The biotech industry is beginning to transition from one focused principally on treating sickness to one that is promoting wellness. The era of personalized medicine is upon us—one that emphasizes predictive and preventive medicine.
Diagnostics companies have been successfully riding this new paradigm. The Burrill Diagnostics Index, for example, is up 43% year-to-date. In addition, we are seeing companies focused in the personalized medicine space beginning to file for IPOs and test the appetite of investors for this new market opportunity.
Genoptix, a company providing specialized laboratory services to hematologists and oncologists, raised $85 million in October pricing its $5 million share offering at $17. This was above its proposed $14–$16 range. Investors liked the company’s prospects, and in the first day of trading after its offering, the firm’s share value jumped almost 50%.
As personal genome sequencing evolves, several groups are racing to find cheaper ways to map an individual’s DNA. The nonprofit X Prize Foundation has offered a $10 million prize for the first team that can sequence the DNA of 100 people within 10 days.
Another pioneer in the field, George Church, Ph.D., professor of genetics at Harvard Medical School, is working on a DNA test that would identify one percent of a person’s genome for $1,000. Another one of his goals is his Personal Genome Project (www.arep.med.harvard.edu/PGP), which aims to integrate data for genomics, environment, and phenotype in more than 100,000 volunteers.
The eventual capability of sequencing the entire human genome for $1,000 continues to draw attention to pharmacogenomics and personalized medicine. Although the U.S. genomics market is still primarily driven by qRT-PCR technologies, DNA microarrays, and next-generation DNA sequencing, it is growing at a fast pace and is expected to double to reach $3.7 billion by 2012.
As drug companies move closer to a personalized medicine model, genomics firms have become attractive targets for deal- making and acquisition. M&A activity in the personalized arena has been high, so far this year, with five deals greater than $1 billion in value.
Innovation in molecular diagnostics and the promise of personalized medicine is driving values upward into the range of those for therapeutics. At the same time, smaller players are realizing the importance of gaining marketing/sales infrastructure and expertise via an established company.
The headline diagnostic transaction in both Q1 and Q2 was Inverness Medical Innovations’ $1.48 billion purchase of BioSite after a protracted bidding war with Beckman Coulter. Biosite commercializes proteomics discoveries for the advancement of medical diagnosis. Its Triage® rapid diagnostic tests are used in more than 70% of U.S. hospitals and in more than 60 international markets.
Not to be outdone, Netherlands-based Qiagen acquired U.S. molecular diagnostics company Digene for $1.6 billion to combine its portfolio of sample and assay technologies and molecular diagnostic testing with Digene’s expertise in HPV-targeted molecular diagnostic testing. Digene’s HPV test product was both FDA approved and CE marked, a key driver of the acquisition. The two companies were already collaborating on a platform for the testing of sexually transmitted disease.
The biggest buyer was Roche Diagnostics, which purchased 454 Life Sciences in Q1 2007 for $154.9 million followed by BioVeris for $600 million and NimbleGen for $272.5 million in Q2 ’07.
Another huge deal was the $6 billion merger in May of Hologic and Cytyc in a cash and stock transaction that created a $10 billion global leader in women’s healthcare, a market that has traditionally been separated by diagnosis and therapy. The combined company is expected to gross $1.7 billion in sales each year and will bring together Hologic’s oncology and osteoporosis screening products with Cytyc’s ThinPrep test and endometrial ablation system for excessive menstrual bleeding.
The two other deals this year that exceeded $1 billion in value were Siemens’ acquisition of Dade Behring for $7 billion, and Quest Diagnostics’ takeover of Ameripath, a diagnostic testing company, for $2 billion.
Expect to see more activity as the personalized medicine paradigm heats up in the coming months.