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Millennium Sees Complementary, Independent Role for Acquisition

Millennium Laboratories Inc. has made an interesting acquisition in its purchase of RxAnte Inc., a McLean, Va.-based company that develops predictive analytics software for medication adherence. Financial terms for the deal were not disclosed.

San Diego-based Millennium is growing fast. Since it was founded in 2007, the company has grown to employ about 1,300 at its Poway headquarters. The privately held company offers medication monitoring, using urine drug testing and pharmacogenetic testing to health care providers that treat pain, substance abuse disorders, psychiatric disorders and other chronic diseases.

Millennium appointed veteran health care executive Brock Hardaway as its new CEO early last year, and this is the company’s first acquisition — and subsidiary — since he took the helm. Before that, the company focused on internal growth, and this is its first major foray outward.

RxAnte, by contrast, is relatively small. It was founded in 2011 and employs about 40 people, and raised about $4.5 million in Series A funding from San Francisco-based Aberdare Ventures and San Diego’s West Health Investment Fund. But the company has attracted a fair amount of industry buzz for the “millions of dollars” of revenue that it has been receiving from customers such as Aetna, CVS Caremark and WellCare Health Plans.

Monitoring 8 Million

Since launching its system that studies patient populations and provides recommendations for medication adherence, RxAnte’s software now monitors the prescription regimens of some 8 million patients.

The acquisition will help Millennium personalize prescription drug therapy plans, deliver targeted patient support programs and monitor patient outcomes, Hardaway said.

RxAnte “had the best approach in taking big data and using predictive analytics,” Hardaway said. “Because RxAnte’s founder is a pharmacist, the company has a deep understanding of medications and behaviors, and why people take drugs.”

Hardaway said talks began with RxAnte last year, when the startup was going through its Series B financing round, and they began discussions to enter potential partnerships and collaborations. But before the Series B round could be concluded, Millennium bought the company.

RxAnte will operate as a subsidiary of Millennium from its base in Virginia and will remain largely unchanged, Hardaway said. RxAnte Founder and President Josh Benner will remain in charge of the software company, reporting to Hardaway.

‘Integration-Lite’

“I would consider this to be integration-lite — let the company really stand alone as a subsidiary,” Hardaway said. “We’ll integrate the things that make sense, take advantage, but they’ve got a great core business that’s growing extremely well, and we’ve got a core business that’s also growing well.”

To put this market niche into perspective, medication monitoring is big business. It’s fiercely regulated, and Millennium, with its sprawling Poway campus and Ford-like efficiency, has emerged as a frontrunner in the industry. At the same time, the company is part of a federal grand jury investigation for possible employee intimidation and alleged fraud for earlier actions.

But the need for regulation is there, and there’s plenty of opportunity to lower costs and make money in the process. The New England Healthcare Institute, as well as pharmacy benefit management company Express Scripts Holding Co. (Nasdaq: ESRX), estimate the cost of medication misuse is more than $300 billion per year.

“RxAnte’s acquisition shows how innovative technologies that can lower health care costs can also create new attractive business opportunities,” West Health Chief Financial Officer Mike Caponetto said in an email. “We’re excited to see how Millennium Labs will carry RxAnte’s innovative technology forward to drive patient adherence and help ensure they get the health care their doctors have ordered.”

Millennium and, by extension, RxAnte are staking claim that their services can help temper these wildly expanding costs.

“We feel like the future of health care lies in predictive analytics — to know the future and do something about it, intervene,” Hardaway said.

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