Cepheid, Propelled By Seattle Chemists, Sells to Danaher for $4B

Xconomy San Francisco — 

Molecular diagnostic test maker Cepheid has been acquired by Washington, DC-based Danaher (NYSE: DHR) in a deal valued at about $4 billion, the companies announced this morning.

Sunnyvale, CA-based Cepheid (NASDAQ: CPHD) has been scaling up its testing service for more than a decade, now offering a variety of molecular-based diagnostic tests for maladies such as hospital-acquired infections, sexually transmitted infections, and infectious diseases like the flu or meningitis. Since its founding in 1996, Cepheid has installed more than 11,000 of its machines, called GeneXpert Systems, which automate the testing process.

While Cepheid got started 20 years ago, its most substantial growth can be attributed to a hiring decision made in 2003. That’s when CEO John Bishop made Alexander Gall, a chemist who formerly worked at Seattle Genetics and Epoch Pharmaceuticals, the head of R&D, as Xconomy reported in 2008. Gall oversaw a team of scientists in Bothell, WA.

That team brought to the company an ability to modify individual nucleic acid chemicals—the building blocks of DNA—which makes a difference in the reliability and speed of Cepheid’s test, Bishop told Xconomy at the time.

Sales reflected that, jumping from $15.8 million to almost $50 million in 2004, the year after Gall joined. In 2015, Cepheid reported revenues of $538.5 million, up from $159 million in 2008, according to regulatory filings.

Over the years, plenty of other businesses have developed tests or other products related to hospital-acquired infections like MRSA, a drug-resistant bacteria. Waltham, MA-based Thermo Fisher (NYSE: TMO) had a test for MRSA approved in 2008. Middleton, WI-based Lucigen makes rapid tests for infections like flu and strep.

Other businesses have sought to treat or prevent the conditions. San Diego-based Trius Therapeutics, which was acquired by Cubist Pharmaceuticals in 2013 for more than $1 billion, received FDA approval for tedizolid, which treats certain acute bacterial skin infections. In Texas, Austin-based Savara Pharmaceuticals is developing what it hopes will be the first inhaled antibiotic for MRSA. And San Antonio-based Xenex Disinfection Services is selling a robotic system that uses pulses of xenon-based ultraviolet light to disinfect hospital rooms.

Danaher, which says it is adding Cepheid to its $5 billion diagnostics platform that includes Beckman Coulter, Leica Biosystems, and Radiometer, expects the acquisition of Cepheid to close later this year.