As can­cer de­tec­tion com­pa­nies thrive, Ex­act Sci­ences looks to con­sol­i­date by spend­ing $2.8B to ac­quire peer Ge­nom­ic Health

As pre­dict­ed by Bloomberg, can­cer di­ag­nos­tics com­pa­ny Ex­act Sci­ences is buy­ing peer Ge­nom­ic Health in a $2.8 bil­lion cash-and-stock deal. 

Ex­act Sci­ences’ flag­ship col­orec­tal can­cer test Co­lo­guard will com­ple­ment Ge­nom­ic Health’s On­co­type DX, a test de­signed to help doc­tors de­ter­mine the best course of treat­ment for women with breast can­cer. To­geth­er the tests help in­form treat­ment de­ci­sions in col­orec­tal, breast and prostate can­cer, rep­re­sent­ing rough­ly 40% of all sol­id tu­mor in­ci­dence, the com­pa­nies said.

Last year, Ex­act Sci­ences en­list­ed Pfiz­er as a US mar­ket­ing part­ner to ex­pand Co­lo­guard adop­tion. The tie-up has ramped up the use of the test — in the sec­ond quar­ter of 2019, Co­lo­guard rev­enue grew 94% year-over-year.

“We re­main Out­per­form on EXAS with our view that Co­lo­guard is still high­ly un­der-pen­e­trat­ed in a pa­tient pop­u­la­tion man­age­ment pegs at 101M where EXAS could de­liv­er 40%+ pen­e­tra­tion or $6B+ in rev­enue longer-term, from just ~5% pen­e­tra­tion to­day,” Leerink an­a­lysts wrote in a note in May.

Ge­nom­ic Health re­port­ed a 19% year-over-year jump in sec­ond-quar­ter rev­enue and es­ti­mates its On­co­type DX suite of prod­ucts in on­col­o­gy and urol­o­gy have a to­tal avail­able mar­ket of $2 bil­lion.

Com­bined un­der one roof, the com­pa­nies are look­ing to take ad­van­tage of economies of scale, as ri­vals loom large. South San Fran­cis­co biotech Freenome raised $160 mil­lion last week to con­duct a piv­otal tri­al for its blood test for col­orec­tal can­cer. Mean­while, Il­lu­mi­na spin­off Grail has raised $1.5 bil­lion to work on a mul­ti-can­cer de­tec­tion test and Third Rock-backed Thrive has scored $110 to build its liq­uid biop­sy plat­form for ear­ly can­cer de­tec­tion.

Kevin Con­roy Ex­act Sci­ences

“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,” Ex­act Sci­ences chief Kevin Con­roy said in a state­ment on Mon­day. 

“Though we be­lieve the pipeline ben­e­fits, po­ten­tial for kit­ted prod­ucts, ex­pan­sion in­to in­ter­na­tion­al mar­kets…and ex­pe­ri­ence with FDA are win­ning as­pects of the deal; EXAS is like­ly to get more in­vestor ques­tions on the near-mid term strate­gic ra­tio­nale and $25M in 3rd year syn­er­gies,” Leerink an­a­lysts wrote in a note.

On Sat­ur­day, Bloomberg re­port­ed the deal was in­com­ing, cit­ing peo­ple fa­mil­iar with the mat­ter.

Ex­act Sci­ences shares $EXAS closed up about 1.6% on Fri­day at $117.92, while Ge­nom­ic Health’s stock $GHDX closed up 5.5% at $68.66.

Un­der the deal, which is ex­pect­ed to close at the end of the year, Ge­nom­ic Health stock­hold­ers will re­ceive $27.50 in cash and $44.50 in shares of Ex­act Sci­ences stock. If con­sum­mat­ed, Ex­act Sci­ences share­hold­ers are set to own about 91% of the com­bined com­pa­ny, while Ge­nom­ic Health stock­hold­ers will be left with the rest. Next year, the com­bined en­ti­ty ex­pects to gen­er­ate rev­enue of ap­prox­i­mate­ly $1.6 bil­lion and a gross prof­it of ap­prox­i­mate­ly $1.2 bil­lion. 

So­cial im­age: Ex­act Sci­ences

A New Fron­tier: The In­ner Ear

What happens when a successful biotech venture capitalist is unexpectedly diagnosed with a chronic, life-disrupting vertigo disorder? Innovation in neurotology.

That venture capitalist was Jay Lichter, Ph.D., and after learning there was no FDA-approved drug treatment for his condition, Ménière’s disease, he decided to create a company to bring drug development to neurotology. Otonomy was founded in 2008 and is dedicated to finding new drug treatments for the hugely underserved community living with balance and hearing disorders. Helping patients like Jay has been the driving force behind Otonomy, a company heading into a transformative 2020 with three clinical trial readouts: Phase 3 in Ménière’s disease, Phase 2 in tinnitus, and Phase 1/2 in hearing loss. These catalysts, together with others in the field, highlight the emerging opportunity in neurotology.
Otonomy is leading the way in neurotology
Neurotology, or the treatment of inner ear neurological disorders, is a large and untapped market for drug developers: one in eight individuals in the U.S. have moderate-to-severe hearing loss, tinnitus or vertigo disorders such as Ménière’s disease.1 With no FDA-approved drug treatments available for these conditions, the burden on patients—including social anxiety, lower quality of life, reduced work productivity, and higher rates of depression—can be significant.2, 3, 4

Patrik Jonsson, the president of Lilly Bio-Medicines

Who knew? Der­mi­ra’s board kept watch as its stock price tracked Eli Lil­ly’s se­cret bid­ding on a $1.1B buy­out

In just 8 days, from December 6 to December 14, the stock jumped from $7.88 to $12.70 — just under the initial $13 bid. There was no hard news about the company that would explain a rise like that tracking closely to the bid offer, raising the obvious question of whether insider info has leaked out to traders.

Endpoints Premium

Premium subscription required

Unlock this article along with other benefits by subscribing to one of our paid plans.

Short at­tack­er Sahm Ad­ran­gi draws crosshairs over a fa­vorite of Sanofi’s new CEO — with PhII da­ta loom­ing

Sahm Adrang Kerrisdale

Kerrisdale chief Sahm Adrangi took a lengthy break from his series of biotech short attacks after his chief analyst in the field pulled up stakes and went solo. But he’s making a return to drug development this morning, drawing crosshairs over a company that’s one of new Sanofi CEO Paul Hudson’s favorite collaborators.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 70,600+ biopharma pros reading Endpoints daily — and it's free.

Civi­ca and Blue Cross Blue Shield launch new ven­ture to low­er gener­ic prices

Five years after Martin Shkreli put a smug face to the volatile prices companies can charge even for generic drugs, payers and governments are coming up with outside-the-box solutions.

The latest fix is a new venture from the Blue Cross Blue Shield Association, 18 of its members and Civica, the generics company founded in 2018 by hospitals fed up with high prices for drugs that had long-since lost patent protection. While Civica focused on drugs that hospitals purchased, the new company will aim to lower prices on drugs that, like Shkreli’s Daraprim, are purchased by individuals.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 70,600+ biopharma pros reading Endpoints daily — and it's free.

Merck Invests in State-Of-The-Art Biotech Development Facility in Switzerland

Mer­ck KGaA match­es lofty R&D goals with €250M in­vest­ment in­to a new clin­i­cal man­u­fac­tur­ing site in Switzer­land

As Merck KGaA strives to prove itself as a capable biopharma R&D player, it has begun construction on a €250 million facility dedicated to developing and manufacturing drugs for use in clinical trials.

The German drugmaker chose a location at Corsier-sur-Vevey, Switzerland, where it already has a commercial manufacturing site, in order to “bridge together research and manufacturing.”

“This investment in the Merck Biotech Development Center reflects our commitment to speed up the availability of new medicines for patients in need, and confirms the importance of Switzerland as our prime hub for the manufacturing of biotech medicines,” CEO Stefan Oschmann said at the groundbreaking ceremony, according to a statement.

Breast can­cer ap­proval in tow, As­traZeneca, Dai­ichi armed an­ti­body scores in key gas­tric can­cer study

AstraZeneca kicked off Monday with a flurry of good news. Apart from unveiling positive results on its stroke trial testing its clot-fighter Brilinta, and welcoming its experimental IL-23 inhibitor brazikumab back from Allergan — the British drugmaker also disclosed some upbeat gastric cancer data on its HER2-positive oncology therapy it is collaborating on with Daiichi Sankyo.

Buoyed by the performance of its oncology drugs, last March AstraZeneca chief Pascal Soriot bet big to partner with Daiichi on the cancer drug, with $1.35 billion upfront in a deal worth up to roughly $7 billion. Roughly 8 months later, as 2019 drew to a close, the FDA swiftly approved the drug — trastuzumab deruxtecan — for use in breast cancer, months ahead of the expected decision date.

Sor­ren­to shrugs off an anony­mous pri­vate eq­ui­ty group’s $1B of­fer to buy the com­pa­ny

San Diego-based Sorrento Therapeutics isn’t going the M&A route — at least not today.

The biotech caused quite a stir when it put out word a few weeks ago that an unidentified private equity group was bidding a billion dollars-plus for the company. The news drove a quick spike in the company’s share price as investors hooked up for the ride — that didn’t happen.

The update sparked a 5% drop in the share price $SRNE ahead of the bell. It’s now trading just above $4, without any evidence that the $7 price looked like it was firm.

UP­DAT­ED: Ab­b­Vie do­nates $1M+ of the HIV drug that Chi­na is now rec­om­mend­ing for coro­n­avirus treat­ment

AbbVie is donating more than $1 million worth of an HIV drug to help combat the fast-spreading coronavirus outbreak in China, the company announced on Friday.

China’s National Health Commission has suggested Aluvia, a pill containing lopinavir and ritonavir, as one of two possible treatments for the symptoms of the virus currently known as 2019-nCoV in the absence of effective antiviral medications. The other part is nebulized alpha-interferon.

UP­DAT­ED: Ab­b­Vie and Al­ler­gan di­vesti­tures are in, and an old As­traZeneca drug comes home

When AbbVie announced their $63-billion Allergan acquisition last year, executives acknowledged the two companies would have to divest some drugs to satisfy regulators. The two main assets in discussion have now been sold off – and one of them is coming home.

AstraZeneca will acquire brazikumab, Allergan’s late-stage IL-23 candidate for Crohn’s disease and ulcerative colitis. The drug was originally developed by AstraZeneca’s defunct subsidiary MedImmune, in collaboration with Amgen. Allergan licensed it for $250 million upfront and $1.27 billion in milestones.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 70,600+ biopharma pros reading Endpoints daily — and it's free.