Playing hard to get

EXACT Sciences rejects $41 million acquisition offer, and Sequenom refuses to give chase

Jeffrey Bouley
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SAN DIEGO—After seeing its offer to acquire Marlborough, Mass.-based EXACT Sciences Corp. rebuffed by the EXACT board of directors on Jan. 12, Sequenom Inc. terminated its exchange offer on Jan. 28. In doing so, Sequenom bore out the observation of Oppenheimer analyst Kevin DeGeeter, who had essentially said that EXACT needed Sequenom far more than Sequenom needed EXACT.

Commenting on the acquisition offer and subsequent rejection of it in mid-January, DeGeeter had indicated the Sequenom offer could be great for EXACT Sciences, which he noted was reporting minimal sales—negative $700,000 in revenue during the third quarter, in fact—and had less than six months of cash left. That made other offers unlikely in his view, and he added that Sequenom didn't need to complete the deal and thus would probably not chase EXACT with more lucrative offers.

In its acquisition proposal, Sequenom Inc. had offered to buy all of the outstanding shares of common stock of EXACT in an all-stock transaction valued at approximately $41 million. Under the terms of the proposal, each share of EXACT Sciences would have been exchanged for $1.50 in Sequenom common stock. For its part, EXACT's board unanimously rejected the offer, reporting that it was "actively pursuing a strategic alternative that the board believes can provide greater value to EXACT and its shareholders than the Sequenom proposal."

Reportedly, if this acquisition had been successful, it would have positioned Sequenom with one of the most comprehensive noninvasive cancer diagnostic portfolios. But Stylli had also said it would potentially bail EXACT out of a set of financial uncertainties, including a decline in its stock price, risk of delisting from The NASDAQ Capital Market, uncertain prospects for continued financing and significant execution risk.

As of Jan. 29, EXACT was out of the woods on the delisting at least, announcing a determination from NASDAQ that the company had evidenced full compliance for continued listing.

Two days before that announcement, and one day before Sequenom pulled the plug on the acquisition offer, EXACT also announced it had formed a strategic relationship with Genzyme Corp. under which Genzyme acquired certain intellectual property assets related to prenatal and reproductive health and three million shares of EXACT common stock for $6 million.

The Genzyme deal also provided for EXACT to receive $16.65 million at closing, with another $1.85 million over the next 18 months, "contingent upon the non-occurrence of certain events, in exchange for the sale and license of certain of EXACT's intellectual property assets, including those relating to reproductive and prenatal health."

That Genzyme deal may, in fact, have been the catalyst for the acquisition offer being yanked, as Sequenom—in its very brief news release about pulling the plug—reiterated that "Sequenom had previously announced that it would terminate the exchange offer if EXACT Sciences entered into any out-licensing agreement, collaboration or financial restructuring." DDN

Jeffrey Bouley

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