The acquisition will combine Haystack's highly sensitive minimal-residual disease cancer-detection technology with Quest's oncology, genomics and pathology expertise, including solid tumour sequencing, specimen collection and EHR connectivity
Quest to acquire Haystack Oncology. (Credit: Louis Reed on Unsplash)
US-based diagnostic laboratory Quest Diagnostics has agreed to acquire Haystack Oncology, an early-stage oncology company, for about $450m.
Under the terms of the agreement, Quest will make an upfront cash payment of $300m at closing, along with an additional payment of up to $150m in potential milestone payments.
Established in 2021, Haystack has developed a minimal residual disease (MRD) detection technology, based on circulating tumour DNA (ctDNA).
MRD testing is a type of liquid biopsy testing that involves identifying (ctDNA) in the bloodstream of patients, who have undergone surgery and treatment for cancer.
Haystack developed the technology based on 20 years of research and development by experts from Johns Hopkins University, including Bert Vogelstein, Ken Kinzler and Nick Papadopoulos.
The transaction is expected to be closed in the second quarter, subject to certain customary closing conditions, including a regulatory review.
Upon closing of the acquisition, Quest will use the MRD test developed at Haystack for its new clinical lab services to be offered in 2024.
Haystack CEO and president Dan Edelstein said: “Combining Haystack with Quest is a major step forward in translating two decades of world-class liquid biopsy research and development into clinical laboratory services that are highly reliable and broadly accessible.
“With Quest, we expect to increase and accelerate access to important tests that will improve the quality of cancer MRD detection and recurrence monitoring for patients. Working together, we have the potential to greatly transform the patient journey and save lives.”
Quest said that the acquisition will combine its expertise and scale in oncology, genomics and pathology, with Haystack’s highly precise MRD cancer-detection technology.
The company has expertise in next-generation tumour sequencing, including identifying patient-specific mutations for Haystack’s tumour-informed MRD approach.
It employs about 400 pathologists through its AmeriPath speciality pathology-diagnostics business and has around 7,000 locations in the US for blood and other specimen collection.
J.P. Morgan Securities served as the exclusive financial advisor to Quest, and Weil, Gotshal & Manges as legal advisor to Quest, while Goldman Sachs & Co. served as the exclusive financial advisor, and Goodwin Proctor as legal advisor to Haystack, on the transaction.
Quest Diagnostics chairman, CEO and president Jim Davis said: “We are excited by the opportunity to work together with Haystack Oncology, a company that we believe has developed a best-in-class ctDNA MRD technology.
“Haystack’s liquid biopsy technology, combined with Quest’s strengths in screening, pathology and sequencing, will now position us to lead in the fast-growing MRD category.
“Working with Haystack, we have an opportunity to broaden access to MRD insights and potentially improve favourable long-term outcomes from cancer.”