Thursday, April 27, 2023

Quest Acquires Haystack Oncology (Liquid Biopsy, MRD); Up to $450M

Summary: Quest Diagnostics is set to acquire Haystack Oncology to enhance its oncology portfolio with Haystack's advanced liquid biopsy technology. Haystack's LBx tech is for early detection of residual or recurring cancer. Haystack's MRD testing should be synergistic with Quest's existing portfolio of oncology, genomics, and pathology services.


In a press release, April 27, 2023, Quest announces it will acquire Haystack Oncology, a sensitive liquid biopsy technology suited for MRD - minimal residual disease diagnostics.

In particular, the technology was validated in a 2022 NEJM report, used in Stage II colon cancer, Tie et al. here. (Op ed by Mantagut & Vidal, here.)

The deal is $300M in cash now and up to $150M based on future milestones.

See also a subscription discussion at Genomeweb here. Open access note here.  See an earlier (subscription) review of Haystack, 11/2022, at Genomeweb here.

Overall, with other news, the stock fell today 5% ($147, $139).


Detailed summary of press release (GPT4):

Quest Diagnostics, a leading provider of diagnostic information services, has announced a definitive agreement to acquire Haystack Oncology, an early-stage oncology company focused on minimal residual disease (MRD) testing. The all-cash equity transaction is set to enhance Quest's oncology portfolio by adding Haystack's cutting-edge liquid biopsy technology.

Haystack's technology is designed to aid in the early, accurate detection of residual or recurring cancer, thereby informing therapy decisions more effectively. Minimal Residual Disease (MRD) testing is a rapidly growing category of liquid biopsy tests that detect circulating tumor DNA (ctDNA) in the bloodstream of patients post-surgery and treatment for cancer. Haystack's ctDNA-based technology, developed over 20 years of research and development by esteemed experts from Johns Hopkins University, is specifically designed for MRD detection.

The merger aims to significantly improve personalized cancer care. By combining Haystack's highly sensitive MRD cancer-detection technology with Quest's broad expertise and scale in oncology, genomics, and pathology, the merged entity is expected to lead in the fast-growing MRD testing category. This includes solid tumor sequencing, specimen collection, and EHR connectivity. The development efforts post-acquisition will initially focus on MRD tests for colorectal, breast, and lung cancers.

After the acquisition closes, Quest plans to adapt the MRD test developed at Haystack as the foundation for new clinical lab services, which are expected to be available beginning in 2024. The combined strengths of Haystack's liquid biopsy technology with Quest's capabilities in screening, pathology, and sequencing aim to broaden access to MRD insights, thereby potentially improving long-term outcomes for cancer patients.

In financial terms, Quest will pay $300 million in cash at closing, net of cash acquired, and up to an additional $150 million on achieving future performance milestones. The acquisition is expected to be modestly dilutive to earnings over the next three years but accretive by 2026. The transaction is anticipated to be completed in the second quarter, subject to customary regulatory review.