Conceptual image for viral ethiology of prostate cancer

Bio-Techne has agreed to acquire Exosome Diagnostics for up to $575 million, in a deal intended to position the buyer as a leader in non-invasive liquid biopsies and a developer of diagnostics for chimeric antigen receptor T cell (CAR-T) cancer therapies.

Headquartered in Waltham, MA, Exosome Diagnostics is a developer of biofluid-based tests for cancer and other diseases, focused on developing and marketing novel diagnostics in pathologies with either difficult or no current diagnostic solutions. The company focuses on diagnostics for prostate, bladder, kidney, and breast cancers, as well as glioblastoma and other cancers.

The company says its diagnostics are designed to harness the power of exosomes that contain RNA, DNA, and proteins from their cell of origin, found within biofluids such as serum, plasma, urine, cerebrospinal fluid, and saliva.

Exosome Diagnostics was founded to commercialize discoveries of its CSO Johan Skog, Ph.D., who led a 2008 study that concluded that tumor-derived microvesicles may provide diagnostic information and aid in therapeutic decisions for cancer patients through a blood test.

In 2016, Exosome Diagnostics developed its first diagnostic, the urine-based test ExoDx Prostate(IntelliScore) (EPI), designed to assist physicians in determining the need for a prostate biopsy in patients with an ambiguous PSA test result. According to the company, the non-invasive nature of EPI and the ability to select for exosomes derived from specific tissues has made the technology a valuable diagnostic tool in cancers where the primary site is not easily accessible for conventional analysis.

In addition to EPI, which is available to healthcare providers for clinical use, Exosome Diagnostics has also developed for research use only ExoDx Lung(ALK), a plasma-based liquid biopsy assay that detects the EML4-ALK mutation and is highly specific for distinct EML4-ALK fusion transcripts.

Exosome Diagnostics says it has protected its technology through approximately 200 filed patents and applications. The company has raised $112.1 million in private financing, according to Crunchbase. Most recently in July 2017, the company completed a $30 million Series C financing that was led by Forbion Capital Partners and Tiger Management, which with NGN have served as Exosome Diagnostics’ main investors.

Bio-Techne President and CEO Charles R. Kummeth said in a statement that Exosome Diagnostics complements Bio-Techne’s molecular pathology business, Advanced Cellular Diagnostics (ACD), which he said remains a robust growth segment for the buyer.

‘Multiple Synergies’

“There are multiple synergies with our core company, including our 40-year track record of developing and commercializing the highest-quality biologicals, especially in the field of cytokines,” Kummeth stated. “We will leverage our strong brand and market leadership position to extend these core competencies to the science of exosomes and cell free-DNA (cfDNA) biology and their utility as novel diagnostic tools.

“The non-invasive nature of this technology creates a new process for liquid biopsies and is likely to transform medical practice,” Kummeth predicted.

He added that the acquisition was strategic for Bio-Techne since the company plans to expand its presence in the CAR-T cell marketplace, leveraging its critical mass in cell culture-focused product lines.

“Following this acquisition, the Company now sells solutions to the entire workflow of cancer: research, diagnostics, and therapeutics,” Kummeth said.

Bio-Techne has agreed to pay $250 million for Exosome Diagnostics, as well as up to $325 million tied to achieving earnings before interest, taxes, and amortization (EBITA) milestones.

“Specifically, if EBITA in 2020 is between $45 million and $58 million or greater, the securityholders [of Exosome Diagnostics] will receive an additional payment of up to $250 million,” Bio-Techne disclosed today in a regulatory filing. “In addition, in 2022 if EBITA for a new instrument product is between $54 million and $70 million or greater, and EBITA for the remaining business is between $150 million and $190 million, the securityholders will receive additional consideration of up to $45 million and $30 million, respectively.”

Bio-Techne said it plans to finance the deal through a combination of cash on hand and a revolving line of credit facility that the company said it expects to obtain before the closing of the acquisition, which is expected to occur in July or early August of this year.

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