Though the stakes aren’t quire so high, an auction-type battle similar to last year’s between Johnson & Johnson and Boston Scientific for the acquisition of Guidant is shaping up in the diagnostic sector.

The board of Biosite (San Diego) this week said that it will consider the acquisition proposal by new suitor Inverness Medical Innovations (IMI; Waltham, Massachusetts) and begin negotiations with IMI, if it determines its offer to be superior to an offer from initial suitor Beckman Coulter (BC; Fullerton, California).

After consultation with its financial and legal advisors, the Biosite board said that the IMI offer — which at $90 a share is about a 5.9% premium over the BC offer of $85 a share (about $1.55 billion) — is “likely to lead to a superior proposal.” BC’s offer for Biosite was first unveiled last month (Medical Device Daily, March 27, 2007).

The Biosite board said, however, that it “has not determined that the Inverness acquisition proposal constitutes a superior proposal.”

The board went on to say that it has not “approved, endorsed or recommended the Inverness acquisition proposal,” and that it has not “withdrawn, qualified, modified, changed or amended its recommendation with respect to the Beckman Coulter tender offer, and the merger agreement between Biosite and Beckman Coulter remains in effect.”

Expressing confidence that its deal is still superior, even at a reduced price, Scott Garrett, president/CEO of BC, said his company remains committed to its acquisition of Biosite and will waive the merger agreement provision that Biosite provide the company with 48 hours notice before negotiating with IMI.

“The conditional and uncertain terms of the Inverness offer should give the Biosite board and its stockholders enormous pause,” said Garrett. “In our view, the fact that Inverness has not proposed a tender offer, which could be concluded relatively quickly, speaks volumes about the firmness of its financing. Inverness’ financing ‘commitments’ contain remarkably broad conditions and contingencies. It is not surprising, therefore, that Inverness instead is suggesting a one-step transaction - one that would take months to complete.”

Garrett further suggested that the Biosite board should communicate the risks and uncertainties of the IMI offer to Biosite’s stockholders who, based on trading levels in the marketplace, may be unaware of these risks.

“We remain committed to our transaction with Biosite and continue to be very enthusiastic about the prospects for developing Biosite and Beckman Coulter as a combined business,” Garrett added. “We believe Biosite stockholders will conclude that Inverness is unable to make an offer for Biosite that is as compelling as the definitive transaction between Beckman Coulter and Biosite which is scheduled to be completed within the next 25 days. By waiving this 48-hour notice period, we are seeking to resolve the uncertainty in the marketplace resulting from Inverness’ offer as quickly as possible.”

Biosite, a company developoing proteomics discoveries for diagnosis, said last week that Inverness is offering “substantially similar business terms” to BC’s offer.

In a letter to Biosite’s board last week that coincided with its richer offering, Ron Zwanziger, president/CEO and chairman of IMI, said that executives from IMI “have made repeated attempts over the past 10 months to engage the Biosite management team and board in a meaningful dialogue about a potential combination of our two companies.”

He said that as recently as Feb. 20, IMI submitted a proposal to acquire Biosite and subsequently entered into a confidentiality agreement for the purpose of working with Biosite to explore the possibility of enhancing that offer.

“We were therefore extremely surprised and disappointed by your announcement on March 25 of an agreement with Beckman Coulter,” he added.

In his letter, Zwanziger also indicated that his company was prepared to take its proposal directly to Biosite’s shareholders” if they didn’t hear from Bosite by April 8, a deadline the Biosite board let expire without reply.

BC’s tender offer for Biosite shares is set to expire on April 27, unless extended.