Nanogen plans to acquire Epoch Biosciences in a stock transaction worth $58 million that is aimed at helping the San Diego company push into the clinical lab and research markets, the companies said this week.
Nanogen has already begun incorporating Epoch's technology, including its 21 MGB Eclipse Detection Reagents, which Epoch began marketing as analyte-specific reagents in July. Nanogen said the reagents fit with its NanoChip workstation, and that it had begun incorporating the technology. Other Epoch products include software and reagents for use in genetic analysis.
Nanogen said it will retain Epoch's R&D capabilities and reagent manufacturing operations in Bothell, Washington. However, "administration, marketing, and sales will be merged" into Nanogen's existing operations in San Diego. The companies declined to say whether layoffs would follow completion of the deal. "We are putting together an integration team, which will determine the company's staffing needs" after the acquisition, said Nanogen spokesperson Pam Lord.
Under the terms of the agreement, Nanogen will pay an offer price of $2 per Epoch share — a 30 percent premium over Epoch's average closing price for the 20 trading days ended Sept. 1. Epoch shareholders will receive a number of shares based on an exchange ratio determined by dividing the $2 per-share offer price by Nanogen's closing issue price.
The acquisition, which is subject to approval by the stockholders of both companies, is expected to close by the end of the year.
As recently as May, Howard Birndorf, Nanogen's CEO and chairman, said the company was interested in expanding into diagnostics involving genomic and proteomic markers, as well as reinforcing its position in the market for virus- and bacteria-detecting tests.
Currently, Nanogen places its $150,000 Hitachi-built NanoChip Workstations at customer sites for minimal cost, selling the necessary reagents separately. Epoch's Detection Reagents would be among those available for purchase. Nanogen is under obligation through Jan. 1, 2005, to purchase $1.9 million of the workstations from Hitachi.
A statement on Nanogen's website said the company would not operate at a greater loss rate following the acquisition. "Epoch will bring short-term positive cash flow results to Nanogen," said the statement.
Nanogen's point-of-care venture coincided with its acquisition of SynX, which it said would accompany a $6 million-$8 million investment intended to help market SynX's heart-failure diagnostic. Pam Lord, a Nanogen spokesperson, said Nanogen planned to sell the diagnostic by the end of the year, first in Europe, followed by the United States.