By Diagnostics World Staff
December 3, 2019 | Veracyte announced today that it has executed a definitive agreement with NanoString for the exclusive global license to the nCounter platform for diagnostic use as well as other tests. Veracyte will pay NanoString $40 million in cash and $10 million in Veracyte common stock in addition to milestone payments.
The strategic transaction positions Veracyte to expand its genomic diagnostics business globally, with the ability to deliver its advanced genomic tests to physicians and their patients via hospital and clinical laboratories throughout the European Union and other parts of the world.
Veracyte expects the expertise of the key technical team that will join the company as part of the transaction to facilitate test integration, and members of the NanoString global diagnostics sales, marketing, medical affairs and distribution teams will also join Veracyte.
Veracyte believes that the transaction will ultimately enable it to access a global market worth more than $40 billion for its current and pipeline products, while expanding its margins through test menu expansion on the nCounter platform. The elegantly designed, FDA-cleared, automated nCounter system is expected to enable broad testing utility through its ability to simultaneously analyze RNA, DNA or protein targets in up to 800 genes.
“NanoString has developed a versatile, world-class diagnostics platform, which we believe will enable us to realize our vision of becoming a leading global provider of advanced genomic testing,” said Bonnie H. Anderson, Veracyte’s chairman and chief executive officer in a press release. “We are especially excited about the opportunity to bring our noninvasive nasal swab classifier to a global market, where it can help save more lives in the fight against lung cancer. Ultimately, this transaction will further our ability to inform clinical care decisions throughout the patient journey in cancer and other clinical indications, while allowing us to deliver profitable, long-term growth for our shareholders.”
“Veracyte is a world-class diagnostics company with an expanding menu of innovative genomic tests that are well-positioned for successful global commercialization,” said Brad Gray, president and chief executive officer of NanoString in the same statement. “They are the ideal company to help ensure that our nCounter-based diagnostic platform can benefit as many patients around the world as possible.”
Veracyte expects to begin offering its Envisia classifier, for use in idiopathic pulmonary fibrosis diagnosis, to international customers in 2021 as a kit-based test that runs on the nCounter system. The company expects its in-development nasal swab classifier, for use in lung cancer diagnosis, to follow on the nCounter system in 2022, after the test becomes available in Veracyte’s CLIA laboratory in the United States in early 2021. The nCounter system can also run additional genomic tests developed by Veracyte, as well as by potential diagnostics or biopharmaceutical partners seeking access to global markets.
The acquisition of the Prosigna breast cancer prognostic test and the LymphMark lymphoma subtyping assay further expands the company’s oncology portfolio. The Prosigna test is available on the nCounter system globally and in the United States to inform risk of recurrence in subgroups of women with breast cancer. Veracyte intends to offer the Prosigna test as a distributed kit within and outside of the United States. It will also add the test to its menu of advanced genomic products offered in the United States through its CLIA- certified laboratory. The LymphMark lymphoma subtyping test is currently in development.
In addition to the $40 million cash and $10 million in common stock payment, Veracyte has agreed to pay up to an additional $10 million in cash contingent upon the commercial launch of Veracyte diagnostic tests for use on the platform. Veracyte expects to realize a modest revenue contribution through the transaction of $6 million to $8 million in 2020, with a neutral impact to cash flow from the current business.
Veracyte’s product discovery and certain commercial products will continue to be powered by its RNA whole-transcriptome sequencing platform, enabling continued expansion of its world-class biorepositories of patient samples in key clinical indications.