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Gen-Probe to Acquire Prodesse, Leader in Molecular Testing for Respiratory Infectious Diseases, for $60 Million in Cash Plus Potential Milestone Payments
Date:10/6/2009

SAN DIEGO, Oct. 6 /PRNewswire-FirstCall/ -- Gen-Probe Incorporated (Nasdaq: GPRO) announced today that it has signed a definitive agreement to acquire Prodesse, Inc., a privately held leader in molecular testing for influenza and other infectious diseases, for approximately $60 million in cash. Gen-Probe's purchase price could increase to up to $85 million if Prodesse achieves certain financial and regulatory milestones in 2010 and 2011.

"We believe acquiring Prodesse supports our strategic focus on commercializing differentiated molecular tests for infectious diseases," said Carl Hull, Gen-Probe's president and chief executive officer. "The acquisition is expected to boost our near-term earnings and revenue growth by providing additional leading-edge assays for our experienced sales force to promote to our global customer base."

In connection with the acquisition, Gen-Probe and Prodesse have signed an agreement under which Gen-Probe's sales representatives in the United States, Canada and Europe will begin co-promoting Prodesse's products in mid-October.

"Our acquisition by Gen-Probe validates the significant progress we have made in developing and commercializing molecular assays that help doctors and laboratories diagnose respiratory and other infectious diseases more accurately than traditional methods," said Tom Shannon, Prodesse's president and chief executive officer. "We believe we can prepare for and accelerate our next stage of growth by leveraging the resources and expertise of one of the most established and highly respected molecular diagnostics companies in the world."

Both companies' boards of directors have unanimously approved the transaction, and the Prodesse shareholder votes necessary to approve the transaction have already been obtained. The transaction is expected to close within a month, subject to customary conditions.

About Prodesse

Prodesse develops molecular diagnostic reagents for a variety of infectious disease applications. Prodesse sells three FDA 510(k) cleared products in the United States, and two additional CE-marked products in Europe. The company's products can be used in conjunction with various nucleic acid extraction and real-time PCR (polymerase chain reaction) platforms, including Cepheid's SmartCycler(®) II System.

Prodesse's ProFlu+(TM) test was cleared by the U.S. Food and Drug Administration (FDA) in January 2008 for the detection and discrimination of Influenza A Virus, Influenza B Virus and Respiratory Syncytial Virus. It is the only commercially available, FDA-cleared molecular test for these respiratory viruses that uses real-time PCR technology. Test results can be obtained in as little as three hours using the assay - a significant improvement over culture-based methods. During a public health emergency, this speed to result and the high sensitivity of molecular tests can make important contributions to effective infection control efforts.

Prodesse also sells FDA-approved, real-time PCR assays for the clinical diagnosis of Clostridium difficile (C. diff), a bacteria that is the most serious cause of antibiotic-associated diarrhea, and human metapneumovirus, a common cause of lower respiratory infection in children.

Financial Detail

Gen-Probe expects to finance the transaction with cash currently on its balance sheet.

Gen-Probe expects to record, under U.S. GAAP, charges for non-recurring cash and non-cash acquisition-related costs following the close of the transaction. The magnitude of these charges will not be determined, under the rules of purchase accounting, until an independent, third party valuation has been completed to allocate the purchase price over the assets and liabilities acquired. The Company has therefore not provided GAAP financial guidance regarding the transaction in this news release. In addition, transaction-related professional fees will be expensed as incurred, under the rules of SFAS 141R.

Excluding the charges discussed above, and on a non-GAAP basis, Gen-Probe's initial expectation is that the acquisition will add approximately $0.05 to the Company's 2010 earnings per share (EPS), based on approximately $15 million in total revenues.

Cooley Godward Kronish is serving as legal counsel to Gen-Probe on this transaction. XMS Capital Partners and Leerink Swann are serving as financial advisers to Prodesse, and Michael Best & Friedrich, LLP is serving as legal counsel.

About Gen-Probe

Gen-Probe Incorporated is a global leader in the development, manufacture and marketing of rapid, accurate and cost-effective nucleic acid tests (NATs) that are used primarily to diagnose human diseases and screen donated human blood. Gen-Probe has approximately 25 years of NAT expertise, and received the 2004 National Medal of Technology, America's highest honor for technological innovation, for developing NAT assays for blood screening. Gen-Probe is headquartered in San Diego and employs approximately 1,200 people. For more information, go to www.gen-probe.com.

About Non-GAAP Financial Measures

In this news release, non-GAAP EPS excludes non-cash charges such as transaction-related intangible amortization expense, as well as transaction expenses. Gen-Probe's management does not itself, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared and presented in accordance with GAAP. Gen-Probe's management believes that non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance by excluding certain expenses that may not be indicative of core business results. Gen-Probe believes that both management and investors benefit from referring to non-GAAP financial measures in assessing Gen-Probe's performance and when planning, forecasting and analyzing future periods. Non-GAAP financial measures also facilitate management's internal comparisons to Gen-Probe's historical performance and our competitors' operating results. Gen-Probe's management believes that non-GAAP financial measures provide Gen-Probe investors meaningful supplemental information regarding the expected financial results of the acquisition.

Caution Regarding Forward-Looking Statements

Any statements in this news release relating to Gen-Probe's expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as believe, will, expect, anticipate, estimate, intend, plan and would. For example, statements concerning the closing of the transaction, the expected benefits of the proposed acquisition and expected financial results are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from those expressed or implied. Some of these risks, uncertainties and assumptions include but are not limited to: (i) the risks that the closing conditions of the acquisition may not be satisfied, that closing will not occur, or that the closing conditions may take longer to satisfy than anticipated, (ii) the risk that Gen-Probe will not successfully integrate Prodesse or achieve expected strategic or financial benefits, (iii) facts relating to Prodesse that may affect timing, or strategic and other benefits of the proposed acquisition, are unknown to Gen-Probe, and (iv) the risk that Gen-Probe may not achieve its expected growth, revenue, earnings or other financial targets that are assumed in its accretion analysis. The foregoing list sets forth some, but not all, of the factors that could affect Gen-Probe's ability to achieve results described in any forward-looking statements. For additional information about risks and uncertainties Gen-Probe faces and a discussion of its financial statements and footnotes, see documents filed with the SEC, including the most recent annual report on Form 10-K and all subsequent periodic reports. Gen-Probe assumes no obligation and expressly disclaims any duty to update forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of subsequent events.

    Contact:

    Michael Watts
    Vice president, investor relations and
    corporate communications
    858-410-8673

SOURCE Gen-Probe Incorporated


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SOURCE Gen-Probe Incorporated
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