Diagnostic Deals: A Roundup of the Key Mergers, Acquisitions, Alliances, Licenses and Other Strategic Transactions From the Past Month

Mid-May to mid-June was the busiest period of the year for diagnostic deal making in terms of both volume and magnitude. Here is a look at the highlights.

M&A
Dollar value-wise, the biggest lab M&A deal of 2018 to date came down on June 19 when Roche announced plans to acquire the remainder of Foundation Medicine for $2.4 billion. Roche had previously acquired 57% of the Cambridge, Mass.-based genomic cancer analysis diagnostics firm via a 2015 tender offer. Under the new deal, Roche will buy the remaining shares at $137 per share in cash, a premium of:

• 29% over Foundation’s June 18 closing price;
• 47% over its 30-day volume weighted share price; and
•  68% over its 90-day volume weighted average share price.

While the two firms have been close collaborators, the acquisition enables Roche to further leverage Foundation’s molecular analysis and genomic profiling assets to enhance its personalized healthcare strategy. The deal, which is expected to close before the end of 2018, is actually being treated as a merger under which Foundation will retain its autonomy.

Also making a splash was Myriad Genetics which announced its agreement to acquire women’s health molecular diagnostics firm Counsyl for $375 million in cash and common stock. Myriad plans to merge Counsyl’s reproductive health products, including the Foresight test, with its existing preventive care business to form a new unit called Myriad Women’s Health which will target OB-Gyns and reproductive healthcare providers. Myriad will also combine its women’s health sales force of approximately 225 reps with Counsyl’s 80 sales pros.

Meanwhile, Agilent Technologies remains highly aggressive in the M&A space completing its $250 million purchase of Advanced Analytical Technologies and announcing two new acquisitions: Korean scientific instruments distributor Young In Scientific and chemical standards provider Ultra Scientific, both for undisclosed amounts.

One deal that did not come off was the merger between Rosetta Genomics and Genoptix which was supposed to happen on May 27. What went wrong? On May 30, Rosetta claimed that Genoptix refused to provide the require assurances of completing the transaction due to an undisclosed “material adverse effect” affecting Rosetta, as well as breaches of representations and warranties and said it would file for bankruptcy if the deal cratered. Sure enough, the deal cratered and Rosetta filed for Chapter 7 the very next day.

Strategic Alliances
Alliance making was also dynamic during the period. Four weeks before word of the Roche merger came down, Foundation Medicine announced a new collaboration with Merck to develop companion diagnostic tests for use with Merck’s Keytruda anti-PD-1 immunotherapy drug. Meanwhile, Roche announced a pair of deals with pharmaceutical companies to develop companion diagnostics, including:

• A new agreement to develop immunohistochemistry CDx assays for Five Prime Therapeutics’ investigational drugs and antibodies; and
• Extension of its current CDx oncology drug development agreement with Pierre Fabre.

On May 24, Qiagen made news by announcing termination of an NGS-based assay commercialization initiative with HTG Molecular Diagnostics—the first of a larger multi-project development agreement between the two firms, which remains intact despite failure of the maiden effort. A week later, Qiagen and Freenome inked a deal to combine the latter’s AI genomics platform with the former’s molecular analysis technology to develop NGS-based immune-oncology companion diagnostics for pharmaceutical companies.

Here’s a summary of all the key diagnostic deals from mid-May through the third week in June: