NeoGenomics Inc. (NEO), which provides cancer-focused genetic testing and contract research, has agreed to acquire Inivata Limited. Inivata is a commercial-stage liquid biopsy platform provider.
NeoGenomics had acquired a minority stake in Inivata in May 2020 for $25 million. At the time, NeoGenomics received an option to acquire the rest of the stake in Inivata for $390 million before the end of December 2021.
NeoGenomics is funding this acquisition with cash on hand, coupled with an equity private placement of about $200 million. It expects the acquisition to simultaneously close with the private placement in June.
Inivata CEO Clive Morris said, “By leveraging our combined resources, we expect to accelerate the development of our promising RaDaR minimal residual disease (MRD) assay and accelerate commercialization efforts with biopharma before driving a successful launch into the clinical setting.” (See NeoGenomics stock analysis on TipRanks)
Subsequent to this transaction, Inivata will operate as a division of NeoGenomics that is focused on liquid biopsy.
Significantly, this acquisition increases NeoGenomics’ addressable market. The company could become a technology leader in the $15 billion minimal residual disease (MRD) market.
On April 16, Needham analyst Michael Matson initiated coverage on the stock with a Buy rating and a $65 price target (36.6% upside potential).
Matson believes that as the impact of the COVID-19 pandemic softens, “NeoGenomics will benefit from positive secular growth associated with the personalization of cancer treatment based upon the stratification of cancer subtypes through the use of genetic signatures and protein biomarkers.”
Consensus on the Street is that NeoGenomics is a Strong Buy based on 7 Buys and 1 Hold. The average analyst price target of $63.33 implies 33.1% upside potential. Shares have gained about 84% over the past year.
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