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Ebb & Flow

Although the terms of the acquisition of BioTrove Inc. by Life Technologies Corp. (NASDAQ:LIFE) haven't been undisclosed, the transaction could result in a more than 10X return over the next 12 months, according to investor Otello Stampacchia of Omega Funds.

"There are going to be some contingencies: the initial upfront payment and a bunch of sales milestones for a product that's already on the market," he said. "With the short term milestones, we get to a pretty high multiple. We get to a double-digit return if we get lucky; I don't think we'll be too far off that."

Omega Fund III owns 8% of the preferred equity of BioTrove, which it acquired in a secondary transaction in late 2007.

BioTrove has two platforms: OpenArray for genomic analysis and the RapidFire system for drug discovery. Life Technologies said OpenArray complements its line of assay products and will build on a 2007 deal in which its Applied Biosystems subsidiary received rights to market the technology for genotyping applications.

RapidFire will be spun out into an independent company upon closing, which is expected by year end. The newco, Biocius Life Sciences Inc., will be owned by BioTrove shareholders.

Biocius will continue to offer contract research services for lead discovery and CYP inhibition screening using the RapidFire technology and instrumentation. According to Stampacchia, Biocius is profitable.

Late last year, BioTrove withdrew a proposed IPO to raise up to $75 million. In August 2008, shareholders included Catalyst Partners (34.9%); CB Health Ventures (16.9%); Fletcher Spaght Ventures (6.1%); and Biofrontier (6%). At that time, the company had raised net proceeds of $64.2 million through venture capital and debt. It raised a series C round in February for an undisclosed amount.

BioTrove is the 11th exit for Omega Funds this year.

Another investor, Steve Gullans of Excel Venture Management, told Ebb & Flow that the exit would result in a "very good" return, but declined to be more specific.

Excel invested $5 million in BioTrove convertible notes in March 2008.

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