Buying across the pond

California-based Gen-Probe plans to acquire Tepnel in the UK for $132 million and possibly tap into pharmacogenomics market

Jeffrey Bouley
Register for free to listen to this article
Listen with Speechify
0:00
5:00
SAN DIEGO, Calif.—Gen-Probe Inc., which specializes in nucleic acid diagnostics for human disease, recently offered to acquire all the outstanding and to-be-issued shares of Tepnel Life Sciences plc, a growing molecular diagnostics company based in the United Kingdom, for just over $132 million in total. The deal, if completed, will be a boon to Gen-Probe's mainstream diagnostic offerings, but might also put it onto a new business track of pharmacogenomics.

The primary reason for pursuing the acquisition is because Gen-Probe anticipates that Tepnel's human leukocyte antigens (HLA) testing products will facilitate its diversification into the transplant typing market. HLA testing is used to match donors and recipients in anticipation of transplant surgeries, as well as in the ongoing management of transplant recipients.

Also, Tepnel's pharmaceutical services business has master service agreements with a number of major pharmaceutical clients, and Gen-Probe believes its ownership of Tepnel will further strengthen these relationships. In addition, Tepnel's activities in this segment could provide Gen-Probe an opportunity to expand into the rapidly emerging market for companion diagnostics, though that is clear a longer-term consideration.

"It's difficult to disaggregate the various benefits and say how much value companion diagnostics holds for us, but I will say that single thing that was particularly attractive for us is the business they have in HLA testing for transplant diagnostics. It's one of the closest fits with our own current business," admits Michael Watts, senior director, investor relations and corporate communications for Gen-Probe. "But we are excited about the pharmacogenomics business as well, and we have wanted to get into it for quite some time, as it's fairly well suited for our technology. Right now, pharmacogenomics is a very nascent area and it's not part of our core business strategy, but we see a lot of promise for it in the future."

On the more concrete and short-term front, Hank Nordhoff, Gen-Probe's chairman and CEO, notes that Tepnel brings an established position in the HLA testing segment with strong opportunities for continued growth. The company sells xMAP multiplex assays in the field of transplant diagnostics under its development and supply agreement with Luminex. The worldwide market for HLA tests is estimated at $260 million in 2008, he points out, and is forecast to grow at a low-double-digit rate.

Gen-Probe has publicly reported that it considers Tepnel's genetic disease testing business—which sells genetic tests for cystic fibrosis, Down's syndrome and familial hypercholesterolemia, among others—to be complementary to its own molecular diagnostics activities. Both companies anticipate that Gen-Probe's proven record in the development of novel diagnostics, its premier commercialization capabilities, and its reputation within the clinical community will help accelerate Tepnel's molecular diagnostics activities.

Gen-Probe expects to complete the transaction with cash currently on its balance sheet, and anticipates that the proposed acquisition will be neutral to the company's 2009 earning per share, and accretive to its 2010 earnings per share. The transaction is expected to close in the second quarter of 2009.

Both companies' boards of directors have unanimously approved the transaction. Already, directors and institutional investors holding approximately 40 percent of Tepnel's outstanding shares have pledged to vote in favor of the transaction, which will be structured as a "scheme of arrangement" under British law.

"We believe Gen-Probe's offer represents significant value for Tepnel shareholders, and recognizes both our past achievements and our future potential in molecular diagnostics and pharmaceutical services," says Ben Matzilevich, Tepnel's CEO. "We are excited about the opportunity to accelerate our strategic plans as part of one of the most established and highly respected molecular diagnostics companies in the world."

Jeffrey Bouley

Published In:


Subscribe to Newsletter
Subscribe to our eNewsletters

Stay connected with all of the latest from Drug Discovery News.

March 2024 Issue Front Cover

Latest Issue  

• Volume 20 • Issue 2 • March 2024

March 2024

March 2024 Issue