Exact Sciences Soars on $2.15 Billion Deal for Testing Firm

(Bloomberg) -- Exact Sciences Corp. said it will acquire Thrive Earlier Detection Corp. to gain technology for cancer screening in a deal worth as much as $2.15 billion.

The cash and stock agreement will bring closely held Thrive’s CancerSeek technology to Exact Sciences, helping establish the Madison, Wisconsin-based company as a competitor in blood-based, multi-cancer screening, according to a statement. Exact Sciences jumped as much as 22% to $130, its highest since the shares began trading in 2001.

Testing companies are increasingly developing liquid biopsies that sift through patients’ blood for early signs of tumors, hoping to help doctors begin treatment before the disease gets out of control. Exact Sciences’ acquisition marks the third such deal this year. Last month, Illumina Inc. snapped up Grail Inc. for roughly $8 billion ahead of its initial public offering while in June Invitae Corp. picked up another private company planning to go public, ArcherDx Inc., for about $1 billion.

Exact Sciences’ deal is a “bargain” compared to Illumina’s, according to Vijay Kumar, an Evercore ISI analyst. The acquisition “removes the bear thesis that Exact Sciences could be cannibalized by liquid biopsy tests,” he wrote in a research note. The market for a simple blood test that can detect cancers is enormous, with some analyst estimates putting it at $30 billion or more.

CancerSeek looks for gene mutations and other markers that can potentially help spot several forms of cancer. The merger will lead to improvements in the accuracy of CancerSeek and get the test in front of doctors and patients faster, Exact Sciences Chief Executive Kevin Conroy said in a phone interview.

Conroy and Thrive expect to start a large registrational study likely including tens of thousands of patients next year. The trial will target multiple different cancer types and the effort will likely take years “to do the right way,” Conroy said.

The pursuit of a viable cancer detection test is a crowded one. Also racing alongside Exact Sciences, Illumina and Invitae are Guardant Health Inc. and closely-held Freenome Inc. “Cancer is the number two cause of death in the U.S.,” Conroy said. “There will be multiple tests.”

Exact Sciences was an early backer of Thrive.

Under the terms of the agreement, Thrive will receive $1.7 billion at the deal’s closing, with 65% in Exact Sciences common stock and 35% in cash, subject to certain adjustments. Thrive would receive an additional $450 million based on reaching goals in developing its testing technology. The deal is expected to close in the first quarter of 2021.

Exact Sciences also announced a deal for Base Genomics Ltd. for $410 million to expand its testing technology.

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