A Medical Device Daily
Laboratory Corporation of America (LabCorp; Burlington, North Carolina) is acquiring and merging with Monogram Biosciences (South San Francisco, California) for $155 million.
LabCorp will acquire all of the outstanding shares of Monogram in a cash tender offer for $4.55 per share for an implied total equity value of approximately $106.7 million, or a total enterprise value of about $155 million as of March 31, including net indebtedness.
David King, chairman/CEO of LabCorp, said "Monogram Biosciences has an excellent clinical reputation, a market leading infectious disease test, a market leading companion diagnostic, an exciting technology platform for oncology and offers LabCorp a substantial growth opportunity. By utilizing LabCorp's national infrastructure to build on Monogram's already strong sales, we will advance our leadership in infectious disease and cancer testing, companion diagnostics and personalized medicine. We look forward to providing improved offerings to both our and Monogram's current customers."
Monogram provides companion diagnostics – molecular diagnostic products that help guide and target appropriate treatments. Monogram's Trofile assay identifies patients who are eligible for the CCR5 class of HIV drugs and is the widely adopted companion diagnostic for the HIV drug Selzentry. Monogram's PhenoSense and PhenoSense GT HIV tests measure individual patient viral drug resistance, thereby enabling physicians to design optimal, individualized treatment plans for each patient. Monogram's HIV tests are used routinely by physicians for managing patient therapy and are an integral component of anti-HIV drug development and clinical evaluations for the pharmaceutical industry.
"The transaction underscores the fundamental value of the Monogram business, the talent and expertise of our global team and the quality of our offerings," said William Young, CEO/chairman of Monogram. "LabCorp has an exciting vision of the role of molecular diagnostics in personalized medicine, and we are excited to see Monogram's technology and employees become a part of that vision. We expect the transaction will significantly accelerate the development of products that will improve treatment outcomes for patients with infectious diseases and cancer."
The acquisition is expected to be about 12 cents dilutive to LabCorp's 2009 earnings per share (EPS), including about 4 cents of transaction related costs, and slightly accretive to 2010 EPS.
The closing of the acquisition is expected in 3Q09.
The board of Monogram unanimously approved the offer and the merger.
The total $155 million estimated enterprise value of the transaction is based on Monogram's approximately 23.5 million fully diluted shares outstanding less net cash and cash equivalents on hand as of March 31, plus outstanding indebtedness as of that date.
In other dealmaking news:
• Baxter International (Deerfield, Illinois) reported an agreement with Edwards Lifesciences (Irvine, California) under which Baxter will acquire certain assets related to Edwards' hemofiltration product line, also known as Continuous Renal Replacement Therapy (CRRT). The transaction is expected to close in 3Q09, pending regulatory approvals.
Baxter will provide Edwards an initial cash payment of about $56 million upon the close of the transaction. Additionally, Baxter will receive transition services from Edwards and is expected to pay Edwards up to an additional $9 million based on revenue objectives expected to be achieved over the next two years. The impact of this transaction is immaterial to Baxter's financial results for 2009.
Hemofiltration, or CRRT, mimics the function of the kidneys 24 hours a day for patients with life-threatening kidney injuries or edema (fluid overload). CRRT provides a method of continuous yet adjustable fluid removal that can gradually remove excess fluid and waste products that build up with the acute impairment of kidney function, and is usually administered in an intensive care setting in the hospital. Baxter currently supplies solutions used in CRRT treatment globally, and is the exclusive distributor of Edwards' product in China, Latin America and the United States. About 60 employees will be joining Baxter from Edwards as part of this transaction.
• NDS Surgical Imaging (San Jose, California) has acquired a wireless video technology that extends its current imaging capabilities in the operating room (OR) and beyond. By integrating this new technology with its medical visualization and informatics platforms, the company plans to develop an array of wireless solutions for surgical, endoscopy and interventional suites.
The new medical-grade ZeroWire product line will deliver HD image quality with interference immunity and security, using the patented technology acquired from TZero Technologies (Santa Clara, California).