PAYDAY FOR NIMBLEGEN
Wisconsin State Journal
By Judy Newman
NIMBLEGEN SYSTEMS HAS HIT ITS HOME RUN.
Spun out of UW-Madison research, it was announced Tuesday that the DNA microarray company will be purchased by Roche, of Basel, Switzerland, one of the world’s giant drug and diagnostics companies, for $272.5 million.
“Roche is one of the premiere life science companies and NimbleGen is delighted to become part of the exciting story of growth and innovation occurring at Roche,” said NimbleGen chief executive Stan Rose.
NimbleGen had been headed toward an initial public stock offering (IPO), after filing a registration statement with the Securities and Exchange Commission in March. The company said it planned to raise up to $75 million through the stock sale to expand research and sales and to add production capacity.
The acquisition by Roche – a corporation with annual revenue of $33.9 billion and 75,000 employees worldwide – will speed the growth, said Bob Palay, chairman of NimbleGen’s board of directors and manager of Tactics II Ventures, a venture capital company in Madison.
“We’re expanding very rapidly right now and Roche plans to continue that kind of expansion,” Palay said. “They have tremendous financial resources beyond an individual public company.”
NimbleGen already is preparing a move from its offices and labs at 1 Science Court to a 50,000-square-foot addition being built onto Third Wave Technologies’ building, 502 S. Rosa Road. NimbleGen will move into 20,000 square feet of the existing Third Wave building in July. The $6 million addition is expected to be ready for occupancy in early 2008, said Mark Bugher, University Research Park director. The research park owns the building, he said.
“We’re excited and thrilled, not only for the folks at NimbleGen but … for the state of Wisconsin and the market here,” said Bugher, who is also chairman of the Madison Economic Development Commission.
About 90 of NimbleGen’s 140 employees are in Madison; the company also has operations in Reykjavik, Iceland, and Waldkraiburg, Germany. Roche said it plans to keep all employees and all three locations.
That could provide a big boost to the local biotech industry, said Jim Leonhart, executive director of the Wisconsin Biotechnology and Medical Device Association.
“It’s very exciting that a world-leading biotechnology company is going to have a presence in Madison. I think that’s just tremendous,” Leonhart said. “These are the kinds of things we’ve been craving.”
Founded in 1999 by UW-Madison scientists Michael Sussman and Franco Cerrina, genetics professor Fred Blattner and then-graduate student Roland Green, NimbleGen’s technology altered the way gene chips are made.
Gene chips, also called DNA chips, are tiny test platforms for researchers exploring genetic differences, for scientific research and drug discovery.
Using a digital micromirror device, DNA chips were manufactured by NimbleGen much more quickly and inexpensively than previous methods. “We could explore DNA space in a way that no one has ever done before. And we’re still the leaders in this field,” said Sussman, who is also a UW-Madison biochemistry professor and director of the UW Biotechnology Center.
The acquisition by Roche is “fantastic,” Sussman said. “I’m really pleased to see NimbleGen succeed so well.”
Roche recently bought a company involved in a different type of genetic research tools, 454 Life Sciences, of Branford, Conn. NimbleGen’s products will complement them, said Severin Schwan, chief executive of Roche’s Diagnostics Division.
“This acquisition represents a further milestone in our strategy to strengthen our position as a major player and complete solution provider in the genomics research market,” Schwan said.
NimbleGen reported revenues of $13.5 million in 2006, up from $9.5 million in 2005 and $4.5 million in 2004. But the company has not yet been profitable.
A May 29 filing with the SEC reported first-quarter 2007 revenues of $4.1 million but a net loss of $4.9 million. As of March 31, 2007, NimbleGen has a cash balance of $17.2 million and an accumulated deficit of $49.4 million.
NimbleGen’s purchase comes just one month after another fast-growing Madison company, TomoTherapy, staged its initial public stock offering. Together, they represent “a big strategic validation of technology development out at the UW – and a very healthy sign for the state,” Palay said.
For the past several years, local tech industry leaders have pointed to NimbleGen as a potential hit. In early 2006, in a Wisconsin State Journal interview, John Neis, senior partner with Venture Investors, an investor in NimbleGen, said it could be a “home-run company.”
The transaction is expected to be completed in the third quarter if approved by NimbleGen’s shareholders and regulators.