GE announced the purchase of Clarient (CLRT) for $5/share or $580M, a 34% premium over Clarient’s previous closing price. Revenues forecasted for 2011 and 2012 are at $114M and $136M respectively, pricing the deal at a Price to Sales of 4.25 to 5X. Revenues for Q1 were $26.6M with a loss of 370k; Q3 revenues were $28.7M with a profit of 825k. Retained earnings or net investment in CLRT formerly called ChromaVision Medical Systems was ($165M).47% of current stockholders have agreed to the transaction although shareholder plaintiff lawyers have filed suit questioning the low value of the deal.
Clarient is focused in cancer diagnostics a high growth testing market and GE says cancer profiling products and services is predicted to grow from $15B in 2009 to $47B by 2015. Some of the top molecular tests being performed in Clarient laboratories and sold to pathologists are BRAF, EGFR mutation analysis. P13k and Pulmotype used in the diagnosis of breast colon and lung cancer. Among the full spectrum of diagnostic tools being used are flow cytometry, PCR, FISH and tissue microarrays. Clarient is positioned in targeted therapy for individualized treatment of cancer utilizing digitized image analysis of tissue and development of biomarkers such as their proprietary TLE3 test for identifying response to taxane chemotherapy used to treat solid tumors.
(see Raygent article from May 10 and articles on Biomarkers in www.genengnews.com)
Safeguard Scientifics (SFE) $14.25 owned 26% of Clarient and will book a $145M gain on the sale. Safeguard is a holding Company that has a model that is both venture capital and private equity with several investments in the Life Sciences.SFE depends on IPO’s and buyouts for building their balance sheet. They have $400M of tax loss carry forwards a portion of which will offset gains from this sale.
Pure Play Molecular Dx Companies Move up on Clarient Deal
There was spillover from this deal into several pure play molecular cancer Dx stocks were up on above average volume: Exact Scientific (EXAS) $7.90 up 6%, Genomic Health(GHDX) $15 up 7.26%, Genoptix (GXDX) $17.30 up 3.4%, and Response Genetics (RGDX) 2.35 up 5.85%.