Bayer Corp. is scooping up Visible Genetics Inc. for $61.4 million in cash as the parties signed a definitive agreement for a deal that brings to Bayer VGI's Trugene HIV-1 Genotyping Kit and OpenGene DNA Sequencing System.

The product, which received marketing clearance in September, expands Bayer's presence in the nucleic acid diagnostic segment of the professional laboratory market. The company's Tarrytown, N.Y.-based diagnostics division labeled the acquisition another milestone in a strategy to expand its infectious disease portfolio through marketing molecular diagnostic tests.

"They feel molecular diagnostics is a growth area," Bruno Maruzzo, VGI's director of investor relations, told BioWorld Today. "They want to be a dominant player in that area, and they feel our technology will help them. We have the only FDA-approved, sequence-based product out there, and we do have sales of that product. We also have other products we are developing."

Bayer called the combination of Trugene, with its line of Versant HIV and HCV viral nucleic acid tests, key to increasing its involvement in nucleic acid diagnostic assay virology. Trugene gives Bayer an immediate U.S. presence in HIV resistance testing, complementing its own Versant line of tests. Viral load testing is used to monitor therapeutic effectiveness, especially in managing HIV-infected patients.

The acquisition covers all VGI sequencing assays, including its hepatitis assays still under development.

"I guess they see that as an opportunity to quickly get into that specific area of genotyping that they're currently not in," Maruzzo said.

Bayer is purchasing VGI's approximately 19.5 million issued and outstanding shares, as well as Series A preferred shares, at $1.50 per share - a premium of 27 to the pharmacogenomics company's opening price Tuesday of $1.18.

VGI said it plans to hold its shareholders' meeting to vote on the transaction in October. CEO Richard Daly is scheduled to remain in place for six months following the deal's close to advise during the transition period.

The sale hardly comes as a surprise, as VGI said it would consider selling its assets a little over a month ago after lowering revenue projections. After releasing first-quarter financial results, the Toronto-based firm dropped its 2002 revenue estimates to a range of $20 million to $25 million instead of the $32 million to $37 million previously estimated. VGI said the lowered outlook reflected a slower uptake of genotyping kits and consumables, and delays in securing a distribution partner for its hepatitis C product. (See BioWorld Today, May 31, 2002.)

In its June 1996 initial public offering, VGI sold 2.5 million shares at $11.50 each. In the past year, its stock has climbed as high as $26.65 and fallen as low as $1.15.

VGI's stock (NASDAQ:VGIN) rose 21.2 percent Tuesday, or 25 cents, to close at $1.43. Bayer's shares (NYSE:BAY) fell $1.26 to close at $25.50.