Personal Genome Diagnostics has agreed to be acquired by one of the world's largest life sciences companies in a deal that could pay up to $575 million.
Baltimore-based PGDx has agreed to sell to Laboratory Corp., of America Holdings, better known as Labcorp. The Burlington, North Carolina-based giant is a leader in medical testing and drug development, and has played a particularly important role during the last year and a half with Covid-19 testing. PGDx specializes in developing in vitro diagnostic (IVD) tests that can be used to analyze the DNA of tumors to diagnose cancer.
The deal announced Thursday morning will see Labcorp, which is publicly traded, pay $450 million in cash at closing. Labcorp could pay up to an additional $125 million if future performance milestones are accomplished. The transaction is expected to close in the first half of 2022.
PGDx's revenue this year is expected to be approximately $22 million. Revenue is expected to grow nearly 82% to $40 million in 2022. Labcorp expects the acquisition of PGDx to negatively impact its adjusted earnings per share slightly over the next couple of years but provide returns in excess of the cost of capital by year five.
"We share Labcorp’s vision of improving health care decisions and outcomes through science, data and a continued commitment to innovation,” PGDx CEO Megan Bailey said in a statement. "For over a decade, PGDx has made great progress toward that goal. As a part of the Labcorp family, we have an incredible opportunity to broaden and accelerate our impact on cancer care through Labcorp’s global reach."
Labcorp (NYSE: LH) has more than 70,000 employees and reported revenue of $14 billion in 2020. The company has clients in more than 100 countries.
Labcorp CEO Adam Schechter said in a statement that combining the company's scale in diagnostic testing and drug development with PGDx's technology will help cancer patients across the world get quicker access to personalized treatments.
"PGDx’s comprehensive portfolio of next-generation sequencing products will meaningfully add to our breadth of capabilities, in line with our strategic priority to lead in oncology," Schechter said. "PGDx’s technology is well positioned in an important segment with strong growth prospects."
PGDx was started in 2010 by two Johns Hopkins researchers, Dr. Luis A. Diaz and Dr. Victor Velculescu. Diaz is now head of the Division of Solid Tumor Oncology at the Memorial Sloan Kettering Cancer Center, while Velculescu is CEO of Delfi Diagnostics, a Baltimore-based biotechnology firm.
PGDx is backed by $214 million but really only started to raise big money within the last few years. The company raised $111.5 million in 2017 and most recently raised $103 million in a Series C round in February. Investors in the Series C round included Baltimore-based Catalio Capital Management and Rock Springs Capital, a firm started several years ago by former T. Rowe Price portfolio manager Kris Jenner.
PGDx has more than 100 employees and is headquartered in Baltimore's Canton neighborhood. The U.S. Food and Drug Administration gave clearance to PGDx for its diagnostic test kit, called elio tissue complete, in April 2020.
Hogan Lovells and Kilpatrick Townsend acted as legal advisors to Labcorp. Cooley LLP acted as legal advisor and Cowen acted as financial advisor to PGDx.
