EKF launches new molecular diagnostic division; acquires 360 Genomics
Espicom View: The acquisition of 360 Genomics places EKF Diagnostics in the rapidly growing companion diagnostics arena. EKF has been able to establish itself as a global in vitro diagnostic provider, but it does not have the resources to compete with the larger players, such as Roche. The company will have to increase its offerings and presence to gain further in vitro diagnostic market share, but will need to attract partners in order to enter the companion diagnostic market.
EKF Diagnostic has reported the launch of a new division to focus on molecular and companion diagnostics. EKF Molecular Diagnostics will develop technologies for cancer gene detection through its acquisition of UK-based 360 Genomics. 360 Genomics is a developer of diagnostic technologies to ensure timely and appropriate therapies for cancer patients.
EKF acquired 360 Genomics for an initial consideration of £1.6 million to be satisfied through the issue of new EKF shares. 360 Genomics has been acquired from Oxitec Limited, Dr Guoliang Fu, H20 Venture Partners, Bruce Savage and Benjamin Cobb. The initial consideration of £1.6 million will be satisfied by the issue of 5,649,717 new ordinary shares in EKF at an issue price of 28.32p per new ordinary share. Additional consideration payments up to a maximum of £8 million in cash will become payable as a percentage of the portion of net aggregate revenues of 360 Genomics products that exceed £8 million up until the year ended 31 December 2019.
This acquisition, and the establishment of EKF Molecular, demonstrates the company's intent to rapidly address the molecular and companion diagnostics market, which is an area of future potential growth.
360 Genomics has a pipeline of analytical tests for the detection of mutations in key cancer genes that it believes to be far more sensitive than existing chemistry platforms. The company's flagship technology is PointMan, a real-time PCR technology that provides highly sensitive detection for cancer mutations. PointMan is highly efficient in amplifying the target sequence of interest whilst suppressing amplification of the wild type. The resulting sample is effectively enriched for the mutation, thereby having the potential to offer industry leading sensitivity in a wide variety of sample types. EKF Molecular expects to follow the spring launch of PointMan with several additional product launches during the second half of 2013.
Xtract is the second product in EKF's launch range from the 360 Genomics acquisition. EKF believes that Xtract offers customers in the pharmaceutical, academic and diagnostic sectors a quicker, less expensive, cleaner and automatable platform for DNA extraction technology.
In addition, Andrew Webb has joined as CEO of EKF Molecular in a non-Board appointment. Andrew joins from Qiagen where he established and led global market development for the high growth personalised healthcare business.
The company has grown rapidly over the past three years. In 2010, it was a Germany-based producer of point-of-care blood analysers. It has since been acquired by a UK-based firm and swallowed up a number of other diagnostic companies, broadening its portfolio to become a global in vitro diagnostic business. The addition of a company that could help EKF enter the up-and-coming companion diagnostic market has the potential to bolster the already rapid growth even further.
In the global molecular diagnostic market EKF will have to compete with big players like Roche, Novartis, QIAGEN and Abbott. A small company will not have the resources to compete on the same level as Roche, a company that dominates the market. According to Roche, the molecular diagnostic market was valued at US$3 billion in 2010, and will likely reach US$5 billion in 2015. Oncology diagnostics are a rapidly growing section of the molecular diagnostic market. Carving a slice of this attractive market could benefit EKF greatly.