Clinical Data's sale of its genomic services unit to Beckman Coulter will not affect its pharmacogenomics efforts, but will enable it to better focus on its drug development and biomarker discovery programs, the company said this week.
Beckman Coulter's acquisition of Clinical Data's Cogenics business for around $17 million, announced last week, "will have no impact on our focus as a pharmacogenomics company," Clinical Data CEO Drew Fromkin told Pharmacogenomics Reporter via e-mail this week.
"Our Cogenics business was a completely separate operation (a service business to pharma/biotech/research institutions worldwide) from our PGxHealth division, which is our targeted therapeutics development and Dx genetic testing business," he added.
Cogenics provides genomics services, such as DNA sequencing, gene expression, clinical and non-clinical genotyping, biomanufacturing support, nucleic-acid extraction, and biobanking. Clinical Data conducts R&D for its internal therapeutics and biomarker programs separate from its Cogenics operations at its CLIA lab in Connecticut.
According to Clinical Data, the Cogenics business will complement those of Beckman's Agencourt Biosciences business, which also offers genomics services and products for nucleic-acid purification.
Under the terms of the sale, Beckman will pay Clinical Data $15.4 million at the closing of the deal, which is expected this month. Clinical Data said that it also expects to retain around $2 million in cash from Cogenics immediately prior to the sale. In exchange, Beckman will acquire all of Cogenics' operations in the US, UK, France, and Germany.
The sale of Cogenics comes as Clinical Data is starting to run low on cash. In a February filing with the Securities and Exchange Commission, the company said that its cash availability was sufficient to fund operations through March 2009. In the filing, the company said it would need between $25 million and $30 million to file the new drug application for its late-stage depression drug candidate vilazodone.
Clinical Data has said for some time that it intends to sell its non-core assets to bring in more funds for its late-stage investigational therapeutics [see PGx Reporter 02-11-2009].
"We planned to sell Cogenics, a non-core asset, since we're focused intently on our therapeutic development and underlying biomarker programs," Fromkin said. "We felt that this was an opportune time to sell the Cogenics business to a company like Beckman that sees this area as a priority in order that we could devote our resources on our Phase III programs and pipeline."
Over the past two years, in an effort to transform itself into a personalized medicine company, Clinical Data has internally expanded its R&D efforts — specifically with clinical programs for vilazodone — and acquired several specialty pharmaceutical and diagnostic firms.
Vilazodone, a selective serotonin-reuptake inhibitor and a 5-HT1A partial agonist currently in Phase III studies, has a companion diagnostic associated with it. Clinical Data plans to complete a second Phase III registration trial in the second quarter of 2009, and submit an NDA to the US Food and Drug Administration in the latter part of the coming year.
This year, the company has said it aims to increase reimbursement for and drive adoption of its Familion and PGxPredict test offerings in the cardiovascular disease space. Clinical Data also plans to establish additional research collaborations to expand its FCGR biomarker program into other targeted monoclonal antibodies and move into the development of personalized treatments beyond oncology, such as in rheumatoid arthritis.
With the Cogenics division sold, Clinical Data's "main source of revenue will be our Familion genetic testing business, which has been growing at over 100 percent year-over-year," Fromkin said. "However, our main focus is on advancing our two Phase III programs and supportive biomarker initiatives, [which are] the primary value drivers of the company."
The Cogenics sale will also allow Clinical Data to recoup some losses associated with recent M&A and R&D activities. "The sale of Cogenics to Beckman Coulter also creates substantial near-term value and cost savings through the divestiture of a non-core program as we approach the completion of our Phase III registration trial of vilazodone," Fromkin said in a statement.
Clinical Data's most recent earnings figures show that the Cogenics division wasn't a major growth area for the company. For the three months ended Dec. 31, 2008, revenue from the Cogenics unit was flat from the year-ago period at $7.3 million, while revenues for PGx Health grew 105 percent, to $2.6 million.
Thomas Weisel Partners analyst Peter Lawson estimated in a research note that Cogenics brought in revenues of around $28 million for full-year 2008.
Clinical Data did not comment on whether the Cogenics divestiture will result in layoffs.
"The deal has not yet closed and I would expect that these decisions will likely be made by Beckman after the close," Fromkin said. Clinical Data expects the deal to close this month.