Once again, Neogenomics, Inc. is using an acquisition to build up its cancer-testing business. In a deal that closed on Jan. 10, the lab company acquired the Oncology Division of Human Longevity, based in San Diego.
Neogenomics said it paid $37 million for the division of Human Longevity that does next-generation sequencing services for pharmaceutical companies.
Last year, the Oncology Division generated approximately $10 million in revenue and ended the year with a backlog of approximately $15 million of signed contracts, NeoGenomics said in a press release. In addition to the added revenue, NeoGenomics gets the division’s workforce as well, stated Douglas VanOort, the Chairman and CEO of NeoGenomics.
Germline, Exome, WGS
“We are delighted to add an experienced, specialized molecular workforce with strong next-generation sequencing expertise, particularly in servicing pharmaceutical customers,” he said in the press release. The acquisition will expand NeoGenomics’ ability to serve pharmaceutical companies with germline testing, as well as whole exome and whole genome sequencing, he added.
The acquisition expands Neogenomics’ pharma division, which serves pharmaceutical companies doing clinical trials and drug development. This division represented 14.5% of the lab company’s revenues in 2018. The bigger proportion of NeoGenomics’ fast-growing clinical oncology testing business.
For the past five years, NeoGenomics has grown steadily by making significant acquisitions since 2015 when it spent $275.2 million to acquire Clarient, a unit of GE Healthcare’s Life Sciences. Included in that was Clarient Diagnostic Services, which provides cancer diagnostic testing to hospitals, physicians, and pharmaceutical companies. (See “NeoGenomics to Acquire Clarient for $275 Million,” TDR, Oct. 26, 2015.)
Acquired Genoptix in 2018 Three years later, NeoGenomics completed the acquisition of the clinical lab company Genoptix for $125 million in cash and one million shares of NeoGenomics’ common stock. At the time, Genoptix was a clinical oncology lab, specializing in hematology and solid tumor testing. The deal expanded NeoGenomics’ reach into oncology practices.
Because of its sustained, profitable growth, the share price of Neogenomics has skyrocketed. In June of 2018, its shares traded at about $8/share. Last week, its shares were priced at more than $32/share, according to company data.
For its part, Human Longevity said it will use the cash for working capital to supplement the $30 million of cash that it raised in a round of financing announced in November from biotech investors.
In a press release about the sale of the Oncology Division, Human Longevity President David Karow, MD, PhD, said, “The sale of this division allows us to focus entirely on longevity and extending the healthy, high-performance human lifespan.”
Human Longevity’s Problems In December 2018, The Wall Street Journal (WSJ) reported that investors in Human Longevity had questions about the company’s own longevity. Shortly after it was founded in 2014, the company had a valuation of $1.6 billion. But by the end of 2018, a new round of financing valued the company at about $310 million, a decline in value of about 80%, the WSJ reported.
Human Longevity did enjoy one major accomplishment. In 2016, the company published a study about what it found from its “high quality, in-depth sequencing (30X to 40X
coverage) of 10,545 human genomes.” In its press release about the study, Human Longevity said, “The team uncovered 150 million new single nucleotide genetic variants (SNVs), 82 million of which were novel.” At the time, this was one of the world’s largest database of whole human genomes.
J. Craig Venter, who helped sequence the first human genome, was one of the company’s cofounders and served as Chief Executive Officer until he left that role early in 2017.
By the end of the year, he had returned to the CEO position and then stepped down again in May 2018, the company said.
In July 2018, Human Longevity sued Venter’s research institute in U.S. District Court in California, alleging misappropriation of trade secrets.