Japan's Fujifilm to buy Madison stem cell company Cellular Dynamics for $307 million

Madisons biotech community and its supporters cheered the news Monday that Cellular Dynamics International (CDI) founded by UW-Madison stem cell pioneer James Thomson in 2004 will be purchased by Fujifilm Holdings Corp., of Tokyo, for $307 million.

I wish every Monday was like this. This is a really nice surprise, said Carl Gulbrandsen, managing director of the Wisconsin Alumni Research Foundation. WARF owns a small percentage of CDI stock and holds patents on some of Thomsons technology, drawing licensing fees and royalties from Cellular Dynamics.

The cash deal calls for the Japanese company to buy publicly traded CDIs stock at $16.50 a share, or more than double the stocks closing price last Friday at $7.94 a share. The stock closed Monday at $16.42.

When the purchase is final, sometime in the next three months if regulators approve, CDI will keep running its headquarters in Madison and branch in Novato, California, as a subsidiary of Fujifilm, the companies said. CDI had 155 employees, as of December 2014, and annual revenue of $16.7 million.

CDI, 525 Science Drive, makes human stem cells in industrial quantities. Using tissue from adults, CDI creates induced pluripotent stem cells (iPSCs) that can be reprogrammed into virtually any cell type in the body. The company specializes in heart, kidney and nerve cells, and it develops customized cell lines.

Its clients include 18 of the top 20 biopharmaceutical companies worldwide. They use the cells to screen compounds for drug screening, for stem cell banks, and for developing stem cell therapeutics.

The sale of CDI is a strong endorsement of stem cell technology and its potential to revolutionize modern medicine. This is good news for all of us in the biotechnology community who are committed to using the technology to unlock the mysteries of disease and to help advance the development of novel therapies, said Chris Armstrong, president and chief executive of Stem Cell Theranostics, a California company that opened a Madison office in 2014.

Al Rauch, a managing analyst with the State of Wisconsin Investment Boards (SWIB) global health care sector team, said the deal gives high marks to CDIs technology. Its really quite cutting-edge. Thats why such a premium was paid for it, over what it was trading for, Rauch said.

Its a positive demonstration of the value of some of the scientists in the area. Thats, in essence, what Fujifilm bought. The value, as far as financial (gains), is a little far off, said Rauch, who toured the company before its 2013 initial public stock offering but did not make an investment from SWIB.

Fujifilm has transformed itself from photographic film to other fields, with the health care industry as one of its major targets for growth. In December, the company bought a majority share of Japan Tissue Engineering Co. Its technology will work well with CDIs, said Shigetaka Komori, chairman and chief executive of Fujifilm. We are delighted to be able to pursue the business from drug discovery to regenerative medicine with CDI, he said.

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Japan's Fujifilm to buy Madison stem cell company Cellular Dynamics for $307 million