Agilent Sells Resolution Bioscience to Exact Sciences Just Two Years After Acquisition

Sep 16, 2023 07:20 CST Updated Sep 15, 17:34

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On September 12, 2023, Agilent Technologies, Inc. (NYSE: A) announced that it had reached an agreement with Exact Sciences (NASDAQ: EXAS), a leading provider of cancer screening and diagnostic tests, to sell Resolution Bioscience to the latter. The detailed financial terms of the agreement were not disclosed.

About Agilent Technologies

Agilent Technologies, Inc. (NYSE: A), headquartered in Santa Clara, California, USA, was founded in 1939 and is a global leader in the life sciences, diagnostics, and applied chemical markets. The company provides laboratory solutions to meet various needs for laboratories engaged in environmental testing, academic research, medical diagnostics, pharmaceutical analysis, petrochemicals, or food testing. The company reported revenue of $6.85 billion in fiscal year 2022 and has 18,000 employees worldwide.

During the conference call discussing Agilent's third-quarter performance, CEO Mike McMullen stated: "The market for NGS-based companion diagnostics (CDx) has not developed as we expected. Moreover, we do not see a realistic path to profitability. Therefore, we have made the difficult decision," Agilent stated, announcing the closure of its Resolution Bioscience liquid biopsy business by early 2024.

In December last year, the FDA approved Agilent Resolution ctDx FIRST as a companion diagnostic (CDx) to identify patients with advanced non-small cell lung cancer harboring KRAS G12C mutations who may benefit from KRAZATI (adagrasib) treatment. This was co-developed with Mirati Therapeutics and gained significant attention. On the regulatory front, Resolution has achieved considerable success, but sales may still be underwhelming.

In terms of financial performance, Agilent reported that revenue for the quarter ended July 31 fell 3% to $1.67 billion from $1.72 billion in the same period last year. The company posted net income of $111 million, or $0.38 per share, in the recently completed quarter, compared with net income of $329 million, or $1.10 per share, a year earlier.The company attributed most of the decline in revenue for the quarter to a drop in sales in China,Because the country's economy is weak. He said,Excluding China, Agilent's revenue grew by 2% year-over-year.

Agilent’s Diagnostics and Genomics Group revenue was $349 million, up 3% from $340 million in the same period last year. The company attributed the growth to increased demand for its immunohistochemistry-based pathology diagnostic products and growth in its nucleic acid solutions segment. The company also noted that it began production on a new line at its expanded oligonucleotide manufacturing facility in Frederick, Colorado, during the quarter, and the added capacity will allow the company to produce active pharmaceutical ingredients for siRNA and antisense nucleic acid therapeutic programs for its pharmaceutical partners.

Agilent's Life Sciences and Applied Solutions DivisionRevenue fell 9% to $927 million from $1.02 billion in the same period last year. McMullen said on the conference call that customers of Agilent's Life Sciences and Applied Markets Group were cautious about making capital purchases, a trend Agilent expects to continue for the rest of the year.

Agilent's CrossLab DivisionRevenue for the quarter increased by 10%, from $359 million in the same period last year to $396 million.

For the fourth quarter, Agilent expects revenue to be between $1.66 billion and $1.71 billion, with adjusted earnings per share between $1.33 and $1.36.

Due to the relatively weak macroeconomic environment, Agilent has lowered its full-year revenue guidance to between $6.8 billion and $6.85 billion, down from the previous range of $6.93 billion to $7.03 billion. Although overall revenue is expected to decrease by about 1% year-over-year, the company stated that its core revenue is projected to grow by 1% in 2023.

Understanding the Sale

Resolution Bioscience

As mentioned above, Agilent CEO Mike McMullen stated that due to the disappointing sales of complementary diagnostic (CDx) products based on second-generation sequencing, the company plans to shut down the Resolution Bioscience business.

It is reported that Resolution Bioscience is a leader in the development and commercialization of precision oncology solutions based on next-generation sequencing (NGS).Agilent acquired the company in 2021 for $550 million in cash and $145 million in milestone payments (approximately RMB 5 billion).The statement at the time was that the acquisition would support Agilent in creating an NGS liquid biopsy companion diagnostic testing business, complementing its tissue-based assays (such as PDL1 and pathology operations), and expanding into companion diagnostics for targeted therapies developed by biopharmaceutical partners.

Resolution Bioscience's non-invasive liquid biopsy testing platform supports the biopharmaceutical services market and the clinical oncology diagnostics testing market, and is backed by its Clinical Laboratory Improvement Amendments (CLIA)-certified laboratory. The platform is designed as a centralized CLIA testing service and distributable kit format.

In addition, the Resolution Bioscience Homologous Recombination Deficiency (HRD) test has received Breakthrough Device Designation from the U.S. Food and Drug Administration. The analysis is performed on standard blood samples and detects genetic mutations that can be used to identify cancer. In 2020, Resolution Bioscience announced a commercial partnership with LabCorp, enabling widespread application of the Resolution ctDx Lung™ test for actionable mutations in genes associated with non-small cell lung cancer.

But it is worth mentioning that, nearly two years after being acquired by Agilent, Resolution Biosciences had its first companion diagnostic (CDx) product approved. However, its application scope is limited to the detection of ctDNA in plasma only, while the market for tissue detection has long been dominated by Qiagen.

Agilent Senior Vice President and President of Diagnostics and Genomics Group, Sam Raha, stated: "We are delighted that Exact Sciences has acquired Resolution Bioscience. Exact is a leading central laboratory for advanced cancer diagnostic testing, with significant capabilities and resources in this field, and the addition of Resolution Bioscience aligns with its strategic goals. This agreement will enable the Resolution Bioscience team to continue serving customers..."Households and patients provide diagnostic solutions, which is a very positive outcome of this transaction.”

Leader in Early Screening of Colorectal Cancer,

Boost Precision Oncology Pipeline

Exact Sciences was founded in 1995 and listed on the NASDAQ Stock Exchange in 2001. Since its establishment, the company has been collaborating with medical institutions, primarily the former Mayo Clinic, to develop PreGen, a colorectal cancer screening product based on stool DNA, and to jointly evaluate the technology and colorectal cancer screening tests.

The company's main businesses are cancer screening and precision oncology. Among them, the screening business mainly includes revenue from Cologuard® testing and laboratory services provided by PreventionGenetics; precision oncology includes revenue from Oncotype DX® products and laboratory services. A review of Exact Sciences' product line reveals that its CDx is a blank slate.This acquisition of Resolution Bioscience will be a strong complement to its precision oncology pipeline.

Exact Sciences' current precision oncology portfolio provides actionable genomic insights to inform prognosis and cancer treatment post-diagnosis. In breast cancer,The Oncotype DX Breast Cancer Recurrence Score® test is the only test proven to predict the likelihood of chemotherapy benefit and recurrence in invasive breast cancer.The Oncotype DX Breast Cancer Recurrence Score Test is considered a standard treatment method and is included in all major breast cancer treatment guidelines.

OncoExTra™ Testing Applies Comprehensive Tumor Analysis, Utilizing Whole Exome and Whole Transcriptome Sequencing to Help Patients with Advanced, Metastatic, Refractory, or Recurrent Cancer Select Treatment Options. The OncoExTra™ test covers approximately 20,000 genes, making it one of the most comprehensive molecular tests available to patients today. Exact Sciences empowers patients to take a more active role in their cancer treatment and makes it easier for healthcare providers to order tests, interpret results, and deliver personalized care by applying real-world evidence and guideline recommendations.

Recently, Exact Sciences released its second-quarter financial report. The report shows that Exact Sciences achieved revenue of $622.1 million in Q2, an increase of 19% compared to $521.6 million in the same period last year. Precision oncology revenue grew by 2% year-over-year, reaching $157.2 million. More crucially, Exact Sciences' free cash flow has shifted from -$124 million in the same period last year to +$65.703 million in Q2 2023.

"We are excited to partner with the Resolution Bioscience team to integrate their innovative diagnostics into the company's precision oncology portfolio," said Brian Baranick, General Manager of Precision Oncology at Exact Sciences.The high-quality non-invasive liquid biopsy platform of Resolution Bioscience perfectly complements our OncoExTra test."Enabling Exact Sciences to help more cancer patients determine the best treatment options."

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