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Bio-Techne Seeks to Build Out 'Substantial Diagnostics Presence' With Asuragen Buy

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NEW YORK ─ Bio-Techne expects its acquisition of molecular diagnostics firm Asuragen will soon contribute valuable expertise and add to year-over-year revenue growth in its diagnostics business segment, Bio-Techne's CEO said.

The Minneapolis, Minnesota-based company anticipates that the purchase of Asuragen for up to $320 million will contribute testing products for applications in which Bio-Techne has no presence currently and provide know-how to help it take new diagnostic tests through regulatory approvals, Bio-Techne CEO Chuck Kummeth said in an interview.

Austin, Texas-based Asuragen was the first firm to have received US Food and Drug Administration approval for a diagnostic and carrier screening kit for prospective parents who are potential carriers of Fragile X chromosomal abnormalities, a new market application for Bio-Techne, Kummeth said.

Last year, the FDA authorized the marketing of Asuragen’s AmplideX Fragile X Dx and Carrier Screen Kit through its de novo classification program.

The company also markets an FDA-cleared Quantitidex qPCR IS BCR-ABL kit that enables the monitoring of leukemia patients for minimal residual disease, and it develops and sells and controls for molecular diagnostic tests. Both products, Kummeth said, add a new dimension to Bio-Techne's current portfolio.

He noted that Asuragen has posted revenue growth in the mid-teens year-over year and in 2020, it booked revenues of more than $30 million. For the foreseeable future, Bio-Techne believes that it can improve that to 20 percent year-over-year.  

Further, Asuragen is already profitable and will be immediately accretive to earnings per share, according to Bio-Techne.

The supplier of tools for life science research, therapeutic manufacturing, and clinical diagnostics plans to integrate Asuragen into its Genomics and Diagnostics business for which it booked $52.5 million, up 20 percent year over year, for its fiscal second quarter ending on Dec. 31.

"We're looking to build out a substantial diagnostics presence in the company," Kummeth said. "With Asuragen, it is about staying out of their way. They're already growing … and they're going to have access to capital for expansion."

Asuragen CEO Matt McManus will lead its legacy business and the acquisition integration within Bio-Techne.

"We have a bolt-on acquisition track record that appeals to the companies we acquire," Kummeth said. "When we tell companies that they can continue to grow as a division within Bio-Techne and that we will help them build on synergies, that sounds a lot better than being torn apart" by another company.

Asuragen, founded in 2006, develops products for testing platforms that are widely available including PCR, qPCR, capillary electrophoresis, and next-generation sequencing instruments. Its products are used by clinical laboratories, hospitals, and regional laboratories.

Kummeth said that the firm has eight CE-marked products. For example, in 2020, the firm obtained CE marking for its in vitro diagnostic test for spinal muscular atrophy, called the AmplideX SMA Plus Kit. 

Further, in 2018, the firm obtained CE marking for its QuantideX next-generation sequencing oncology panel for the detection of clinically relevant variants. The kit screens for 21 of the most commonly observed genomic variants across a variety of cancers including non-small cell lung cancer, colorectal cancer, and melanoma.

Asuragen is also developing a panel for carrier screening comprising eight undisclosed genes, and a single-gene panel for cystic fibrosis, Kummeth said.

He added that about 60 percent of Asuragen's revenues comes from its carrier screening products, and about 20 percent comes from sales of its BCR-ABL kit. "The remaining 20 percent comes from molecular controls," an area that Bio-Techne is eager to enter, Kummeth said. According to the firm's estimates, the total addressable market for its carrier screening tests amounts to about $750 million and for its chronic myeloid leukemia tests amounts to about $250 million.

Bio-Techne has relied largely on acquisitions for its Genomics and Diagnostics segment. In 2016, it paid up to $325 million to acquire Advanced Cell Diagnostics, a business that develops consumables for use in genomic analysis. It also has a portfolio of probe reagents and reagent kits for manual and automated use, and ACD markets an RNA in situ hybridization technology, called RNAscope, which enables researchers to visualize the expression of many genes in individual cells while retaining information on tissue morphology.

In 2018, Bio-Techne paid up to $557 million to acquire Exosome Diagnostics, which markets a liquid biopsy exosome-based test, called ExoDx Prostate, to help clinicians determine whether a patient with an ambiguous PSA test needs a prostate biopsy. Bio-Techne targets urologists for sales of the urine-based test, which is available as a lab-based test as well as an at-home collection kit that can be initiated by a physician and sent to a patient’s home.

Kummeth said that the Exosome Dx laboratory has performed more than 60,000 ExoDx tests to date. However, in 2020, Bio-Techne saw less traction for its tests than anticipated because fewer urologists have been working during the coronavirus pandemic. The business, he added, is about one year away from being profitable.

SVB Leerink analyst Puneet Souda said in an interview that the investment bank expects "most of the synergies [from the Asuragen acquisition] will be on Exosome Dx and very limited on the life science tools side of its business."

Under Bio-Techne, the Asuragen business could reach $100 million over the five years following the acquisition, which adds scale to Bio-Techne's molecular diagnostic franchise, Souda said in a research note.

Bio-Techne's ACD acquisition "has already delivered, and we believe should continue to deliver mid-teens growth longer term," Souda said. The Exosome Diagnostics acquisition has taken longer to deliver but with Medicare and commercial payor reimbursement, the firm "should deliver stronger results in FY21 and beyond," he added.

Kummeth said that Asuragen's regulatory experts will be the key to helping Bio-Techne achieve one of its main strategic objections for the Exosome Dx business. "The company has experts in getting tools from research-use-only to IVD kits, and kitting Exosome Diagnostics' tests is going to be a big deal in our future," Kummeth said. "We've been building out our diagnostics presence on top of the content we have for RUO, but to speed that up we had to acquire a new team and experience."

Kidney rejection testing

The next test in Bio-Techne's Exosome Diagnostics portfolio is a multigene urine-based exosomal mRNA assay for kidney transplant rejection, called ExoTru. The Exosome Diagnostics business developed the test in collaboration with the Transplantation Research Center at Boston-based Brigham and Women's Hospital.

Last week, Bio-Techne announced the publication of preliminary data for the test in a study published in the Journal of the American Society of Nephrology. Among the most important outcomes, the test showed it can discriminate between different types of kidney rejection, which is valuable for clinicians seeking to optimize patient care, Kummeth said.

IVD assays provide a welcome alternative to tissue biopsies used to test for kidney transplant rejection. Clinicians currently rely on measuring changes in serum creatinine levels, but that is a low-performing biomarker for kidney transplant rejection, Kummeth noted.

Bio-Techne said the published study showed high stability for urinary exosomes and reliability in the monitoring of patients for allograft rejection. Further, its assay showed that it can discriminate between any-cause rejection and no rejection with a negative predictive value of 93.3 percent and a positive predictive value of 86.2 percent, and it differentiated between T-cell mediated rejection (TCMR) and antibody-mediated rejection (ABMR) with a negative predictive value of 90.6 percent and positivity predictive value of 77.8 percent.

Bio-Techne anticipates conducting early access testing using the kidney transplant rejection assay later this summer in Exosome Diagnostics' laboratory in Massachusetts, and plans to conduct a second study to validate the clinical utility of the assay.

The firm believes that the total addressable market for its prostate test is about $1 billion, and the market for its kidney rejection test in development is up to $2.5 billion, Kummeth said.

Marketing the kidney rejection test should be easier than marketing the prostate test, he said. The firm needs to target 25,000 urologists for its ExoDx Prostate but only 80 percent of the 100, or so, top organ transplant centers that do all US-based kidney transplants.

SARS-CoV-2 antibody testing

In a separate development for its diagnostics business, Kummeth noted that Bio-Techne expects sales to rise soon for the COVID-SeroKlir SARS-CoV-2 antibody ELISA test that it has worked on with Kantaro Biosciences.

Last year, Kantaro received FDA EUA for the test, which is designed to detect the presence and precise levels of immunoglobulin G (IgG) against SARS-CoV-2. New York City-based Kantaro, a joint venture of Mount Sinai Health System and RenalytixAI, partnered with Bio-Techne to scale manufacturing and for test distribution.

Kantaro and Bio-Techne expect to obtain a new regulatory claim for the test that would enable its use to measure specific antibody titers and to evaluate the potential that a patient is protected against SARS-CoV-2, Kummeth said, adding that the test could be used to assess the effectiveness of a vaccine on an individual who's been vaccinated.

"We think there will be a lot of demand for this test when more people are vaccinated," he said.

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