FOSTER CITY, Calif.—Applied Biosystems Inc. announced in late May that it had entered a definitive agreement to acquire for $120 million Agencourt Personal Genomics (APG), a privately-held research and development company focused on the development of next-generation genetic analysis technologies. Subject to customary closing conditions and regulatory approval, the purchase is expected to close some time in the third quarter this year.
With the acquisition, Applied Biosystems continues to widen its position in the genetic analysis market. The company already has a very solid market position in products in the sequencing, microarray and PCR areas, as well as an internal R&D program. Yet despite its clear lead in this business, Applied Bio is showing that it won't rest on its internal programs to maintain its lead in the market but will invest in different approaches to creating an inexpensive sequencing platform.
Late last year, Applied Bio completed an equity investment in VisiGen, a Houston-based company whose DNA sequencing work is focused on creating a method to analyze a single molecule of DNA in real-time—a method the companies believe will dramatically reduce the cost of sequencing while also markedly increasing throughput.
With the acquisition of APG, Applied Bio brings another approach to the problem on-board: APG's massively parallel fluorescence sequencing by stepwise ligation, sometimes also called "sequencing by synthesis".
"We have a number of different programs working on sequencing technology, but many are longer term approaches," says Andy Watson, Applied Bio senior director of market development. "We see APG as the next thing and we will begin placing their systems in the market sometime in calendar 2007."
For APG, the time was right to join a deep-pocketed company like Applied Bio. "Applied Biosystems has a history of rapidly commercializing innovative sequencing technology," says APG's CEO and co-CSO, Kevin J. McKernan. "The Applied Biosystems product and instrument development team is exceptional and should accelerate our time to market."
The pending sale also marks a divestment of interest in APG by Beckman Coulter, a 49 percent owner of the company, which was spun off from Agencourt Biosciences in early 2005, shortly after it was acquired by Beckman Coulter. In a separate press announcement in conjunction with the planned sale, Beckman Coulter reported it would net roughly $50 million after the sale of APG.
That's not bad, considering Beckman's purchase price last year of Agencourt totaled $100 million. With that acquisition, Beckman gained a solid reagents business from Agencourt to support the burgeoning sequencing market, as well as a contract sequencing operation at Agencourt's headquarters in Beverly, Mass.
"The technology at APG reached a state of maturity more rapidly than people would have thought and that is what brought the attention from ABI," says Bruce Wallace, VP of nucleic acid testing with Beckman Coulter, explaining the company's divestiture. "It's a crowded market, but what seems to get lost in this is that we stand to earn a substantial amount of money from this deal that we will then have to invest in our ongoing strategic programs."
And that is just fine with Applied Bio, as it gets a technology that is very close to commercialization, that it anticipates will have an impact in the market shortly. "The interest will be very strong in researchers looking at mutations in cancer genes," says Watson. "We think that resequencing is one of the highest growth areas and one of the most captive areas for the APG technology."