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NovaScreen Acquisition Would Give Caliper Service Arm, May Boost Cell-Based Assay Play

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Caliper's plan to acquire NovaScreen Biosciences, announced last week, will add a service arm to Caliper's business that addresses recent customers' requests for assay development services in addition to its microfluidics-based screening instrumentation, according to a Caliper official.

The acquisition, which is expected to contribute about $2 million to Caliper's revenues this year, may also provide Caliper with several tangential benefits, such as additional cell-based assay capabilities, increased play at the National Institutes of Health, and a "technology center" that will allow potential Caliper customers to see first-hand the full range of instrumentation and associated services now offered by the company.

"There are several key customers we've been talking to that really like the combination, and now want to work with Caliper based on the fact that we have both the instrument platform and the assay development services," Mark Roskey, Caliper's vice president of worldwide marketing, told CBA News. "These include Amgen in particular, but also [Johnson & Johnson], Pfizer, Merck, and [Bristol-Myers Squibb] — just to name some of the bigger ones."

Caliper's flagship LabChip technology has traditionally been designed for low-volume enzymatic and biochemical assays, such as those for kinases and phosphatases. However, last year Caliper increased the capability of its platform by acquiring technology from Amphora Discovery that allows LabChip users to perform calcium flux assays on certain adherent cell types for GPCR screening (see CBA News, 5/18/2004).


NovaScreen has "a pretty strong background in cell-based assays, in particular GPCR assays, where as a service they have more than 100 GPCR assays. We thought it would make a lot of sense to help get some of those assays onto LabChip."

One of NovaScreen's largest areas of expertise is in GPCR screening, so Caliper can also add assay development skills to the fold.

"NovaScreen was originally evaluating a number of technologies, in particular for kinase assay screening, and actually purchased a LabChip 3000," Roskey said. "That actually started some dialogue and led to the situation now.

"But they've actually started to adopt the technology for cell-based assays as well," he added. "They have a pretty strong background in cell-based assays, in particular GPCR assays, where as a service they have more than 100 GPCR assays. We thought it would make a lot of sense to help get some of those assays onto LabChip. We had been working with our customers to do more GPCR and calcium flux assays on LabChip, and now NovaScreen … expands our ability to do that."

NovaScreen has developed and offers somewhere in the neighborhood of 600 assays, David Manyak, the company's president and CEO, told CBA News. These assays run on a variety of instrumentation platforms in addition to LabChip.

Many of the company's screening services begin with biochemical assays in order to determine general target binding activity and structure-activity relationships, because "generally biochemical assays are better for that than cellular or functional assays," Manyak said.

"But once you have binding information, you need to know whether it's an agonist or an antagonist, and we are doing more and more cellular assays for that kind of work," Manyak added. "We'd already done a lot in the past, but that's a very active expansion area for us."

As an example, Manyak pointed to an approximately $13 million contract NovaScreen currently has with the National Institute of Allergy and Infectious Diseases to conduct assay-development research for innate immune system activator screens. These activators, by triggering the innate immune system, might stimulate the adaptive immune system, which would lead to their potential use as vaccine adjuvants. "In addition, when you activate the innate immune system, you produce defensive molecules that are generally anti-infective — not specific against any class of organism — but general anti-bacterials," Manyak said. "So NIAID is interested in these from a biodefense view."

That particular assay program uses a multiplexed approach in which NovaScreen researchers look at five targets at once in one cell-based assay. Although this assay does not use Caliper technology, Manyak said, similar types of assays could be run on LabChip.

NovaScreen's NIAID contract — along with other NIH grants the company has been awarded over the past few years — underscore another possible benefit to Caliper: an NIH play where none existed previously.

"We now have direct access to the Baltimore, Maryland, biotech belt, and specifically the NIH and government research labs in this general area," Caliper's Roskey said. Caliper currently has offices in Hopkinton, Mass., and Mountain View, Calif.

"NovaScreen has been very effective at securing some government funding to develop their business, and I think that helps us in that process, because that's something that Caliper didn't do a lot of before the acquisition," Roskey said. "Their location, and the fact that they have a lot of contacts in government, opens up the NIH research market to us a little bit more for our standard products."

As for integration of NovaScreen into Caliper, Roskey said that NovaScreen would continue to function essentially as an independent entity, and that no layoffs are planned.

The Money Behind the Deal

The deal calls for Caliper to acquire Hanover, Md.-based NovaScreen in the fourth quarter for up to $30 million in stock and cash. Caliper will purchase the screening, profiling, and assay development-services company for $22 million, subject to certain financial parameters, and up to an additional $8 million, depending on revenue milestones over the next 30 months, the company said in a statement. Eighty percent of the payments will be made in Caliper common stock and 20 percent in cash.

"We're going to keep NovaScreen running as this service part of our business as it exists today," he said. "So we don't anticipate any sort of reduction.

In fact, Roskey added, Caliper sees NovaScreen's Maryland biotech-belt location as a possible technology center.

"NovaScreen uses our LabChip technology for some assays, but they also use other technologies for their full breadth of assays," he said. "We'll be able to try out our technologies here with their assay development scientists, as well as evaluate our technology compared to other technologies, and be able to bring our customers in where they'll get exposed to this full range of assay services and technologies. We do have some pretty good plans for this site."

— Ben Butkus ([email protected])

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