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Clarient to Purchase Applied Genomics for Nearly $18M

NEW YORK (GenomeWeb News) – Healthcare technology services provider Clarient announced after the close of the market Monday that it will acquire the Huntsville, Ala.-based cancer molecular diagnostics company Applied Genomics.

The all-stock merger is valued at up to $17.6 million, "if all conditions and milestones set forth in the merger agreement are successfully met." Applied Genomics will become a wholly-owned subsidiary of Clarient.

According to Clarient CEO Ron Andrews, Applied Genomics provides Clarient with "a full and near-term product pipeline, including an important new lung cancer panel; an active development engine for new diagnostic and prognostic cancer tests; an eastern US development lab facility to support the Company's pharmaceutical services initiative; a working network of the top academic and industry validation resources and some of the top minds in the field of cancer testing."

While the merger will bring to Clarient expertise and potential new diagnostics in cancer genomics, the deal stands to provide national commercialization reach for Applied Genomics' tests. In its pipeline, Applied Genomics has a lung cancer test, called Pulmotype, slated for launch in the first quarter of 2010, as well as a number of tests for lung, breast, and ovarian cancer expected to be commercialized in the next two years.

According to terms of the merger agreement, Clarient acquired all outstanding capital stock of Applied Genomics in exchange for a total of 7.6 million shares of Clarient common stock, including 4.4 million shares of Clarient common stock issued to former Applied Genomics' stockholders at closing and up to 3.2 million additional shares of Clarient common stock issuable to former stockholders contingent upon the satisfaction of certain milestones.

"The shares issued at closing will be reduced by 440,000 shares that will be placed into an escrow account to cover future indemnity claims," Clarient said in a statement.

"AGI's lung cancer pipeline fulfills an important strategic need for Clarient. Having a test that provides us access to the primary lung tumor block much earlier in the diagnostic process will allow Clarient to provide pathologists with critical information at the early stages of therapy decision," Andrews said. "It also strengthens our position to gain a greater share of the rapidly increasing epidermal growth factor receptor mutation testing market."

The molecular lung cancer diagnostics market has recently been heating up.

DxS, which recently was acquired by Qiagen, markets the EGFR29 Mutation Test Kit on its TheraScreen platform. The test detects 29 mutations in EGFR that correlate with the effectiveness of certain tyrosine kinase inhibitors for the treatment of non-small cell lung cancer, such as Iressa and Tarceva. DxS licensed the right to market the test in the US and Canada from Genzyme earlier this year.

DxS inked a deal with Iressa-maker AstraZeneca to commercialize its TheraScreen EGFR29 Mutation Kit in Europe as a companion diagnostic for the NSCLC drug. No such deal has yet been announced for the US [see GenomeWeb Daily News sister publication PGx Reporter 08-05-2009]. The companion diagnostic operates on DxS' RT-PCR-based platform, ARMS and Scorpions.

Applied Genoomics' Pulmotype is a five antibody immunohistochemistry-based test that can be used to distinguish between adenocarcinoma and squamous cell carcinoma in NSCLC tumor specimens.

"The histologic classification of non-small cell lung tumors has gained clinical relevance because newly developed targeted therapies show different clinical effectiveness or toxicity dependent upon the histotype of the tumor," Applied Genomics states on its website.

According to officials from Clarient and Applied Genomics, Pulmotype has been compared in clinical trials to a homebrew two-marker panel test, including thyroid transcription factor-1 and TP63.

Pulmotype distinguishes adenocarcinoma from squamous cell carcinoma in NSCLC by gauging the presence of five antibodies targeting the proteins TRIM29, CEACAM5, SLC7A5, MUC1, and CK5/6.


A more detailed version of this article will appear this week in Pharmacogenomics Reporter.

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