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QIAGEN Acquires DxS Ltd - Creating Leadership in Personalized Healthcare
In addition, QIAGEN unveils for the first time its companion diagnostic pipeline, which the Company believes is unmatched in terms of depth and profile
With this acquisition, QIAGEN has taken a strong leadership position in the new era of personalized healthcare (PHC). The Company believes it offers all the required elements to help drive and shape this rapidly emerging trend in healthcare.
In addition, QIAGEN unveiled for the first time that the combined company is currently active in over 15 collaborations with pharmaceutical companies to market and / or develop companion diagnostic products. The programs span genetic, expression, epigenetic and other markers. QIAGEN believes that this pipeline is the deepest such portfolio in the pivotal field of molecular diagnostics for personalized healthcare.
Acquisition of DxS
The acquisition of DxS brings to QIAGEN a portfolio of molecular diagnostic assays and intellectual property, as well as a deep pipeline of active or planned companion diagnostic partnerships in oncology with many of the leading pharmaceutical companies, including seven of the largest drug makers in this field. These assets complement QIAGEN's existing strong portfolio of personalized healthcare diagnostic solutions and are very synergistic with QIAGEN's sample and assay technologies.
DxS has developed a set of molecular diagnostic assays which allow physicians in oncology to predict patients' responses to certain treatments in order to make cancer therapies more effective and safer. The currently marketed portfolio spans seven real-time PCR tests including a test for the mutation status of the oncogene K-RAS, which is indicative for successful treatment of patients suffering from metastatic colorectal cancer (mCRC) with EGFR inhibitors. In addition, three assays are in the near-term pipeline and further assays are in the medium-term pipeline. DxS' portfolio of assays, both marketed and in its pipeline, is strongly suitable for use with QIAGEN's existing suite of platform instruments, including QIAsymphony and Rotor-Gene Q.
DxS is one of the pioneers which have brought molecular companion diagnostics to market. The TheraScreen: K-RAS Mutation Kit® developed by DxS has already been CE-marked. In the United States, the test is expected to be submitted to the FDA for regulatory approval (PMA) in 2010. It is estimated that in the future the market for overall K-RAS testing could reach up to US$ 100 million. DxS' current portfolio and near-term pipeline includes ten unique and proprietary assays. The company has accumulated a significant intellectual property portfolio for its current and planned diagnostic content.
"The acquisition of DxS is strategically a highly important transaction for QIAGEN. It combines two leadership positions to create a very powerful leader in a transformational area of healthcare: personalized healthcare. This transaction is a key element of our strategy to lead in molecular diagnostic-based prevention, profiling and personalized healthcare. These three elements are expected to significantly shape and contribute to future improvements in healthcare and have the potential to provide significant benefits to patients as well as exceptional value for payers, providers, and the pharmaceutical industry", said Peer M. Schatz, CEO of QIAGEN.
"QIAGEN is the ideal partner for DxS to globally roll out our assays, to take our partnerships to the next level and to take a leadership position in companion diagnostics", said Stephen Little, founder and CEO of DxS. "Unlike any other company, we believe that QIAGEN addresses the broadest range of companion diagnostic options for pharmaceutical and large biotech companies - starting from an independent sales reach over broad technology, R&D and manufacturing capabilities up to expertise in regulatory affairs and access creation to physicians and laboratories."
"This combination has the potential to create a classical win-win situation for everyone involved", said Peer Schatz. "We believe that QIAGEN can use its enhanced strategic position to leverage the opportunities in personalized healthcare: pharma customers can benefit from a stronger, independent and focused partner to better serve their special development needs, employees can benefit from enhanced career opportunities, physicians can benefit from faster access to better tools for diagnosis and treatment, and healthcare systems can benefit from the potential for increases in effective and efficient treatments. But most importantly, patients who suffer from serious diseases, such as cancer, stand to benefit significantly from these new trends in personalized healthcare, which can lead to the avoidance of unnecessary or even harmful treatments and therefore to an increase in the quality of their lives."
DxS' senior management will join QIAGEN in leading roles in the Company's rapidly expanding personalized healthcare focus area, facilitating rapid integration and focus on the further expansion of this key segment. For that purpose, QIAGEN intends to establish DxS' headquarters in Manchester as a Center of Excellence in Pharma Partnering. Given the high level of synergies, QIAGEN expects to grow the Manchester location.
- QIAGEN believes it has taken a leadership position in molecular diagnostics for personalized healthcare, positioned to help drive and shape this rapidly emerging trend.
- QIAGEN unveils for the first time the depth of its partnered companion diagnostics pipeline and is now active in over 15 partnerships. This is believed to be one of the deepest such pipelines in the industry.
- QIAGEN expands leadership in personalized healthcare, a key pillar in the Company's strategy to focus on molecular diagnostic-based prevention, profiling, and personalized healthcare.
- QIAGEN creates a leading portfolio in companion diagnostics:
DxS adds seven PCR assays targeting biomarkers including K-RAS and EGFR29, which may be useful in identifying patients' response to certain cancer treatments (e.g. colon, lung cancer).
QIAGEN's existing portfolio already included pyrosequencing-based K-RAS, BRAF and methylation assays targeting biomarkers, as well as large numbers of gene expression and miRNA assays for discovery of future biomarkers and instrument platforms to automate these tests.
- Accretion to adjusted EPS beyond the year 2010.
- Very synergistic; minimal overlap and seamless integration expected. DxS' senior management will continue to assume leading positions in expanding QIAGEN's partnerships with pharma and biotech in companion diagnostics.
Under the terms of the agreement, QIAGEN acquired the entire outstanding share capital in DxS. QIAGEN expects to incur one-time charges of approximately US$ 0.02 in EPS in the third quarter 2009 in connection with this acquisition. These charges primarily relate to consulting and advisory fees incurred in connection with the acquisition and the write-off of certain assets. In addition, based on preliminary analyses and following the streamlining of the portfolio, QIAGEN expects this transaction to contribute approximately US$ 6 million in sales in the remainder of 2009 and approximately US$ 30 million in sales in 2010. 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 neutral to EPS in the remainder of 2009 and to be dilutive by US$ 0.02 in 2010. Beyond 2010, it is expected that the acquisition will be accretive to adjusted EPS. Jefferies acted as exclusive financial advisors in this transaction.
About QIAGEN in Molecular Diagnostics
With a run-rate over US$ 450 million in sales and rapid growth in this segment, QIAGEN believes it is a leader in molecular diagnostics, excluding viral load testing and blood screening.
QIAGEN has defined three segments in laboratory-based molecular diagnostics it is focusing on:
1. Prevention: This segment covers markers tested for in asymptomatic patients for the purpose of early disease or risk detection and in regular intervals. These assays are typically performed by laboratories in high volumes. QIAGEN's portfolio in HPV testing and, in addition, the panel of assays in development (including tests for chlamydia and gonorrhea) address the most attractive and fastest growing segments in Prevention. These assays can be performed on current systems and on QIAGEN's QIAensemble platform. This platform is expected to be launched in late 2010 in Europe and in mid 2012 in the United States and is expected to set a new standard in molecular diagnostic screening in terms of throughput and utility.
2. Profiling: This segment covers tests performed on symptomatic patients to create or confirm a diagnosis. The assays are mostly performed at lower throughputs, but are often of higher value per test. QIAGEN's portfolio of molecular diagnostic assays (>80) for pathogens is considered one of the broadest in the world and is used to detect and profile pathogens. This segment also includes a number of genetic and other assays.
3. Personalized Healthcare: QIAGEN believes that this is the most transformative area of molecular diagnostics. These assays are used to guide therapy for pre-diagnosed symptomatic patients. They are typically higher value, lower volume assays. QIAGEN today sells approximately 20 assays in personalized healthcare.
In Personalized Healthcare and Profiling throughput requirements are lower than in the segment of Prevention, but the bandwidth requirements (sample types, etc.) are much higher. The random access, continuous load QIAsymphony platform (sample to result, of which the first modules have been very successfully launched) was designed for these segments.
About QIAGEN in Personalized Healthcare
QIAGEN believes it brings a special value proposition to pharmaceutical companies for companion diagnostics development projects. The Company is considered a key partner as it is:
- The largest molecular diagnostics company based on revenues, technology and portfolio breadths, outside blood screening/viral load testing.
- A significant supplier to pharmaceutical discovery and development already today.
- Owner of a broad technology portfolio in molecular sample & assay technologies.
- Independent: not owned by a pharmaceutical company.
- A company with strong regulatory presence, sales channel strength and global reach.
About Companion Diagnostics and Personalized Healthcare
Companion diagnostics are expected to become a key contributor to the transformational trend towards personalized healthcare (PHC). In addition to the increasing awareness of the significant benefits of PHC to key players in healthcare (payers, physicians, regulators, patients), new possibilities in molecular diagnostics and in particular very recent regulatory and payer decisions, most notably around products where DxS' portfolio plays a key role, have accelerated the trend towards a more integrated use of diagnostic information to guide therapy.
While most current companion diagnostics are "retrofitted" diagnostics, i.e. diagnostics that were retroactively added to approved drugs to improve outcomes, the new generation of companion diagnostics is being developed together with drugs to predict responses of patient populations to the drug treatment and increase its efficacy and safety. By testing for specific genetic variations related to certain biomarkers, health professionals can customize their therapies and avoid unnecessary or harmful treatments. The concept of personalized healthcare plays an increasingly important role in treatment decisions in clinical areas such as cardiovascular and neurological diseases and - most prominently - in cancer. There are 28 companion diagnostic tests for valid genomic biomarkers identified by the FDA in the context of FDA-approved drug labels. According to industry reports, the market for personalized healthcare grew annually at 24% over the last decade, amounting to US$ 13 billion in 2008.
DxS is a personalized healthcare company providing molecular diagnostics to aid doctors and drug companies in selecting safe and effective therapies for patients based on their molecular profiles (Companion diagnostics). Headquartered in Manchester, UK, the company employs approximately 80 employees in two countries, most of them in the UK. More information about DxS can be found at http://www.dxsdiagnostics.com/.
SAFE HARBOR STATEMENT
Statements contained in this release that are not historical facts are forward-looking statements, including statements about our products, markets, strategy and operating results. Such statements are based on current expectations that involve risks and uncertainties including, but not limited to, those associated with: management of growth and international operations (including currency fluctuations and logistics), variability of our operating results, commercial development of our markets (including applied testing, clinical and academic research, proteomics, women's health/HPV testing, molecular diagnostics, personalized healthcare and companion diagnostics), our relationships with customers, suppliers and strategic partners, competition, changes in technology, fluctuations in demand, regulatory requirements, identifying, developing and producing integrated products differentiated from our competitors' products, market acceptance of our products, and integration of acquired technologies and businesses. For further information, refer to our filings with the SEC, including our latest Form 20-F. Information in this release is as of the date of the release, and we undertake no duty to update this information unless required by law.
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