BioWorld International Correspondent
Qiagen NV is paying $28.5 million in cash to acquire whole-genome amplification technology from Molecular Staging Inc.
The deal also includes earnout provisions that would add up to $6.75 million to the purchase price.
Qiagen, of Venlo, the Netherlands, said it would incur a one-time charge of $2 million in the third quarter, but that the transaction would have "a positive and slightly accretive impact" on earnings per share and revenue growth in 2005. It is forecasting net income of $1 million and sales of $6 million from the technology in 2005 with rapid growth thereafter.
Under the transaction, Qiagen has acquired a portfolio of more than 160 issued and pending patents from New Haven, Conn.-based Molecular Staging. Those describe a method known as "Multiple Displacement Amplification," which relies on a high-fidelity rolling circle DNA-replication step, catalyzed by the bacteriophage enzyme Phi29 DNA polymerase, to rapidly produce multiple copies of the entire complement of DNA present within a sample.
The technology is aimed at any analytical procedure constrained by limited sample sizes, such as clinical research and forensic analysis. Qiagen spokeswoman Solveigh Maehler said it also will enable more efficient construction of biobanks as smaller sample sizes subsequently can be amplified for analysis. "Whole-genome amplification fits perfectly with the rest of our product portfolio," she said. "It bridges the gap between the purification step and the bioassay."
The market failed to respond to the news, however. The company's stock (NASDAQ:QGENF) closed at $10.33 on Monday, when the transaction was disclosed, up just 2 cents.
Daniel Wendorff, analyst at Dusseldorf, Germany, based WestLB AG, said some investors considered the acquisition price to be too high. "The market probably does not see the huge potential that is in this acquisition," he said. "It's a very young market."
"Four to five times sales is not a very high multiple for this acquisition," Maehler said. The transaction, she said, is in line with Qiagen's strategy of finding "tiny, smart acquisitions bringing in top technologies for pre-analytical sample preparation." It closed two such transactions in 2002, acquiring GenoVision AS, of Oslo, Norway, and Xeragon Inc., of Huntsville, Ala., which, respectively, developed nucleic acid-purification and synthetic RNA technologies. Qiagen's business development unit is reviewing more than 100 additional acquisition candidates at present, Maehler said. The company bolstered its cash reserves last month by raising $150 million in senior convertible notes.
Wendorff has a buy rating on the stock and has set a target price of €10.50 per share. Quarterly earnings growth would deliver that increase, he said. "I think one of the key issues here is whether the spending by its industrial customer base will not just continue as it has in the past, but accelerate."