Viacell Acquired by Perkin Elmer

Now that PerkinElmer (PE) has purchased Viacell, the company best known to me for its PCR machines* now owns the distribution arm of Viacell's cord blood stem cell storage unit- Viacord. The announcement of Viacell's takeover, valued at USD 300 million (approx 960 million MYR) was certainly a whole lot more than what Celgene paid for LifebankUSA which was closer to USD 60 million a few years ago.

Viacell had several subsidiaries; one focusing on R&D for cord blood expansion and differentiation; one focusing on therapeutics; another focusing on freezing and storing women's eggs (Viacyte) and its most well known backbone cord blood stem cell banking service Viacord.

PE's intention is essentially to sell off Viacell's stem cell therapeutic business, the Viacyte service, probably wind down the R&D aspects of the business and to ride on Viacord's cord blood banking strengths.


WHY ACQUIRE A CORD BLOOD COLLECTION SERVICE?

PE acquired two companies last year namely Macri Technologies and NTD Laboratories, the former developed a genetic screening kit called Ultrascreen and the latter company offers the screening test at their facilities. In the latest addition to its stable, PE's acquisition of Viacord is to develop an end-to-end package for prospective parents who are shopping for cord blood storage and will also be provided the option of having their babies screened for freeBeta hCG (a peptide hormone indicative of first trimester down syndrome prenatal risk assessment). The chairman and CEO of PE indicated that the acquisitions represent the next steps in their initiative to build a comprehensive screening and diagnostics capability in maternal healthcare.

PE also intends to expand their genetic screening tools that test the cord blood collected for any conditions which are potentially treatable with stem cells. PE also plans to take advantage of Viacell's established distribution consumer network which is doesn't have- allowing it direct access to patients and clients instead of having to rely on doctors and hospitals to sell their product.


GROWTH IN THE MARKET

According to the Boston Globe, Viacord expects to generate less than USD 70 million in sales but Perkin Elmer believes that the cord blood banking market could reach more than USD 1 billion within the next five years. Additionally, PE's CEO also said that the genetics screening business is expected to account for more than 10% of PE's annual sales which totals USD 1.7 billion, and is growing faster than PE's business as a whole.


DRUG GIANTS ARE IN

PE plans to sell Viacyte (egg freezing and storage technology) to EMD Serono which is part of Merck Serono and Viacell's therapeutic business to another drug giant- possibly Amgen.


The CEO of PE Gregory Summe said that Viacord would continue to run independently of PE but that PE may provide additional funding and resources to accelerate Viacord's growth. With PE's generous offer of USD 7.25 per share, I wonder if the management team have decided to retire and let PE's management takeover the day to day operations of the company. Will PE succeed in this latest corporate move? It remains to be seen how the acquisition of Viacord's network can integrate with the screening services. In direct comparison, Celgene's acquisition of LifebankUSA hasn't enabled it to boost its position to No. 1 in the US yet.


*PerkinElmer's PCR machines were the most loved of the lot in the research lab where I used to work. There were long queues for the machine as it was known to give beautiful amplification sequences at high yield. Despite its bulky shape, the best labs still insist on having at least one version of the machine.