SALT LAKE CITY—Molecular diagnostics and personalized medicine company Myriad Genetics Inc. recently acquired Köln, Germany-based Sividon Diagnostics, a leading breast cancer prognostic company, for €35 million (about $39 million) upfront, with the potential for €15 million(about $16.7 million) in additional performance-based milestones. According to Myriad, it is funding the transaction entirely through cash on hand.
Sividon Diagnostics was spun out of Siemens Healthcare Diagnostics in 2010 as part of a management buyout. The company’s core product is EndoPredict, a kit-based RNA expression test that evaluates 12 genes to assess the aggressiveness of breast cancer on a molecular level. The test is currently CE marked on the Siemens Versant instrument; however, Myriad is transitioning the product to the Thermo Fisher QuantStudio platform as a key step in its international kit strategy.
“Sividon brings to Myriad the best-in-class breast cancer prognostic test and strengthens our market-leading oncology portfolio of high-value personalized medicine products,” said Mark C. Capone, president and CEO of Myriad Genetic Laboratories. “The EndoPredict test will be the foundational product of our newly initiated kit-based strategy and allow Myriad to leverage its global oncology distribution to bring this important test to patients worldwide.”
Capone noted in a conference call about the deal that Myriad envisions selling multiple kit-based products outside of the United States, all of which will run on a single instrument platform.
“As we have previously stated, we are working on developing a kit-based version of five RNA-based tests, including EndoPredict, Prolaris, myPath Melanoma, myPlan Lung Cancer and myPlan Renal Cancer,” he explained. “Our partnership with Thermo Fisher will allow us to develop these tests to run on their QuantStudio instrument platform. We are also currently working on obtaining a CE mark for EndoPredict on the QuantStudio instrument. Since many of our kit-based tests will take time to obtain broad reimbursement, including Prolaris, we envision EndoPredict as a foundational product in our kit-based strategy.”
Looking at some of the other strategic rationales for the acquisition, Capone also noted that EndoPredict is distributed by Myriad on a global basis with the exception of the United States and China. “Consequently, we will be able to continue to use our international direct sales force and distributor network to commercialize the test,” he pointed out. “In addition, our market research shows that this second-generation test in either a kit-based format or as a laboratory-developed test would also be highly desirable in the United States. Consequently, we are planning to launch EndoPredict into the U.S. market in the second half of fiscal year 2017. Since we already have the sales infrastructure in place and can leverage Myriad’s existing customer service, billing, managed care and other support functions, we would expect the contribution margin on incremental EndoPredict revenue to be accretive to our current margins.”
“We are excited to be integrated with the global leader and pioneer in personalized medicine,” said Christoph Petry, CEO of Sividon Diagnostics. “Myriad has the reimbursement, regulatory and commercial expertise to make this product very successful, especially as we seek distribution in the United States and broader reimbursement coverage in Europe.”
EndoPredict has been evaluated in five major studies incorporating more than 4,000 patients, utilized on a clinical basis in more than 13,000 patients worldwide, and is extensively referenced in clinical guidelines across the globe, the companies note. In a head-to-head study, it was shown to outperform the prognostic ability of the leading first-generation test while providing definitive answers with no intermediate results.
Myriad believes the global market opportunity for EndoPredict is in excess of $600 million, with the majority of that market being in major European countries, Canada and the United States—a market that Myriad estimated is currently less than 25-percent penetrated on a global basis.
One of the more attractive aspects of the deal, of course, was that it broadens Myriad’s comprehensive product offering in oncology. Myriad already sells market-leading tests in oncology for hereditary cancer and companion diagnostics and, as the company notes, “EndoPredict answers another important clinical question for breast cancer patients by identifying which can safely forgo chemotherapy. Oncology customers can increasingly rely on Myriad as a single source trusted advisor answering questions across the entire continuum of care with unmatched quality.”
“From a clinical perspective, EndoPredict has three distinct advantages over competing tests,” Capone said in the conference call. “First, the data is exceptional and EndoPredict outperformed the market-leading first-generation test in a head-to-head study. Secondly, EndoPredict has no intermediate risk group and does not provide ambiguous classifications that are frustrating to patients and physicians. Finally, the kit-based format provides unique advantages allowing the test to be performed by local laboratories that can in turn share in the economic benefits.”