Agilent Revs up Precision Medicine Push with Planned Resolution Bioscience Acquisition

Electronics Firm Agilent To Sell Chip Unit For $2.66 Billion
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In a planned acquisition aimed at expanding its next-generation sequencing (NGS)-based capabilities in cancer diagnostics, Agilent Technologies announced yesterday it has agreed to buy Resolution Bioscience for up to $695 million.

Once rolled into the company, Resolution Bioscience’s liquid biopsy platform will complement Agilent’s existing tissue-based companion diagnostics business. In total, Agilent says the addressable market for these diagnostic tests is expected to be $3 billion by 2025, and double that by the end of the decade.

“By adding Resolution Bioscience’s liquid biopsy-based diagnostic technologies to our portfolio, we are strengthening Agilent’s offering to our biopharma customers and boosting the growth of our diagnostics and genomics business,” Agilent president and CEO Mike McMullen said in a statement.

Resolution’s patented circulating cell-free DNA (cfDNA) NGS analysis test has two channels for penetrating the burgeoning market for non-invasive cancer testing—as both a service for centralized Clinical Laboratory Improvement Amendments (CLIA)-certified testing labs and as a distributable kit for clinical oncology testing.

The Resolution Bioscience homologous recombination deficiency (HRD) assay is designed to be performed on a standard blood sample and detects actionable mutations in genes for identifying cancer. The assay has received the FDA’s Breakthrough Device Designation.

In February 2020, Resolution Bioscience announced a commercial partnership with LabCorp to enable broad access to the Resolution ctDx Lung test that detects actionable mutations in genes associated with non-small cell lung cancer (NSCLC). And in January of this year, Resolution Bioscience agreed to leverage its ctDx liquid biopsy platform by partnering with Mirati Therapeutics to identify patients who may benefit from Mirati’s investigational KRAS G12C inhibitor to treat NSCLC.

Analyst: Deal to help drive growth

One analyst appeared to agree with McMullen’s view of the market potential of combining the companies’ technologies.

“The acquisition is complementary to Agilent’s pharmDx portfolio, its IHC and FISH capabilities and its CDx [companion diagnostics] service. We believe the deal will help drive growth in the near-term with Resolution’s ctDx NSCLC product despite what appears to be a competitive market in therapy management,” Puneet Souda, managing director, life science tools and diagnostics with SVB Leerink, wrote in a research note.

“Though we view the acquisition likely helping Agilent participate in the liquid biopsy market in the near-term, the offerings are likely to compete with largely central lab liquid biopsy products in the therapy management market,” Souda added. He cited competitors that include Guardant Health—which last month launched Guardant Reveal™, its first blood-based liquid biopsy for residual disease detection and recurrence monitoring,—as well as Roche-owned Foundation Medicine, NeoGenomics, Invitae, Exact Sciences, Caris, and Tempus.

“This also accelerates our strategy to broaden access to precision oncology testing for patients worldwide through distributed NGS-based diagnostic kits,” McMullen added. “We look forward to Resolution Bioscience joining with us to expand our work in the fight against cancer.”

Headquartered in Kirkland, WA, Resolution Bioscience finished 2020 with revenues of approximately $35 million, and is expected to generate $50 million to $55 million in revenue this year.

Agilent, headquartered in Santa Clara, CA, generated revenue of $5.34 billion in its 2020 fiscal year, which ended October 31. The company employs 16,400 people worldwide.

Series of acquisitions

One key factor in Agilent’s growth in recent years has been a series of acquisitions, including buying Seahorse Bioscience for $235 million  in 2015, snapping up Luxcel Biosciences in 2018 for an undisclosed price, and shelling out $1.165 billion to buy Biotek Instruments a year later.

For Resolution Bioscience, Agilent agreed to pay $550 million cash at the closing of the acquisition, plus up to an additional $145 million tied to achieving future performance milestones.

Agilent said it expected its acquisition of Resolution Bioscience to “slightly” reduce its non-GAAP earnings per share (EPS) in fiscal 2021 and 2022, then add to non-GAAP EPS in future years. Last month, Agilent raised its guidance to investors on non-GAAP earnings per share, to a range of $3.80 to $3.90 from a range of $3.57 and $3.67.

Shares of Agilent dipped in early trading today, to $123.54 as of 10:45 a.m., down 0.76% from yesterday’s close of $124.48.

The transaction is expected to close in April, subject to regulatory approvals and customary closing conditions.

“Agilent’s broad expertise, global regulatory and commercial infrastructure, extensive partnerships with biopharma companies, and decades-long leadership in precision medicine will enhance and accelerate our groundbreaking work,” stated Mark Li, Resolution Bioscience’s president and CEO. “We are excited to further expand the use of NGS in precision oncology for clinical diagnostics as part of the Agilent team.”

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