Paradigm Genetics to Buy TissueInformatics in All-Stock Deal

NEW YORK, Jan. 29 (GenomeWeb News) - Paradigm Genetics plans to acquire TissueInformatics in an all-stock deal that may eventually be worth $7.8 million if based on today's closing price of Paradigm shares, the companies said today.

TissueInformatics, which is based in Pittsburgh, Pa., develops automated pathology software for the quantitative analysis of tissue changes in drug discovery, disease assessment, toxicology, and tissue engineering, the company said.

Paradigm, of Research Triangle Park, NC, intends to use these technologies in its biomarker and target-discovery efforts. Paradigm will also obtain a portfolio of drug targets and diagnostics products in diabetes, obesity, and ageing through TissueInformatics' joint venture with DiAthegen.

Terms of the deal call for Paradigm to issue approximately 3.4 million shares immediately, while around 2.7 million additional shares are subject to undisclosed performance milestones. Based on the closing price of Paradigm shares on Thursday, which was $1.28, the total cost for the acquisition in stock would be $7.8 million. Paradigm also stands to pocket approximately $2.7 million in cash and assume roughly $150,000 in long-term debt and capital lease obligations if the deal closes.

If the deal closes, Paradigm will employ 225 people--Paradigm currently employs around 200 people, and TissueInformatics 24 people--and it will continue to be based in ResearchTrianglePark. TissueInformatics' operations in Pittsburghwill remain in operation, Paradigm said. Additionally, the existing TissueInformatics management team will join Paradigm Genetics. Peter Johnson will become executive vice president and chief medical officer, and Mark Braughler will become vice president of business development of healthcare.

In addition, Todd Joron will head the TissueAnalytics software business, and Max Fedor will oversee product development of the unit.

In March 2003, the two companies penned a biomarker-discovery collaboration centered on liver disease.