GE to acquire Clarient Print E-mail
By Patrick Crutcher   
Friday, 22 October 2010 09:09

clarientGE Healthcare, a unit of General Electric (NYSE: GE), has agreed to a $580M deal to acquire Clarient, Inc.(NASDAQ: CLRT), a leading molecular diagnostics firm. GE's Healthcare unit will pay $5 per common Clarient share or $20 per preferred share.

This doesn't come as a big surprise for subscribers. Back in early August, we released a report on Clarient where we recognized them to be a long-term leader in cancer diagnostics and molecular testing. They combine innovative diagnostic technologies with world-class pathology expertise to assess and characterize cancer. The rise of individualized medicine as the new direction in oncology has created a need for CLRT's resources in  leading diagnostic technologies, such as flow cytometry and molecular testing. GE must be very interested in some of CLRT's next generation tests like Mammostrat and their proprietary taxane predictive product line that includes an array of tests created for lung, ovarian and breast cancers, among others. This represents more than a 50% gain from our initial coverage.

Clarient's technologies, combined with GE Healthcare's strengths in diagnostic imaging, are expected to accelerate the development of new integrated tools for the diagnosis and characterization of cancer. Molecular diagnostics provide precise information about a patient's cancer and can help doctors decide on the best treatment.  The rapid increase in the incidence of cancer worldwide, together with advances in specific cancer-focused therapies, is driving significant demand for molecular diagnostics.  The global demand for cancer-profiling products and services is predicted to grow from $15 billion in 2009 to an estimated $47 billion by 2015*.  Since 2005, Clarient's revenues have grown at a 68 percent compounded annual growth rate.

John Dineen, President and CEO of GE Healthcare, said, "GE Healthcare has built a world-class set of diagnostic, information and life science technologies.  We are experiencing solid growth in the core business this year and we see that growth continuing into 2011. Adding Clarient's leading technology to our portfolio will accelerate our expansion into cancer diagnostics and therapy selection tools, while strongly enhancing our current diagnostic and life sciences offerings.  We believe we can build a $1 billion-plus business by developing integrated diagnostic solutions for cancer and other diseases.

"GE and Clarient share a vision that through the integration of our diagnostic technologies we can help pathologists and oncologists make more confident clinical decisions, bring improvements in the quality of patient care and lower the costs of disease management," Dineen said.

Ron Andrews, CEO and Vice Chairman of Clarient, said, "The combination of Clarient's people, technologies and services with the resources, brand value, technical capabilities and global reach of GE Healthcare is a tremendous opportunity for the highly talented Clarient team. We will now have access to the resources we need to accelerate our development plans.  We are proud of the progress we have made in bringing our molecular diagnostic technologies to market, and joining with GE Healthcare will allow us to realize our ambitious plans and actualize our goal of becoming one of the industry's most relevant companies in the management of cancer."

Clarient provides pathologists and oncologists with access to key diagnostic tests that shed light on the complex nature of various cancers.  Clarient is focused on developing novel, proprietary diagnostic markers and tests for the profiling of breast, prostate, lung, colon and blood-based cancers, to help clinicians make informed decisions on how best to treat their patients.  Given the increasing importance of more targeted cancer diagnostics, Clarient is well positioned to bring differentiated, added-value molecular diagnostic products and services to market.  

Disclosure: No position.

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