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In vitro to in vivo
January 2011
by Amy Swinderman  |  Email the author


HOPKINTON, Mass.—Since Caliper Life Sciences Inc., a developer of microfluidics, lab automation, liquid handling and optical imaging technologies, evolved into its own entity in 2003, the company has grown about 21 percent annually.
With the lofty goal to become a $240 million company by 2014, Caliper is continuing that rapid growth by deploying what it calls an "I-to-I Bridge" strategy, one that that aims to help its customer "bridge" the gaps that exist in bringing in-vitro assays to in-vivo results—and that strategy recently manifested itself in the form of Caliper's acquisition of Cambridge Research & Instrumentation (CRi), a privately held company that develops optical imaging systems to advance biomedical research and molecular-based drug and diagnostic development.
Under the terms of the acquisition agreement, announced Dec. 9, Caliper will acquire Woburn, Mass.-based CRi for $20 million, including net debt. In exchange for all of CRi's outstanding equity securities, Caliper will issue common stock valued at approximately $10.5 million, pay cash of approximately $7.5 million and assume CRi indebtedness of approximately $2 million.
According to Kevin Hrusovsky, Caliper's president and CEO, CRi's patented preclinical and tissue-based multiplexed analysis systems will expand Caliper's life sciences tools portfolio, particularly as it bridges into clinical research, pathology and clinical market applications.
 "CRi's advanced platforms add an important new dimension of capability to our suite of next-generation life science tools, and positions Caliper to further address biomarker discovery and companion diagnostics solutions for personalized medicine development programs," says Kevin Hrusovsky, Caliper's president and CEO.
The acquisition also extends the reach of Caliper's proprietary offerings along the in-vitro to in-vivo bridge by filling the gap in tissue analysis platforms, he adds.
"Five years ago, we had a lot of customers tell us that they were getting phenomenal results with in-vitro assays, thinking they had a great drug, but when they moved into testing on small animals, they found all kinds of side effects," says Hruosovsky. "They needed testing platforms to expand that continuum."
That's when Caliper made the decision to acquire Xenogen Biosciences, a provider of in-vivo preclinical CRO services, in 2006.
"After that happened, one of my customers at Johnson & Johnson called me to ask, 'what are you doing buying Xenogen? You should be buying CRi. It has a phenomenal fluorescence technology that would be a great complement to your offerings,'" Hruosvsky says. "Over the last few years, we could see the technologies CRi was building out, and could see them fitting into our long-term quest to become a major companion diagnostics partner for Big Pharma."
CRi brings to the table $12 million in expected revenues for 2010, and Caliper expects its technologies to deliver a 20 percent growth rate once it has been absorbed into Caliper's portfolio and operations. Those technologies include Nuance and TRIO for multispectral imaging on brightfield and fluorescence microscopes; inForm automated image analysis software; Vectra for high-throughput slide imaging and analysis; and Maestro for in- vivo optical imaging.
Ultimately, Caliper's entry into the emerging digital and multiplexed pathology market segment has the potential to deliver a substantially greater growth profile, Hrusovsky says.
"Similar to the approach we used in our successful commercialization of other disruptive technologies such as microfluidic LabChips and whole-animal optical imaging systems, we see an opportunity to leverage CRi's advanced multiplex technology towards unmet needs in a rapidly changing market, in this case the billion-dollar tissue imaging and digital pathology clinical research market," he says. "With CRi's technologies in our toolkit, we will be able to offer a more comprehensive suite of tools and services to address the important emerging trend toward personalized medicine."
Hrusovsky also notes that CRi has relationships with several universities, medical institutions and pharmaceutical and biotechnology companies. Pfizer, Merck, Novartis, the Dana Farber Cancer Center, Stanford and Baylor College of Medicine are a few stand-out customers that have used CRi's products to perform high-throughput, quantitative imaging of intact tissue, simultaneous analysis of multiple biomarkers and multispectral imaging of small animals.   "When we look at that customer list, it's duplicative to the list we have today," Hrusosvky says. "So it's not so much that this acquisition opens us up to new markets, but creates more one-stop shopping for our customers."
By mid-2011, CRi's headquarters and manufacturing operations will be consolidated into Caliper's facilities in Hopkinton, Mass., and CRi's Woburn facility will close. Nearly three- quarters of CRi's 49 employees will be offered employment with Caliper.
CRi did not respond to a request for comment. In a statement announcing the deal, George Abe, president and CEO of CRi, said, "Caliper's market leadership and extensive corporate relationships within the biotech and pharmaceutical industries, coupled with its rich culture of nurturing and commercializing innovative technologies, make Caliper the right partner to fully realize the market potential of CRi's portfolio of multiplexed imaging technologies."
Abe will join Caliper as senior vice president of cellular and tissue analysis and will be responsible for directing the growth and strategic direction of the tissue analysis business.
Overall, Caliper expects to incur restructuring, integration and initial capital investment costs of approximately $2.5 million, occurring mainly in 2011, in order to achieve anticipated business combination synergy cost benefits of  $2.5 million to $3 million per year, which will be fully phased in by the end of 2011. The transaction is expected to be EBITDA accretive in 2011.
Hrusovsky hints that this acquisition may soon be followed by others, as Caliper sets its sites on becoming a $240 million company within the next three years.
"What we need to do to achieve that is do some other acquisitions in the range of another $40 million during that period," he says. "What we're most interested in doing is finding a reagents company to be part of this family. And as our value goes up, it is going to be easier to acquire one of these companies."
Code: E011112



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