Assumes $100 invested on July 18, 2000 in Transgenomic’s common stock, the Nasdaq Market Index and the Peer Group Index, with reinvestment of dividends.

PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITOR

The Audit Committee of the Board of Directors has appointed Deloitte & Touche LLP to be our independent auditors for 2004. We are asking our stockholders to ratify the appointment of Deloitte & Touche LLP. The ratification of the appointment of our auditor requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote. Abstentions will have the same effect as a vote against ratification. Broker nonvotes will not be considered shares entitled to vote with respect to ratification of the appointment and will not be counted as votes for or against the ratification.

The Board of Directors recommends that stockholders vote “FOR” the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent auditors for 2005.

Representatives of Deloitte & Touche LLP are expected to be present in person or by telephonic conference at the Annual Meeting and will be provided an opportunity to make a statement and to respond to appropriate inquiries from stockholders.

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Accounting Fees and Services

The following fees were billed by Deloitte & Touche LLP to us for professional services provided during 2004 and 2003:

Audit Fees.    Deloitte & Touche LLP billed us a total of $250,000 and $227,000 in 2004 and 2003, respectively, for professional services rendered for the audit of our annual financial statements for those fiscal years and to review our interim financial statements included in Quarterly Reports on Form 10-Q filed by us with the SEC during those years.NO. 1

Audit-Related Fees.    Deloitte & Touche LLP billed us a total of $42,000 and $46,000 in 2004 and 2003, respectively, for audit-related services. Audit-related services generally include fees for the audits of our employee benefit plans and fees incurred in connection with services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings and research consultation on proposed transactions.

Tax Fees.    Deloitte & Touche LLP billed us a total of $44,000 and $33,000 in 2004 and 2003, respectively, for tax services. Tax services consisted primarily of planning, advice and compliance, or return preparation, for U.S. federal, state and local, as well as international jurisdictions.

All Other Fees.    Deloitte & Touche LLP did not render any services other than the services described under the above captions in 2004 and 2003.

The Audit Committee approved all services provided by Deloitte during fiscal year 2004 and has determined that the provision of these services did not adversely affect Deloitte’s independence. It is currently the policy of the Audit Committee to review and pre-approve all services provided by the independent auditor to the Company in order to assure that the provision of such services does not impair the auditor’s independence. Unless a type of service to be provided by the independent auditor has received general preapproval, it will require specific preapproval by the Audit Committee. Any proposed services exceeding preapproved cost levels will require specific preapproval by the Audit Committee. The term of any preapproval is 12 months from the date of preapproval, unless the Audit Committee specifically provides for a different period.

PROPOSAL TO AUTHORIZE THE COMPANY TO ISSUE AN UNLIMITED NUMBERSHARES OF SHARES UNDER ITS $7.5 MILLION CONVERTIBLE REVOLVING CREDIT LINE WITH LAURUS MASTER FUND, LTD. AND ASSOCIATED WARRANTS, WHICH MAY EXCEEDCOMMON STOCK IN A PRIVATE PLACEMENT EXCEEDING 20% OF THE SHARES OUTSTANDING ON THE DATE THE COMPANY ENTERED INTO THE CREDIT LINE.ASSOCIATED SECURITIES PURCHASE AGREEMENTS.

General

We are asking stockholdersOn September 22, 2005, we entered into Securities Purchase Agreements with a number of institutional investors (the “Securities Purchase Agreements”) in which we have agreed to approvesell the following securities: (i) 14,925,743 shares of our Common Stock, plus (ii) five-year, non-callable warrants to purchase another 5,970,297 shares of Common Stock with an exercise price of $1.20 per share (the “Proposed Offering”). The aggregate purchase price for the securities to be sold in the Proposed Offering is $1.01 per share of Common Stock initially being sold (the “Purchase Price”) or $15.1 million.

Under Nasdaq National Market (“Nasdaq”) rules, stockholder approval is required for any issuance of common shares or securities convertible into or exercisable for common shares in a proposal thatnon-public offering at a price below the market value or book value of such shares when the issuance or potential issuance will increase our abilityresult in the sale of securities having 20% or more of the value, or 20% or more of the voting power, of the then outstanding common shares.

The number of shares to convert amounts borrowedbe issued by us under the Proposed Offering exceeds 20% of the total number of shares of Common Stock that were issued and outstanding on September 22, 2005. Under the rules of the Nasdaq, after taking into account the deemed value of the warrants, the portion of the Purchase Price attributable to the Common Stock being sold in the Proposed Offering is $0.96 per share. Accordingly, the sale of Common Stock in the Proposed Offering is considered to be at a price that is less than the market price of our $7.5 millionshares on September 22, 2005 of $1.01 per share. Because of this, we are required by the Nasdaq rules and the terms of the Securities Purchase Agreements to obtain authorization of our stockholders before closing the Proposed Offering.

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Reasons for the Proposal

The proceeds from the Proposed Offering will allow us to strengthen our consolidated balance sheet by enhancing our liquidity and overall working capital positions and by eliminating all convertible revolving credit line (the ”Credit Line”)debt with Laurus Master Fund, Ltd. (“Laurus”). As of June 30, 2005, our working capital was approximately $0.2 million. In addition, we had approximately $1.3 million of additional borrowing availability under our revolving line of credit with Laurus. Increasing our liquidity and working capital positions are essential to efficiently executing our business plan.

As a result, we began exploring a number of alternatives to obtain additional liquidity and capital that have included, among other things, restructuring our existing facilities with Laurus, obtaining alternate debt facilities and/or various placements of common or preferred stock. We engaged Oppenheimer & Co., Inc. (“Oppenheimer”) to assist in our review of these alternatives and, ultimately, to act as our placement agent in connection with a private placement of Common Stock to institutional investors. On September 22, 2005, we executed Securities Purchase Agreements relating to the Proposed Offering

Terms of the Proposed Offering

Under the terms of the Securities Purchase Agreements, we will issue, at a purchase price of $1.01 per share of Common Stock being sold, (i) 14,925,743 shares of our Common Stock, plus (ii) five-year, non-callable warrants to purchase another 5,970,297 shares of Common Stock with an exercise price of $1.20 per share. We will also issue a warrant to Oppenheimer to purchase 753,750 shares at $1.20 per share as part of their placement fee for the proposed offering. The Common Stock and warrants will be sold to a limited number of institutional investors in a private placement that is exempt from registration under federal and state securities laws. We are required to register all shares of Common Stock sold in the Proposed Offering and issuable upon exercise of the warrants (including the warrant issued to Oppenheimer) within 90 days of the closing of the Proposed Offering. As a result, the Common Stock we issue to these institutional investors may be sold in the secondary market at any time once such registration is effective. If we fail to register these shares in a timely manner, we are subject to certain penalties.

The net proceeds of $13.2 million from the Proposed Offering, after estimated transaction costs of $1.9 million, will be used to prepay all of our indebtedness to Laurus and for our general working capital needs.

In addition to receiving the approval of our stockholders and the amendment of our Certificate of Incorporation described in Proposal No. 2, the closing of the Proposed Offering is conditioned on the repayment of our indebtedness to Laurus. Our indebtedness to Laurus consists of a $7.5 million revolving line of credit which has an outstanding principal balance of approximately $6.5 million, and a $2.75 million term note which has an outstanding principal balance of approximately $1.7 million (collectively the “Laurus Loans”). Borrowings under the Laurus Loans and related interest are generally convertible at any time into shares of our Common Stock at a conversion price of $1.00 per share. In contemplation of the Proposed Offering, we entered into an agreement with Laurus under which Laurus has agreed not to convert more than $1,000,000 of our indebtedness into Common Stock, and to allow the entire indebtedness owed to Laurus to be repaid simultaneously with the closing of the Proposed Offering. In return, we agreed to pay Laurus a fee of $0.5 million in addition to prepayment penalties of approximately $0.3 million. By prepaying the Laurus Loans, we will eliminate the potential issuance of up to 8.2 million shares of Common Stock issuable upon conversion of the current outstanding principal balance of the Laurus Loans plus an additional amount related to accrued and unpaid interest.

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In connection with the Laurus Loans, we also issued warrants to Laurus for the purchase of 1,075,000 shares of Common Stock at exercise prices ranging from $1.25 per share to $3.11 per share. These warrants will remain outstanding even though the Laurus debt is repaid in full at the closing of the Proposed Offering. Because the sale price of Common Stock under the Securities Purchase Agreements is less than the exercise prices of the Laurus warrants, these exercise prices will be reduced to a range from $1.18 to $2.58 due to the antidilution provisions of these warrants.

Capitalization

The following table describes our cash, cash equivalents and capitalization as of June 30, 2005 on an actual basis and pro forma basis as adjusted to give effect to the Proposed Offering. You should read this table together with information found in our quarterly report for the period ended June 30, 2005 and our 2004 annual report on Form 10-K, as amended. Dollars are in thousands.

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Certain Risks Associated with Proposal No. 1

Before granting your proxy to vote for Proposal No. 1, you should carefully consider the following:

The issuance of the additional shares of Common Stock contemplated by the Proposed Offering will be dilutive to existing shareholders. By approving Proposal No. 1, stockholders will allow us to issue a substantial amount of additional Common Stock which will reduce the existing stockholders’ proportionate ownership and voting rights in the Company. The dilution caused by the issuances of shares of Common Stock under the Proposed Offering could reduce per share results and dividends, when and if declared by the Board of Directors.

The Proposed Offering may cause Laurus to convert up to $1,000,000 of its existing indebtedness into Common Stock which will be dilutive to existing shareholders.Borrowings under the Laurus Loans and related interest are generally convertible at any time into shares of the Company’s Common Stock at a conversion price of $1.00 per share. While we have entered into an agreement with Laurus under which Laurus has agreed not to convert more than $1,000,000 of our indebtedness into Common Stock prior to closing of the Proposed Offering, Laurus may convert this entire amount of debt into Common Stock if the Proposed Offering closes. The amount of shares issued to Laurus upon conversion of this indebtedness will also reduce the existing stockholders’ proportionate ownership and voting rights in the Company and could reduce per share results and dividends, when and if declared by the Board of Directors.

The issuance of shares of Common Stock at the price provided for in the Securities Purchase Agreements will reduce the exercise price under existing warrants. Under the antidilution feature of the warrants issued to Laurus, any sale of our Common Stock at a price that is below the exercise prices of these warrants will cause the exercise price of the warrants to adjust downward on a weighted average basis. If the sale of shares under the Securities Purchase Agreements is completed, the exercise prices of these warrants will be reduced from their current range of $1.25 per share to $3.11 per share to a new range of $1.18 per share to $2.58 per share.

The resale of Common Stock issued in the Proposed Offering may reduce the market price of the Company’s stock. We have agreed that the Common Stock issued in the Proposed Offering will be registered for resale under federal securities laws. Accordingly, the institutional investors who acquire common stock. In particular,stock in the Proposed Offering, including shares issued to them upon the exercise of their warrants, will be able to resell these shares in the market once this registration is completed. It can be expected that some or all of these investors will sell some or all of the shares issued to them. Because the average trading volume for shares of the our Common Stock is relatively modest, the sale by any of these purchasers of a substantial number of shares could cause the trading price for our Common Stock to decline in order for the market to clear these sales.

The failure to register the Common Stock issued in the Proposed Offering for resale under federal securities laws will subject us to penalties.If the Proposed Offering is closed, we are asking stockholderswill be required to use our best efforts to file a registration statement covering the resale of the Common Stock

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issued in the Proposed Offering and the Warrants within 30 days following closing and to cause the registration statement to become effective with the SEC on or prior to the 90^th day following closing. Failure to comply to these registration rights will result in a penalty equal to 1.5% of the aggregate purchase price for each successive 30-day period thereafter, calculated on a pro-rated basis over any partial 30-day period. The amount of this penalty is approximately $225,000 per month.

Vote Required

Proposal No. 1 to authorize the Company to issue shares of our common stock in excess of 20% of the number of shares that were outstanding on December 3, 2003 (the date we entered into the Credit Line) if needed to allow Laurus to convert borrowingsCommon Stock under the Credit Line into shares of common stock or to exercise the warrants we issued to Laurus in connection with the Credit Line. Due to the revolving nature of the Credit Line, with the approval of our stockholders, the number of shares that may be issued to Laurus upon conversion of this facility will be unlimited. By converting borrowings under the Credit Line into common stock, we are able to borrow additional funds under the Credit Line which may be necessary from time to time to meet our liquidity needs or make capital expenditures. Without the ability to continue to convert these borrowings into common stock, we may not have access to sufficient debt financing to meet our liquidity needs in the future or to fund necessary capital expenditures. Converting our borrowings under the Credit Line into common stock will also allow us to reduce our interest expense and the cash needed to make interest payments.

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The proposal to authorize the Company to issue and unlimited number of shares under the Credit Line and associated warrants, which may exceedSecurities Purchase Agreements exceeding 20% of the shares outstanding on the date the Company entered into the Credit LineSecurities Purchase Agreements requires the affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock.the Company’s Common Stock. Accordingly, abstentions and broker nonvotes will have the same effect as a vote against this proposal.Proposal No. 1.

Stockholder approval of Proposal No. 1 will only be effective if stockholders also approve Proposal No. 2. Therefore, a vote against Proposal No. 2 will have the same effect as a vote against Proposal No. 1.

The Board of Directors recommends that stockholders vote “FOR” the proposalProposal No. 1 to authorize the Company to issue an unlimited number of shares under the Credit Line and associated warrants, which may exceedSecurities Purchase Agreements exceeding 20% of the shares outstanding on the date the Company entered into the Credit line.Securities Purchase Agreements.

PROPOSAL NO. 2

TO AMEND THE CERTIFICATE OF INCORPORATION

TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK

General

The Board of Directors has approved and is hereby soliciting stockholder approval of an amendment to the Company’s existing Certificate of Incorporation to increase the total number of shares of Common Stock that the Company is authorized to issue from 60,000,000 to 100,000,000 shares. The additional 40,000,000 shares of Common Stock would become a part of the existing class of Common Stock and, if and when issued, would have the same rights, privileges and preferences as the shares of Common Stock currently issued and outstanding. As a result of this increase in the number of authorized shares of Common Stock, the total number of shares of capital stock (including both Common Stock and Preferred Stock) that the Company is authorized to issue will increase from 75,000,000 to 115,000,000, but the number of shares of Preferred Stock the Company will issue will remain 15,000,000. If the amendment is approved by the stockholders, Section 4.1 of the Certificate of Incorporation would read as follows:

Section 4.1. The total number of shares of capital stock which the Corporation shall have the authority to issue is 115,000,000 consisting of (a) 100,000,000 shares of Common Stock, par value $0.01 per share, and (b) 15,000,000 shares of Preferred Stock, par value $0.01 per share.

If the stockholders approve Proposal No. 2, the amendment to the Certificate of Incorporation will become effective when a Certificate of Amendment is filed with the Secretary of State of the State of Delaware. Though the Company anticipates the filing of the Certificate of Amendment promptly after the Special Meeting, the Board of Directors will have the discretion to make the filing at any time after the Special Meeting.

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Reasons for the Proposal

BecauseAs explained above in connection with Proposal No. 1, we have been working to improve our liquidity and working capital positions so that we can efficiently execute our business plan. In furtherance of these goals, we entered into Securities Purchase Agreements with a number of institutional investors under which the Company has agreed to issue 14,925,743 shares thatof Common Stock and warrants to purchase 5,970,297 shares of Common Stock. In addition, as partial consideration for its services as placement agent for the sale of Common Stock and warrants under the Securities Purchase Agreements, we will issue in future conversionswarrants to Oppenheimer for the purchase of borrowings753,750 shares of Common Stock. In order to be able to legally issue the shares of Common Stock sold under the Credit LineSecurities Purchase Agreements, and to reserve enough authorized but unissued shares of Common Stock for issuance under these warrants and other stock options and warrants that are already outstanding, the Company will beneed to have authorized approximately 65,000,000 shares of Common Stock.

On the Record Date, there were 34,246,336 shares of Common Stock issued at effective conversion prices below the closing sale price of our sharesand outstanding. In addition, as of December 3, 2003 ($1.80 per share), the listing requirements of the Nasdaq Stock Market limit the total number of sharesRecord Date, we can issue under the Credit Line and associated warrants to 20% of the totalhad reserved (i) 6,246,231 shares of our common stock outstanding as of that date unless our stockholders grant their approvalCommon Stock for issuance to the issuance of shares in excess of this amount. Accordingly, a maximum of 5,595,705 shares of common stock may be issued by us to Laurusemployees, directors and consultants pursuant to the Credit LineCompany’s Fourth Amended and associated warrants without approval from our stockholders. Since entering into the Credit Line, Laurus has converted principal of $3.86 million into 4,509,091Restated 1997 Stock Option Plan (of which 5,543,681 shares of our common stock. Laurus also holdsCommon Stock are subject to outstanding, unexercised options), (ii) 243,717 shares of Common Stock for issuance to employees pursuant to the Company’s Employee Stock Purchase Plan and (iii) 1,159,421 shares of Common Stock for issuance pursuant to outstanding warrants to purchase 940,000 shares of our common stock at a weighted average exercise price per share of $1.88 that were issued in connection withCommon Stock. Additionally, so long as the Credit Line. While Laurus has not exercised any of these warrants,Loans remain outstanding, we are required to keep this number of shares available for issuance upon exercise of these warrants. Accordingly, we can issue only 146,614 additional shares of our common stock to Laurus in conjunction with debt conversions under the Credit Line without additional authority from our stockholders.

We are proposing that stockholders authorize the Company to issue an unlimitedreserve a sufficient number of shares of common stock in connection withCommon Stock to reflect the Credit Line and associated warrants. The conversion price set forth in the Credit Line is currently $1.00 per share. However, on one occasion we waived the stated conversion price and authorizednumber of shares that may be issued to Laurus upon conversion of debtthis indebtedness.

In addition to equity at prices as low as 90%allowing us to issue the shares of Common Stock and warrants under the current market priceSecurities Purchase Agreements, Proposal No. 2 has been made because we believe that it is advisable to have a greater number of our commonauthorized but unissued shares of Common Stock available for general corporate purposes. We may from time to time consider public or private financings to provide the Company with capital that may involve the issuance of additional shares of Common Stock or securities convertible into Common Stock, acquisitions, stock dividends or stock splits. We believe that having authority to issue additional shares of Common Stock will avoid the possible delay and significant expense of calling and holding a special meeting of stockholders to increase authorized shares of Common Stock. Except for the issuance of Common Stock proposed in order to facilitate conversionsProposal No. 1, the right of debt. We have also twice agreed with Laurus to lower the stated conversion price under the Credit Line in order to obtain a waiver of our borrowing limit under the Credit Line and other concessions. We currently expect that future conversions of borrowings under the Credit Line will be made at $1.00 per share. However, we may decide to convert these borrowingsdebt into common stock at lower prices if we determine that it is necessary to ensure thatas described herein, the Company has adequate borrowing capacity underCompany’s Employee Stock Purchase Plan and the Credit Line. However, we will not convert debt under the Credit Line into common stock at a conversion price that is less than 90% of the then current market value of our common stock.

We entered into the Credit Line on December 3, 2003. The term of the Credit Line is three years carrying an interest rate of 2.0% over the prime rate or a minimum of 6.0%. Funds available under the Credit Line are determined by a borrowing base equal to 90% of eligible accounts receivable balances plus up to $1.0 million related to inventory balances. The Credit Line is secured by most of our assets. Originally, the Credit Line provided that payment of interestCompany’s outstanding options and principal could, under certain circumstances, be made with shares of our common stock at a fixed conversion price of $2.20 per share. Conversion of this debt to common stock may be madewarrants, at the electionpresent time we have no agreement or arrangement involving the issuance of Laurus or the Company. We may also elect to convert debt but only if our shares trade at a price exceeding $2.42 per share for ten consecutive trading days, and such conversion is further subject to trading volume limitations and a limitation on the total beneficial ownership by Laurus of our common stock. Upon entering into the Credit Line, we issued warrants to Laurus to acquire 550,000 shares of the our common stock at an exercise price exceeding the average trading price of our common stock over the ten trading days prior to the date of the warrant.

In February 2004, Laurus waived the borrowing base limitation on the Credit Line, thereby making the full $7.5 million facility available to us regardless of the available collateral. On August 31, 2004, Laurus agreed to

14

extend the borrowing base waiver on the Credit Line through March 19, 2005. In addition, Laurus reduced the interest rate on the Credit Line to 0% for any day the closing sale price of our common stock is at or above $1.75 per share. In return, we agreed to lower the conversion price to $1.00 per share and issued a warrant to Laurus covering an additional 400,000 common shares at an exercise price of $1.25 per share. The closing price of our common stock on August 31, 2004 was $1.20 per share. On March 18, 2005, Laurus agreed to further extend the borrowing base waiver on the Credit Line until March 31, 2006. In connection with this waiver, we agreed to allow Laurus to convert $1.87 million of the outstanding principal balance under the Credit Line into 3,600,000 shares of common stock. As a result of the extension of the borrowing base waiver and the conversion of this $1.87 million of outstanding debt into equity, we had available borrowing capacity under the Credit Line of $2.60 million at March 31, 2005. While we believe the available capacity under the Credit Line is sufficient to meet our liquidity requirements for 2005, management believes that it would be in the best interests of the Company to take steps to expand its access to additional capital under the Credit Line by authorizing additional shares to be available to issue upon conversion of borrowings under the Credit Line into common stock.Common Stock.

Certain Risks Associated with the Proposal to Increase the Number of Shares Issuable under the Credit Line.No. 2

Before granting your proxy to vote for Proposal No. 2, you should carefully consider the following:

The issuanceauthorization of additional shares of Common Stock may allow the Company to issue shares in the future without further approval by the stockholders and these future issuances of Common Stock will reduce the ownership of existing stockholders and may be dilutive.dilutive.By authorizing the Company to issueapproving Proposal No. 2, stockholders will authorize an additional 40,000,000 shares of common stock in order to convert borrowings under the Credit Line into common stock, an unlimited number of additional shares may be issued for such purposes. We also have obligations to issue approximately 6.2 million shares of common stock under outstanding stock options and warrants. Additionally,Common Stock which we may issue sharesfrom time to time. Further action by the stockholders would not necessarily be required for the issuance of common stock upon conversion of all or part of our borrowings under a separate $2.75 million Term Note with Laurus.these additional shares. The issuance of suchthis additional shares of common stockCommon Stock will reduce the existing stockholders proportionate ownership of existing stockholders.the Company and voting rights in the Company. In addition, the issuance of these additional shares may be dilutive to our current stockholders and could negatively impact the market price of our common stock.the Company’s Common Stock. The possible dilution caused by

8

future issuances of shares of Common Stock could reduce per share results and dividends, when and if declared by the Board of Directors.

An increase in the authorized shares of Common Stock may have certain anti-takeover effects. The increase in the authorized shares of the Company’s Common Stock is not intended as an “anti-takeover device,” which would inhibit or affect any possible change in control of the Company. However, the availability for issuance of additional shares of Common Stock in a public or private sale, merger, or similar transaction would increase the number of outstanding shares, thereby possibly diluting the interest or increasing the cost to any person or persons attempting to purchase the Company or otherwise obtain control of the Company. We are not aware of any pending or threatened efforts to acquire control of the Company.

The sale by LaurusVote Required

Proposal No. 2 to amend the Company’s Certificate of Incorporation to increase the number of authorized shares issuedof Common Stock from 60,000,000 to it upon conversion of borrowings may reduce100,000,000 shares requires the market price of our stock.    Under the termsaffirmative vote of the Credit Line, Laurus may not own more than 4.99%holders of oura majority of the issued and outstanding common stock at any time. We have agreed to register the shares issued to Laurus for resale under federal securities laws. Accordingly, upon conversion of borrowings under the Credit Line into common stock, Laurus will generally be required to sell most or all these shares in the market. Because the average trading volume for shares of our common stock is relatively modest, the sale by LaurusCompany’s Common Stock. Accordingly, abstentions and broker nonvotes will have the same effect as a vote against Proposal No. 2.

The Board of a substantialDirectors recommends that stockholders vote “FOR” Proposal No. 2 to amend the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from time60,000,000 to time could cause the trading price for our common stock to decline in order for the market to clear these sales.100,000,000 shares.

FINANCIAL INFORMATION

Requests for printed financial material for Transgenomic—annual reports and Forms 10-K and 10-Q—should be directed to Mitchell L. Murphy, Vice President, Secretary and Treasurer, Transgenomic, Inc., 12325 Emmet Street, Omaha, NE 68164, telephone (402) 452-5400. A representative of the Company’s independent auditors, Deloitte & Touche LLP, is expected to attend the Special Meeting and will be available to answer questions.

SUBMISSION OF STOCKHOLDER PROPOSALS

Pursuant to our Bylaws, stockholder proposals submitted for presentation at the Annual Meeting,our next annual meeting, including nominations for directors, must be received by our corporate Secretary at the address of our home office no later than 35 days prior to the date of the Annual Meeting.next annual meeting. If less than 35 days’ notice of the Annual Meetingnext annual meeting is given, then stockholder proposals must be received by our corporate Secretary no later than seven days after the mailing date of the notice of the Annual Meetingnext annual meeting to stockholders. Any stockholder nomination for director must set forth the name, age, address and principal occupation of the person nominated, the number of shares of our common stock owned by the nominee and the nominating stockholder and other information required to be disclosed about the nominee under federal proxy solicitation rules.

In order to be included in our Proxy Statement relating to next year’s annual meeting, stockholder proposals must be submitted in writing by February 22, 2006 to our corporate Secretary at the address of our home office. The inclusion of any such proposal in our proxy materials will be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934, as amended.

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OTHER MATTERS

Management does not currently intend to bring any matter before the Annual Meeting other than those disclosed in the Notice of Annual Meeting of Stockholders, and it does not know of any business which persons, other than the management, intend to present at the meeting. The enclosed proxy for the Annual Meeting confers discretionary authority on the Board of Directors knows of no other matters to vote on any matter proposed by stockholders for considerationbe presented at the AnnualSpecial Meeting. If, however, any other business should properly come before the Special Meeting, or any adjournment thereof, it is intended that the proxies will be voted with respect thereto in accordance with the best judgment of the persons named in the proxies.

We will bear the cost of soliciting proxies for the Annual Meeting. To the extent necessary, proxies may be solicited by our directors, officers and employees, but these persons will not receive any additional compensation for such solicitation. We will reimburse brokerage firms, banks and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of our common stock. In addition to solicitation by mail, we will supply banks, brokers, dealers and other custodian nominees and fiduciaries with proxy materials to enable them to send a copy of such materials by mail to each beneficial owner of our common stock that they hold of record and will, upon request, reimburse them for their reasonable expenses in so doing.COMMUNICATIONS WITH THE COMPANY

Stockholders mayand other interested parties who desire to communicate directly with any director, including the Chairman of the Board and the chairman of any committee of the Board, by sending a letter to the attention of the appropriate person (which may be marked as confidential)Company’s independent, non-management directors should submit communications in writing addressed to our corporate Secretary at our home office. All communications received by the corporate Secretary will be forwardedAudit Committee Chair, Transgenomic, Inc., 12325 Emmet Street, Omaha, NE 68164. Stockholders, employees and other interested parties who desire to the appropriate directors. In addition, it is the policy of our Board of Directors that whenever possible directors attend, and be availableexpress a concern relating to discuss stockholder concerns at, the Annual Meeting. Collin J. D’Silva attended last year’s Annual Meeting.

Our Form 10-K/A, as filed by the Companyaccounting or auditing matters should communicate directly with the Securities and Exchange Commission, is includedCompany’s Audit Committee in our Annual Report that is being deliveredwriting addressed to our stockholders together with this Proxy Statement. The Form 10-K/A is not, however, to be considered part of this proxy solicitation material.

None of the information set forth in this Proxy Statement under the headings “Report of the CompensationAudit Committee on Executive Compensation,” “Report of the Audit Committee” or “Company Performance” is deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or to the liabilities of Section 18 of the Securities Exchange Act of 1934 (the “1934 Act”)Chair, Transgenomic, Inc., and this information will not be deemed to be incorporated by reference into any prior or subsequent filing by the Company under the Securities Act of 1933 or the 1934 Act.12325 Emmet Street, Omaha, NE 68164.

By Order of the Board of Directors

/s/    Mitchell L. Murphy

Mitchell L. Murphy,Secretary

Omaha, Nebraska

June 22,October, 2005

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REVOCABLE PROXY

TRANSGENOMIC, INC.

ANNUAL

SPECIAL MEETING OF STOCKHOLDERS

Wednesday, July 13, 2005 10:30 A.M., Eastern Daylight Time

INVESCO PRIVATE CAPITAL 1166 Avenue of the Americas New York, New York

TRANSGENOMIC, INC. revocable proxy

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TRANSGENOMIC, INC. FOR USE ONLY AT THE ANNUALSPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, JULY 13,[DAY], OCTOBER [    ], 2005 AND AT ANY ADJOURNMENT THEREOF.

The undersigned hereby authorizes the Board of Directors of Transgenomic, Inc. (the “Company”), or any successors in their respective positions, as proxy, with full powers of substitution, to represent the undersigned at the AnnualSpecial Meeting of Stockholders of the Company to be held at the offices of INVESCO Private Capital, 1166 Avenue of the Americas, New York, New York,[location] on Wednesday, July 13,[day], October [    ], 2005, at 10:30 a.m., Eastern Daylight[Time] Central Time, and at any adjournment of said meeting, and thereat to act with respect to all votes that the undersigned would be entitled to cast, if then personally present, in accordance with the instructions below and on the reverse side hereof.

1. To authorize the Company to issue a number of shares of its Common Stock in connection with a private placement to certain institutional investors that exceeds 20% of the shares of Common Stock outstanding on the date the Company entered into the Securities Purchase Agreements relating to such private placement;

¨ FOR                 ¨ WITHHELD                 ¨ ABSTAIN

2. To authorize an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 60,000,000 to 100,000,000;

¨ FOR                 ¨ WITHHELD                 ¨ ABSTAIN

3. To vote, in its discretion, upon such other matters as may properly come before the Transgenomic, Inc. Special Meeting or any adjournment thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTIONIN FAVOR OF THE BOARD OF DIRECTORS’ NOMINEES FOR DIRECTOR, FOR THE RATIFICATION OF THE APPOINTMENT OF AUDITORSPROPOSAL 1 AND TO AUTHORIZE THE COMPANY TO ISSUE AN UNLIMITED NUMBER OF SHARES TO LAURUS MASTER FUND, LTD.PROPOSAL 2.

[continue and to be signed on the reverse hereof]

This proxy is revocable and the undersigned may revoke it at any time prior to the AnnualSpecial Meeting by giving written notice of such revocation to the Secretary of the Company. Should the undersigned be present and want to vote in person at the AnnualSpecial Meeting, or at any adjournment thereof, the undersigned may revoke this proxy by giving written notice of such revocation to the Secretary of the Company on a form provided at the meeting. The undersigned hereby acknowledges receipt of a Notice of AnnualSpecial Meeting of Stockholders of the Company called for July 13,October [    ], 2005 and the Proxy Statement for the AnnualSpecial Meeting and the Company’s 2004 Annual Report to Stockholders prior to the signing of this proxy.

(Continued and to be signed on the reverse hereof.)

Please detach here

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

1. ELECTION OF CLASS II DIRECTORS: NOMINEES: 01 Jeffrey L. Sklar 02 Gregory T. Sloma

Instructions: To withhold authority to vote for any individual nominee, check the “Vote FOR” box to the right, but write the number of the nominee for whom authority is being withheld in the box provided to the right .

2. AUDITORS. Ratification of the appointment of Deloitte & Touche LLP as independent auditors for the year ending December 31, 2005.

3. To authorize the Company to issue an unlimited number of shares under its $7.5 million convertible revolving credit line with Laurus Master Fund, Ltd. and associated warrants, which may exceed 20% of the shares outstanding on the date the Company entered into the revolving credit line.

4. To vote, in its discretion, upon any other business that may properly come before the Annual Meeting. Management is not aware of any other matters which should come before the Annual Meeting.

Address Change? Mark Box Indicate Changes below

Vote FOR all nominees (except as marked to the contrary below )

WITHHOLD AUTHORITY to vote for all nominees

For Against Abstain

For Against Abstain

Dated: , 2005

Signature(s) in Box

Please date and sign exactly as the name appearsyour name(s) appear(s) on this proxy. When sharesShares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If a corporation, please sign in full corporate name by authorized officer. If a partnership, please sign in partnership name by authorized person.