The Burrill Report

Tools companies Thermo Fisher Scientific and Life Technologies are expanding their presence in the diagnostics arena through major acquisitions. They are following a trend that has been gaining ground in 2012 exemplified by Agilent’s acquisition of Dako in May for $2.2 billion.

Thermo Fisher Scientific is paying $925 million in cash to acquire One Lambda, a maker of transplant diagnostics. The purchase price includes the cost of a three-year retention program established by One Lambda for the benefit of key employees, amounts payable to certain shareholders for noncompete agreements, and a one-year earn-out provision based on the achievement of certain financial targets.

Founded in 1984 and privately-held, One Lambda’s diagnostic tests are used by transplant centers for tissue typing, primarily to determine the compatibility of donors and recipients pre-transplant, and to detect the presence of antibodies that can lead to transplant rejection. The California company, which generated revenue of $182 million in 2011 and is profitable, will become part of Thermo Fisher’s Specialty Diagnostics Segment.

Increasing global demand for transplant procedures and post-transplant patient monitoring are drivers of the deal. The acquisition strengthens Thermo Fisher’s in vitro diagnostics strategy and is complementary with its existing business.

“One Lambda gives us access to the attractive transplant diagnostics market and complements our existing immunosuppressant monitoring assays,” says Marc Casper, president and CEO of Thermo Fisher. “It also offers the opportunity to leverage our global commercial infrastructure to serve growing transplant needs in emerging markets. From a financial perspective, we expect One Lambda to be immediately accretive to our adjusted EPS and to yield a strong return on invested capital.”
The transaction is expected to be immediately accretive to Thermo Fisher’s adjusted earning upon close, and accretive by $0.09 to $0.11 per share in 2013.

Life Technologies is moving into the field of genetic diagnostics with the acquisition of personal genetic testing company Navigenics. The company says it is the first step in executing against a strategy to build out its molecular diagnostics business through internal development, partnerships and select acquisitions.

“Genetic analysis is becoming increasingly accessible, cost-effective and a critical part of patient clinical management,” says David Agus, co-founder of Navigenics. “As a result, physicians have more complete and accurate information about the patient than ever before, which is translating into more effective, individualized care programs for patients.”

“The advent of personalized medicine will require a combination of technologies and informatics focused on delivering relevant information to the treating physician," says Ronnie Andrews, president of Medical Sciences at Life Technologies. “Navigenics has pioneered the synthesis and communication of complex genomic information, and we will now pivot the company's effort to date and focus on becoming a comprehensive provider of technology and informatics to pathologists and oncologists worldwide.”

Besides its genetics platform and support services, the acquisition of Navigenics’ includes an established CLIA-certified laboratory, licensed throughout the United States, which will be employed for design and validation of new diagnostics assays. Life Technologies plans to develop and offer lab-developed tests as well as commercialized assays that are approved by regulatory authorities.

Life Technologies, which also develops the Ion Torrent of DNA sequencers, is currently developing diagnostic tests across multiple platforms. In October 2011, it announced a partnership to develop a companion diagnostic for GlaxoSmithKline's MAGE-A3 cancer immunotherapy. Life also has an assay development partnership with Gen-Probe, and recently announced collaborations with Boston Children's Hospital and the Hospital for Sick Children in Toronto to develop the company's next generation sequencers for clinical research in pediatric diseases.



July 20, 2012
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