This article has been updated from a version posted April 15 to include comments from PerkinElmer.
PerkinElmer has reached an agreement to buy Signature Genomic Laboratories. The acquisition, scheduled to close sometime in May, will cost the firm $90 million in cash, according to a filing with the US Securities and Exchange Commission.
Spokane, Wash.-based Signature, which employs around 120 people, provides microarray-based cytogenetic testing for chromosome abnormalities in people with unexplained physical and developmental disabilities. The seven-year-old firm offers comparative genomic hybridization-based tests for both pre-natal and post-natal identification of DNA alterations associated with genetic diseases, and it recently launched services for diagnosing patients with leukemia.
PerkinElmer said its acquisition of Signature will "strengthen its existing genetic testing service business, expand its position in early detection of disease, specifically in the molecular diagnostics market, and provide the company with additional strengths in cancer diagnostics."
CEO Robert Friel said in a statement that Signature brings to PE "very strong complementary assets for diagnosing disorders that are often undetected by traditional genetic tests."
Lisa Shaffer, co-founder, president, and CEO of Signature, said that PE has the "resources and worldwide presence to enable our combined testing services to reach more patients and families."
Thomas Weisel Partners analyst Peter Lawson in a research note released last week called the agreement a "synergistic tuck-in deal" for PE that will "bolster" the company's neonatal and prenatal business, "which has shown robust growth over the past few years." The acquisition is also "synergistic" with PE's OB/GYN based sales force, he noted.
Lawson said the deal is a "natural extension" of PE's diagnostic business and expands its presence in confirmatory diagnostic tests and oncology.
According to Lawson, Signature also stands to benefit as it "has very limited international presence" and could gain from the PerkinElmer sales force.
While privately held Signature's financial data is unavailable, Lawson said he believes 2009 revenues to have been in the "low double-digit million-dollar range, growing double digits in 2009."
Jim Corbett, PerkinElmer's vice president and general manager of genetic screening, told BioArray News this week that the company was interested in Signature because the firm has "proven they can take arrays and move them into a clinical environment" and has "matured to a robust lab with a nice product pipeline."
Corbett said that the acquisition will expand the footprint of PerkinElmer's existing genetic screening business, which includes maternal, molecular, and newborn test portfolios. The company believes the Signature portfolio will also give PerkinElmer an "entrance into cancer diagnostics," Corbett said, citing Signature's leukemia research.
Signature's Shaffer declined to comment on how the acquisition will benefit the firm she founded with Chief Medical Officer Bassem Bejjani in 2003.
Corbett said that Signature will be joining a life sciences company with a "global distribution capability that will allow us to bring products out of Signature and launch them with a bigger footprint than they could have as an entrepreneurial company."
Signature has mostly relied on a services model since its founding, though it has sought to sell some products to customers. For instance, Signature sells its Genoglyphix web-based visualization software to cytogeneticists. The online tool also gives users access to the firm's internal database. Roche NimbleGen, which manufactures the arrays used in Signature's services, last year also began selling CGH chips designed by Signature for cytogenetic research (BAN 11/10/2010).
Beyond expanding its reach in the cytogenetics market, the acquisition could also benefit Signature in any future discussions with the US Food and Drug Administration, Corbett noted. While the FDA has not recommended that companies that offer array-based cytogenetic tests like Signature seek clearance for those assays, it has stated that it is reviewing the way it regulates array-based cyto tests, and chip manufacturers are preparing to submit their platforms to the agency for 510(k) clearance (BAN 4/13/2010).
"It's an area that's new for regulatory bodies and a lot of analysis is taking place," Corbett said. "We do have a strong regulatory organization that we think will be an asset in discussions with the FDA in understanding what road lies ahead," he said. "The sheer capabilities in our organization will be beneficial as this new technology gets fleshed out by regulatory bodies."
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'No Immediate Change'
While both companies look to benefit from the business combination, Signature customers should expect the firm to continue its operations as usual should the acquisition close as scheduled in May, according to Corbett.
"I think that Signature customers should expect no immediate change, though over the longer term customers will benefit from newer technologies we intend to put into Signature," Corbett said. "As far as Signature's business as a service lab and their interaction with customers, though, they should expect no change."
Going forward, Signature will be maintained as either a PerkinElmer subsidiary or a branded service, he said, and the firm's operations will remain as is. "Signature has a great brand and we intend to maintain that brand with its unique customer base," Corbett said. Though Signature "will be folded into [PerkinElmer's] genetic services group," the company has "no intentions" to move Signature's operations from Spokane, he said. Roche NimbleGen will also continue to manufacture Signature's arrays. Corbett said that PerkinElmer has signed a "secure supply agreement" with the Madison, Wis.-based array vendor.
According to Corbett, PerkinElmer and Signature are developing a roadmap for future integration. The "first logical step" will be to cross-train PerkinElmer's sales force to market Signature's prenatal diagnostics services in the North American market. Beyond that, PerkinElmer and Signature will "prioritize other areas" of collaboration "around the world," but that is "still to be determined."
PerkinElmer is also interested in moving some of its existing technology platforms into use at Signature, though Corbett declined to elaborate.
PerkinElmer has had its eye on the cytogenetics testing space for a number of years. In 2006, it bought Houston, Texas-based Spectral Genomics and its bacterial artificial chromosome-based SpectralChip platform for molecular karyotyping and genome profiling (BAN 10/10/2006). Since then, it has relocated chip manufacturing to Turku, Finland, and continues to sell the Spectral platform for research purposes.
Corbett noted that since its acquisition of Spectral, PerkinElmer has expanded the platform, introducing its BACs-on-beads assays, where BACs are immobilized onto Luminex encoded beads, which are, in turn, used to assay chromosomal gains and losses from samples in 96-well plates. According to Corbett, it is possible that PerkinElmer might seek to introduce the Spectral technology into Signature's services at some point. "There is an opportunity to place that technology within Signature at a later date," he said.
When asked why the firm decided to buy Spectral first, Corbett noted that there are a number of differences between the acquisitions, even though both firms' technologies target similar markets. "With Signature, we acquire a fully integrated service lab with service capabilities as well as R&D," Corbett said. "The 2006 acquisition of Spectral Genomics was of an early-stage company. The assets we acquired were really just technology," he said. "These were two different companies in terms of maturity."