BOTHELL – Epoch Biosciences Inc., which makes molecular testing tools, is being acquired by Nanogen Inc. of San Diego in a stock deal worth about $58 million.
Nanogen plans to merge Epoch’s administrative, sales and marketing into its own operations in San Diego. Epoch’s research and development lab and manufacturing operations will stay in Bothell, however.
Bert Hogue, Epoch’s chief financial officer, said about 40 people work for the firm. “The manufacturing and research and development groups are the bulk of that 40,” he said. “There likely will be some job losses out of Bothell, but how many is unknown.”
Executives from both companies said the merger makes sense because they serve many of the same customers and market similar products.
“By adding Epoch’s high-quality products, we expect to increase our productivity, expand our customer reach and significantly grow revenue,” Nanogen’s chairman, Howard Birndorf, said in Tuesday’s announcement.
Epoch CEO William Gerber said discussions on combining the two firms began earlier this year after they collaborated on research.
Nanogen agreed to pay the equivalent of $2 per share for Epoch in the all-stock deal. Epoch’s stockholders will receive Nanogen shares, though the actual exchange ratio will be based on Nanogen’s stock price when the transaction closes. Epoch’s stock price closed Tuesday, before the merger announcement, at $1.78 a share, up 2 cents. Nanogen’s closing price was $4.57 a share.
While never a large company, Epoch has been a fast-growing one. In 2002, it ranked No. 9 among the state’s biotech and technology companies in Deloitte &Touche’s annual ranking of biotech and technology companies with fast-growing revenues.
In the past two years, though, the company has been through changes in an effort to become profitable. In 2003, Epoch sold its California-based division, which made DNA probes. It then refocused on its primary business of genomic and molecular analysis tools.
Despite that, the company still lost $748,000 in the second quarter of this year, excluding a one-time gain from the adjusted value of stock warrants. Revenue decreased by 15 percent compared to the same quarter last year.
Epoch started in 1995 as a spin-off out of the sale of another Bothell-based company, MicroProbe Corp. After several years with headquarters in Redmond, the company returned to south Snohomish County in late 2000.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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