Myriad Genetics jumps into RA Dx with its $270M Crescendo Bioscience deal

Myriad Genetics ($MYGN) dropped a big hint in November that it would pursue a major acquisition, and now it has pulled the trigger. The Utah company known for its predictive cancer tests said it will pay $270 million for Crescendo Bioscience, a California outfit that has been making a name for itself launching a rheumatoid arthritis molecular diagnostic.

That purchase price includes a $25 million investment Myriad made into Crescendo last November, a transaction Myriad termed a loan. If all of the regulatory and closing requirements can be met, the deal will close before the end of Myriad's 2014 fiscal year.

Crescendo plans to keep its name, become a wholly owned Myriad subsidiary and remain based in South San Francisco. Founded in July 2002, the company employs 130 people and is best known for Vectra DA, a protein-based test designed to routinely assess a patient's rheumatoid arthritis disease activity so doctors can then design more effective treatments based on those results

Speaking on the planned Crescendo acquisition, Myriad President and CEO Peter Meldrum said in a statement that the purchase fits well with Myriad's broader diagnostic portfolio "and diversifies our business into a new high growth, multibillion-dollar market opportunity. "

Myriad Genetics also disclosed its fiscal 2014 second-quarter financials at market close on Feb. 4. The company said it produced $204 million in revenue, 37% higher than the same period a year ago. Net income reached $50.4 million, 44% higher than the fiscal 2013 second quarter. Meldrum said in a separate statement that the company's revenue growth comes as it continues to focus on "transitioning" its hereditary cancer market, expanding internationally and diversifying its revenue base with new products. Its planned Crescendo acquisition becomes an intriguing part of that broader strategy.

In acquiring Crescendo, Myriad gains a company that already crossed a major milestone last July when it won Medicare coverage for Vectra DA. Diagnostics companies have struggled to obtain insurance coverage, and Medicare coverage often paves the way for private reimbursement.

Back in January 2013, Crescendo nailed down $28 million in Series D financing to help support commercialization efforts for Vectra DA. At the time, CEO William Hagstrom told FierceMedicalDevices that Crescendo raised money in a tough climate because Vectra DA is "serving a very large market with significant unmet needs."

Myriad is perhaps best known for its BRACAnalysis test, which screens for mutations to BRCA1 and BRCA2 genes to determine a patient's risk for breast and ovarian cancer. The market-leading test has driven much of Myriad's revenue. But a U.S. Supreme Court decision last summer overthrew some patents relating to the test and upheld others, determining that natural genes can't be patented but that the rule does not apply to genes altered by man. This opened the door to competition, and several rivals have since launched their own BRCA predictive tests; Myriad is suing all of them.

Myriad, meanwhile, has pursued diversification through the launch of a number of new products, including a next-gen molecular diagnostic tool that can analyze 25 different genes associated with 8 major cancers.

- read the deal announcement
- here's Myriad's financial release