Qiagen Up on Enzymatics' Unit Buy, ArcherDX Partnership Deal - Analyst Blog
Shares of sample and assay technologies provider Qiagen NV (QGEN) climbed 2.8% to eventually close at $23.29 yesterday, following the company's announcement that it has acquired the Enzyme Solutions Unit of Massachusetts-based private company Enzymatics. The financial terms of the transaction, which was completed in Dec 2014, have not been disclosed. Enzymatics is a leading producer of reagents, kits and assays.
Qiagen expects this buyout to provide approximately $20 million CER (constant exchange rates) of incremental net sales and to be accretive by approximately a penny to its adjusted diluted EPS for full year 2015.
Included in this transaction are R&D, manufacturing, formulation, and analytical capabilities of the Enzyme Solutions Unit which, according to Qiagen, will boost the company's expertise in enzymology. Approximately 50 employees have joined Qiagen at the current Enzymatics site in Beverly, MA.
These acquired products will be commercialized globally through Qiagen's direct, indirect, and OEM channels.
Management believes the inclusion of the Enzymatics franchise will allow Qiagen to provide a complete NGS workflow ranging from biological sample to valuable molecular insights, while also bolstering the rapidly expanding portfolio of its NGS products that will be suitable for any sequencer.
As a result of this transaction Qiagen expects to incur certain business integration and acquisition-related pre-tax charges on operating income in the fourth quarter of 2014.
Moreover, Qiagen has reaffirmed its guidance for adjusted net sales growth of approximately 4% CER for both fourth-quarter 2014 as well as the full year.
This business unit acquisition has led to the formation of a newly founded independent NGS applications company – ArcherDX, Inc., which incorporates Enzymatics' former Archer NGS technology and Supply Chain Solutions units.
Simultaneously with this transaction, Qiagen entered into a strategic partnership with ArcherDX. Per the deal, Qiagen will have access to technology and also gain a distribution right for the latter's NGS products.
Management believes this collaboration with ArcherDX will allow Qiagen to provide improved personalized healthcare to oncology patients, while also offering competitive leverage to the company for offering comprehensive solutions to its pharmaceutical customers who need companion diagnostics for precision medicine.
Currently, Qiagen retains a Zacks Rank #3 (Hold). Better-ranked stocks in the med-biomed/generic industry include Affymetrix Inc. (AFFX), Alexion Pharmaceuticals, Inc. (ALXN) and AMAG Pharmaceuticals, Inc. (AMAG). All the three stocks sport a Zacks Rank #1 (Strong Buy).
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