One week after telling investors that it was still mulling potential acquisitions, Bio-Rad Laboratories this week said that it has agreed to purchase Ciphergen’s proteomics instrument business for approximately $20 million in cash and make a $3-million equity investment in Ciphergen.
The firm has not been as aggressive as some of its chief competitors — namely Qiagen and Invitrogen — in the M&A market over the past couple of years, but the Ciphergen acquisition is the firm’s second in the past six months.
While it may seem protein research tools have become more of a focus for Bio-Rad, company officials said this week that its Ciphergen deal and the March acquisition of early-stage proteomics shop ProteOptics aim to strengthen the company’s existing position in the field.
“We’ve been highly focused on protein research for years,” said Ron Hutton, Bio-Rad’s treasurer. “Certainly, the proposed acquisition of Ciphergen and the acquisition of ProteOptics strengthens that position.”
He said it is possible Bio-Rad could pursue additional similar investments in its protein tools portfolio, but “that really depends on what’s available and how it fits into our programs and our plans.”
Under the deal with Ciphergen, Bio-Rad will acquire the company’s proteomics products including its SELDI (surface enhanced laser desorption/ionization) technology, ProteinChip arrays, and accompanying software. Bio-Rad will manufacture, sell, and market the SELDI technology to the life sciences marketplace for applications such as biomarker discovery, characterization, and validation.
Ciphergen will retain exclusive rights to the products for the diagnostics market, and will maintain a supply agreement with Bio-Rad to purchase SELDI instruments and consumables for the continued development of its diagnostics business. The companies will also collaborate to identify SELDI customers interested in partnering with Ciphergen to commercialize biomarker discoveries.
Hutton declined to give an estimated market size for the SELDI technology.
Following the transaction, which is expected to be approved by Ciphergen stockholders in the fourth quarter, Ciphergen will have about 40 employees dedicated to commercializing diagnostic tests, primarily in oncology, with an initial focus on ovarian and prostate cancers.
Last year, Ciphergen entered a three-year strategic alliance with Quest Diagnostics to develop and commercialize proteomic diagnostic tests, including the first for ovarian cancer, and Quest purchased a 17-percent stake in the firm.
Strengthening the Protein Tools Franchise
Over the past few months, Bio-Rad President and CEO Norman Schwartz, has hinted that acquisitions could be in the offing.
“We have a few [acquisition targets] actually in the hopper now,” Schwartz said last week during the firm’s second-quarter conference call (see BioCommerce Week 8/9/2006). “I think we've tried to be very disciplined in our approach here and not let [the firm’s $246 million in cash holdings] burn a hole in our pocket.
“But we do have a couple of things that have queued up and hopefully we'll see something in the near future to deploy some of that,” he said.
The Ciphergen acquisition clearly fit the firm’s budget: Schwartz had previously said the firm was evaluating acquisition targets in the $20 million to $50 million range (see BioCommerce Week 5/10/2006).
The acquisition follows the firm’s purchase earlier this year of ProteOptics, an Israeli-based firm that developed an instrument for studying protein-protein interactions (see BioCommerce Week 3/1/2006). That acquisition, for an undisclosed amount, targets a relatively small $80-million market — and it was the company’s first since its purchase of MJ Research in August 2004 for $32 million in cash and the assumption of certain liabilities related to patent-infringement litigation with Applied Biosystems and Roche.
The ProteOptics acquisition provided Bio-Rad with a companion instrument to its Bio-Plex suspension array system for quantitative peptide and protein analysis. According to Emily Dale, marketing manager in Bio-Rad's Protein Function Division, ProteOptics' instrument, based on surface plasmon resonance (SPR) technology, also enables the firm to bundle these tools for customers performing earlier-stage research and biomarker discovery.
It is possible Bio-Rad could pursue additional similar investments in its protein tools portfolio, but “that really depends on what’s available and how it fits into our programs and our plans.”
"What we're offering is the next step in proteomics," Dale told BioCommerce Week at the time of the ProteOptics acquisition. "Proteomics these days is really a big word, and people use the word proteomics if it has anything to do with proteins. But we view proteomics, and the mass spec workflow, the 2D gel workflow, as a discovery tool [to find] which proteins are interesting, what is regulated, [and] what is a biomarker.”
Todd Morrill, director of business development for Bio-Rad’s Life Sciences group, said this week, “We are extremely interested in proteomics research and analysis, with a real focus on our customers’ workflow. The Ciphergen technology is an important part of that protein workflow — the ability to separate and identify proteins from complex samples — and it fits in very nicely with a number of the other technologies we already have in house.”
He told BioCommerce Week that the Ciphergen technology would greatly complement the firm’s other proteomic technologies, such as its Bio-Plex system, as well as its QPCR products. “It fits all of those workflows on some level,” said Morrill.
The Ciphergen technology is particularly suited to translational research, “which we’re extremely interested in,” he said. “This will add to the firepower that we already have in this area.”
One other possibility for expanding SELDI’s utility would be pairing it with MALDI mass spectrometry, which in theory could run on mass spec instruments offered by firms such as Applied Biosystems, Thermo Electron, Agilent, and Waters. The SELDI technology, though popular among biological researchers eager to dip their toes in the mass-spec field, has been hamstrung by Ciphergen's own mass-spec platform, which is generally believed to be a low-end instrument (see BioCommerce Week 8/4/2005).
According to Morrill, it’s too early to comment on whether Bio-Rad would seek such collaborations. Hutton did note that Bio-Rad formerly had a partnership with Waters focused on pairing Bio-Rad’s technologies with Waters’ mass spectrometry offerings, but that agreement no longer exists.