Oxford Gene Technology this week announced that it has acquired Cytocell, a supplier of probes for fluorescence in situ hybridization experiments.
OGT CEO Mike Evans told BioArray News that the deal will enable the Oxford, UK-based company to sell more products to customers that use its chromosomal microarrays, as well as to develop new FISH probes based on array findings.
"In the developmental delay area, when a customer has got an array result, he or she often confirms the result using FISH, or [does] parental studies using FISH," Evans said. "By having the capability to sell FISH probes for those applications, we can sell additional tests to the same customer base," he said. "This deal is definitely an opportunity to grow sales together, because we will have more than one technology going into the same markets."
OGT used a combination of cash and debt provided through Silicon Valley Bank to finance the transaction, which Evans said closed last week. Going forward, Cytocell's 30 employees will remain at the company's office in Cambridge, UK, while Cytocell will become a subsidiary of the OGT Group. OGT itself employs 70 people, so the combined companies have a workforce of 100 personnel.
Evans cited Cytocell's "very strong team," as one of the reasons for the acquisition. He also noted that the business is "fast growing and profitable," with sales of £4.5 million ($7.5 million) in 2013, and an annual growth rate of 20 percent. Because of the "positive financial impact" for OGT, Evans said that the Cytocell deal made more sense than signing up with a supply partner.
The deal could also make OGT more competitive against other players in the chromosomal microarray market. Agilent Technologies, which manufactures OGT's CytoSure chips, two years ago introduced its own line of oligonucleotide SureFISH probes, while BlueGnome, also based in Cambridge and now an Illumina company, maintains a library of 26,000, prelabeled bacterial artificial chromosome-based BlueFISH probes.
Cytocell, founded in 1991, supplies FISH probes based on a library of 34,000 BAC clones. The company offers 350 products for cytogenetics, hematology, and solid tumor analysis, as well as custom FISH probes through its myProbes brand.
Martin Lawrie, Cytocell's managing director, told BioArray News that Cytocell's probes have been sequenced and mapped to the most recent iteration of the human genome. He said that myProbes custom products often develop into catalog products, and that OGT array findings could similarly find their way into the Cytocell catalog in the future.
"Researchers using arrays may well pick up recurrent chromosome rearrangements or deletions that could easily be made into FISH probes," Lawrie said. "We will get that information hot off the research bench and we will work with researchers to develop new tests for emerging chromosomal rearrangements, based on the work people are doing with microarray," he said.
As part of the deal, Lawrie, who will remain in his position at Cytocell, joined OGT's executive committee.
FISH has been in use for about 30 years and the technique continues to gain popularity. OGT in a statement cited an estimated market size of $295 million, growing by 19 percent per year. Lawrie said that various aspects of the FISH market are growing better than others, and that Cytocell has seen "a great deal of growth" in the use of FISH for hematalogical malignancies. There has also been growth in demand for FISH probes in pathology, he said.
Evans portrayed OGT's acquisition of Cytocell as a "great fit" for the company in several ways.
First, while OGT's array customers tend to use its products mainly for studying developmental delay and other disorders, with some adoption in cancer research, Cytocell has had a "strong emphasis on selling FISH probes into leukemia applications," meaning that the combination of both businesses offer "nice complementarity between the technologies and the application areas we serve."
Another example of the symbiotic deal concerns international sales and distribution channels. In 2012, OGT opened a North American sales office in Tarrytown, NY. While Cytocell reaches US and Canadian customers through partner Rainbow Scientific, OGT can contribute to those sales activities, Evans said. Cytocell, in turn, has a distribution network serving 60 countries, relationships that "open up the possibility for Cytocell distributors to become channels for OGT products as well," Evans said.
Evans has led OGT since 2005, when the company, founded on the patent estate of microarray inventor Ed Southern, began introducing its own products and services, including its menu of CytoSure arrays for CMA, and, more recently, its next-generation sequencing services. He portrayed the acquisition of Cytocell as a means to expand OGT's offerings, making it more attractive to potential clients.
"If we are looking at the genomic medicine market, we have now got all the major technologies used – arrays, FISH, and NGS services," he said.