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: