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Agilent Charges Into Liquid Biopsy Space with Resolution Bioscience Acquisition

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This article has been updated from a previous version to clarify statements made by an Agilent executive. 

NEW YORK – Agilent Technologies' planned $695 million acquisition of liquid biopsy startup Resolution Bioscience, announced earlier this week, is expected to provide the firm with immediate access to the next-generation sequencing (NGS)-based liquid biopsy market.

The acquisition is part of Agilent's long-term strategy to build NGS liquid biopsy companion diagnostic tests that complement its tissue-based assays and are tailored to indications for targeted drugs developed by biopharma partners.

Sam Raha, president of Agilent's diagnostic and genomics group (DGG), explained that the firm has examined opportunities to expand its immunohistochemistry and FISH platforms with molecular capabilities — particularly in NGS — through acquisitions.

Raha said that Agilent found Kirkland, Washington-based Resolution attractive due to its platform's ability to look all the major cancer mutations — including indels, single nucelotide variants, fusions, and copy number variations — that are compelling to Agilent's global pharma partners and for companion diagnostic development.

Resolution's ctDx Lung assay, which was co-launched in September with the Laboratory Corporation of America, uses circulating tumor DNA (ctDNA) extracted from a patient's blood sample. The test can help guide oncologists' decisions to administer targeted therapies to patients that have been diagnosed with recurrent, relapsed, refractory, metastatic, or advanced non-small cell lung cancer (NSCLC). After a blood sample arrives at Resolution's CLIA-certified lab, the firm can return results to oncologists within a week.

Raha noted that Agilent believes the partnership between Resolution and LabCorp is important and looks forward to seeing it continue.

Resolution CEO Mark Li could not be reached for comment for this article, but has previously said that the firm has spoken with several undisclosed pharmaceutical partners about leveraging the assay as a companion diagnostic to support therapeutics development.

"Resolution had over $30 million in full-year 2020 revenue tied to working with more than 10 pharma partners and over two dozen programs, and [so] it was important to us to buy something real, both technology-wise and had enough traction in pharma," Raha added.

Agilent also believes that Resolution's liquid biopsy platform is amenable to kitting as an in vitro diagnostic (IVD) product for distribution in the US, European, and the rest of the world markets. Raha said the firm will register the companion diagnostic tests with the relevant regulatory agencies in the US, EU, China, and other countries closely following the approval of each pharmaceutical partner's associated therapeutic.

Raha said that Agilent's primary focus is in the distributed model, which will require some time because pharma companion diagnostic programs will need to go through clinical trials. When the associated drug is launched and receives regulatory clearance for the targeted indication, Agilent will then kit and distribute the specific companion diagnostic assay based on NGS or Resolution's technology.

While Raha noted that Agilent has not yet established a clear commercial timeline for kitted products, he predicts that the firm will begin selling IVD tests globally in two to four years due to its access to labs around the world and history of regulatory approvals.

"Working with regulators and getting registration [is] what we bring to [Resolution] due to our experience of registering products in over 84 countries today," Raha added.  

Beyond lung cancer, Agilent will explore liquid biopsy assays for other cancer types based on its pharma partners' specific needs. However, Raha said "it makes sense" that the companion diagnostic assays that Agilent will develop "would be linked to the most common types, including breast, colorectal, prostate, stomach, liver, [and] cervical cancer."

Agilent has also indirectly participated in the liquid biopsy space for several years with its genomics business. Raha pointed out that Agilent's SureSelect NGS target enrichment and library prep product lines power hundreds of undisclosed global customers' technology in cancer testing and inherited diseases.

"With NGS-based diagnostics, it's all about sample quality," Raha said. "Our quality control system has become the industry standard, and it is used by the  ... vast majority of leading NGS-based diagnostic companies that are either doing [testing] in-house as a laboratory-developed test service, or they're providing some sort of [other] offering."

Agilent ultimately expects to provide distributed Resolution IVD kits integrated with other NGS workflow elements that the firm offers, such as the TapeStation for NGS sample quality control, its Magnis NGS library prep automation system, and informatics products for clinical diagnostic testing workflows.

Agilent will face a crowded field of competitors developing or offering their own blood-based assays to help guide therapeutic decision-making in oncology.

Raha said that Agilent's strategy is relatively unique in its ability to kit and distribute an eventual IVD assay leveraging the Resolution technology and Agilent's capabilities in IVD kit manufacturing, global registration, and distribution. He also highlighted Agilent's ability to access "thousands of diagnostic testing labs" around the world. In contrast, he pointed out that most of Agilent's competitors in the liquid biopsy space have engaged primarily in reference lab-based models.

However, Raha acknowledged that Roche Diagnostics — which previously acquired Foundation Medicine and its US Food and Drug Administration 510(k)-approved FoundationOne Liquid CDx assay in 2018 — will serve as Agilent's closet competitor, as its tissue diagnostic business competes with Agilent's own PDL1 and pathology business.

"What will happen over the next three to five years is a more distributed testing methodology where, along with central labs, there will be more clinical diagnostic labs [and] academic medical centers who themselves will take on more ... NGS-based [cancer] testing," Raha said. "We think that ... getting closer to standard-of-care testing of two to three days will make a difference [for patients]."

Financial expectations

Agilent will initially pay Resolution stockholders $550 million as part of the acquisition, with up to an additional $145 million based on future performances. Raha explained that the two key milestones are related to achieving certain regulatory filings of Resolution's technology in its research pipeline as well as revenue trajectory achievements.

"We expect that Resolution's pharma service revenue will be the lion share of its revenue over the next couple of years," Raha said. "Product revenue will only ramp up in three to five years or so [through] the firm's [CLIA-certified] lab."

Raha noted that Resolution will remain a "relatively independent" part of Agilent's DGG division, with Li reporting to the firm's companion diagnostic business.

Raha said that the acquisition — which the firms expect to close in April — will be slightly dilutive in Agilent's DGG division in the short term. However, Agilent expects to see a positive impact on its earnings per share within a couple of years due to Resolution's financial profile and its anticipated $50 million to $55 million in revenue in 2021. 

"The revenues from Resolution will still be immaterial at the Agilent level, which is above $5.5 billion per year, but we're not looking for cost synergies," Raha said. "Our model is about topline growth, both for the asset we're acquiring and our own firm's growth."

By incorporating Resolution Bio's technology with Agilent's existing workflow and global reach, Raha believes the firms will ensure a faster turnaround time for central lab providers to produce actionable results for patients.

"From all the data we've seen, we believe the non-invasive nature [of liquid biopsy] … is so compelling that it will increasingly become a reality in clinical diagnostics, and this now allows us to fully participate in that through our pharma partners and distributed testing," he added. 

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