A Diagnostics & Imaging Week

While its $21.5 billion planned acquisition of Guidant (Indianapolis) is still in limbo, thanks to rival Boston Scientific’s (Natick, Massachusetts) $25 billion counteroffer for that company, it appears healthcare giant Johnson & Johnson (J&J; New Brunswick, New Jersey) is not shying away from making substantial acquisitions in the meantime.

On Dec. 16, J&J reported that it had entered into a definitive merger agreement to buy insulin-delivery company Animas (West Chester, Pennsylvania) for $518 million in cash.

In the cash-for-stock transaction, Animas shareholders will receive $24.50 for each outstanding share, 35% premium to Animas’ Thursday closing stock price on the Nasdaq. Animas currently has 22 million fully diluted shares outstanding.

Once the merger is completed, Animas is expected to operate as a stand-alone entity reporting through J&J’s LifeScan (Milpitas, California) division, which makes blood glucose monitoring systems.

The acquisition affords LifeScan immediate entry into the rapidly growing insulin delivery pump market, J&J said.

Both company’s boards have approved the transaction, which is still subject to antitrust clearance and Animas shareholder approval.

The transaction is expected to close in 1Q06.

“The combination of Animas’ insulin delivery systems and LifeScan’s glucose monitoring systems will allow us to offer more comprehensive disease management solutions for our patients,” said Eric Milledge, J&J company group chairman with responsibility for the LifeScan business. “We have worked in partnership with Animas Corporation since 2003 and know they share our commitment and passion for advancing the standards of care for people with diabetes.”

Animas CEO and President Katherine Crothall said the acquisition would not only be in the best interest of Animas stockholders and employees, but would benefit people with diabetes.

“Insulin pumps allow significant improvements in blood glucose control over conventional therapy for people with insulin-requiring diabetes, reducing the long term morbidity of diabetes and improving quality of life,” Crothall said. “We expect that in combination with LifeScan, our capacity to further contribute to the management of this disease will be meaningfully increased.”

Nanogen (San Diego) reported signing an agreement to acquire the rapid cardiac immunoassay test business of Spectral Diagnostics (Toronto), including its cardiac STATus, Decision Point and i-Lynx product lines.

The total consideration for the transaction is C$9 million ($7.67 million), comprised of C$5.65 million in cash and C$3.35 million in Nanogen common stock.

The transaction is expected to close during 1Q06, subject to approval by Spectral’s shareholders and other customary closing conditions. Nanogen will assume related sales, marketing and manufacturing activities.

David Ludvigson, Nanogen’s president and CEO, termed the acquisition “part of our continuing strategy to acquire product lines and businesses to complement and accelerate our growth strategy to become a leading advanced diagnostics company.”

He added: “The Spectral point-of-care products are noted for their quality and, when combined with our StatusFirst congestive heart failure test, will significantly expand our offering and market position for the rapid diagnosis of cardiac conditions.”

In a conference call on the acquisition, Dr. Paul Walker, president and CEO of Spectral, said the transaction benefits both companies.

“For Nanogen, it does fit with their broader cardiac strategy. For Spectral, this is a way for us to capitalize on value that we’ve created in a portion of a business unit ... that has been decreasing in value for some time now.”

Walker said that the transaction will “significantly improve” Spectral’s financial position and enable it to move quickly to successful commercialization of its EAA Sepsis assay and West Nile products. The company also will maintain its reagent business, highlighted by its single-chain Troponin I products.

Looking forward, Walker said the company sees this asset sale as “the first step of a necessary revitalization of Spectral.”

According to Walker, the company’s exit from the cardiac testing market was largely due to the commonality of such tests, and the need to invest many more resources than Spectral had at its disposal to make that business profitable. “We expect this transaction to enhance Spectral shareholder value, as we execute on our strategic plans for our new products,” he said.

In other dealmaking activity:

• IDX Systems (Burlington, Vermont) said its shareholders have approved the proposed $1.2 billion merger into GE Healthcare (Chalfont St. Giles, UK).

There were 25,061,576 votes cast at the special shareholder meeting in favor of the merger, representing about 79.8% of the 31,414,129 eligible shares. There were 17,606 votes against and 8,124 abstentions, IDX said.

Upon the closing of the transaction each share of IDX stock will be converted into the right to receive $44 per share in cash. Following the closing of the transaction, IDX will become part of GE Healthcare.

According to Joe Hogan, president and CEO of GE Healthcare, “GE and IDX share a common goal of making a difference in healthcare through the delivery of state-of-the-art information and imaging technology globally. The combination of the two companies will position GE Healthcare as a leading provider of healthcare information technology, with comprehensive electronic health record solutions, administrative practice management tools, and enterprise image and information management solutions.”

On Nov. 4, the Federal Trade Commission and Department of Justice granted early termination of the waiting period under the Hart-Scott-Radino Act (HSR act). In addition, all other regulatory approvals have been received. The transaction is expected to close on Jan. 4.

The companies said the combination will create a leading healthcare IT vendor, offering one of the most comprehensive suites of clinical, imaging and administrative information systems on the market.

• 3M (St. Paul, Minnesota) reported that it has entered into a definitive agreement to acquire the Siemens Ultrasound (Malvern, Pennsylvania) division’s flexible circuit manufacturing line in Canoga Park, California.

Terms of the transaction were not disclosed.

This manufacturing line of the Siemens Ultrasound division produces flexible interconnect circuits that provide electrical connections between components in electronics systems used primarily in the transducers of ultrasound machines.

“Adding Siemens’ flexible circuits expands 3M’s business in the ultrasound and medical imaging markets,” said Frank Little, division vice president, 3M Electronic Solutions division.

3M Electronics is a provider of flex circuits used in medical devices and diagnostics, printer, and cell phone applications, as well as many other products for the electronics industry.

The transaction is expected to close by year-end, subject to customary closing conditions. The facility employs 56 people and will remain in Canoga Park as part of 3M Electronics.

• CeMines (Golden, Colorado) said it has been soliciting offers to purchase its Research Tools business and related inventory of polyclonal antibodies, cDNA and mRNA. The business also includes associated trademarks and a multinational customer base that includes some of the world’s most prestigious research institutions, the company said.

CeMines said it has received “multiple offers” since it began to selectively notify prospective buyers several months ago. It said it is actively reviewing pro forma bids, some of which it says are “quite interesting propositions” for extended business partnerships.

The company said it anticipates making a final decision before the end of this year.

CeMines is a life sciences company specializing in cell systems biology and regulatory network research and development that is principal to commercialization of clinical products for worldwide use in diagnosis and treatment of cancer.

• Integrated DNA Technologies (IDT; Coralville, Iowa) has completed its acquisition of custom oligonucleotide supplier GenBase (San Diego).

IDT said the acquisition, which results in the establishment of a new West Coast Operations division for the company, gives it “an immediate, locally based, next-day oligo production capability in the heart of the California biotech industry, as well as access to GenBase’s local knowledge and industry experience.”

Heading IDT’s West Coast operations in San Diego will be general manager Dan Dernbach, an eight-year veteran at IDT. GenBase’s CEO, Jun Wang, will remain as IDT’s vice-president of international sales, with a focus on the Pacific Rim. The new facility will use IDT’s in-house nucleic acid synthesis technologies and processes, and will begin oligonucleotide production late this month.

IDT is one of the largest suppliers of custom nucleic acids in the U.S., serving the areas of academic research, biotechnology, clinical diagnostics and pharmaceutical development.

• Alliant Diagnostics (Boca Raton, Florida), which provides drug testing and background screening services to employers, reported its merger with a Delaware company, ASD Group.

Under the terms of the merger, Alliant’s operations were merged into ASD and ASD changed its name to Alliant Diagnostics Inc. The shares of ASD were reverse-split on a 10:1 basis, and all of the shares of Alliant were cancelled and then immediately re-issued by the newly merged company.

The merger became effective for all purposes in late November. As a result of the merger, Alliant’s shares are now traded on the Pink Sheets under the trading symbol ADGJ.PNK.

• 20/20 GeneSystems (Rockville, Maryland) has acquired exclusive rights from the University of Kentucky (UK; Lexington) to a new blood test that it said has shown exceptional accuracy for the early detection and screening of non-small cell lung cancer.

Working with the team from UK and other medical and scientific groups, the company said it intends to develop a diagnostic that would help identify lung cancer in smokers, former smokers and other at-risk individuals at its earliest, most effectively treatable stages.