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

by Glenn S. Demby | Jan 15, 2019 | Deals-lir, Essential, Laboratory Industry Report

While overall deal volume for 2018 increased, the year was relatively light in the dramatic transactions that were so prolific in the previous two years. Here’s a quick overview of deals and predominant trends during the year. M&A The number of mergers and acquisitions in the molecular diagnostics and omics life science tools space rose 12% in 2018, according to research conducted by GenomeWeb. However, its research shows that the values of those deals were generally smaller than deals completed in 2017. That’s not surprising given that the lead-up to the PAMA market-based system for lab tests had been the primary driver in the lab space over the past two years as large labs looked to acquisitions to offset the anticipated Medicare reimbursement losses. Accordingly, most of the strategic mergers and acquisitions were already completed when PAMA officially took effect on Jan. 1, 2018. Even so, many deals were made during the year and some pretty big ones at that. The year saw the closing two deals valued in the billions, both involving the same company: Roche. By contrast, there were four nine-figure M&A deals that closed in 2017, all at higher prices than the richest deal of this year, […]

While overall deal volume for 2018 increased, the year was relatively light in the dramatic transactions that were so prolific in the previous two years. Here's a quick overview of deals and predominant trends during the year.

M&A
The number of mergers and acquisitions in the molecular diagnostics and omics life science tools space rose 12% in 2018, according to research conducted by GenomeWeb. However, its research shows that the values of those deals were generally smaller than deals completed in 2017.

That's not surprising given that the lead-up to the PAMA market-based system for lab tests had been the primary driver in the lab space over the past two years as large labs looked to acquisitions to offset the anticipated Medicare reimbursement losses. Accordingly, most of the strategic mergers and acquisitions were already completed when PAMA officially took effect on Jan. 1, 2018.

Even so, many deals were made during the year and some pretty big ones at that. The year saw the closing two deals valued in the billions, both involving the same company: Roche. By contrast, there were four nine-figure M&A deals that closed in 2017, all at higher prices than the richest deal of this year, i.e., the $2.48 billion paid by Roche for Foundation Medicine. Here are the 2018 top 10 M&A deals, including transactions that have been announced but not yet closed as of year-end:

Top 10 Lab M&A Deals of 2018

Rank	Buyer	Target	Reported Price
1	Roche	Foundation Medicine	$2.48 billion
2	Roche	Flatiron Health	$1.98 billion
3	Illumina	Pacific Biosciences	$1.2 billion*
4	Thermo Fisher Scientific	Gatan	$925 million
5	Sonic Healthcare	Aurora Diagnostic	$540 million*
6	Myriad Genetics	Counsyl	$375 million
7	Bio-Techne	Exosome Diagnostics	$250 million upfront + up to $325 contingent on milestones
8	Agilent Technologies	Advanced Analytical Technologies	$250 million
9	Qiagen	NeuMoDX	$234 million*
10	Quest	Oxford Immunotec Global	$170 million

* Announced in 2018 with closing scheduled for 2019

Strategic Alliances
Strategic alliance activity was also more robust this year, particularly in the new molecular, AI and NGS segments. Biopharma was a major theme with numerous deals featuring collaborations between pharma and test makers to develop companion diagnostics for new drug treatments. Product integration was also a prolific pattern in alliance making.

In addition to its $1.2 billion acquisition of Pacific Biosciences, which has not yet closed, Illumina initiated a number of alliances this past year and launched an incubator for genomic startups. Past activity suggests 2019 will also be a busy year for Illumina.

Here's a summary of key diagnostic deals from late November through December:

MERGERS, ACQUISITIONS & ASSET SALES
Acquiring Company	Target(s)	Deal Summary
Sonic Healthcare	Aurora Diagnostic	Price: $540 million Status: Agreement signed with no closing date announced Acquisition and absorption of Florida anatomic pathology provider expands Australia-based Sonic's US market presence
NeoGenomics	Genoptix	Price: $125 million cash + 1 million shares of NeoGenomics common stock Status: Closed Acquisition boosts NeoGenomics' position in oncology market
Strand Life Sciences	Quest Diagnostics	Price: Undisclosed Status: Closed Bangalore-based Strand acquires Quest's India diagnostics business including 3 reference labs, 45 touchpoints and leading pharmaceutical clients
Quest Diagnostics	Boyce and Bynum Pathology Laboratories	Price: Undisclosed Status: Agreement signed with no closing date announced Boyce and Bynum Pathology Professional Services, Inc., target's owner, to become exclusive pathology provider for Quest in Missouri and a preferred pathology provider in greater Midwestern region
10x Genomics	Spatial Transcriptomics	Price: Undisclosed Status: Closed 10x acquires Swedish developer of two-dimensional gene expression technology for tissue sample sections
Q-State Biosciences	Pairnomix	Price: Undisclosed Status: Closed Firms merge to create company focused on precision medicine and drug discovery for central nervous system diseases
LGC	SeraCare Life Sciences	Price: Undisclosed Status: Closed Acquisition of quality control materials for infectious disease testing and NGS markets boosts LGC's position in clinical quality control tools market and expands its calibration verification materials and proficiency testing offerings
Cancer Genetics	NovellusDx	Cancellation of merger announced in Sept.
STRATEGIC ALLIANCES, PARTNERSHIPS & COLLABORATIONS
Partner 1	Partner 2	Deal Summary
LabCorp	Walgreens	Objective: Expansion of LabCorp at Walgreens retail alliance into California Inland Empire Dynamic: Open nine new LabCorp patient service centers within Walgreens stores in greater Riverside, California area by year's end
IncellDx	Zomedica	Objective: Identify circulating tumor cells from canine cancers Dynamic: Develop assay that combines biomarkers from Zomedica's canine cancer research programs with IncellDx's BioINK reagents
Biocept	Prognos	Software license and lab data supply agreement Dynamic: Biocept to provide Prognos de-identified data from its liquid biopsy testing Prognos to leverage its AI tools to help pharma clients ensure that patients get the right therapies
Bristol-Myers Squibb	H3 Biomedicine	Objective: Evaluate therapeutic potential of H3's RNA splicing platform Dynamic: Joint research using H3 RNA platform to study development of cancer immunotherapies Bristol-Myers responsible for development and commercialization of resulting drug candidates H3 eligible for unspecified upfront payment + development, regulatory and sales milestones + royalties
Bristol-Myers Squibb	Boston Medical Center	Objective: Identify prognostic and predictive immuno-oncology biomarkers across different cancers Dynamic: Multi-year research study on tissue and circulating biomarkers and role of microbiome in predicting benefit from immune checkpoint inhibitors
Roche	Merck	Objective: Create pan-cancer CDx test to assess if patients have mismatch repair deficiency in their tumors and are eligible to use Merck's Keytruda checkpoint inhibitor Dynamic: Immunohistochemistry-based CDx will operate on Roche BenchMark Ultra instrument
Roche	Daiichi Sankyo	Objective: Create immunohistochemistry-based CDx for Daiichi investigational breast cancer drug Dynamic: Roche to develop, manufacture and commercialize CDx for identifying HER2 low-expressing metastatic breast cancer patients for enrollment in a phase III study evaluating Daiichi's HER2-targeting antibody drug conjugate
Guardant Health	AstraZeneca	Objective: Develop blood-based CDx tests for AstraZeneca oncology drugs Dynamic: Guardant to develop and seek FDA approval for CDx test to help identify non-small cell lung cancer patients likely to respond to AstraZeneca's third-generation EGFR inhibitor Tagrisso
Biocartis	AstraZeneca	Objective: Expedite lung cancer molecular diagnostics results Dynamic: Conduct a European prospective lung cancer study using Biocartis' Idylla EGFR mutation test
BiomX	Janssen Research & Development	Objective: Discover microbiome-based biomarkers to identify responders to a Janssen inflammatory bowel disease treatment Dynamic: Use BiomX's XMarker platform to stratify responders and non-responders to undisclosed Janssen IBD treatment
Proteomics International	Janssen Research & Development	Objective: Use Proteomics' PromarkerD test for diabetic kidney disease in drug development Dynamic: Firms to evaluate test's effectiveness in predicting kidney function decline and drug response in patients from Janssen's clinical trials
Centogene	Chiesi	Objective: Identify genetic mutations that cause disease Dynamic: Centogene to perform a European epidemiological study focused on prevalence of a rare lysosomal storage disorder caused by mutations in MAN2B1 gene Chiesi to use its CentoCard dried blood spot collection kit to collect samples to sequence MAN2B1 gene to identify disease-causing mutations
Foundation Medicine	QED Therapeutics	Objective: Develop CDx for QED's drug candidate infigratinib for bile duct cancer Dynamic: Infigratinib and new CDx to be incorporated into Foundation's genomic profiling assay for all solid tumors
Qiagen	Novartis	Objective: Develop molecular CDx to guide use of Novartis investigational PI3K inhibitor in breast cancer patients Dynamic: CDx to cover DNA extraction, detection of clinically relevant mutations and final reporting and fill void in market for FDA-approved therapies targeting PIK3CA mutations in HR+/HER2- advanced breast cancer
Qiagen	NeoGenomics	Objective: Expedite development and launch of CDx tests for pharma Dynamic: Master service agreement under which Qiagen will provide investigational-use-only tests to NeoGenomics and other labs "enabling them to verify, set up and run our companion diagnostics in clinical trials and in anticipation of regulatory approval"
Sysmex	MolecularMD	Objective: Develop CDx for precision medicine Dynamic: Non-exclusive partnership leveraging the firms' technology and global regulatory experience to accelerate CDx and drug commercialization
Sema4	Sanofi + Mount Sinai Health System	Objective: Asthma research Dynamic: 5-year research study
Indivumed	Institute of Molecular and Cell Biology (IMCB) at the Agency for Science, Technology and Research (A*STAR) in Singapore	Objective: Launch cancer library initiative to support development of precision diagnostics and personalized cancer treatments Dynamic: Leverage Singapore's clinical network to collect omics data to be stored in the Asian-centric Cancer Database and made available for local research
Synlab Pharma	Biotype	Objective: Provide clinical trial service for microsatellite instability and DNA polymerase epsilon/polymerase delta 1 mutation detection for European market Dynamic: Service to use using Biotype's Modaplex technology
Shivom	Lifebit	Objective: Launch AI-powered platform for identifying appropriate patients for clinical trials Dynamic: Firms to combine their technologies to offer DNA data platform allowing users to perform immediate genome-wide association study analyses, and access proprietary software and AI tools for data analysis
GeneCentric	University of North Carolina at Chapel Hill	Objective: Study patient responses to immunotherapeutic drugs, including PD-1 and PDL-1 inhibitors, based on bladder cancer subtypes Dynamic: Researchers to investigate links between certain bladder cancer changes, disease progression and clinical response to anti-PD-1 and anti-PDL-1 checkpoint inhibitor therapy
Mobidiag	Autobio Diagnostics	Objective: Create joint venture in China Dynamic: Mobidiag to grant joint venture an exclusive license for human infectious disease assays (except for sepsis assays) Joint venture to register the Mobidiag Novodiag platform and assays for meningitis, respiratory infections and gastroenteric infections, with the National Medical Products Administration (formerly called the China Food and Drug Administration)
BGI Research	China National GeneBank (CNGB) + Australia's Macquarie University	Objective: Establish a synthetic biology research partnership Dynamic: Five-year partnership under which parties will collect genomics technologies and resources and promote their use by the research community
NIPD Genetics	Medicover	Objective: Support NIPD Genetics' noninvasive prenatal tests and development of new tests Dynamic: Bring NIPD's Veracity and Veragene noninvasive prenatal tests to Medicover's network and other new markets Design and develop new genetic tests in prenatal, postnatal, neonatal, oncology and other spaces
DISTRIBUTION, SALES & MARKETING AGREEMENTS
Property Owner	Distributor	Deal Summary
HalioDx	Hyupjin	Products: HalioDx's Immunoscore assay Territory: South Korea
HalioDx	IDB Resources	Products: HalioDx's Immunoscore assay Territory: Singapore, Malaysia, Thailand
HalioDx	IPS Genomix	Products: HalioDx's Immunoscore assay Territory: Lebanon, Jordan, Saudi Arabia, UAE, Egypt, Oman, Qatar
HalioDx	MicroDiagnostics	Products: HalioDx's Immunoscore assay Territory: Greece
HalioDx	South Genetics	Products: HalioDx's Immunoscore assay Territory: Argentina, Chile, Uruguay
Jeta Molecular	Inno-train Diagnostik	Products: QTRACE, Jeta's qPCR reagent and software suite Territory: US and most of Europe (excluding France)
Lucence Diagnostics	iGenetic Diagnostics	Products: Lucence's LiquidHallMark liquid biopsy panel Territory: India
Synthego	Eurofins Genomics	Products: Synthego's synthetic single guide RNA (sgRNA) products Territory: 44 countries
LICENSES
Licensor	Licensee	Deal Summary
DarwinHealth	Encheng Group	Property: Darwin's precision cancer medicine tests Exclusive rights in Hong Kong, Macao and Taiwan
ERS Genomics	Lonza Pharma & Biotech	Property: ERS's CRISPR-Cas9 genome editing technology Lonza licenses for use in its bioproduction products and services and in induced pluripotent stem cells for research
SUPPLY, SERVICE & TESTING AGREEMENTS
Supplier/Servicer	Client/User	Deal Summary
Seegene	Biogroup-LCD	Seegene to supply $8.9 million worth of PCR-based diagnostic kits, including tests for sexually transmitted infections, women's health and gastrointestinal infections
Primerdesign (molecular testing division of Novacyt)	Genesis Diagnostics	Exclusive supply agreement with Primerdesign to develop and supply 384-well plate molecular assay panels, including respiratory, women's health, sexually transmitted diseases, wound and urinary tract infections, to Genesis to use in its Pennsylvania-based clinical service lab

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

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