Exact chases its dream with $1.7bn Thrive deal

Setting its sights on the screening setting, Exact aims to be a major liquid biopsy player.

Less than two and a half years after it came out of stealth mode, the pan-cancer liquid biopsy developer Thrive Earlier Detection has been snapped up by Exact Sciences for $1.7bn up front. 

Exact, which made its name with the Cologuard faecal test for colon cancer, has been developing a blood test capable of screening for a wide range of solid tumours, and data on this project released last month looked good. In adding Thrive’s CancerSeek test to its pipeline Exact now has two candidates and is fast becoming a major player in this growing segment. 

Thrive’s test is the most advanced multi-cancer liquid biopsy in that it is the only one to have generated data in a prospective clinical trial, wherein it was used to evaluate samples whose cancer status was unknown. This is considered more representative of the real world than the retrospective studies used by other cancer blood test developers.

A promising cut of data from the 10,000-patient Detect-A trial indicated that CancerSeek’s sensitivity was just about acceptable but its specificity was very good indeed (AACR 2020 – Thrive steals a march, April 29, 2020).

Exact now intends to develop a more advanced version of CancerSeek, incorporating other biomarkers to boost the sensitivity. This kind of iterative development is not unusual in this arena: the pan-cancer liquid biopsy launched by Roche last month was a tweaked version of the assay that had been used in the pivotal trial. 

On a conference call today Exact management said that despite the planned alterations to CancerSeek, another similar 10,000-patient trial would probably not be necessary before the planned US registrational study of the test begins. The pivotal study is to enrol around 80,000 patients and discussions are under way with the FDA to determine its design.

Exact has yet to decide whether to seek FDA approval for CancerSeek before launching it, or whether to offer it in the US as a lab-developed test. Guardant Health took the latter path with its Guardant360 liquid biopsy, which was on the US market for several years before its approval this August. Grail, recently bought by Illumina in a deal worth $8bn, also plans to sell its tests as LDTs, at least at first. 

Selected major liquid biopsy players
Company Company history Liquid biopsy Test details Status in US
Guardant Health $550m VC funding; floated in 2018, current market cap $8.5bn Guardant360 Helps assign targeted therapy Approved Aug 7, 2020
Lunar-1 Postsurgical, detects disease recurrence Sold for research use only
Foundation Medicine (Roche) $115m VC funding; bought by Roche for $2.5bn in 2015 FoundationOne Liquid CDx Helps assign targeted therapy Approved Aug 27, 2020
Grail* $2.1bn VC funding; bought by Illumina for $8bn in September 2020 Galleri Screening for early detection and identification of tumour origin Launch as LDT expected in H2 2021
DAC Identification of tumour origin Launch as LDT expected in 2021
Unnamed Postsurgical, detects disease recurrence In development
Exact Sciences Floated in 2001, current market cap $18.8bn Unnamed Screening for early detection and identification of tumour origin In development
Thrive Earlier Detection* $367m VC funding; bought by Exact Sciences for $1.7bn in October 2020 CancerSeek Screening for early detection and identification of tumour origin FDA breakthrough device status
*Acquisitions by Illumina and Exact are yet to close. Table considers pan-cancer tests only. Source: EvaluateMedTech, company websites.

The group declined to say when CancerSeek might launch, or how much it might cost. But launch, should it happen, is likely to trigger one of the milestone payments, in total worth $450m, that are also included in the deal. The $1.7bn upfront fee comprises 65% in Exact Sciences common stock and 35% in cash. The acquisition is scheduled to close in the first quarter of 2021. 

All your Base are belong to us

The other acquisition Exact unveiled today, being much smaller at $410m, is likely to close before that. Base Genomics specialises in epigenetics, and specifically DNA methylation, one of the processes that controls gene expression. Methylation analysis can be useful in improving the sensitivity and tissue of origin identification in early detection cancer tests, and Base’s technology will be added to Exact’s own methylation expertise as Exact updates CancerSeek.

To help fund today’s deals Exact is to sell around 8.6 million shares of common stock to ten institutional investors in a deal that could raise around $870m. 

Exact has pursued four deals this year, though it’s biggest to date was 2019’s purchase of Genomic Health, for $2.8bn (Exact buys, but profitability questions remain, July 29, 2019). 

Exact Sciences' acquisition history
Date Target Value ($m)
October 27, 2020 Thrive Earlier Detection  2,200
October 27, 2020 Base Genomics 410
March 3, 2020 Paradigm Diagnostics -
March 3, 2020 Viomics -
November 8, 2019 Genomic Health 2,800
October 18, 2018 Biomatrica -
December 31, 2017 Armune BioScience 30
Source: EvaluateMedTech, company communications. 

With a market cap now approaching $19bn – boosted by the 18% jump in its shares today – Exact is a force to be reckoned with. It is currently forecast to be the fifth biggest diagnostics group by sales in 2026; if CancerSeek takes off it could climb the rankings further.

And its newly acquired technologies are not the only surprise. Exact reported third-quarter results today, and one of the technologies driving its revenue growth was its Covid-19 test. This generated $102m in revenue against the markets’ expectations of $40m. Overall the group reported sales of $408m for the quarter, up 87% year-on-year and beating analysts’ expectations of around $337m.

That said the company’s net loss widened markedly, at nearly $220m compared with $40.5m in the third quarter of 2019. Exact needs its big business development plans to pay off.

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