A New Jersey public company has agreed to acquire Baltimore’s Haystack Oncology in a deal that could be worth up to $450 million.
Quest Diagnostics (NYSE: DGX) will pay $300 million in cash at the closing of the acquisition and up to an additional $150 million if future performance milestones are met. The deal, announced Thursday, will close in the second quarter of this year.
The early cancer diagnostics company is the latest brainchild of Johns Hopkins University researchers Bert Vogelstein, Ken Kinzler and Nick Papadopoulos to sell for a major payout. Their company Thrive Earlier Detection sold for $2 billion in 2020, while another Vogelstein creation, Personal Genome Diagnostics, sold for $575 million in 2022.
The acquisition comes only two years after Haystack Oncology was founded in 2021. The company raised a $56 million funding round in 2022 to move into a lab in City Garage on the Baltimore Peninsula. Haystack Oncology did not immediately respond to a Baltimore Business Journal email about the status of its Baltimore office.
The company's test looks for a byproduct of tumors, called circulating tumor DNA, after a patient has received initial treatment for cancer. Patients with early-stage forms of cancer can often be treated through surgery alone without the need for additional treatments. However, follow-up diagnostic tools such as MRIs can often miss small tumors. Haystack's technology hopes to offer a more accurate tool for doctors so they can give better follow-up care to patients. If Haystack finds circulating tumor DNA in a patient, it is an indication that the patient still has the disease.
Quest expects to use Haystack’s technology as the basis for new tests for colorectal breast and lung cancers starting in 2024. Haystack previously planned to release a laboratory-developed test showcasing its innovation.
“Combining Haystack with Quest is a major step forward in translating two decades of world-class liquid biopsy research and development into clinical laboratory services that are highly reliable and broadly accessible. Like looking for a needle in a haystack, accurately detecting (Minimal Residual Disease) has been very challenging to date," Haystack Oncology CEO Dan Edelstein said in a press release. "With Quest, we expect to increase and accelerate access to important tests that will improve the quality of cancer MRD detection and recurrence monitoring for patients.”
