San Diego Business Journal

San Diego-based Illumina Inc. announced it has signed an agreement to acquire fetal chromosome testing company Verinata Health Inc. in Redwood City for as much as $450 million.

The deal includes $350 million upfront and up to $100 million in milestone payments through 2015. The company did not specify whether the initial payment would be in cash, stock or some combination thereof. SEC documents related to the deal have not been posted.

Once the agreement is finalized, Verinata will retain its management and employees and operate as a division of Illumina.

In lieu of potentially dangerous procedures like amniocentesis, Verinata’s noninvasive “Verifi” prenatal tests analyze fetal DNA found in a pregnant woman’s blood to screen for diseases like Down syndrome and other chromosomal disorders. Illumina said in a statement that by acquiring Verinata, it will have access to the most comprehensive intellectual property portfolio in the noninvasive prenatal testing industry.

This isn’t the company’s first foray into the prenatal testing arena. Illumina acquired Cambridge, U.K.-based cytogenetics and in vitro fertilization screening company BlueGnome Ltd. last September.

“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,” said Illumina President and CEO Jay Flatley in a statement.

Another contender in the noninvasive prenatal diagnostics market is San Diego-based Sequenom Inc., which launched a similar Down syndrome-detecting technology in October 2011. According to a filing, Sequenom performed 60,000 of its MaterniT21 PLUS prenatal tests in 2012 and reported an annual run rate of more than 120,000 tests by the end of the year.

Illumina said that based on guidelines from the American College of Obstetrics and Gynecology and the Society of Maternal and Fetal Medicine, the noninvasive prenatal testing market is estimated to exceed $600 million in 2013. It added that the total domestic market is estimated to grow to 1.5 to 2 million tests performed annually within the next five years.

--Meghana Keshavan