Medtech developments over the Christmas period

The FDA scrambles for more rapid Covid-19 tests, and the device sector enjoys a late flurry of deals.

The final week of the year was a quiet one for medtech, but a few things still stood out. Encouraging signs on testing for Covid-19 have been seen in the US, with the FDA moving to get more assays – both antigen-based and PCR tests – to market quickly. 

And just before Christmas, two company acquisitions were announced, one of them – that of Ortho Clinical Diagnostics by Quidel – in the billions of dollars. This last hurrah has taken the total spent on medtech M&A in 2021 to over $50bn. Important events to have occurred in the medtech sector over the past week or so include the following.

December 29:

Amid dire shortages of rapid tests for Covid-19 in the US, the FDA has rushed to authorise a couple of new antigen-based assays, and the companies concerned made much of their manufacturing capacity. Siemens Healthineers’ Clinitest Rapid Covid-19 Antigen Self-Test may be used by people aged 14 and up, and can also be used on children aged between two and 13 if it is administered by an adult. 

Healthineers believes it will be able to produce “tens of millions” of US-bound tests each month. The assays will be distributed on a retail basis nationwide beginning in January, though pricing has not been finalised. 

In a US study, the test had sensitivity of 86.5% and specificity of 99.3% compared with PCR, Healthineers said, adding that this covers “currently circulating variants”.

On Christmas Eve, the FDA had authorised a similar product from Roche. That company, too, said it would be able to manufacture tens of millions of its Covid-19 At-Home Tests per month. Roche claims sensitivity and specificity of 95.3% and 100%, respectively, for the assay.

December 27:

Three weeks ago the FDA suggested that a Covid-19 PCR test developed by Tide Laboratories would be unable to detect the Omicron variant, since it only targeted a single region of the virus’s genome – a region that is mutated in Omicron. With commendable speed, Tide has tweaked its assay by adding a second reverse primer to assess a different genomic target, and the FDA has reissued the test’s authorisation

The agency said that bioinformatics analysis had shown that the DTPM Covid-19 RT-PCR test demonstrated a 100% match with Omicron sequences as well as Delta variant sequences. Initial laboratory testing also showed that Tide’s assay could detect Omicron.

Two other tests, from Meridian Bioscience and Applied DNA Science, remain on the FDA’s list of tests believed to be unable to detect Omicron. 

December 23:

In terms of medtech M&A, 2021 ended with a bang. Quidel, its coffers swollen with Covid-19 test revenues, bought Ortho Clinical Diagnostics for $6bn in the second largest medtech acquisition of the year. 

It is an odd thought as Covid-19 still rages thanks to the emergence of Omicron, but Quidel is looking ahead to a time when the pandemic might finally diminish, and its testing revenues with it. Buying Ortho Clinical is a move to diversify Quidel’s range of diagnostics, but also to build scale. 

Many diagnostics groups have reaped sizeable rewards from Covid-19 tests and spent the cash on large acquisitions – for example in the spring Roche bought Genmark Diagnostics and Diasorin took out Luminex, both for $1.8bn. Quidel doubtless feels it has to keep up. In fact it will do more than just keep up: Evaluate Medtech’s sellside consensus suggests that the deal will make Quidel the largest pure-play diagnostics company in the world by 2026.

Be that as it may, Quidel’s shareholders were not keen on the deal, and its shares fell 18% on the announcement. Perhaps they felt the choice of target was not ideal; Ortho Clinical’s IPO in January was not too well received, and it is carrying net debt of $2bn.

Top 5 medtech deals announced in 2021
Announcement date Acquirer Target  Value ($bn) Focus
September 1 Baxter International Hill-Rom 10.5 General hospital & healthcare supply; healthcare IT
December 23 Quidel Ortho Clinical Diagnostics 6.0 In vitro diagnostics
January 12 Steris Cantel Medical 4.6 Endoscopy; general & plastic surgery; nephrology
November 8 Coloplast  Atos Medical 2.5 Ear, nose & throat; general hospital & healthcare supply
September 8 ICU Medical Smiths Medical (subunit of Smiths Group) 2.4 Anaesthesia & respiratory; patient monitoring
Note: excludes Spac transactions and pure tech companies. Source: Evaluate Medtech.

The same day saw another, smaller diagnostics acquisition. Labcorp has underlined its interest in liquid biopsy technology with the $450m purchase of Personal Genome Diagnostics. The all-cash deal also allows for $125m in performance milestone payments.

Personal Genome Diagnostics has one FDA-cleared test: Elio Tissue Complete, a pan-cancer test which uses targeted next-generation sequencing of DNA taken from tumour tissue to detect mutations in more than 500 oncogenes. But it is developing two blood tests – one a rough equivalent of the tissue test, and another more focused assay, Elio Plasma Resolve, which tests just 33 genes but is also designed to detect microsatellite instability status to aid treatment selection.

Should these reach market they will join Resolution ctDx-Lung Assay, the NSCLC-focused blood test developed by Resolution Bioscience which Labcorp sells in the US. Resolution was itself bought out this year, with Agilent paying $550m for the group in March.

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