Casting a clinical eye
SANTA CLARA, Calif.—Agilent calls its acquisition of Glostrup, Denmark-based Dako, a cancer diagnostic company, the "next step in Agilent's growing role in clinical diagnostics" but it's also one of the company's biggest steps in general, with a price tag of $2.2 billion—Agilent's largest acquisition so far.
"Agilent's strategy in acquiring Dako is about strengthening the company's presence in life science and about revenue growth," said Agilent President and CEO Bill Sullivan in a news release, characterizing Dako as one of the world's leading providers of cancer diagnostics tools. "Dako employs extremely talented people with specialized expertise that we highly value. Their knowledge and experience will be very important as we move forward together. In the rapidly growing diagnostics market, Dako's products and capabilities are a strategic complement to Agilent's existing offerings."
Sullivan predicts that together, the combined companies will be able to develop a wider range of products to aid in the fight against cancer.
According to Sullivan, one of the reasons Agilent is eager to make this plunge is that its biggest long-term growth opportunities continue to be in life sciences, and he adds, "This is a $21 billion industry with 4 percent to 6 percent in annual growth, where Agilent is currently a $1.8 billion player. Dako is one of the leading global providers of cancer diagnostic tools, and the addition of Dako and its portfolio will help Agilent to accelerate our growth in several rapidly expanding areas of diagnostics. These include the $2.2 billion anatomic pathology market, growing at 8 percent to 10 percent annually, and the $4.5 billion molecular diagnostic market, growing at 10 percent to 15 percent per year. Dako has an established channel and regulatory experience, which provides Agilent with an immediate entry into these markets."
He notes that more than 90 percent of Dako's business is in reagents and services, and as a result, Agilent expects to see an immediate increase in its recurring revenues from 25 percent to 30 percent of total revenues. In turn, Agilent provides Dako with Agilent's broad range of technologies and strong global presence.
"This is particularly true in emerging markets, where Dako has a significant opportunity for further penetration," according to Sullivan. "This acquisition is primarily about revenue synergies, not cost synergies. While we expect to realize some cost synergies, we are most exciting about what Dako can do to add to Agilent's profitable growth."
Lars Holmkvist, CEO of Dako, predicts the combination of the two companies "is going to be a very exciting journey" and adds that the entire executive team has chosen to go along on that journey subsequent to the acquisition being finalized.
"Like Agilent, Dako has a long history as a leader in scientific advancement and a culture that values discovery and innovation, said Lars Holmkvist, CEO of Dako, as he looked at complementary strengths possessed by the two companies. "We believe that Agilent and Dako are a winning combination."
"This deal appears to make sense as Dako is considered an attractive asset in tissue diagnostics, a market with robust underlying fundamentals," wrote Doug Schenkel, an analyst at Cowen & Co., shortly after the announcement of the deal, adding that Agilent has some $3.9 billion in cash outside the United States, and that money could be used for more life-science and diagnostic deals in other countries to avoid U.S. taxes.
At the time of the announcement, the acquisition was expected to close in June or July, subject to the satisfaction of customary closing conditions, and Agilent expects the acquisition to be immediately accretive to corporate earnings on a non-GAAP basis.
Dako provides antibodies, reagents, scientific instruments and software primarily to customers in pathology laboratories "to raise the standards for fast and accurate diagnostic answers for cancer patients," according to the companies. Dako also collaborates with a number of major pharmaceutical companies to develop new potential pharmacodiagnostics, or companion diagnostics, which may be used to identify patients most likely to benefit from a specific targeted therapy. Dako's products are sold in more than 100 countries employing more than 1,000 people, and in 2010 its annual revenue was approximately $340 million.
Agilent expects Dako to generate sales $373 million in fiscal year 2013, and noted that it will probably report Dako sales as a separate segment. If Agilent's predictions of immediate gains from the acquisition hold true, it could be a good boost for the company, given that the life-science part of Agilent was responsible for roughly one-third of the company's 2011 revenue of $5.58 billion.
NIH grant will further Agilent's toxicology work
SANTA CLARA, Calif.—Agilent Technologies Inc. and a team of scientists and investigators from six leading research organizations, are using a $6 million grant from the National Institutes of Health (NIH) to pioneer transformative research in toxicology, according to an announcement made by the company in May.
Funding for the project comes from the Common Fund's NIH Director's Transformative Research Projects Program, which is designed to support exceptionally innovative, high-risk, original and/or unconventional research that has the potential to create or overturn fundamental scientific paradigms.
The consortium has been funded to map and provide quantitative dose-response models for selected pathways of toxicity. Its goal is to establish a public data resource to share the results of new testing strategies for assessing human health risks.
The project is initially focusing on endocrine disruption pathways as a first step toward mapping the complete human toxome. This effort will, in turn, improve accuracy, while lowering costs and reducing the time needed to predict the toxicity of new compounds.
Agilent will develop and contribute to the consortium new strategies for data management as well as software for data analysis and visualization. This software will be built using Agilent's GeneSpring multi-omics analysis platform. In addition, much of the data will be collected using Agilent microarrays and mass spectrometers.
"The NIH award to the consortium underscores the importance of major stakeholders working together to create this community resource and ultimately to advance toxicity testing," says Gustavo Salem, vice president and general manager of Agilent's Biological Systems division. "Agilent is committed to this vision. Our expertise in bioinformatics software and bioanalytical platforms will provide the tools for the consortium to collect, organize, share and analyze the generated data in conjunction with established databases of biochemical and toxicological knowledge."
The consortium is led by Dr. Thomas Hartung, director of the Johns Hopkins Center for Alternatives to Animal Testing. Agilent's lead investigator is Dr. Michael Rosenberg, director bioinformatics in the company's Life Sciences group.
Other principal investigators include: James Yager, professor in preventive medicine at the Johns Hopkins Bloomberg School of Public Health; Robert Kavlock, director of the National Center for Computational Toxicology at the U.S. Environmental Protection Agency; Mel Andersen, associate director of the Hamner Institute for Health Sciences; Kim Boekelheide, professor of medical sciences at Brown University; and Albert J. Fornace Jr., molecular cancer research chair at Lombardi Comprehensive Cancer Center at Georgetown University Medical Center.