Diagnostic Deals: A Roundup of February’s Mergers, Acquisitions, Alliances, Licenses and Other Major Transactions

After January's flurry of deals, the M&A front has been relatively quiet so far this month. But relatively low volume of M&A deals has been more than offset by surges in strategic alliances and partnerships. Here's an overview of the key deals and trends.

M&A
Dollar-wise, the biggest M&A deal so far was the closing of Grifols's acquisition of Hologic's blood screening business. The acquired assets include a San Diego plant, development rights and Hologic's access to patented technologies under license agreements. In addition to the $1.85 billion purchase price, the sale enables Hologic to get out of blood screening, which Hologic CEO Steve MacMillan described as a "drag on our growth" and concentrate on its core women's health and molecular diagnostics business.

Both sides to the deal appeared vindicated a week later when Hologic issued its 2017 first quarter results reporting a 6 percent increase in year over year revenue by 8 percent growth in molecular diagnostics (from $129.6 million to $139.9 million) and "continued strength" across Aptima women's health products on the automated Panther and Tigris platforms. The report also made Grifols look pretty smart, especially the part citing a 7 percent rise in Hologic's blood screening revenues for the period ($65.2 million) thanks to "Zika-related sales and strong international ordering patterns."

Other than Quest's acquisition of northwest nonprofit PeaceHealth Laboratories' outreach lab operations, most of the other M&A activity for the month involved smaller start-ups, foreign ventures and genomics firms.

Last but not least, there are unconfirmed reports (from Reuters) that LabCorp is in talks to acquire contract research organization Pharmaceutical Product Development for over $8 billion. However, the Reuters report adds that there are other bidders for PDP. LabCorp demonstrated its affinity for CROs when it shelled out $6 billion for Covance in 2015.

Strategic Alliances
Among the most active companies in February so far is Quest Diagnostics which in addition to the PeaceHealth Laboratories acquisition noted above, cut a deal to secure its physician clients access to Veracyte's Affirma Gene Expression Classifier non-invasive test for diagnosing thyroid cancer [See related Veracyte story on page 11] and expanded its hospital partnership network to include New York City's Montefiore Health System.

Thermo Fisher was also busy starting the month by expanding its year-old deal with Invivoscribe Technologies to co-develop oncology tests for its Ion PGM Dx System to include in vitro assays for the TF Applied Systems Biosystems 3500Dx Genetic Analyzer. A week later, the biotech firm announced a similar deal with Asuragen to co-develop diagnostic kits for the 3500Dx CS2 instrument. Following a busy January (See LIR, Diagnostic
Deals, Jan. 23, 2017), Illumina stayed active announcing a new collaboration with Invivoscribe aimed at developing new in vitro diagnostic assays for the former's MiSeqDx next generation sequencing platform for the US market.

Trend-wise, the month was notable for collaborations pairing diagnostics companies with big pharma firms to develop new drug diagnoses and treatments, such as:

• Perthera's collaboration with Novartis to identify breast and lung cancer patients for pharmaceutical clinical trials;

• The collaboration between Exosome Diagnostics and Merck KgaA on oncology drug development; and

• GenomeDx Biosciences agreement with Astella using the former's genomic profiling tumor technology to identify patients who are candidates to use the latter's XTANDI prostate cancer drug.