NEW YORK (GenomeWeb) -- Myriad Genetics is acquiring genetic screening firm Counsyl for $375 million in cash and common stock, the molecular diagnostics firm said last night. The move is a bid to bolster its position in the women's health space.
The acquisition will allow Myriad, a leader in the hereditary cancer genetic screening market, to expand into carrier screening with Counsyl's Foresight test, which covers more than 175 clinically actionable conditions across ethnicities, and into the rapidly growing noninvasive prenatal screening market with Counsyl's Prelude test.
"Offering these tests in conjunction with Myriad's leading hereditary cancer test [MyRisk,] provides a single source of genetic tests for the 40,000 physicians in the women's health market," Myriad said in a statement announcing the deal.
Counsyl also markets a hereditary cancer panel, called Reliant, though the company decided last year to lay off its oncology sales team, and focus on its women's health business. The company raised $80 million in financing last year from life sciences investment firm Perceptive Advisors, and had said it planned to use it to grow the company "with an eye toward making expanded carrier screening as routine as taking folic acid, noninvasive prenatal screening as routine as an ultrasound, and hereditary cancer screening as well-known as a pap smear."
Myriad will merge Counsyl's reproductive health tests with its existing preventive care business unit into a new business unit called Myriad Women's Health, which will focus solely on OB-Gyns and reproductive healthcare providers. Myriad will also combine its women's health sales force of approximately 225 representatives with Counsyl's 80 sales professionals, enabling a threefold increase in physician reach for reproductive testing, according to Myriad.
Myriad CEO Mark Capone said in a conference call on Tuesday morning that the Counsyl acquisition was Myriad's largest to date. Previously, the company purchased Rules-Based Medicine in 2011, for $80 million; Crescendo Bioscience in 2014, for $245 million in cash; and Assurex in 2016, for $225 million in upfront payments, plus up to $185 million in performance-based milestones.
Myriad intends to fund the transaction through cash on hand, a revolving credit facility, and by issuing stock. At the end of its fiscal third quarter, Myriad had cash and cash equivalents of $209 million and $231 million in its revolving credit facility.
The transaction, slated for completion in Myriad's first fiscal quarter of 2019 in the fall, is valued at $375 million in cash, and shareholders can receive up to 25 percent of that consideration in common stock, based on a 30-day average stock price. Former Counsyl shareholders will not receive more than 3 million shares.
During the conference call, Myriad CFO Bryan Riggsbee said the company will include the Counsyl acquisition in its financial guidance for FY 2019 during its fourth-quarter earnings call in August. Myriad is expecting Counsyl's reproductive genetic tests to become quickly accretive to its revenues, given existing reimbursement levels and opportunities to expand coverage and payment in the future.
The American College of Obstetricians and Gynecologists broadened its professional guidelines for expanded carrier screening last year, and a new category 1 CPT code for a comprehensive panel of genes is slated to be priced next year. Additionally, Myriad is expecting reimbursement for noninvasive prenatal screening testing to improve as commercial payors cover testing for average-risk women, reimburse for microdeletions, and as Medicaid coverage grows.
The company estimated that in the US, around 900,000 carrier screening tests and approximately 1.3 million noninvasive prenatal screening tests will be conducted during the 2018 fiscal year. These reproductive genetic testing segments are expected to grow at a double digit rate and become a $1.5 billion market by fiscal year 2023.
Myriad also expects to achieve cost synergies by integrating the two companies, and to leverage Counsyl's unique capabilities, such as its patient-centric software tools and electronic medical records integration system, for its entire product portfolio.
Additional details on the acquisition are availble here.