Labcorp Acquires Precision Oncology Testing Company PGDx for $450M

Labcorp Acquires Precision Oncology Testing Company PGDx for $450M
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Personal Genome Diagnostics Inc. (PGDx) is being acquired by testing giant Labcorp for $450M. PGDx offers the elio tissue complete diagnostic kit, which is cleared by the U.S. Food and Drug Administration (FDA) for pan-solid cancer comprehensive tumor profiling using a 500+ gene panel.  Because it is a kit, and incorporates proprietary analytical software, elio can be used at local labs and hospitals, furthering the application of precision medicine.

Labcorp says PGDx, and its portfolio of comprehensive liquid biopsy and tissue-based products, complements the testing giant’s existing liquid biopsy capabilities and expands its oncology portfolio of next-generation sequencing (NGS)-based genomic profiling capabilities. Labcorp’s global reach also provides the opportunity to bring this technology to pharmaceutical companies for oncology clinical trials,

“Labcorp’s leadership and scale in diagnostic testing and drug development, coupled with PGDx’s innovative technology and suite of capabilities, will accelerate access to personalized treatments for cancer patients globally,” said Adam Schechter, chairman and CEO of Labcorp.

He added that, “PGDx’s comprehensive portfolio of next-generation sequencing products will meaningfully add to our breadth of capabilities, in line with our strategic priority to lead in oncology. PGDx’s technology is well positioned in an important segment with strong growth prospects.”

Under the terms of the acquisition, Labcorp will pay $450 million in cash at closing and up to an additional $125 million on achieving future performance milestones.

PGDx’s offerings are expected to enhance the scalability of the technology and support long-term growth across Labcorp’s oncology portfolio, while also enabling Labcorp to seamlessly offer oncology testing at every stage of care.

Overall demand for noninvasive tumor profiling and therapeutic response monitoring is expected to grow significantly—largely thanks to technological advances in the identification of biomarkers using NGS, applicability to companion diagnostics and immuno-oncology solutions, and widespread government support.

With more than 70,000 employees, Labcorp serves clients in more than 100 countries. The company reported revenue of $14 billion in FY2020. Labcorp currently offers: OmniSeq INSIGHT an NGS-based, precision medicine test for solid tumors; IntelliGEN Myeloid, an NGS-based precision medicine test for myeloid malignancies;  Hereditary cancer genetic testing through VistaSeq; clonoSEQ, the first and only FDA-cleared assay for measurable, residual disease detection; and Resolution ctDx Lung, a non-invasive test for patients with non-small-cell lung cancer.

Founded in 2010, PGDx was established by researchers from Johns Hopkins University who are pioneers in cancer genome sequencing and liquid biopsy technologies—Luis Diaz and Victor Velculescu.

In April 2020, the PGDx elio portfolio of tissue-based and liquid biopsy comprehensive genomic solutions became the first FDA-cleared, clinical NGS diagnostic kit for comprehensive tumor profiling. PGDx’s elio tissue complete detects single nucleotide variants (SNVs) and small insertions and deletions (indels) in 500+ genes, select amplifications and translocations, and genomic signatures including microsatellite instability (MSI) and tumor mutation burden (TMB).

“We share Labcorp’s vision of improving health care decisions and outcomes through science, data and a continued commitment to innovation,” said Megan Bailey, CEO of PGDx. “For over a decade, PGDx has made great progress toward that goal. As a part of the Labcorp family, we have an incredible opportunity to broaden and accelerate our impact on cancer care through Labcorp’s global reach.”

PGDx 2021 revenues are expected to be approximately $22 million and projected revenues for 2022 are forecast to grow to nearly $40 million. The acquisition is expected to be slightly dilutive to Labcorp’s adjusted earnings per share over the next couple of years and provide returns in excess of its cost of capital by year five.