By Turna Ray
Qiagen's proposed acquisition of Australian testmaker Cellestis would give the firm a test portfolio that will work in concert with its existing tests and allow it to improve diagnostics for preventing disease and personalizing care.
The A$341 million ($355 million) acquisition plan, announced this week, is still subject to approval by Cellestis' shareholders. Qiagen projects that the transaction will be approved in June, when Cellestis' shareholders are scheduled to meet.
Upon successful completion of the deal, Qiagen will immediately gain access to Cellestis' "pre-molecular" technology, the QuantiFeron platform, which detects interferon-gamma produced in response to antigen exposure. Cellestis' flagship products are a test for latent tuberculosis, QuantiFeron-TB Gold In-Tube, and another test that monitors disease risk due to cytomegalovirus.
Cellestis posted A$40.4 million in receipts for its fiscal year ending June 30, 2010, which represents a 17 percent increase year over year. Qiagen said its offer price for Cellestis represents a 39 percent premium over its share price over the prior six-month period prior to the offer.
With the help of QuantiFeron tests in the first-line setting, Qiagen is hoping to improve the capabilities of DNA and RNA diagnostics in its portfolio. In turn, as part of Qiagen, Cellestis wants to accelerate the adoption of its products in the healthcare market.
Qiagen believes the acquisition could also enhance its position in personalized medicine. New classes of medicines often warn that patients should not be at risk of having latent TB and should be free of other viral infections before receiving the treatment. As such, this creates new market opportunities for Cellestis' QuantiFeron-based infectious disease tests.
Qiagen's other personalized medicine acquisition occurred in 2009, when it purchased DxS for $95 million. That acquisition gave Qiagen a greater foothold in collaborating with drug companies for the co-development of Rx/Dx combination products.
In a research note, Brian Weinstein, an analyst for Chicago-based investment firm William Blair, wrote that the acquisition is in line with Qiagen's personalized medicine focus. "The strategic alliances it has established should provide a strong ﬁrst-mover advantage in what we believe will be the fabric of 21st-century healthcare," Weinstein said.
Furthermore, in the face of increasing competition in the HPV diagnostics market from players such as Roche, Gen-Probe, and others, it may be a good strategy for Qiagen to acquire companies that will help grow other aspects of its business.
Qiagen entered the HPV molecular testing market in mid-2007 with the acquisition of Digene for $1.6 billion. According to Weinstein, Qiagen's HPV business accounts for 25 percent of its total revenues, but the segment performed poorly last year due to declining doctors' office visits. Weinstein predicted that revenues from Qiagen's HPV tests could further decline in the coming years as new tests enter the market.
With the Cellestis acquisition, Qiagen may be trying to offset declines in the HPV testing market by growing its leadership in at least two large infection disease markers. Qiagen is projecting double-digit sales growth from QuantiFeron products in 2012.
By testing whole-blood samples for the presence of "systematically amplified" molecular analytes, Cellestis claims that its QuantiFeron platform can provide information on the diagnosis of latent infections that excrete low levels of pathogens, often undetectable by DNA/RNA-based diagnostics.
"Patients identified to be at risk for certain diseases using QuantiFeron assays can then be tested and monitored with corresponding Qiagen molecular diagnostics to assess the level of disease activity or to guide treatment decisions," Przemek Jedrysik, Qiagen's associate director of public relations, told PGx Reporter this week. "To fully capitalize on these possibilities, Qiagen would primarily look into the development of QuantiFeron assays that are complementary to our existing portfolio of DNA- and RNA-based tests for profiling of infections."
According to Jedrysik, the QuantiFeron technology operates by stimulating effector T-cells in whole blood with a specific antigen, and then quantifying the resulting interferon-gamma in the plasma. "Individuals exposed to diseases have specific T-cell lymphocytes in their blood that maintain an immunological memory for the immunologically reactive molecules (antigens) of the priming disease," Jedrysik explained via e-mail.
When a disease antigen is added to the blood of an individual, the antigen-specific effector T cells become restimulated, and can respond quickly when exposed to the priming antigen. "Thus the production of interferon-gamma in response to antigen exposure is a specific marker for cellular immune response against that disease antigen," Jedrysik added.
Qiagen plans to migrate Cellestis' QuantiFeron technology onto its QIAsymphony, QIAensemble, and point-of-care testing platforms. At first, Qiagen envisions that the QuantiFeron technology will mostly be applied in the infectious disease space.
Currently, the majority of Cellestis' sales come from its TB test, which was approved by the US Food and Drug Administration and is considered to be an improvement over the tuberculin skin test, which was the standard method of gauging latent tuberculosis for more than a century.
"Most latent infections today cannot be detected using DNA-based molecular diagnostics," Qiagen noted in a statement, though the company expects that this test will enhance its existing portfolio of real-time PCR and pyrosequencing DNA-based molecular detection technologies in diagnosing TB infections.
Qiagen also plans to adapt the QuantiFeron technology for use with its ESE detection system, particularly to enhance TB testing in healthcare settings that don't have laboratory access.
According to Cellestis, its QuantiFeron -CMV4 test, commercialized in 2009, is the first test that enables doctors to monitor a person's risk of cytomegalovirus disease. "These patients are being treated with medicines that suppress the body's immune system, which increases the risk for infections," Qiagen said in a statement, adding that Cellestis' QuantiFeron-CMV will help bolster Qiagen's DNA- and RNA-based molecular tests used in transplantation medicine. Additionally, Qiagen said it plans to submit a premarket approval application with the FDA this year for the Artus RG PCR CMV test.
Beyond the tests for TB and CMB, Cellestis is also developing other tests for latent infection using its QuantiFeron technology. While the company said these tests also stand to be "highly complementary" with its existing pipeline of molecular diagnostics, they have not yet been disclosed.
Eventually, Qiagen may decide to use Cellestis' platform in non-infectious disease settings. "In the long term, the technology could also be used to address other non-infectious diseases which induce body immune responses, but we believe it is too early to speculate about potential targets at this point," Jedrysik said.
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