NEWS

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

The big story of April wasn’t any particular new deal but the apparent resolution of an old one—the Abbott-Alere merger. Deal volume remained brisk, particularly in the alliance arena. But for those who like dramatic, blockbuster stories, April 2017 may have been the cruelest month..

M&A
M&A activity for the year has been fast and furious. But most of the action has centered on the physician side. HealthCareMandA. com reports that there were 48 physician medical group acquisitions in the first quarter of 2017, 78% more than in the previous quarter and a staggering 109% increase from the first quarter of 2016.

Key benchmarks for the year so far:

  • Biggest deal: The $3.277 billion purchase of Surgical Care Associates by United Health Group subsidiary Optum;
  • Most active purchaser: MEDNAX with 5 deals closed. Next comes Envision Healthcare with 4, followed by Dermatology Associates and Epiphany Dermatology with 3 each;
  • Target size: Among the 48 medical groups acquired, 9 had 20 or more physicians.

Things have been far less hectic in the diagnostics sector. After a quiet March, M&A deal volume remained relatively light in April. The headliner was the April 14 announcement that the on-again off-again Abbott and Alere merger was back on again. In addition to dropping their lawsuits, both sides have agreed to new terms essentially giving Abbott a discount to compensate for the erosion in equity value that Alere has incurred since the original deal was announced in February 2016. Specifically, the purchase price has been reduced from $5.8 billion to $5.3 billion, or $51 per common share. The deal still requires regulatory clearance and the approval of Alere’s shareholders. If all goes according to plan, closing will take place by the end of the third quarter of 2017.

Other notable M&A deals during the month included:

  • The acquisition of Imegen, a firm known for its clinical genetics and genomics products including tests for over 1,500 human genetic diseases, by a pair of private equity firms in Spain for €10 million ($10.8 million);
  • Janssen Diagnostics’ sale of its Cellsearch test, which the firm claims is the only clinically validated blood test to receive FDA clearance for detecting circulating tumor cells, to Bologna, Italy-based Menarini- Silicon Biosystems; and
  • NantOmics’ purchase of San Francisco-based consumer genomics firm Genos for an undisclosed amount.

Meanwhile, word came down that Enigma Diagnostics, a UK firm in liquidation, was putting its point-of-care diagnostics platform on the block as part of its liquidation. The platform, known as the Enigma MiniLab, has reportedly attracted £140M million ($174 million) in investment capital to date.

Strategic Alliances
Thermo Fisher, Phillips, Illumina and Invitae were among the diagnostic giants to make significant new strategic collaborations during the month. Thermo Fisher entered into alliances with a pair of foreign partners:

  • The Institute of Medical Genetics and Pathology at University Hospital in Basel, Switzerland, to launch a new companion diagnostics development initiative called the Next Generation Companion Diagnostics Center of Excellence Program; and
  • Australia-based SpeeDx designed to secure FDA approval for SpeeDx’s ResistancePlus MG assay for antibiotic-resistant Mycoplasma genitalium.

HTG Molecular Diagnostics was even busier, concluding three separate alliances with foreign research firms aiming to leverage HTG’s proprietary EdgeSeq Oncology biomarker panel to develop new diagnostic products, including:

  • A breast cancer recurrence score via a collaboration with the Instituto Valenciano de Oncología in Spain;
  • A custom assay to detect nearly 3,000 mRNA targets in collaboration with Daiichi Sankyo; and
  • Biomarkers for predicting and diagnosing genetic disorders via partnering with Centre Léon Bérard in France.

On April 20, Grail announced the start of STRIVE, a clinical trial for its nextgeneration sequencing-based blood test for early-state cancer detection. Grail will collaborate with the Mayo Clinic and Sutter Health to enroll up to 120,000 women who’ve just received a mammogram in the hopes of validating the test. Other notable alliances from April aimed at diagnostics product development included:

  • Royal Phillips’s collaboration with PathAI leveraging the latter’s deeplearning algorithms and expertise to develop tissue-based early breast cancer detection tests;
  • Myriad Genetics’ partnership with BeiGene, the latter’s latest venture to develop companion diagnostics based on its BRAC Analysis CDx technology—other Myriad partners include AstraZeneca, Medivation, Tesaro and AbbVie; and
  • The co-development and cross-licensing arrangement between ArcherDx and HeliTec aimed at developing next-generation sequencing based cancer tests for the Chinese market.

Co-Marketing & Product Integration
April featured an unusually large number of co-marketing deals combining proprietary products to be promoted together as single solutions. Examples:

  • Glenalice’s agreement to combine its Map technology with BioDiscovery’s NxClinical data visualization platform to form a single solution for interpreting next-generation sequencing data;
  • The partnership between TTP Labtech and Advanced Analytical Technologies merging the former’s AATI Fragment Analyzer with the latter’s Mosquito platform to create an integrated next-generation sequencing library preparation solution; and
  • The agreement of bioinformatics firm Omicia, which changed its name to Fabric Genomics this month, to incorporate its genome annotation technology into Veritas Genetics’ myGenome whole genome sequencing service.

Here’s a graphic rundown of April’s key diagnostic deals:

MERGERS & ACQUISITIONS
Acquiring Company Target Deal Summary
Abbott Laboratories Alere Inc.
  • Price: $51 per common share based on equity valuation of $5.3 billion (reduced from original $5.8 billion)
  • Status: Expected to close by end of Q3
  • Both sides agree to drop litigation against other
NantOmics Genos
  • Price: Undisclosed
  • Status: Closed
  • NantoOmics to absorb Genos’s whole-exome sequencing systems into its pan-omic tools
Informatics for Integrating Biology and the Bedside (i2b2) Foundation TranSmart Foundation
  • Price: Undisclosed
  • Merger to form single foundation providing precision medicine open-source biomed software and databases
Menarini-Silicon Biosystems Janssen Diagnostics
  • Price: Undisclosed
  • Status: Closed
  • Menarini establishes US market presence by acquiring all assets related to Janssen’s Cellsearch circulating tumor cell system
Q-Growth Fund and Biolty (Spanish private equity firms) Imegen
  • Price: €10 million ($10.8 million)
  • Status: Closed
STRATEGIC ALLIANCES, PARTNERSHIPS & COLLABORATIONS
Partner 1 Partner 2 Deal Summary
Thermo Fisher Scientific Institute of Medical Genetics and Pathology at University Hospital Basel
  • Objective: Develop TF’s NGS-based Oncomine products into tests for use as companion diagnostics
  • Dynamic: First partnership under Thermo’s so called Next Generation Companion Dx Center of Excellence Program
Thermo Fisher Scientific SpeeDx (Australia)
  • Objective: Get FDA approval for SpeeDx’s ResistancePlus MG assay for antibiotic-resistant Mycoplasma genitalium
  • SpeeDx to submit test to FDA after it’s validated for use on the Applied Biosystems 7500 Fast Dx Real-Time-PCR system
HTG Molecular Diagnostics Instituto Valenciano de Oncología (Spain)
  • Objective: Develop breast cancer recurrence risk score
  • Dynamic: Research partnership leveraging HTG’s EdgeSeq Oncology biomarker panel
HTG Molecular Diagnostics Centre Léon Bérard
  • Objective: Identify biomarkers for predicting and diagnosing genetic disorders
  • Dynamic: Use HTG EdgeSeq technology to retrospectively characterize immunologic profiles from advanced malignant tumor samples collected in the ProfiLER study
Edico Genome Congenica
  • Partnership bundling Congenica’s Sapientia genome-analysis software with Edico’s field-programmable gate array bioinformatics processor, Dragen, as single product
EpicGenetics UCLA and University of Illinois College of Medicine Chicago
  • Objective: Develop new genetic markers for fibromyalgia
  • Dynamic: University research centers to clinically evaluate EpicGenetics FM/a protein biomarker test for fibromyalgia
  • Data to be then used identify new markers for disorder
Pfizer HitGen
  • Objective: Develop DNA-encoded libraries (DELs) for drug discovery
  • Dynamic: Partners to use HitGen’s technologies to design and screen proprietary DELs for Pfizer to use to discover new small molecule-based drug candidates
  • HitGen to also screen its own DELs against Pfizer’s therapeutic targets
Bristol-Myers Squibb Nordic Bioscience
  • Objective: Develop biomarkers to diagnose scar-tissue related to liver diseases
  • Dynamic: Partnership to evaluate non-alcoholic steatohepatitis in pre-clinical models of fibrotic diseases and clinical settings
Bristol-Myers Squibb Foundation Medicine
  • Objective: Use tumor profiling to predict patient response to cancer immunotherapy
  • Dynamic: BMS to use FM’s FoundationOne genomic profiling assay in its cancer drug clinical trials for studying tumor mutational burden and microsatellite instability in subject patients
Janssen Research and Development Castleman Disease Collaborative Network
  • Objective: Improve diagnosis and treatment of idiopathic multicentric Castleman disease (iMCD)
  • Dynamic: Measure analytes in serum samples from iMCD patients
  • Janssen to finance venture and contribute serum samples it collected in previous clinical trial
Illumina Human Vaccines Project
  • Research partnership to decipher genetic features of human immune system for development of vaccines and immunotherapies
LifeCodexx Charité–University Medicine Berlin
  • Objective: Develop test for early detection of preeclampsia
  • Dynamic: Assay to be based on LifeCodexx’s methylation-specific quantitative PCR technology for exploiting different methylation profiles of maternal and fetal DNA in maternal plasma
BGI Genomics Allen Institute for Brain Science
  • Objective: Defining brain cell types to promote understanding of neurodegenerative diseases
  • Dynamic: Organizations discussing collaboration on sequencing technology, bioinformatics and data mining
  • No actual collaborations yet announced
GATC Biotech University of Constance (Germany)
  • Objective: Develop new DNA sequencing methods
  • Dynamic: Formation of new research partnership called the Alliance for Sequence and Transcript Analysis (ASTRA)
Myriad Genetics BeiGene
  • Objective: Develop companion diagnostics
  • Dynamic: BeiGene, which develops cancer treatments combining immunotherapy and molecularly targeted drugs, to use Myriad’s myChoice HRD and BRACAnalysis CDx in clinical development program for its investigational PARP inhibitor BGB-290
  • Myriad also has companion diagnostics partnerships for BRACAnalysis CDx with AstraZeneca, Medivation, Tesaro and AbbVie
ArcherDx HeliTec
  • Objective: Develop NGS-based cancer diagnostics for Chinese market
  • Dynamic: Companies to co-develop and cross-license NGS technologies with goal of registering oncology diagnostic kits with the China Food and Drug Administration
Fabric Genomics (previously known as Omicia) Toma Biosciences
  • Partnership to co-develop oncology genomic testing and clinical interpretation service for clinical lab clients
Fabric Genomics (previously known as Omicia) Veritas Genetics
  • Fabric to incorporate its genome annotation technology into Veritas Genetics’ myGenome personal whole-genome sequencing service
Invitae Alnylam Pharmaceuticals,
  • Objective: Provide genetic testing for hereditary ATTR (hATTR) amyloidosis, a rare, progressive and life-threatening disease caused by a mutation in the TTR gene
  • Dynamic: Partners to use Alnylam Act™ program for early genetic testing for prompt genetic diagnosis
Philips PathAI
  • Objective: Early breast cancer detection and diagnosis
  • Dynamic: Leverage PathAI deep-learning algorithms to create applications for automatically spotting cancerous lesions in breast cancer tissue
DNAlytics VIB (Belgian life sciences research institute)
  • Objective: Develop blood-based screening test for colorectal cancer
  • Dynamic: Use VIB’s 23-gene expression signature in tumor-educated circulating monocytes to develop test for colorectal screening
BioDiscovery Genalice
  • Objective: Co-market and promotion
  • Dynamic: Combine Genalice’s Map technology with BioDiscovery’s NxClinical data visualization platform to form single NGS data interpretation solution
Advanced Analytical Technologies TTP Labtech
  • Objective: Co-marketing
  • Dynamic: Partnership to combine TTP’s Mosquito and AATI’s Fragment Analyzer platforms
DISTRIBUTION, SALES & MARKETING AGREEMENTS
Property Owner Distributor Deal Summary
Illumina Lucigen
  • Products: Epicentre Technologies’ genomics kits, enzymes and ancillary reagents (which Illumina acquired in 2011)
  • Territories: Worldwide
  • Exclusive
Sygnis Tanon
  • Products: InstantBlue stain for protein detection and Ultrafast buffer for western blotting assays
  • Territory: China
  • New deal expands Tanon’s rights under existing sales agreement
Kailos Genetics Illumina
  • Illumina gets rights to market KG’s TargetRich research solutions for pharmacogenetic target enrichment
Infopia GenDx
  • Product: Infopia’s GeneFinder human leukocyte antigen real-time PCR assay kits
  • Territory: Europe
  • Kits to be sold thru GenDx’s local distributor network
VHLGenetics BioBank
  • Products: Microorganism, animal, and plant genetic testing products
  • Territory: Norway
  • Netherlands-based VHL has similar distribution agreements in Spain and Belgium
Dovetail Genomics Daon BioSciences
  • Products: Dovetail’s genome assembly services
  • Territory: South Korea
  • Exclusive
  • Dovetail named Tomy Digital Biology its distributor in Japan last Dec.
Streck Anopoli Biomedical Systems (Austrian firm)
  • Products: Streck’s cell stabilization and molecular products
  • Territory: Not disclosed but presumably Austria
Streck Ruwag Diagnostics
  • Products: Streck’s cell stabilization and molecular products
  • Territory: Switzerland
Streck GenomePrecision Technology
  • Products: Streck’s cell stabilization, molecular, urinalysis and flow cytometry products
  • Territory: China
Somatex Hologic
  • Products: Somatex biopsy products including Tumark Professional X, Q, Vision, and Flex markers and application devices
  • Territory: US
  • Exclusive
CellMax Life Core Diagnostics
  • Products: CellMax-DNA Genetic Cancer Risk Test and CellMax-LBx Liquid Biopsy assay
  • Territory: India
  • Partnership rather than distribution agreement
Mobidiag AB Analitica
  • Product: Real-time PCR-based Amplidiag in vitro diagnostics
  • Territory: Italy
  • 3-year exclusive
Biocept Oregon Health & Sciences University
  • Product: Biocept’s Target Selector liquid biopsy testing services
  • Territory: Oregon
  • Preferred provider collaboration that also includes research and testing services
Acea Biosciences Bioké
  • Product: Acea’s xCelligence cell analyzer
  • Territories: Belgium, Netherlands and Luxembourg
  • Bioké also Benelux distributor of Horizon Discovery Group’s reference standards and RainDance’s RainDrop Digital PCR systems
MDxHealth Lab21
  • Product: SelectMDx prostate cancer test
  • Territory: UK
  • Non-exclusive
LICENSES
Licensor Licensee Deal Summary
Oxford Cancer Biomarkers My-BioMed Biotechnology
  • Product: OCB’s ColoTox, ColoProg, and ColoPredict tests
  • Territory: China
1Cellbio UCB
  • Product: InDrop single-cell sequencing technology, consumables and training for use in immune cell profiling
  • Territory: Belgium
Oncgnostics Changchun Jienuo Medical Technology (subsidiary of Sinopharm Group in China)
  • Product: Oncgnostics’ GynTect cervical cancer test
  • Territories: China, Hong Kong, Macau
  • Exclusive
Ghent University MDxHealth
  • Product: GU’s molecular diagnostic visualization technology for detecting cancer associated epigenetic changes in tissue and liquid samples
  • Territory: Global
  • Exclusive
Johns Hopkins University Qiagen
  • Product: Right to detect AR-V7 biomarker in all sample and cell types using nucleic acid tests
  • Territory: Global
  • Exclusive
  • Q to commercialize its research-use-only AdnaTest Prostate Cancer Panel AR-V7 for detecting androgen receptor splice variant 7 from liquid biopsies to investigate resistance to new advanced prostate cancer drugs
Johns Hopkins and Washington University in St. Louis Canopy Biosciences
  • Product: TUNR gene-editing technology
  • Territory: Undisclosed
  • Exclusive
Brandeis University ThermaGenix
  • Product: BU’s technologies to detect and analyze nucleic acids using PCR
  • Territory: Undisclosed
  • Exclusive
SUPPLY, SERVICE & TESTING AGREEMENTS
Supplier Client Deal Summary
HTG Molecular Diagnostics Daiichi Sankyo
  • Objective: Develop custom assay to detect nearly 3,000 mRNA targets using HTG EdgeSeq technology
  • Dynamic: HTG to provide research services for Daiichi in former’s VERI/O lab
Veritas Genetics Toronto’s Women’s College Hospital
  • Veritas to provide BRCA testing for TWCH’s The Screen Project for BRCA1 and BRCA2
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