments shall be reduced to the extent necessary to avoid the Excise
Tax and no Gross-Up Payment shall be made. If the Accounting Firm determines that the Total Payments are to be reduced under the
preceding sentence, then Gen-Probe shall promptly give the Executive notice to that effect and a copy of the detailed calculation
thereof. The Executive may then elect, in his sole discretion, which and how much of the Total Payments are to be eliminated or
reduced (as long as after such election no Excise Tax shall be payable), and the Executive shall advise Gen-Probe in writing of his
election within ten (10) days of receipt of notice. If the Executive make no such election within such ten (10)-day period, then Gen-
Probe may elect which and how much of the Total Payments are to be eliminated or reduced (as long as after such election no Excise
Tax shall be payable), and it shall notify the Executive promptly of such election.
11. Miscellaneous.
(a) Arbitration. Executive and Gen-Probe agree that any and all claims or disputes that in any way relate to or arise out of Executive’s
employment with Gen-Probe or the termination of such employment (including but not limited to claims under this Agreement or any
other contract, tort claims, and statutory claims of employment discrimination, retaliation or harassment) shall be resolved exclusively
through final and binding arbitration in San Diego, California.
8
Executive and Gen-Probe waive any rights to a jury trial in connection with such claims or disputes. The costs of the arbitration,
including the fees of the arbitrator, shall be borne exclusively by Gen-Probe. Any such arbitration shall take place in San Diego,
California and shall be conducted by a single neutral arbitrator who shall be a retired federal or state judge, to be appointed by the
American Arbitration Association (“AAA”) in accordance with AAA rules. The applicable procedural rules of AAA shall govern the
arbitration. The arbitrator’s decision shall be delivered in writing and shall disclose the essential findings and conclusion on which
the arbitrator’s decision is based. The parties shall be permitted to conduct adequate discovery to allow for a full and fair exploration
of the issues in dispute in the arbitration proceeding. The arbitrator may grant any relief which otherwise would have been available
to the parties in a court proceeding. The decision and award of the arbitrator shall be final and binding, and judgment upon the
arbitrator’s award may be entered by any court of competent jurisdiction.
(b) Governing Law. This Agreement shall be construed and enforced in accordance with and be governed by the laws of the State of
California.
(c) Entire Agreement. This Agreement and the Indemnification Agreement set forth the entire agreement and understanding between the
Executive and Gen-Probe on the subject matter hereof, and supersede any other negotiations, agreements, understandings, oral
agreements, representations and past or future practices, whether written or oral, on the subject matter hereof. No provision of this
Agreement may be amended, supplemented, modified, cancelled, or discharged unless such amendment, supplement, modification,
cancellation or discharge is agreed to, in writing, signed by the Executive and a duly authorized officer of Gen-Probe (other than the
Executive); and no provisions hereof may be waived, except in writing, so signed by or on behalf of the party granting such waiver.
(d) Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(e) Notices. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be
in writing and shall be deemed to have duly given when personally delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Henry L. Nordhoff
[Intentionally Omitted]
If to Gen-Probe:
9
Vice President, Human Resources

San Diego, California 92121
With a copy to:
General Counsel
San Diego, California 92121
(f) Successors. Gen-Probe will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all the business and/or assets of Gen-Probe, by agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and to the same extent that Gen-Probe would be
required to perform it if no such succession had taken place. This Agreement and all rights under the Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the party’s personal or legal representatives, executors, administrators,
heirs, and successors.
(g) No Right to Continued Employment. Nothing herein shall be construed as giving the Executive any rights to continued employment
with Gen-Probe, and Gen-Probe shall continue to have the right to terminate the Executive’s employment at any time, with or without
cause, subject to the provisions of this Agreement.
In witness whereof, the parties have executed this Agreement as of the Amendment Effective Date.
Executive: Gen-Probe Incorporated:
/s/ Henry L. Nordhoff By /s/ Diana De Walt

Henry L. Nordhoff Diana De Walt
Senior Vice President, Human Resources
By /s/ R. William Bowen

R. William Bowen
Senior Vice President and General Counsel
10
ATTACHMENT “1”
DEFINITION OF “CHANGE IN CONTROL”
Change in Control.
“Change in Control” shall mean a change in ownership or control of Gen-Probe effected through any of the following transactions:
(a) any person or related group of persons (other than Gen-Probe or a person that, prior to such transaction, directly or indirectly controls,
is controlled by, or is under common control with, Gen-Probe) directly or indirectly acquires beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of Gen-Probe’s
outstanding securities by means of any transaction or series of transactions; or
(b) there is a change in the composition of the Board over a period of thirty-six (36) consecutive months (or less) such that a majority of the
Board members (rounded up to the nearest whole number) ceases, by reason of one or more proxy contests for the election of Board members,
to be comprised of individuals who either (i) have been Board members continuously since the beginning of such period or (ii) have been
elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (i) who
were still in office at the time such election or nomination was approved by the Board; or
(c) the stockholders of Gen-Probe approve a merger or consolidation of Gen-Probe with any other corporation (or other entity), other than a
merger or consolidation which would result in the voting securities of Gen-Probe outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or another entity) more than 66-
2/3% of the combined voting power of the voting securities of Gen-Probe or such surviving entity outstanding immediately after such merger
or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of Gen-Probe (or similar
transaction) in which no person acquires more than 25% of the combined voting power of Gen-Probe’s then outstanding voting securities
shall not constitute a Change in Control; or
(d) the stockholders of Gen-Probe approve a plan of complete liquidation of Gen-Probe or an agreement for the sale or disposition by Gen-
Probe of all or substantially all of Gen-Probe’s assets.
Exhibit 10.79
S ECOND AMENDMENT TO
DEFERRED ISSUANCE RESTRICTED S TOCK CONVERSION AGREEMENT
AND
DEFERRED ISSUANCE RESTRICTED S TOCK ELECTION AGREEMENT
(THE 2003 INCENTIVE AWARD PLAN)
This Second Amendment (the “Amendment”) to the Deferred Issuance Restricted Stock Conversion Agreement (“Conversion
Agreement”) and Deferred Issuance Stock Election Agreement (the “Election Agreement”) entered into by and between Gen-Probe
Incorporated (the “Company”) and Henry L. Nordhoff (“Employee”) is effective as of October 31, 2008.
WHEREAS, on June 1, 2004 and August 15, 2003 the Company granted Employee awards of the Company’s restricted stock totaling 40,000
shares of the Company’s common stock (together the “Restricted Stock Awards”) pursuant to Article VII of the 2003 Incentive Award Plan of
Gen-Probe Incorporated (the “Plan”).
WHEREAS, effective as of September 10, 2004 (the “Conversion Date”), the 40,000 shares of Company common stock subject to the
Restricted Stock Awards were converted into a Deferred Issuance Restricted Stock Award for 40,000 shares of the Company’s common stock,
which converted award became governed by the terms and conditions set forth in the Conversion Agreement (the “Deferred Issuance
Award”).
WHEREAS, effective as of September 10, 2004, the agreements evidencing the Restricted Stock Awards were amended and restated in the
form of a Deferred Issuance Restricted Stock Award Agreement (the “Deferred Issuance Award Agreement”).
WHEREAS, pursuant to the terms of the Conversion Agreement and the Employee’s Election Agreement, the shares of common stock
subject to the Deferred Issuance Award were to first become issuable upon the earlier of (i) Employee’s Termination of Service (as defined in
the Deferred Issuance Award Agreement), or (ii) the date or dates of issuance selected by Employee pursuant to an irrevocable prior election
in accordance with the Election Agreement.
WHEREAS, in October 2004, Congress passed the American Jobs Creation Act of 2004 (the “AJCA”), which included the adoption of new
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and effective February 1, 2005, the Company and the Employee
entered into an amendment to the Conversion Agreement and Election Agreement (the “Prior Amendment”) to amend the distribution terms
of the Conversion Agreement and the Election Agreement to provide that such provisions would not create any adverse tax consequences
pursuant to Code Section 409A.
WHEREAS, in April 2007, final regulations were issued with respect to Code Section 409A, and the Company and the Employee wish to
amend certain provisions of the Conversion Agreement and the Election Agreement, as amended by the Prior Amendment, pursuant to the
terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt of
which is hereby acknowledged, the Company and Employee hereby agree as follows:
1. Subject to the vesting schedule evidenced in the Conversion Agreement, the shares of common stock subject to the Deferred Issuance
Award shall become first issuable upon the earlier of: (i) the Employee’s Termination of Service (as defined in the Deferred Issuance Award
Agreement), provided that such termination constitutes a “separation from service” within the meaning of Treasury
Regulation Section 1.409A-1(h), or (ii) the date or dates of issuance selected by Employee pursuant to his irrevocable prior election in
accordance with the Election Agreement; provided, however, that notwithstanding the foregoing or any provision contained in the
Conversion Agreement, the Deferred Issuance Award Agreement or the Election Agreement to the contrary, the shares issuable pursuant to
Employee’s Deferred Issuance Award shall be issued to Employee in a manner that complies with the requirements of Section 409A of the
Code. Accordingly, to the extent delayed commencement of any portion of the issuance is required in order to avoid a prohibited distribution
under Section 409A(a)(2)(B)(i) of the Code, such portion of the issuance shall not be provided to the Employee prior to the earlier of the
expiration of the six-month period measured from the date of the Termination of Service or the date of the Employee’s death. Upon the first
business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) deferral period, any issuance deferred pursuant to this
Section shall be issued to the Employee. Nothing in this Section 1 shall require the issuance of shares to Employee earlier than they would
otherwise be issued under the terms of the Conversion Agreement, the Prior Amendment or the Election Agreement.
2. Employee acknowledges receipt of, and understands and agrees to the terms of, the Conversion Agreement (as amended by this
Amendment), the Election Agreement (as amended by this Amendment), the Deferred Issuance Award Agreement and the Plan. Employee
further acknowledges that effective as of the date first stated above, the Conversion Agreement (as amended by this Amendment), the
Election Agreement (as amended by this Amendment), the Deferred Issuance Award Agreement and the Plan set forth the entire
understanding between Employee and the Company regarding the acquisition of shares subject to the converted Deferred Issuance Award
and supersedes all prior oral and written agreements on that subject without exception. Employee acknowledges and agrees that he has had an
opportunity to obtain the advice of counsel prior to executing this Amendment and fully understands all provisions of this Amendment.
3. This Amendment shall be administered, interpreted and enforced under the laws of the State of California without regard to conflicts of
laws principles thereof. Employee agrees upon request to execute any further documents or instruments necessary or desirable in the sole
determination of the Company to carry out the purposes or intent of this Amendment.
4. This Amendment may not be modified, amended or terminated except by an instrument in writing, signed by Employee and by a duly
authorized representative of the Company.
5. If all or any part of this Amendment or the Plan is declared by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any portion of this Amendment or the Plan not declared to be unlawful or invalid. Any section
of this Amendment (or part of such a section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such section or part of a section to the fullest extent possible while remaining lawful and valid.
In witness whereof, this Amendment is executed by the parties hereto effective as of the first date set forth above.
GEN-PROBE INCORPORATED HENRY L. NORDHOFF
/s/ Henry L. Nordhoff

Diana De Walt
Title: Senior Vice President, Human Resources
Date: October 31, 2008 Date: October 17, 2008
Exhibit 10.82
AMENDMENT TO EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement (the “Amendment”) is entered into as of October 31, 2008 (the “Effective Date”), between Carl
W. Hull (the “Executive”) and Gen-Probe Incorporated, a Delaware corporation (“Gen-Probe”).
RECITALS
WHEREAS, on February 13, 2007, the Executive and Gen-Probe entered into an Employment Agreement, which agreement was amended
and restated effective as of March 1, 2008 (as amended and restated, the “Agreement”) which sets forth the terms of the Executive’s
employment with Gen-Probe and provides for benefits upon the occurrence of certain terminations of Executive’s employment; and
WHEREAS, the parties wish to amend certain provisions of the Agreement to reflect recent changes affecting the taxation of deferred
compensation arrangements under Section 409A of the Internal Revenue Code of 1986, as amended, pursuant to the terms and conditions set
forth below.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereby agree as follows
effective as of the Effective Date. Except as otherwise defined herein, capitalized terms shall have the meanings assigned to them in the
Agreement.
1. The following shall be added at the end of Section 4:
“To the extent that reimbursements made pursuant to this Agreement are subject to the provisions of Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”), (a) the reimbursement shall be made no later than December 31 of the calendar year following the year
in which the expense was incurred, (b) the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in
another benefit.”
2. The initial text of Section 7 preceding Section 7(a) shall be amended in its entirety to read as follows:
“If Gen-Probe terminates the Executive’s employment for reasons other than for Cause, or if the Executive terminates his employment for
Good Reason, and such termination constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h) (a
“Separation from Service”), the Executive shall be entitled to receive as liquidated damages, the following severance benefits:”
3. Section 7(a) of the Agreement shall be amended in its entirety to read as follows:
“(a) Salary.
shall continue to receive his base salary, at the rate in effect at the time of his termination of employment, in monthly installments following
termination and continuing for an aggregate period of twelve (12) months (the “Salary Continuation Period”), except that any payments that
would otherwise have been made before the sixtieth (60th) day after the date of termination of the Executive’s employment (the “First Payment
Date”) shall be made on the First Payment Date.
(ii) If the termination under this Section 7 occurs in connection with a Change in Control, then the Executive shall receive a lump sum
payment as described in this Section 7(a)(ii). For purposes of this Agreement, “Change in Control” shall have the meaning set forth on
Attachment “1” to this Agreement (hereby incorporated by reference). A termination shall be “in connection with” a Change in Control if the
termination occurs within the period six (6) months prior to or eighteen (18) months after a Change in Control (and in the event that the
termination occurs during the six (6) months prior to a Change in Control, subject to the consummation of the Change in Control and the
transaction constituting a change in the ownership or effective control of Gen-Probe or a change in the ownership of a substantial portion of
the assets of Gen-Probe, as described in Treasury Regulation Section 1.409A-3(i)(5)). The lump sum payment will be payable on the later of
(A) five (5) days after the Change in Control, or (B) sixty (60) days after the date of the termination of employment. If the termination occurred
within the six (6) months prior to a Change in Control, the amount of the lump sum payment pursuant to this Section 7(a)(ii) shall be equal to
six (6) months’ base salary (and shall be in addition to the installment payments described in Section 7(a)(i)); if the termination occurs within
eighteen (18) months after a Change in Control, the amount of the lump sum payment pursuant to this Section 7(a)(ii) shall be equal to eighteen
(18) months’ base salary.”
4. Section 7(b) of the Agreement shall be amended in its entirety to read as follows:
“(b) Bonus. If the termination under this Section 7 occurs in connection with a Change in Control, then the Executive shall be entitled to
receive, in lieu of the bonus provided in Section 3(b) and in addition to the salary payment described in Section 7(a) above, an amount equal to
two times the greater of (i) the Executive’s targeted level bonus in the year of the termination, or (ii) the Executive’s highest discretionary
bonus in the preceding three years. The amount payable shall be paid in a lump sum at the same time as the salary compensation paid under
subsection (a)(ii) above. No bonus compensation shall be payable under this Section 7 unless the termination occurs in connection with a
Change in Control.”
5. Section 7(g) of the Agreement shall be amended in its entirety to read as follows:
“Notwithstanding any provision to the contrary in this Agreement, if Executive is deemed by Gen-Probe at the time of his Separation from
Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion
of the benefits to which Executive is entitled under this Agreement is required in order to
2
avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s benefits shall not be provided to
Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of the Executive’s Separation from Service or
(ii) the date of Executive’s death. Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period,
all payments deferred pursuant to this Section 7(g) shall be paid in a lump sum to Executive (or the Executive’s estate or beneficiaries), and any
remaining payments due under the Agreement shall be paid as otherwise provided herein. For purposes of Section 409A of the Code,
Executive’s right to receive the payments of compensation pursuant to the Agreement shall be treated as a right to receive a series of separate
payments and accordingly, each payment shall at all times be considered a separate and distinct payment.”
6. Except as set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect.
7. This Amendment shall be governed by the law of the State of California as such laws are applied to agreements between California
residents entered into and to be performed entirely within the State of California.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the Effective Date.
EXECUTIVE
/s/ Carl W. Hull

Carl W. Hull
Exhibit 10.86
AMENDMENT
TO OFFER LETTER AGREEMENT
This Amendment to Offer Letter Agreement (the “Amendment”) is entered into as of October 31, 2008 (the “Effective Date”), between
Christina Yang and Gen-Probe Incorporated, a Delaware corporation (“Gen-Probe”).
RECITALS
WHEREAS, on April 27, 2007, you and Gen-Probe entered into an offer letter (the “Agreement”) which set forth certain terms of your
employment with Gen-Probe and provides for certain relocation assistance benefits; and
WHEREAS, the parties wish to amend the relocation assistance provision of the Agreement to reflect recent changes affecting the taxation
of deferred compensation arrangements under Section 409A of the Internal Revenue Code of 1986, as amended, pursuant to the terms and
conditions set forth below.
AGREEMENT
effective as of the Effective Date.
1. The following shall be added at the end of the Relocation Assistance section :
“To the extent that the relocation assistance reimbursements described above are subject to the provisions of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), (a) the reimbursement shall be made in the no later than December 31 of the calendar year
following the year in which the expense was incurred, (b) the amount of expenses reimbursed in one year shall not affect the amount eligible
for reimbursement in any subsequent year, and (c) your right to reimbursement as described above will not be subject to liquidation or
exchange for another benefit.”
[Signature page follows]

/s/ Christina Yang

Christina Yang
Exhibit 10.93
FIRST AMENDMENT
TO EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement (the “Amendment”) is entered into as of October ___, 2008 (the “Effective Date”),
between (the “Executive”) and Gen-Probe Incorporated, a Delaware corporation (“Gen-Probe”).
RECITALS
WHEREAS, on , 200___, the Executive and Gen-Probe entered into an Employment Agreement (the “Agreement”) which sets
forth the terms of the Executive’s employment with Gen-Probe and provides for benefits upon the occurrence of certain terminations of
Executive’s employment; and
forth below.
AGREEMENT
Agreement.
another benefit.”
Good Reason (provided that (i) Executive notified Gen-Probe of his or her intent to resign for Good Reason within 90 days of the initial
existence of the condition giving rise to Good Reason (a “Good Reason Condition”) and provides Gen-Probe with a period of 30 days during
which it may remedy the Good Reason Condition, (ii) Gen-Probe did not remedy the Good Reason Condition during such period, and
(iii) Executive terminated for Good Reason based on the condition specified in the notice, and such resignation occurs within one year after the
initial existence of such Good Reason
Condition), and such termination constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h) (a
“Separation from Service”), the Executive shall be entitled to receive as liquidated damages, the following severance benefits:”
“(a) Salary.
termination and continuing for an aggregate period of [Vice Presidents: six (6)][Executive Team: twelve (12)] months (the “Salary Continuation
Period”), except that any payments that would otherwise have been made before the sixtieth (60th) day after the date of termination of the
Executive’s employment (the “First Payment Date”) shall be made on the First Payment Date.
eighteen (18) months after a Change in Control, the amount of the lump sum payment pursuant to this Section 7(a)(ii) shall be equal to [Vice
Presidents: twelve (12)] [Executive Team: eighteen (18)] months’ base salary.”
receive, in lieu of the bonus provided in Section 3(b) and in addition to the salary payment described in Section 7(a) above, an amount [Vice
Presidents: equal to] [Executive Team: equal to 1.5 times] the greater of (i) the Executive’s targeted level bonus in the year of the termination, or
(ii) the Executive’s highest discretionary bonus in the preceding three years. The amount payable shall be paid in a lump sum at the same time
as the salary compensation paid under subsection (a)(ii) above. No bonus compensation shall be payable under this Section 7 unless the
termination occurs in connection with a Change in Control.”
2
5. Section 7(f) of the Agreement shall be amended in its entirety to read as follows:
“(f) Release of Claims. Gen-Probe’s obligation to make the payments and provide the benefits under this Section 7 shall be conditioned
upon (i) Executive’s execution of a release of all claims, in standard form and content, within fifty (50) days following the Executive’s
termination of employment and (ii) such release shall not have been revoked by the Executive within any period permitted under applicable
law. The release shall be mutual and shall also be signed on behalf of Gen-Probe.”
of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under
Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the
expiration of the six-month period measured from the date of the Executive’s Separation from Service or (ii) the date of Executive’s death. Upon
the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this
Section 7(g) shall be paid in a lump sum to Executive (or the Executive’s estate or beneficiaries), and any remaining payments due under the
Agreement shall be paid as otherwise provided herein. For purposes of Section 409A of the Code, Executive’s right to receive the payments of
compensation pursuant to the Agreement shall be treated as a right to receive a series of separate payments and accordingly, each payment
shall at all times be considered a separate and distinct payment.”
3
EXECUTIVE
[Name]
By:
Diana De Walt
Its: Senior Vice President — Human Resources
The following Vice Presidents have executed this agreement:

Robert Blake
Tammy Brach
Frederick Eibel
Brian Hansen
The following members of the Executive Team have executed this agreement:
Jorgine Ellerbrock
Christina Yang
Exhibit 10.94
SECOND AMENDMENT
TO EMPLOYMENT AGREEMENT
This Second Amendment to Employment Agreement (the “Amendment”) is entered into as of October ___, 2008 (the “Effective Date”),
between (the “Executive”) and Gen-Probe Incorporated, a Delaware corporation (“Gen-Probe”).
RECITALS
WHEREAS, on , 200___, the Executive and Gen-Probe entered into an Employment Agreement, which agreement was amended
pursuant to a First Amendment to Employment Agreement (as amended, the “Agreement”) which sets forth the terms of the Executive’s
employment with Gen-Probe and provides for benefits upon the occurrence of certain terminations of Executive’s employment; and
forth below.
AGREEMENT
Agreement.
another benefit.”
Good Reason (provided that (i) Executive notified Gen-Probe of his or her intent to resign for Good Reason within 90 days of the initial
existence of the condition giving rise to Good Reason (a “Good Reason Condition”) and provides Gen-Probe with a period of 30 days during
which it may remedy the Good Reason Condition, (ii) Gen-Probe did not remedy the Good Reason Condition during such period, and
(iii) Executive terminated for Good Reason based on the condition specified in the notice, and
such resignation occurs within one year after the initial existence of such Good Reason Condition), and such termination constitutes a
“separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h) (a “Separation from Service”), the Executive shall be
entitled to receive as liquidated damages, the following severance benefits:”
“(a) Salary.
termination and continuing for an aggregate period of [Vice Presidents: six (6)][Executive Team: twelve (12)] months (the “Salary Continuation
Period”), except that any payments that would otherwise have been made before the sixtieth (60th) day after the date of termination of the
Executive’s employment (the “First Payment Date”) shall be made on the First Payment Date.
eighteen (18) months after a Change in Control, the amount of the lump sum payment pursuant to this Section 7(a)(ii) shall be equal to [Vice
Presidents: twelve (12)] [Executive Team: eighteen (18)] months’ base salary.”
receive, in lieu of the bonus provided in Section 3(b) and in addition to the salary payment described in Section 7(a) above, an amount [Vice
Presidents: equal to] [Executive Team: equal to 1.5 times] the greater of (i) the Executive’s targeted level bonus in the year of the termination, or
(ii) the Executive’s highest discretionary bonus in the preceding three years. The amount payable shall be paid in a lump sum at the same time
as the salary compensation paid under subsection (a)(ii) above. No bonus
2
compensation shall be payable under this Section 7 unless the termination occurs in connection with a Change in Control.”
“(g) Release of Claims. Gen-Probe’s obligation to make the payments and provide the benefits under this Section 7 shall be conditioned
upon (i) Executive’s execution of a release of all claims, in standard form and content, within fifty (50) days following the Executive’s
termination of employment and (ii) such release shall not have been revoked by the Executive within any period permitted under applicable
law. The release shall be mutual and shall also be signed on behalf of Gen-Probe.”
6. Section 7(h) of the Agreement shall be amended in its entirety to read as follows:
of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under
Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the
expiration of the six-month period measured from the date of the Executive’s Separation from Service or (ii) the date of Executive’s death. Upon
the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this
Section 7(h) shall be paid in a lump sum to Executive (or the Executive’s estate or beneficiaries), and any remaining payments due under the
Agreement shall be paid as otherwise provided herein. For purposes of Section 409A of the Code, Executive’s right to receive the payments of
compensation pursuant to the Agreement shall be treated as a right to receive a series of separate payments and accordingly, each payment
shall at all times be considered a separate and distinct payment.”
3
EXECUTIVE
[Name]
By:
Diana De Walt
Its: Senior Vice President — Human Resources
The following Vice Presidents have executed this agreement:

Lyle J. Arnold
Paul E. Gargan
The following members of the Executive Team have executed this agreement:
R. William Bowen
Diana De Walt
Dan L. Kacian
Stephen J. Kondor
Herm Rosenman
Exhibit 21.1
SUBSIDIARIES OF GEN-PROBE INCORPORATED
Name Jurisdiction of Formation

Gen-Probe Sales & Service, Inc. Delaware
Gen-Probe International, Inc. Delaware
Gen-Probe UK Limited United Kingdom
Molecular Light Technology Limited and its subsidiaries: United Kingdom
— Molecular Light Technology Research Limited
— Bioanalysis Limited
Gen-Probe Italia, S.r.l. Italy
Gen-Probe Deutschland GmbH Germany
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-99947) pertaining to the 2000 Equity
Participation Plan of Gen-Probe Incorporated, in the Registration Statement (Form S-8 No. 333-103899) pertaining to the 2002 New-Hire Stock
Option Plan of Gen-Probe Incorporated, in the Registration Statement (Form S-8 No. 333-105649) pertaining to the 2003 Incentive Award Plan
of Gen-Probe Incorporated and the Gen-Probe Incorporated Employee Stock Purchase Plan, in the Registration Statement (Form S-8 333-
135493) pertaining to the 2003 Incentive Award Plan of Gen-Probe Incorporated, in the Registration Statement (Form S-3 No. 333-108410) of
Gen-Probe Incorporated for the registration of its common stock, preferred stock, debt securities and warrants of Gen-Probe Incorporated and
in the related Prospectus of our reports dated February 17, 2009, with respect to the consolidated financial statements and schedule of Gen-
Probe Incorporated and the effectiveness of internal control over financial reporting of Gen-Probe Incorporated, included in this Annual
Report (Form 10-K) for the year ended December 31, 2008.


February 20, 2009
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Henry L. Nordhoff, certify that:
1. I have reviewed this Annual Report on Form 10-K of Gen-Probe Incorporated;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
DATE: February 25, 2009 By: /s/ Henry L. Nordhoff

Henry L. Nordhoff
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

I, Herm Rosenman, certify that:
1. I have reviewed this Annual Report on Form 10-K of Gen-Probe Incorporated;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
DATE: February 25, 2009 By: /s/ Herm Rosenman

Herm Rosenman
Senior Vice President, Finance and Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
In connection with the Annual Report of Gen-Probe Incorporated (the “Company”) on Form 10-K for the fiscal year ended December 31, 2008
(the “Report”), as filed with the Securities and Exchange Commission on or about the date hereof, I, Henry L. Nordhoff, Chairman Chief
Executive Officer of the Company certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that to the best of my knowledge:
(i) the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended;
and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
DATE: February 25, 2009 By: /s/ Henry L. Nordhoff

Henry L. Nordhoff
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not
to be incorporated by reference into any filing of Gen-Probe Incorporated under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation
language contained in such filing.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
In connection with the Annual Report of Gen-Probe Incorporated (the “Company”) on Form 10-K for the fiscal year ended December 31, 2008
(the “Report”), as filed with the Securities and Exchange Commission on or about the date hereof, I, Herm Rosenman, Senior Vice President,
Finance and Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(i) the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended;
and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
DATE: February 25, 2009 By: /s/ Herm Rosemman

Herm Rosenman
Senior Vice President, Finance and Chief Financial Officer
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not
to be incorporated by reference into any filing of Gen-Probe Incorporated under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation
language contained in such filing.

GEN PROBE INC 10-K (Annual Reports) 2009-02-25

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GEN PROBE INC 10-K (Annual Reports) 2009-02-25

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Commission file number: 001-31279

10210 Genetic Center Drive, San Diego, CA 92121-4362

DOCUMENTS INCORPORATED BY REFERENCE

ABOUT THIS ANNUAL REPORT

Product Development; Recent Events

Current Market Opportunity

The Product Categories in Which We Compete

Industry Growth Trends

Our Competitive Strengths

Proprietary Core Technologies

Extensive Range of FDA-Approved Products and Intellectual Property Portfolio

Innovative Product Research and Development

Sales and Technical Support Capabilities

Regulatory and Quality Assurance Experience

Our Growth Strategy

Establish Leadership Positions in New Markets by Leveraging Our Core Technologies

Pursue Future Licensing and Acquisition Opportunities

Our Proprietary NAT Technologies

• chemiluminescent detection using Hybridization Protection Assay and DKA technologies;

Clinical Diagnostic Products

Clinical Diagnostic Products for the Detection of Non-Viral Microorganisms

Clinical Diagnostic Products for the Detection of Viral Microorganisms

Targe t FDA C om m e rcial

Clinical Diagnostic Products for the Detection of Markers for Cancer

Blood Screening Products

Targe t FDA C om m e rcial

Products for Emerging Diagnostic and Industrial Testing Applications

TIGRIS Instrument System

DTS 400, 800 and 1600 Instruments

Panther Instrument System

CUDA Instrument System

Marketing and Sales

Corporate Collaborations and Strategic Arrangements

Agreement with Siemens Healthcare Diagnostics, Inc. (formerly Bayer Corporation)

Supply and Purchase Agreement with Roche

Research Agreement with GSK

Collaboration Agreement with GEI

Collaboration Agreement with Millipore

Agreements with Molecular Profiling Institute, Inc.

Agreements with Stratec

Licenses We Have Obtained to Third-Party Technology

Patents and Proprietary Rights

Manufacturing and Raw Materials

Research and Development

Item 1A. Risk Factors

Our sales to international markets are subject to additional risks.

Item 1B. Unresolved Staff Comments

Item 3. Legal Proceedings

Item 4. Submission of Matters to a Vote of Security Holders

2007 High Low

2008 High Low

Issuer Purchases of Equity Securities

Total Number Approximate

Item 6. Selected Financial Data

SELECTED FINANCIAL INFORMATION

2008 2007 2006 2005 2004

Offer to Acquire Tepnel Life Sciences

Stock Repurchase Program

Voluntary Counterbid to Acquire Innogenetics

Final Payment Received in Litigation Settlement

Critical accounting policies and estimates

Valuation of goodwill and long-lived assets