SAN DIEGO—The biological assay market got a little smaller in February with the announcement by Illumina that it had signed a definitive agreement to merge with and eventually take over CyVera Corp. The merger will cost Illumina, based here, $17.5 million, consisting of 1.5 million shares of common stock and the payment of $2.3 million of CyVera's liabilities. Both companies have largely made their mark in the market by producing bead-based assays and detection systems.
CyVera, Wallingford, Conn. has developed and produces beads imprinted with holographic elements that can be scanned to give a digital address, much like a bar code. Like Illumina's BeadArray system, each bead is also capable of supporting biological molecules, such as proteins and nucleic acids, making them ideal for biological assays, which can be scanned using CyVera's Virtual Cytometer.
"CyVera is a company of 24 people today, focused on the development of a digital microbead platform that we think is high complementary to Illumina's," says Jay Flatley, Illumina president, director, and CEO, during an earnings conference call. "The technologies are being developed with the intent of enabling easy assay customization, high sample throughput, reliable performance, and low manufacturing costs."
According to Flatley, what makes Illumina and CyVera systems complementary is their levels of throughput. "CyVera bead technology is ideally suited for lower multiplex levels in the range of 10 to its highest of 1000 targets," he says. "Illumina's beads, on the other hand, are optimized for dense high-throughput applications with multiplex levels currently ranging from 384 to over 200,000 targets per sample."
Illumina plans to integrate the CyVera technologies into an expanded portfolio of products based on the BeadArray system, and sees the new tools as a way to enter the biomarker R&D and in vitro molecular diagnostic markets. But, they are quick to note, this is only a foot in the doorway.
"The emerging molecular diagnostic market is a very exciting opportunity, and we think it has great potential," Flatley explained. "To participate successfully will require an extensive infrastructure and significant base of related resources. As a result, Illumina intends to expand its activities to seek diagnostic collaborators and partners."
Initially, Illumina expects few external results from the merger.
"Given the early development status to CyVera's products, there will be a substantial in-process R&D charge recorded as of the closing of the merger," added Timothy Kish, Illumina's CFO, reporting on the company's financials. "We are not assuming any significant revenue from CyVera in 2005."
According to Flatley, the first products based on CyVera technology are expected to be available in the second half of 2006. That being said, the company is expecting to hit the ground running in retooling and deploying CyVera systems.
"Illumina's growing portfolio of assays and content will allow our team in Connecticut to focus on development of the bead manufacturing capability and the Virtual Cytometer system," said Alan Kersey, president and CEO of CyVera, in a press release.
"In addition, we will be able to utilize Illumina's direct sales and marketing organization to bring products to the research market as well as forging strong partnerships with third-party companies in both research and diagnostics fields."