Diagnostics & Imaging Week
And D&IW Staff Reports
Cytyc (Marlborough, Massachusetts), a provider of surgical and diagnostic products targeting women’s health and cancer diagnostics, reported that it has entered into an agreement to acquire Adeza Biomedical (Sunnyvale, California) a publicly traded company, which makes products for women’s health for $452 million, to be paid out of Cytyc’s existing cash, the cash on Adeza’s balance sheet and Cytyc’s existing credit facility.
The deal values Adeza at 185 times its estimated 2006 earnings compared with a sector average of 39 times, Cytyc said.
Adeza’s primary product, FullTerm, a fetal fibronectin test, is used by OB/GYN’s to identify women at risk for preterm birth. The tests are processed by hospital and reference laboratories.
The market opportunity for FullTerm is estimated at more than $500 million worldwide, and Adeza said that its current revenue for this product is roughly $50 million annually.
Cytyc said the acquisition will leverage its worldwide sales force, including a U.S. OB/GYN sales force of about 200 people, a U.S. laboratory sales force of about 50, and an international commercial operations team of about 150.
“The FullTerm fetal fibronectin test offers an excellent complement to our diagnostic products portfolio and will allow us to leverage our formidable sales force which is already calling on obstetricians and gynecologists, as well as commercial labs, in the U.S. and abroad,” said Patrick Sullivan, Cytyc’s chairman, president/CEO during a conference call discussing the acquisition. “This technology offers clear clinical and cost benefits for maternal-fetal care and we believe our infrastructure, experience, and expertise in this sector will accelerate adoption of this product worldwide.”
Based on a purchase price of $24 a share, Cytyc said it expects the acquisition to be break-even to earnings in 2007 and 5 cents accretive to 2008 diluted EPS.
FullTerm is a single-use disposable cassette run on the TLiIQ system, Adeza’s instrument which assesses the level of the fetal fibronectin protein in vaginal secretions.
Fetal fibronectin is highly correlated with preterm birth, and is important for enabling physicians to triage pregnant women more effectively by determining the necessity for hospitalization, since the product has a negative predictive value of more than 99%. The presence of Fetal fibronectin also may serve as a signal for therapeutic intervention, which can increase the health of the baby.
The acquisition will be conducted via a tender for all of the outstanding shares of Adeza. The board of Adeza has unanimously recommended that the stockholders of Adeza accept the offer.
The deal is expected to be completed before the end of March.
In other dealmaking news:
• Sequenom (San Diego) has again expanded its non-invasive prenatal diagnostics portfolio by acquiring exclusive rights in the U.S., Europe, Australia, Canada and Japan as well as non-exclusive rights in China, to non-invasive prenatal diagnostic intellectual property from The Chinese University of Hong Kong.
The licensed intellectual property adds to Sequenom’s portfolio of patents related to non-invasive prenatal genetic analysis methods using fetal nucleic acids obtained from maternal serum or plasma, the company said. The newly acquired rights include methods of fetal nucleic acid analysis using methylation marker and gene expression analysis on a maternal blood, serum, or plasma sample. Sequenom also obtained exclusive rights to a portfolio of methylation and nucleic acid markers. Financial terms were not disclosed.
Harry Stylli, PhD, Sequenom’s president/CEO, told Diagnostics & Imaging Week that the acquired rights are an important addition to the company’s fetal nucleic acid technology.
“We continue to build our non-invasive prenatal diagnostic intellectual property portfolio on a platform-independent basis, and these licensed rights provide us with expanded opportunities,” Stylli said. He said they are important “because they provide us with an opportunity to expand our technology offering beyond genetic analysis of fetal DNA to include epigenetic and expression analysis. In view of our pre-existing intellectual property, these additional methods of analysis may provide alternative or complementary paths to a sensitive and specific non-invasive prenatal aneuploidy solution, and more generally, may potentially reduce or avoid the technical hurdles for developing assays for a broad range of non-invasive prenatal tests.”
Dennis Lo and others at The Chinese University of Hong Kong invented the technology. Lo is a “world-renowned researcher” in the field of non-invasive prenatal genetic analysis, the company said.
Stylli said the technology “enables patients to be tested in their first trimester non-invasively with minimal or no risk to the mother and fetus.” As a result, it could be useful in the early detection of Down syndrome, he said.
Stylli said that many women who need to undergo screening for genetic abnormalties avoid it because they perceive a level of risk associated with the testing. With this technology, doctors could diagnose fetal health by doing a simple blood test on the mother which “leads to a change in maternal and fetal health and I think that’s ultimately the goal here,” he said. “If you’re able to diagnose diseases that affect the fetus . . . ultimately it could change clinical practice and open up therapies for these diseases.”
Emphasizing the importance of this type of testing, Stylli noted that the American College of Obstetricians and Gynecologists (ACOG; Washington) in January mandated that all pregnant women, regardless of age, should be offered screening for Down syndrome. Previously, women were “automatically” offered genetic counseling and diagnostic testing only if they were 35 years or older.
These newly acquired intellectual property rights build upon the non-invasive prenatal diagnostic intellectual property rights that Sequenom previously licensed from Isis Innovation, the technology transfer company of the University of Oxford (Oxford, UK).
Sequenom says its MassArray system is a nucleic acid analysis platform that measures the amount of genetic target material and variations, to deliver specific data from complex biological samples and from genetic target material only available in trace amounts.
Stylli said Sequenom’s first non-invasive prenatal test, the Rhesus D will be launched commercially in June as a “home brew” test in the U.S.