A Medical Device Daily

Gen-Probe (San Diego) reported that it is spinning off its industrial testing assets into a new, independent company focused on developing rapid, highly accurate molecular assays for biopharmaceutical production, water and food safety testing, and other applications.

Gen-Probe initially will own 19.9% of the new company, Roka Bioscience. Affiliates of private equity firms OrbiMed Advisors, TPG (TPG Biotechnology) and New Enterprise Associates have agreed to provide Roka up to $37.2 million in aggregate equity funding to complete development of several industrial assays and Gen-Probe's Closed Unit Dose Assay (CUDA) system, a fully integrated, portable testing instrument that is designed to deliver highly accurate molecular results in about one hour.

"We believe establishing a highly focused, standalone company is the best way to maximize the considerable long-term potential of our molecular technologies in industrial markets," said Carl Hull, Gen-Probe's president/CEO. "Our ownership position enables us to participate in Roka's long-term success, while allowing us to concentrate Gen-Probe's internal resources and core competencies on clinical opportunities in infectious disease testing, blood screening, transplant diagnostics and oncology."

Eighteen former Gen-Probe employees with expertise in industrial fields have joined Roka, which will begin operating as an independent company immediately. Gen-Probe also will contribute to Roka its CUDA system, other industrial assets, and the right to use certain of its technologies and related know-how in industrial markets. In addition to biopharmaceutical production and water and food safety testing, these markets include veterinary, environmental and bioterrorism testing. Roka also will have rights to develop certain infection control tests for use on the CUDA system.

Gen-Probe will receive royalties on any potential Roka product sales, and retain rights to use the CUDA system for clinical applications. In addition, Gen-Probe will provide contract manufacturing and certain other services to Roka on a transitional basis.

The spin-off is expected to have no material effect on Gen-Probe's 2009 earnings, as reductions in operating expenses will be offset by lower collaborative research and product revenues.

Gen-Probe's industrial testing collaborators, Millipore (Billerica, Massachusetts) and GE Water — a division of GE Energy, a business unit of General Electric (Fairfield, Connecticut), have agreed to the transfer of their respective collaborations with Gen-Probe to Roka. Gen-Probe's collaboration with Millipore is focused on developing microbial detection assays to ensure the purity of biopharmaceutical production processes, while the Company is working with GE to develop rapid molecular tests to detect microbial contamination in industrial water.

Roka's CEO is Paul Thomas, who recently was chairman, president and CEO of LifeCell (Branchburg, New Jersey), a regenerative medicine company, before it was sold to Kinetic Concepts (San Antonio) for $1.8 billion in 2008 (Medical Device Daily, May 28, 2008).

Gen-Probe develops nucleic acid tests that are used primarily to diagnose human diseases and screen donated human blood.