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Sigma-Aldrich Expands RNAi Play with Genospectra Pact; Execs Reviewing List of Acquisition Candidates

Licensing certain technologies from privately held Genospectra, Sigma-Aldrich has further expanded its presence in the RNAi and cell-based assay fields.

As part of the alliance announced last week, the companies said they plan to develop new technology and products in the area of cell-based assays, and in particular aim to develop live-cell biosensor assay reagents that can provide real-time data on the location and activity of proteins in living cells.

Sigma-Aldrich officials also revealed this week that they are reviewing a list of 175 acquisition candidates with an eye toward expanding their offerings this year.

Terms of the alliance call for Sigma to gain access to Genospectra's QuantiGene gene expression-profiling assay and its nanoparticle system for delivery of siRNA and other biomolecules to cells, called its inducible siRNA technologies.

Sigma-Aldrich also has made an undisclosed minority equity investment in Genospectra, which announced last week that it had acquired Panomics, a manufacturer of reagents for transcription regulation, cell signaling, and signal transduction. Genospectra, which now operates under the Panomics name, said that Sigma-Aldrich was one of several investors to participate in a $12.2-million financing in connection with the acquisition.

"We're not done in biotech, molecular biology, or genomics by any stretch. The fact is there are still parts of the world where we are underrepresented."

Genospectra does not currently offer products for live-cell assays. Its flagship product, QuantiGene, was licensed exclusively in 2004 from Bayer Diagnostics and rebundled as a product that allows basic researchers to quantify the absolute amount of mRNA in fresh cell lysate without the need for amplification, reverse transcription, or any other preparation methods.

In August 2004, Genospectra signed a deal with RNAi firm Dharmacon, which is owned by Sigma-Aldrich rival Fisher Scientific, to bundle QuantiGene with Dharmacon's RNAi reagents into a single product offering.

Sigma officials were unable to comment in time for this article.

The alliance and equity investment is the latest in Sigma's aggressive strategy for growth in the RNAi field. A year ago, the firm entered the RNAi market through the acquisition of Proligo (see BioCommerce Week 2/24/2005), which trails dominant player and Fisher Scientific subsidiary, Dharmacon, and reagent giant Qiagen in the emerging RNAi reagent sector.

A few months ago, Sigma-Aldrich expanded its RNAi play by acquiring the rights to Benitec's RNAi patent portfolio, while taking an equity stake in that firm as well (see BioCommerce Week 10/27/2005). The primary goal of that alliance is to help expand Proligo's current offerings and quell any patent-infringement fears potential pharmaceutical partners may have about licensing its technology.

The firm also holds non-exclusive rights to the Kreutzer-Limmer patent family owned by Alnylam through a pact signed last summer. The patents cover short-interfering RNAs and their use to mediate RNA interference in mammalian cells. At the time, Sigma became the 12th company, joining seven reagent and service providers, to take a license to Alnylam's patent estate.

"The thing about RNAi and many of the initiatives we've announced over the last six to 12 to 18 months, is we're really in the early days of these things," Mike Hogan, Sigma's CFO, said during the firm's fourth-quarter conference call today. He cited RNAi collaborations with the Broad Institute, Dana Farber Cancer Institute, MIT, and Harvard University as providing the firm with "access to some of the leading thinkers in these fields. But the full fruit and benefit of that to Sigma-Aldrich shareholders is out five and 10 years, not five and 10 months."

Q4 Sales up 16.7 Percent

Separately this week, Sigma reported fourth-quarter sales growth of 16.7 percent, with 11.5 percent of that amount attributed to JRH Biosciences, which Sigma acquired in January 2005 (see BioCommerce Week 1/20/2005). Total revenue for the quarter was $410.5 million, compared with $351.9 million in the fourth quarter of 2004. It reported organic growth of 9.3 percent for the quarter.

The firm's net income grew 4.8 percent to $57.3 million, or $.84 per share, from $54.7 million, or $.79 per share, year over year. Its R&D spending rose 9.9 percent to $12.2 million for the quarter.

For fiscal 2005, Sigma's revenue rose 18.2 percent to $1.67 billion from $1.41 billion the year before. Its organic sales growth was 8.2 percent.

Sigma posted a profit of $258.3 million for 2005, an increase of 10.9 percent over last year's net income of $232.9 million. The firm posted earnings per share of $3.76 for 2005 versus EPS of $3.34 in 2004, and its R&D spending increased 16.9 percent to $49.8 million from $42.6 million.

Sigma finished 2005 with $98.6 million in cash and cash equivalents, and $283.2 million in long-term debt.

The firm is predicting organic sales growth of 7 percent and EPS of $3.80 to $3.90 for 2006.

During 2005, Sigma-Aldrich restructured its business into four units in an attempt to more effectively serve its customer base (see BioCommerce Week 7/14/2005). The reorganization divided Sigma's existing Scientific Research and Biotechnology businesses into three "customer-centric" units called Essentials, Specialties, and Biotech. Each unit is overseen by a president that reports to Jai Nagarkatti, the company's new CEO, who assumed that post at the beginning of 2006 following the retirement of David Harvey.

Part of the renewed emphasis on the customer base has included executives getting first-hand feedback from clients. "One of the things that we're doing, that we don't talk about a lot, is each of the senior executives in the company … we are actually out sitting with customers, learning a great deal about how to serve them better, and have been doing that for the last six months," said Hogan.

Company officials also noted during the call they have a list of 175 acquisition candidates. The firm expects to make a few more acquisitions this year, though they said none of them would be of the size of JRH, which Sigma purchased for $370 million.

In discussing areas in which Sigma may look to expand its offerings through acquisitions this year, Hogan said, "We're not done in biotech, molecular biology, or genomics by any stretch. The fact is there are still parts of the world where we are underrepresented. Those are the areas we are most interested in." He did not provide further details.

— Edward Winnick ([email protected])

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