About four months after dipping into the coffers to buy product lines and technology rights from PanVera LLC, Invitrogen Corp. is making another acquisition - this time shelling out $325 million in cash for Molecular Probes Inc.
Invitrogen's stock (NASDAQ:IVGN) closed Wednesday at $45.09, up $6.57, or 17.1 percent.
The company is "in the process of expanding its universe from being focused primarily on early stage research to a company that will do this and also become the pre-eminent partner for drug development," said Greg Lucier, president and CEO of Carlsbad, Calif.-based Invitrogen.
Molecular Probes, privately held in Eugene, Ore., is regarded as the leader in fluorescence-based methods for labeling molecules used in research and drug discovery.
The transaction is expected to be completed in the third quarter and be accretive to Invitrogen's pro forma earnings per share in 2003, resulting in revenues of $66 million for the year, while substantially adding to pro forma 2004 earnings as well, Invitrogen said.
Molecular Probes' intellectual property includes more than 150 patents and patent applications and it has facilities in the Netherlands as well as Eugene, where Invitrogen will locate a "center of excellence for labeling," Lucier said. Revenues totaled $56 million last year, and the firm has a history of double-digit revenue growth and operating margins above 40 percent.
"We believe we can attain at least 18 percent revenue growth going forward and maintain that 40 percent operating margin as well," Lucier told investors during a conference call.
Invitrogen already is out in front of the field of molecular biology kits, holding 20 percent of the $1.7 billion market. The company's goods enable basic research, target identification and validation, as well as providing media for production of biopharmaceuticals. Its proteomics base will broaden thanks to the Molecular Probes buyout, and through recent moves Invitrogen is expanding the traditional markets and extending them into target screening.
In February, Invitrogen agreed to pay $95 million in cash for PanVera's biochemical and cellular assay capabilities and its commercial portfolio of proprietary reagents, probes and proteins, along with the firm's research facility in Madison, Wis. (See BioWorld Today, Feb. 5, 2003.)
"We're going to nominate somebody to start running our molecular biology business that will be over all of PanVera, Molecular Probes and the other pieces of molecular biology that were in Invitrogen," Lucier said. "That should give us the first step toward bringing these technologies together that the company has lacked in the past."
Invitrogen will "push Molecular Probes' products through [the] existing worldwide structure of warehouses out to our customers," Lucier said, noting that Invitrogen does 50 percent of its business overseas. Molecular Probes' sales have been done by way of catalogues, with orders placed by phone, fax and over the Internet, he added, but now a sales force will be in place to more actively market the products.
Asked whether Invitrogen might enter the instrumentation field as well as the reagents market, Lucier said the company is "going through a strategic planning process as we speak," and plans to take a "very broad perspective about how Invitrogen can continue to solve more and more issues and problems inside this space."
The company will not take its high-throughput technology into diagnostics, however.
"That pathway is there if Invitrogen wants to go in that direction, and I have to tell you that is extremely exciting as a way to add to our intellectual property portfolio," Lucier said. "We are not at this stage moving in the diagnostics direction, though."