Measures aim to ensure sustained success in a fast-changing market environment
Roche today announced changes to the management and set-up of its life-science business. The Applied Science Business Area will be dissolved and its portfolio of products integrated within Roche’s other Diagnostics Business Areas.
Following assessment of its sequencing R&D portfolio, Roche has decided to:
- Return the ISFET project for the development of a semiconductor-based sequencing system to DNA Electronics. The project was a partnership with 454 Life Sciences. Roche believes that it will be unable to disrupt the market with the product at launch.
- End its partnership with IBM for the development of a nanopore-based sequencing platform due to high technical risks involved.
- Establish a dedicated unit to focus solely on sequencing. This unit will be tasked with implementing a sequencing strategy from life-science research to clinical diagnostics, explore internal and external opportunities that can provide customers with differentiated products, and will also manage Roche’s existing sequencing business.
The price pressure and funding cuts in life-science research that have been features of the market environment for some time now are expected to continue. The organisational arrangements Roche is introducing are designed to further improve productivity and enhance the market responsiveness of its life-science business, which currently accounts for about 7 % of total Diagnostics sales.
As a consequence, the Applied Science business area will be dissolved as of the end of 2013.
Changes expected to affect approximately 110 positions in Penzberg (Germany) and 60 positions in Branford (Connecticut, USA), the home of its 454 Life Sciences business.
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First high-throughput sequencing platform to deliver one million reads with read lengths of up to 1000 bp and beyond.
Roche announced today the launch and immediate availability of a new software package (v2.8) that significantly improves long-read shotgun sequencing performance on its GS FLX+ System. This system is the first high-throughput sequencing platform to deliver one million reads with accuracy and length that are comparable to traditional Sanger-based methods. The improvements will allow researchers to discover more novel complex genetic variants and uncover the hidden biology in difficult-to-sequence regions of genomes, transcriptomes, and metagenomic samples. The GS FLX+ System and software will be presented today at the American Society for Human Genetics Annual Meeting in San Francisco. Read more
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Roche is increasing its offer to purchase Illumina from $44.50 to $51 per share. This represents a deal valued at almost $6.6 billion, cash. Amazing!
Though no deal has yet been struck, because this is a cash deal that has been made public by Roche, the FTC is already investigating the acquisition for violations of antitrust laws.
Illumina has advised their stockholders to defer taking any action in response to Roche’s increased offer. (Illumina press release)
“Based on our discussions with Illumina shareholders we have seen interest to accelerate the takeover process,” says Severin Schwan, CEO of Roche. “As a result, we are increasing our offer price to $51.00 per share. Roche’s preference continues to be a negotiated transaction. We look forward to the possibility of a swift completion that offers immediate value to Illumina’s shareholders.” (Roche’s press release)
Below is the text of the letter Roche sent on March 29, 2012 to Jay Flatley, President and Chief Executive Officer of Illumina, Inc:
Over the past several weeks, we have had a number of productive discussions with Illumina’s shareholders and we have observed the market reaction to our offer to acquire Illumina. We are also cognizant of your statements that you regarded our offer price of $44.50 as insufficient to provide a basis for discussions between our companies.
In light of this, we are increasing our offer for all outstanding shares of Illumina to $51.00 per share. Our revised offer represents a 15% premium to our offer on January 25, 2012 and a substantial premium of 88% over Illumina’s closing stock price on December 21, 2011, the day before market rumors about a potential transaction between Roche and Illumina drove Illumina’s stock price significantly higher. It also represents a 34.1x multiple of Illumina’s projected forward earnings based upon analysts’ current consensus estimates for 2012.
As you know from our prior communications, it has been and remains Roche’s preference to conclude a negotiated transaction with Illumina. We hope that you will agree that our new price presents a very attractive opportunity to your shareholders and that the interests of your shareholders and the fiduciary responsibilities of you and your Board require that you agree to enter into discussions with us.
If you continue to decline to negotiate with us, we will have no choice but to continue our effort to effect a transaction unilaterally. However, I strongly hope that you will either agree to commence discussions with us now or remove all obstacles so that your shareholders can make their own determinations about the adequacy of our increased offer.
I look forward to hearing from you.
Franz B. Humer
Chairman, Roche Holding Ltd
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Last week an article appeared in BioArray News as part of the coverage of the ongoing Roche/Illumina story – Illumina Array Customers ‘Apprehensive’ of Possible Roche Takeover, Fear Platform ‘Stagnation’
Yesterday, I received an email from Life Technologies (I guess I’m on their marketing list) that seemed unusual to me. No message, just an image with a link to the article.
This email was clearly intended to draw attention to the article and highlight the fears of current Illumina customers about the possible deal. Were they trying to build opposition to the deal? Do they feel the combined financial strength of Roche and the technical strength of Illumina would be a formidable competitor? You decide…
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Last week, Roche released a plan to take over Illumina’s Board. Roche announced that it has provided notice to Illumina, Inc. that it will nominate a slate of highly qualified, independent candidates for election to Illumina’s Board of Directors and propose certain other matters for the consideration of Illumina’s shareholders at Illumina’s 2012 annual meeting, which, if adopted, would result in Roche-nominated directors comprising a majority of the Illumina board. Roche also named five alternate nominees for election to Illumina’s board. (see the Roche release…) Read more
On Tuesday, Roche announced a $5.7 Billion hostile takeover bid for Illumina. Roche said it is making its proposal after “multiple efforts to engage with Illumina in order to reach a negotiated transaction,” were rebuffed. Under the terms of its all-cash proposed deal, Roche would acquire all outstanding shares of the San Diego-based next-generation sequencing and microarray firm at $44.50 per share. The bid price is a 61 percent premium over the one-month historical average of Illumina’s share price and 43 percent premium over the firm’s three-month historical average, both as of Dec. 21. (See the Roche Press Release…)
Today, in response to Roche’s bid for the company, Illumina has created a rights agreement to “deter coercive and otherwise unfair takeover tactics”. The agreement states that if any person or group, such as Roche, becomes the holder of 15 percent or more of Illumina’s stock, then shareholders — excluding those owning 15 percent or more of the stock — would have the right to purchase additional shares at the then-current exercise price (a favorable price), but that the shares would have a market value of twice that exercise price. In other words, the shareholder would be able to buy a share of Illumina at half the market price. (See the Illumina Press Release… )
If completed, the acquisition would combine two of the leading names in next-gen sequencing.
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Illumina’s Q3 Revenues Jump 50 Percent on Strength of HiSeq
Illumina reported after the close of the market Tuesday that its third-quarter revenues jumped 50 percent, easily beating analysts’ consensus estimate.
Life Technologies’ Q3 Revenues Rise 8 Percent on Record SOLiD 4 Sales
The company’s CE and next-generation sequencing business saw strong results, while its PCR business suffered from difficult year-ago comparison figures, it said.
Roche’s Sequencing Business Grows 12 Percent YTD as Applied Science Sales Shrink in Q3
Roche said it has seen “robust uptake” in the European Union and Asia Pacific for the 454 GS Junior sequencer, a benchtop sequencer launched in May that is geared at small laboratories.
Helicos BioSciences Cuts 14 More Positions in Q3
The firm also cut 40 jobs in May amid its plans to restructure and focus on the molecular diagnostics market. Part of its restructuring includes the departure of J. William Efcavitch as chief technology officer.
The firm will cut another 14 positions, on top of the previously announced 40 jobs, as it aims to reduce its operating costs. Additionally, Lapidus steps down as Chairman.
Pacific Biosciences Files for IPO in Q3
The firm has raised around $370 million since its inception, and announced plans to go public in an offering that could potentially bring in $200 million.
The firm went on to sell 12.5 million shares at $16 per share, the mid-point of its estimated offering range, at the initial public offering in October.