Labs, Universities and Even Computer Companies Target Point-of-Care COVID-19 Test Development

The imperative to create and provide tests capable of detecting the SARS-CoV-2 virus that causes COVID-19 coronavirus continues to fuel strategic deal making. SARS-CoV-2 point-of-care tests was the objective of three of the key strategic collaborations during the period, including the creation of Corona Diagnostics, a new joint venture between Todos Medical and Emerald Organic Products that will seek FDA approval for a rapid point-of-care kit called Colloidal Gold. A week earlier, Todos announced that it had entered into an exclusive agreement to distribute Colloidal Gold in the US and Israel.

Most of the point-of-care SARS-CoV-2 tests in the pipeline are based on technology that detects the antibodies the body creates to fight off the virus. But one of the new ventures unveiled this month pairs North Carolina vaccine maker Heat Biologics with the University of Miami that uses isothermal amplification technology to detect viral nucleic acids. According to test codeveloper Sylvia Daunert, chair of biochemistry and molecular biology at the University of Miami Miller School of Medicine, “unlike tests that detect antibodies (IgG and IgM method), which can take weeks to manifest, our test is being developed to utilize molecular recognition and amplification of the target virus. This should allow for much earlier detection—within a couple days of exposure—providing critical and time-sensitive information to help curb the spread of the disease.”

One of the more unusual new COVID-19 collaborations is the alliance among BGI Genomics, part of the Guangdong, China-based BGI Group that has played a leading role in coronavirus test development, and computer technology firms Intel and Lenovo. The strategy is to leverage the latters’ computational and genomic analysis expertise and technologies, including a high-performance computing cluster to process reads from BGI’s BGI DNBSeq-T7 sequencer, to advance BGI’s research into COVID-19 virulence, transmission patterns and host-pathogen interactions in the interest of accelerating development of COVID-19 diagnostics and the identification of potential drug targets.

M&A Report: Thermo Fisher $11.5 Billion Qiagen Blockbuster Highlights Huge Strategic Month

Deals weren’t plentiful in March and, not surprisingly tailed off as the COVID-19 crisis deepened. But the deals that did occur were massive in significance, highlighted by what in normal times would have been the diagnostics business story of the month. It happened on March 3, 2020, when Thermo Fisher Scientific announced plans to acquire molecular diagnostics and pharmaceutical research powerhouse Qiagen for $11.5 billion. Although it came on the heals of Qiagen’s public determination to spurn would-be acquisition partners and go it alone, rumors of a takeover had been swirling since last October when long-time Qiagen CEO Peer Schatz tendered his resignation.

Terms of the Deal

Under the deal, which is slated to close in 2021 subject to regulatory approval and the usual closing conditions, Thermo Fisher will pay $43.35 per share of Qiagen common stock, a premium of roughly 23% above the closing price on the Frankfurt Prime Standard on March 2, the trading day before the deal was announced. Thermo Fisher will also assume approximately $1.4 billion of net debt from Qiagen.

Thermo Fisher also provided additional details about the terms regarding what happens if the deal falls through, which assume critical importance in light of the COVID-19 situation. Each side is on the hook to the other for termination payments depending on why the deal is terminated. Under one set of scenarios, Qiagen would have to pay Thermo Fisher $367 million in cash; another set of scenarios would obligate Thermo Fisher to give Qiagen a reverse termination cash payment of $575 million.

The Business Strategy

“This acquisition provides us with the opportunity to leverage our industry-leading capabilities and R&D expertise to accelerate innovation and address emerging healthcare needs,” noted Thermo Fisher Chairman, President and CEO Marc Casper in a statement. In addition to its $1.53 billion in 2019 revenues, Qiagen’s principal allure are its infectious disease and other molecular test products, which will significantly expand Thermo Fisher’s own specialty diagnostics portfolio. In his statement, Casper cited specific Qiagen products, including its:

• Quantiferon-TB Gold Plus latent tuberculosis detection test, which will bolster Thermo Fisher’s own allergy, autoimmunity and transplant diagnostics tests; and
• QiaSymphony platform for molecular infectious disease testing, and QiaStat-Dx syndromic testing system, which will complement Thermo Fisher’s gene analysis technologies.

Qiagen’s sample prep technologies, assays and bioinformatics solutions will fit nicely within the Thermo Fisher life sciences suite.

Exact Sciences Makes a Move

 Coming off its recent merger with Genomic Health, Exact Sciences was also active with a pair of acquisitions designed to expand its genetic cancer testing footprint beyond its signature Cologuard test, including of:

• Paradigm Diagnostics, the producer of a solid tumor sequencing test that recently received a Medicare local coverage determination from Medicare Administrative Contractor Palmetto; and
• Viomics, a molecular diagnostics company specializing in biomarker selection for cancer diagnostics.

Exact didn’t disclose the price of either acquisition but did indicate that it paid stock for Paradigm and will pay a combination of cash and stock for Viomics.

Invitae Takes Aim at Myriad Genetics

 The other big M&A story of the month was Invitae’s shopping spree consisting of three strategic purchases, the most significant of which was the $95 million acquisition of Diploid, a Belgian firm that manufactures Moon, AI software for diagnosing genetic disorders from gene sequencing. Invitae’s addition of Diploid’s pharmacogenetic assets throws down the gauntlet to Myriad Genetics, which has strong new direct competition in the hereditary cancer risk and non-invasive prenatal testing market.

Here’s a summary of the key strategic diagnostic deals announced from late February through March 2020: