Roche acquires gene chip manufacturer for USD 272.5m

Swiss pharmaceutical company Roche has bought US-based gene chip manufacturer NimbleGen Systems for USD 272.5m.

NimbleGen, a University of WisconsinñMadison spin-off founded in 1999, had initially filed for a proposed IPO of up to USD 75m in common stock back in March 2007. The company had not revealed how big a percentage of the company it would sell in the IPO, so how much of a premium Roche paid for it remains undetermined. However, NimbleGenís CEO Stan Rose has been reported as saying it was 'significant'.

The transaction should close in Q3 2007, subject to approval by NimbleGen's shareholders and regulatory approval.

Roche says it will retain NimbleGen's facilities in the US, Iceland and Germany, including the existing 140 employees. NimbleGen will be absorbed by Roche Applied Science, which is part of Roche's Diagnostic arm.

The deal augments Roche's DNA sequencing activities, which involves analysing the chemical composition of genes and assessing how individual genetic profiles differ to develop more targeted medicines and diagnostics tests. NimbleGen's gene chip technology consists of high-density DNA microarrays, which are used to investigate genetic causes of disease and identify potential drug targets.

Severin Schwan, the head of Roche Diagnostics, said in a statement: "The acquisition represents a further milestone in our strategy to strengthen our position as a major player and complete solution provider in the genomics research market."

Roche has said that the global market for microarray systems was worth approximately USD 600m and grew by 10 per cent in 2006.

Kepler Equities analysts added that the deal made good strategic sense for Roche. Although the microarray business remains quite competitive, they expected that Rocheís acquisition would accelerate NimbleGen's prospects significantly.

Rocheís FY06 net income was USD 7.4bn, which equated to USD 7.94 per share, on sales of USD 33.9bn in 2006. Sales are split between its pharmaceutical business (USD 26.8bn) and its diagnostics business (USD 7bn).

Before the acquisition, NimbleGen's revenues had increased from USD 4.5m in FY04, to USD 9.5m in FY05 and USD 13.5m in FY06. However, the firm posted total losses of USD 44.5m: USD 8.3m in FY04, USD 5.2m in FY05 and USD 6.8m in FY06, according to the IPO filing. The company had raised USD 70m in private funding and had USD 19m in cash and cash equivalents at the end of 2006.