Exact Sciences has moved to acquire Genomic Health, with plans to bring their cancer screening and diagnostic tests up through a combined commercial organization of about 1,000 employees, including sales, marketing and reimbursement staff.
The $2.8 billion deal—split between $1.1 billion in cash and $1.7 billion in stock—is expected to create a single diagnostics company with at least $1.6 billion in annual revenue by the end of 2020.
Driven by Exact Sciences’ Cologuard at-home fecal DNA test for colorectal cancer and Genomic Health’s Oncotype DX assays for breast and prostate cancer, the companies’ leaders hope to see a gross profit of $1.2 billion next year, with a commercial presence in more than 90 countries.
Those three areas alone represent about 40% of all new cases of solid tumors, according to the companies, which estimate a combined market opportunity of about $20 billion—of which they say they’ve penetrated less than 10%, with more room to expand in international markets.
The two also hope to see annual synergies of about $25 million within three years, mostly by reducing public company costs and optimizing new purchases. The acquisition averages out to $72 for each of Genomic Health’s shares, at a premium of about 19%.
The deal, approved by both companies’ boards, is slated to close by the end of the year—with Exact Sciences shareholders expected to own about 91% of the combined company, while Genomic Health stockholders claim the rest.
“Exact Sciences is continuing to grow sales and expand adoption of Cologuard at a rapid pace, and Genomic Health’s Oncotype DX is the global standard of care to inform treatment decisions for women with breast cancer,” Exact Sciences CEO Kevin Conroy said in a statement.
“Together, with our collective resources and broader platform, we will be able to provide our existing tests to more people, while also accelerating the development and launch of future cancer diagnostic tests,” Conroy added.
Exact Sciences has pegged its Cologuard test with an available U.S. screening market of about $15 billion in people over 50 years old—and if the FDA approves its currently pending application for the 45 to 49 age group, that would potentially add another $3 billion.
According to the company, Cologuard’s revenue grew 94% year-over-year in the second quarter of 2019, driven in no small part by its marketing tie-up with Pfizer inked last August. Earlier this year, Exact Sciences saw increases of about 40% to 50% in the number of physicians ordering the test for the first time, compared to pre-Pfizer trends.
In a joint conference call with investors, Exact Sciences said the merger with Genomic Health wouldn’t have an immediate impact on its Big Pharma partnership, although they would certainly discuss longer-term opportunities.
“This transaction provides immediate value to Genomic Health stockholders through an upfront cash payment, as well as ownership in a combined company with enhanced financial strength and the commercial and R&D capabilities to continue to drive significant growth into the future,” said Genomic Health’s CEO, president and chairman, Kim Popovits. Their Oncotype IQ portfolio hasn’t slouched either, delivering over 19% year-over-year growth in overall revenue in this year’s second quarter.
The transaction will also merge their R&D teams, with the goal of identifying biomarkers across the top 15 deadliest cancers, in addition to plans to build upon Genomic Health’s lab presence in the San Francisco Bay Area.
By Conor Hale
Source: Fierce Biotech
The Serum Institute of India (SII) expects to soon receive World Health Organisation (WHO) emergency use authorisation for the Oxford University/AstraZeneca Covid-19 vaccine, produced for mid and low-income countries.
According to the deal, Sanofi will gain full global rights to Kymab’s fully human monoclonal antibody, KY1005 that attaches to OX40-Ligand and can potentially treat various immune-mediated diseases and inflammatory ailments.
Moderna tapped veteran Amgen executive Corinne Le Goff to spearhead that effort as chief commercial officer.