NEW YORK, Nov. 6 – Invitrogen is exploring the possibility of acquiring Incyte Genomics, a source inside Invitrogen told GenomeWeb.
The source, a senior-level employee who asked not to be named, said that the company is interested in acquiring the genomics data provider but is waiting to act until the price is right.
Asked to comment, Lyle Turner, Invitrogen’s chairman and CEO, said in an interview with GenomeWeb last week that “there is value [in Incyte]." However, he denied any current plans to acquire the company, against which Invitrogen recently filed a patent-infringement lawsuit.
"That’s what we’ve been positioning ourselves to do is to buy assets when they are priced appropriately for us," he said. Asked whether Incyte is now priced appropriately for Invitrogen, Turner replied: “No.”
Industry analysts who were asked about the likelihood of an acquisition said that Incyte and Invitrogen likely began speaking six months ago. Since then, as GenomeWeb has reported, Incyte has jettisoned its custom sequencing operation, laid off roughly 400 employees, and embarked on a major corporate restructuring program—all of which makes it a more attractive acquisition prospect, they said.
Now, with these corporate changes in place, the market will have had a chance to react.
Shares in Incyte dipped $0.415, or 2.71 percent, to $14.905 in late-afternoon trading on the Nasdaq on Tuesday. The stock has plunged from a 52-week high of $38.3750 but was trading above its 52-week low of $10.400.
Some industry analysts largely echoed Turner’s statement.
“If something were to occur between those companies, the price would be the determining factor,” according to Alan Auerbach, a senior analyst with Wells Fargo Van Kasper, in Los Angeles.
But, he added: “You can clearly see where there would be synergy between these two companies.”
Other analysts were skeptical.
Winton Gibbons, an analyst with William Blair & Company, in Chicago, responded in an e-mail that an acquisition of Incyte by Invitrogen is likely to be a costly affair given their lawsuit. It “could have implications for many of the proprietary products from Incyte,” he wrote.
“Second, Invitrogen and Incyte are in a bit of a race for creating and selling full-length clones, with Invitrogen in the lead, in my opinion,” Gibbons added. “Furthermore, Celera has reinvigorated its clone deal with Invitrogen that was essentially put on hold” after Invitrogen acquired Life Technologies, with whom the deal was struck.
“We believe that this obviates at least some of the value Invitrogen would get from Incyte, and an acquisition would jeopardize this,” Gibbons wrote.
Last month, Invitrogen filed a lawsuit against Incyte claiming that the company violated a research-use license it acquired to use Invitrogen’s SuperScript RNAse H minus reverse transcriptase.
Invitrogen, based in Carlsbad, Calif., obtained the SuperScript product after it acquired Life Technologies in September 2000. Before the acquisition, Life Technologies had stopped selling the technology to Incyte, according to Invitrogen’s Goodson, though he contends Incyte continued to obtain the product through Madison, Wis.-based Promega.
Gibbons continued: “Invitrogen's strategy is to sell value-added reagents, moving from proprietary enzymes/cells/etc. to kits to clones/arrays/etc.” Moreover, he went on, “Incyte just sold its oligo and array businesses—two important businesses for Invitrogen—to move further into pharma discovery.
“If Invitrogen were to acquire a firm with this strategy, it could likely set itself up as a competitor to its customers,” Gibbons added. “That said, Lyle [Turner, Invitrogen’s chairman and CEO] has high aspirations and may have a specific, non-obvious goal in mind that this [potential acquisition] could accomplish.”
Incyte would not return calls seeking comment.
Last month, Incyte killed its custom-genomics program and laid off roughly 400 employees as it began a corporate restructuring program.
As GenomeWeb reported, the discontinuation of the company’s custom genomics product lines will lead Incyte to close its facilities in Fremont, Calif., and St. Louis, the company said. Details of the schedule for the shutdown were not disclosed.
The same day, Oct. 25, Incyte reported increased third-quarter revenues to $57.3 million from $52 million for the same period one year ago.
The company's database and partnership programs accounted for $39.8 million of its total income from the quarter ended Sept. 30, up 13 percent year over year. Custom genomics programs, which have been targeted for discontinuation, brought in $12.2 million in revenue, which was the same the programs brought in over the third quarter 2000.