Yin and yang
GE Healthcare acquires cancer diagnostic company Clarient Inc.
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BOSTON—When GE Healthcare was looking for a way to expand its presence into the molecular diagnostics sector, its search started and ended with Clarient Inc.
In October, GE Healthcare announced a definitive agreement to acquire Clarient, a leading player in the fast-growing molecular diagnostics sector. The transaction values Clarient at approximately $580 million, net of cash and investments as of June 30.
The Federal Trade Commission has cleared the way for GE Healthcare's purchase of Clarient by granting the company early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, removing antitrust barriers in the United States to the cash deal, estimated at $570 million to $580 million.
According to GE Healthcare, the deal is expected to close later this year or early in 2011.
Based in Alisio Viejo, Calif., Clarient provides pathologists and oncologists with access to key diagnostic tests that shed light on the complex nature of various cancers. The company is focused on developing novel, proprietary diagnostic markers and tests for the profiling of breast, prostate, lung, colon and blood-based cancers, to help clinicians make informed decisions on how best to treat their patients.
Clarient's technologies, combined with GE Healthcare's strengths in diagnostic imaging, are expected to accelerate the development of new integrated tools for the diagnosis and characterization of cancer.
"We are extremely excited about the acquisition of Clarient," says Pascale Witz, president and CEO of Medical Diagnostics at GE Healthcare. "This marks an immediate step forward in how we treat cancer. Clarient is a clear leader in molecular diagnostics, and they have services and technologies that they use for tests of characterization and assessment of cancer."
A subsidiary of GE will commence a tender offer for all outstanding common and preferred shares of Clarient at $5 per common share and $20 per preferred share, in each case payable in cash.
The board of directors of Clarient has approved the transaction and unanimously recommended that Clarient stockholders tender their shares in the transaction.
Stockholders holding approximately 47 percent of Clarient's current outstanding voting stock have agreed, among other things, to tender their shares in the proposed transaction. GE Healthcare will acquire any Clarient shares not purchased in the tender offer in a second-step merger at the same price per share paid in the tender offer.
The Clarient brand also will be retained, Witz says.
"This is really a platform for expanding our capabilities, and we want Clarient to continue to grow and we hope to accelerate and expand that by leveraging our global reach and our technology for them," she says.
Witz points out that cancer is a very complex disease and "the more we understand the disease, the more we come to understand its complexities. While we used to define cancer by geography, now we realize every cancer is different. What defines every cancer is its molecular profile."
Moreover, molecular diagnostics provide precise information about a patient's cancer and can help doctors decide on the best treatment, she adds.
"You need to understand the molecular profile, which is the fingerprint of the cancer," Witz explains. "You can define which treatment you are going to use."
The therapies, as a result, are complex and they depend on the molecular profiling of the cancer and require powerful diagnostics.
"Imaging gives you the in vivo information of the disease, such as where the disease is in the patient," Witz says. "The in vitro molecular diagnostics will give you information on the molecular profile and the type of tumor your are dealing with. We are convinced that you have to combine the in vitro molecular diagnostics with the in vivo imaging, and this will give us the complete diagnostic solution."
The acquisition of Clarient could be the right deal at the right time for GE Healthcare.
The rapid increase in the incidence of cancer worldwide, together with advances in specific cancer-focused therapies, is driving significant demand for molecular diagnostics. The global demand for cancer-profiling products and services is predicted to grow from $15 billion in 2009 to an estimated $47 billion by 2015. Since 2005, Clarient's revenues have grown at a 68 percent compounded annual growth rate.
Given the increasing importance of more targeted cancer diagnostics, Clarient is well positioned to bring differentiated, added-value molecular diagnostic products and services to market.
John Dineen, president and CEO of GE Healthcare, explains that adding Clarient's technology to his company's portfolio will "accelerate our expansion into cancer diagnostics and therapy selection tools, while strongly enhancing our current diagnostic and life sciences offerings. We believe we can build a $1 billion-plus business by developing integrated diagnostic solutions for cancer and other diseases."
And, as Witz explains, the companies share a vision that with the integration of their technologies they can help pathologists and oncologists make more confident clinical decisions, bring improvements in the quality of patient care and lower the costs of disease management.
Clarient's team also stands to benefit from the acquisition, notes Ron Andrews, the company's CEO and vice chairman.
"The combination of Clarient's people, technologies and services with the resources, brand value, technical capabilities and global reach of GE Healthcare is a tremendous opportunity for the highly talented Clarient team," he says. "We will now have access to the resources we need to accelerate our development plans."
Andrews also points out that joining with GE Healthcare will allow Clarient to realize its ambitious plans and actualize our goal of becoming one of the industry's most relevant companies in the management of cancer.
And while the deal isn't necessarily part of an overall growth strategy for GE Healthcare, the company certainly isn't closing the doors on future acquisitions, either.
"GE will continue to look at interesting technologies and opportunities in the market," Witz points out. "Clearly, Clarient has a platform that has great growth opportunities. This is a strategic decision to expand our scope. It wasn't a case where we were looking at several things. They are a nice fit and it was evident early on."
Dineen points out that across the whole business, there are some nice opportunities, but adds, "we're not necessarily looking for some big acquisition that fundamentally changes the scope of the business."
Moving forward, Witz says that success will be gauged by the value added to how cancer patients are treated by combining the information of the in vitro molecular diagnostics and the in vivo imaging.
"Continuing to expand in the U.S. and internationally are things that we want to achieve," she concluded. "We are going to change the way we treat cancer patients."
In October, GE Healthcare announced a definitive agreement to acquire Clarient, a leading player in the fast-growing molecular diagnostics sector. The transaction values Clarient at approximately $580 million, net of cash and investments as of June 30.
The Federal Trade Commission has cleared the way for GE Healthcare's purchase of Clarient by granting the company early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, removing antitrust barriers in the United States to the cash deal, estimated at $570 million to $580 million.
According to GE Healthcare, the deal is expected to close later this year or early in 2011.
Based in Alisio Viejo, Calif., Clarient provides pathologists and oncologists with access to key diagnostic tests that shed light on the complex nature of various cancers. The company is focused on developing novel, proprietary diagnostic markers and tests for the profiling of breast, prostate, lung, colon and blood-based cancers, to help clinicians make informed decisions on how best to treat their patients.
Clarient's technologies, combined with GE Healthcare's strengths in diagnostic imaging, are expected to accelerate the development of new integrated tools for the diagnosis and characterization of cancer.
"We are extremely excited about the acquisition of Clarient," says Pascale Witz, president and CEO of Medical Diagnostics at GE Healthcare. "This marks an immediate step forward in how we treat cancer. Clarient is a clear leader in molecular diagnostics, and they have services and technologies that they use for tests of characterization and assessment of cancer."
A subsidiary of GE will commence a tender offer for all outstanding common and preferred shares of Clarient at $5 per common share and $20 per preferred share, in each case payable in cash.
The board of directors of Clarient has approved the transaction and unanimously recommended that Clarient stockholders tender their shares in the transaction.
Stockholders holding approximately 47 percent of Clarient's current outstanding voting stock have agreed, among other things, to tender their shares in the proposed transaction. GE Healthcare will acquire any Clarient shares not purchased in the tender offer in a second-step merger at the same price per share paid in the tender offer.
The Clarient brand also will be retained, Witz says.
"This is really a platform for expanding our capabilities, and we want Clarient to continue to grow and we hope to accelerate and expand that by leveraging our global reach and our technology for them," she says.
Witz points out that cancer is a very complex disease and "the more we understand the disease, the more we come to understand its complexities. While we used to define cancer by geography, now we realize every cancer is different. What defines every cancer is its molecular profile."
Moreover, molecular diagnostics provide precise information about a patient's cancer and can help doctors decide on the best treatment, she adds.
"You need to understand the molecular profile, which is the fingerprint of the cancer," Witz explains. "You can define which treatment you are going to use."
The therapies, as a result, are complex and they depend on the molecular profiling of the cancer and require powerful diagnostics.
"Imaging gives you the in vivo information of the disease, such as where the disease is in the patient," Witz says. "The in vitro molecular diagnostics will give you information on the molecular profile and the type of tumor your are dealing with. We are convinced that you have to combine the in vitro molecular diagnostics with the in vivo imaging, and this will give us the complete diagnostic solution."
The acquisition of Clarient could be the right deal at the right time for GE Healthcare.
The rapid increase in the incidence of cancer worldwide, together with advances in specific cancer-focused therapies, is driving significant demand for molecular diagnostics. The global demand for cancer-profiling products and services is predicted to grow from $15 billion in 2009 to an estimated $47 billion by 2015. Since 2005, Clarient's revenues have grown at a 68 percent compounded annual growth rate.
Given the increasing importance of more targeted cancer diagnostics, Clarient is well positioned to bring differentiated, added-value molecular diagnostic products and services to market.
John Dineen, president and CEO of GE Healthcare, explains that adding Clarient's technology to his company's portfolio will "accelerate our expansion into cancer diagnostics and therapy selection tools, while strongly enhancing our current diagnostic and life sciences offerings. We believe we can build a $1 billion-plus business by developing integrated diagnostic solutions for cancer and other diseases."
And, as Witz explains, the companies share a vision that with the integration of their technologies they can help pathologists and oncologists make more confident clinical decisions, bring improvements in the quality of patient care and lower the costs of disease management.
Clarient's team also stands to benefit from the acquisition, notes Ron Andrews, the company's CEO and vice chairman.
"The combination of Clarient's people, technologies and services with the resources, brand value, technical capabilities and global reach of GE Healthcare is a tremendous opportunity for the highly talented Clarient team," he says. "We will now have access to the resources we need to accelerate our development plans."
Andrews also points out that joining with GE Healthcare will allow Clarient to realize its ambitious plans and actualize our goal of becoming one of the industry's most relevant companies in the management of cancer.
And while the deal isn't necessarily part of an overall growth strategy for GE Healthcare, the company certainly isn't closing the doors on future acquisitions, either.
"GE will continue to look at interesting technologies and opportunities in the market," Witz points out. "Clearly, Clarient has a platform that has great growth opportunities. This is a strategic decision to expand our scope. It wasn't a case where we were looking at several things. They are a nice fit and it was evident early on."
Dineen points out that across the whole business, there are some nice opportunities, but adds, "we're not necessarily looking for some big acquisition that fundamentally changes the scope of the business."
Moving forward, Witz says that success will be gauged by the value added to how cancer patients are treated by combining the information of the in vitro molecular diagnostics and the in vivo imaging.
"Continuing to expand in the U.S. and internationally are things that we want to achieve," she concluded. "We are going to change the way we treat cancer patients."
