Myriad Genetics said today it will acquire Counsyl for $375 million in cash and stock, in a deal designed to expand the buyer’s presence in women’s health genetic testing.
Myriad said the acquisition will enable the company to position itself as a single source of genetic tests for the 40,000 physicians in the women’s health market—in part by entering the high-growth reproductive testing market, which it pegs as expanding to $1.5 billion by its fiscal year ending June 30, 2023, based on double-digit annual growth.
By FY 2023, Myriad projects that 3.5 million reproductive genetic tests will be performed in the U.S., up from the 2.2 million the company estimates for its current fiscal year, set to end June 30. Those 2.2 million tests, Myriad said, will consist of approximately 1.3 million non-invasive prenatal screening tests and approximately 900,000 carrier screening tests.
Over the last 12 months, South San Francisco, CA-based Counsyl has performed over 280,000 reproductive genetic tests, generating more than $134 million in revenue.
Counsyl offers the Foresight expanded carrier screening test, which covers more than 175 clinically actionable conditions with accuracy across ethnicities of greater than 99.99% for most genes on the panel, the company says. Foresight also offers what Myriad and Counsyl say is the highest detection rate of any commercially available test on the market.
Also offered by Counsyl is the Prelude non-invasive prenatal screening test, which according to the company has the lowest inconclusive rate of any product on the market.
“The Counsyl management team has a remarkable track record of success,” Myriad President and CEO Mark C. Capone, said in a statement. “By offering Counsyl’s best-in-class reproductive testing products in conjunction with Myriad’s leading hereditary cancer tests, we are well positioned to be the premier women’s health genetic testing company.”
Myriad said it expects to expand commercial insurance reimbursement for both Foresight and Prelude. The company noted that the American College of Obstetricians and Gynecologists recently broadened its professional guidelines for expanded carrier screening, creating a new category one current procedural terminology (CPT) code for a more comprehensive panel of genes. Myriad also foresees expanded commercial coverage in non-invasive prenatal screening for average-risk women, expanded Medicaid reimbursement, and reimbursement for microdeletions.
In addition, Myriad plans to combine its approximately 225 sales representatives with Counsyl’s approximately 80 sales representatives. The combined sales force would be the largest among companies focused on women’s molecular diagnostics, Myriad said, and will provide a three-fold increase in physician reach for reproductive testing.
However, Myriad cautioned that it expects to generate cost-cutting through synergies—such as Myriad using across its entire portfolio Counsyl’s patient-centric software tools and electronic medical record integration.
Last year, Counsyl eliminated its oncology sales team, accounting for 5% of its workforce—24 people, according to MedCity News—in a restructuring intended to reposition the company as a leader in women’s health. But in November 2017, Counsyl raised $80 million in financing from Perceptive Advisors, with proceeds intended to fund development of tests for expanded carrier screening, non-invasive prenatal screening, and hereditary cancer screening.
“We are excited to be joining the global leader in personalized medicine to create the largest women’s health genetic testing company in the world,” added Counsyl CEO Ramji Srinivasan. “As our physicians increasingly look for a single source of genetic testing, we can leverage our collective strengths to provide the highest quality genetic tests with a seamless customer experience.”
Counsyl will become a wholly-owned subsidiary of Myriad upon completion of the deal, which is expected to occur during the buyer’s first fiscal quarter of July-September 2018, subject to customary closing conditions and regulatory approvals.
Myriad said it intends to fund the transaction through cash on hand, an existing revolving credit facility and the issuance of common stock. shareholders having the right to receive up to 25 percent of that consideration in Myriad common stock based on a trailing 30-day average share price. The number of shares delivered to former Counsyl shareholders will not exceed 3 million shares.
At the end of the fiscal third quarter, Myriad had cash and cash equivalents of $209 million and $231 million in availability on its revolving credit facility.