PARSIPPANY, N.J.—Powered by a $27-million investment from Ampersand Capital Partners, commercial and bioinformatics player Interpace Diagnostics Group has acquired the Biopharma Services business from Cancer Genetics for a reported $23.5 million. The acquisition will bolster Interpace’s biopharma capacity, complementing their existing clinical specialty. According to Jack Stover, president and CEO at Interpace, they see the deal as a major milestone for Interpace, with a new stake in the ability to identify predictive markers and developing products to reduce the incidence of tumor return.
“We believe it is a significant opportunity for Interpace Diagnostics to capitalize on the eve of the revolution in cancer care that is now transitioning to earlier-stage development,” asserts Stover. “Cure vs. progression-free survival is the new focus of drug developers.”
The Biopharma Services business purchased from Cancer Genetics led the marketplace in pharmacogenomics testing, genotyping and biorepository services, with the capacity to advance personalized medicine by partnering with pharmaceutical, academic and technology leaders. Prior to the deal, Biopharma netted more than $15 million and established relationships with most of the top 10 companies, and many smaller ones as well. According to Stover, they are gaining far more than a customer base, as the purchase brings a host of other biopharma benefits as well.
“As part of the acquisition, we acquired not only a high-quality customer base, but in addition, a list of comprehensive services which include project management capabilities, world-class data management expertise, expansive testing platforms and menus, extensive long-term bio-banking capabilities, customizable programs, and worldwide logistics and specimen handling capabilities,” he explains.
Interpace’s clinical arm specializes in molecular diagnostic tests, and currently offers four commercialized products: PancraGEN for the diagnosis and prognosis of pancreatic cancer from pancreatic cysts; ThyGeNEXT for the diagnosis of thyroid cancer from thyroid nodules utilizing a next-generation sequencing assay; ThyraMIR for the diagnosis of thyroid cancer from thyroid nodules utilizing a proprietary gene expression assay; and RespriDX, which differentiates lung cancer of primary vs. metastatic origin. They also have a fifth product to help diagnose Barrett’s esophagus, which is in development.
From a financial perspective, adding some biopharma capacity will help diversify Interpace’s revenue stream by offering products that are not dependent on reimbursement for purchase. Biopharmaceutical firms tend to have more stable payment streams that aren’t subject to the vagaries of clinical trials and subsequent approvals. This, coupled with the recent growth of the business sphere and the success of Biopharma Business itself, made Interpace an attractive investment opportunity for Ampersand Capital, a private equity firm dedicated to growth-oriented investments in the healthcare sector.
Herb Hooper, managing partner at Ampersand Capital Partners, is impressed by the transaction, noting that “We see the opportunity for Interpace, with its strong product portfolio and commercial capabilities, to be a platform for building a leading franchise in the oncology-related molecular and biopharma laboratory services space. Ampersand’s investment is intended to assist Interpace as it continues to add capabilities and accelerate its growth trajectory within both the clinical diagnostic and biopharma markets.”
In a conference call with investors, Stover referenced an increased push in pharmaceutical R&D on early detection and early treatment in oncology. Citing an article in the Wall Street Journal, he paraphrased the comments from AstraZeneca’s new head of cancer research, José Baselga, who is driving AstraZeneca to prioritize early-stage cancers over advanced disease when developing new cancer drugs. In the article, Baselga—a prominent breast cancer doctor—said it is getting easier to prioritize early cancer due to better ways of identifying which patients are at higher risk of their tumors returning and the rise of drugs that can more accurately target tumor cells, reducing potential side effects. “We need to spend our resources on those places where we can cure more people and that’s in early disease,” Baselga stated. “It’s a deep philosophical belief that we have.”
Or, as Stover put it, “All future oncology drug development will be pushed backwards to earlier-stage development, because that’s where you save lives.”
“I am very excited about our acquisition of the BioPharma Business of Cancer Genetics, and the support and confidence that Ampersand Capital Partners has shown in our expertise and capabilities,” Stover remarked. “I believe that expanding more aggressively into the growing biopharma sector with a strong product and service offering, as well as partnering with one of the leading private equity firms in this space, will be transformative for Interpace and will also benefit the patients and customers we now serve in each market.”