IRIS International: Acquires CLIA Certified Laboratory

IRIS International is a leading manufacturer of automated in-vitro diagnostics systems and consumables for use in hospitals and commercial laboratories worldwide. AlliedPath, Inc focused on oncology and molecular diagnostics. This agreement is for $4.7 million in cash, with an additional earn-out up to $1.3 million subject to the achievement of specific sales and revenue targets in the span of 3 years. The acquisition is expected to close on or before July 30, 2010.

Cesar Garcia, Chairman and CEO of IRIS International said, "This is a very strategic acquisition for IRIS as it provides us with a state-of--the-art high complexity CLIA-certified molecular pathology laboratory offering differentiated, high value molecular diagnostic services in the rapidly growing field of personalized medicine. Furthermore, the acquisition provides a direct commercial channel for accelerating our NADiA(R)ultra-sensitive nucleic acid detection immunoassay platform, beginning with NADiA ProsVue(TM), a prostate cancer prognostic test designed to identify patients at low risk of cancer recurrence post-radical prostatectomy, which is pending FDA clearance,"

IRIS will get control of the 10,000 square foot CLIA (Clinical Laboratory Improvement Act)-certified laboratory with this acquisition. It will also gain control over the commercialization of ProsVue(TM), including sales, marketing and communications programs and value-based pricing strategies. Additionally, the company is of the view that the laboratory will accelerate the development efforts of NADiA's current pipeline and enable direct access to the clinical end-users. The acquisition is expected to be dilutive in 2010 and 2011. In 2010, IRIS anticipates $0.09 -- $0.11 dilution per share.

San Diego-based AlliedPath was founded in 2008 and received its CLIA license in 2009 to focus on oncology molecular diagnostic testing, which is the analysis of DNA, RNA, and proteins, derived from a patient's tissue or fluid samples.

The laboratory's primary customer audience comprise of anatomic pathology groups, hospitals and regional and community laboratories. They believe that several of these companies are unable to integrate molecular diagnostics into their test menu as they lack the required technical expertise, high capital outlay for equipment, and sufficient test volume necessary to justify their investment in this high complexity test modality. Thus, several laboratories in the U.S. are not able to proffer molecular diagnostic services.

IRIS aims to develop the CLIA laboratory's test menu to complement NADiA ProsVue, in addition to providing a richer menu of diagnostic panels useful for the diagnosis, disease characterization, treatment and monitoring of cancer. At present, the laboratory provides molecular mutation testing for solid tumors, including lung and colorectal cancer. The company is hopeful to add breast cancer by the end of the year. Furthermore, IRIS is planning to add flow cytometry for detection and monitoring of leukemia and lymphoma and will add FISH testing to augment the laboratory's test menu.