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Thermo Fisher Buys Denmark's Proxeon to Build up its LC Product Line for Proteomics

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This story originally ran on April 15 and has been updated with additional comments.

By Tony Fong

Thermo Fisher Scientific this week said it has acquired proteomics workflow company Proxeon for an undisclosed amount, strengthening Thermo Fisher's presence in a space in which the company has been looking to expand since at least 2007.

Based in Odense, Denmark, Proxeon offers sample prep products and bioinformatics software, but its flagship product is its Easy-nLC platform.

The deal is the second by a major mass spec vendor of a liquid chromatography vendor since the start of the year, following AB Sciex's purchase of Eksigent's LC business in February (PM 02/19/10).

In a statement, Marc Casper, president and CEO of Thermo Fisher, said that the acquisition gives his firm a "high performance solution that addresses the need for simplified operation," allowing it to "meet the increasing demand for LC-MS in proteomics applications.

"These systems can be easily integrated with our leading ion trap, hybrid, and triple quadrupole mass spectrometry systems, in line with our strategy of providing comprehensive LC-MS solutions for both high-end research and routine applications," he added.

In its statement Thermo Fisher said Proxeon posted approximately $10 million in revenue in 2009 and has almost 40 employees.

In an interview with ProteoMonitor, Mårten Winge, the outgoing CEO of Proxeon, said that as a venture capital-backed firm, the plan was always to eventually sell Proxeon.

Winge said that the company doubled its sales in 2009 over 2008 figures and that it holds an estimated 10 percent share of the nano-LC market. Having achieved what it set out to do, the company determined that it would need more resources than it could muster on its own in order to further build up its operations.

"We have proven successful sales and a high rate of growth, so we believe we have proven to everyone that we have commercially viable and very, very attractive and competitive products," Winge said.

"Growing from this state to another significant state would require a lot of resources," he added. "It would require a very, very strong market presence and, to some extent, we have that being a standalone company, but being part of a company like Thermo Fisher, we will have, of course, a lot more resources, and a lot stronger marketing and sales impact."

A year ago, Proxeon raised DKK 14 million — about $2.4 million at the time — which the firm planned to use to break-even and to build up its sales and marketing force. The company has burned through most of those funds, Winge said, but the deal with Thermo Fisher was not a "fire sale."

The company had alternative financing plans, but the best choice was to find a larger buyer, he said. He added that the deal was done in a "straightforward" manner. While the weakened equities and credit market over the past year and a half may have pushed back some potential deals because of the lowered value of companies looking to be acquired, Winge said that was not the case with Proxeon.

"There has been a lot of interest in the market, and we have not been forced to delay or to back out" of a deal, he said. "It's been a very straightforward process for us."

The two companies have some familiarity with each other. In March 2008, Proxeon announced a license agreement for use of its ProteinCenter in Thermo Fisher's demonstration labs as part of a data interpretation workflow. Later that summer, Thermo Fisher and Proxeon integrated the Easy-nLC system software with Thermo Fisher's Xcalibur software suite. In the process, Proxeon became a registered Thermo Fisher Scientific Virtual Instrument Partner.

In addition, Proxeon has had collaborations on a regional and local sales level in which its LCs have been offered together with Thermo Fisher's mass specs as a package, Winge said. Proxeon has also sold its instruments to "several" of Thermo Fisher's demo labs "so they have actually used our nanoflow LCs together with their mass spec when they are [demonstrating] their mass specs to their end-users," he added.

As part of the purchase, all of Proxeon's employees will be absorbed by Thermo Fisher, he said, though he is not moving to Thermo Fisher. Proxeon will retain its name and remain in Odense and be integrated into Thermo Fisher's Analytical Technologies Segment.

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Thermo Fisher said the deal is not expected to have a material impact on its 2010 financial results.

LC Aspirations

Proxeon was founded in 2002 from what had been Protana Engineering, a company originally founded by Matthias Mann, now at Max Planck Institute for Biochemistry, and eventually purchased by MDS Proteomics (PM 04/07/03).

Proxeon's product portfolio also includes sample prep and purification tools, such as perforated microtiterplates for in-gel digestion, and purification capillaries, as well as ProteinCenter, a web-based proteomics data interpretation tool.

Its lead product, however, is the Easy-nLC platform. In February, Proxeon launched the second generation of the system with a new autosampler and upgraded software.

For Thermo Fisher, the LC business was also the main draw of the deal. The company launched its Accela HPLC system in 2006, and since then has made a small handful of purchases in the LC space to build up that business. In December 2006, it bought Cohesive Technologies, a manufacturer of LC and sample prep products, and then a month later purchased the SwissAnalytic Group, which included Flux Instruments, a maker of HPLC pumps and software.

Back then, its former CEO, Marijn Dekkers, made no secret that he wanted to bring Thermo Fisher to the forefront of the LC market. During a conference call accompanying Thermo Fisher's Q1 2007 earnings release, he said that "with the mass-spec franchise that we have, it’s important to have a product line that is strong with mass spec. Our major focus in HPLC is the linkage between HPLC and mass spec — more so than that we focus on stand-alone HPLC," (PM 05/03/07).

Since then, Thermo Fisher has been quiet about its LC aspirations — and Dekkers has left the firm and been replaced by Casper — but within the mass spec arena, the trend has been to sell mass specs and LC platforms together as integrated systems rather than as standalone instruments. Waters and Agilent Technologies have had the upper had with that strategy because in addition to their mass spec businesses, they are the two market leaders in liquid chromatography, and have not had to rely on original equipment manufacturing agreements made with LC vendors as their competitors have.

Today's deal may be another sign that other mass spec vendors are looking to horn in on the LC market as well.

In an e-mail, Kevin Chance, president of the scientific instruments division at Thermo Fisher, said that the vast majority of mass spec systems sold by the company are integrated LC-MS systems.

That division is part of the Analytical Technologies segment at the company.

"Most of our non-proteomic LC/MS systems are sold with our own Accela HPLC and UHPLC systems on the front end," he said. "This acquisition enables us to provide our own front-end nano-HPLC with our proteomic LC/MS systems."

Proxeon's nano LC technology provides a complete integrated offering for Thermo Fisher's proteomics customers and those who need high-performance chromatographic separation in the nano- to microliter range, he added.

"The simplicity and performance provided by the Easy-Nano LC system combined with the performance of the Thermo Scientific mass spectrometry portfolio will make complex proteomic sample analysis more accessible, more reproducible and easier to set up," he said.

In addition to Thermo Fisher's purchase of Proxeon, newly minted AB Sciex bought the LC operations of Eksigent two months ago. Eksigent's technology specialty is low-flow LC technology. That deal was made as part of AB Sciex's plan to make investments and purchase technologies that complement its mass specs.

AB Sciex was formed as a result of Danaher's purchase of the mass spec joint venture between Life Technologies and MDS (PM 09/10/09).

At the time of AB Sciex's acquisition of the Eksigent LC business, company officials were mum about other deals, whether in the LC space or otherwise, that may be in the works, but Laura Lauman, one of AB Sciex's two presidents, said "Certainly we're looking at [acquisitions] and the combination of the company under one organization and under Danaher allows us to look at a wide range of possibilities."

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