Exact Sciences said today it has agreed to a pair of acquisitions designed to create a diagnostics powerhouse across multiple cancers.
In the larger acquisition, Exact Sciences said it agreed to acquire blood-based diagnostics developer Thrive Earlier Detection for up to $2.15 billion in cash and stock. Exact Sciences also said it completed a $410 million cash acquisition of Base Genomics, adding Base’s DNA methylation analysis technology, designed to detect cancer at its earliest stages.
The deal for Thrive will add its early-stage CancerSEEK screening test to Exact Sciences’ offerings, which include its tech platform, clinical organization, and commercial infrastructure.
CancerSEEK is a DNA- and protein-based liquid biopsy designed to detect cancer by analyzing eight tumor specific genomic mutations in circulating tumor DNA (ctDNA) and cancer-associated protein biomarkers in plasma to identify abnormalities that are common across multiple cancers.
“The acquisition of Thrive is a giant leap toward ensuring blood-based, multi-cancer screening becomes a reality and eventually, the standard of care. We couldn’t be more excited that Exact Sciences will be at the forefront of this incredible opportunity to serve patients,” Kevin Conroy, Chairman and CEO of Exact Sciences, said in a statement. “We have long respected the Thrive team for their rigorous scientific approach, having participated in both funding rounds as an investor.”
Exact Sciences said its R&D groups, specializing in clinical and evidence generation capabilities, will be joined with Thrive’s R&D groups specializing in next- generation sequencing, Bioinformatics, and liquid biopsy to form a combined research team capable of drawing upon Exact’s database of proprietary biomarkers, blood sample biorepository, and financial strength. Both companies have teamed up with top-tier research partners that include Mayo Clinic and Johns Hopkins University.
“Our team has made significant progress toward our mission and we are eager to collaborate with and benefit from Exact Sciences’ expertise, and believe that together we will enable broader, quicker adoption of our test,” added David Daly, CEO of Thrive. “With the support of our ongoing partnership with Johns Hopkins University, we are energized to contribute meaningfully to our shared mission of advancing the fight against cancer and providing life-changing answers to patients in need.”
In April, researchers from Thrive joined study collaborators from Johns Hopkins University School of Medicine and Geisinger Health to publish a study in Science that reported results from 10,006 women between ages 65–75 without a prior cancer history who were screened via an early version of CancerSEEK developed in 2016.
The study, also known as DETECT-A (Detecting cancers Earlier Through Elective mutation-based blood Collection and Testing), showed that in 9,911 women who completed the study, incorporating CancerSEEK more than doubled the percentage of cancers—from 25% to 52%—detected in women who were diagnosed compared to screening through current standard-of-care tests alone.
“We believe this acquisition further catalyzes the entire liquid biopsy market, and view expected commercial synergies upon launch of CancerSEEK given EXAS‘ large, established sales team and relationships with primary care physicians and offices throughout the country,” Puneet Souda, managing director, Life Science Tools and Diagnostics with SVB Leerink, wrote in a research note this morning.
$257M Financing
In July, three months after the DETECT-A study was published, Thrive completed $257 million in Series B financing whose proceeds were intended to advance development of CancerSEEK.
Thrive has sought to incorporate CancerSEEK into routine medical care, where it can detect more cancers at earlier stages. Exact Sciences said it can achieve that goal by applying its clinical and regulatory teams, scaled laboratory and IT capabilities, primary care sales team and direct-to-consumer marketing experience to support the development of CancerSEEK and help it achieve commercial success.
In doing so, Exact Sciences added, it can advance to leadership in a market segment it sized up as potentially exceeding $25 billion by showing it could detect the deadliest cancers at earlier, more treatable stages.
Exact Sciences has developed the marketed Cologuard test for colorectal cancer, which won FDA approval in August 2014 and has since gained inclusion in the American Cancer Society’s (2018) colorectal cancer screening guidelines and the recommendations of the U.S. Preventive Services Task Force (2016) and National Comprehensive Cancer Network (2016).
Cologuard is indicated to screen adults 45 years of age and older who are at average risk for colorectal cancer by detecting certain DNA markers and blood in the stool
Exact Sciences has also developed the Oncotype portfolio of genomic tests designed to guide treatment for a variety of cancers based on the company’s Oncotype IQ Genomic Intelligence Platform. They include Oncotype DX® tests for forms of breast and prostate cancer, as well as Oncotype MAP, a pan-cancer tissue test. Oncotype was developed by Genomic Health, which was acquired by Exact Sciences last year for $2.8 billion.
Exact Sciences agreed to pay up to $2.15 billion for Thrive. Most of that amount—$1.7 billion—will be paid at the close of the deal, of which 65% ($1.105 billion) will consist of Exact Sciences common stock and the remaining 35% ($595 million) being cash.
Thrive would receive an additional $450 million tied to achieving milestones related to developing and commercializing a blood-based, multi-cancer screening test.
Exact Sciences added that its own DNA methylation expertise and multi-marker approach would be complemented by the addition of Base Genomics’ DNA methylation technology, which is designed to analyze DNA methylation and mutations in a single sample.
Souda of SVB Leerink agrees: “DNA methylation analysis has proven to be a useful approach in improving sensitivity and tissue of origin identification in early detection assays, though we note that Thrive’s CancerSEEK assay does not currently use the technology, and rather pairs their test result with a PET scan to improve performance.”
The boards of Exact Sciences and Thrive have approved the acquisition deal, which is expected to close during the first quarter of 2021 subject to regulatory approval and satisfaction of other conditions.
Exact Sciences announced the Thrive and Base Genomics deals on the same day it announced third quarter 2020 results. The company’s revenue jumped during Q3 to $408.4 million, nearly double the $218.8 million reported in the year-ago quarter. However, the company finished Q3 with a net loss of $219.9 million, or $1.46 per share, compared to a net loss of $40.5 million, or $0.31 per share in the third quarter of 2019.
