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Life Partners with Bristol-Myers

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In an attempt to develop its diagnostics business, Life Technologies (LIFE) entered into a Master Development Agreement with Bristol-Myers Squibb (BMY) for companion diagnostic projects. This represents the second collaboration between the two players, who would work in the areas of oncology and other therapeutic areas. Several ongoing trials in oncology reflect the segment’s immense potential.

The collaboration with Bristol-Myers is in line with the company’s strategy of building partnerships with pharmaceutical majors for companion diagnostic development including participation in early-phase clinical trials. Life Technologies has strengthened its diagnostics franchise with two recent tuck-in acquisitions – Navigenics and Pinpoint Genomics.

The acquisition of Pinpoint Genomics provides Life Technologies with its early-stage non-small cell lung cancer test that can help doctors identify early-stage patients who are at high risk for progression into the late-stage disease. Lung cancer is currently the leading cause of cancer deaths worldwide, claiming close to 1.5 million lives every year. This 14-gene panel test has been developed to run on the qPCR platform. The company plans to launch the test as a laboratory developed test later in 2012.

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 assays. In October 2011, the company formed a partnership to develop a companion diagnostic for GlaxoSmithKline's (GSK) MAGE-A3 cancer immunotherapy. The company also has an assay development partnership with Gen-Probe, which was recently acquired by Hologic (HOLX). Life Technologies also announced collaborations with Boston Children's Hospital and the Hospital for Sick Children in Toronto to develop the company's next generation sequencers for clinical research in pediatric diseases.

Life Technologies enjoys a strong position in the life sciences market. We are optimistic about its recent acquisitions, which we believe will strengthen its diagnostics franchise. However, economic uncertainties in Europe and unfavorable currency were the major headwinds for Life Technologies during the last reported quarter.

Our Neutral recommendation is backed by a Zacks #3 Rank (‘Hold’) in the short term.

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