By Mary Welch
Select Therapeutics Inc. will acquire Sierra Diagnostics Inc. for 220,000 shares of Select stock in a deal valued at $1.3 million. The takeover should close during the third quarter.
Sierra develops and manufactures in vitro diagnostic products and reagents.
"We believe Sierra Diagnostics has technology that applies to sample preservation and that's an interesting opportunity. It also relates to other things that we have under development," said Robert Bender, Select's CEO.
Sonora, Calif.-based Sierra has technology for the preservation of samples, such as blood and urine, for use in DNA and RNA testing. Preservation of specimens affects the quality of analytical evaluation. Discussions with potential partners for the technology's commercialization are under way.
Near-Term Opportunities At Hand
Select, of Cambridge, Mass., was founded in 1996 and has targeted cancer in its evaluation of the therapeutic potential of verotoxin, a naturally occurring protein produced by strains of Escherichia coli. The company's business is based on acquiring drugs and diagnostics in the early stages of development.
"We evaluated the different options — licensing, partnership — and found that the acquisition was the preferable alternative," Bender said, referring to Sierra.
The diagnostics company has several near-term product opportunities that Select intends to exploit, Bender added. An FDA-approved gonorrhea test, Gonostat, is one such product.
"It is on the market now but it is just entering the stage of existence where we will see how the sales are going. We didn't buy Sierra because of Gonostat, but we're happy to have Gonostat as an opportunity," Bender said.
Another attraction was Sierra's FDA-licensed manufacturing facility. Select intends to use it to develop a new product for early diagnosis of HIV infection, based on technology Select licensed last November from the University of Toronto Innovations Foundation.
Bender said there would be no employee layoffs at Sierra. Tony Baker, president and chief scientist of Sierra, is now a vice president at Select in charge of development of diagnostic products.
"Not only will there be no employee cuts, I'd say it is just the contrary," Bender said. "We have taken on the Sierra employees fully. We intend to run the company as a distinct operating entity," he said.
Select's stock (NASDAQ:SLPU) closed Thursday at $5.50, down $0.50. *