New Day Diagnostics has agreed to buy Epigenomics’ blood testing technology for the early detection of cancer in a deal worth up to $12 million.
Epigenomics, a German diagnostics company, reduced its headcount and stopped selling its Epi proColon colorectal cancer test earlier this year after failing to raise funding for a pivotal trial of its next-generation product. Since then, the company has been looking for a deal to realize the value of its assets, leading it to start advanced negotiations with an unnamed company last month.
The negotiations have now concluded. Epigenomics has agreed to sell “substantially all” of its assets to New Day Diagnostics, a developer of tests for the early detection and monitoring of disease that merged with EDP Biotech earlier this month. EDP Biotech is developing a colorectal cancer blood test, ColoPlex.
Buying Epigenomics’ assets will give New Day Diagnostics control of additional colorectal cancer testing technology. Epi proColon is designed to detect Septin9, a type of DNA that is altered in colorectal cancer tumor cells, through the analysis of blood samples at clinical laboratories. The test is approved in the U.S., EU, China, and other markets.
However, while the U.S. Food and Drug Administration (FDA) has approved Epi proColon, the Centers for Medicare & Medicaid Services (CMS) denied coverage of the test. Epigenomics responded by developing a next-generation test that exceeded the CMS’ reimbursement criteria in a study of 241 subjects. The company planned to run a pivotal study of the next-generation assay to support approval in the U.S., but was unable to secure funding.
In a statement, Jens Ravens, executive of Epigenomics, said “further development and commercialization of the ‘Next-Gen’-Test requires significant resources that we as a company can no longer provide.” Ravens is “very confident that with New Day Diagnostics as an experienced partner in the U.S. and global markets, we will be able to successfully further develop the test.”
The success of the next-generation test will determine how much New Day Diagnostics ultimately pays for the assets. New Day Diagnostics has agreed to pay $1.8 million in cash, split across three payments over the next 11 months. A further $8 million is tied to “certain milestones related to Epi proColon and foremost Epi proColon ‘Next-Gen’.” Royalties and a 3% stake in New Day Diagnostics are also part of the deal.