Medical Device Daily 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 Sciences 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 said during a conference call on the acquisition 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 the molecular diagnostics space 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.

Applera (Norwalk, Connecticut) said its board of directors has approved a restructuring of its Celera Diagnostics (Alameda, California) joint venture, whereby, effective Jan. 1, Applied Biosystems (Foster City, California) has transferred its 50% interest in the j-v to Celera Genomics (also Norwalk) in exchange for a package of considerations to Applied Biosystems.

Since formation in 2001, Celera Diagnostics has been held equally by Applera's two business groups, Applied Biosystems and Celera Genomics.

"Several factors have contributed to our conclusion that this restructuring is in the best interests of both Applied Biosystems and Celera Genomics," said Tony White, president, CEO and chairman of Applera. "Transferring full ownership of Celera Diagnostics to Celera Genomics acknowledges growing synergies between these businesses; provides greater visibility for the promising developments at Celera Diagnostics; responds to shareholder interests for simplicity in our organizational structure; and provides investors with a direct means to invest in the growing diagnostics business.

"At the same time, the restructuring enables an expansion of Applied Biosystems' field of activity to include end-user clinical diagnostic instrumentation in addition to its current instrumentation for the research market," White added. "Applied Biosystems and Celera will work together and, through the alliance Celera Diagnostics has with Abbott Laboratories [Abbot Park, Illinois], will bring their unique skills in instrument and assay development to serve the diagnostic marketplace.

Applera also reported that it has restructured its alliance with Abbott. The companies will continue to work with each other exclusively through a profit sharing arrangement between Abbott and Celera in most areas of molecular diagnostics, while both companies will also work outside the alliance in other "selected areas."

As part of the restructuring, Celera has paid Applied Biosystems $30 million in cash. Celera Diagnostics was established in 2001 to discover and develop new gene- and protein-based diagnostics. Marketed products include the HIV-1 ViroSeq Genotyping System, analyte specific reagents used to detect genetic mutations associated with cystic fibrosis, and analyte specific reagents used for viral load monitoring and genotyping hepatitis C.

In other dealmaking news:

• Allergan (Irvine, California) reported that it is extending the expiration date of its exchange offer for all outstanding shares of common stock of Inamed (Santa Barbara, California) in its $3.2 billion merger offer for that company. The offer will now expire at 5 p.m., EST, Jan. 24. It previously was scheduled to expire at 5 p.m., EST, Jan. 9.

About 26,081,810 shares, around 71%, of Inamed's outstanding common stock had been tendered as of 4 p.m., EST, Jan. 9.

Allergan is offering to exchange for each outstanding share of Inamed common stock, either $84 in cash or 0.8498 of a share of Allergan common stock, at the election of the holder.

Botox maker Allergan beat out previous suitor Medicis Pharmaceutical (Scottsdale, Arizona) for the right to acquire breast implant maker Inamed by making a superior offer for the company this past November (Medical Device Daily, Nov. 16, 2005).

Allergan also confirmed that its registration statement has been declared effective by the SEC and that the shares of Allergan common stock to be issued to Inamed stockholders in the exchange offer and the subsequent merger have been authorized for listing on the New York Stock Exchange, two conditions to the exchange offer.

"We continue to make excellent progress in the closing of the acquisition and look forward to offering the benefits of the transaction to our customers, patients, employees and our stockholders in the near future," said David Pyott, Allergan's president, CEO and chairman.

• Satellite Healthcare (Mountain View, California) said it has acquired Peninsula Nephrology (San Mateo, California), a physician-owned dialysis program. As part of the deal, Satellite Healthcare will acquire Peninsula Nephrology's two existing dialysis centers, in San Mateo and South San Francisco. Terms of the transaction were not disclosed.

Satellite Healthcare focuses exclusively on the kidney and kidney-related disorders.

• AssistMed (Los Angeles) said it has acquired Lexicore (Salem, New Hampshire), a provider of speech recognition solutions for healthcare organizations. Terms were not disclosed.

"This strategic acquisition significantly ... now enables our organization to offer a full-spectrum of software and services to address the clinical information needs of healthcare practitioners, while providing a unique high-level of support for important government initiatives focused on creating affordable, patient-centric Community Electronic Health Records," said Leonardo Berezovsky, MD, CEO and chairman of AssistMed.

Lexicore's software is designed to enhance the output of back-end speech recognition engines, improving transcription productivity. AssistMed is an enterprise systems integrator, developer, and provider of Internet-based dictation/transcription and EHR application services.

• AmerisourceBergen (Valley Forge, Pennsylvania) has agreed to purchase Network for Medical Communications & Research (Atlanta), a private provider of physician accredited continuing medical education (CME) and analytical research for the oncology market, for about $90 million. AmerisourceBergen is a pharmaceutical services company.