CHATSWORTH, Calif.—IRIS International Inc., a manufacturer of automated in vitro diagnostics systems and consumables for use in hospitals and commercial laboratories worldwide, has closed on its acquisition of AlliedPath Inc., a private, early-stage, high-complexity, CLIA-certified laboratory focused on oncology and molecular diagnostics.
The transaction includes $4.7 million in cash, with an additional earn-out of up to $1.3 million, subject to the achievement of specific sales and earnings targets over the next three years. Although the monetary value of the acquisition is modest, IRIS chairman and CEO Cesar Garcia explains that its value is strategic.
"We believe the laboratory has the ability to realize significant growth due to the attractive market dynamics in personalized medicine," he says. "In addition, the acquisition of the laboratory provides IRIS with a direct commercial channel for its proprietary NADiA ultra-sensitive nucleic acid detection immunoassay platform, beginning with NADiA ProsVue, a prostate cancer prognostic test designed to identify patients at low risk of cancer recurrence post-radical prostatectomy, which is pending FDA clearance.
"This strategic acquisition," he adds, "provides us with a state-of–the-art, high-complexity, CLIA-certified molecular pathology laboratory offering differentiated, high-value molecular diagnostic services in the rapidly growing field of personalized medicine."
AlliedPath currently offers molecular pathology, immuno-histochemical (IHC) staining, immunochemistry cancer marker testing and circulating tumor cell (CTC) testing. All of these disciplines are focused on personalized medicine, defined as the characterization of individual tumors in a way that the attending physician can better determine how to manage the patient—for example, what drugs will work best on that particular tumor, whether the tumor has spread to other organs (metastatic) or whether the primary tumor is beginning to regrow.
This is very different from the kinds of tests other "esoteric" labs offer, Garcia notes. The IRIS laboratory currently differentiates itself in two areas, he adds: turnaround time (IRIS provides preliminary results within 72 hours of receipt of sample, while most laboratories take 5 to 7 days) and pathology-to-pathology consultation services, where one of the lab pathologists speaks with the referring physician and/or pathologist to aid in the diagnosis and management of the patient.
"Our strategy is to add disciplines that round out the test offerings for personalized medicine," Garcia adds. "We will set up flow cytometry for hematologic cancers, fluorescent in situ hybridization (FISH) to further characterize solid tissue tumors, and we will exploit digital pathology to partner with hospital-based pathology groups in such a way that we become a de facto extension of their laboratories. Finally, NADiA ProsVue will be exclusively available through the laboratory. Thus, once IRIS expands the current menu to provide the full range of personalized medicine, coupled with the offering of ProsVue, the laboratory will be well-positioned with its high-value differentiated offering of testing services."
Industry sources, he notes, indicate that the U.S. market for personalized medicine for esoteric laboratory services and tests is expected to grow to $21 billion annually in 2015, from $11 billion in 2009.
With the closing of the acquisition, Dr. Vance "Randy" White has been appointed corporate vice president of IRIS International and president of the new IRIS Laboratory Division. In addition, AlliedPath co-founders, Dr. Philip J. Ginsburg, CEO, and Robin Vedova, president, have been named corporate vice president and chief medical officer of IRIS International and vice president of administration of the Laboratory Division of IRIS International, respectively.
