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The silent wave of sample-to-answer POC acquisitions

September 17, 18
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CERYX - Read time: 3 minutes, 30 seconds

What’s happening?

Over the last 5 years there has been a string of exits (Initial Public Offering or acquisitions) of companies that developed sample-to-answer systems for highly complex tests. The median price paid was close to $200M and the aggregate value has been north of $5.5Bn.

Acquiror

Acquired

Value [M USD]

Date announced

Illumina

Advanced Liquid Logic

 $              96

23-Jul-13

BioMerieux

BioFire

 $           450

3-Sep-13

Roche

Iquum

 $           175

7-Apr-14

Initial Public Offering

BioCartis

 $           645

24-Apr-15

Perkin Elmer

Vanadis

 $              90

26-Jan-16

Danaher

Cepheid

 $        4,000

6-Sep-16

Qiagen

STAT-Dx

 $           191

31-Jan-18

Bruker

Hain

 Not disclosed

24-Apr-18

 

What do we make of it?

This is part of a broader trend in Diagnostics: the push to develop and launch fully automated and integrated workflows (“sample-to-answer”) for highly complex tests using dedicated platforms. The intent in launching integrated workflows is to make previously highly complex tests simple (CLIA waived and with regulatory approval), fast (on demand sample processing, no batching), and cost effective (non-expert labor) enabling more laboratories to provide patients and physicians with molecular diagnostics. Don’t take our word for it… read the value proposition statements of the acquirors:

 

 

 

 

 

 

Why do we find it interesting?

 

For the industry

The push towards simple, fast and cost-effective tests is driven by two of the fundamental, and sometimes overseen, trends driving innovation in the diagnostic industry: (1) that workflows tend to become integrated by clinically dedicated platforms, and (2) once workflows are simple, fast and cost effective, test menus tend to become broader to capture higher margin segments.

 

PCR matured along these lines, starting with non-integrated workflows on research and development instrumentation with highly trained and dedicated staff.  After Cepheid pioneered a clinical instrument that provided a sample-to-answer workflow for a clinical PCR test local hospital lab began adopting previously highly complex molecular diagnostics.  Today, Alere provides a CLIA-waived PCR test designed for the doctor’s office. As customers adopt these products, companies develop technologies to offer a broader menu of conditions on integrated workflows. In essence, clinical labs prefer not to use general purpose R&D instruments and have lots of human in the loop to process a sample.  

 

These companies are pushing the limits of the number of different targets that can be interrogated with multiplex PCR, providing more insights per sample for existing conditions, and charging more per sample or addressing conditions that can command higher margins per sample. As new entrants threaten incumbents, they may be acquired. As other players catch up, incumbents squeeze more content per sample to access higher margin segments. Since Cepheid launched in 1996, the industry has pushed the boundaries of PCR multiplex from a few targets to ~40 targets and enabled numerous clinical PCR tests.

 

The bigger picture

With Precision Medicine assays requiring hundreds to thousands of targets to answer clinical questions, the bigger question is how to provide a workflow that is as easy to operate as a Cepheid system and has the ability to look at 100,000s of targets, not 10s. Such a system would leapfrog the incumbents that have spent at least $5.5Bn in acquisitions over the last 5 years, bring sample-to-answer diagnostics to the next level and provide great value to the final customer and patients.  

 

That’s our vision and what we are working on at BioCeryx.