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Nanogen to buy Bothell biotech

By Luke Timmerman
Seattle Times business reporter

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The deal, expected to close this year, would be valued at about $2 a share to Epoch shareholders, based on recent closing prices. Epoch shares closed at $1.78 yesterday.

Nanogen said it intends to keep Epoch's research, development and manufacturing operation in Bothell, while the administration, marketing and sales sides will be merged into its home base in San Diego. Nanogen is bigger, with 136 employees and a market value of $154 million, compared with 45 employees and a market value of $51 million for Epoch.

Epoch Chief Financial Officer Bert Hogue said, "It's the right thing for the company. Nanogen's sales and marketing force, and its capital position, will enable us to really penetrate the market as opposed to what we can do when we're capital-constrained."

Nanogen develops tools to help doctors predict and diagnose diseases, based on genetic abnormalities.

Epoch has had many ups and downs in its 19-year history. Its only profitable quarter was the final quarter of 2002, according to its most recent annual report.

Epoch was founded in 1985 as Microprobe, one of the Seattle area's early biotech companies. It developed a diagnostic product, was sued for patent infringement and had to divest the product line to Becton Dickinson, Hogue said.

Epoch Biosciences Founded: 1985 Located: Bothell CEO: William Gerber Employees: 45 2003 revenue: $8.9 million 2003 net loss: $4.7 million Major stockholders: Grace Brothers Limited, Spurgeon, Bay City Capital, Perkins Capital Management What it does: Makes tools to speed up genetic analysis.

Epoch has reinvented itself by licensing technology to other companies and lately by selling a new product line to researchers and diagnostic clinics. Its losses were narrowing, but in the last quarter, it lost $570,000. The company had $9.2 million in cash at the end of June.

Its stock is down 22 percent year to date.

The companies said they serve some of the same customers, and the merged company will have more ability to market products that help doctors diagnose and predict diseases based on a patient's genetics. Epoch's package of software and chemical lab supplies will be sold by Nanogen, and some of the underlying technology is being incorporated into Nanogen's tools.

In a statement, Nanogen Chairman and Chief Executive Officer Howard Birndorf said the deal "will broaden Nanogen's product offerings to research institutions and clinical reference labs and allow us to further leverage our existing sales and marketing infrastructure."

Epoch Chief Executive Officer William Gerber will not join Nanogen, Hogue said.

It's unknown how many employees might lose jobs or be asked to move, Hogue said, but it's possible the Bothell site may expand so Nanogen can consolidate some manufacturing that it does under contract.

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com

Copyright © 2004 The Seattle Times Company

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