NEW YORK (360Dx) – Quest Diagnostics announced Tuesday it will acquire the US laboratory testing business of Oxford Immunotec Global for $170 million in cash.
As part of the definitive agreement reached by the companies, the acquisition will include the T-Spot.TB tuberculosis testing service and the Accutix tick-borne disease testing service provided by Oxford Immunotec laboratories in Norwood, Massachusetts and in Memphis, Tennessee. Oxford Immunotec is headquartered in Abingdon, UK.
The T-Spot.TB test is an interferon-gamma release assay (IGRA) intended for use as an aid in the diagnosis of Mycobacterium tuberculosis infection and disease. The Infectious Diseases Society of America and other medical associations recommend blood-based IGRA TB testing over traditional skin testing for certain patient populations, due to relative accuracy and the ability to perform the testing with one office visit, the firms said in a statement.
During Oxford Immunotec's conference call in July to discuss its second quarter financial results, Oxford Immunotec CEO Peter Wrighton-Smith said that TB-related revenues grew 17 percent year over year to $25 million, "the strongest reported growth in our TB business since 2016."
CFO Rick Altieri added that more than 250,000 TB tests were sold in the US in Q2 as kits and as a service business.
As part of today's transaction, Oxford Immunotec will sell T-Spot.TB test kits and related accessories to Quest through a long-term supply agreement, which will go into effect at the closing of the acquisition. In addition, the parties expect to enter into a strategic collaboration agreement to drive continued growth of T-Spot.TB testing in the US.
Ross Muken, an analyst at investment bank Evercore ISI, noted that the deal is consistent with Quest's pattern of building out specialty testing in high growth markets. The growth rate of the tuberculosis testing market ranges from the mid-teens to 20 percent, he said in a note published Tuesday. Muken also said that Quest can bring scale and reach to Oxford Immunotec's US business, enabling more efficient lab operations.
Quest, which is based in Secaucus, New Jersey, said it intends to continue to offer Qiagen's QuantiFeron TB blood testing services to provide physicians with a choice in blood-based TB testing. Quest's addition of Oxford Immunotec's tuberculosis is unlikely to hurt Qiagen as the market for IGRA tests is still considered less than 25 percent penetrated, according to Muken.
"This acquisition will extend our capabilities in infectious disease diagnostics, consistent with our strategy to accelerate growth by broadening access to diagnostic innovation. It will build on our momentum in tuberculosis services by enabling us to bring greater choice to physicians who seek innovative blood-based TB testing over traditional methods," said Steve Rusckowski, chairman, president and CEO of Quest.
Wrighton-Smith said that the transaction will help the company grow access to T-Spot.TB in the US.
The transaction has been approved by the boards of directors of both companies, and is expected to be completed in the fourth quarter of 2018, subject to customary regulatory approvals. Shareholder approval will not be required for either company.
The deal follows Quest's announcement on Monday that acquired fertility diagnostics service firm ReproSource.