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Veracyte to Acquire Decipher Biosciences for $600M; Prelim Q4 Revenues Grow 14 to 18 Percent

NEW YORK – Veracyte on Tuesday announced preliminary fourth quarter revenue growth of 14 to 18 percent.

The firm has also entered a definitive agreement to acquire San Diego-based urologic cancer test developer Decipher Biosciences for $600 million in cash and stock.

Veracyte said that it expects Q4 revenue of $34.0 to $35.0 million compared to $29.7 million a year ago and above the consensus Wall Street estimate of $31.8 million. The firm expects Q4 product and testing volume of between 13,000 and 13,200 tests.

Veracyte plans to report full year revenue of between $117.0 million and $118.0 million, compared to $120.4 million in the same year prior, which would beat analysts' estimate of $114.9 million.

The firm also expects product and testing volume of between 44,400 and 44,600 tests for the full year, compared to 40,292 tests for full year 2019.

Veracyte also plans to report ending the year with cash and cash equivalents of between $345.0 million and $350.0 million.

"We continued the strong rebound in our business during the fourth quarter, with revenue and genomic testing and product volume exceeding pre-pandemic levels," Bonnie Anderson, chairman and CEO of Veracyte, said in a statement. "With our comprehensive menu of advanced genomic tests that address unmet needs across the care continuum our platform for serving global markets and our robust pipeline, we believe we are well-positioned for long-term sustained growth."

Decipher acquisition

As part of the agreement, Decipher will become a wholly owned subsidiary of Veracyte, which will pay $600 million to Decipher security holders, consisting of $250 million in cash and up to $350 million in stock consideration. The number of Veracyte shares issued at the closing will be based on a fixed price of $54.30 per share, resulting in a maximum issuance of 6.4 million common shares.

Veracyte has the option, until March 15 and the fourth business day following the closing, to substitute cash in lieu of shares in any amount up to the entire stock consideration or $350 million.

Anderson noted that Tina Nova, president and CEO of Decipher, will join Veracyte as general manager of urologic cancers. Serving as member of Veracyte's board since 2015, Nova is now resigning from the firm's board as part of the agreement. Decipher's employees will also join Veracyte's team.

Decipher's portfolio of tests for urologic cancers apply whole-transcriptome analysis and machine learning algorithms to improve patient decision-making and accelerate adoption of new therapies.

Decipher's Prostate Biopsy and post-radical prostatectomy tests are broadly covered by Medicare and private payors. The firm expects to commercially launch its Decipher Bladder test later this year.

Anderson believes the acquisition will help Veracyte serve patients across the clinical care continuum in 7 of the 10 most prevalent cancers in the US with highly differentiated and clinically impactful tests. Veracyte expects that about 1.1 million patients in the US, based on cancer incidence, will potentially be able to benefit from the firm's comprehensive menu of advanced diagnostic tests.

In addition, Veracyte believes the Decipher GRID will augment the firm's biorepositories, positioning Veracyte to advance biopharma company partnerships and pipeline development efforts.

"With our best-in-class nCounter diagnostics platform, we are well-positioned to deliver comprehensive genomic cancer testing to physicians and their patients worldwide," Anderson said in a statement.

Veracyte expects to close the transaction by May.

"Our goal is to enable better treatment decisions and patient outcomes in urologic cancers by providing valuable information about the underlying biology of a patient's tumor," Nova said in a statement. "Our team has made significant process … [and] is thrilled to join Veracyte to benefit from their expertise and infrastructure, accelerating commercial expansion of our tests in the US and globally." 

In mid-morning trading on the Nasdaq, Veracyte's shares were up 11 percent at $72.46.

For a more in-depth look at the acquisition, click here.

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