By Turna Ray
Novartis this week announced plans to acquire oncology laboratory services firm Genoptix in order to bolster its in-house companion diagnostics efforts.
The acquisition, announced Jan. 24, "complements the Novartis internal capabilities aimed at improving health outcomes by advancing individualized treatment programs," Novartis said in a statement.
Novartis launched its own molecular diagnostics unit in 2009 to support the company's personalized medicine efforts. However, since the division's inception, Novartis has not announced any specific companion diagnostics development efforts.
However, Novartis may be on its way toward announcing a diagnostics development program in the area of oncology in the near term. The acquisition of Genoptix "will support and expedite the development of companion diagnostic programs, especially in oncology," Novartis stated.
The decision to acquire Genoptix is the second diagnostics deal in the oncology space for Novartis in recent weeks, suggesting the Swiss drug firm is growing its capabilities in the cancer personalized medicine space. Earlier this month, Novartis said it is working with Foundation Medicine to advance a comprehensive cancer analysis test for use in Novartis drug trials (PGx Reporter 01/05/11).
With regard to the Genoptix acquisition, Novartis said it would extend a tender offer for all outstanding shares of Genoptix at $25 per share, giving the transaction an equity value of $470 million and an enterprise value of $330 million. The offer represents a 27 percent premium over Genoptix's closing price of $19.76 on Jan. 21, the last trading day before the acquisition was announced. The company's shares were trading at $24.90 as PGx Reporter went to press on Jan. 26.
Genoptix said that its board of directors unanimously determined that the merger agreement and the terms "are fair to and in the best interests of Genoptix and its stockholders." The company recommends that its stockholders tender their shares and adopt the merger agreement. "Each of Genoptix's directors and executive officers has agreed to tender their shares in the offer," the company stated.
The transaction, slated for completion in the first half of 2011, will close after at least a majority of Genoptix's shares are tendered in the offer.
Under the terms of the acquisition, the nearly 500 Genoptix employees will become part of Novartis Molecular Diagnostics. Novartis indicated it will maintain Genoptix's existing operations and will continue to offer its portfolio of personalized diagnostics services to community-based hematologists and oncologists across the US.
According to Genoptix's website, the firm offers assessment of bone marrow and blood workups through its Compass assessment program, which utilizes immunohistochemistry and morphology techniques, flow cytometry, cytogenetics, FISH, and molecular testing.
Furthermore, Genoptix also offers a clinical assessment service, called CHART, which applies the results from the Compass assessment program to assess residual disease, gauge disease progression, monitor treatment response, identify changes in cytogenetics, and look at clonal evolution.
The company also markets a service to identify key biomarkers and predict response to treatment for colorectal cancer patients. The service gauges a range of predictive biomarkers, including MSI, TS, and DPD, which can help guide CRC treatment with 5-FU or capecitabine (Roche's Xeloda); ERCC1 expression, which can help gauge possible response to oxaliplatin; UGT1A1, which can gauge the likelihood of irinotecan toxicity; KRAS mutations, which can predict response to EGFR inhibitors such as panitumumab (Amgen's Vectibix) and cetuximab (Bristol-Myers Squibb/Merck/Lilly's Erbitux); and BRAF mutations that can prognose survival of patients independent of the drug. Genoptix also conducts a circulating tumor cells test in its CRC program to learn of the chances that a patient's cancer will metastasize.
Genoptix has a similar service offering for non-small cell lung cancer patients in which it tests for UGT1A1, EGFR amplification, EGFR mutations, ERCC1, RRM1, and TS to guide treatment with a variety of agents: carboplatin, cisplatin, cetuximab, erlotinib (Genentech/OSI's Tarceva), gemcitabine, irinotecan (Pfizer's Camptosar), and pemetrexed.
Genoptix's capabilities in hematology, CRC, and NSCLC open up an array of pharmacogenomic technologies for Novartis in advancing personalized oncology products.
Foremost, Novartis markets Gleevec as a treatment for Philadelphia chromosome-positive chronic myelogenous leukemia and other blood cancers, as well as for gastrointestinal stromal tumors. Recently, Novartis inked two separate deals with Asuragen and Cepheid to develop tools to standardize BCR-ABL testing in Ph+ CML (PGx Reporter 12/08/10).
According to Novartis' pipeline, which was last updated in October, it is currently investigating a new formulation of the candidate LBH589 and a new molecule HCD122 in hematologic malignancies, which are cancers in the lymph nodes, blood, and bone marrow. Additionally, Novartis is studying ASA404 as a second-line NSCLC treatment and is investigating several agents in solid tumors, such as TKI258, BEZ235, and BKM120.
Neither Novartis, nor Genoptix, responded to questions for this article ahead of press time.
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