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Amid Chase for Illumina, Roche Posts Q1 MDx Sales Jump as Applied Science Drops

NEW YORK (GenomeWeb News) – Roche today reported that its molecular diagnostics sales increased 4 percent year over year, while its sales for microarrays and genomic sequencing products dropped sharply.

The Swiss pharmaceuticals, diagnostics, and research products giant also issued another statement saying that its $51-per-share offer to acquire Illumina is "full, fair, and extremely attractive by every conceivable metric."

Amid its ongoing efforts to get Illumina to negotiate a deal, Roche today reported a one percent decline in its overall Q1 sales to CHF 11.03 billion ($12.05 billion) from CHF 11.12 billion. On a constant currency basis, its sales were up 2 percent year over year.

Sales for the firm's Diagnostics Division were roughly flat at CHF 2.40 billion versus CHF 2.41 billion, but up 4 percent excluding the negative effect of currency translation. Its molecular diagnostics sales were CHF 285 million, up 4 percent in local currency and 8 percent at constant exchange rates. Roche said that its molecular diagnostics sales were driven by 19 percent sales growth for its blood screening business and 9 percent growth for its human papillomavirus/microbiology products.

Its tissue diagnostics sales, which include some companion diagnostic efforts from the Ventana business, increased 15 percent in local currency and 18 percent at constant exchange rates to CHF 147 million.

Sales for Roche's applied science business, which includes its next-generation sequencing products and microarrays, dropped 8 percent in local currency year over year to CHF183 million. Roche attributed the decline to competitive pressure and continuing restraints on research funding.

The firm is hoping to bolster its genomics business with the addition of Illumina. It launched its initial hostile takeover bid in late January at $44.50 per share, or $5.7 billion. It increased the bid to $51 per share in late March, but thus far Illumina has rejected both bids and has refused to negotiate a deal with Roche.

Roche is aiming to bring Illumina to the table by replacing four of its directors and adding two additional members — all nominated by Roche — at Illumina's annual shareholders meeting next week. However, three separate proxy advisory firms have recommended that Illumina shareholders re-elect Illumina's board members and reject Roche's proposal to expand the board.

"The simple fact remains that Roche's unsolicited offer clearly undervalues Illumina and that our highly qualified and experienced directors are best positioned to create value for Illumina's stockholders," Illumina CEO Jay Flatley said earlier this week.

With Illumina management not in favor of a deal, Roche has appealed directly to Illumina's shareholders, urging them to vote for its slate of board nominees while arguing that its bid is fair. This week, it sent a third letter to the shareholders seeking support for the deal.

"As a standalone company, Illumina's future is far from certain," Roche CEO Severin Schwan said in the letter. "Roche is willing to assume this risk because we believe that a combination with Roche will position Illumina for greater long-term success as part of a larger, more global organization."

"We believe that if Illumina's current directors really were determined to maximize the value of your investment they would have engaged with Roche to determine our maximum price by demonstrating the extra value they describe and then let you decide whether you prefer our best offer or their suggested alternative," he added.

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