Illumina Strengthens Leadership Position in Reproductive Health with Agreement to Acquire Verinata Health, Inc.

  Illumina Strengthens Leadership Position in Reproductive Health with
  Agreement to Acquire Verinata Health, Inc.

Verinata Developed and Markets Industry’s Most Comprehensive Non-Invasive Test
         for Early Identification of Fetal Chromosomal Abnormalities

Business Wire

SAN DIEGO -- January 7, 2013

Illumina, Inc. (NASDAQ:ILMN) today announced that it has signed a definitive
agreement to acquire Verinata Health, Inc., a leading provider of non-invasive
tests for the early identification of fetal chromosomal abnormalities, for
consideration of $350 million plus up to $100 million in milestone payments
through 2015. Upon completion of the acquisition, Illumina will have access to
Verinata’s verifi® prenatal test, the broadest non-invasive prenatal test
(NIPT) available today for high-risk pregnancies, and to the most
comprehensive intellectual property portfolio in the non-invasive prenatal
test industry. As non-invasive prenatal testing is one of the most rapidly
growing areas utilizing next-generation sequencing, Illumina is uniquely
positioned to be at the forefront of providing superior prenatal testing
options.

“This agreement with Verinata demonstrates Illumina’s commitment to developing
innovative diagnostic solutions and providing our partners with the most
advanced technologies for improved patient care,” said Jay Flatley, President
and CEO of Illumina. “Building on the recent acquisition of BlueGnome Ltd. and
our expertise in next-generation sequencing, this announcement further
establishes Illumina as a leader in reproductive health.”

Available through a physician, the verifi test analyzes cell-free fetal DNA
naturally found in a pregnant woman’s blood to look for missing or extra
copies of chromosomes (referred to as aneuploidies). Specifically, the test
detects Down syndrome (trisomy 21 or T21), Edwards syndrome (trisomy 18 or
T18) and Patau syndrome (trisomy 13 or T13). It is the first non-invasive
prenatal test that offers the option to include evaluation of sex chromosome
aneuploidies, such as Turner syndrome (Monosomy X), Triple X (XXX),
Klinefelter syndrome (XXY) and Jacobs syndrome (XYY) – the most common fetal
sex chromosome abnormalities.

Compared to other testing options, the verifi prenatal test provides more
definitive information than risk score-based tests (traditional protein serum
screens), which calculate probabilities, and does not carry the risk of
complications that an invasive procedure, such as an amniocentesis, can have.
The robust technology behind the verifi test leverages the power of massively
parallel next-generation sequencing with a highly optimized algorithm to
provide accurate aneuploidy detection, with the ability to look across the
entire genome.

“Together, Illumina and Verinata are well-suited to drive the adoption of the
non-invasive prenatal testing market. With approximately 500,000 high-risk
pregnancies annually in the United States and an estimated four million
pregnancies in total, there is a clear need for such tests,” said Dr. Jeffrey
Bird, Executive Chairman and CEO of Verinata Health. “Given the recent
American College of Obstetrics and Gynecology (ACOG) and Society of Maternal
and Fetal Medicine (SMFM) joint opinion that recommended cell–free DNA
prenatal testing as a first or second trimester option for women at increased
risk of aneuploidy, we believe more physicians will be adopting NIPT.”

The verifi test will continue to be offered through Verinata’s CLIA-certified
and CAP-accredited laboratory, which will continue to act as a reference
laboratory to gather some of the necessary clinical data for future regulatory
submissions.

According to Greg Heath, SVP and General Manager of Illumina’s Diagnostics
business, “The synergies between Verinata’s and Illumina’s capabilities,
combined with the expertise in reproductive health gained from the acquisition
of BlueGnome, enable Illumina to provide a compelling portfolio of offerings
across the spectrum of reproductive health.” He added, “We look forward to
integrating Verinata into our organization and leveraging the combined
knowledge and resources.”

Based on ACOG and SMFM guidelines for high-risk pregnancies in the United
States, the addressable NIPT market is estimated to be more than $600 million
in 2013. The total domestic market is estimated to grow to 1.5 to 2 million
tests performed annually within the next five years. Working with our partners
in this space, Illumina expects to service a significant portion of that
market. Including the impact of synergies, the transaction is expected to be
approximately $0.20 dilutive to Illumina's non-GAAP earnings per share in 2013
before turning accretive beginning in 2014 and beyond. Fiscal year 2013
guidance, including the impact of this transaction, will be provided during
the Company's fourth quarter and fiscal year 2012 earnings call. The
transaction will be financed primarily with cash on hand and is expected to
close after the satisfaction of customary regulatory approval.

Bank of America Merrill Lynch acted as financial advisor to Illumina, and
Covington & Burling LLP acted as legal counsel.

About Illumina

Illumina (www.illumina.com) is a leading developer, manufacturer, and marketer
of life science tools and integrated systems for large-scale analysis of
genetic variation and function. We provide innovative sequencing and
array-based solutions for genotyping, copy number variation analysis,
methylation studies, gene expression profiling, and low-multiplex analysis of
DNA, RNA, and protein. We also provide tools and services that are fueling
advances in consumer genomics and diagnostics. Our technology and products
accelerate genetic analysis research and its application, paving the way for
molecular medicine and ultimately transforming healthcare.

Forward-Looking Statements

This release contains forward-looking statements that involve risks and
uncertainties. Examples of forward-looking statements include, but are not
limited to, statements we make regarding the expected impact of synergies and
the transaction’s effect on Illumina’s non-GAAP earnings per share. Important
factors that could cause actual results to differ materially from those in any
forward-looking statements include challenges inherent in integrating Verinata
with our existing operations and the other factors that are detailed in our
filings with the Securities and Exchange Commission, including our most recent
filings on Forms 10-K and 10-Q, or in information disclosed in public
conference calls, the date and time of which are released beforehand. We do
not intend to update any forward-looking statements after the date of this
release.

Dilution calculated on non-GAAP basis

In estimating future dilution on a non-GAAP basis, Illumina excludes
amortization expense related to acquired intangible assets, contingent
compensation expense, acquisition related expense, non-cash interest expense
associated with the company's convertible debt instruments that may be settled
in cash, headquarter relocation expense, costs related to unsolicited tender
offer for the company's stock andthe double dilution associated with the
accounting treatment of the company's 0.625% convertible senior notes
outstanding and the correspondingcall option overlay.

Contact:

Illumina, Inc.
Investors:
Rebecca Chambers
858-255-5243
rchambers@illumina.com
or
Media:
Jennifer Temple
858-882-6822
pr@illumina.com
 
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