DIAGNOSTIC DEALS

Diagnostic Deals: Illumina/PacBio Merger Derails & Qiagen Takes Itself Out of Play

As 2019 came to a close, the biggest story in DX deal making was the pair of anticipated M&A deals that suddenly seem unlikely to happen. As a result, two major genetic testing companies will apparently continue as stand-alones in the coming year, one because it wants to and the other because it has to.

FTC Foils Illumina-PacBio Merger

Announced at the end of 2018, the would-be $1.2 billion merger of Illumina and Pacific Biosciences has apparently foundered on the rocks of regulatory opposition. The genetic giants are facing strict antitrust scrutiny on both sides of the Atlantic. In the UK, the Competition and Markets Authority (CMA) review that was expected to take a couple of months has now expanded and dragged on until Feb. 5, 2020 at the earliest. On Dec. 17, the prospects of closing became even grimmer with word that the US Federal Trade Commission was taking action to block the deal claiming that Illumina is trying to maintain a monopoly in the US market for next-generation DNA sequencing systems by “extinguishing PacBio as a nascent competitive threat.”

But Illumina isn’t giving up, expressing “strong disagreement” with the FTC decision and vowing to continue to work through the regulatory approval process. Illumina’s long-term future looks bright either way. Should the deal collapse, the real loser would be PacBio, which has been relying on cash infusions from Illumina to stay afloat. Even so, the promising beginning to the Sequel II launch could enable PacBio to turn things around and remain viable as a stand-alone company.

Qiagen to Remain a Stand-Alone

The other major genetic testing company that appeared in play was Qiagen. The one-two punch of disappointing third quarter earnings and loss of long-time CEO Peer Schatz, accompanied by a strategic pivot to team with long-time rival Illumina on NGS kits, seemed to mark turning points that compelled Qiagen to at least listen to acquisition offers, including from Thermo Fisher Scientific. Takeover rumors spread and drove up share prices with buyers anticipating major acquisition premiums.

But on Dec. 26, Qiagen put all the speculation to rest by announcing that it had decided to reject all the offers and remain a stand-alone company. The announcement also took the air out of the stock rally with Qiagen shares falling 21% in a single day.

Roche Pulls Plug on Syapse Collaboration

One of the key developments on the alliance making front was Roche’s decision to terminate its partnership with software developer Syapse. Under the collaboration, which was announced in Jan. 2018, Roche was going to finance the development of new precision medicine cancer technologies based on the Syapse platform, including a “learning health system” to provide physicians with continually updated evidence at the point of care. But less than two years in, Roche has decided to pull out without giving specific reasons. The deal won’t affect Syapse’s other current pharma partnerships with Pfizer and Amgen.


Here’s a summary of key diagnostic deals announced from the third week of November through the end of 2019:

MERGERS, ACQUISITIONS & ASSET SALES
Acquiring Company Target(s) Deal Summary
Illumina Pacific Biosciences
  • Price: $1.2 billion cash ($8 per share, representing 71% premium over market for 30 days ending Oct. 31, 2018)
  • Status: Closing delayed to spring 2020 at earliest due to antitrust concerns in US + UK
  • PacBio long-read sequencing technology complements Illumina short-read sequencing platforms and enables it to provide integrated workflows and innovations that leverage both technologies
Clayton, Dubilier & Rice investment funds Cynosure (owned by Hologic)
  • Price: $205 million cash (of which Hologic will net $138 million)
  • Status: Expected to close before end of 2019 pending regulatory approval
  • Hologic sells off medical aesthetics business it acquired for $1.6 billion in 2017 after $732 million value write down
  • Sale enables Hologic to concentrate breast health and molecular diagnostics core businesses
Tempus Akesogen
  • Price: Undisclosed
  • Status: Closed
  • Acquisition of genomics and clinical trial precision medicine services provider helps Tempus expand into disease areas outside of cancer
Oncology Pharma Diagnomics
  • Price: Undisclosed
  • Status: Letter of intent signed with no closing date announced
  • Oncology Pharma to acquire at least 50% of molecular genomic firm Diagnomics, including latter’s stake in Eone-Diagnomics Genome Center
PerkinElmer Shangdong Meizheng Bio-Tech
  • Price: $152 million + additional contingent consideration of up to $26 million
  • Status: Closed
  • Acquisition of bioscience company offering products for food safety + environmental monitoring
Tulip Diagnostics (owned by PerkinElmer) Biosense Technologies
  • Price: Undisclosed
  • Status: Closed
  • Acquisition of Mumbai, India-based developer of point-of-care, in vitro diagnostic solutions
Unilabs Saltro
  • Price: Undisclosed
  • Status: Expected to close Jan. 1, 2020 pending regulatory approval
  • Acquisition expands Swiss lab’s presence in Netherlands market
Quest Diagnostics Boston Clinical Laboratories (BCL)
  • Price: Undisclosed
  • Status: Closed
  • Acquisition of BCL’s clinical laboratory services business driven by PAMA Medicare price cuts
Canopy Biosciences Core Diagnostics
  • Price: Undisclosed
  • Status: Closed
  • Canopy acquires Core’s CLIA facility, from which it will provide its multi-omic immune profiling services
Phenomics Health Precera Bioscience
  • Price: Undisclosed
  • Status: Closed
  • Phenomics acquires Precera’s PrecisMed technology for analyzing blood from a finger prick to detect, measure + assess over 200 medications in bloodstream
Medix Biochemica Lee Biosolutions
  • Price: Undisclosed
  • Status: Agreement to acquire 100% of Lee Biosolutions’ shares with no closing date announced
  • Acquisition enables Medix to add high-quality biomaterials to complement its antibodies + antigens portfolio
Consortium led by private equity firms Cinven + Astorg LGC
  • Price: Undisclosed
  • Status: Agreement to acquire with no closing date announced
  • Acquisition of UK provider of reference materials, proficiency testing schemes, oligonucleotides, genomics reagents + instrumentation
Mesa Laboratories Gyros Protein Technologies Holding
  • Price: $180 million
  • Status: Closed
  • Mesa to make GPT core of its new biopharmaceutical development platform
STRATEGIC ALLIANCES, PARTNERSHIPS & COLLABORATIONS
Partner 1 Partner(s) 2+ Deal Summary
Prescient Metabiomics (Prescient Medicine Holdings subsidiary) CoreBiome (OraSure Technologies subsidiary)
  • Objective: Develop colon cancer screening test
  • Dynamic: Leverage CoreBiome’s DNA sequencing platform to create test called LifeKit Prevent which will use microbial biomarkers to predict development of precancerous adenomas + carcinomas
Dolomite Bio S2 Genomics
  • Objective: Automate library preparation of tissue samples for single-cell RNA sequencing
  • Dynamic: Combine S2 Genomics’ Singulator instrument for automated solid tissue preparation with Dolomite Bio’s Nadia single-cell sample prep platform
Takeda Pharmaceuticals USA MiTest Health
  • Objective: Optimize MiTest personalized risk and outcome prediction tool for Crohn’s disease
  • Dynamic: Exclusive partnership with Takeda to provide MiTest support in scaling up tool to expand its reach among gastroenterologists + patients
Takeda Pharmaceutical Enzyre
  • Objective: Develop home test that hemophilia patients can use to determine their coagulation status
  • Dynamic: Takeda to fund Enzyre’s efforts to tailor its technology to enable automatic determination of coagulation status of hemophilic patients + transfer test results treating physicians via a mobile phone app
Stratify Genomics PWNHealth
  • Objective: Offer Stratify’s prostate cancer genetic risk test directly to consumers with medical oversight
  • Dynamic: Use Stratify online portal to offer latter’s Prompt Personal Genetic Score (PGS) with PWNHealth to provide clinical oversight + patient support
Invitae BioMarin Pharmaceuticals
  • Objective: Expand access to genetic testing for skeletal dysplasias
  • Dynamic: Discover Dysplasias to offer free genetic testing to patients with symptoms of having a skeletal dysplasia
  • Invitae to provide testing + free genetic counseling
  • BioMarin to provide financial support to allow testing + counseling to be provided at no charge
Personalis Merck KGaA
  • Objective: Investigate new biomarkers of for use in cancer therapies
  • Dynamic: Merck to use Personalis’ ImmunoID NeXT cancer immunogenomics platform to identify biomarkers, analyze therapy resistance mechanisms, stratify patients + study combination therapy strategies
Ontera QuantuMDx
  • Objective: Develop technology to detect bloodstream infections + drug-resistance
  • Dynamic: Technology to use QuantuMDx’s rapid cell/sample preparation technology, Capture-XT + Ontera’s nanopore biosensor
NeuMoDx Molecular Sentinel Diagnostics
  • Objective: Develop new molecular diagnostics assays
  • Dynamic: Combine technologies to create assays to detect + monitor post-transplant infections, parasitic, hospital-acquired + respiratory infections
Adaptive Biotechnologies AbbVie
  • Objective: Use NGS-based minimal residual disease testing in myeloma drug trials
  • Dynamic: Carry out multiple clinical trials in which AbbVie will use Adaptive’s clonoSeq assay to assess MRD status in response to venetoclax, an inhibitor AbbVie is developing for multiple myeloma treatment
Royal Philips Paige
  • Objective: Provide clinical-grade AI technologies to pathology labs
  • Dynamic: AI technologies, including Paige Prostate software, designed to help pathologists identify, quantify + characterize cancer in tissue samples more efficiently
Ambry Genetics Caris Life Sciences
  • Objective: Provide genetic cancer testing in U.S.
  • Dynamic: Caris to offer Ambry’s CancerNext-Expanded gene panel to evaluate hereditary risk of cancer alongside its own Caris Molecular Intelligence tumor profiling
Enpicom Cytura Therapeutics
  • Objective: Develop early cancer detection assay
  • Dynamic: Use sequencing- + machine learning-based methods to quantify genomic instability-causing mutations in blood cells
Illumina ArcherDx
  • Objective: Develop NGS-based based in vitro diagnostic tests
  • Dynamic: ArcherDx to develop IVD test kits to run on Illumina’s NextSeq 550Dx clinical sequencing system, including companion diagnostic tests for targeted therapy selection + monitoring minimal residual disease of patients with solid + blood tumors
  • ArcherDx responsible for commercializing + obtaining necessary regulatory approvals for each test kit
GenomSys SysMeta IT
  • Objective: Implement fledgling MPEG-G genomic data compression standard at Swiss labs + clinics
  • Dynamic: SysMeta IT to integrate GenomSys’ MPEG-G tools into its Tangerine Medical software for viewing + annotating patient records + electronic ordering of sample analysis
Fujitsu Laboratories Aichi Cancer Center
  • Objective: Develop AI-based technologies for interpreting cancer genome data
  • Dynamic: Fujitsu to oversee database construction, integration of clinical and genomic profiles + development of patient diagnosis and drug selection technologies
  • Aichi to provide patient-specific genomic + medical data, advise on data interpretation + treatment selection for different cancers + verify technologies
Leica Biosystems Sectra
  • Objective: Develop an integrated clinical pathology solution + secure FDA Sec. 510(k) clearance
  • Dynamic: Combine Sectra’s digital pathology software solution with Leica Bio’s Aperio AT2 DX system
Indivumed Biognosys
  • Objectives: Add proteomic + phosphoproteomic data to Individumed’s IndivuType multi-omics cancer database
  • Dynamic: Biognosys to use its mass spectrometry technology to profile proteome + phosphoproteome of clinical samples in Indivumed’s database
HalioDx OSE Immunotherapeutics
  • Objective: Identify potential immune biomarkers for a non-small cell lung cancer treatment
  • Dynamic: HalioDx to test + analyze patient biopsy tissue samples for ongoing Phase III Atalante 1 clinical trial of OSE’s neoepitope combination Tedopi
HalioDx Kite Pharma
  • Objective: Validate immune-based biomarkers for Kite’s investigational therapies
  • Dynamic: Leverage HalioDx’s Immunoscore immune-based tests
Biolidics Sysmex
  • Objective: Develop liquid biopsy-based cancer test for Asian market
  • Dynamic: Continuation of collaboration began in 2016 to create liquid biopsy system combining Biolidics’ ClearCell FX1 automated label-free circulating tumor cell separation + enrichment platform with Sysmex’s MI-FCM molecular imaging flow cytometer system
  • Firms to jointly develop laboratory-developed test based on respective technologies
  • Biolidics to commercialize test in Asia (outside Japan) after clinical validation by its affiliate SAM Laboratory
Asuragen Wave Life Sciences
  • Objective: Develop companion diagnostics for Wave’s investigational allele-selective therapeutic programs for Huntington’s disease
  • Dynamic: Asuragen to use its AmplideX PCR technology to develop CDx based on SNP phasing methodology Wave is using in Huntington’s clinical trials
Diagenode Bio-Rad Laboratories
  • Objective: Provide Diagenode’s single-cell transposase accessible chromatin by sequencing (ATAC-seq) services on Bio-Rad’s droplet digital PCR technology
  • Dynamic: Diagenode scATAC-Seq services to utilize Bio-Rad’s ddSEQ Single-Cell Isolator to encapsulate thousands of cell nuclei or whole cells into nanoliter-sized droplets
Ikonisys Sheba Medical Center
  • Objective: Develop circulating tumor cell (CTC)-based diagnostics for different cancers
  • Dynamic: Sheba researchers to identify CTC-based biomarker panels for specific cancers, which will be evaluated as potential new Ikoniscope tests
DISTRIBUTION, SALES & MARKETING AGREEMENTS
Property Owner Distributor Deal Summary
 Spartan Bioscience Angiocare
  • Products: Spartan’s CYP2C19 mutations tests
  • Territory: Netherlands but may expand to other territories
Magnolia Medical Cardinal Health
  • Products: Magnolia’s Steripath Gen2 Initial Specimen Diversion Device
  • Territory: Not specified
LICENSES
Licensor Licensee Deal Summary
Qiagen LabCorp
  • Extension of agreement covering Qiagen’s Human Gene Mutation Database which LabCorp will use to improve identification + interpretation of genetic variants within inherited diseases
StageZero Life Sciences Oncore Pharma
  • Expansion of current 5-year deal to include StageZero’s BreastSentry + Prostate Health Index
  • Oncore to pay all costs of marketing, distributing, sample collection + shipping of tests to StageZero’s Virginia lab
  • StageZero gets 1 million shares of Oncore, fixed fee for processing and reporting tests + a 10% of Oncore’s yearly profits as a special royalty payment
NanoString Technologies Veracyte
  • Veracyte gets exclusive global license to NanoString’s nCounter platform for diagnostic use and + rights to Prosigna breast cancer prognostic test + research-use LymphMark lymphoma subtyping assay
  • NanoString gets $40 million cash, $10 million in Veracyte common stock + up to $10 million in contingent cash upon commercial launch of Veracyte diagnostic tests on nCounter platform
  • Veracyte to market + sell Prosigna assay and future tests developed for nCounter platform and distribute nCounter Flex system for diagnostic purposes
  • NanoString retains exclusive rights to commercialize nCounter products for research + investigational uses + to develop its other platforms for diagnostic use
  • NanoString to manufacture kits for Prosigna, LymphMark + new tests Veracyte develops for nCounter
SUPPLY, SERVICE & TESTING AGREEMENTS
Supplier/Servicer Client/User Deal Summary
Quanterix Siemens Healthineers
  • Quanterix to provide Siemens Healthineers access to neurofilament-light (Nf-L) antibodies for use in developing blood-based Nf-L clinical tests
NEW CLINICAL STUDIES
DX Partner Other Partner(s) Description of Study
Prescient Medicine Erasmus MC
  • Netherlands study to evaluate Prescient’s LifeKit Prediction genetic test for analyzing individual’s risk of opioid addiction to confirm positive results of prior U.S. research
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