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Business as Usual for Stratagene Customers As Company Starts Integrating into Agilent

This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
One week after Agilent Technologies completed its $250 million acquisition of Stratagene, a company official said that he expects Stratagene’s molecular diagnostic collaborations to remain on track and that Agilent will be in close contact with those partners.
Agilent is at the beginning stages of the integration process and is focused on retaining Stratagene’s current customer base. As such, the Agilent official told BioCommerce Week that Stratagene’s sales channels will remain intact while Agilent’s sales team is trained to support the new product portfolio.
Agilent inked the deal in April to acquire Stratagene in a bid to add to its instrument offerings a vast portfolio of complementary consumables and reagents (see BioCommerce Week 4/11/2007). The acquisition also brought an established life sciences research customer base and molecular diagnostic technologies and collaborations missing from Agilent’s arsenal.
Stratagene has a molecular diagnostics collaboration with Siemens — originally signed in March 2006 with Bayer Diagnostics, which Siemens has since acquired (see BioCommerce Week 3/8/2006). Under terms of that deal, Bayer agreed to sell customized versions of Stratagene's Mx3005P instruments to clinical labs for molecular diagnostic testing worldwide.
It also has a partnership with Focus Diagnostics, which was bought by giant clinical lab firm Quest Diagnostics last year, under which Focus is developing diagnostic assays based on Stratagene’s FullVelocity technology (see BioCommerce Week 12/8/2005).
This week, Nick Roelofs, vice president and general manager of Agilent’s Life Sciences Solutions unit, said, “We expect these projects to continue on track. These are very important customers and we will continue to maintain close contact with them.”
In addition to the molecular diagnostic collaborations, Agilent gained immediate entry into the clinical diagnostics market with the assays Stratagene had obtained through its merger with HyCor Biomedical in 2004, as well as staff with extensive experience dealing with the US Food and Drug Administration's regulatory procedures.
Agilent’s future plans for the molecular diagnostics market, beyond retaining Stratagene’s collaborations and customers in the field, are not yet clear. At the JP Morgan Healthcare Conference in January, Roelofs, who is a former COO of Stratagene, and Agilent CFO Adrian Dillon suggested that Agilent’s preferred format for the molecular diagnostics market is its Lab-on-a-Chip technology (see BioCommerce Week 1/17/2007).
In answering questions from BioCommerce Week via e-mail this week, Roelofs declined to specify which of Stratagene’s molecular diagnostic technologies have been sold or licensed to a new company, called Decisive Diagnostics, that has been formed by former Stratagene Chairman and CEO Joe Sorge. As part of the acquisition agreement, Sorge paid $6.6 million for the rights to certain of Stratagene’s molecular diagnostics technologies.
Roelofs also declined to comment on any of Stratagene’s outstanding legal issues, which include its appeal of a $16.2 million judgment against the firm in a patent-infringement case filed by Invitrogen, the related countersuit against Invitrogen, and a patent-infringement suit filed recently by Stratagene against Bio-Rad Laboratories. Most recently, Applera filed a patent-infringement suit against Stratagene in Europe seeking an injunction on certain of Stratagene’s thermal cycler products (see BioCommerce Week 5/30/2007).

“We expect these projects to continue on track. These are very important customers and we will continue to maintain close contact with them.”

Business as Usual
“Our first order of business is to make sure [Stratagene’s] existing customers remain satisfied,” said Roelofs. “Stratagene sales channels are remaining intact and customers should continue to order Stratagene products in the same way they have been ordering them.
“The Agilent sales channel will also be trained over time to support Stratagene products,” he added.
Roelofs said there are many complementary technologies that can be combined into new integrated workflows, and chief among these are Stratagene’s microarray quality-control reagents and labeling kits. “These products are a natural fit and expand our own microarray offerings,” he said.
Agilent trails market-leader Affymetrix by a wide margin in the microarray field, but company officials believe the firm tops the market for rapidly growing comparative genomic hybridization microarray applications.
Roelofs also noted that Stratagene will be rebranded as “An Agilent Technologies Company,” with that line being added to Stratagene’s current logo. “We’ll be evaluating product line branding in the future,” he added.
Upon completion of the acquisition, Agilent issued revised revenue guidance for its third quarter up to a range of between $1.38 billion and $1.42 billion from earlier projections of between $1.36 billion and $1.4 billion.
Though the expected results would be 2 percent to 4.8 percent lower than last year’s third quarter, last year’s results included the operations of Verigy, the semiconductor business Agilent spun off during the year. Adjusted for that discontinued operation for the third quarter of 2007, revenue was $1.2 billion, meaning that Agilent’s revised guidance represents a growth of between 11 percent and 15 percent.