A Medical Device Daily

Applied Biosystems Group (Foster City, California) has agreed to acquire Agencourt Personal Genomics (APG; Beverly, Massachusetts), a private developer of next-generation genetic analysis technologies, for about $120 million in cash.

The transaction, subject to customary closing conditions, is expected to close in the third quarter.

APG has developed parallel fluorescence sequencing by stepwise ligation technology, a high-throughput approach to DNA/RNA analysis. Applied Bio said the technology is expected to be complementary to its current platforms and applicable to many genetic analysis applications, including de novo genome sequencing, medical sequencing, high-throughput gene expression and high-throughput genotyping.

Applied Bio said it anticipates placing initial systems with early-access customers during calendar 2007.

It said the acquisition will be dilutive in FY07 and FY08, due to R&D spending, commercialization activities and acquisition related amortization. In FY09, the acquisition is anticipated to be accretive, excluding the impact of amortization associated with the acquisition.

Catherine Burzik, president of Applied Bio, said the company evaluated more than 40 companies and academic research groups and “concluded that APG's technology is both tested and commercializable. We believe it should be able to address the scientific community's goal of dramatically reducing the cost of sequencing without sacrificing quality . . . by addressing multiple applications cost effectively and by combining sample preparation and analysis within a single platform.”

Kevin McKernan, CEO and co-chief scientific officer of APG, said, “The Applied Biosystems product and instrument development team is exceptional and should accelerate our time to market.”

APG technology combines single-tube, micro-bead sample preparation with high-throughput, multi-color fluorescence and “sequencing chemistry [using] ligation probes, an approach that provides high quality data compared to competitive polymerase-based approaches.” APG has applied for several patents and has multiple technology licenses.

The APG R&D team will continue in Beverly and will join the Applied Bio team reporting into the Molecular and Cell Biology Division of Applied Bio in Foster City.

APG was incorporated in January 2005 as a separate entity owned by Agencourt Bioscience (also Beverly).

Since the acquisition of Agencourt Bioscience by Beckman Coulter (Fullerton, California),completed in May 2005 (Medical Device Daily, April 28, 2005), Beckman Coulter has owned 49% of APG, with 51% owned by other shareholders, including APG management.

Agencourt Bio provides genomic services and nucleic acid purification products to academic, government and bio-pharmaceutical organizations.

In other dealmaking activity:

• Morgenthaler Partners (Cleveland) reported acquring Flow Solutions (Livermore, California), a provider of filtration and fluid-control systems used by biopharmaceutical and semiconductor companies, as well as customers in the food and beverage and general industrial markets. Terms of the deal were not disclosed.

Morgenthaler purchased Flow Solutions from a group of private investors represented by D.A. Davidson, with financing led by KeyBanc

Flow Solutions had 2005 revenues of about $90 million and employs 125 people covering the majority of the Western U.S. It said that the acquisition, to be finalized May 9, will enable expansion of its product and services to a growing customer base.

The Flow management team will remain intact, with David Patterson, CEO, continuing to lead the company. Morgenthaler general partners, Al Stanley and John Lutsi, will join the Flow board of directors.

“Flow has distinguished itself with outstanding customer service and customized logistics solutions,” said Stanley. “That's a recurring theme we heard from their customers. Complex, high-value filtration and associated technologies are mission- critical to semiconductor, biopharma and other purification processes.” Stanley added that Flow has set the standard for solutions providers in the space. Flow carries and sells signature names in the business – such as Pall's market-filtration and separations technology.

Patterson said that the new capital structure “will in no way change our laser focus on customer service. If anything, it will bolster it.”

Flow Solutions sells products and provides sales and logistics services for Pall , a manufacturer of solutions for critical filtration, separation and purification in the Western U.S.

Morgenthaler, a national buyout and venture-capital firm with offices in Cleveland; Boston; Boulder, Colorado; Menlo Park, California; and Princeton, New Jersey, reports about $2.5 billion under management.

• Parata Systems (Durham, North Carolina) reported that it has agreed to acquire the Automated Prescription Systems (APS) business unit of McKesson (San Francisco) and that the companies are entering into a long-term alliance in which McKesson will become the sole third-party distributor for all Parata products in North America and become a significant minority investor in Parata.

The McKesson APS product line will come under the Parata banner, creating a portfolio of automation solutions, from low-volume, semi-automated systems, to mid-volume workflow and robotics solutions, and high-volume processing. The goal is to enhance the retail pharmacy market's access to the advanced technologies for improving the safety and accuracy of the prescription process. McKesson High Volume Solutions and McKesson Pharmacy Systems are excluded from this transaction.

Parata, founded in 2001, designs and markets the automated Robotic Dispensing System Parata RDS (Robotic Dispensing System), its flagship products, which counts 30 tablets/second to process up to 154 prescriptions an hour. In about 20 seconds, Parata RDS selects and labels a vial, fills, caps and sorts by patient last name. Its drug-to-vial accuracy is 100%. It has a footprint of 12 square feet.

The transaction is expected to close in McKesson's first fiscal quarter. It said that associated charges should reduce its diluted EPS by about 4 cents in the quarter in which it closes.

McKesson's High Volume Solutions division, a provider of automated prescription fulfillment systems for the central fill, mail service and specialty pharmacy industries, will obtain rights to all of Parata's products.

McKesson reports fewer than 10% of the nation's retail pharmacies using automation, but adoption of automation technologies on the rise in the face of 10% to 15% annual prescription growth and a pharmacist shortage.

Jess Eberdt, CEO of Parata, called the acquisition “the perfect next-stage development for us.”

• Bio-Matrix Scientific Group (San Diego), a biotech focused on stem cell cryogenics and disposable stem cell/tissue transfer instruments, said it will sell its Bio-Matrix Scientific Group subsidiary, to Tasco Holdings International, a Delaware corporation.

Brian Pockett, Bio-Matrix' managing director and COO, said that the deal “will result in Bio-Matrix acquiring approximately 80% of Tasco Holdings International Inc., which may allow us to develop relationships with financial institutions that can better support our future growth.”

A company spokesperson for Bio-Matrix said it is receiving a controlling interest or a total of 10 million shares in Tasco in exchange for the transfer of the company's wholly owned operating subsidiary.

Bio-Matrix is a development stage company in the business of medical devices and monitoring systems R&D and commercialization. It listed other companies in the same industry as Cord Blood America (Los Angeles), StemCells (Palo Alto, California)and Regeneration Technologies (Alachua, Florida).