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Aiming to Boost Molecular Dx Portfolio, Cepheid Acquires Assay Maker Sangtec

This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
 
In an effort to expand its emerging molecular diagnostics business, Cepheid announced last week that it has acquired Sangtec Molecular Diagnostics from Altana Pharma for approximately $27 million in cash.
 
The acquisition gives Cepheid a portfolio of real-time PCR-based assay kits for a variety of infectious diseases that affect immunocompromised patients. The firm intends to introduce Sangtec’s assays into the US market initially for research-use-only and eventually seek US Food and Drug Administration clearance for the tests.
 
The acquisition also provides Cepheid with significantly more content for its instrument platforms, as it aims to keep pace with other RT-PCR assay makers, such as Qiagen, Tm Bioscience (which is being acquired by Luminex), Third Wave Technologies, Stratagene, Beckman Coulter, and Prodesse.
 
Among Sangtec’s Affigene kits are assays for cytomegalovirus, Epstein-Barr virus, herpes simplex virus 1 and 2, hepatitis B virus, varicella zoster virus, BK virus, and aspergillus.
 
Sangtec makes similar kits for a variety of platforms, Cepheid CFO John Sluis told BioCommerce Week following the announcement. It makes assays for Cepheid’s SmartCycler instrument, as well as for Roche, and “they have their own line of products” that can run on other platforms, he said.
 
Sluis said that Sangtec would continue to offer those assays that run on competitors’ instruments.
 
“These are highly complex assays, and they would be sold into laboratories,” said Sluis.
 
To be sold in the US, the assays would require FDA approval. “Right now, they’re marketed elsewhere as regular in vitro diagnostic products [and] CE-marked,” he said. “In the US, we will begin introducing the products here on a research-use-only basis and then ultimately look at possible 510(k) submissions and clearance.”
 
He said Cepheid is not giving specific guidance right now on when it would seek FDA clearance. Like Cepheid, Sangtec holds a license to Roche’s PCR patents for diagnostic assays.
 
Although Sangtec has not developed any of the assays for multiplex systems, “that’s part of our overall strategic plan relative to Sangtec — to eventually incorporate the GeneXpert cartridge into their development and manufacturing scheme.”
 
Launched in 2004, the GeneXpert is Cepheid’s fully automated molecular diagnostics system for biothreat detection. The system’s single-use cartridges can detect multiple targets. The GeneXpert technology has been incorporated into a biohazard detection system manufactured by Northrop Grumman and is used at postal facilities to identify anthrax.
 
Cepheid’s SmartCycler instrument is also a multiplex RT-PCR system. The firm has about a dozen assays that run on its SmartCycler, said Sluis.
 
Cepheid currently offers three assays that have been cleared by the FDA. It sells four assays that run on the GeneXpert and are for research-use but have diagnostics potential and are CE-marked, said Sluis.
 
Last July, the FDA cleared Cepheid’s Group B Streptococcus molecular diagnostic assay for use on the GeneXpert instrument.
 
In addition to the assay kits, Sangtec, which is based in Bromma, Sweden, will provide Cepheid with an established reagent manufacturing base in Europe. The firm generated revenue of roughly $8 million in 2006. Sluis said Cepheid would provide revenue guidance for Sangtec during its fourth-quarter conference call next week.
 

“In the US, we will begin introducing the products here on a research-use-only basis and then ultimately look at possible 510(k) submissions and clearance.”

Sangtec employs 59 people, one-third of whom are in R&D, one-third are in manufacturing, and the remaining third are in sales and administration, according to Sluis. He said that Cepheid intends to retain all of Sangtec’s employees.
 
”Sangtec will be an integral part of the [R&D] program,” said Sluis. “They complement us from an R&D standpoint. They’re very experienced at developing real-time PCR products. Some of our efforts might be joint efforts between here and Sweden,” he said.
 
Its instruments and assays compete in a rapidly growing market — most estimates place the molecular diagnostics market at $2 billion and growing at more than a 20 percent clip — that includes several companies in the BCW Index, including a couple that have pursued a similar route of acquiring smaller assay developers.
 
Qiagen has spent the past two years building its portfolio of molecular diagnostics assays through internal efforts and acquisitions. Similar to Cepheid, Qiagen decided to quickly grow its assay portfolio through the May 2005 acquisition of German firm Artus for $40 million (see BioCommerce Week 6/2/2005). That deal brought Qiagen more than 60 assays, 30 of which had already received the CE Mark.
 
It also recently acquired multiplex-assay maker Genaco for up to $40 million, depending on whether certain milestones are met (see BioCommerce Week 11/1/2006).
 
Meanwhile, Luminex, whose xMAP technology is used by many firms in the molecular diagnostics field in developing mutiplex assays, recently signed a deal to acquire molecular diagnostics manufacturer Tm Bioscience for $44 million (see BioCommerce Week 12/20/2006).

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