NEWS

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

Deal volume in May and June was noticeably higher, especially in terms of M&A activity. There was more global activity over the current than at any other point in 2017, particularly in Asia. Here is a rundown of the big stories and trends in Dx.

M&A
As usual, M&A activity in the diagnostics segment was dominated by the corporate giants. The biggest deal of the period was Thermo Fisher’s $7.2 billion acquisition of contract development and manufacturing organization (CDMO) Patheon, a North Carolina-based company that provides drug development support for pharmaceutical firms. Thermo says the deal, which is expected to close by the end of 2017, will secure its access to the $40 billion CDMO market and create $120 million in synergies ($90 million in cost and $30 million in revenues synergies), prompting the company to increase its 2018 adjusted earnings per share by $0.30.

Thermo also made news by disclosing the terms of its previous acquisitions. According to a May 10, SEC filing, the firm paid $94 million (net of cash acquired in the deal) to acquire Core Informatics in March. The informatics firm has since been made part of Thermo’s Analytical Instruments segment. The other key bit of M&A intelligence disclosed in the SEC filing is the total purchase price of Thermos’s February acquisition bioproduction software maker Finesse Solutions, i.e., $220 million in cash (net of cash acquired).

Quest led all companies in deal volume with three acquisitions, including a June 12 agreement to purchase two lab businesses in Lewisville, Texas, Med Fusion and Clear Point, from some of the state’s biggest network providers, including non-profit Baylor Scott & White Health and The US Oncology Network, whose The Network is the largest oncology network in the country with more than 400 locations and 1,400 community-based doctors. Under the deal, Quest will become a preferred provider of oncology diagnostics for The Network.

Quest’s other move was officially closing its February purchase of Peace- Health Laboratories’ outreach service operations in Oregon, Washington and Alaska. PeaceHealth will retain ownership of 11 of the labs but Quest will take over their management.

Speaking of consummating earlier deals, LCA closed its acquisition of PAML (Pathology Association Medical Laboratories, LLC) from joint owners Providence Health and Catholic Health Initiatives. In addition to the outreach lab operations, LCA acquires PAML’s interests in five lab-related joint ventures.

Rosetta Genomics also made news in May by announcing plans to sell PersonalizeDx, the fluorescence in situ hybridization-based cancer tests seller (and CLIA lab business operator) it acquired just two years ago. Rosetta’s strategy is to concentrate on U.S. commercialization of its RosettaGx Reveal assay business.

Eurofins Scientific was the most active M&A player in Europe, acquiring a pair of German firms including DNA sequencing and genetic testing firm GATC Biotech and Hygel (Laboratoriumsmedizin am Hygiene-Institut), a €35 million lab group operating out of seven sites in Germany.

Strategic Alliances
There were a slew of strategic partnerships, including a pair of cancerrelated deals from Royal Phillips: a collaboration with Intermountain genomics spinout Navican to offer oncology services to health systems, and a partnership with Memorial Sloan Kettering designed to leverage Phillips’s IntelliSpace platform to develop pancreatic cancer diagnostics.

The traffic in lab-pharma alliance making was slower than usual but there were a couple of notable deals, including:

  • Qiagen’s collaboration with Bristol-Myers Squibb to develop NGS assays for cancer treatment predictions that can be used for BMS’s immune-oncology therapies; and
  • Guardant Health’s agreement to provide its Guardant360 liquid cancer biopsy to Pfizer for use in clinical trials; and
  • The partnership of Thermo Fisher and Agios Pharmaceuticals to develop and commercialize NGS diagnostics for the latter’s investigational cancer drug ivosidenib.

Other notable deals included new product development arrangements in the genomics space pairing:

  • Biocartis and MRC Technology for molecular tests to be used on Biocartis’s Idylla platform;
  • Agilent Technologies and Agendia for NGS molecular breast cancer test kits;
  • Illumina and Integrated DNA Technologies for NGS target enrichment products; and
  • OncoDNA and Cryogene for personalized cancer treatments.

Here’s a graphic rundown of key diagnostic deals in May and early June:

MERGERS & ACQUISITIONS
Acquiring Company Target(s) Deal Summary
Quest Diagnostics Med Fusion and Clear Point (owned by Baylor Scott & White Health,; The US Oncology Network); Texas Oncology; and Pathologists Bio-Medical Laboratories)
  • Price: Undisclosed
  • Status: Expected to close in Q3
  • Quest to become advanced oncology diagnostics preferred provider for The US Oncology Network, the largest not-for-profit health care system in Texas
Quest Diagnostics PeaceHealth, non-profit health system in Alaska, Washington, Oregon
  • Price: Undisclosed
  • Status: Closed in May
  • Quest acquires PeaceHealth Laboratories’ outreach laboratory services operations
  • PeaceHealth keeps 11 labs which Quest will professionally manage
Transgenomic Precipio Diagnostics
  • Price: New firm, to be called Precipio Inc., to receive up to $7 million in funding from upcoming private placement
  • Status: Shareholders of both companies approve proposed merger announced in October 2016
Eurofins Scientific GATC Biotech
  • Price: Undisclosed
  • Status: Expected to close in July
  • Eurofins expands genetic testing and DNA sequencing capabilities
  • GATC roughly €20 million ($22.5 million) annual revenues
Sysmex Oxford Gene Technology
  • Price: Undisclosed
  • Status: Expected to close in mid-June
  • OGT corporate structure to be kept intact but will become wholly-owned subsidiary of Sysmex
Grail Cirina
  • Merger of 2 startups
  • Objective: Commercialization of liquid biopsy tests for early cancer detection
  • Cirina to operate as subsidiary of Grail
Stago Group HemoSonics LLC
  • Price: Undisclosed
  • Status: Closed in May
  • Stago enhances point-of-care testing capabilities via acquisition of HemoSonics’ SEER technology (Sonic Estimation of Elasticity via Resonance) and associated Quantra Hemostasis Analyzer
Quidel InflammaDry and AdenoPlus businesses owned by RPS Diagnostics
  • Price: $14 million in cash
  • Status: Closed in May
  • Target companies sell rapid, lateral flow assays to detect infectious and inflammatory eye conditions that generate roughly $5 million in annual revenue
  • Quidel will manufacture products in its San Diego facility
Laboratory Corporation of America Holdings Pathology Associates Medical Laboratories, LLC—jointly owned by Providence Health & Services and Catholic Health Initiatives
  • Price: Undisclosed
  • Status: Closed in May
  • LabCorp also acquires PAML’s interest in 5 joint ventures
  • Providence, CHI and hospital joint venture owners will continue providing in-patient hospital lab services
  • LabCorp will provide outreach testing services and reference lab services currently provided by PAML and joint ventures
Thermo Fisher Scientific Patheon
  • Price: $7.2 billion–$35 per share in cash + assumption of $2 billion debt
  • Status: Expected to close by end of 2017
  • TF gets access to $40 billion contract development and manufacturing organization market
Thermo Fisher Scientific Core Informatics
  • Price: $94 million (net of acquired cash)
  • Status: Closed March
  • Informatics firm had $10 million in 2016 revenues
  • TF makes firm part of its Analytical Instruments segment
Thermo Fisher Scientific Finesse Solutions
  • Price: $220 million (net of acquired cash)
  • Status: Closed February
  • Bioproduction automation systems and software firm had roughly $50 million in 2016 revenues
Lonza HansaBioMed Life Sciences (Estonia)
  • Price: $94 million (net of acquired cash)
  • Status: Closed May
  • Acquisition gives Lonza access to exosomes-based cancer assays market
  • As part of strategy, Lonza also cuts separate deal for an equity stake in Italian molecular diagnostics startup Exosomics
UK’s Medical Research Council Consortium for Mass Cytometry Fluidigm
  • Price: Undisclosed
  • Status: Closed
  • Asset sale in which MRC acquires 7 of Fluidigm’s Helios mass cytometry systems
Eurofins Scientific MVZ für Laboratoriumsmedizin am Hygiene-Institut (Hygel)
  • Price: Undisclosed
  • Status: Expected to close in July
  • Hygel is a group of diagnostics labs operating out of 3 sites and 4 hospitals in Germany with over €35 million ($38.3 million) in 2016 revenues
STRATEGIC ALLIANCES, PARTNERSHIPS & COLLABORATIONS
Partner 1 Partner 2 Deal Summary
Biocartis MRC Technology
  • Objective: Develop molecular Dx tests for use on Biocartis’s Idylla platform
  • Dynamic: MRCT to act as a development contractor and Biocartis to commercialize tests under its own label
  • First project: Develop liquid biopsy test to monitor metastatic breast cancer patients for resistance to hormone therapy
Qiagen Bristol-Myers Squibb
  • Objective: Develop NGS (next-generation sequencing) assays for cancer treatment
  • Dynamic: Sides to work together to create gene expression panels to be used as predictive tools for BMS immuno-oncology therapies
Qiagen Maccura Biotechnology
  • Objective: Commercialize Q’s GeneReader NGS system in China and develop gene panels for China market
  • Dynamic: Form joint venture called Maqgen based in Chengdu
  • Maccura to own 60% and Qiagen 40% (which could go as high as 49% in 3 years)
  • Qiagen to continue operating its wholly-owned subsidiary in China
Jackson Laboratory 3 groups in China: i. Wenzhou Municipal People’s Government; ii. Ouhai District People’s Government; iii. Wenzhou Medical University (WMU)
  • Objective: Research genomic propensities for disease
  • Dynamic: Chinese partners to form Wenzhou Institute for Genomic Medicine to do research under Jackson’s management
  • Jackson scientists to form genomics research collaborations with WMU investigators in US and China
Guardant Health Pfizer
  • Objective: Cancer research
  • Dynamic: Guardant to provide Pfizer its Guardant360 liquid biopsy cancer assay to for use in clinical trials
Agilent Technologies Agendia
  • Objective: Develop NGS molecular breast cancer diagnostics kit
  • Dynamic: Use Agilent’s SureSelect target enrichment system to develop RNA sequencing kit version of Agendia’s microarray-based MammaPrint 70-gene breast cancer recurrence risk test and BluePrint breast cancer subtyping assay
Royal Philips Navican (Intermountain Healthcare genomics spinout)
  • Objective: Furnish end-to-end precision oncology services for health systems
  • Dynamic: Integrate Navican’s TheraMap services with the Philips’s IntelliSpace Genomics platform
Royal Philips Memorial Sloan Kettering Cancer Center (NYC)
  • Objective: Develop precision pancreatic cancer diagnostics
  • Dynamic: Leverage Phillips’s IntelliSpace technology to resolve single cell-level differences between (and within) tumors
Indivumed Intermed
  • Objective: Expand personalized cancer testing market share in Germany
  • Dynamic: Intermed to support growth of Indivumed’s cancer database in Germany
  • Intermed to distribute Indivumed’s Dx tests via its partnership with physician-managed lab network LADR Laborverbund
Illumina Integrated DNA Technologies
  • Objective: Create NGS target enrichment products
  • Dynamic: Companies to develop portfolio of indexed adapters that IDT will manufacture
  • Deal includes co-marketing agreement pairing couples Illumina’s TruSeq and Nextera library prep kits with IDT’s xGen Exome Research Panel
Rosetta Genomics Meir Medical Center (in Israel)
  • Objective: Develop a microRNA-based test to identify non-small cell lung cancer (NSCLC) patients who would benefit from a specific class of immunotherapeutics
  • Dynamic: Launch study to identify miRNAs differentially expressed between PD-L1-positive and PD-L1-negative NSCLC samples
Thermo Fisher Scientific Agios Pharmaceuticals
  • Objective: Develop and commercialize NGS companion diagnostic for Agios’ investigational cancer drug ivosidenib
One BioMed A*Star’s Genome Institute of Singapore
  • Objective: Develop molecular diagnostic infectious disease tests for Asian market
  • Dynamic: Tests to be created out of newly established joint testing lab
OncoDNA Cryogene (OncoDNA’s current distributor for Middle East)
  • Objective: Development of personalized cancer treatments
  • Dynamic: Launch study of effectiveness of OncoDNA’s liquid biopsy technology to assess clinical utility of personalized treatments for metastatic cancer
Alexion Pharmaceuticals Rady Children’s Institute
  • Objective: Develop precision medicine platform for use in newborns with rare genetic disorders
  • Dynamic: Platform to be based on Alexion’s SmartPanel
GeneNews Any Lab Test Now
  • US partnership with lab testing services provider covering GeneNews’ portfolio of early cancer detection tests
Biocept Addario Lung Cancer Medical Institute
  • Objective: Detect and assess lung cancer treatment biomarkers
  • Partners to evaluate use of Biocept’s Target Selector liquid biopsy platform in lung cancer clinical study
Admera Health University of Rochester School of Medicine and Dentistry
  • Objective: Evaluate use of Admera’s 50-gene PGxOne Plus pharmacogenomics test in guiding pain management decisions after acute dental surgery
  • Dynamic: Test to be used on patients in clinical study
MDxHealth Maastricht University
  • Objective: Development genetic and epigenetic cancer diagnostics
  • Dynamic: Expansion of existing partnership to, among other things, cover recently launched SelectMDx prostate cancer test
Critical Path Institute Translational Genomics Research Institute
  • Objective: Develop personalized treatments for tuberculosis
  • Dynamic: Collaboration to sequence thousands of bacteria isolated by tuberculosis
Tempus Basser Center for BRCA at University of Pennsylvania’s Abramson Cancer Center
  • Objective: Develop and improve personalized treatments for heritable BRCA mutations
  • Dynamic: Tempus to work with Basser investigators to analyze existing molecular and clinical data of patients treated at Center
  • Tempus has similar collaborations with University of Chicago, Duke, University of Michigan, Ohio’s University Hospitals Seidman Cancer Center and Mayo Clinic
Fulgent Genetics Xilong Scientific and Fuzhou Jinqiang Investment Partnership
  • Objective: Offer genetic testing in China
  • Dynamic: Form joint venture called Fujian Fujun Gene Biotech
  • Fulgent to supply $8.7 million in genetic sequencing and other equipment and own 30%
  • Xilong will own 51% and FJIP 19%
  • Joint ownership term of 20 years
DISTRIBUTION, SALES & MARKETING AGREEMENTS
Property Owner Distributor Deal Summary
LifeCodexx LifeCell
  • Product: LifeCodexx’s PrenaTest noninvasive prenatal screening test
  • Territory: India
  • LifeCell to sell test under its BabyShield brand
Pathway Genomics Salud Interactiva
  • Products: Pathway’s NGS assays
  • Territory: Mexico
Thermo Fisher Scientific Biognosys
  • Co-marketing deal
  • Products: TF’s Orbitrap mass spectrometers and Biognosys’ Spectronaut Pulsar software
  • Two companies also to collaborate in developing data-independent acquisition-related workflows
Streck Nordic BioSite
  • Products: Streck’s cell stabilization and molecular products
  • Territories: Sweden, Finland, Denmark and Norway
  • In April, Streck concluded distribution deals covering China, Switzerland and Austria
Streck Ngaio Diagnostics
  • Products: Streck’s cell stabilization and molecular products
  • Territory: New Zealand
Streck Genomax Technologies
  • Products: Streck’s cell stabilization and molecular products
  • Territories: Singapore and Malaysia
Mobidiag Wallac (PerkinElmer subsidiary)
  • Product: Amplidiag product line
  • Territories: Israel, Botswana, Ghana, Ivory Coast, Kenya, Mauritius, Morocco, Mozambique, Nigeria, Rwanda, Senegal and Uganda
  • Expansion of current deal allowing Wallac to distribute Amplidiag in South Africa
OncoDNA Providens
  • Products: OncoDNA’s cancer genomic tests
  • Territories: Serbia, Croatia, Bosnia-Herzegovina, Slovenia, Montenegro and Macedonia
Orig3n Innovasalud
  • Products: LifeProfile genetic assessment tests including Fitcode, Aura, Fuel, Bliss and Bloom
  • Territory: Mexico
  • Co-branding deal
Rosetta Genomics Cytolog Laboratories
  • Product: RosettaGX Reveal thyroid test
  • Territory: Brazil
  • Exclusive
  • Rosetta’s first distribution deal in South America
Protea Biosciences Proteos (contract research organization)
  • Products: Co-marketing deal covering both Protea’s bioanalytical services and Proteos’ protein production solutions
  • Territory: Not disclosed
LICENSES
Licensor Licensee Deal Summary
Atum Horizon Discovery
  • Cross-licensing agreement
  • Property: Atum gets right to combine Horizon’s CHO Source platform and glutamine synthetase knockout CHO K1 line with its own Leap-In transposase technology as a cell line development service
  • Property: Horizon gets exclusive license to a vector suite developed by Atum for the CHO Source platform and right to offer its customers no-fee access to Leap-In system
Johns Hopkins University Qiagen
  • Property: Genetic biomarkers used to assess microsatellite instability (MSI) and mismatch repair (MMR) in all sample and cell types
  • Territory: Worldwide
  • Qiagen gets right to commercialize NGS assays assessing MSI and MMR status
ERS Genomics Taconic Biosciences
  • Property: ERS’s CRISPR gene-editing technology (aka "the UC Berkeley patent")
  • Territory: Worldwide
  • Non-exclusive
  • Taconic gets right to use CRISPR to generate unique murine models
ERS Genomics Oxford Genetics
  • Property: ERS’s CRISPR gene-editing technology (aka "the UC Berkeley patent")
  • Territory: Undisclosed
  • Non-exclusive
  • Oxford gets right to use CRISPR to provide genome-engineering services, in cell line development and gene therapy viral vector improvement, and for development and sale of research tools and reagents
Thermo Fisher Scientific One Lambda
  • Property: TF’s technology that uses microarrays to measure transcript levels to diagnose rejection of solid organ transplants
  • Territory: Undisclosed
  • Exclusive
Atum (formerly known as DNA2.0) Thermo Fisher Scientific
  • Product: Atum’s Gene Designer 2.0 software
  • Territory: Undisclosed
Oxford BioDynamics Nova Satra Diagnostics Asia
  • Product: OB’s EpiSwitch technology platform
  • Territories: 13 territories in Asia
  • Exclusive
  • NSDA gets right to use EpiSwitch develop and commercialize non-invasive breast cancer testing and is solely responsible for securing any required regulatory approvals
UCLA GWG Holdings (parent company of life insurance firm GWG Life)
  • Property: Technology using epigenetic markers to predict life expectancy
  • Territory: Undisclosed
  • Exclusive
Boston Children’s Hospital Cambridge Epigenetix
  • Property: DNA methylation technology for identifying cancer biomarkers
  • Territory: Undisclosed
  • Exclusive
Becton Dickinson Roche
  • Property: BD’s patented stochastic labelling technology which uses molecular barcodes to count individual DNA, RNA and other complex molecules
  • Territory: Undisclosed
  • Non-exclusive
SUPPLY, SERVICE & TESTING AGREEMENTS
Supplier Client Deal Summary
Interpace Diagnostics Einstein Medical Center of Philadelphia
  • Deal gives Einstein researchers access to Interpace’s ThyGenX oncogene panel and ThyraMir microRNA gene expression classifier, which are used to diagnose thyroid nodules with indeterminate cytology
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