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february 17, 2016
DAILY BUSINESS REVIEW
DEALMAKERS
K&L Gates Team Backs $310 Million Pharma Deal
by Mary Hladky
Special to the Review
Shortly after their client NeoGenomics
Inc. acquired Clarient Inc. in a deal valued
at $310 million, K&L Gates attorneys Clay­
ton Parker and Matthew Ogurick received
an unexpected accolade.
NeoGenomics sent an email to K&L
Gates chairman Peter Kalis, congratulating
the Miami corporate and securities partners
and the rest of their legal team on a job es­
pecially well done.
“It is very satisfying to have an apprecia­
tion of that,” Parker said.
The Dec. 30 closing culminated nearly a
year of negotiations between NeoGenomics,
a cancer genetics diagnostic testing compa­
ny, and Clarient, a unit of General Electric
Healthcare Life Sciences.
The talks were launched when Neo­
Genomics chairman and CEO Douglas
VanOort called GE chairman and CEO Jef­
frey Immelt on Nov. 6, 2014, according to
NeoGenomics’ proxy statement.
Offers and counteroffers flew back and
forth with changing amounts of cash and
stock in play until the two companies signed
a purchase agreement last Oct. 20. In the final
push to get the deal done by the end of the
year, “people were working in excess of 20
hours a day on Christmas week,” Parker said.
The purchase price included $80 million
in cash, $110 million in preferred stock and
15 million shares of NeoGenomics common
stock. NeoGenomics financed $65 million
of the cash portion with a $55 million term
loan from AllianceBernstein and with $10
million of a $25 million credit facility from
Wells Fargo.
K&L Gates has represented Fort Myersbased NeoGenomics as outside general coun­
sel since 2005. In all, 28 attorneys in 10 of the
firm’s offices played a role in the transaction.
“Our vision is to become America’s pre­
mier cancer testing laboratory, and this ac­
quisition is a major step forward in achiev­
ing that vision,” VanOort said when the
companies reached an agreement.
The companies have complimentary
product offerings. Clarient, based in Califor­
nia and Texas, is a provider of cancer diag­
nostic testing.
The acquisition of
Clarient will allow Ne­
oGenomics to acceler­
ate its growth, broaden
its offering of diagnostic
tests to hospitals and
physicians across the
country, expand its geo­
graphic reach, and le­
verage its laboratories
and infrastructure to
lower operating costs,
the company said.
The lengthy nego­
harvey bilt
tiations centered on
Clayton
Parker,
left,
described
Matthew
Ogurick,
center,
as
the
“real
quarterback
the cash and stock ele­
ments of the purchase of the transaction from a legal standpoint,” and also credited Miami corporate
partner David Baghdassarian.
price.
“There were very
active negotiations as to the terms of the cial officer George Cardoza — for their “incred­
deal, purchase price, indemnities, represen­ ible effort” to complete the transaction.
“Our drive was to get it closed. Then it
tations and warranties,” Parker said. “That
became GE’s drive to get it closed as well.
was really, really challenging.”
Many balls were in the air at the same We had unanimity of focus that helped us
time, including significant due diligence overcome the challenges we faced,” Parker
and getting antitrust and state health care said.
GE Healthcare Life Sciences is GE’s $4
regulatory approvals as well as shareholder
billion molecular medicine business that fo­
approval and financing.
One factor that drew scrutiny from GE cuses on drug discovery and development
was the size of NeoGenomics, which report­ as well as molecular tools for diagnostics
ed $87 million in 2014 revenue compared and therapy selection. Now that the deal
has closed, GE Healthcare owns 32 percent
with Clarient’s revenue of $127 million.
Significant amounts were at stake if the of NeoGenomics and a GE Healthcare offi­
transaction failed to close. Termination fees cial will join the NeoGenomics board.
“The acquisition is about a lot of things,”
ranged from $3 million to $15 million, de­
pending on the reason the deal hit a road­ Jones told the online news organization
block. “That was a lot of pressure,” Parker GenomeWeb in October. “But getting more
scale to be better able to compete in our in­
said.
Geography added a challenge as lawyers dustry is one of the primary aims of this.”
NeoGenomics expects to more than dou­
traveled to meetings and drafting sessions
around the country. “Time zones were an ble its revenue to about $240 million and
interesting added issue,” Ogurick said. “I cut costs by as much as $6 million this year.
The company also expects the acquisi­
would be in California with a conference
tion will speed its growth in the market for
call starting at 5 a.m.”
Parker described Ogurick as the “real pharmaceutical clinical trials and research.
quarterback of the transaction from a legal In addition, NeoGenomics and GE Health­
standpoint” and also credited Miami corpo­ care have agreed to collaborate on a new
rate partner David Baghdassarian and the bioinformatics initiative that will explore
K&L Gates attorneys in other offices who the potential for new products that combine
genomic and imaging data.
were part of the team.
With a goal of leading the cancer testing
He also recognized NeoGenomics execu­
tives — including VanOort, executive vice presi­ industry, Parker said: “I believe they have
dent for finance Steven Jones and chief finan­ the management to execute that plan.”
Reprinted with permission from the 2/17/16 edition of the DAILY BUSINESS REVIEW © 2016 ALM Media Properties, LLC. All rights reserved. Further duplication without
permission is prohibited. Contact: 877-257-3382 reprints@alm.com or visit www.almreprints.com. # 100-02-16-09