GTX Genetix Grp

 

TIDMGTX 
 
RNS Number : 4236R 
Genetix Group PLC 
30 April 2009 
 

Genetix announces further expansion into digital pathology market through 
acquisition of SlidePath 
 
 
New Milton, UK, 30 April 2009 - Genetix Group plc ("Genetix") (AIM: GTX), the 
cell imaging and analysis group, today announces that it has acquired all of the 
issued share capital of SlidePath Limited ("SlidePath"), in order to further 
strengthen its position in the fast growing digital pathology market. Genetix 
has acquired SlidePath, a private company based in Dublin, Ireland, for cash and 
shares worth up to EUR3.7 million (GBP3.3 million) of which EUR2.5 million (GBP2.2 
million) was paid on closing and up to a further EUR1.2 million (GBP1.1 million) 
is payable based on the achievement of EBIT milestones during the years 2009 and 
20101. 
 
 
Strategic rationale 
  *  In line with Genetix' strategy to accelerate and strengthen its presence in the 
  growing digital pathology market; 
  *  Natural progression following on from the 2006 acquisition of Applied Imaging, 
  strengthening Genetix' tissue analysis product offerings for both the clinical 
  and drug discovery markets; 
  *  SlidePath's competencies in cell imaging analysis software are aligned to 
  Genetix' core skills in imaging and image analysis, enabling Genetix to build a 
  stronger platform to offer a broader mix of products for the digital pathology 
  market; 
  *  SlidePath's expertise in web-enabled viewing, information management and 
  computer-aided image analysis solutions will enhance Genetix' product offerings 
  through added functionality in its current markets of drug discovery and 
  diagnostics; and 
  *  Genetix' sales and customer support infrastructure worldwide and deep customer 
  relationships with diagnostics and pharmaceutical companies will open up new 
  markets and customers for SlidePath products. 
 
 
 
 
 
SlidePath 
SlidePath, a Dublin City University spin out, was founded in 2003 and has 25 
employees and customers in 10 countries, including the UK, Ireland, Germany, 
France and Australia. Audited results for the 12 months ended 31 December 2008 
showed revenues of EUR1.3 million with a loss before tax of EUR0.5 million; net 
liabilities as at 31 December 2008 were EUR0.1 million. Over the two years ended 
31 December 2008 SlidePath has grown its reported revenues at a compound annual 
growth rate of 61%. 
 
 
SlidePath has a strong product offering allowing the analysis, management and 
viewing of tissue and cellular samples via the web for the growing digital 
pathology market. Digital pathology is the computer-enabled management and 
interpretation of pathology information generated from slides. The market has 
multiple applications, including clinical laboratories, clinical trials, drug 
discovery and academia. Digital slides overcome problems associated with glass 
slides including damage and deterioration and allow samples to be viewed, 
archived and re-examined remotely. 
The founding shareholders of SlidePath, the Chief Executive Officer, Dr Donal 
O'Shea, and Head of Customer Relations, Dr Sean Costello, will remain with and 
continue to lead the business. 
 
 
 
 
1 The share element of the initial consideration is calculated using the 29 
April 2009 closing share price of Genetix shares of 52.5p and a EUR/GBP exchange 
rate of EUR1.12/GBP1.00. 
 
 
Transaction details 
The acquisition of SlidePath is structured with an initial payment of EUR2.5 
million. The initial consideration is satisfied by the payment of EUR2.0 million 
in cash and the issue of 785,520 new ordinary shares in Genetix ("Consideration 
Shares"). The share consideration is equivalent to EUR0.5 million based on the 
closing price of Genetix' ordinary shares on 29 April 2009. The Consideration 
Shares will rank pari passu in all respects with the existing ordinary shares. 
SlidePath's founding shareholders (who are due to receive 80% of the 
Consideration Shares) have agreed not to dispose of any such Consideration 
Shares for a period of one year from closing. Other shareholders in SlidePath 
have agreed not to dispose of any Consideration Shares until 31 August 2009 or 
two weeks after publication of Genetix' interim results for the period ending 30 
June 2009, whichever is sooner. 
Dependent on the achievement of EBIT targets in the years ending 31 December 
2009 and 2010 further consideration of up to a maximum of EUR1.2 million 
(comprised of a combination of cash and shares) may be payable to the vendors of 
SlidePath. EUR0.5 million of any additional consideration is payable in the event 
that a breakeven target is achieved in 2009 and the balance of EUR0.7 million is 
payable in the event that the 2010 EBIT target of EUR0.5 million is achieved, 
subject to a reduction of up to EUR0.2 million if losses in 2009 exceed EUR0.2 
million. A catch up mechanism is included where the aggregate results for the 
two years deliver a profit of EUR0.4 million or more. 
The initial cash consideration and any further cash consideration will be 
financed through the Company's existing cash resources which stood at GBP15.2 
million as at 31 December 2008. 
Application will be made for the Consideration Shares to be admitted to trading 
on AIM. Admission is expected to occur on 7 May 2009 following which Genetix' 
issued share capital will be 72,564,509 ordinary shares of 50p each. 
 
 
Trading update 
Genetix has made a positive start to the year and is trading in line with the 
Board's expectations. We continue to tightly manage the business through the 
current economic climate and remain confident of the outlook for the full year. 
 
 
 
 
Commenting on the acquisition, Charles de Rohan, Chief Executive of Genetix, 
said, 
"This transaction brings together two companies with highly complementary core 
skills that will greatly strengthen our competitive position in the growing 
digital pathology market. Combining Genetix' global infrastructure with 
SlidePath's leading-edge products and technologies will allow us to offer 
compelling new products and enhance our existing product ranges. We are 
impressed by the skill and expertise of SlidePath's employees and believe that 
this investment will further solidify Genetix' position in this exciting growth 
market as well as enhancing shareholder value." 
 
 
Dr Donal O'Shea, Chief Executive of SlidePath said, 
"We are excited to be joining forces with Genetix, a company which has an 
excellent track record in product innovation and has built a high quality 
customer base and global infrastructure. The combined company will have many 
synergistic opportunities, a stronger market position and the capital structure 
to be able to execute on its strategic growth initiatives. We believe this is an 
excellent fit." 
 
 
Genetix Group plc 
Charles de Rohan, Chief Executive 
Andrew Kellett, Finance Director 
Tel: +44 (0) 1425 624600 
 
 
Financial Dynamics 
Jonathan Birt; Susan Quigley 
Tel: +44 (0) 20 7831 3113 
 
 
Piper Jaffray Ltd 
James Steel 
Tel: +44 (0) 20 3142 8700 
 
 
The release will be available on the Company's website: www.genetix.com 
 
 
Notes to Editors 
About Genetix Group plc 
Headquartered in New Milton, UK, with offices in the UK, US, Germany and Japan, 
and quoted on the AIM (GTX: AIM), Genetix provides scientists and clinicians 
with unrivalled solutions for imaging and intelligent image analysis in the life 
science and diagnostic markets. 
 
 
In life sciences, the company's systems set industry standards for accurate 
selection of microbial colonies, and for screening and selection of mammalian 
secretory cell lines. Other systems evaluate the response of cells to potential 
therapeutic agents and quantify tissue biomarkers. 
 
 
In diagnostics, Genetix holds a leading position in genetic testing with 
thousands of the company's platforms used in laboratories worldwide. 
 
 
Through its expertise in robotics, cell and molecular biology, image analysis 
and interpretation, supported by a strong IP portfolio, Genetix is committed to 
the continual development of innovative solutions. 
 
 
 
 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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