Diagnostic Deals: A Roundup of Mergers, Acquisitions, Alliances, Licenses and Other Major Transactions

Two-thirds of the way through the month, March has seen a relatively high volume of strategic deals but mostly of the marginal variety, particularly with regard to M&A activity.

M&A
The headline M&A deal for the month was LabCorp's acquisition of the ownership interests of Washington-based Pathology Associates Medical Laboratories (PAML) in five joint ventures: Colorado Laboratory Services, Kentucky Laboratory Services, MountainStar Clinical Laboratories, PACLAB Network Laboratories and Tri-Cities Laboratory. Under the terms of the deal, which does not include PAML's California joint ventures, LabCorp will furnish outreach testing and reference lab services currently provided by PAML while PAML's joint owners, Catholic Health Initiatives and Providence Health & Services, continue to provide in-patient hospital lab services.

Strategic acquisitions by LabCorp are nothing new. After all, the diagnostic giant has been locked in something of an M&A race with rival Quest Diagnostics for several years. However, the PAML deal is a bit of a role reversal from recent practice. Acquisition of health system outreach labs has largely been Quest's modus operandi (for example, Quest's February acquisition of northwest nonprofit PeaceHealth Laboratories' outreach lab operations) with LabCorp focusing instead on acquiring specialty labs to bolster the sophistication of its product lines.

Other items of March M&A news that you may have missed were a pair of revelations disclosed by PerkinElmer in its recent SEC filing regarding 2016 deals, including the fact that the company:

• Paid $63.5 million in cash to acquire Bio Scientific;

• Had also acquired Delta Instruments for $8.8 million.

Strategic Alliances
While M&A activity was relatively slow, strategic partnerships and alliances continued to chug along at a rapid pace. Key deals from March include:

• The one-year extension of the collaboration between Quest and Vermillion for commercialization of the latter's OVA 1 ovarian cancer test;

• The strategic research partnership among Illumina, IBM Watson and Munich Leukemia Laboratory integrating IB Watson for Genomics with Illumina's BaseSpace and tumor sequencing process to simplify genomic data interpretation;

• Royal Phillips's collaboration with OneLife (which includes a minority equity stake in OneLife) combining proprietary technologies to develop pregnancy and early child care diagnostics products.

Continuing recent patterns, March featured a number of strategic alliances between diagnostics firms and big pharma, such as SenzaGen's granting AstraZeneca the right to use its GARD platform for rapid genomic allergen detection for development of a genomic test differentiating allergens from irritants for use in drug development research.

Key Coverage Determinations
Although several companies secured favorable diagnostic coverage determinations in March, the big winner was Vermillion, manufacturer of the OVA1 ovarian cancer early detection test—the test covered in the expanded commercialization agreement between Vermillion and Quest mentioned above. On March 1, Vermillion announced that Aspira Labs, the wholly-owned subsidiary that manufactures the test, had secured a major contract for OVA1 with Blue Cross Blue Shield of Michigan. Less than a week later, Aspira Labs was granted Medi-Cal (the California Medicaid program) out-of-state provider status, effectually expanding OVA1 access to 12 million new patients.

Key Product Developments
Diagnostic firms whose products achieved significant approvals in March included:

• OncoCyte, which reported that its early lung cancer detection test achieved favorable results in a 300-patient study ahead of a planned launch for the second half of 2017;

• Agendia, whose MammaPrint 70-gene signature test measuring risk of breast cancer recurrence received a1A label, the highest medical evidence level granted under German Association of Gynecological Oncology guidelines; and

• Beckman Coulter Diagnostics, which announced the FDA clearance and commercial launch of its DxC 700 AU chemistry analyzer.

Here's a graphic rundown of the key deals from March (so far):