Acquisitions Scorecard

The early fall season was a busy one for equity acquisition deals involving labs and diagnostics providers. Three key deals that happened in just the month of September alone include:

Rennova Ups Stake in Genomas

On Sept. 29, Rennova Health, the Florida diagnostic software provider and owner of a 15% stake in Connecticut-based pharmacogenetics firm Genomas, announced that it had acquired the remaining 85% of the company for $1.75 million in newly created Series F preferred shares and $800,000 of existing debt.

Context: Genomas is the developer of the PhyzioType System for DNA-guided management of prescription drugs to treat mental illness. In August 2015, the company formed a strategic alliance with California-based AutoGenomics to develop assays and test platforms to help physicians dose statins, i.e., medications that regulate cholesterol levels to reduce risk of cardiovascular disease.

T2 Biosystems Sells Stake to Finance Lyme Disease Panel Launch

On Sept. 22, T2 Biosystems announced that it had sold $40 million of its common stock to Canon USA to finance the scheduled 2017 market launch of its T2 [bacterial sepsis] panel for the rapid detection of Lyme disease. Under the private placement deal, Canon paid $6.56 per share (the stock’s closing price on Sept. 20) to acquire a 19.9% stake in the company.

Context: T2 is a potentially key player in developing diagnostics capable of rapid detection of sepsis. In 2014, the small Massachusetts lab company received U.S. Food and Drug Administration approval to market its T2Candida test and T2Dx platform which uses magnetic resonance imaging to analyze blood samples measuring how water molecules react in the presence of magnetic fields to detect the fungal virus that causes sepsis within three to five hours—as opposed to the couple of days required to detect the virus using traditional blood culturing test methods. (See LIR, Nov. 19, 2015, for more about T2.)

Pharos Takes Control of TechLab

On Sept. 21, private equity firm Pharos Capital Group, LLC acquired a controlling interest in Blacksburg, Virginia-based TechLab, Inc. Founded in 1989, TechLab develops non-invasive tests for C. difficile bacteria, a leading cause of hospital-acquired infections, inflammatory bowel disease, irritable bowel syndrome, E. coli and other gastrointestinal diseases. Pharos acquired the shares from Alere, which held a 49% block, and from individual TechLab founders Dr. Tracy Wilkins and Dr. David Lyerly, who will remain with the company as minority shareholders and board members. Former board member and president of Alere North America will take over as CEO. And Alere will remain the principal global distributor of TechLab products.

Context: Although the terms of the deal were not disclosed, we know that at the end of 2015 Alere valued its 49% stake in TechLab at $13.3 million and indicated that it booked profits of $1.5 million from that investment.