Agilent strikes $550M Resolution buyout to muscle in on liquid biopsy space

Dive Brief:

Agilent Technologies has struck a deal to buy Resolution Bioscience for $550 million upfront to expand in the liquid biopsy market.
Resolution sells products including a test for genes associated with non-small cell lung cancer, putting it in competition with companies such as ArcherDX, Foundation Medicine and Guardant Health.
Analysts at Evercore said the Resolution takeover was "extremely compelling" and calling the price fair to get into a fast-growing market.

Dive Insight:

The liquid biopsy sector has been a hotspot for medtech dealmaking in recent months, with Illumina inking an $8 billion takeover of Grail and Exact Sciences paying $2.15 billion to buy Thrive Earlier Detection. Those deals have come amid a period in which companies have stepped up their pursuits of key testing markets and CMS has outlined a path to Medicare coverage.

Agilent has a presence in the market for profiling tumors using next-generation sequencing through products such as ClearSeq but is on the periphery of the liquid biopsy space. The move to acquire Resolution will give Agilent a beachhead in the sector.

Resolution sells cancer diagnostics to biopharma and clinical customers using a liquid biopsy assay platform that supports a CLIA test service and distributable kits. Last year, LabCorp entered into a commercial partnership to increase access to Resolution's ctDx Lung, a test for mutations in genes associated with non-small cell lung cancer.

The various products and services brought in $35 million last year. Agilent expects Resolution's sales to rise to up to $55 million this year. The numbers are small for a company such as Agilent, which generated revenues of $5.3 billion last year, but the growth rate and potential addressable market suggest Resolution could ultimately bring in significant sales.

Such projections have led investors and strategic buyers to place big premiums on the valuations of liquid biopsy companies. Analysts at Evercore said the most comparable publicly traded companies to Resolution trade at up to 35 times their current revenues.

The upfront component of the Resolution takeover is around 10 times Resolution's forecast sales for this year. The Evercore analysts said the price is "perhaps surprising" and makes the deal appear to be "extremely compelling." If Resolution commanded a similar premium to its public peers, Agilent would have needed to pay more than $1 billion. As it is, Agilent will pay less than $1 billion even if Resolution hits all its performance goals, which are tied to $145 million in milestones.