Diagnostics & Imaging Week Associate

In what is the largest new healthcare deal thus far in 2006, BD (Becton, Dickinson; Franklin Lakes, New Jersey) said it will acquire GeneOhm Sciences (San Diego), a privately held company developing molecular testing for the rapid detection of bacterial organisms, including those known to cause healthcare-associated infections (HAIs).

BD has agreed to pay $230 million, plus up to $25 million in additional incentives, for the company. The acquisition, subject to regulatory approvals, is expected to close by the end of March.

HAIs account for nearly 6 million illnesses annually in the U.S., Europe and Japan, and cause up to 90,000 deaths annually in the U.S., the company noted.

The transaction is slightly dilutive; however, BD reaffirmed its guidance that reported diluted earnings per share from continuing operations for FY06 in the range of $3.15 to $3.19. The company said it will provide further details in its first quarter earnings call on Jan. 26.

GeneOhm is developing nucleic acid-based assay systems providing rapid results. Its IDI-MRSA and IDI-Strep B tests are FDA-cleared and designed to provide an accurate and rapid format for these critical tests.

MRSA (methicillin resistant Staphylococcus aureus) is a "super bug" known to cause HAIs, and Group B Strep is a health threat to pregnant women and their children during the latter stages of pregnancy.

Edward Ludwig, president, CEO and chairman of BD, during a conference call on the acquisition, said that BD's diagnostic strategy "is to provide systems which are fast, easy and accurate and essentially increase dramatically the value of diagnostics in the marketplace."

Ludwig said the company's goal in molecular diagnostics is "to drive time-to-results from an average of three to five days, which we currently have in culture-based systems to real-time or day zero answers which have extraordinary value in the marketplace." He added: "The acquisition of GeneOhm will enable BD to play a leading role in the evolution of molecular biology."

Ludwig said the company looked at the world's developed markets — including Western Europe, U.S., Canada and Japan — and estimated that out of 100 million patients being admitted in those regions annually, the company's screening products could be used in between 20% and 40% of the cases.

Pressed for a dollar figure for that market, he estimated that if BD takes 30% of the aforementioned patient market at $20 a test, the company could be looking at a market "nicely north of $500,000."

GeneOhm Sciences, launched in 2001 by Professor Jacqueline Barton of the California Institute of Technology (Pasadena), had $5 million in revenue for 2005, and 48% in quarterly growth through sales in the U.S., Canada and Europe.

Peter Klemm, CEO of GeneOhm, will remain as president of BD-GeneOhm.