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Caliper Gets $11M for Xenogen Biosciences Sale

This article has been updated to include comments from a conference call.

NEW YORK (GenomeWeb News) – Caliper Life Sciences today said that it has sold its Xenogen Biosciences subsidiary to Taconic Farms for approximately $11 million.

Xenogen Biosciences provides in vivo pre-clinical CRO services and became part of Caliper through the acquisition of Xenogen Corp. in 2006.

The sale is part of Caliper's ongoing efforts to divest non-core assets and enhance its focus on its core products, applications, and services. It said that roughly 90 percent of Xenogen Biosciences' business relates to animal production and phenotyping services, which "are not essential to growing Caliper's core IVIS instrumentation business," said Caliper.

In addition to the sale, Taconic will become the distributor of Caliper's LPTA models and will obtain non-exclusive rights to perform imaging services under Caliper's patent estate in this field. The mouse strains were developed by Caliper for use with its IVIS instruments to determine the safety and efficacy of drug candidates, and Caliper expects Taconic to create new mouse models for in vivo imaging applications for use by customers in IVIS instruments.

Of the $11 million in cash that Caliper will receive for the sale, 10 percent will be held in escrow for potential indemnification claims until April 30, 2011. After the escrow and estimated transaction costs, Caliper expects to receive cash of around $9 million for the current quarter. In addition, Caliper said that it may receive future payments tied to the distribution and supply agreement with Taconic for the LPTA mouse models.

"This sale further improves our balance sheet and will enable us to drive greater investment in our IVIS imaging business," Caliper President and CEO Kevin Hrusovsky said in a statement. "At the same time, through the remainder of our CDAS (formerly NovaScreen) business unit, we are able to consolidate our strategic pre-clinical CRO services in a single location and maintain our ability to offer services that are supportive of Caliper's core technologies."

Hrusovsky said during a conference call today that following the divestiture, 44 percent of the firm's revenues are linked to its IVIS business, and 22 percent is linked to its microfluidics business. He said that those are the two fastest growing segments within the firm and are expected to account for more than 70 percent of Caliper's revenues in 2010.

He also noted that Caliper has made three divestitures in the past 14 months, and it has additional opportunities to divest further businesses within the firm. He said that "there is probably $10 to $20 million in revenue that we would still consider to be non-core that's possible" for divestiture over the next two years.

As a result of the Xenogen Biosciences sale, Caliper updated its guidance for expected fourth-quarter revenues to a range of between $33 million and $35 million.

Hrusovsky noted during the call that the firm is following a three-course strategy: first, is a focus on its core biomolecular applications; second, is an effort to grow its recurring revenue and profit margins; and third, is the rationalization of some of its technologies. The six key biomarker applications areas identified by Hrusovsky include small molecules, biologicals, vaccines, next-generation sequencing, biomarkers and molecular diagnostics, and stem cells.

"When we launch our new product in the first half of 2010 for fractionation of next-gen sequencing that will be a very rapid growth opportunity for us starting in May of 2010," he said.

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