Exact Sciences Puts Itself on the Block After Investor’s Prodding

3/18/08

Looks like Carl Icahn isn’t the only activist investor yanking local life sciences firms’ chains these days. Just a few weeks after a California fund manager called for a sale of cancer-diagnostics firm Exact Sciences (NASDAQ: EXAS), the Marlborough, MA-based firm announced that it’s putting itself on the block. (Seriously, what is it with all the acquisition news the last couple of days?)

In an announcement this morning, Exact said it has hired Boston-based investment bank Leerink Swann to help its board “in its evaluation of strategic alternatives for the business, including, but not limited to, the sale of Exact or merger with another entity.”

Exact’s announcement follows close on the heels of a prodding SEC filing made by Kenneth Luskin, founder of Santa Monica, CA-based Intrinsic Value Asset Management. The filing said that Luskin—whose fund owns 8 percent of Exact’s common stock—had recently “communicated with [Exact] and to members of its board of directors great concerns about serious deficiencies in the management of the [firm].” (The filing doesn’t get more specific on those “deficiencies,” but Exact has been criticized in some quarters for its handling of the regulatory issues surrounding its noninvasive colon-cancer screening test; the test was recently added as an option in American Cancer Society guidelines for screening for the disease.)

Luskin’s filing, dated February 28, went on to say that, “Over the last week, the filing person has come to the conclusion that the sale of the Exact Sciences through a formal auction process, led by mergers and acquisitions team from a highly reputable investment banking firm, is the best and safest way to maximize shareholder value. Therefore, the filer is formally requesting that the board of directors immediately retain an outside investment firm to be charged with selling the company to the highest bidder in a process to be conducted over a period not less than 30 days or more than 90 days.” Reputable investment banking firm? Check. Exploration of a sale? Check. Timeline? Not specified in Exact’s announcement. Exact says it’s not likely to make any more announcements about a potential sale or merger until the board has approved a transaction.

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