Further solidifies global leadership in differentiated, genomics-driven cancer diagnostics
Expands TAM with presence in 7 of the 10 most common cancers
Expected to accelerate revenue growth
Tina Nova, Ph.D., Decipher Biosciences’ president and CEO, has left Veracyte’s board and will become Veracyte’s GM, urologic cancers
SOUTH SAN FRANCISCO, Calif., & SAN DIEGO, Calif.–(BUSINESS WIRE)–Feb. 3, 2021– Veracyte, Inc. (Nasdaq: VCYT) and Decipher Biosciences, Inc., a commercial-stage precision oncology company focused on urologic cancers, today announced they have entered into a definitive agreement through which Veracyte will acquire Decipher, further solidifying Veracyte’s global leadership in the genomic cancer diagnostics market while accelerating revenue growth.
“By combining Decipher Biosciences’ leadership in urologic cancers with our comprehensive genomic testing menu, Veracyte will be able to serve patients across the clinical care continuum in 7 of the 10 most prevalent cancers in the United States with highly differentiated and clinically impactful tests, significantly accelerating revenue growth and driving shareholder value. Further, with our best-in-class nCounter diagnostics platform, we are well-positioned to deliver comprehensive genomic cancer testing to physicians and their patients worldwide,” said Bonnie Anderson, Veracyte’s chairman and chief executive officer. “I am also delighted that Dr. Tina Nova, Decipher’s president and CEO, and a veteran diagnostics industry leader, will join Veracyte as general manager, urologic cancers, and that Decipher’s talented employees will also join our team.”
Dr. Nova has been a member of Veracyte’s board since 2015, but was not involved in Veracyte’s deliberations regarding the transaction and is resigning from the Veracyte board in connection with the transaction.
Decipher has established a market-leading position for its comprehensive portfolio of tests in urologic cancers, which leverage whole transcriptome analysis and proprietary machine learning algorithms to improve patient decision-making across the clinical care continuum and accelerate adoption of new therapies. Collectively, Decipher’s genomic tests have been used by more than 3,200 urologists and radiation oncologists, including at all 28 National Comprehensive Cancer Network (NCCN) centers in the United States. The Decipher Prostate Biopsy and post-radical prostatectomy (RP) tests are included in NCCN guidelines and the Decipher Prostate RP test is the only genomic molecular diagnostic test recommended in NCCN guidelines for use in patients with localized prostate cancer. They are also broadly reimbursed by Medicare and private payers and included in practice-changing clinical trials, with growing adoption within the urology community. Further, the company’s Decipher Bladder test is expected to launch commercially in 2021 and its kidney cancer test is in development. Decipher GRID, a large, well-annotated urologic cancer database, is fueling the company’s biopharmaceutical partnerships and product innovation.
“Our goal is to enable better treatment decisions and patient outcomes in urologic cancers by providing valuable information about the underlying biology of a patient’s tumor,” said Dr. Nova. “Our team has made significant progress in advancing our mission and is thrilled to join Veracyte to benefit from their expertise and infrastructure, accelerating commercial expansion of our tests in the United States and globally.”
Global Leadership in Genomic Diagnostics for Cancer
Veracyte currently offers high-value advanced genomic tests that address unmet clinical needs at multiple points in the care continuum for lung cancer, breast cancer, thyroid cancer and interstitial lung diseases, and its lymphoma subtyping test is in development. With the addition of Decipher’s genomic tests in prostate, bladder and kidney cancers, Veracyte will provide an expanded comprehensive testing menu and, with the nCounter system, is uniquely positioned to make its tests available to physicians and their patients in global markets, where hospitals and laboratories can perform them locally. Veracyte estimates that approximately 1.1 million patients in the United States alone, based on cancer incidence, will potentially be able to benefit from the company’s comprehensive menu of advanced genomic tests.
In addition, the Decipher GRID is expected to augment Veracyte’s extensive biorepositories, further positioning Veracyte to advance biopharmaceutical company partnerships and its pipeline development efforts.
The transaction will also provide Veracyte with increased operational flexibility by including Decipher Bioscience’s state-of-the-art facilities in Southern California and its highly qualified team.
Revenue Growth Acceleration
Decipher Biosciences grew its 2020 total revenue by more than 130% to approximately $39 million to $40 million, compared to $16.5 million in 2019. This included total revenue between $11.75 million and $12.25 million for the three months ended December 31, 2020. Decipher’s genomic test volume for 2020 was between 15,500 and 16,500. The annualized total revenue for the combined company based on the midpoint of the total revenue that each company expects to report for the three months ended December 31, 2020 is approximately $186 million. Veracyte expects the acquisition of Decipher Biosciences to significantly accelerate its revenue growth in 2021 and to expand the near-term addressable market for Veracyte’s current and pipeline genomic tests from approximately $10 billion to an estimated $12 billion. Veracyte estimates that the acquisition will further expand its long-term addressable market beyond approximately $50 billion. The transaction is also expected to be accretive to Veracyte’s gross margins and accelerate its path to profitability.
The foregoing revenue amounts are preliminary, have not been audited and are subject to change in connection with the completion of each company’s financial statements for the year ended December 31, 2020.
Transaction Terms and Other Information
Under the terms of the definitive agreement, Decipher Biosciences will become a wholly-owned subsidiary of Veracyte. At closing, Veracyte will pay $600 million in total consideration to Decipher security holders, consisting of $250 million in cash and up to $350 million in stock consideration, subject to customary purchase price adjustments. The number of Veracyte shares issued at the closing will be based on a fixed price of $54.30 per share, resulting in a maximum issuance of 6.4 million common shares. However, without changing the total consideration paid at closing, Veracyte has the option, at its sole discretion, until the earlier of March 15, 2021 and the fourth business day following the closing of any potential equity financing, to substitute cash in lieu of shares in any amount up to the entire stock consideration or $350 million. The transaction, which has been unanimously approved by Veracyte’s board of directors and by an independent special committee appointed by the Decipher Biosciences board of directors, is expected to close by May 2021, subject to regulatory approval and the satisfaction of other customary conditions.
Upon finalization of the transaction, Dr. Nova will become general manager of Veracyte’s urologic cancer business unit. Prior to the signing of the transaction, Dr. Nova resigned from Veracyte’s board of directors. Decipher Bioscience’s laboratory and other operations will remain in San Diego.