Exact Sciences Rallies On 2 M&A Deals In Cancer Screening Market

Shares of cancer screening and diagnostics company EXACT Sciences Corporation EXAS were rallying to a record high Tuesday after it announced two M&A transactions and third-quarter results.

Exact Sciences Strikes 2 Deals: Madison, Wisconsin-based Exact Sciences said it has agreed to acquire Thrive Earlier Detection, a blood-based, multi-cancer screening company, for up to $2.15 billion in cash and stock.

Of the total transaction value, $1.7 billion would be payable at closing, comprising 65% stock and 35% cash. An additional $450 million is payable based on achievement of certain milestones related to the development and commercialization of a blood-based, multi-cancer screening test.

Exact Analyst Says Deal Validates Liquid Biopsy Market: The Thrive acquisition comes just over one month after Illumina, Inc.'s ILMN acquisition of the competing pre-revenue liquid biopsy screening company GRAIL for about $8 billion, and provides further validation for the liquid biopsy market as a whole, SVB Leerink analyst Puneet Souda said in a note.

"We believe this acquisition further catalyzes the entire liquid biopsy market, and view expected commercial synergies upon launch of CancerSEEK given EXAS' large, established sales team and relationships with primary care physicians and offices throughout the country," the analyst said.

Exact Buys Base Genomics: Exact Sciences also said it has acquired Base Genomics, an epigenetics company engaged in DNA methylation analysis — an approach to detect cancer in its earliest stages.

The deal, which has been approved by boards of both companies, is expected to close in the first quarter of 2021.

"Combining Thrive's pioneering early-stage screening test, CancerSEEK, with Exact Sciences' best-in-class scientific platform, clinical organization, and commercial infrastructure will establish Exact Sciences as a leading competitor in blood-based, multi-cancer screening," the company said.

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Exact Sciences Q3 Results: Exact Sciences said its third-quarter revenue came in at $408.4 million, up about 87% year-over-year from $218.8 million.

Analysts, on average, estimated revenues of $337.37 million for the quarter.

Screening revenue declined 2% to $214.6 million, while precision oncology and COVID-19 testing revenue came in at $91.6 million and $102.2 million, respectively.

The loss per share widened from 31 cents to $1.46, weighed down by higher cost of sales and opex.

Separately, the company also announced agreements to sell an aggregate of 8.61 million shares in a registered direct offering to 10 institutional investors, including some of its largest shareholders as well as health care specialist firms Casdin Capital and Rock Springs Capital.

At $101 each, the company expects to raise net proceeds of $866 million from the offering.

EXAS Price Action: Exact Sciences shares were up 21.45% at $129.43 at last check Tuesday.

Related Link: Exact Sciences's Debt Overview