BioWorld International Correspondent
In a cash transaction that it said would be earnings accretive from next year, Qiagen NV is acquiring Artus GmbH for a total outlay of $39.2 million. Some $11.6 million of that will be held in escrow and released upon the achievement of performance milestones.
The deal, said Qiagen CEO Peer Schatz, represents an important strategic move for the company in the area of molecular diagnostics, a field which already is responsible for some 20 percent, or $70 million, of its total business.
"Artus is something like a small Intel inside' in the molecular diagnostics industry," he said. Its particular expertise lies in the rapid development of PCR-based assays for a broad range of pathogenic microorganisms, as well as veterinary and genomics applications. "They were first to introduce a SARS test in 2003," he said.
Hamburg, Germany-based Artus has developed a portfolio of some 60 assays, more than 30 of which have received the European CE mark. It sells those via a network of 15 OEM diagnostics partners, including Abbott Laboratories, of Abbott Park, Ill.
Qiagen, of Venlo, the Netherlands, is forecasting $5 million in net sales from the business for the second half of 2005, rising to $15 million in 2006. It expects to record $1.5 million to $2 million in net profit next year, which, Chief Financial Officer Roland Sackers said, would translate into 1 cent to 2 cents in earnings per share. It will record charges of $2 million to $3 million in connection with the transaction this year, but that will have no effect on Qiagen's earnings guidance, Sackers said.
There is, Schatz said, considerable upside potential attached to Artus' array of partnerships.
"We're just trying to model a conservative view of what we can do in 2006," he said. Its partners have applauded the combination, he said, as it will offer them a complete, seamless solution for the pre-analytical and PCR steps in their diagnostic products.
Qiagen also has initiated discussions with the FDA in order to move parts of the portfolio and the Artus pipeline into clinical trials.
"We're looking to respiratory infectious agents as an area with optimum growth potential," said Noel Doheny, vice president for molecular diagnostics solutions at Qiagen.
Analyst Mike Booth at Canaccord Capital's London office reacted positively to the transaction and reiterated a "buy" recommendation on Qiagen, with a target price of €11.
"It appears to complement Qiagen's core expertise in sample preparation and handling, and it augments the company's ability to penetrate further into higher-margin businesses such as molecular diagnostics," he wrote in a research note.