- change ups
CMM prepares to grow more
Sequenom Inc.’s proposed acquisition of the Center for Molecular Medicine in Grand Rapids is expected to accelerate the center’s growth as well as accelerate Spectrum Health’s and the Van Andel Institute’s access to genetic tests, taking them one step closer to the promise of personalized medicine.
Sequenom provides genetic analysis products that are sold nationwide. Soon to be known as the Sequenom Center for Molecular Medicine, CMM is an advanced molecular pathology laboratory that was started by the VAI and Spectrum in March 2007 to research diseases such as cancer, heart disease and mental illness at the DNA, RNA and protein levels.
VAI and Spectrum have a binding letter of intent with Sequenom, but the deal has not been finalized. Matthew G. Van Vranken, chairman of the board of CMM and president of the Spectrum Health Hospital Group, said he’s confident the deal will close.
Under the terms of the agreement, San Diego-based Sequenom will pay approximately $4 million for CMM, 90 percent of which will be paid in shares of its common stock. Sequenom will also enter into collaborative agreement with Spectrum for coordination of third-party payer agreements with Blue Cross, Priority Health and others, and will enter into a research agreement with VARI to delve into technology development, women’s health and oncology.
The company indicated it would invest approximately $10 million in the lab near term. In addition to the purchase of the lab and the investment in it, the letter of intent anticipates a three-year agreement in which Sequenom will sponsor research involving both VAI and Spectrum Health.
“We are going to collaborate with these excellent institutions and actually fund research programs there that could lead to informed discoveries with commercial potential,” explained Sequenom President and CEO Harry Stylli, Ph.D. “SCMM will serve the entire country. It will be the major testing facility for Sequenom.”
Stylli said that through CMM his company will initially offer noninvasive prenatal tests for Down syndrome, RhD blood disorders, and fetal X and Y chromosome sex-linked disorders. It intends to expand that menu as time goes on to include tests for other chromosomal disorders and for cancer. Stylli said if Sequenom’s business plan and the potential of the tests are realized, it could lead to the creation of about 500 direct and indirect jobs in the life sciences over the next five years.
In the letter of intent, Sequenom made commitments to maintain the lab here and allow Spectrum and VAI to have access not only to the current molecular testing that CMM provides, but also the tests Sequenom has in its formulary and for future tests it develops, Van Vranken said.
The lab offers biotech and pharmaceutical companies microarray analysis on pre-clinical samples in a CLIA-certified laboratory. Its capabilities include clinical diagnostics, high throughput/high density array analysis, real-time PCR, pharmacogenomics, tumor cell detection, biobanking and multiplex measurements of protein biomarkers. The VAI provides CMM with translational research and bioinformatics expertise while Spectrum Health provides the clinical resources, such as access to patients and to the physicians that apply the research.
CMM Executive Director Daniel Farkus, Ph.D., will become a member of Sequenom’s management team and his staff will stay on, as well. Initially, Sequenom will operate out of CMM’s existing facility in the Cook-DeVos Center for Health Sciences, but last week the company already had a couple people here scouting out larger spaces.
The center is located on the “Medical Mile” and Stylli said the company prefers to stay on the Mile.
Van Vranken said Spectrum and the VAI were not looking to sell CMM. He said the center was started with a modest investment on the part of both parties, and they knew at the outset it was going to take some time to grow the lab. Stylli said he and his team had heard about CMM and the reputation it had built.
“We didn’t believe it was available,” Stylli said, “but a conversation occurred between Dan Farkas and one of my people, and one thing led to another. We were very excited and pleased to find out that Spectrum and Van Andel Institute were involved in CMM: That made the opportunity even more attractive. We met with Spectrum and the Van Andel Institute and before long we had established common ground, and that provided the basis for moving forward.”
Stylli could have moved CMM to San Diego but there were too many good reasons to keep it here: the confluence of Spectrum and the Van Andel Institute; the vision of the city; and the fact that Grand Rapids is located in the center part of the country and is well served by a number of airports, Stylli said.
Van Vranken said the proposition was attractive because it offered CMM immediate and significant access to capital. It was a kind of a “leap frog” strategy for Spectrum and the VAI, he added.
“When they came here they were quite pleasantly surprised by the breadth and depth of our clinical services at Spectrum Health and also the vision and current research portfolio of the VAI,” Van Vranken said. “We came to the agreement very quickly. They were very motivated, and when we understood that our visions were consistent with one another, we were motivated. We realized there was quite a bit a synergy beyond their need for a lab.”
David Van Andel, chairman and CEO of the VAI said the shared vision is to move important scientific findings from the research laboratory to the clinical laboratory to patients, and that shared goal can be realized more immediately with Sequenom’s purchase of CMM.
According to Sequenom, the state of Michigan and city of Grand Rapids granted the company $20 million in incentives over 12 years.