Diagnostics & Imaging Week Managing Editors

Siemens (Erlangen, Germany/Malvern, Pennsylvania) reported completing its acquisition of Diagnostic Products Corp. (DPC; Los Angeles), saying that the purchase marks "a significant milestone" enabling it to enter the in vitro diagnostics (IVD) market.

The company said that with DPC, it "will become the first full-service diagnostics company."

Siemens in late April unveiled its plan to acquire DPC for $1.68 billion, and late last week DPC shareholders approved the merger into a wholly owned subsidiary of Siemens Medical. Each share of DPC common stock will be converted into the right to receive cash of $58.50 a share.

DPC is a leading immunodiagnostics company, focusing on developing, manufacturing, and distributing automated body fluid analyzers and tests, such as those related to cancer and cardiac disease, as well as hormone and allergy conditions.

The acquisition combines with Siemens' intent to acquire Bayer Diagnostics (Tarrytown, New York, the diagnostics division of Bayer (Leverkusen, Germany), disclosed in late June, for $5.3 billion (Diagnostics & Imaging Week, July 6, 2006).

Erich Reinhardt, president/CEO of Siemens Medical Solutions, said, "Today is just the beginning of a fascinating new chapter for Siemens Medical Solutions. DPC is an ideal fit, as it has a similar philosophy to Siemens, with a dedication to trendsetting innovation, customer partnership, and efficiency in healthcare.

"Combining the strengths of DPC and Bayer Diagnostics with those of Siemens Medical Solutions, we will be in a position to offer our customers and partners an unbeatable IVD combination and a most comprehensive portfolio covering both in vivo and in vitro diagnostics, combined with powerful IT solutions," he said.

Reinhardt said the mergers also will expand Siemens' competencies in the area of molecular medicine from in vivo molecular imaging for instance, using positron emission tomography imaging to the in vitro field, being of specific importance for the early detection of disease.

Siemens said it will "bridge the gap between in vivo and in vitro diagnostics and offer a unique blend of expertise and technologies in diagnostic imaging, healthcare information technology (IT), molecular biology, and biochemistry . . . driving and leading the advancement of personalized healthcare."

Michael Ziering, who will continue to serve as CEO of DPC, said, "We now will have access to a global research and development network that complements and broadens our existing capabilities."

DPC said that prior to the merger it was "the world's leading independent producer of immunodiagnostic products." The company's diagnostic tests supply information for the detection and management of disease, including adrenal/pituitary dysfunction, allergy, anemia, bone metabolism disturbances, cancer, cardiovascular disease, diabetes, and reproductive and thyroid disorders.

In another large deal marking further consolidation in the imaging sector, Hologic (Bedford, Massachusetts), a provider of diagnostic imaging and digital imaging systems for women's health, reported completing the purchase of Suros Surgical Systems (Indianapolis). The deal was first unveiled in April.

The purchase price, exclusive of certain transaction costs and expenses, is about $240 million, payable in about $135 million in cash and 2.33 million shares of common stock. In addition, an earn-out will be payable in two annual cash installments equal to the revenue growth in Suros's business in the two years following the closing.

"This acquisition is an important milestone in the execution of our overall strategy to grow our business and expand our presence in the women's health market," said Jack Cumming, CEO and chairman of Hologic. "Combined, we will share one goal, to work together to advance technology for women's healthcare."

He added: "We believe the increasing adoption of minimally invasive procedures, such as vacuum-assisted breast biopsy, will improve patient safety, advance the quality of care and reduce costs."

Suros's Automated Tissue Excision and Collection (ATEC) line of products include percutaneous, automatic vacuum-assisted breast biopsy systems, ancillary breast biopsy devices and biopsy site markers. In addition to more conventional image guidance compatibility, ATEC has become the market leader in MRI-guided breast biopsy technology, the company said.

Jim Pearson, president/CEO of Suros, said, "We believe Hologic's industry presence and experience will facilitate getting the ATEC Breast Biopsy and Excision System in the hands of physicians, which will only benefit their patients worldwide."

The ATEC Breast Biopsy and Excision System is compatible with stereotactic X-ray, ultrasound and MRI systems using the all-in-one ATEC Sapphire, MRI only with the ATEC Emerald, or ultrasound and stereotactic only using the ATEC Pearl.

Hologic manufactures imaging technologies focused on mammography and breast biopsy, osteoporosis assessment, and mini C-arm and extremity MRI imaging for orthopedic applications.

PerkinElmer (Boston) reported completing the acquisition of J.N. Macri Technologies (Huntington Station, New York), which holds and licenses patents for free beta Human Chorionic Gonadotropin (free Beta hCG), a peptide hormone produced in the early stage of pregnancy and recognized as a biomarker for first-trimester prenatal risk assessment.

Additionally, PerkinElmer acquired NTD Laboratories (Huntington Station), a reference laboratory specializing in prenatal risk assessment.

The purchase price for both transactions was about $56.65 million.

NTD offers laboratory-developed and validated testing under the brand name UltraScreen, of which free Beta hCG is a component. The UltraScreen biomarker data, combined with an ultrasound measurement of fluid accumulation behind the neck of the fetus (the "combined test") and maternal demographic data, provide clinicians with patient-specific risk probability for fetal abnormalities, according to NTD Labs.

NTD Labs generated $15 million of revenue in its last fiscal year ending June 30.

Gregory Summe, CEO and chairman of PerkinElmer, said, the acquisitions provide "a leading position in free Beta hCG measurement in the U.S. and will be an integral part of expanding our maternal health portfolio globally."

Perkin Elmer said the agreement builds upon recent announcements related to its screening and diagnostics strategies, including a global licensing agreement to develop assay kits for the ADAM12 biochemical marker, with potential in maternal health screening for fetal chromosomal abnormalities; and the securing of global rights for Placental Protein 13, a biomarker for identifying patients at risk for pre-eclampsia in the first trimester.

Perkin Elmer said the efficacy of the NTD-provided service has been validated by two trials by the National Institutes of Health (Bethesda, Maryland), EATABUN and FASTER. Published in the New England Journal of Medicine in November 2005, the FASTER study found the combined test, administered in the first trimester of gestation, to be safer and more accurate than second trimester prenatal risk assessment.

Robert Friel, president, PerkinElmer Life and Analytical Sciences, said the agreement will accelerate the company's own maternal health R&D initiatives, "by giving us the ability to better understand first-hand the needs of the clinical community. Our future plans include the introduction of the free Beta hCG biomarker, which is used throughout Europe, on PerkinElmer's proprietary platforms, further extending our maternal health solutions."

In other dealmaking news:

Asuragen (Austin, Texas), a new oncology molecular diagnostic company and molecular biology service provider, reported entering into a semi-exclusive licensing agreement with Rockefeller University (New York) for the diagnostic rights to its proprietary microRNA sequences, described as expression profiles and functions involved with human diseases like diabetes and cancer.

Asuragen will have access to microRNAs identified by a group led by Rockefeller University researcher Thomas Tuschl, PhD, researching siRNAs and microRNAs.

"This licensing agreement, combined with our expertise in microRNAs, will facilitate Asuragen's efforts to investigate the potential of these new molecular biomarkers as diagnostic analytes," said Matt Winkler, CEO of Asuragen. "We spun Asuragen out of Ambion to create a molecular diagnostics company focused on RNA technologies and this license significantly strengthens our position in this rapidly growing field."

MicroRNAs are naturally occurring small RNAs that act to regulate mRNA expression, with potential to be the basis for a new class of diagnostics and therapeutics, according to Asuragen. About 350 microRNAs have been identified in humans, with the total predicted to eventually reach 1,000 or more. MicroRNAs are thought to play significant roles in the manifestation of many disease states, including metabolic, infectious diseases and cancer.

Asuragen resulted from the sale of the Research Products Division of Ambion (Austin) to Applied Biosystems Group (Foster City, California). It is comprised of two of Ambion's former divisions, Diagnostics and Services, along with the formation of a new Discovery group developing technologies. Asuragen's portfolio consists of Signature Genetic Testing and Oncology Testing products, as well as controls and standards engineered using its patented Armored RNA technology.

Asuragen has recently formed a partnership with Digene (Gaithersburg, Maryland) distribute its Signature cystic fibrosis screening products.

Hemagen Diagnostics (Columbia, Maryland), a maker of diagnostic test kits, reported the sale of a manufacturing building for $1.8 million. It said it purchased the facility in June of last year for $800,000. With the sale, the company said it would record a gain in 4Q06.

The company said that the building was originally purchased to house its headquarters, to combine certain manufacturing processes and to provide space for expansion and acquisition.

William Hales, president and CEO, said, "[W]e expect to be able to achieve our operational goals in our current leased space. In recording this transaction, we eliminated approximately $665,000 in short-term liabilities related to the construction financing and recorded approximately $1 million dollars in additional cash to the balance sheet."

Hemagen has three different product lines: the Virgo product line of kits used to diagnose certain autoimmune and infectious diseases, using ELISA, Immunofluorescence and hemagglutination technology; clinical chemistry reagents under the brand name Raichem and various OEM arrangements; and clinical chemistry analyzers.

IRIS International (Chatsworth, California), a manufacturer of automated IVD urinalysis systems and medical devices, said it has prepared its allocation of the purchase price paid to acquire Leucadia Technologies (Carlsbad, California). The deal, disclosed in early April, is for IRIS to acquire Leucadia for $10.1 million.

The company established the following allocation: cash, $2,000; fixed assets, $21,000; core technology, $1.79 million; goodwill, about $2.23 million; total assets, somewhat more than $4 million; and in-process R&D expense, $5.18 million.

IRIS said the core technology intangible asset amount reflects the valuation of the two technology platforms acquired in the Leucadia buy Nucleic Acid Detection Immuno Assay, a diagnostic method more sensitive than current immunoassay technology, it said; and a separation and concentration technology which develops albumin micro-bubbles coated with antibodies that attach and float specific cell types.