IRIS announces product acquisition from BioMicro Systems

Nov 30 2010

IRIS International, Inc. (Nasdaq:IRIS), a leading manufacturer of automated in-vitro diagnostics systems and a provider of high value personalized medicine products and testing services, announced today that it has acquired the assets of a multi-purpose, bench-top instrument platform for automating highly repetitive, manual laboratory protocols for (F)ISH (fluorescence in-situ hybridization) testing and other slide-based cytogenetic applications. The product acquisition is a natural extension to the successful ThermoBrite^® DNA Hybridization System and in line with the Company's entry into personalized medicine with emphasis on cancer diagnostics. The product and proprietary technology assets were purchased for $3.2 million in cash from BioMicro Systems, Inc. The new product platform will be integrated into the Iris Sample Processing Division and it is expected to position IRIS as a major competitor in the high growth cytogenetic instrumentation market.

"The product acquisition is an excellent strategic fit and natural product extension for our Iris Sample Processing Division which is the market leader for small semi-automated (F)ISH denaturation and hybridization instrumentation with more than 4,500 units sold of its StatSpin^® ThermoBrite^® instrument since its launch in 2003. We expect the new system to enable us to capitalize on the success of the ThermoBrite^®, creating a family of products for this market segment. In addition, we believe this acquisition furthers the Company's strategy to move into high value applications focused on Personalized Medicine, with an emphasis on utilizing genetic information as a guide to treat diseases, such as cancer. With the increasing rate of adoption of (F)ISH testing as standard protocol for cancer diagnostics, mid-range laboratories performing between 10 and 50 tests per day are requiring a higher level of automation. We estimate there are approximately 4,000 of these mid-range laboratories in the clinical and research market that we will be targeting," stated Cesar Garcia, Chairman, President and CEO of IRIS International.

"At this time, the acquired instrument is substantially complete and pre-production stage instruments have been successfully evaluated at two clinical sites. Subject to certain engineering enhancements identified during the product evaluations, the system is expected to be launched early 2012, with no FDA regulatory approvals necessary as it is deemed a Class I (exempt) device. Although we have not yet established the price for the new instrument, competitive products performing only some of the functionality of the acquired product have an end-user price ranging between $35,000 and $60,000 per unit," added Mr. Garcia.

(F)ISH uses nucleic acid probes, which are segments of labeled DNA that are designed to hybridize or bind to the target DNA of a positive specimen. The probes are labeled with fluorescent molecules to enable the identification of genetic abnormalities, providing valuable information about cancer and other genetic diseases. The total cytogenetics market relevant to (F)ISH was approximately $1.2 billion in the year 2009, and is expected to grow to $2.8 billion in the year 2014, and $6 billion in the year 2019. The greater growth of the market beyond 2009 is anticipated on the basis of greater use of (F)ISH in clinical diagnostics, according to Jain PharmaBiotech.

"The protocols used for (F)ISH testing are very time and temperature sensitive and can take up to eight hours of hands-on processing time. Through independent laboratory evaluations, we found the system was able to cut technologist's labor by at least 50%  while avoiding potential operator errors, fulfilling a significant need in the marketplace as there is a declining number of CLIA-certified technicians," stated Robert Mello, President of the Iris Sample Processing Division.

The system has been developed as a standalone and versatile bench-top instrument capable of automating a growing number of laboratory protocols. The initial and primary market focus for the instrument will be for (F)ISH applications, although the system also automates other processes for WISH (whole mount in-situ hybridization), IHC (immunohistochemistry), blots (Western/Southern/Northern), and other slide-based applications. This bench-top platform is user programmable and it is capable of automating most steps of the (F)ISH test protocol with a significant reduction in technologist labor and increased reliability.

On a GAAP basis, IRIS expects the acquisition to become accretive to its earnings per share (EPS) in 2012, and to be slightly dilutive to 2011 EPS.        

Source: IRIS International, Inc.