QIAGEN makes proposal to acquire Australian diagnostics company Cellestis Limited

Venlo, the Netherlands and Melbourne, Australia, (PresseBox) - .
- QIAGEN to acquire Cellestis Limited (CST:AU) via a Scheme of Arrangement (the Scheme) for approximately A$341 million[1] (US$355 million), or A$3.55 per share
- Unanimous support from Cellestis board of directors[2]; QIAGEN granted options to acquire up to 19.9% of Cellestis ordinary shares under certain circumstances, subject to regulatory approvals
- Acquisition provides QIAGEN with exclusive access to QuantiFERON® technology for high sensitivity, early disease detection not possible with other diagnostic approaches
- QuantiFERON® technology successfully commercialized with two marketed Cellestis tests for detection of latent tuberculosis (TB) and life-threatening CMV virus
- QIAGEN to expand QuantiFERON® portfolio, migrate technology to QIAsymphony and QIAensemble platforms and leverage synergies with current QIAGEN assay portfolio and pipeline
- Acquisition would accelerate QIAGEN’s sales and adjusted EPS growth rates in 2012

QIAGEN N.V. (NASDAQ: QGEN; Frankfurt, Prime Standard: QIA) has reached an agreement to acquire Cellestis Limited (CST:AU) for approximately A$341 million (US$355 million) in cash, providing QIAGEN with access to a novel “pre-molecular” technology that offers a new dimension in disease detection not currently possible with other diagnostic methods.

The acquisition of Cellestis, a publicly listed, profitable company headquartered in Australia, will provide QIAGEN with exclusive rights to QuantiFERON® technology, a proprietary approach for disease detection and monitoring.

Cellestis has successfully commercialized this technology with QuantiFERON®-TB Gold In-Tube (QFT), a leading test for latent tuberculosis (TB), and is in the early stages of commercializing QuantiFERON®-CMV for monitoring of disease risk from the life-threatening cytomegalovirus (CMV). These tests are approved and commercialized in various countries and are believed to have significant untapped market potential.

QuantiFERON® is a patent-protected platform technology that can provide information on diseases far earlier than possible with other diagnostic methods. QuantiFERON® tests whole blood samples for the presence of systemically amplified molecular analytes which provide information from the immune system’s memory.

Based on its ability to provide diagnostic information far earlier than DNA-based molecular tests, QuantiFERON® is considered a “pre-molecular” testing technology. As a result, tests based on QuantiFERON® can even provide critical information on latent infections, where pathogens (bacteria, viruses, fungi) are present in such low amounts that they are not detectable with traditional DNA-based molecular diagnostics.

QuantiFERON® is complementary to QIAGEN’s portfolio of molecular diagnostics. Its high sensitivity and ability to provide clinically relevant information means that this technology can be used ahead of DNA- or RNA-based molecular testing. Greater use of QuantiFERON® technology can help guide and drive the use of traditional DNA- and RNA-based molecular diagnostics. For example, patients identified through QuantiFERON®-based tests to be at risk for certain diseases could then proceed for subsequent testing or increased monitoring with corresponding DNA- or RNA-based molecular diagnostics to assess disease activity levels and guide treatment decisions.

“We believe next-generation DNA- and RNA-based molecular testing can benefit from greater use of QuantiFERON® technology, which has a unique ability to identify patients at risk from potentially life-threatening diseases. The power of QuantiFERON® can help save lives by enabling medical treatment through earlier, deeper and much more sensitive disease detection than previously possible,” said Peer Schatz, Chief Executive Officer of QIAGEN N.V. “Cellestis has developed a technology that is highly complementary to our portfolio and which we expect to migrate onto our QIAsymphony, QIAensemble and our point of need platforms, thereby adding a new, unique assay menu to these QIAGEN platforms. We believe the addition of Cellestis will further strengthen our capabilities to offer innovative sample and assay technologies that are making improvements in life possible.”

“Cellestis has succeeded in developing QuantiFERON® as a breakthrough technology, via the QFT-TB test that is becoming the standard for latent TB diagnosis,” said Cellestis CEO Anthony Radford. “We believe QIAGEN as an industry-leading company provides the best strategic fit in terms of capabilities and resources. As part of QIAGEN, we will be able to accelerate our growth much faster than as a stand-alone company and offer even greater benefits to patients and healthcare providers.”

Following successful completion of the transaction, QIAGEN plans to migrate QuantiFERON® onto QIAensemble, a next-generation high-throughput automation system in development and nearing market entry; QIAsymphony, a highly versatile automation system for low- to mid-throughput volumes available around the world; and QIAGEN’s point of need testing platforms acquired from ESE GmbH.

Successful commercialization of QuantiFERON® technology

Cellestis has launched, depending on regional regulatory approvals and clearances, two commercial diagnostic products and has several new products based on QuantiFERON® technology under evaluation. It has also developed an extensive R&D program targeting other diseases and conditions. In the fiscal year ending June 30, 2010, net sales rose 17% to A$40.4 million (US$42.0 million). Profit from operations before tax and non-recurring items in FY2010 was A$10.2 million (US$10.6 million), up 26% from FY2009.

Its flagship product, QuantiFERON®-TB Gold In-Tube (QFT), accounts for the majority of current sales and was launched in 2006 as a third-generation test for detection of latent tuberculosis (TB). QFT is recommended in many national guidelines since the test overcomes significant shortcomings of the previous standard test used to detect latent TB: the 110-year-old Tuberculin Skin test (TST). Benefits of QFT include its accuracy and significantly improved workflow, making it the only next-generation assay which has been widely commercialized in an instrument and kit format. Most latent infections today cannot be detected using DNA-based molecular diagnostics. QFT is available in many markets and has been approved in many countries, including the U.S. (pre-market approval, or PMA), Canada and Japan and has been CE marked for use in Europe.[3]

Cellestis’ other commercialized diagnostic product is QuantiFERON®-CMV[4] which was launched in 2009 and is the first commercially available test designed to allow physicians to monitor a person’s risk of cytomegalovirus (CMV) disease. CMV is one of the most common and problematic viral infections in immunosuppressed patients (in cancer, transplantation, HIV therapies). QIAGEN has DNA-based molecular diagnostic tests for CMV viral load testing which could be complemented by QuantiFERON®-CMV to monitor patients for risk of CMV-induced disease.

Products based on QuantiFERON® technology can enhance QIAGEN’s leading portfolio in DNA- and RNA-based molecular diagnostics:

- Prevention example: QFT is rapidly expanding as a new treatment standard for testing asymptomatic patients for latent TB infection (and identifying those at risk for active disease), and it is expected to be synergistic with QIAGEN’s leading portfolio of real-time PCR and Pyrosequencing DNA-based molecular diagnostic detection technologies which, depending on the indication are use as adjunct tests or reflex/subsequent tests.
- Profiling example: QuantiFERON®-CMV has the potential to accelerate the fast-growing leadership position of QIAGEN in providing a broad range of diagnostic testing solutions for use in monitoring immunosuppressed patients for life-threatening infectious diseases. These patients are being treated with medicines that suppress the body’s immune system, which increases the risk for infections. QuantiFERON®-CMV is expected to be synergistic with QIAGEN’s DNA- and RNA-based molecular tests used in transplantation medicine. QIAGEN plans to submit a PMA application with the U.S. Food and Drug Administration (FDA) in 2011 for approval of the artus RG PCR CMV test.
- Personalized healthcare examples: Several new classes of medicines require patients to be free of latent TB in advance of treatment initiation, creating new opportunities for QFT. In addition, a number of medicines require patients to be free of viral infections and other pathogens or clinical profiles, which could be verified with tests based on QuantiFERON® technology.
- Point of need example: QuantiFERON® technology will be adapted for use with QIAGEN’s ESE detection technology, a battery-operated mobile device, and in particular QFT for latent TB testing in areas without immediate access to a laboratory.

Transaction summary

QIAGEN and Cellestis have entered into a Scheme Implementation Deed (SID) pursuant to which QIAGEN, or a wholly owned subsidiary, will acquire all of the ordinary shares in Cellestis for approximately A$341 million in cash, or A$3.55 per share. Based on an exchange rate of A$1.00 = US$1.04 [5], the transaction value is approximately US$355 million.

Under the SID, the consideration offered may be structured to include a fully franked, special dividend (payable only if the Scheme becomes effective and upon receipt of a favourable ATO ruling, and subject to Cellestis Board approval). The cash consideration payable under the Scheme would be reduced by the cash amount of any dividend paid.

The acquisition will be implemented by way of a Scheme of Arrangement pursuant to which Cellestis shareholders will receive a cash payment for their shares. Full details of the transaction will be set out in the Scheme booklet.

The offer for Cellestis’ shares represents a premium of:

- 24.3% to the one-month volume weighted average share price prior to this announcement;
- 31.5% to the three-month volume weighted average share price; and
- 39.2% to the six-month volume weighted average share price.

The Cellestis board of directors unanimously recommends shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to an Independent Expert concluding that the Scheme is fair and reasonable and in the best interests of Cellestis shareholders. All members of the Cellestis board of directors intend to vote or cause to be voted all of their direct and indirect interests in Cellestis in favour of the Scheme (subject to the same qualifications as their recommendations), which in aggregate amount to approximately 27% of Cellestis’ outstanding shares.

QIAGEN and Cellestis have agreed to customary exclusivity arrangements in relation to the SID, including that unless the SID is terminated, Cellestis will not solicit any competing transaction or (subject to the fiduciary duties of the Cellestis directors) participate in any discussions or negotiations in relation to any competing transaction. QIAGEN also has a right in the SID to match a competing offer prior to Cellestis entering into any other agreement regarding a superior proposal. Under certain circumstances set out in the SID, Cellestis has agreed to pay QIAGEN a break fee of A$3.5 million.

In addition, QIAGEN has entered into an option deed with each of the two founders of Cellestis – Anthony Radford and James Rothel – and their respective controlled entities and joint shareholders. Pursuant to this deed, QIAGEN has been granted an option to acquire a total of 14.9% of the ordinary shares in Cellestis for A$3.55 per share, and to acquire a further 5% at the same price subject to approval by the Australian Foreign Investment Review Board (FIRB) where a competing transaction is matched by QIAGEN under the matching rights included in the SID or in certain circumstances where a competing transaction is not matched by QIAGEN.

The Scheme is subject to a number of conditions, including FIRB approval, court approval and the approval of Cellestis shareholders. A full copy of the Scheme Implementation Deed has been released to the Australian Securities Exchange (ASX).

A Scheme booklet with full details of the transaction, including an Independent Expert’s Report, is expected to be distributed to Cellestis shareholders in May 2011. The shareholder meeting to approve the Scheme is expected to be held in June 2011.

A more detailed timetable for the approval and implementation of the transaction will be announced in due course.

QIAGEN will fund this acquisition from existing cash. On an adjusted basis, which excludes one-time charges, integration and restructuring costs, and amortization of acquisition-related intangible assets, the transaction is expected to be moderately dilutive to full-year 2011 adjusted EPS due to planned large investments in sales capabilities and R&D initiatives for migration of existing Cellestis products onto QIAGEN platforms as well as for new product developments.

For 2012, QIAGEN expects double-digit sales growth from QuantiFERON® products and accretion of approximately US$0.02-0.03 to adjusted EPS.

Barclays Capital is acting as exclusive financial adviser and Freehills is acting as legal adviser to QIAGEN in relation to the transaction.

Further information on this transaction can be found in the Investor Relations section of the QIAGEN website at www.qiagen.com.

[1] Based upon 96.15 million ordinary shares and excludes any cash payments to option holders.
[2] The Cellestis board of directors unanimously recommends shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to an Independent Expert concluding that the Scheme is fair and reasonable and in the best interest of Cellestis shareholders.
[3] QFT is indicated for use in the United States as an in vitro diagnostic (IVD) test using a peptide cocktail simulating ESAT-6, CFP-10 and TB7 7(p4) proteins to stimulate cells in heparinized whole blood drawn directly into specialized blood collection tubes. Detection of interferon-y by enzyme-linked immunosorbent assay (ELISA) is used to identify in vitro responses to these peptide antigens that are associated with mycobacterium tuberculosis infection.
[4] QuantiFERON®-CMV is IVD CE marked for clinical use in the European Union and is a Research Use Only Product in the United States.
[5] Foreign exchange rates as of April 1, 2011.

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