SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

of the Securities Exchange Act of 1934

Filed by the Registrantx   Filed by a Party other than the Registrant¨

Check the appropriate box:

TRANSGENOMIC, INC.Transgenomic, Inc.

(Name of Registrant as Specified In Itsin its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

TRANSGENOMIC, INC.TRANSGENOMIC, INC.

NOTICE OF SPECIALANNUAL MEETING OF STOCKHOLDERS

October 26, 2005May 23, 2007

A SpecialThe Annual Meeting of Stockholders of Transgenomic, Inc. (the “Company”) will be held at the offices of Kutak Rock LLP, 1650 Farnam222 South 15^th Street, 14^th Floor, Omaha, Nebraska, on Wednesday, October 26, 2005,May 23, 2007 at 9:0030 a.m. Central Daylight Time, for the following purposes:

Please read the enclosed Proxy Statement for important information about the SpecialAnnual Meeting.

Only stockholders of record at the close of business on September 30, 2005,March 26, 2007 are entitled to notice of, and to vote at, the SpecialAnnual Meeting.

Please sign and return the enclosed proxy card using the envelope provided. You can revoke your proxy at any time. If you attend the SpecialAnnual Meeting in person you may withdraw your proxy and vote in person.

By Order of the Board of Directors

Mitchell L. Murphy,Secretary

By Order of the Board of Directors

Debra A. Schneider, Chief Financial Officer, Vice President, Secretary and Treasurer

Omaha, Nebraska

October 10, 2005

May 2, 2007

IMPORTANT: IT IS IMPORTANT THAT WE RECEIVE YOUR PROXY TO ENSURE A QUORUM AT THE SPECIALANNUAL MEETING. BY PROMPTLY RETURNING YOUR PROXY CARD TO US, YOU WILL SAVE THE COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION.

TRANSGENOMIC, INC.Transgenomic, Inc.

12325 Emmet Street

Omaha, Nebraska 68164

PROXY STATEMENT

for

SPECIALANNUAL MEETING OF STOCKHOLDERS

of

TRANSGENOMIC, INC.

We are sending this Proxy Statement to you in connection with our request for your proxy to use at a Specialthe Annual Meeting of Stockholders of Transgenomic, Inc. (the “Company”) to be held on October 26, 2005.May 23, 2007. Only those owners of our common stock of record at the close of business on September 30, 2005March 26, 2007 (the “Record Date”) are entitled to vote at the SpecialAnnual Meeting. This Proxy Statement, along with the Notice of the SpecialAnnual Meeting, the Annual Report to Stockholders and a proxy card are being first mailed to stockholders on or about October 12, 2005.

May 2, 2007.

Your proxy is being solicited by the Board of Directors of the Company and will give them or the Chief Executive Officer the power to vote on your behalf at the SpecialAnnual Meeting. All shares of the Company’s common stock represented by properly executed and unrevoked proxies will be voted by the Board of Directors or the Chief Executive Officer in accordance with the directions given by those proxies. Where no instructions are indicated, the Board of Directors or the Chief Executive Officer will vote “FOR” each of the proposals 1 and 2 that will be considered at the SpecialAnnual Meeting. In addition, the Board of Directors believes outstanding shares owned by three institutional stockholders as well as thecurrent executive officers and directors of the Company will be voted “FOR” both proposals 1 and 2.each such proposal. Shares owned by these stockholderspersons represent a majorityless than 1% of the total shares outstanding as of the Record Date.

You may revoke your proxy at any time before it is exercised by the Board of Directors or the Chief Executive Officer at the SpecialAnnual Meeting. If you decide to do this, you will need to give the Secretary of the Company written notice that you want to revoke the proxy or you can submit a new proxy to him.the Secretary. In addition, if you attend the SpecialAnnual Meeting in person, you may withdraw your proxy and vote in person. Shares of common stock entitled to vote and represented by properly executed, returned and unrevoked proxies will be considered present at the SpecialAnnual Meeting for purposes of establishing a quorum. This includes shares for which votes are withheld, abstentions are cast or there are broker nonvotes. The holders of at least a majority of our common stock issued and outstanding on the Record Date must be present at the SpecialAnnual Meeting, either in person or by proxy, in order for there to be a quorum.

We will pay the cost of soliciting proxies for the Special Meeting. Our officers and employees may solicit proxies, without additional compensation, in person, by telephone, in writing or otherwise. We may make arrangements with banks, brokerage houses and other custodians, nominees and fiduciaries to forward solicitation material to the beneficial owners of shares held by them of record, and we may reimburse them for reasonable expenses they incur in so doing.

Voting Securities and Beneficial Ownership by Principal Stockholders and Our Directors and Officers

On the Record Date there were 34,246,33649,189,672 issued and outstanding shares of our common stock. Each share of common stock is entitled to one vote on each matter to be voted on at the SpecialAnnual Meeting. Stockholders do not have the right to cumulate votes in the election of directors.

This table shows the beneficial ownership of our common stock by our directors and all nominees for director, by those of our executive officers who are named in the Summary Compensation Table, included within the Proxy Statement for our last Annual Meeting, by all of our current executive officers and directors as a group, and by each person we believe beneficially owns more than 5% of our outstanding common stock as of September 30, 2005,March 26, 2007, the record date established for our SpecialAnnual Meeting of Stockholders. Each stockholder named in this table has sole voting and investment power over the shares he or she beneficially owns and all such shares are owned directly by the stockholder unless otherwise indicated. Stock ownership information of persons other than our current executive officers and directors is based on available

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information including, but not limited to, Schedules 13D, 13F or 13G filed with the Securities and Exchange Commission.Commission (the “SEC”) or information supplied by these persons.

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PROPOSAL NO. 1TO ELECT CLASS I AND CLASS III DIRECTORS

TO AUTHORIZE THE COMPANY TO ISSUE SHARES OF COMMON STOCK IN A PRIVATE PLACEMENT EXCEEDING 20% OF THE SHARES OUTSTANDING ON THE DATE THE COMPANY ENTERED INTO THE ASSOCIATED SECURITIES PURCHASE AGREEMENTS.Board of Directors and Committees

General

On September 22, 2005, we enteredOur entire Board of Directors consists of seven positions of which six are currently occupied. The Board of Directors is divided into Securities Purchase Agreementsthree classes with directors in each class serving for a numberterm of institutional investors (the “Securities Purchase Agreements”) in which we have agreed to sell the following securities: (i) 14,925,743 sharesthree years. The terms 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 non-public offering at a price below the market value or book value of such shares when the issuance or potential issuance will result in the sale of securities having 20% or moreoffice of the value, or 20% or more ofcurrent Class I, Class II and Class III directors (other than Rodney S. Markin) will expire in 2007, 2008 and 2009, respectively. Although Dr. Markin was appointed as a Class III director and, as such, would normally serve for a term expiring in 2009, the voting power, ofBoard is submitting him for re-election at the then outstanding common shares.

2007 Annual Meeting since he is a new appointment to the Board.

The numberBoard of sharesDirectors has nominated Craig J. Tuttle and Frank R. Witney as Class I directors to be 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 soldserve three-year terms expiring 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 shares 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.

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 debt with Laurus Master Fund, Ltd. (“Laurus”). As of June 30, 2005, our working capital was approximately $0.2 million.2010. In addition, we had approximately $1.3 millionthe Board of additional borrowing availability under our revolving lineDirectors has nominated Rodney S. Markin as a Class III director to serve a two-year term expiring in 2009. The Board of credit with Laurus. Increasing our liquidity and working capital positionsDirectors knows of no reason why Mr. Tuttle, Dr. Witney or Dr. Markin might be unavailable to serve. There 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/no arrangements 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

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connection with a private placementunderstandings between Mr. Tuttle, Dr. Witney or Dr. Markin and any other person pursuant to which they were selected as nominees. Mr. Tuttle, Dr. Witney and Dr. Markin are current members 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.

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 per share to $2.58 per share due to the antidilution provisions of these warrants.

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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 LaurusDirectors and each has expressed an intention to convert upcontinue 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 byserve on the Board of Directors.Directors if they are elected.

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 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 purchaserselection 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 will be required to use our best efforts to file a registration statement covering the resale of the Common Stock 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 90th day following closing. Failure to comply with 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 Common Stock under the Securities Purchase Agreements exceeding 20% of the shares outstanding on the date the Company entered into the Securities Purchase Agreementsdirector requires the affirmative vote of the holders of a majorityplurality of the issuedshares present in person or represented by proxy at the meeting and outstanding

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shares of the Company’s Common Stock. Accordingly, abstentionsentitled to vote. This means that votes withheld and broker nonvotes with respect to the election of directors will have no effect on the same effectelection of directors. If Mr. Tuttle, Dr. Witney or Dr. Markin is unable to serve as a director, the Board of Directors may nominate a substitute nominee. In that case, the Board of Directors will vote against Proposal No. 1.

Stockholder approvalall valid proxies that voted in favor of Proposal No. 1 will onlyMr. Tuttle, Dr. Witney or Dr. Markin, as the case may be, effective if stockholders also approve Proposal No. 2. Therefore, a vote against Proposal No. 2 will havefor the same effect as a vote against Proposal No. 1.

election of the substitute nominee.

The Board of Directors recommends that the stockholders vote “FOR” Proposal No. 1the election of Mr. Tuttle and Dr. Witney as Class I Directors and Dr. Markin as a Class III Director.

The following table sets forth information about our directors, including the nominees who are to authorizebe voted on at the Annual Meeting. The Board of Directors has determined that Messrs. Witney, Markin, Duman, Sloma and Sklar are independent directors of the Company to issue shares under the listing standards adopted by the Securities Purchase Agreements exceeding 20%and Exchange Commission. All directors have held the positions with the companies (or their predecessors) set forth under “Principal Occupation” for at least five years, unless otherwise indicated.

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Information regarding our other executive officers is found in our Form 10-K that is part of the shares outstanding onAnnual Report to Stockholders that accompanies this Proxy Statement. The Board of Directors has adopted a code of ethical conduct that applies to our principal executive officers and senior financial officers as required by Section 406 of the dateSarbanes Oxley Act of 2002. This code of ethical conduct is embodied within our Business Ethics Policy, which applies to all persons associated with the Company, entered intoincluding our directors, officers, and employees. The Business Ethics Policy is available on our website atwww.transgenomic.com.

The Board of Directors conducts its business through meetings of the Securities Purchase Agreements.

PROPOSAL NO. 2

TO AMEND THE CERTIFICATE OF INCORPORATION

TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK

General

Board and actions taken by written consent in lieu of meetings and by the actions of its committees. During the year ended December 31, 2006, the Board of Directors held eleven meetings and acted by written consent in lieu of a meeting one time. Other than Dr. Sklar and Parag Saxena (who is no longer a director), all directors attended at least 75% of the meetings of the Board of Directors and of the committees of the Board of Directors on which they served during 2006. Dr. Sklar attended six meetings of the Board of Directors and two Compensation Committee meetings. Mr. Saxena attended eight meetings of the Board of Directors, four Audit Committee meetings and two Compensation Committee meetings.

The Board of Directors has approvedestablished and assigned certain responsibilities to an Audit Committee and a Compensation Committee. We do not have a standing nominating committee. The Board determined that due to the relatively small size of the Board, and due to the policy on director nominations, which is described below, it was not necessary to form a separate committee to evaluate director nominations. Under the director nomination policy, director candidates are identified primarily through suggestions made by directors, management and stockholders of the Company. We have implemented no material changes to the procedures by which stockholders may recommend nominees for the Board of Directors. The Board of Directors will consider director nominees recommended by stockholders that are submitted in writing to the Secretary or Chief Executive Officer of the Company in a timely manner and which provide necessary biographical and business experience information regarding the nominee. All candidates for director will be evaluated based on their independence, character, judgment, diversity of experience, financial or business acumen, ability to represent and act on behalf of all stockholders, and the needs of the Board. In general, the Board expects to nominate incumbent directors who express an interest in continuing to serve on the Board. The independent directors of the Company review and consider all candidates to serve as a director of the Company who are properly suggested by directors, management and stockholders of the Company, and the Board of Directors selects its nominees to serve as a director of the Company from among those candidates who are recommended to the Board of Directors by a majority of the independent directors of the Company.

Audit Committee.    The Audit Committee’s primary duties and responsibilities include monitoring the integrity of our financial statements, monitoring the independence and performance of our external auditors, and monitoring our compliance with applicable legal and regulatory requirements. The functions of the Audit Committee also include reviewing periodically with independent auditors the performance of the services for which they are engaged, including reviewing the scope of the annual audit and its results, reviewing with management and the auditors the adequacy of our internal accounting controls, reviewing with management and the auditors the financial results prior to the filing of quarterly and annual reports, and reviewing fees charged by our independent auditors. Our independent auditors report directly and are accountable solely to the Audit Committee. The Audit Committee has the sole authority to hire and fire the independent auditors and is hereby soliciting stockholderresponsible for the oversight of the performance of their duties, including ensuring the independence of the independent auditors. The Audit Committee also approves in advance the retention of, and all fees to be paid to, the independent auditors. The rendering of any auditing services and all non-auditing services by the independent

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auditors is subject to the approval in advance of the Audit Committee. The Audit Committee operates under a written charter which is available on our website atwww.transgenomic.com. The Audit Committee is required to be composed of directors who are independent of the Company under the rules of the Securities and Exchange Commission. The current members of the Audit Committee are directors Duman, Markin, and Sloma. The Board of Directors has determined that Mr. Sloma qualifies as an “audit committee financial expert” under the rules of the Securities and Exchange Commission. The Audit Committee met five times during 2006.

Compensation Committee.The Compensation Committee reviews and approves our compensation policy, changes in salary levels and bonus payments to our executive officers and other management and determines the timing and terms of awards made pursuant to our stock option plan. The Compensation Committee currently consists of directors Sklar, Duman, and Markin, each of whom has been determined by the Board of Directors to be independent under the rules of the Securities and Exchange Commission. The Compensation Committee met three times during 2006 and took action by unanimous written consent one time.

Section 16(a) Beneficial Ownership Reporting Compliance.    Item 405 of Regulation S-K requires disclosure of any known late filing or failure by an insider to file a report required by Section 16 of the Securities Exchange Act of 1934. We believe all Section 16 reports were filed in a timely manner during 2006.

DIRECTOR COMPENSATION TABLE

The following table sets forth information regarding the compensation paid by us to our Board of Directors for services rendered during the year ended December 31, 2006. No 2006 compensation is reported for Craig Tuttle, Rodney Markin or Frank Witney since they each joined the Board in 2007. Craig Tuttle is also an executive officer of the Company and is not separately compensated for services as a director. Roland Santoni and Parag Saxena each resigned from the Board during the first quarter of 2007.

Directors who are also our officers or affiliates are not separately compensated for serving on the Board of Directors other than reimbursement for out-of-pocket expenses related to attendance at board and committee meetings. Independent directors are paid an annual retainer of $20,000 and they receive reimbursement for out-of-pocket expenses related to attendance at board and committee meetings. Independent directors serving on any committee of the Board of Directors are paid an additional annual retainer of $2,500 unless they are also a chairman of a committee. The Chairman of the Audit Committee receives an additional annual retainer of $8,000 and the chairman of any other committee receives an additional annual retainer of $4,000. In addition, any independent director who attends more than four meetings, which includes committee meetings, per quarter receives a $500 per meeting fee for each meeting attended over the four.

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Our non-employee and non-affiliated directors are issued options to purchase 15,000 shares of common stock under our stock option plan upon initial appointment to the Board. These options are typically granted at the next scheduled Compensation Committee meeting. For options granted prior to March 28, 2003, such options vest at the rate of 20% per year of service on the Board. Additional grants were made from time to time so that each non-employee director would hold 15,000 unvested options at any time. Effective March 28, 2003, the options granted to a non-employee and non-affiliated director upon initial appointment to the Board vest at the rate of 33 1/3% per year of service on the Board. Additional grants of options to purchase 5,000 shares of common stock will be made on a date reasonably close to each anniversary of such director’s appointment to the Board to be determined by the Compensation Committee in its sole discretion, with such options vesting on the third anniversary of the grant. All options granted to non-employee directors have exercise prices that represented or exceeded the fair market value of our stock on the grant date. Exercise prices on outstanding options granted to our non-employee directors range from $0.69 per share to $13.00 per share. On December 28, 2005, the Company’s directors approved a plan to accelerate the vesting of all outstanding stock options. Aside from the acceleration of the vesting date, the terms and conditions of the stock option award agreements governing the underlying stock option grants remained unchanged. All such options were out-of-the money, and accordingly, the accelerated vesting resulted in no compensation expense since there was no intrinsic value associated with these fixed awards at the date of modification. Accelerating the vesting of these options allowed the Company to avoid recognition of compensation expense associated with these options in future periods.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview.    The Compensation Committee endeavors to establish total compensation packages for the Company’s executive officers that both fairly reflect the value of their services to the Company and help the Company attract and retain high quality individuals in its key executive positions. The Compensation Committee also requires that a significant portion of each executive’s compensation be linked to the achievement of performance targets that are integral to the Company achieving the goals of its business strategies.

Decisions regarding executive compensation during 2006 were complicated by the fact that the Company’s senior management team completely changed during the course of the year. On April 3, 2006, Collin J. D’Silva resigned his position as President and Chief Executive Officer of the Company. Michael A. Summers, our then Chief Financial Officer, was appointed by the Board of Directors to also act as interim President and Chief Executive Officer until a permanent replacement for Mr. D’Silva could be appointed. Mr. Summers filled this role while continuing his normal duties as Chief Financial Officer until July 12, 2006, when Craig J. Tuttle assumed the role as our President and Chief Executive Officer. Mitchell L. Murphy resigned as Vice President on April 27, 2006. His responsibilities have been transferred to other employees and officers. Finally, on September 20, 2006, Michael Summers resigned as our Chief Financial Officer in order to take a position with another company. Mr. Summers continued to provide ongoing assistance to the Company in connection with the preparation of its third quarter 2006 financial statements and SEC reports and was an employee through November 14, 2006. On December 4, 2006, Debra A. Schneider assumed the role as our Chief Financial Officer. As of the end of 2006, Mr. Tuttle and Ms. Schneider were the only executive officers of the Company. However, Messrs. D’Silva and Summers are each treated as “named executive officers” for purposes of the Summary Compensation Table and, accordingly, decisions relating to their 2006 compensation are included in this discussion and analysis.

Components of Executive Officer Compensation.    Executive officer compensation contains three principal components: (i) a base salary, (ii) a cash bonus and (iii) grants of equity-based compensation under the Company’s 2006 Equity Incentive Plan. The following paragraphs describe each of these components of executive compensation.

Base Salary.    Each executive officer receives a base salary which is established in his or her employment agreement, but is subject to an annual increase for subsequent terms of their agreements as determined by the

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Compensation Committee. In general, any increase in base salary levels is a function of increases in the cost of living and a review of peer group data for other public companies engaged in similar industries and that generate revenues in the same range as the Company. These companies are not necessarily the same companies that are included in the peer group index used in the performance graph included in our annual report on Form 10-K. Base salaries are not established on the basis of any specific performance criteria.

The base salaries for Messrs. D’Silva and Summers were established by the terms of their employment agreements which provided for the potential for annual increases as determined by the Compensation Committee. For 2006, the Compensation Committee kept the base salary of Mr. D’Silva at the same level as it had been in 2005. Similarly, Mr. Summers’ base salary was not initially increased for 2006 over his 2005 base salary. However, in April 2006, the Committee increased Mr. Summers’ base salary from $200,000 to $250,000 per annum in order to reflect the additional responsibilities Mr. Summers assumed when he was appointed as interim President and Chief Executive Officer. This increase in his base salary remained in effect for 120 days after a permanent Chief Executive Officer was employed by the Company and, accordingly, was in effect through November 14, 2006.

The 2006 base salaries for both Mr. Tuttle and Ms. Schneider of $250,000 and $200,000, respectively, were established through arm’s length negotiations in connection with their hiring and are reflected in the terms of their respective employment agreements. In each case, the Compensation Committee determined that the base salary levels were consistent with those paid by peer companies to their senior executives, as well as with the salaries previously paid to Messrs. D’Silva and Summers with respect to the positions of Chief Executive Officer and Chief Financial Officer.

Annual Cash Bonus.    The employment agreements for each of our executive officers provides that they are eligible for cash bonuses up to a stated percentage of his or her base salary which will be based on their performance against goals and objectives determined by the Compensation Committee.

Given their departure from the Company during the year, no cash bonuses were paid to either Mr. D’Silva or Mr. Summers for 2006. Likewise, given that Ms. Schneider did not join the Company until the fourth quarter of the year, she was not eligible for a cash bonus for 2006 other than a $10,000 “signing bonus” that she was paid in January, 2007 as an additional incentive to accept the Company’s offer of employment.

With respect to Mr. Tuttle, his employment agreement provides that he is eligible for a bonus of up to 20% of his base salary, which was to be calculated on a pro rata basis for 2006. Accordingly, he was eligible for a maximum bonus of $25,000 for 2006. The Compensation Committee assigned $8,250 of this potential bonus to his remaining employed by the Company through the year. The remaining bonus payments were tied to the achievement of certain performance goals. The Compensation Committee noted that the Company needed to focus on reducing fixed costs associated with its various facilities and employee base in order to reach profitability. Accordingly, the first performance goal was the completion of an amendmentanalysis of outsourcing or relocating production of the Company’s instruments, components and consumable products and reporting the results to the Board. A total potential bonus of $8,250 was assigned to the achievement of this goal. In addition, the Compensation Committee believed that the Company needed to work to enhance shareholder value by progressing its efforts to submit patent applications for the numerous cancer-linked mutations that had been identified by its Discovery Services Group and to complete its Surveyor CE kit and application development and bring this product to launch. The remaining $8,500 of Mr. Tuttle’s potential 2006 bonus was tied to achieving these goals. At its meeting in January 2007, the Compensation Committee reviewed Mr. Tuttle’s performance against the goals established for him for 2006 and determined that Mr. Tuttle had achieved each of the performance goals established for 2006. Accordingly, Mr. Tuttle was awarded a bonus of $25,000 for 2006.

Equity Incentive.    The Compensation Committee may also make awards to the Company’s existing Certificateexecutive officers of Incorporationequity-based compensation under the Company’s 2006 Equity Incentive Plan (the “Plan”). Unlike the payment of cash bonuses, equity-based awards do not become exercisable (or remain subject to forfeiture) until they become vested. By vesting such awards over a period of years, these awards also provide a long-term

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incentive to our executive officers to remain with the Company. Equity-based awards also provide an incentive to the executive officers to maximize their efforts on behalf of the Company by providing them with a proprietary interest in the Company. Any grant of options to purchase common stock must be made with an exercise price no less than the closing sale price of the common stock on the date of grant. Therefore, the compensation value of these stock options is directly related to the long-term performance of the Company as measured by its future return to stockholders. Finally, the use of equity-based compensation allows the Company to preserve cash thereby making it available to meet its general working capital needs.

The Compensation Committee did not make any equity-based awards to Mr. D’Silva or Mr. Summers during 2006. However, the Compensation Committee amended the terms of 250,000 stock options previously awarded to Mr. Summers so that the options would continue to be exercisable by Mr. Summers for the full ten-year period of such options rather than terminating 90 days after his employment with the Company ceased. The Compensation Committee agreed to this modification in light of Mr. Summers’ agreement to provide ongoing assistance to the Company in connection with the preparation of its third quarter 2006 financial statements and SEC reports after his resignation as Chief Financial Officer. Mr. Summers remained employed by the Company through November 14, 2006.

The terms of the employment agreements entered into by the Company with Mr. Tuttle and Ms. Schneider provide for the award of a specified number of stock options to them. In the case of Mr. Tuttle, he received an initial award of 200,000 options and is entitled to receive additional awards of 200,000 options in January 2007 and in July 2007. In the case of Ms. Schneider, she received an initial award of 100,000 options and is entitled to receive additional awards of 100,000 options in June 2007 and November 2007. The awards of these options were negotiated at arm’s-length with Mr. Tuttle and Ms. Schneider in connection with their hiring and neither Mr. Tuttle nor Ms. Schneider is required to meet any performance goals in order to receive these awards or for their options to vest. However, they must remain employees of the Company on the future award dates in order to receive the options then awarded. In all cases, the exercise price of these options is equal to the fair market value of the Company’s common stock on the applicable grant dates. All such options vest equally on the first three anniversaries of the respective grant dates and terminate ten years after their grant dates. There is a clause in both of these agreements that provides for vesting of unvested options upon the Company being acquired or merged into another entity.

OtherCompensation.    Each of our executive officers is entitled to participate in the employee benefit plans which are made available to all of our employees on a non-discriminatory basis. These benefits consist of medical and dental health insurance and group life insurance for which the Company pays a portion of the premiums. The Company also makes matching contributions to the executive officers’ 401(k) accounts. In addition, Mr. Tuttle’s agreement provides for a leased vehicle for his use during the term of his agreement. The Company also is responsible for any income tax liability arising from this arrangement.

In addition, the Company provided certain additional payments to Mr. Tuttle to assist him in connection with the transfer from his home in Oregon to Nebraska, which included providing temporary housing in Omaha. The Company also paid the costs of commuting from Oregon on a weekly basis. In each case, the Company also paid any income tax liability arising from these payments. The Company further agreed to pay qualified moving expenses of up to $20,000 incurred by Mr. Tuttle. These payments were negotiated at arm’s-length with Mr. Tuttle in connection with his hiring. The Compensation Committee determined that the types and amount of these payments were a reasonable and necessary accommodation to Mr. Tuttle in order to allow him to take on the position as the Company’s President and Chief Executive Officer without unnecessary delay.

Severance Payments.    As described more fully in this Proxy Statement under “Employment Agreements”, we have entered into employment agreements with each of our executive officers. In addition to the compensation provisions described above, each employment agreement provides that an executive officer will be entitled to receive severance payments from the Company if his or her employment is terminated involuntarily except if such termination is based on “just cause”, as that term is defined in the employment agreement. The severance payment payable to both Mr. Tuttle and Ms. Schneider in such circumstances is equal to their base

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salary at the time of termination and will be paid to them over a twelve-month period. The employment agreements provide that the severance payment provisions will be honored if the Company is acquired by, or merged into, another company and their positions are eliminated as a result of such acquisition or merger. These severance payments are designed to provide the executive officers with an amount of cash sufficient to provide for living expenses and other needs which would normally be paid from his or her monthly base salary payments in situations where the executive officer’s employment was not terminated voluntarily. In addition, the payments are designed so as to not exceed the maximum amount which may be paid without imposition of the excise tax imposed by Section 4999 of the Internal Revenue Code or resulting in a loss of the Company’s income tax deduction for any portion of these payments under Section 280G of the Internal Revenue Code if such payments are made after, or in contemplation of, a change of control transaction.

Chief Executive Officer Compensation.    The Compensation Committee uses the same factors in determining the compensation of Craig J. Tuttle, our President and Chief Executive Officer, as it does for all other executive officers. The terms of Mr. Tuttle’s compensation package for 2006 were largely established through negotiations with him in connection with his hiring and were determined to be reasonable by the Compensation Committee. These terms included the awards of stock options under the Plan which the Committee determined were appropriate to provide Mr. Tuttle with economic incentive to manage the Company to increase the total number of shares of Common Stock that the Company is authorizedlong-term returns to issue from 60,000,000stockholders and as an additional inducement 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 approvedemployed by the stockholders, Section 4.1 of the Certificate of Incorporation would read as follows:

Section 4.1.Company. 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.

Reasons for the Proposal

As 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 ofrepresented by 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 of 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 warrants to Oppenheimer for the purchase of 753,750 shares of Common Stock. In order to be able to legally issue the shares of Common Stock sold under the Securities 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 need to have authorized approximately 65,000,000 sharesis less than 2% of Common Stock.

On the Record Date, there were 34,246,336 shares of Common Stock issued and outstanding. In addition, as of the Record Date, we had reserved (i) 6,246,231 shares of Common Stock for issuance to employees, directors

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and consultants pursuant to the Company’s Fourth Amended and Restated 1997 Stock Option Plan (of which 5,543,681 shares of Common 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 Common Stock. Additionally, so long as the Laurus Loans remain outstanding, we are required to reserve a sufficient number of shares of Common Stock to reflect the number of shares that may be issued to Laurus upon conversion of this indebtedness.

In addition to allowing us to issue the shares of Common Stock and warrants under the Securities Purchase Agreements, Proposal No. 2 has been made because we believe that it is advisable to have a greater number of authorized 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 Proposal No. 1, the right of Laurus to convert debt into common stock as described herein, the Company’s Employee Stock Purchase Plan and the Company’s outstanding options and warrants, at the present time we have no agreement or arrangement involving the issuance of Common Stock.

Certain Risks Associated with Proposal No. 2

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

The authorization 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.    By approving Proposal No. 2, stockholders will authorize an additional 40,000,000 shares of Common Stock which we may issue from time to time. Further action by the stockholders would not necessarily be required for the issuance of these additional shares. The issuance of this additional Common Stock will reduce the existing stockholders proportionate ownership of the Company and voting rights in the Company. In addition, the issuance of these additional shares may be dilutive to current stockholders and could negatively impact the market price of the Company’s Common Stock. The possible dilution caused by 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.

Vote Required

Proposal No. 2 to amend the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 60,000,000 to 100,000,000 shares requires the affirmative vote of the holders of a majority of theall issued and outstanding shares of the Company’s Common Stock.common stock. The performance criteria established with respect to Mr. Tuttle’s 2006 cash bonus reflected the views of the Compensation Committee and management regarding the most immediate problems that needed to be addressed by the Company’s senior management and certain concrete steps that should be taken in order to address these concerns.

Compliance with Section 162(m) of the Internal Revenue Code.    The current tax law imposes an annual, individual limit of $1 million on the deductibility of the Company’s compensation payments to its executive officers. Specified compensation is excluded for this purpose, including performance-based compensation, provided that certain conditions are satisfied. The Compensation Committee believes that the compensation policies that it has implemented for the Company’s executive officers preserve, to the maximum extent practicable, the deductibility of all compensation payments to the Company’s executive officers.

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SUMMARY COMPENSATION TABLE

The following table sets forth information regarding the annual and long-term compensation paid by us to our executive officers for services rendered during the three years ended December 31, 2006.

Grants of Plan-Based Awards

The Compensation Committee may grant either qualified or non-qualified stock options to the officers and employees of the Company and non-qualified stock options to non-employee directors and advisors under our stock option plan. In addition, the Company has an annual non-equity incentive plan in place with both of the executive officers of the Company. The following table shows the options granted during 2006 to those executive officers of the Company and also shows the detail around the executive officers who have equity incentive plan awards and whose compensation is reported in the Summary Compensation Table.

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GRANTS OF PLAN-BASED AWARDS

The following table sets forth information concerning each grant of a plan-based award made to the executive officers whose compensation is reported in the Summary Compensation Table during 2006.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table sets forth certain information concerning outstanding option awards held by the executive officers of the Company whose compensation is reported in the Summary Compensation Table.

Option Exercises and Stock Vested

No stock options, SARs or similar instruments were exercised by any executive officer named in the Summary Compensation Table during 2006. Furthermore, no shares of restricted stock, restricted stock units or

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similar instruments vested with respect to any executive officer named in the Summary Compensation Table during 2006. Accordingly, abstentionsno tabular disclosure is being provided under this heading.

Pension Benefits

The Company does not provide for any defined benefit and broker nonvotesactuarial pension plans for its executive officers. Accordingly, no tabular disclosure is being provided under this heading.

Non-Qualified Deferred Compensation

The Company does not provide for any deferred compensation arrangements for its executive officers. Accordingly, no tabular disclosure is being provided under this heading.

Equity Incentive Plan and Other Compensation Plans

2006 Equity Incentive Plan.    The Company’s 2006 Equity Incentive Plan (the “Plan”) allows the Company to make awards of various types of equity-based compensation, including stock options, dividend equivalent rights (“DERs”), stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance units, performance shares and other awards, to employees and directors of the Company. The Plan was adopted in 2006 as a modification of the Company’s 1997 Stock Option Plan (the “Prior Plan”). In addition to providing for additional types of equity-based awards, the Plan increases the total number of shares of common stock that the Company may issue from 7,000,000 under the Prior Plan to 10,000,000 shares under the Plan; provided, that no more than 5,000,000 of such shares may be used for grants of restricted stock, restricted stock units, performance units, performance shares and other awards. Outstanding options for a total of 5,667,664 shares of our common stock are outstanding at the Record Date, of which 5,127,664 may be exercised at this time. Outstanding options have exercise prices ranging from $0.42 to $13.00 per share.

The Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”) which has the authority to set the number, exercise price, term and vesting provisions of the awards granted under the Plan, subject to the terms thereof. Either incentive or non-qualified stock options may be granted to employees of the Company, but only non-qualified stock options may be granted to non-employee directors and advisors. However, in either case, the Plan requires that stock options must be granted at exercise prices not less than the fair market value of the common stock on the date of the grant. Options issued under the plan vest over periods as determined by the Compensation Committee and expire ten years after the date the option was granted. The Company has elected to record expense on a straight-line basis. If the option holder ceases to be employed by the Company, the Company will have the same effectright to terminate any outstanding but unexercised options. To date, the only awards made under the Plan (and the Prior Plan) have been non-incentive stock options.

Employee Savings Plan.    We have established an employee savings plan that is intended to qualify as a vote against Proposal No. 2.

Thetax-qualified plan under Section 401(k) of the Internal Revenue Code. This plan allows for voluntary contributions up to statutory maximums by eligible employees. We match a specific proportion of these contributions, subject to limitations imposed by law. We may make additional contributions to the savings plan on behalf of our employees if our Board of Directors recommends that stockholders vote “FOR” Proposal No. 2decides to amenddo so. For the Company’s Certificate of Incorporationyears ended December 31, 2006, 2005 and 2004, Company contributions to increase the number of authorized shares of Common Stock from 60,000,000 to 100,000,000 shares.401(k) plan were $164,000, $172,000 and $279,000, respectively.

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FINANCIAL INFORMATIONEmployment Agreements

Requests for printed financial material for Transgenomic—annual reportsWe have entered into employment agreements with Craig J. Tuttle, our President and Forms 10-KChief Executive Officer, and 10-Q—should be directed to Mitchell L. Murphy,Debra A. Schneider, our Chief Financial Officer, Vice President, Secretary and Treasurer, Transgenomic, Inc.Treasurer. Mr. Tuttle’s employment agreement has an initial term of two years ending on July 12, 2008. Ms. Schneider’s employment agreement has an initial term of one year ending on December 4, 2007. The employment agreements with our executive officers include customary confidentiality, non-competition, and non-solicitation

13

provisions. The other material terms of the employment agreements with Mr. Tuttle and Ms. Schneider are described under the heading “Executive Compensation-Compensation Discussion and Analysis”.

The Company had entered into an employment agreement with former Chief Executive Officer, Collin J. D’Silva. The employment agreement with Mr. D’Silva had a term of 22 months that expired in December 2006. On January 12, 2007, the Company entered into a Separation Agreement with Mr. D’Silva (the “Separation Agreement”). Pursuant to the Separation Agreement, effective January 19, 2007, Mr. D’Silva resigned his position as the Company’s Secretary. Mr. D’Silva served as the Company’s Director of Mergers and Acquisitions through March 31, 2007. The Company paid Mr. D’Silva’s base salary through March 31, 2007, and shall pay the cost of Mr. D’Silva’s continued group health insurance coverage for a period of eighteen (18) months. The agreement also contains customary confidentiality, non-competition, non-solicitation, and release of claims provisions.

Report of the Compensation Committee on Executive Compensation

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. Based on our Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, our Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 for filing with the Securities and Exchange Commission.

Jeffrey L. Sklar, M.D., 12325 Emmet Street, Omaha, NE 68164, telephone (402) 452-5400. A representativePh.D.

Gregory J. Duman

Rodney S. Markin, M.D., Ph.D.

Compensation Committee Interlocks and Insider Participation

There are no Compensation Committee interlocks and no insider participation in compensation decisions that are required to be reported under the rules and regulations of the Securities Exchange Act of 1934.

Report of the Audit Committee

The Audit Committee is comprised of Gregory T. Sloma, Gregory J. Duman and Rodney S. Markin, M.D., Ph.D., each of which is an independent director of the Company under the rules adopted by the Securities and Exchange Commission.

The Company’s management is responsible for the preparation of the Company’s financial statements and for maintaining an adequate system of internal controls and processes for that purpose. Deloitte & Touche LLP acts as the Company’s independent auditors and they are responsible for conducting an independent audit of the Company’s annual financial statements in accordance with auditing standards generally accepted in the United States of America and issuing a report on the results of their audit. The Audit Committee is responsible for providing independent, objective oversight of both of these processes.

The Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2006 with management of the Company and with representatives of Deloitte & Touche LLP. As a result of these discussions, the Audit Committee believes that the Company maintains an effective system of accounting controls that allow it to prepare financial statements that fairly present the Company’s financial position, results of its operations and cash flows. Our discussions with Deloitte & Touche LLP is expected to attendalso included the Special Meeting and will be available to answer questions.matters required by Statement on Auditing Standard No. 61 (Communications with Audit Committees), as amended.

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In addition, the Audit Committee reviewed the independence of Deloitte & Touche LLP. We received written disclosures and a letter from Deloitte & Touche LLP regarding its independence as required by Independent Standards Board Standard No. 1 and this information was discussed with Deloitte & Touche LLP.

Based on the foregoing, the Audit Committee has recommended that the audited financial statements of the Company for the year ended December 31, 2006, be included in the Company’s Annual Report on Form 10-K to be filed with the Securities and Exchange Commission.

Gregory T. Sloma

Gregory J. Duman

Rodney S. Markin, M.D., Ph.D.

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Accounting Fees and Services

The following fees were billed by Deloitte & Touche LLP to us for professional services provided during 2006 and 2005:

Audit Fees.    Deloitte & Touche LLP billed us a total of $344,000 and $343,000 in 2006 and 2005, 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.

Audit-Related Fees.    Deloitte & Touche LLP billed us a total of $74,000 and $7,000 in 2006 and 2005, 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 $80,000 and $34,000 in 2006 and 2005, 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 2006 and 2005.

The Audit Committee approved all services provided by Deloitte during fiscal year 2006 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 pre-approval, it will require specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee. The term of any pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period.

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SUBMISSION OF STOCKHOLDER PROPOSALS

Pursuant to our Bylaws, stockholder proposals submitted for presentation at our next annual meeting,the 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 next annual meeting.Annual Meeting. If less than 35 days’ notice of the next annual meetingAnnual Meeting is given, then stockholder proposals must be received by our corporate Secretary no later than seven7 days after the mailing date of the notice of the next annual meetingAnnual 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, 2006January 2, 2008 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.

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 knowsto vote on any matter proposed by stockholders for consideration at the Annual Meeting.

We will bear the cost of nosoliciting 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 matterscustodians, 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.

Stockholders may communicate 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) addressed to our corporate Secretary at our home office. All communications received by the corporate Secretary will be forwarded to the appropriate directors. In addition, it is the policy of our Board of Directors that whenever possible directors attend, and be available to discuss stockholder concerns at, the Annual Meeting. Collin J. D’Silva attended last year’s Annual Meeting.

Our Form 10-K, as filed by the Company with the Securities and Exchange Commission, is included in our Annual Report that is being delivered to our stockholders together with this Proxy Statement. The Form 10-K is not, however, to be presented atconsidered part of this proxy solicitation material.

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None of the Special Meeting. If, however, any other business should properly come beforeinformation set forth in this Proxy Statement under the Special Meeting,heading “Report of the Audit Committee” is deemed to be “soliciting material” or any adjournment thereof, it is intended that the proxies willto be voted with respect thereto in accordance“filed” with the best judgmentSEC or subject to the SEC’s proxy rules or to the liabilities of Section 18 of the persons named inSecurities Exchange Act of 1934 (the “1934 Act”), and this information will not be deemed to be incorporated by reference into any prior or subsequent filing by the proxies.

COMMUNICATIONS WITH THE COMPANY

Stockholders and other interested parties who desire to communicate directly withCompany under the Company’s independent, non-management directors should submit communications in writing addressed to Audit Committee Chair, Transgenomic, Inc., 12325 Emmet Street, Omaha, NE 68164. Stockholders, employees and other interested parties who desire to express a concern relating to accountingSecurities Act of 1933 or auditing matters should communicate directly with the Company’s Audit Committee in writing addressed to Audit Committee Chair, Transgenomic, Inc., 12325 Emmet Street, Omaha, NE 68164.

1934 Act.

By Order of the Board of Directors

Debra A. Schneider, Chief Financial Officer,

Mitchell L. Murphy,Vice President, Secretary

and Treasurer

Omaha, Nebraska

October 10, 2005May 2, 2007

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TRANSGENOMIC, INC.

SPECIALANNUAL MEETING OF STOCKHOLDERS

Wednesday, October 26, 2005 May 23, 2007

9:0030 A.M., Central Daylight Time

Kutak Rock LLP 1650 Farnam

222 South 15th Street

14th Floor

Omaha, Nebraska

TRANSGENOMIC, INC.

revocable proxy

SPECIAL MEETING OF STOCKHOLDERS

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TRANSGENOMIC, INC. FOR USE ONLY AT THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, OCTOBER 26, 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 Special Meeting of Stockholders of the Company to be held at the offices of Kutak Rock LLP, 1650 Farnam Street, Omaha, Nebraska, on Wednesday, October 26, 2005, at 9:00 a.m., 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.

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 IN FAVOR OF PROPOSAL 1 AND PROPOSAL 2.

This proxy is revocable and the undersigned may revoke it at any time prior to the Special 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 Special 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 Special Meeting of Stockholders of the Company called for October 26, 2005, and the Proxy Statement for the Special Meeting prior to the signing of this proxy.

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

		n
				TRANSGENOMIC, INC.		revocable proxy
		ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TRANSGENOMIC, INC. FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, MAY 23, 2007 AND AT ANY ADJOURNMENT THEREOF. The undersigned hereby authorizes the Board of Directors and Chief Executive Officer 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 Annual Meeting of Stockholders of the Company to be held at the offices of Kutak Rock LLP, 222 South 15th Street, 14th Floor, Omaha, Nebraska on Wednesday, May 23, 2007, at 9:30 a.m., Central Daylight 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. 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 ELECTION OF EACH OF THE LISTED NOMINEES FOR DIRECTOR. This proxy is revocable and the undersigned may revoke it at any time prior to the Annual 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 Annual 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 Annual Meeting of Stockholders of the Company called for May 23, 2007, and the Proxy Statement for the Annual Meeting and the Company’s 2006 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 USING THE ENCLOSED ENVELOPE.

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;

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;

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

MARK HERE IF YOU PLAN TO ATTEND THE SPECIAL MEETING

MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW

FOR

FOR

WITHHELD

WITHHELD

ABSTAIN

ABSTAIN

Dated:

, 2005

Signature(s) in Box

òPlease date and sign exactly as your name(s) appear(s) on this proxy. When shares 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.detach hereò