Affymetrix Signs Agreement to Acquire ParAllele BioScience

03-Jun-2005

Affymetrix Inc. announced that it has entered into a definitive agreement to acquire ParAllele BioScience Inc. Initially applied to genotyping, these highly flexible assays have the potential to be used in a broad variety of microarray applications.

When used with Affymetrix GeneChip(R) technology, ParAllele's proprietary assay effectively gives researchers a powerful "molecular microscope" for examining the entire genome. Together these technologies offer scientists the ability to perform detailed analysis from several to tens of thousands of different sites in the genome, giving them the freedom to design virtually any experiment they want.

This acquisition builds on a successful two-year collaboration between Affymetrix and ParAllele that has enabled scientists to access more genomic information, in less time, and for less money, than ever before. By acquiring ParAllele, Affymetrix expects to strengthen its assay R&D capabilities, accelerate its development and commercialization of new products, and drive sales by opening new market opportunities.

A key component of ParAllele's technology is its proprietary Molecular Inversion Probe (MIP) assay. The MIP design allows up to tens of thousands of reactions to be multiplexed in a single tube with a high degree of accuracy and specificity. When combined with an Affymetrix GeneChip universal tag array, MIP technology provides scientists with unprecedented access to any area of the genome. This proven technology has been used successfully in the International Human Haplotype Mapping (HapMap) Project.

Affymetrix is paying approximately $120 million to acquire ParAllele, subject to certain adjustments, including changes in ParAllele's working capital prior to closing. The merger consideration is intended to be paid in Affymetrix stock. The transaction is expected to close in the third quarter of 2005, subject to customary closing conditions and regulatory approvals.

As a result of the transaction, for fiscal 2005, Affymetrix expects to incur a merger-related charge for in-process research and development of approximately $15 million as well as operational charges in the range of $4 million to $7 million. These operational charges include non-cash amortization of about $2 million. The company expects this transaction to be financially neutral to its operating results in 2006 and accretive to net income in 2007.

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