Tuesday, June 15, 2010

M&A is on the rise again – and so is the speculation about companies like WaferGen

One area where another buyout may happen is a heretofore out-of-the-way sector of biotech: DNA sequencing and genetic analysis. Consider the deals already produced over the past 3 years.

One investment banker is quoted as saying, "We are going to see increasing momentum in acquisition activity as the large players in genomic research try to acquire emerging technologies by buying the innovative smaller companies."

One player is Illumina, a leading maker of integrated systems for large-scale analysis of genetic variation and biological function. Some are betting that Illumina – which markets an array of products for gene expression, sequencing and genotyping – will continue to be one of the major acquirers in a consolidating genomics industry.

In 1/07, Illumina picked up Solexa, a company developing next-generation sequencing technology.  Two other bigger players have pursued and acquired smaller biotechs. In 8/07, Roche bought NimbleGen, a maker of custom microarrays. And in 12/09, Life Technologies purchased BigTrove, which makes chips for detecting particular genes involved in specific diseases.

One likely buyout target is Wafergen Bio-Systems. It's an emerging company whose SmartChip technology -- used for analyzing gene expression -- is "paradigm-shifting," says one biotech analyst. With gene expression analysis becoming a focus in disease research and drug development, he says, Wafergen could see significant growth in the sale of its SmartChip product over the coming years.

Wafergen is in talks with drugmakers (incuding Pfizer, Amgen, and Novartis) about using its SmartChip product. The discussions could lead to a partnership or a merger deal with one of the companies, says one Wafergen executive.

SmartChip enables scientists to know which genes or proteins are turned on or off in a given tissue sample in a cheaper, faster and more powerful way. It helps researchers and scientists in their quest to develop new drugs that target specific genes affecting a given disease.

With the broad applicability of SmartChip, Wafergen may be an attractive acquisition target for a number of established companies, including Illumina and Life Technologies.

See more in a full article from DailyFinance.

And read more about Wafergen Bio-Systems at www.wafergen.com.

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