Diagnostics & Imaging Weeks

In a bid to meld diagnostics with pharmacogenomics, Clinical Data (Newton, Massachusetts) is taking over Genaissance Pharmaceuticals (New Haven, Connecticut), in an all-stock deal valued at about $56 million.

"Clinical Data understands the marketplace and the approvals process, and that's a key thing for us at this point," Kevin Rakin, president and CEO of Genaissance, told Diagnostics & Imaging Week's sister publication, BioWorld Today, limiting his remarks a bit due to legal concerns pending the filing of a proxy statement related to the deal. He did say that by "putting the companies together, we have greater heft and substance."

Clinical Data offers blood chemistry instruments and diagnostic assays to clinics and small hospitals. The combined firm would sell pharmacogenomics services to pharmaceutical, biotech and agricultural markets.

Under the merger terms, unanimously approved by the boards of both companies, Genaissance stockholders would get, at a fixed exchange ratio, 0.065 shares of Clinical Data common stock for each share of Genaissance's common stock. Based on the two firms' closing prices Monday, the amount represents a price of $1.33 a share of Genaissance common stock.

Genaissance's preferred shareholders would exchange their shares for Clinical Data preferred shares, and when the deal closes — expected in 4Q05 — Genaissance's common and preferred shareholders would own about 40% of the combined company.

With two molecular diagnostic tests on the market, Genaissance also has work ongoing in the areas of central nervous system disorders and cardiovascular disease. Last fall, the firm acquired an exclusive worldwide license from Merck (Darmstadt, Germany) to develop and commercialize the Phase II small molecule vilazodone, a selective serotonin reuptake inhibitor and a 5HT1A partial agonist for depression.

That deal provided Genaissance with a lead compound, and the company said it would know within two years whether it could move vilazodone into Phase III trials. The compound operates by way of a different mechanism of action than other drugs for depression and anxiety. A pharmacogenomic-based compound will do better for patients than available treatments, which provide initial relief of depression only in about 50% of those dosed, the firm said.

Genaissance's strategy involves in-licensing drug candidates, a la the Merck compound, and then finding genetic markers to identify a responsive patient population.

"We're developing next-generation diagnostics and 'theranostics,'" Rakin said. "That's the main strategic goal here, and all of our research and development efforts fall under that umbrella."

The firm's broad-ranging investigations include the finding late last year of genetic markers that might predict whether schizophrenics under treatment are at risk for developing clozapine-induced agranulocytosis. Data from the study might apply to other drugs that affect white blood cell counts and require frequent blood testing, Genaissance said.

Genaissance board members Rakin and Joseph Klein would join Clinical Data's board, along with Burton Sobel, professor of biochemistry at the University of Vermont (Burlington), bringing board membership to seven.

Fischer Imaging (Denver) reported that it has agreed to sell to Hologic (Bedford, Massachusetts) the intellectual property associated with its mammography business and products, including the rights to its SenoScan digital mammography and MammoTest stereotactic breast biopsy systems, for $32 million in cash.

Additionally, Hologic agreed to extend a $5 million secured loan to Fischer as of the execution of the agreement, which will be credited toward the $32 million purchase price if the transaction is completed, but which will otherwise be due and payable by Fischer to Hologic.

The acquisition is expected to close in 90 to 120 days and is subject to customary closing conditions and the approval of Fischer's stockholders.

"This is a difficult decision, but one that we believe is in the best interests of all Fischer stakeholders," said Harris Ravine, Fischer president and CEO. "We intend to use the proceeds from this transaction to pay outstanding obligations and to continue to rebuild and explore strategic alternatives for our radiology, electrophysiology and surgical business," he added.

Hologic expressed satisfaction with the pending deal. "Expanding our market share in women's health is a key element in the growth of our company," said Jack Cumming, chairman and CEO. "The acquisition of these technologies is consistent with the company's strategy of looking to the future and building upon our established technology roadmap. We believe this acquisition provides us additional technical capabilities and customer relationships to further solidify our position of strength in the growing mammography market."

The agreement allows Fischer to continue to service and support the installed base of SenoScan and Mammo-Test systems with its existing service organization and to maintain its contractual obligations for providing Mammo-Test and SenoScan systems to Ethicon Endo-Surgery (Cincinnati) and Philips Medical Systems (Andover, Massachusetts), respectively.

"As the business and regulatory processes proceed we would like to assure Fischer customers that we will do everything in our power to maintain a high level of service and support," Ravine said. "Our sales and support organization will be contacting customers in the days ahead and will be on call 24/7 to respond to any specific questions."

Hologic is a developer of medical imaging systems dedicated to serving the healthcare needs of women as well as a developer of digital imaging technology for general radiography and mammography applications.