|
Growing steadily downstream
January 2012
EDIT CONNECT
SHARING OPTIONS:
SANTA CLARA, Calif.—In a move that Affymetrix Inc. is
characterizing as a very deliberate and carefully orchestrated one, the
company
has announced that it is acquiring eBioscience
Inc., a privately held San
Diego-based company with a notable market presence in flow cytometry and
immunoassay reagents for immunology and
oncology research and diagnostics.
In characterizing the value of the eBioscience acquisition,
Dr.
Frank Witney, president and CEO of Affymetrix, expressed to industry
watchers recently that his company's board of directors feels some "urgency" in
its desire to get the company on a growth track, but that the acquisition was
carefully considered. He further noted in a recent conference call to
investors
and media that "our aim is to return the company to growth and sustained
profitability. We expect to achieve these goals through a number of
ways,
including stabilizing our gene expression business, growing our genotyping
market share, building a market-leading position in cytogenetics and
maintaining
consistent growth of our life science reagents business."
Over the past several months,
Witney notes, Affymetrix has
conducted a number of meetings and discussions with investors that have covered
moves such as mergers and acquisitions and
buying back stock.
"On the M&A front, we've shared the key criteria that any
potential
acquisitions would have to meet, which include being larger enough to
make a difference to our overall business trends, that it would need to extend
our strategic footprint and that it have strong current financials and future
profit prospects—a combination that is very hard to find," he explains.
"We've
been clear that we're not interested in investing in a platform company that is
burning cash. We've been very disciplined in assessing
targets, and I'm happy
to say that eBioscience is a company that meets all of our criteria.
"Affymetrix has been moving aggressively downstream from
discovery with acquisitions such as Panomics and products such as CytoScan and
OncoScan,"
Witney continues, "so this is a very logical next step to add the
capabilities of eBioscience. We are now in a position to provide a much more
comprehensive toolkit for translational medicine research."
Under the terms of the agreement,
Affymetrix will acquire
eBioscience for $330 million in cash, subject to certain customary adjustments,
with an expectation in late November that if
all closing conditions were met,
the transaction would close late in the fourth quarter of 2011. Affymetrix
plans to maintain eBioscience's management
team and operations in San Diego.
Affymetrix expects the acquisition of eBioscience to create
significant new commercial opportunities in the key post-genomic applications
of immunology, oncology, cell biology, stem cell biology and diagnostics;
diversify the company's revenues to complement its genomics franchise; augment
the company's growing business in molecular diagnostics; expand the
company's
product portfolio to include multicolor flow cytometry reagents and a broad
spectrum of reagents for the analysis of cytokines, growth
factors and other
soluble proteins; enhance the operational and new product opportunities for
Panomics RNA and protein analysis products; and leverage
the commercial
capabilities of both companies to generate new opportunities for growth.
"The
acquisition of eBioscience is transformational for our
business, and we are enthusiastic about the opportunities it creates," adds
Witney. "With
eBioscience, Affymetrix will significantly expand its addressable
markets by adding an industry-leading portfolio of cell-based and immunoassays.
These
new products are a critical part of our customers' workflow in our key
target markets of translational medicine, oncology, and immunology. We believe
that these markets represent a nearly three-billion dollar annual opportunity,
which will put Affymetrix on a solid path to sustained growth and
profitability."
Zacks Investment Research acknowledges that Affymetrix is
pursuing a number of strategies, including expansion into new markets such as
cytogenetics and cancer research, which are aimed at expanding its top line,
adding in a note about the eBioscience acquisition that "the company is
shifting its R&D focus from discovery and exploration markets to the
faster-growing validation and routine testing markets. However, Affymetrix is
operating in an intensely competitive industry and faces risks associated with
lower R&D spending by its customers due to a soft economy and
government
actions including budget cuts."
Because Affymetrix is exposed to a "volatile
funding
environment" and because declines in government research grants "may
substantially affect the company's revenues," Zacks has maintained a
"Neutral"
stance on Affymetrix's stock.
The mood is notably more upbeat at Affymetrix, with Dr.
Stephen P.A. Fodor, founder and chairman of the company, saying, "This
transaction places Affymetrix at the forefront of immunology and oncology, two
of the fastest-growing segments of molecular and translational medicine,"
adding that eBioscience "complements our traditional businesses of
genomics and
cytogenetics, and dramatically strengthens our foundation in molecular
diagnostics."
For his part, Don Tartre, CEO of eBioscience, asserts, "the
combination of the Affymetrix presence in genomics, its global commercial
footprint
and our protein and cell analysis tools is a great match."
"The combination of Affymetrix and
eBioscience has
significant benefits," noted Tim Barabe, executive vice president and chief
financial officer of Affymetrix, in the news release about
the deal. "With 2011
sales expected to exceed $70 million, gross margins in excess of 70 percent and
EBITDA margin of approximately 30 percent,
eBioscience makes Affymetrix a much
stronger company, both operationally and financially. The purchase price
represents approximately 4.5 times 2011
revenue and 14 times 2011 EBITDA."
The transaction will be funded using a combination of
roughly
50 percent cash-on-hand and 50 percent committed debt to avoid dilution
and maximize value to shareholders, Barabe added.
Affymetrix,
Genisphere ink deal
for miRNA reagent kit
SANTA CLARA, Calif.—Affymetrix Inc. also announced
last
month an exclusive agreement with Genisphere
LLC to offer the company's
proprietary FlashTag Biotin HSR Reagents designed for Affymetrix.
According to Affymetrix, the miRNA reagents provide
streamlined, high-fidelity target preparation methods yielding high-quality
data and
unmatched reproducibility when used with the Affymetrix GeneChip
Arrays.
"Launched in March 2009, the
FlashTag product line has
provided a powerful standardized tool for investigating miRNA expression when
coupled with the GeneChip miRNA Arrays. This
licensing agreement combines the
technologies from both companies for the benefit of our mutual customers."
Genisphere reagents are compatible across a wide variety of
sample types including formalin-fixed, paraffin-embedded (FFPE) fresh frozen
samples and blood. This complete solution provides researchers with faster
insight into the role of miRNAs in biological processes including mRNA
degradation, transcriptional gene silencing, translational repression and
ultimately in biomarker discovery in translational and cancer research, says
Affymetrix.
Starting with as little as 100 ng of total RNA, these
reagents provide
ultrasensitive miRNA labeling in just 45 minutes, with no purification
steps required to go from sample to target for microarray hybridization. When
used with the recently released GeneChip miRNA 2.0 Array, these tools provide
customers with a single validated workflow to better understand the
biology of
miRNA molecules from 131 different organisms.
"The new miRNA reagents designed
specifically for Affymetrix
GeneChip Arrays provide researchers with the best tools to access challenging
samples and interrogate them on the world's
leading microarray platforms," said
Dr. Kevin Cannon, general manager of Affymetrix's Gene Expression business
unit, in a statement. "This reagent
addition provides researchers with the
tools to move from a whole-genome view of complex biological systems using the
GeneChip miRNA Arrays to single-
gene validation with QuantiGene View miRNA
Assays."
Affymetrix-branded reagent kits will be launched
in early
2012.
Code: E011202 Back |
Home |
FAQs |
Search |
Submit News Release |
Site Map |
About Us |
Advertising |
Resources |
Contact Us |
Terms & Conditions |
Privacy Policy
|