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With Clontech on the Block, BD Biosciences to Focus on Cellular Analysis

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Does the new biology lie in the area of cellular analysis?

BD Biosciences, the approximately $600 million unit of Becton Dickinson, certainly seems to think so. Last week, when the company announced plans to sell its Clontech business, it told the market it intends to fully shift its attention to cellular analysis and drug-discovery technologies.

BD hasn’t yet named a potential buyer, but Gene Vivino, vice president of strategic planning and portfolio management for BD Biosciences, told Inside Bioassays that the company is working with investment banking firm Goldman Sachs to solicit offers from a limited number of potential buyers.

“We’re not in the position to name them,” Vivino added, but said “interested parties might include other biotech tool makers, other people in molecular biology in adjacent spaces, or just other people that might want a play in it.

“If you take a look around at other [BD-related] activity in the past few years, then that might give you some indication,” Vivino added.

Yet even if BD finds a buyer, insiders will be eager to see whether the company’s increasing attention toward cellular assays and drug-discovery tools will be profitable.

In many ways, BD is getting back to its roots at a time when the cellular analysis arena — particularly as it applies to drug discovery — is undergoing a renaissance. BD was founded around the concept of cellular analysis in the early 1970’s, when its FACS (fluorescence-activated cell sorting) platform paved the way for modern flow cytometry.

Vivino stressed that BD would continue to build upon its very strong market presence in flow-based cellular analysis for medical and basic research applications. Specifically, he said the company’s goals in this area include making flow cytometry more powerful, easier to use, and more attainable; maintaining BD’s strong position in monoclonal antibody reagents; multiplexing flow-based analysis with bead-based assays; and continuing its leadership in flow-based CD4 and CD8 testing for the clinical diagnosis and monitoring of AIDS.

But BD thinks that flow-based analysis also has much more untapped potential for drug discovery — one of three ways Vivino cited that the company intends to further drug discovery.

“One [way] is to expand flow into pharma,” Vivino said. “To take that technology and show [pharma] ways to use it, such as immune function monitoring, that haven’t really been integrated yet into their processes. The second area, the big new one, is cell imaging. What we’re going to do there is go into pharma with a range of tools to help them understand cellular processes, and immune function and how it’s related to what’s going on not only outside and between cells, but inside of cells. And the third area is ADME/Tox, [which] was spearheaded by the acquisition of GenTest in 2001.”

Out of all these, BD’s recent acquisition of Atto Bioscience and foray into high-content cellular imaging is probably farthest removed from its area of expertise. But BD has the advantage of having acquired a company whose flagship technology — the Pathway HT confocal-based imaging system — already has an established customer base. Atto rang up about $3 million in sales in 2004, and Vivino said BD Biosciences is expecting about $10 million in revenues from the product in BD’s fiscal year 2005, which began on Oct. 1. (For more on the Atto platform, see Inside Bioassays, 7/6/2004)

“The potential for this whole high-content analysis area is much larger,” Vivino said. “We didn’t buy it to be a $3 million business, we bought it to be a bigger business, and we’ll do whatever we can to accomplish that.”

For the time being, that means leveraging the expertise on Atto’s side of the fence. “We’ve retained key people [from Atto], and they are in fact part of our organization,” Vivino said. “It’s about the most proactive interaction I’ve seen in an acquisition. These guys are onboard, they’re interested, and they see areas to leverage — not only in our go-to-market capability, but our technologies.”

Although BD will retain the enabling technology behind the Pathway HT in the short-term, Vivino said the company couldn’t rule out, and would tend to expect changes in the instrument to occur.

“We’ve been in the flow business for a long time, and as much as we are the clear leader, 30 years after we introduced it we just had the most prodigious launch of instrument platforms in our history,” Vivino said. “So it’s not too far-fetched to think that we’d do the same thing, and that there would be a next-generation imaging instrument. It’s a little too soon to say when that would be, though.”

One of the most pressing areas for BD Biosciences to attend to may be the software necessary for analyzing the enormous amounts of data generated by high-content imaging. Atto had software in place already, but Vivino said that this “would be a logical next-generation thing to work on.”

“But we’ve only owned them a couple of months, so we’re still defining what we need to prioritize in the next stage,” he added.

The company expects to record a pre-tax charge in its fiscal fourth quarter of about $125 million in connection with the planned sale of Clontech, it said in a statement.

BD purchased Clontech in 1999 for approximately $200 million, in an attempt to catch the swelling genomic and proteomic analysis wave. Specifically, Vivino said, Clontech currently encompasses “things like labeling, amplification technologies, reporter fluorescent protein products, RNA, and even arrays.”

But as several of those sectors have seen increasingly cutthroat competition and dwindling opportunities, Clontech has provided BD with waning revenues.

“A few years back, there was more of an emphasis on gene identification, and as that business has slowed or reduced in the wake of the genome [project], we’ve reemphasized some of the growth areas,” Vivino said. “So we’ve focused most recently on areas like PCR and RNAi. Those are nascent relative to the other lines, but that’s kind of where we’ve been shifting lately — from gene identification, to gene and protein function.

“One of the reasons we’ve had some overall reduction in revenues over the years is that the product line was more focused on the gene identification area, so as that has gone down, some other opportunities have arisen, but not enough to make it up,” Vivino added.

— BB

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