) is on an acquisition bandwagon, targeted towards building its
diagnostics franchise. The company acquired Compendia Bioscience, a
cancer bioinformatics player, which identifies gene targets for
drug discovery and development. These services are widely used by
the pharmaceutical industry. Based on the oncology data provided by
Compendia, Life Technologies should be able to develop its own
tests as well as collaborate with pharmaceutical companies in
companion diagnostic development.
The financial terms of the deal were however not disclosed. The
acquisition of Compendia is expected to be neutral to 2012 earnings
and accretive to the company's overall ROIC by 2015.
Earlier, the company strengthened its diagnostics franchise with
two tuck-in acquisitions - Navigenics and Pinpoint Genomics. The
acquisition of Pinpoint Genomics provided Life Technologies with a
14-gene panel test, Pervenio Lung RS, a risk stratification test
for early stage lung cancer. This test, launched in September, will
provide immense help to a huge patient base by identifying lung
cancer patients, who are at high risk of mortality following
surgery, in the early stages. In addition, the test will also aid
prevention and disease management.
On the other hand, the Navigenics deal brings in an established,
CLIA-certified laboratory licensed throughout the US. This facility
will be employed for design and validation of new diagnostics
Life Technologies also has a Master Development Agreement with
) for companion diagnostic projects. The collaboration with
Bristol-Myers is in line with the company's strategy to build
partnerships with pharmaceutical majors for companion diagnostic
development including participation in early-phase clinical trials.
Other partnerships include those with
) for MAGE-A3 cancer immunotherapy and with Gen-Probe.
Life Technologies enjoys a strong position in the life sciences
market. We are optimistic about the company's focus on its
diagnostics franchise, which holds potential. However, economic
uncertainties in Europe and unfavorable currency were the major
headwinds for the company during the last reported quarter.
We have a 'Neutral' recommendation on Life Technologies. The
stock carries a Zacks #3 Rank ('Hold') in the short term.
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