M&A Report

Exact Sciences Makes a Bold Double Play to Bolster Its Early Cancer Detection Capabilities

Although volume was light, October was a robust month for M&A deal making in terms of impact, especially in the cancer diagnostics space. The month started with the announcement of Invitae’s acquisition of liquid biopsy testing firm ArcherDx for $1.4 billion and ended with a pair of strategic acquisitions of early cancer detection firms by Exact Sciences, one in liquid biopsies and the other in genomics technology.

Exact Science to Acquire Thrive Earlier Detection

Oct. 27 was a big day for Exact Sciences. In addition to publishing its Q3 2020 earnings, the Wisconsin-based producer of Cologuard and other cancer screening products announced that it has signed a binding agreement to acquire liquid biopsy test maker for $2.15 billion. Deal terms: Exact will pay $1.7 billion at closing, which is expected to take place in Q1 2021, 65 percent in Exact Sciences common stock and the 35 percent balance in cash. Thrive shareholders will also receive an addition $450 million in contingent payments based on the achievement of milestones in the development and commercialization of Thrive’s CancerSEEK, a blood-based, screening test that interrogates genomic mutations in circulating tumor DNA (ctDNA) and cancer-associated protein markers in plasma to identify abnormalities associated with multiple cancers.

It’s a bold move that comes just a year after Exact acquired fellow cancer technologies firm Genomic Health for $2.8 billion, bringing Cologuard and Genomic Health’s Oncotype DX tests for predicting response to cancer treatments and quantifying recurrence risk under the same roof. CancerSEEK, which received FDA Breakthrough Device designation in June 2019 year for the detection of genetic mutations and proteins associated with pancreatic and ovarian cancers, could form the third leg of a formidable early cancer detection triad. Thrive is currently collaborating with Geisinger Health System on DETECT, a massive clinical trial assessing CancerSEEK’s effectiveness on 10,000 healthy individuals.

Exact said that combining CancerSEEK with its own scientific platform, clinical organization and commercial infrastructure will help establish it as a leading competitor in blood-based, multi-cancer screening. “We have long respected the Thrive team for their rigorous scientific approach, having participated in both funding rounds as an investor,” noted Exact Sciences Chariman and CEO Kevin Conroy in a statement.

It’s not too hard to figure out why Thrive is such an appealing acquisition target. The previously obscure liquid biopsy maker made headlines last year by raising $110 million in a series A financing, breaking the previous record series A record of $100 million held by Grail (a company that’s also in the process of being by Illumina from whence it was originally spun out). Last June, Thrive raised another $257 million in a series B round.

Exact Sciences Also Acquires Base Genomics

But Exact Sciences had one more blockbuster deal up its sleeve—the acquisition of epigenetics company Base Genomics for $410 million, which the company disclosed in its October 27 U.S. Securities and Exchange Commission filing. Created by the Ludwig Institute for Cancer Research Branch at the University of Oxford, Base Genomics has developed a technology enabling accurate analysis of DNA methylation and mutations in a single sample. Exact says it plans to leverage that technology to enhance all of its cancer diagnostics products across the continuum.

Invitae Acquires ArcherDx

The other big M&A news in October was the completion of Invitae’s $1.4 billion acquisition of ArcherDx, a deal first announced in June. The addition of ArcherDx’s tumor profiling and liquid biopsy technologies give Invitae the capacity to predict and monitor therapeutic response to its service offerings and move beyond germline cancer genetic testing. “Invitae is now well positioned to accelerate the utilization of genetic information throughout a cancer patient’s journey,” noted the statement from Invitae CEO Sean George. “Starting from risk profiling and diagnostic testing, moving to therapy optimization, monitoring and recurrence surveillance, Invitae can deliver the information needed to enable best-in-class personalized cancer care.”

Invitae paid $325 million in cash and 30 million in company common shares upfront. ArcherDx shareholders will also receive up to 27 million more Invitae shares if certain milestones are met.

Here’s a summary of the key M&A diagnostic deals in October 2020:

MERGERS, ACQUISITIONS & ASSET SALES

Acquiring Company Target(s) Deal Summary
Exact Sciences Thrive Earlier Detection
  • Price: Up to $2.15 billion, including $1.7 billion would be payable at closing, comprising 65% in Exact Sciences common stock and 35% in cash + $450 million contingent milestone payments
  • Status: Closing scheduled for Q1 2021
  • Acquisition of liquid biopsy firm to ramp up Exact’s early cancer detection capabilities
Exact Sciences Base Genomics
  • Price: $410 million
  • Status: Closed
  • Acquisition of epigenetics company developing methylation analysis methods for early cancer detection adds genomics piece to Exact’s cancer detection portfolio
Invitae ArcherDx
  • Price: $1.4 billion, including $325 million cash + 30 million shares of Invitae common stock upfront + up to 27 million additional Invitae shares if milestones met
  • Status: Closed
  • Merger with cancer testing firm enables Invitae to expand its cancer service offerings beyond germline cancer genetic testing to include tumor profiling and liquid biopsy technologies for predicting and monitoring therapeutic response
Novacyt IT-IS International
  • Price: $13.1 million in cash
  • Status: Closed
  • Acquiring the exclusive manufacturer of the firm’s q16 and q32 rapid PCR instruments near-patient testing of COVID-19 enables Novacyt to secure intellectual property associated with instruments and expand its core capabilities in instrument manufacturing and product offerings in mobile PCR devices
10x Genomics ReadCoor
  • Price: $350 million in cash and stock
  • Status: Expected to close by end of October
  • Acquisition of spinout from George Church’s lab at Harvard Medical School and the Wyss Institute, which recently launched RC2 spatial multiomics platform based on fluorescent in situ sequencing technology
10x Genomics Cartana
  • Price: $41.2 million
  • Status: Closed in August
  • 10x Genomics acquires Sweden-based developer of in situ RNA analysis technology
Calibre Scientific Lorne Laboratories
  • Price: Undisclosed
  • Status: Closed
  • Acquisition of UK-based specialty manufacturer of blood grouping reagents and diagnostic test kits, and distributor of lab equipment, enzymes and biochemicals
Proteintech ChromoTek
  • Price: Undisclosed
  • Status: Closed
  • Addition of German manufacturer of single-domain antibodies
Cyted Pathognomics
  • Price: Undisclosed
  • Status: Closed
  • Cyted acquires UK digital pathology and clinical diagnostic lab services provider
Summa Equity Sengenics
  • Price: Undisclosed
  • Status: Closed
  • Private equity firm acquires functional proteomics firm that produces full-length folded protein arrays using its KREX protein folding technology
Geneyx Genomex Toldot Genetics
  • Price: Sellers, including biomedical informatics firm BATM Advanced Communications and minority shareholders receive 5 percent equity stake in Geneyx
  • Status: Closed
  • Israel-based developer of genomic analysis and interpretation software to integrate Toldot’s TGex NGS analysis technology into its own platform
HNL Lab Medicine NLM Laboratories
  • Price: Undisclosed
  • Status: Closed
  • HNL acquires fellow lab services provider

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