DRUG GIANT TO ACQUIRE NIMBLEGEN
Milwaukee Journal Sentinel
By Kathleen Gallagher
ROCHE WILL KEEP FIRM IN MADISON, WHERE UW SCIENTISTS STARTED IT
NimbleGen Systems Inc. on Tuesday became the second Madison company in as many months to raise hundreds of millions of dollars for shareholders and, its chairman said, will pave the way for more high-paying, high-tech jobs in the area.
The maker of gene chips used in drug research agreed to be acquired for $272.5 million by the diagnostics arm of Roche Holding AG, the giant Swiss pharmaceutical company. Roche plans to keep NimbleGen’s 140 employees in Madison; Reykjavik, Iceland; and Waldkraiburg, Germany, the companies said.
“NimbleGen is not leaving Wisconsin,” said Bob Palay, NimbleGen’s chairman and managing member of Tactics II Ventures of Northbrook, Ill., one of its investors. “Its shareholders are changing and it’s getting better financed, more sophisticated shareholders, and it will continue to grow.”
NimbleGen’s announcement follows TomoTherapy Inc.’s successful $223 million initial public stock offering in May.
NimbleGen filed with federal securities regulators in March to raise as much as $75 million in an IPO. But the board got a higher valuation by selling the company to a strategic buyer in Roche.
NimbleGen will be able to grow faster as part of Roche because of its industry expertise and financial strength, Palay said.
“This is one of the biggest companies in the world basically taking a technology built at UW-Madison and saying, ‘This is something we can build a dominant business on,’ ” Palay said.
Roche’s diagnostics division has been adding companies with expertise in genomics – the study of genes and their function. In May, it paid $140 million to buy 454 Life Sciences, a Bradford, Conn., company with 167 employees that makes gene sequencing products, which determine the sequence of DNA in an organism.
Roche’s move into Wisconsin will mark the first time a global pharmaceutical company has had operations here, said James Leonhart, executive vice president of the Wisconsin Biotechnology and Medical Device Association.
“That’s part of the excitement here – having the presence of one of the world’s leading biotech companies now in Madison,” Leonhart said.
NimbleGen is moving in July into a new 50,000 square foot facility it will lease from University Research Park and adding another 27,000 square feet by the end of the year, research park director Mark Bugher said.
“My guess is they’re going to stay for quite a while, given their infrastructure commitment,” Bugher said.
Skyline Venture Partners II, Palo Alto, Calif.; Cargill Inc., San Mateo, Calif.; and Schott AG, Mainz, Germany, owned about 40% of NimbleGen as of March 12, according to securities filings. Regional investors included Palay’s fund, Venture Investors, Madison; and Baird Venture Partners, Chicago.
The acquisition would make NimbleGen a division of Roche Applied Science, which is part of Roche Diagnostics.
The transaction is expected to close in the third quarter, pending approval by NimbleGen’s shareholders and regulatory clearance.
NimbleGen incorporated in 1999 after being spun out of technology developed by four researchers from the University of Wisconsin-Madison and after a license agreement with the Wisconsin Alumni Research Foundation.
The company faced tough competition and many obstacles, such as the patents held by a competitor that stopped it for a time from selling its gene chips in the United States. NimbleGen’s management addressed that challenge by devising a strategy to sell services based on the gene chip technology from Iceland, where the patents weren’t recognized.
“This is a good case where a smart management team finds ways around obstacles. It’s not uncommon in a venture-backed company that management has to innovate, and NimbleGen is no exception,” said Pete Shagory, a partner at Baird Venture Partners.
NimbleGen reported a loss of $6.8 million on revenue of $13.5 million last year.
Shagory and others said NimbleGen’s growth involved a lot of hard work and capital, but is a victory for the company, its employees and its shareholders.
“We’re optimistic there are other companies that have this type of potential in Wisconsin, but these are not overnight successes. A lot of time and hard work go into them,” Shagory said.