Agilent Technologies Inc. will acquire Resolution Bioscience Inc. for $550 million in cash at closing and up to an additional $145 million based on performance milestones. The deal will expand Agilent’s cancer diagnostics offerings and its presence in next-generation sequencing (NGS) technology for the fast-growing precision medicine market. The acquisition is expected to close in April 2021.
Santa Clara, Calif.-based Agilent projects that adding Resolution's noninvasive liquid biopsy platform will boost its addressable market by $3 billion in 2025 and $6 billion by 2030. Resolution had $35 million in revenues in calendar year 2020 and is projected to bring in sales of $50 million to $55 million in 2021. The acquisition is expected to be slightly dilutive to Agilent’s non-GAAP earnings per share in fiscal 2021 and 2022 and to improve in subsequent years.
Resolution’s Ctdx platform uses NGS and cell-free DNA (cfDNA) from a peripheral blood sample to detect actionable mutations in genes associated with cancers, enabling physicians to select the treatment most likely to be effective for each individual patient. A comparison of the company’s liquid biopsy assay to three commercial circulating tumor DNA (ctDNA) NGS tests found it had the highest positive predictive value, at 80%, and the lowest number of false positives among the four gene panels. It also identified more actionable gene fusion mutations than Guardant Health’s widely used Guardant360 test in another study.
“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,” said Agilent president and CEO Mike McMullen. “This also accelerates our strategy to broaden access to precision oncology testing for patients worldwide through distributed NGS-based diagnostic kits.”
Diagnostics account for about 15% of Agilent’s sales and had been the segment of the company facing the greatest risk of disruption, according to an analysis by Morningstar Senior Equity Analyst Julie Utterback. Larger players such as Roche Holding AG and Danaher Corp. as well as liquid biopsy developers like Resolution posed the potential for significant challenges in this area. “[T]his end market could come under some pressure in the intermediate term primarily as liquid biopsies emerge that could reduce false-positive rates (and related tissue biopsies) in individual cancer screening indications (like colorectal and breast cancer), which represents a moderate threat for the company,” noted Utterback.
The acquisition of Resolution addresses this vulnerability. “We don’t currently have regulatory approved NGS cancer assays and see Resolution Bioscience as a mechanism to build out a regulatory approved NGS menu of products,” Kevin Meldrum, vice president and general manager of Agilent’s genomics division told BioWorld.
It also integrates well across Agilent’s established distribution channels and customer base. “We are a leading provider of equipment and services for cancer NGS assays on an OEM basis. We supply some of largest commercial labs in the genomics (genetics and oncology) diagnostics market. The Resolution Bioscience acquisition helps us to ultimately leverage our workflow and commercial capabilities with the Resolution Bioscience test menu to enable broader access to liquid biopsy-based cancer testing in decentralized settings,” Meldrum added.
The Resolution deal reflects the interest in using Agilent’s strong balance sheet to support acquisitions expressed by McMullen on the Feb. 16, 2021 first quarter earnings call. “[W]e want to invest in the business, not only in terms of capital expansion ... but also growth accretive M&A. And that remains our priority.”
The liquid biopsy and precision medicine fields also met the criteria for acquisitions Robert McMahon, Agilent’s senior VP and chief financial officer laid out on the call. “[A]s we think about the markets that we compete in, our framework really hasn't changed. We're looking at markets that are faster growing than the markets that we are in or subsegments of those markets.”
Resolution will remain intact following the acquisition at its current headquarters in Kirkland, Wash. “While the agreement has not closed and is still subject to regulatory review, the intent is for the Resolution team and the company leadership to remain with the company, reporting to Mark Li,” Agilent’s vice president for global communications and public affairs Tom Beermann told BioWorld. Li is currently president and CEO of Resolution. The Resolution team will become part of Agilent’s Diagnostics and Genomics Group.
On Resolution’s side, the deal offers greater access to biopharma companies and a well developed path through global regulatory processes and commercialization. In September 2020, Resolution announced a partnership with Lab Corporation of America Holdings to commercialize Resolution’s Ctdx Lung liquid biopsy assay. The company had also inked collaborative agreements for companion diagnostics with Mirati Therapeutics Inc. and Janssen Research & Development LLC.