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An Array Customer is Born as Genaissance Sets To Buy Houston s Lark Technologies for $19M

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With the joining of Genaissance Pharmaceuticals and Lark Technologies, a new microarray customer may be created.

Genaissance Pharmaceuticals of New Haven, Conn., announced last week that it will acquire Lark Technologies of Houston, in an all-stock transaction worth about $19.9 million.

The deal has been approved by the boards of directors of both publicly traded companies and is expected to close in the first half of 2004, subject to shareholder approval.

For the microarray industry, the acquisition is notable because Lark Technologies’ business is focused on Good Laboratory Practices-compliant research services, and the company provides microarray support, among other offerings to customers in pharmaceutical, diagnostic, and agricultural product research and development. The company, which also has a site in Cambridge, has a long-term deal with Pfizer to support the research operation located in Sandwich, UK.

Microarrays were not the primary impetus for the acquisition, which was accomplished in a relatively swift six months, Kevin Rakin, president and chief executive officer of Genaissance, told BioArray News.

“It wasn’t a consideration, it’s a pretty small part of their business,” he said. However, in the future, Rakin said he sees microarray support as an important part of a potential premium services offering.

This is the second acquisition this year for Genaissance, which acquired DNA Sciences in April for $1.3 million. Genaissance, a pioneer in using haplotype technologies in drug-discovery alliances with the pharmaceutical industry, expects to take in $25 million in pro forma revenues for 2004, and to reduce its operating loss and expand its service and technology portfolio as a result of the transaction, according to the company. With $23.3 million in cash on hand as of June 30, the company, which slashed its R&D budget during the first two quarters to slow down a cash burn rate that had reached $18 million a year, said it had enough money to last 10 months.

Lark Technologies reported a 50 percent increase in its revenues for the third quarter ending Sept. 30, compared to its total revenues for the year-ago quarter. The company had net revenues of $243,000 for the quarter, compared to $154,000 for the year-ago period. The company had total revenues of $2.4 million for the period, compared to $1.6 million for the same quarter in 2002. 

Carl Balezentis, Lark’s president and CEO, will join Genaissance as senior vice president and will remain president of the Lark Technologies division.

He told BioArray News that Lark Technologies, which offers microarray validation services using techniques such as quantitative PCR and Northern blots, would be considering the addition of microarray services in the future, in addition to its validation services. If it decides to do so, the company is likely to choose an alternative to Affymetrix.

“Affymetrix is expensive,” Balenzentis said. “And from what we have heard from our customers, there are some platforms that are better suited for the custom, smaller types of arrays that they want to build — a little more specific, better binding, lower background — like the Agilent platform,” he said. “They have been pretty high on that, in terms of the data they get off of it.”

However, Balezentis did not rule out also providing Affymetrix microarray analysis services, in a possible partnership with Genome Explorations out of Memphis, Tenn. (see BAN 2/14/2003).

“They have done a nice little business and we have talked with them about partnering with them to continue and develop new services and do it under a GMP quality system,” Balezentis said.

— MOK

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