Last updated on July 30th, 2019 at 12:39 pm
Exact Sciences produces Cologuard, a noninvasive, at-home screening test that detects the presence of colon cancer in stool samples.
Genomic Health develops Oncotype IQ, a portfolio of genomic tests and services that check for various cancers, including breast and prostate.
Joining the two brands will provide a strong platform for growth, the companies said. As a combined entity, the companies expect to generate revenue of about $1.6 billion and gross profit of about $1.2 billion in 2020.
The deal is expected to close by the end of 2019.
Under the terms of the deal, Genomic Health stockholders will receive $27.50 in cash and $44.50 in shares of Exact Sciences stock.
The deal is expected to generate annualized cost synergies of about $25 million within the third full year, the companies said.
“Uniting the best minds and molecular diagnostics capabilities will advance the fight against cancer. Combining industry pioneers Exact Sciences and Genomic Health is a pivotal step toward building the leading cancer diagnostics company in the world,” said Kevin Conroy, chairman and chief executive officer of Exact Sciences. “Exact Sciences is continuing to grow sales and expand adoption of Cologuard at a rapid pace, and Genomic Health’s Oncotype DX is the global standard of care to inform treatment decisions for women with breast cancer. Together, with our collective resources and broader platform, we will be able to provide our existing tests to more people, while also accelerating the development and launch of future cancer diagnostic tests. We are excited to join together two teams who are united in their dedication to making a positive impact on patients’ lives.”
Exact Sciences reported Monday second-quarter revenue of $199.9 million, up from $102.9 million in the second quarter of 2018.
It reported a net loss of $38.4 million, or 30 cents per share, compared to $36.4 million, or 30 cents per share, in the second quarter of last year.
Exact Sciences’ test volume totaled 415,000 in the second quarter, an increase of 93% from the same period last year.
“The Exact Sciences team delivered another strong quarter, bringing us closer to our goal of capturing at least 40% share of the U.S. colorectal cancer screening market with Cologuard, from about 6% today,” Conroy said. “The foundation we’ve built with our team, infrastructure, and commercial scale positions Exact Sciences well for continued growth.”
In June, Exact Sciences opened a new 169,000-square-foot clinical laboratory and warehouse in Madison. The facility is expected to help bring the company’s total annual Cologuard processing capacity to 7 million tests, 3 million of which will be produced at its original lab in Madison. It has 2,300 employees, about three-fourths of whom work in Wisconsin.
Genomic Health reported second-quarter net income of $16 million, or 43 cents per share, up from $8.3 million, or 23 per share, for the second quarter of 2018.
“We are very pleased to join forces with Exact Sciences, a company and team with which we have a shared vision to revolutionize the way cancer is diagnosed and treated,” said Kim Popovits, chairman of the board, chief executive officer and president of Genomic Health. “Genomic Health has achieved incredible success over nearly two decades in pioneering cancer diagnostics, and the recent landmark TAILORx trial results set a new standard of care for the use of the Oncotype DX test for women with early-stage invasive breast cancer. This transaction provides immediate value to Genomic Health stockholders through an upfront cash payment, as well as ownership in a combined company with enhanced financial strength and the commercial and R&D capabilities to continue to drive significant growth into the future.”