A Medical Device Daily

Qiagen (Venlo, the Netherlands), a provider of molecular diagnostics products and a supplier of solutions for preanalytical sample preparation, reported acquiring all outstanding shares of Genaco Biomedical Products (Huntsville, Alabama).

Genaco is an early-stage company applying a proprietary PCR-based multiplexing technology, Tem-PCR, to develop Templex molecular diagnostic tests.

Qiagen acquired the shares of Genaco for $22 million in cash, plus 125,000 shares of restricted Qiagen stock which are issued to the founder and chief scientist of Genaco. In addition Qiagen will pay up to $18 million in milestones to be triggered by the receipt of anticipated grants and comparable funding in the same amount.

Qiagen said it expects to incur one-time charges of about $0.02 in EPS in the 4Q06, primarily related to in-process R&D and the write-off of certain assets. In addition, Qiagen said it expects the transaction to contribute about $200,000 in sales in the last quarter of 2006 and about $3 million in sales for full year 2007.

On an adjusted basis, Qiagen said it expects the acquisition to reduce EPS in 4Q06 by about $0.01 and to be dilutive to EPS by up to $0.03 in 2007, largely due to the costs associated with conducting clinical trials and filing for regulatory approvals for the infectious disease panels.

Multiplexing is a diagnostic test approach in which multiple targets are screened for in one single test, typically in situations in which one or more of several pathogens or disease markers could be present in one sample.

With the Templex panel, a patient sample can be tested against a panel of 10 or more pathogens to rapidly determine the identity of the cause of infection. In a second step, a highly sensitive and quantitative qPCR test can then be used to confirm the identity and quantify the amount of pathogens present in the sample.

Genaco has developed multiplex testing products used by medical researchers to investigate respiratory, hospital-acquired, and bacterial infections as well as additional panels for other pathogens, available as for research only. The ResPlex III multiplex panel that is designed to differentiate between different subtypes of Influenza from a single sample.

Genaco said it is in the process of completing clinical studies in order to submit a 510k application to the FDA for its H5N1 avian flu assay, which is a subset of its ResPlex III panel product.

"Genaco has developed a truly innovative approach to sensitive and high-level multiplex testing," said Peer Schatz, Qiagen CEO. "We believe that multiplexed molecular diagnostic testing is increasingly attractive due to current trends in molecular diagnostics and research, where identifying pathogens and disease markers against a broad panel of potential markers in a quick and in a cost efficient manner is developing into a significant need. The Genaco solutions leverage and employ Qiagen preanalytical and assay technologies and offer novel and highly attractive molecular diagnostics solutions to our customers in clinical research, applied testing and molecular diagnostics."

Dennis Grimmaud, CEO of Genaco, said, "We are very pleased and excited to join forces with Qiagen, the world's leading provider of preanalytical solutions and the broadest portfolio of highly synergistic qPCR-based molecular diagnostic assays. Given leadership in molecular diagnostics and strong technology, sales and operational resources, we believe the combined companies can expand and accelerate getting our technologies into the market and into the hands of more customers."

In other dealmaking activity:

Applied Imaging (San Jose, California) said that in response to "an unsolicited [higher] bid from a third party" to acquire all of its securities, its agreement to be acquired by Genetix Group (New Milton, Hampshire, UK) was amended on Oct. 27, increasing the deal value. The third party was not named.

The amendment reflects an increase in the consideration payable by Genetix to Applied Imaging's stockholders from $3.50 a share to $3.70 a share, putting the value of the purchase at about $19.6 million.

Applied Imaging originally disclosed the agreement to be acquired by Genetixin Septemberfor about $18 million (Medical Device Daily, Sept. 6, 2006).

Mark Reid, chief executive of Genetix, said that the group continues to feel very positive concerning the potential growth seen in combining the two business and that he was still confident that the additional investment will result in enhanced shareholder value.

A special meeting to approve the proposed acquisition is set to take place on Nov. 21, 10 a.m., at Applied Imaging's headquarters.

Applied Imaging is supplier of automated imaging and image analysis systems for the detection and characterization of chromosomes and molecular markers in genetics and cancer applications. The company develops imaging and image analysis systems for fluorescence and brightfield microscopy, including its Ariol and CytoVision product families.

Genetix, with additional offices in the U.S. and Germany, develops systems for cell biology, proteomic and genomic research.