Natera breaks ties with Qiagen on NGS testing, citing Illumina deal

Dive Brief:

Natera has ended its agreement with Qiagen on next generation sequencing-based genetic tests and accused its former partner of breaching of the terms of their deal.
In a regulatory filing late Thursday, Natera framed the termination, effective March 8, as a consequence of Qiagen’s decision to stop developing its next generation sequencing platform and ally with Illumina.
The termination follows a tumultuous few months for Qiagen, which changed its CEO and NGS strategy before accepting an $11.5 billion takeover offer from Thermo Fisher Scientific.

Dive Insight:

Two years ago, Natera agreed to develop cell-free DNA assays for Qiagen’s GeneReader NGS system. Around 18 months later, Qiagen suspended development of its NGS platform and struck a deal to develop and commercialize IVD kits for use with Illumina’s sequencing equipment.

After hearing Qiagen’s plans, Natera notified its partner “of its material breach of the agreement.” As the agreement empowers Natera to terminate the partnership in the event of an “uncured material breach,” the cell-free DNA testing specialist has decided to cut Qiagen loose.

The full consequences of that action are still being decided. In disclosing the news, Natera noted that the deal features provisions “for monetary payment by the breaching party in certain circumstances.” Natera said it has received an upfront license fee and prepaid royalties totaling $40 million, plus $5 million in tiered royalties, in conjunction with the deal. Natera and Qiagen are still discussing “their respective obligations resulting from the termination of the agreement,” rendering the financial implications of the dispute unclear.

Qiagen originally partnered with Natera to enable laboratories with GeneReader systems to perform prenatal screening and other types of genetic testing in-house. However, Qiagen’s situation changed in the months following the signing of the deal.

Notably, by October 2019 Qiagen was contending with a sales slowdown in China. Qiagen disclosed the headwind alongside news of the departure of its CEO and decision to stop development of its NGS system and instead rely on Illumina.

The following month, Qiagen revealed it had received several non-binding of indications of interest from companies weighing up whether to buy the business. Bloomberg named Thermo Fisher as one of the companies interested in buying Qiagen.

Late in 2019, Qiagen said it would remain an independent company because the takeover talks failed to yield a “compelling” proposition. That changed earlier this month when Qiagen said it had accepted an offer from Thermo Fisher — a deal valued at $11.5 billion.