Diagnostic Deals: A Roundup of the Key Mergers, Acquisitions, Alliances, Licenses and Other Strategic Transactions From the Past Month

Deal volume in May and June was noticeably higher, especially in terms of M&A activity. There was more global activity over the current than at any other point in 2017, particularly in Asia. Here is a rundown of the big stories and trends in Dx.

M&A
As usual, M&A activity in the diagnostics segment was dominated by the corporate giants. The biggest deal of the period was Thermo Fisher’s $7.2 billion acquisition of contract development and manufacturing organization (CDMO) Patheon, a North Carolina-based company that provides drug development support for pharmaceutical firms. Thermo says the deal, which is expected to close by the end of 2017, will secure its access to the $40 billion CDMO market and create $120 million in synergies ($90 million in cost and $30 million in revenues synergies), prompting the company to increase its 2018 adjusted earnings per share by $0.30.

Thermo also made news by disclosing the terms of its previous acquisitions. According to a May 10, SEC filing, the firm paid $94 million (net of cash acquired in the deal) to acquire Core Informatics in March. The informatics firm has since been made part of Thermo’s Analytical Instruments segment. The other key bit of M&A intelligence disclosed in the SEC filing is the total purchase price of Thermos’s February acquisition bioproduction software maker Finesse Solutions, i.e., $220 million in cash (net of cash acquired).

Quest led all companies in deal volume with three acquisitions, including a June 12 agreement to purchase two lab businesses in Lewisville, Texas, Med Fusion and Clear Point, from some of the state’s biggest network providers, including non-profit Baylor Scott & White Health and The US Oncology Network, whose The Network is the largest oncology network in the country with more than 400 locations and 1,400 community-based doctors. Under the deal, Quest will become a preferred provider of oncology diagnostics for The Network.

Quest’s other move was officially closing its February purchase of Peace- Health Laboratories’ outreach service operations in Oregon, Washington and Alaska. PeaceHealth will retain ownership of 11 of the labs but Quest will take over their management.

Speaking of consummating earlier deals, LCA closed its acquisition of PAML (Pathology Association Medical Laboratories, LLC) from joint owners Providence Health and Catholic Health Initiatives. In addition to the outreach lab operations, LCA acquires PAML’s interests in five lab-related joint ventures.

Rosetta Genomics also made news in May by announcing plans to sell PersonalizeDx, the fluorescence in situ hybridization-based cancer tests seller (and CLIA lab business operator) it acquired just two years ago. Rosetta’s strategy is to concentrate on U.S. commercialization of its RosettaGx Reveal assay business.

Eurofins Scientific was the most active M&A player in Europe, acquiring a pair of German firms including DNA sequencing and genetic testing firm GATC Biotech and Hygel (Laboratoriumsmedizin am Hygiene-Institut), a €35 million lab group operating out of seven sites in Germany.

Strategic Alliances
There were a slew of strategic partnerships, including a pair of cancerrelated deals from Royal Phillips: a collaboration with Intermountain genomics spinout Navican to offer oncology services to health systems, and a partnership with Memorial Sloan Kettering designed to leverage Phillips’s IntelliSpace platform to develop pancreatic cancer diagnostics.

The traffic in lab-pharma alliance making was slower than usual but there were a couple of notable deals, including:

• Qiagen’s collaboration with Bristol-Myers Squibb to develop NGS assays for cancer treatment predictions that can be used for BMS’s immune-oncology therapies; and

• Guardant Health’s agreement to provide its Guardant360 liquid cancer biopsy to Pfizer for use in clinical trials; and

• The partnership of Thermo Fisher and Agios Pharmaceuticals to develop and commercialize NGS diagnostics for the latter’s investigational cancer drug ivosidenib.

Other notable deals included new product development arrangements in the genomics space pairing:

• Biocartis and MRC Technology for molecular tests to be used on Biocartis’s Idylla platform;

• Agilent Technologies and Agendia for NGS molecular breast cancer test kits;

• Illumina and Integrated DNA Technologies for NGS target enrichment products; and

• OncoDNA and Cryogene for personalized cancer treatments.

Here’s a graphic rundown of key diagnostic deals in May and early June: