WuXi buys big into genomics with NextCODE deal

Chinese CRO giant WuXi PharmaTech ($WX) is continuing its push into genomic sequencing, paying $65 million for NextCODE Health, a Big Data-focused spinout of the high-profile deCODE.

For its money, WuXi gains the use of deCODE's expansive genomics platform, on which NextCODE has a 5-year exclusive lease. The plan is to merge the company into WuXi's existing sequencing operation, creating a combined unit called WuXi NextCODE Genomics, headquartered in Shanghai with outposts in Cambridge, MA, and deCODE's native Iceland.

NextCODE came to be last year shortly after Amgen ($AMGN) paid $415 million for deCODE, planning to make its money by lending out its huge, refined genomic database to healthcare providers, using the technology to help physicians identify and analyze gene mutations and provide fast diagnoses without the need for major IT infrastructure.

Now, integrating that database with its own clinical development-focused efforts in genomics, WuXi believes it has built an end-to-end sequencing and analysis operation. WuXi began its relationship with NextCODE last month in a bioinformatics alliance.

WuXi PharmaTech CEO Ge Li

WuXi CEO Ge Li has long touted his company as a value-adding partner for global R&D, not just a box-checking contractor, and this acquisition fits within the CRO's continuing evolution.

"With the huge unmet medical needs in diseases with a genetic component and the rapid advances in genomics and bioinformatics, now is the right time for WuXi to make a strategic investment in this field, and NextCODE is the right partner," Li said in a statement. "This new venture of WuXi NextCODE Genomics will create important new genomic and bioinformatic products and services to help make personalized treatment and medicine a reality. It will also enable doctors to provide better treatments to patients."

The deal caps a busy 12 months for WuXi and its genomic arm. In October, the company signed a deal with Foundation Medicine ($FMI) to offer that company's cutting-edge cancer profiling tests at its Shanghai lab. And WuXi made a splash in March when the CRO became one of the few researchers in the world to buy a HiSeq X Ten, Illumina's ($ILMN) 10-device system that promises population-scale human whole genome sequencing at $1,000 per person.

The CRO's focus on genomics is part of a cross-cutting plan to grow its presence on the market through expansions in technology and geographic presence. In the third quarter, WuXi's revenue jumped 18% to $173.6 million, a gain driven by 16% growth in its lab services business and a 23% leap in manufacturing. For the full year, the company expects to pull in as much as $672 million, an improvement over its previously announced range of between $665 million and $670 million.

- read the statement

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