Taking another step in its evolving strategy to gain a foothold in the next-generation DNA sequencing market, Applied Biosystems has inked a deal to acquire Agencourt Personal Genomics for approximately $120 million in cash.
The acquisition provides ABI with a relatively advanced technology in the emerging market for alternative DNA sequencing instruments, and the firm said it expects to place initial systems with early-access customers in 2007.
"After conducting a thorough evaluation of more than 40 companies and academic research groups, we have concluded that APG's technology is both tested and commercializable," said ABI President Cathy Burzik in a statement. "APG has the potential to expand our market by addressing multiple applications cost effectively and by combining sample preparation and analysis within a single platform."
In addition, a company official told BioCommerce Week that the firm is not done evaluating other next-generation sequencing technologies for possible acquisition or partnering opportunities. ABI in October made an undisclosed equity investment in Visigen, another emerging next-generation sequencing technology company.
For Beckman Coulter, which held a 49-percent stake in APG, the sale marks the end of its short-term dance in that market — though the firm still sells its legacy electrophoresis capillary-based sequencing instruments.
As part of the deal, ABI will pay Beckman approximately $50 million in cash for its interest in APG. Beckman acquired the stake as part of its $140-million acquisition of Agencourt Biosciences last May (see BioCommerce Week 5/5/2005).
"What we're selling isn't of critical importance to us."
The remainder of the purchase price will go to the other shareholders of APG, which includes management of the unit.
The sale of Beckman's stake in APG is not much of a surprise, given that at the time of the Agencourt acquisition Beckman officials had said that they planned to eventually spin off APG.
But just last week, Bruce Wallace, who runs Beckman's nucleic acid testing business, wrote to BioCommerce Week in an e-mail that Agencout's sample-prep and sequencing technology were important to the company. "Both [technologies] form a key part of our strategy going forward," he said (see BioCommerce Week 5/24/2006).
"We will continue to develop the SPRI-based chemistries with differentiated products, specifically products that address the molecular diagnostic testing market. In the case of the genomic services business, we plan to expand both our geographic reach as well as our product offering."
He added that the firm had "no specific plans to out-license" either technology.
This week, Paul Whitlock, a company spokesman, said that it would be "difficult to answer" whether Beckman would retain any interest in Agencourt's next-generation sequencing technology. However, he added, "What we're selling isn't of critical importance to us."
Beckman will continue to offer Agencourt's DNA sequencing services, which use ABI's 3700 and 3730xl DNA sequencers. "The only action we're taking is regarding APG," Whitlock told BioCommerce Week. "So, nothing else of what we acquired is being changed in any way at this stage."
While it is selling off the sequencing technology, Beckman retains Agencourt's Solid Phase Reversible Immobilization (SPRI) technology for isolating and purifying DNA and RNA in its automated sample preparation systems for biomedical research and molecular testing. Whitlock confirmed that the SPRI technology was the key to the Agencourt acquisition last year as Beckman crafts its strategy for the molecular diagnostics market.
Whitlock told BioCommerce Week in a separate interview last week that Beckman was still considering divesting assets that aren't considered core to the company's growth strategy. The firm is nearing the end of a reorganization, begun last summer, which included a 3-percent reduction in its workforce and combining the firm's two operating divisions — Clinical Diagnostics and Biomedical Research — into one.
Piecing Together Technologies; ABI Not Done Evaluating
APG's massively parallel sequencing method, based on fluorescence stepwise ligation technology, is expected to complement current ABI platforms and will be applicable to genetic analysis applications such as de novo genome sequencing and high-throughput genotyping.
Kevin Corcoran, vice president and general manager of ABI's genetic analysis business, suggested in an e-mail to BioCommerce Week that the firm may not be done shopping. "AB will continue to evaluate technologies that have the potential to provide real time single molecule sequencing," he wrote.
He said that ABI expects Agencourt to be an early access customer of the APG technology. And though the APG technology combines sample prep and analysis in a single platform, Corcoran said that Agencourt's SPRI was not the sample prep technology being used.
APG is racing against several other efforts from start-up rivals including 454 Life Sciences, Solexa, Helicos BioSciences, Pacific Biosciences, Microchip Biotechnologies, AQI Sciences, GenoVoxx, and VisiGen Biotechnologies, to stake an early lead in the next-generation sequencing market.
Thus far, 454 is the only firm out of the bunch to sell its instrument, while Solexa hopes to commercialize its platform within the next few months. The others are in various stages of development, with APG and Helicos recently telling BioCommerce Week sister publication Genome Technology that they plan to begin marketing their respective sequencers in 2007.
In October 2005, ABI made an undisclosed equity investment in VisiGen and began collaborating with the firm on its real-time sequencing system, in which polymerase and nucleotides act together as direct molecular sensors for DNA base identification (see BioCommerce Week 11/3/2005). According to Corcoran, ABI does not intend to combine VisiGen's technology with APG's technology.
The collaboration with VisiGen was the first glimpse at ABI's plans for the next-generation sequencing market since it acknowledged at an investors' conference in late September that it was working on its own alternative sequencing technologies (see BioCommerce Week 10/6/2005). ABI executives had stressed at the time that the partnership with VisiGen was just the beginning.
"I can't predict over time exactly what action we are going to take, but we are not limited by the one action we have taken so far with VisiGen," Burzik said at the time.
APG's R&D team will continue to be based in Beverly, Mass., and will become part of ABI's molecular and cell biology division in Foster City, Calif. ABI expects to close the acquisition in the third quarter.
ABI said that it expects the acquisition to be dilutive in both fiscal 2007 and 2008, primarily due to R&D spending, commercialization activities, and acquisition-related amortization associated with APG. Dilution to ABI's 2007 earnings is expected to be $.06 per share.
The firm expects the acquisition to be accretive in fiscal 2009.
— Edward Winnick ([email protected])