ExonHit Backs Out of $22.5M Agreement to Acquire RedPath Integrated Pathology

Companies were unable to agree to new financial terms following PathFinderTG reimbursement issues.

ExonHit Therapeutics has backed out of its planned acquisition of diagnostics firm RedPath Integrated Pathology following uncertainty about whether Medicare contractor Highmark Medicare Services would continue coverage of the latter’s PathFinderTG® pancreatic cancer test.

The agreement for ExonHit’s $22.5 million cash and shares acquisition of RedPath was announced in April, but in June Highmark announced its intention to discontinue reimbursement of the PathFinderTG pancreatic cancer test unless RedPath could provide significant data upholding its utility.

In September Highmark admitted that an influx of positive comments from clinical users had led it to agree to continue coverage of the PathFinderTG pancreatic cancer test, as a “reasonable and necessary” service for use in second-line diagnosis in cases of pancreatic cysts and masses for which first-line diagnostic evaluation has been inconclusive. However, Highmark stressed that it will only cover the PathFinderTG pancreatic cancer test, and no other diagnostic utilizing the PathFinderTG technology. For its part, RedPath will have to maintain and populate a Medicare-specific database comprising data on all Medicare patients for which PathfinderTG technology is utilized as a diagnostic tool.

ExonHit had planned to use the RedPath acquisition as a springboard into the commercial U.S. diagnostics market. However, Highmark’s decision to restrict reimbursement to the pancreatic test means ExonHit and RedPath have been “unable to agree on revised financial terms and conditions,” ExonHit notes.

RedPath is a cancer-focused molecular diagnostic company operating a CLIA-licensed, CAP-certified laboratory. The firm’s DNA-based PathFinderTG technology has been developed as a diagnostic tool to help in the diagnosis of cancer in cases for which traditional testing methods have provided only indeterminate or indefinite results. The PathFinderTG molecular diagnostic for pancreatic cancer was RedPath’s first to be developed, launched, and earn reimbursement. RedPath is also expecting to launch a second diagnostic assay designed to differentiate new primary cancer from metastatic tumors. It says the PathFinderTG technology can differentiate between metastatic, synchronous, and recurrent tumors in a range of organs, including breast, lung, liver, endometrium, and ovary.