Bloomberg News

Gen-Probe Shares Tumble on Report Novartis May Not Bid

June 06, 2011

(Updates share price in the second paragraph.)

June 6 (Bloomberg) -- Gen-Probe Inc. fell the most in six years in Nasdaq trading after the Wall Street Journal reported Novartis AG may not bid for the medical-test maker, leaving it with no suitors.

Gen-Probe, which makes tests for sexually transmitted diseases and blood screening, dropped $10.35, or 13 percent, to $71.41 at 4 p.m. in Nasdaq Stock Market trading for the biggest decline since May 2005. The shares are up 22 percent this year.

Novartis may be the last remaining contender for San Diego- based Gen-Probe, after Thermo Fisher Scientific Inc. and Life Technologies Corp. dropped out of the running, the Journal said.

“Thermo, after they went after Phadia, we felt that their hands were full,” Peter Lawson, an analyst with Mizuho Securities in New York, said today in a telephone interview. “We never saw any clear revenue and cost synergies” in a purchase by Carlsbad, California-based Life Technologies.

Thermo-Fisher announced May 19 it would buy Sweden’s Phadia AB, a maker of tests for allergies and autoimmune diseases, for $3.5 billion. Thermo, based in Waltham, Massachusetts, said it would fund the acquisition with about $500 million in cash and the rest with debt.

Joe Jimenez, chief executive officer of Novartis, said May 31 that the Basel, Switzerland-based company viewed diagnostics as one of the areas where it may make purchases of as much as $3 billion. Novartis, Europe’s second-largest drugmaker, has worked for 13 years with Gen-Probe to develop and sell tests and machinery to screen blood for infections.

‘Interesting Space’

“The diagnostics space is a very interesting space for Novartis and for many companies,” Jimenez said in an interview.

Eric Althoff, a spokesman at Novartis, said today that the company has no comment.

Jaime Rupert, a spokeswoman for Life Technologies, and Ron O’Brien, a spokesman for Waltham, Massachusetts-based Thermo Fisher, declined to comment. Paula Izidoro, a spokeswoman for Gen-Probe, didn’t immediately return a call seeking comment.

Gen-Probe’s diagnostic testing products generated 96 percent of the company’s $543 million revenue in 2010 and are used to identify disease, screen donated blood and check the compatibility of donated organs, according to its website.

The company has more than 100 marketed diagnostic tests and products and continues to introduce new ones, said Michael Watts, a spokesman for Gen-Probe. A test for trichomonas, the most common curable sexually transmitted disease, was approved April 20 by the U.S. Food and Drug Administration. Tests for human papillomavirus and a gene implicated in some prostate cancer cases are pending before the agency, he said.

--With assistance from Eva von Schaper in Munich, Rob Waters in San Francisco and Drew Armstrong in Washington. Editors: Robin D. Schatz, Andrew Pollack

To contact the reporters on this story: Meg Tirrell in New York at mtirrell@bloomberg.net; Chris Staiti in Boston at cstaiti@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.


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