QIAGEN Signs Agreement for the Acquisition of eGene
Strategic Transaction adds Capillary Sample Separation Technology
eGene has developed a multi-channel sample separation and analysis technology for nucleic acids that includes an affordable and robust instrument, software analysis package, and a selection of consumable cartridges specifically designed for specific high value applications in the molecular diagnostic and research markets. The HDA-GT12™ Genetic Analyzer is a revolutionary multi-capillary system which incorporates many capabilities into one easy to use platform, integrating automatic sample loading, separation, and data analysis.
The HDA system significantly improves the workflow and increases the productivity of medium to high throughput laboratories. No longer does the lab technician have to pour and wait for slab gels to solidify or laboriously load each nucleic acid sample into the gel individually. With the HDA system, the technician simply loads a 96 well plate containing the samples, sets the software specification and then walks away while the instrument automatically loads and processes the samples. At the end of the experiment, the technician can access a graphic representation of the collected digital data, giving accurate information of the DNA fragments (targeted genetic variants) with a separation in high resolution (2-5 bp) quality.
Currently, eGene’s consumable cartridges are available for a number of research applications, including formats addressing the Human Leukocyte Antigen (HLA) testing market, genetic testing including microsatellite analyses, DNA post-PCR separation and analysis at different resolutions, and RNA integrity quality control. eGene’s product offering is therefore highly synergistic with QIAGEN’s sample and assay technologies.
For example, in the market for transplantation-related (HLA) molecular diagnostics, eGene’s consumable facilitate the use of QIAGEN’s SSP PCR-based molecular diagnostics for HLA. The QIAGEN SSP HLA product line is IVD CE marked for clinical diagnostic use in the European Union and is for research use only in the US and Canada. Customers in the HLA market prepare what are often large numbers of conventional slab gels each month which they load with the samples on which the QIAGEN HLA assays have been performed to identify and match donors and recipients prior to organ transplantation. The eGene system now offers QIAGEN’s customers in HLA testing the opportunity to automate the tedious, manual preparation and loading of slab gels. In addition the full-featured software analysis and result documentation represents a significant advantage in this diagnostic environment.
Next generation products will most likely include an expanded menu of products targeting use in research in applied testing and molecular diagnostics and may be combined with the Company’s recently acquired QIAplex technology. With the QIAGEN QIAplex multiplex test technologies a patient sample can potentially be tested against multiple pathogens at the same time to rapidly determine the origin of the infection. QIAplex products are currently available as research use only products for the investigation of respiratory (ResPlex™ I; II, III), hospital-acquired, and bacterial (StaphPlex™) infections as well as additional panels for other pathogens.
"eGene has developed a sample separation system for nucleic acid processing that is both affordable and robust” said Peer M. Schatz, QIAGEN’s Chief Executive Officer. “With the eGene system, we are adding a consumable and instrument line which provides quality control capabilities following the use of sample technologies as well as a readout system for our assay technologies in one platform. The combination of novel and patented multiplex fluorescence detection designs with solid-state light sources and micro-optical collectors creates an advantage over conventional gel-based sample separation technologies. The eGene system permits a new dimension of ease of use and automation, freeing up the researcher’s time for more important endeavors.”
“The eGene solutions leverage and seamlessly combine with QIAGEN sample and assay technologies and create novel and highly attractive molecular diagnostics solutions to our customers in research in clinical research, applied testing and molecular diagnostics" Peer M. Schatz continued. “QIAGEN provides a comprehensive direct-sales and service channel as well as a complete and complementary product portfolio to increase the value for customers in these market segments."
Under the terms of the agreement, QIAGEN North American Holdings, Inc. will offer $0.65 in cash and 0.0416 common shares of QIAGEN stock per share of eGene stock. The aggregate purchase consideration amounts to approximately $34.0 million (based on the average closing prices of QIAGEN stock on the NASDAQ Global Select Market for the 20 trading days ending on April 12, 2007). Based on preliminary analyses and assuming the transaction closes early in the third quarter of 2007, QIAGEN expects this transaction to contribute approximately US$2 million in sales in the second half of 2007 and roughly US$7-$9 million in sales for the full year of 2008. QIAGEN expects to incur one-time charges of approximately US$0.01 in EPS at closing, expected in the third quarter 2007. These charges primarily relate to in-process research and development and the write-off of certain assets. On an adjusted basis excluding one-time charges, integration and restructuring costs and amortization of acquired IP, the acquisition is expected to reduce EPS in the second half of 2007 by approximately US$0.01 and to be neutral to earnings in 2008. Beyond 2008, revenues for this product line are expected to grow rapidly and contribute significant accretion to net income as the instrument base expands rapidly and drives increasing consumable usage.
Financial Highlights of the Transaction:
· Merger agreement signed on April 12, 2007.
· Transaction expected to close early in the third quarter of 2007.
· Entered into binding voting agreement with management and key shareholders.
· Expected to add revenues of approximately US$2 million in second half of 2007.
· Expected to incur one-time charges of approximately US$0.01 in EPS at closing, expected in the third quarter 2007.
· Expected to reduce adjusted EPS in the second half of 2007 by approximately US$0.01 and to be neutral in 2008.
· No material change to QIAGEN’s expected margins.
· Early-stage company rapidly commercializing its technology.
QIAGEN N.V., a Netherlands holding company, is the leading provider of sample and assay technologies. Sample technologies are used to isolate and process DNA, RNA, and proteins from biological samples such as blood or tissue. Assay technologies are used to make such isolated biomolecules visible. QIAGEN has developed and markets more than 500 consumable products as well as automated solutions for such consumables. The company provides its products to molecular diagnostics laboratories, academic researchers, pharmaceutical and biotechnology companies, and applied testing customers for purposes such as forensics, animal or food testing, and pharmaceutical process control. QIAGEN's assay technologies include what is considered to be the broadest panel of molecular diagnostic tests available worldwide. This panel includes the only FDA-approved test for human papillomavirus (HPV), the primary cause of cervical cancer. QIAGEN employs more than 2,800 people in more than 30 locations worldwide. Further information about QIAGEN can be found at http://www.qiagen.com/.