Covance picks up Merck lab

PRINCETON, N.J.—Covance announced it has entered into a definitiveagreement with Merck & Co. Inc. under which Covance will acquire Merck'sSeattle-based Gene Expression Laboratory, and Merck will in turn buy genomicanalysis services from Covance.

Under the terms of the agreement, Merck has committed to afive-year $145 million contract to purchase genomic analysis services fromCovance. In addition, Covance will acquire Merck's Seattle-based GeneExpression Laboratory that performs genomics services such as genotyping, genesequencing and gene expression profiling. The division is part of Merck's Rosetta Inpharmatics group,a 300-person unit that is in the process of being dismantled. In June,Microsoft purchased the assets of Rosetta Biosoftware, and said it planned tokeep some employees on board.

Based in Princeton, N.J., Covance is a drug developmentservices firm that has operations in 25 countries, and more than 10,000employees worldwide.

According to Joe Herring, chairman and chief executiveofficer of Covance, the acquisition of the laboratory brings world-class talentand technologies to Covance and further expands our capabilities in genomicstesting and personalized medicine.

"We recognized the need to expand our footprint in theimportant and growing genomics testing market, and this transaction providedboth a superior and quicker entry point than the build or buy options weconsidered," he says. "The overall size of the genomics market is estimated atseveral hundred million dollars per year, including services fordiscovery/preclinical and clinical trials support."

According to Tom Turi, vice president for biomarkers atCovance, Rosetta Inpharmatics has a well-established reputation as a leadingprovider and developer of genomics applications and technology, making it anattractive acquisition.

"The depth of scientific talent, leading-edge technologiesand unparalleled capabilities from this organization provides Covance with asuperior entry point in genomics segment," he says.

According to Deborah Tanner, corporate senior vice presidentof central laboratory services at Covance, the acquisition "establishes Covanceas the largest genomics service provider in the world."

"This agreement will broaden our participation in projectsand partnerships with clients in the drug discovery process," she says.

The companies closed the deal on Aug. 17. Covance assumedcontrol of the facility and the Seattle team has joined Covance. Covance saidit expects to offer employment to the majority of its current employees.

The sale could breathe life into the facility, Herring says.

"This is a new day for Rosetta. We plan to invest in it, andgrow it," says Herring.

Turi adds that the laboratory will fit well with Covance'smission to expand its testing capabilities.

"Covance has long recognized the need to expand our testingcapabilities to support our

clients' discovery efforts and the development ofpersonalized medicine," he says. "Our landmark deal with Lilly last summerincluded the acquisition of discovery support capabilities and this recentaddition further expands our footprint in discovery services, specifically inthe biomarker discovery platform and extends our genomic capabilities insupport of clinical development."

According to Dr. Rupert Vessey, vice president of MerckResearch Laboratories, the Gene Expression Laboratory proved to be anattractive opportunity because it has established a reputation for consistentdelivery of high-quality experimental data in support of Merck's externalcollaborations and internal research projects.

"This agreement assures continued access to these servicesfor our researchers while securing a future for the facility as an integralpart of a world leading drug development service provider," Vessey notes.

Merck will start off as a key client of the laboratory'sservices, notes Turi.

"Covance will provide complete genomics services such asgene expression analysis, DNA variation analysis, including next-generationsequencing and genome-wide variation detection capabilities," he says. "Thisacquisition provides a unique opportunity to enhance our relationship withMerck at a more strategic level through this five-year genomics partnership. Wealso hope to be providing these services to our other clients in thelong-term."