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Castle Biosciences to Acquire AltheaDx for $65M

NEW YORK – Castle Biosciences said Monday after the close of the market that it has signed a definitive agreement to acquire molecular diagnostics firm AltheaDx, which specializes in mental health pharmacogenomic testing.

The company currently markets a test called IDgenetix, which assesses pharmacogenomic loci associated with response to drugs prescribed for depression, anxiety, and other mental health conditions. 

"Similar to our acquisition of Cernostics in December 2021, the pending acquisition of AltheaDx enables us to offer a testing solution that we believe has the potential to accelerate our impact on patient care in an area of high unmet clinical need," Castle President and CEO Derek Maetzold said in a statement. 

According to Maetzold, IDgenetix is expected to significantly expand Castle's potential market reach to about $8 billion. It could also spark development of a larger mental health franchise, he added. 

Under the terms of the agreement, AltheaDx will become a wholly owned subsidiary of Friendswood, Texas-based Castle Biosciences. At closing, Castle will pay $65 million in initial consideration to AltheaDx security holders, which will consist of $32.5 million in cash and $32.5 million of its common stock.

A maximum of another $75.0 million in cash and common stock will be payable in connection with the achievement of certain milestones based on 2022, 2023, and 2024 performance and expanded payor coverage for IDgenetix. The transaction is expected to close in the second quarter of 2022, subject to customary conditions. 

Upon closing of the transaction, the executive management team and other AltheaDx staff are expected to stay with Castle. AltheaDx's laboratory and operations are expected to remain in San Diego. 

Castle highlighted AltheaDx's "forward-looking" choices to build a test that incorporates both drug-gene and drug-drug interactions, as well as the firm's proprietary approach to analyzing genetic data. 

Maetzold also cited a randomized controlled clinical trial of patients with moderate and severe depression and anxiety. "Response rates and remission rates were significantly higher in the IDgenetix-guided group as compared to the control group at 12 weeks," he said. 

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