Sequenom announced that it entered into an agreement to acquire the Center for Molecular Medicine (CMM), a Clinical Laboratory Improvement Act (CLIA) certified clinical diagnostics laboratory based in Grand Rapids, Michigan.
CMM is an innovative joint venture between Spectrum Health, one of the largest not-for-profit health systems in Michigan, and the Van Andel Research Institute, an independent research institute with significant molecular biology expertise.
Under the terms of the agreement, Sequenom will pay a purchase price of approximately $4.0 million (less CMM's cash at closing) to acquire CMM and will enter into collaborative agreements with Spectrum Health and the Van Andel Research Institute. Ninety percent of the purchase price will be paid in shares of Sequenom common stock. Sequenom also received a tax incentive package valued at up to $20 million over 12 years. The project includes a potential, near-term capital investment of approximately $10 million and the potential creation of several hundred jobs over five years.
Daniel H. Farkas, Ph.D., HCLD, executive director of CMM, and a nationally recognized leader in the field of molecular diagnostics, will continue to oversee the lab and join the Sequenom management team. Sequenom also announced its plans to complete a CLIA-certified laboratory facility in San Diego, California which is expected to be used to expand existing genetic research and serve as a West Coast adjunct to Sequenom's prenatal business that will be serviced by the CMM laboratory.
CMM is an advanced molecular pathology laboratory created specifically to support advanced cutting-edge diagnostics, translational research and clinical trials. The Center combines Spectrum Health's clinical resources, which serves hundreds of thousands of patients annually, and the Van Andel Research Institute's translational research and bioinformatics expertise with the latest in genomics and proteomics technology. CMM provides access to robotic DNA and RNA extraction, DNA microarrays, multiplex protein detection, gene expression profiling and other diagnostic services. Under the collaborative agreements, Spectrum Health will provide ongoing support for coordinating third party payer agreements, IT interface between Spectrum Health and CMM, other state licensor certifications and operations support. Sequenom will also enter into a research collaboration agreement with the Van Andel Research Institute focused primarily on technology development, women's health and oncology.
"We believe CMM's expertise in molecular diagnostic testing and its relationship with a key health care system with the stature of Spectrum Health, as well as the Van Andel Research Institute's innovative genomic and translational research capabilities will be valuable and complementary additions to Sequenom," stated Harry Stylli, Ph.D., President and Chief Executive Officer of Sequenom. "This acquisition positions us well to successfully launch our SEQureDx Trisomy 21 Down syndrome test through a CLIA-certified lab on schedule during the first half of 2009. The agreement also provides us with a partnership with Spectrum Health, which is one of the largest health care providers in the country, with more than 140 service sites and approximately 8,000 births each year. Our relationship with Spectrum Health should be invaluable as we expedite prospective clinical validation studies for our Trisomy 21 test as part of our market development plan."
Dr. Stylli added, "The relationships we are forging with the Van Andel Research Institute, to collaborate on cutting edge research, and the economic development leaders in West Michigan will allow us to be well positioned to increase our presence and provide significant value to our clinical development and commercialization efforts down the road."
Acquisition of the CLIA-certified lab will allow Sequenom control over all aspects of the commercialization of its SEQureDx technology, including marketing and communication programs, and critical sales and third-party payer reimbursement contracting strategies.
Matthew G. Van Vranken, chairman of the board of CMM, executive vice president of Spectrum Health System and president of the Spectrum Health Hospital Group added, "The Center for Molecular Medicine was an investment in the future of health and this agreement with Sequenom accelerates our commitment to realizing the promise of personalized medicine. We are very pleased to offer physicians and patients access to Sequenom's advanced diagnostic tools and tests, and to be a part of bringing them to the broader health care market."
"Sequenom and the Van Andel Research Institute have a shared vision - to move important scientific findings from research laboratory to clinical laboratory to patients," stated David Van Andel, chairman and chief executive officer of the Van Andel Institute. "CMM was created to leverage new technologies for the purposes of more precise treatment options for patients and through this acquisition by Sequenom and our research collaboration, this goal can be realized more immediately."
Dr. Farkas, CMM executive director, possesses extensive experience in the molecular diagnostics industry and has established three hospital-based molecular diagnostics laboratories in his nearly 20 years in the field: Saint Barnabas Medical Center, Livingston, NJ; William Beaumont Hospital, Royal Oak, MI; and The Methodist Hospital, Houston, TX. Dr. Farkas has held faculty positions at Weill Medical College of Cornell University, Baylor College of Medicine, Michigan State University (current) and William Beaumont Hospital. He has also written extensively on molecular diagnostics, and lectured internationally on the subject. Dr. Farkas was President of the Association for Molecular Pathology in 2003 and is a consultant for the FDA Clinical and Molecular Genetics Advisory panel.
Sequenom is committed to providing the best genetic analysis products that translate the results of genomic science into solutions for non-invasive prenatal diagnostics, biomedical research, translational research and molecular medicine applications, and for research conducted in the agro (agricultural and livestock) industry.