NEW YORK – Yourgene Health said on Tuesday that it is acquiring AGX-DPNI, its current distribution partner for its Iona noninvasive prenatal test in France, for €2.4 million ($2.7 million) in cash and up to €1.7 million in cash earn-out payments based on sales growth performance.
AGX-DPNI is a newly formed entity that consists of the NIPT distribution business of AdGeniX, a privately held company based near Versailles that sells cytogenetic and pharmaceutical laboratory products.
AdGeniX became the distributor of Yourgene's Iona test in 2015 and has rapidly grown sales for the test, a trend that is expected to continue following the introduction of NIPT reimbursement in France in early 2019. Sales are expected to grow further once Yourgene launches its Illumina sequencer-based Iona test, for which it is currently seeking CE-IVD approval.
Yourgene said that its NIPT customers in France are mainly large private laboratory networks with nationwide coverage and access to new high-growth markets in French-speaking regions of Africa and the Middle East.
Under the terms of the deal, Yourgene will pay AdGeniX €2.4 million in cash. Two additional cash payments of €0.6 million each are payable in October of this year and April of next year, depending on NIPT sales growth, and another €0.5 million is due in April 2021 if NIPT sales exceed additional targets.
To finance the initial payment and to provide general working capital, Yourgene has raised gross proceeds of €2.5 million through a direct subscription of 17,482,517 new ordinary shares at 14.3p per share with BGF Investment Management, an existing shareholder of Yourgene. The company plans to meet the earn-out payments using future cash flow resulting from the acquisition.
Yourgene CEO Lyn Rees said in a statement that the acquisition will have an immediate positive impact on earnings. "Whilst this provides us with our first direct commercial presence in Europe, and gives us an EU-based presence post-Brexit, it also opens up access to high-growth French-speaking African and Middle Eastern markets not previously addressed by Yourgene," Rees said.
In a note to investors, analysts at N+1 Singer wrote that the acquisition is expected to add £0.8 million ($1 million) to earnings and is strategically important to Yourgene ahead of the rollout of its Illumina-based test later this year. "Overall, this looks to be a nice accretive deal and moves Yourgene further into sustainable profitability," they wrote.