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Molecular Devices Enters Niche LCM, Sample Prep Markets with Acquisition of Arcturus Unit

Entering a new market, Molecular Devices has acquired the laser capture microdissection (LCM) business of Arcturus Biosicence for $10 million in cash.

The acquisition pushes Molecular Devices into the sample preparation products arena and puts the company in competition with other LCM tool providers, such as Leica Microsystems, Molecular Machines & Industries (MMI), and Carl Zeiss, which has an alliance for the technology with BCW Index firm Qiagen.

Though these firms are fighting in a relatively small market — Molecular Devices CEO Joe Keegan said it's "less than $50 million on a worldwide basis" —the company is betting Arcturus' LCM systems will be a "natural fit" with its genomics and cellular imaging products, and that the integration will entice a wider array of customers. LCM is "typically an upstream step for genomic or imaging analysis," Keegan said in a statement this week.

Under the terms of the acquisition, Molecular Devices bought Arcturus' LCM-related assets and hired 42 Arcturus employees. The LCM operations will immediately move to Molecular Devices' headquarters in Sunnyvale, Calif.

Arcturus has more than 1,000 LCM systems installed worldwide, according to Molecular Devices. The company's LCM platform includes reagents for sample preparation, instrumentation and consumables for visualization and excision, and additional reagents for post-capture processing.

"Offering the combination of both the sample preparation and the reagents that allow you to isolate the genetic material, both the DNA and the RNA, and make the measurement with our GenePix products, means we do come to the market with a complete solution for the genomics scientist."

Products in its portfolio include the Veritas LCM and laser cutting system, the RiboAmp RNA amplification kit, the PicoPure RNA isolation kit, the Paradise reagent line, the HistoGene LCM immunofluorescence staining kit, and the PixCell IIe LCM system, which is a new live-cell LCM system.

Although LCM is a new market for Molecular Devices, "we consider life-science research our market, and we consider the opportunity to sell laser capture microdissection to be a life science research opportunity for us," said Keegan. "It's not the classical territory for Molecular Devices, which has been microplate detection."

He said the LCM technology particularly complements Molecular Devices' GenePix platform for microarray analysis. "Offering the combination of both the sample preparation and the reagents that allow you to isolate the genetic material, both the DNA and the RNA, and make the measurement with our GenePix products, means we do come to the market with a complete solution for the genomics scientist," said Keegan.

"This isn't traditional sample prep, in terms of going to the wet lab," Keegan told BioCommerce Week in an interview this week. "This is a sophisticated, two-laser instrument … it's very laser optics-based, and many of our products are laser optics-based. The GenePix product can be bought with one or up to four lasers, and historically, a lot of our screening tools are laser-based. In a lot of ways, both in terms of the engineering foundation of the product, and the market that it's sold into, it's very near into what Molecular Devices does."

While some firms are applying LCM technologies to molecular diagnostic opportunities, Molecular Devices is sticking with genomic research applications, Keegan said. "It's not an entry into diagnostics for Molecular Devices," he said.

Keegan acknowledged that LCM is "not a huge market. We haven't given any specific information about that, but it's something less than $50 million on a worldwide basis," he said.

Among Molecular Devices' competitors in the LCM space is Carl Zeiss subsidiary PALM Microlaser Technologies, which inked a collaboration last year with Qiagen to combine its laser microdissection systems with Qiagen's reagents and components.

The other two major players are Leica and MMI, but "in terms of markets, we're clearly number one, and number two is a distant number two," Keegan claimed.

Molecular Devices expects that the acquisition will increase its 2006 revenues by between $8 million and $10 million and its earnings per share by $.03 to $.05 this year, though Keegan said the firm is not disclosing the annual revenue recognized by Arcturus for the LCM products at this time. Molecular Devices reported $181 million in revenues last year — a 21-percent year-over-year increase — atop earnings of $.95 per basic share, which declined from $1.08 in 2004.

The company is expected to provide further details and guidance during its first-quarter conference call, which will likely occur in early May.

Unlike several of its rivals in the BCW Index, Molecular Devices has had a modest acquisition strategy. The firm has traditionally done one acquisition per year, and it usually is a relatively small purchase. Keegan recently told BioCommerce Week that he doesn't expect that to change in 2006 (see BioCommerce Week 3/22/2006).

Molecular Devices' acquisition of Axon Instruments in July 2004 for $140 million in cash and stock was fairly large by the company's standards. The purchase brought Molecular Devices the ImageXpress cell-imaging products line, the PatchXpress system for ion channel analysis, and scanners for DNA and protein arrays. Perhaps most importantly, Molecular Devices gained a direct sales channel for its products, which it had previously lacked.

— Edward Winnick ([email protected])

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