Quest Diagnostics is hoping it’s found a winner in Haystack Oncology, with a $450 million bet on the cancer-focused blood test startup.
The clinical testing giant plans to acquire Baltimore-based Haystack for its technology to detect minimal residual disease by catching the early signs of a solid tumor’s recurrence by sifting out small pieces of cancer DNA floating in the bloodstream.
The deal includes $300 million in upfront cash, plus an additional $150 million should Haystack’s tests achieve certain performance milestones. Quest said it expects the deal to close by the end of June.
“Haystack’s liquid biopsy technology, combined with Quest’s strengths in screening, pathology and sequencing, will now position us to lead in the fast-growing MRD category,” Quest CEO Jim Davis said in the company’s announcement.
Backed by a trio of scientific founders from Johns Hopkins—Professor Nick Papadopoulos, Ph.D., and the Ludwig Center’s co-directors Kenneth Kinzler, Ph.D., and Bert Vogelstein, M.D.—Haystack publicly launched just six months ago with a $56 million series A funding round led by Catalio Capital Management.
The company’s approach aims to uncover the one mutant DNA molecule in a million—the proverbial needle in the eponymous haystack—that can be taken as evidence a cancer has begun to return after treatment.
Its test was the centerpiece of a randomized trial, dubbed DYNAMIC, that explored whether the detection of circulating tumor DNA in the bloodstream could help guide the use of follow-up chemotherapy among patients with colon cancer.
A positive result four to seven weeks after the initial surgery to remove the tumor would trigger a hopefully preventive regimen, while those who tested negative could go without. The study—with results published last year in The New England Journal of Medicine—showed that the test could reduce the overall use of chemotherapy without shortening the time before patients’ cancers returned.
The goal now, with Quest as its new owner-to-be, is to work on translating that test to the masses, with an initial focus on colorectal, breast and lung cancers.
“Combining Haystack with Quest is a major step forward in translating two decades of world-class liquid biopsy research and development into clinical laboratory services that are highly reliable and broadly accessible,” said Haystack CEO Dan Edelstein.
Quest also said it plans to assimilate the test’s technology into its platforms for solid tumor sequencing while scaling up its reach through its established businesses for blood sample collection before rolling it out to the public in 2024.