Roche Rolls With BioVeris

An upstart takes on a giant and prevails a second time.
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BioVeris

(BIOV)

shows that David can beat Goliath twice.

The scrappy Maryland biotechnology player has cornered heavyweight diagnostics giant Roche and forced the company to pay it huge sums of money once again.

This time around, BioVeris is selling itself to Roche for $600 million -- or $21.50 a share -- in a transaction that will give stockholders a swift 58% gain on their investment. The company pulled off a similar feat four years ago, following a hard-fought courtroom battle, when it sold part of itself to Roche for $1.4 billion.

BioVeris shares soared $7.17 to $20.77.

In exchange for that earlier sum, BioVeris gave Roche the rights to use its diagnostic technology with important strings attached. Notably, BioVeris banned Roche from using its machines for certain purposes -- such as clinical drug trials -- unless it handed over most of the proceeds from those tests to BioVeris itself.

BioVeris felt that Roche had violated that agreement and, last year, started seeking repayments from the company. Back then, as

reported by

TheStreet.com

, BioVeris estimated that it would score $5.3 million for every 1% of sales generated by Roche through "out-of-field' use of its tests.

"This acquisition ensures that Roche will be able to provide unrestricted access to all customers," Roche said Wednesday, "and therefore represents a significant growth opportunity for our immunochemistry business."

BioVeris CEO Samuel Wohlstadter was satisfied as well.

"We are pleased that this transaction will deliver substantial value to BioVeris shareholders," Wohlstadter said on Wednesday. "Given the history between the parties and the scope of Roche's existing diagnostics business, Roche is the natural buyer for BioVeris."

Of course, Wohlstadter has never been one to walk away from his ventures completely. As part of the latest deal, he has formed two new entities that will retain BioVeris's vaccination business and continue to use the company's technology.

Still, the 65-year-old Wohlstadter could retire in style if he wishes. He ranks as BioVeris's largest stockholder, with 1.9 million of the company's shares. He stands to pocket more than $40 million from his company's second sale.