QIAGEN Acquires Biosystems Business from Biotage
Transaction adds fundamental assay technology for high-resolution sequence detection and quantification of genetic variations
Qiagen N.V. announced that it has acquired all assets related to the Biosystems business from Biotage AB, a publicly listed developer, manufacturer and distributor of products for genetic analysis and medicinal chemistry headquartered in Uppsala, Sweden. The transaction is valued at approximately US$53 million in cash (subject to certain customary purchase price adjustments) and performance milestone payments of up to approximately US$7 million over the next four years.
The Biosystems unit of Biotage is best known for having pioneered Pyrosequencing, which has become a fundamental technology in next-generation sequencing. Pyrosequencing is a patented assay technology that in special formats can achieve significantly longer runs and can be employed in a massively parallel design to address the needs for applications such as high volume data generation in whole genome sequencing applications. In its widely used standard format this technology provides the opportunity to read DNA-sequences up to 100 base pairs in real time and at a price per read in the single dollar range.
To automate the use of the Pyrosequencing technology, Biosystems has developed PyroMark instrumentation, the world's first real-time sequence detection system whose primary product family includes the PyroMark MD, PyroMark ID and PyroMark Q24. The system is considered to offer significant advantages over other sequence analysis technologies in short length sequence detection and quantification and to represent a synergistic addition to other detection technologies QIAGEN offers. For example, while detection methods such as PCR and qPCR allow to make “yes/ no” and “indirect quantitative” statements about the presence of a specific target with high sensitivity and specificity, Pyrosequencing provides a high resolution sequence detection and quantification down to reads of the level of a single base-pair and thereby allows detection not only of known but also of unknown DNA sequences or mutations in targeted regions.
The technology offers significant value for applications including:
* Epigenetics in research and molecular diagnostics: Pyrosequencing is the only proven technology that offers absolute and direct quantification of methylation patterns. Assessments and quantifications of methylation, a mechanism that controls gene-expression, help to better understand and predict diseases which are associated with abnormal methylation patterns, such as cancer.
* Multiplex analyses in genetic and pathogen detection: Due to its ability to be performed in parallel, Pyrosequencing assays have great utility in detecting a broad range of different targets in the same run. Unlike PCR based multiplex assays, this technology detects both known and unknown genetic variants in DNA target regions. Pyrosequencing assays are therefore used to perform analyses of oncogenes such as K-ras, which require the analysis of several sections of DNA and which are associated with colon and other cancers. The technology is also widely used for multiplexed genotyping of viruses, bacteria, fungi and others.
In 2003 Biotage licensed rights to certain massively parallel formats of the Pyrosequencing technology to 454 Life Sciences for a product development, which later became Roche’s next generation sequencing platform. While this and other massively parallel formats are very useful for generating large volumes of data in whole genome sequencing applications, current cost and workflows make next generation sequencing technologies prohibitive for many key applications in research and molecular diagnostics. Many assays, such as K-ras cancer tests require the generation of smaller data volumes and target limited stretches of DNA in known regions. Many other assays have to be performed at prices ranging as low as under $10 per run. In these applications, the PyroMark solutions to sequence-based detection and quantification have proven to be of great value and are increasingly recognized for their capabilities to perform highly reliable, quantifiable reads at prices as low as $1 per 100 base pairs. With this acquisition, QIAGEN has therefore not only acquired fundamental technologies used in next generation sequencing formats, but added formats of this same technology which have significant utility for current and near term applications in areas including research and molecular diagnostics.
The acquisition of sequence-based detection and quantification technology complements QIAGEN’s existing portfolio of detection platforms. Detection marks the final of the three steps which are performed in molecular testing. QIAGEN holds leading market positions in the first two steps (sample preparation and assay setup) and recently added strong positions in detection through the acquisitions of eGene (for DNA fragment analysis by capillary electrophoresis) and Corbett Life Science (for its real-time PCR platform). The addition of detection modules allows QIAGEN to offer its proprietary molecular testing solutions in solutions spanning from sample to result. The Biosystems solutions are compatible with QIAGEN’s consumables and instruments. QIAGEN intends to optimize existing assays for use on PyroMark and also develop novel molecular diagnostics as well as research use tests for use with the platform and its successor systems.
Under the terms of the agreement, QIAGEN has acquired all assets related to the Biosystems business for the consideration described above. This consideration includes also the purchase of the remaining 17.5% of the outstanding stock of Corbett Life Science Ltd. QIAGEN will assume all employees related to the Biosystems business. Biotage will also in accordance with a separate “transfer service agreement” provide certain administrative services to QIAGEN for the next twelve months.
QIAGEN expects to incur one-time charges of approximately US$0.02 in EPS in the fourth quarter of 2008 in connection with this acquisition. These charges primarily relate to in-process research and development and the write-off of certain assets. In addition, based on preliminary analyses and following the streamlining of Biosystem’s product portfolio, QIAGEN expects this transaction to contribute approximately US$2.5 million in sales in the remaining three months of 2008 and approximately US$15 million in sales for the full year of 2009. On an adjusted basis excluding one-time charges, integration and restructuring costs, and amortization of acquisition related intangible assets, the acquisition is expected to be dilutive by approximately US$0.01 to EPS in the fourth quarter of 2008 and to be dilutive by approximately US$0.02 to adjusted EPS in 2009. Beyond 2009, it is expected that the acquisition will contribute significant accretion to net income.
Financial highlights of the acquisition:
QIAGEN acquires the assets related to the Biosystems business from Biotage for US$53 million in cash (subject to certain customary purchase price adjustments) and up to approximately US$7 million in milestone payments over the next four years.
* Expected to add revenues of approximately US$2.5 million in the remaining three months of 2008 and approximately US$15 million in sales for the full year of 2009.
* Expected one-time charges of approximately US$0.02 in EPS in the fourth quarter of 2008.
* Expected to be dilutive by approximately US$0.01 to adjusted EPS in the fourth quarter of 2008 and to be dilutive by approximately US$0.02 to adjusted EPS in 2009. Beyond 2009, it is expected that the acquisition will contribute significant accretion to net income.
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