Myriad Genetics acquires genetic testing startup Counsyl for $375 million
The demands for genetic testing continue to rise. The global genetic testing market is anticipated to grow from $5.05 billion in 2017 to $11.86 billion by 2026. As of 2018, there are at least 120 genetic startups, according to publicly available data by Angel.co. Counsyl is a health technology startup that offers DNA screening for men, women, and their children.
Founded in 2008 by Balaji S. Srinivasan, Eric Evans, Ramji Srinivasan, and Rishi Kacker, Counsyl focuses on diseases where advanced knowledge makes a difference in health outcomes, whether it’s changing a behavior, pursuing preventative measures, or simply preparing for what lies ahead. Counsyl has screened over 500,000 patients and served over 6,000 health professionals in its modern clinical laboratory. From the purely mechanical to profoundly human, Counsyl strives to make DNA screening truly accessible to everyone.
Today, Myriad Genetics, Inc., a leader in molecular diagnostics and personalized medicine, announced that it has signed a definitive agreement to acquire Counsyl, a pioneer in expanded carrier screening and non-invasive prenatal screening for $375 million through a combination of cash and Myriad common stock. Counsyl has experienced rapid growth since being founded in 2007, and in the last twelve months alone has generated more than $134 million in revenue and performed over 280,000 reproductive genetic tests.
On completion of the transaction, which is expected to close in Myriad’s fiscal first-quarter 2019, Counsyl will become a wholly owned subsidiary of Myriad. A discussion on the details and strategy underlying this acquisition will be provided on a conference call tomorrow, May 29, at 7:30 a.m. EDT.
Myriad intends to fund the transaction through cash on hand, an existing revolving credit facility and the issuance of common stock. The transaction was valued at $375 million in cash with shareholders having the right to receive up to 25 percent of that consideration in Myriad common stock based on a trailing 30 day average share price. The number of shares delivered to former Counsyl shareholders will not exceed 3 million shares. At the end of the fiscal third quarter, Myriad had cash and cash equivalents of $209 million and $231 million in availability on its revolving credit facility. The transaction is expected to close in the fiscal first-quarter 2019 and is subject to customary closing conditions and regulatory approvals.
“By offering Counsyl’s best-in-class reproductive testing products in conjunction with Myriad’s leading hereditary cancer tests, we are well positioned to be the premier women’s health genetic testing company,” said Mark C. Capone, president and CEO of Myriad Genetics. “The Counsyl management team has a remarkable track record of success, and combining our commercial capabilities will lead to a three-fold increase in physician reach for Counsyl’s reproductive tests.”
“We are excited to be joining the global leader in personalized medicine to create the largest women’s health genetic testing company in the world,” said Ramji Srinivasan, CEO of Counsyl. “As our physicians increasingly look for a single source of genetic testing, we can leverage our collective strengths to provide the highest quality genetic tests with a seamless customer experience.”
With this acquisition, Myriad Genetics will get access into the high-growth reproductive testing market. Myriad estimates that approximately 900,000 carrier screening tests and approximately 1.3 million non-invasive prenatal screening tests will be performed in the United States during its fiscal year 2018. The company believes these markets will grow at a double-digit rate with approximately 3.5 million total reproductive genetic tests performed in the United States in fiscal year 2023, representing a market of more than $1.5 billion.
Counsyl is the current market leader in expanded carrier screening with its Foresight™ test which covers more than 175 clinically actionable conditions with high accuracy across ethnicities (greater than 99.99% for most genes on the panel) and the highest detection rate of any commercially available test on the market. In the non-invasive prenatal screening market, Counsyl has been rapidly gaining market share with its Prelude™ test which has the lowest inconclusive rate of any product on the market. Offering these tests in conjunction with Myriad’s leading hereditary cancer test provides a single source of genetic tests for the 40,000 physicians in the women’s health market.
Counsyl reproductive genetic tests are broadly covered by commercial insurance in the United States with the potential for expanding reimbursement for both Foresight and Prelude. The acquisition also provides potential for revenue synergies by tripling reproductive testing reach. Currently, Myriad has a women’s health sales force of approximately 225 sales representatives and Counsyl has approximately 80 sales professionals. The combined team will represent the largest women’s health sales force in molecular diagnostics and will provide a three-fold increase in physician reach for reproductive testing.
The integration of the two companies will provide opportunities to drive efficiencies and leverage the unique capabilities within each company. For example, Counsyl has developed innovative patient-centric software tools and electronic medical record integration that can be leveraged across the entire portfolio of Myriad products.