Big Investor Interest in Lab-Developed Tests as Investors Put $2 Billion into Companies: Report

ROCKVILLE, Md., Oct. 4, 2017 /PRNewswire/ -- According to IVD market research firm Kalorama Information, companies with laboratory-developed tests (LTDs), tests performed by laboratories owned by IVD companies and others, are attracting investor interest, with over $2 billion raised between January and August 2017.  LDTs are used for complex testing that smaller laboratories are not equipped or do not choose to handle and are sued for a variety of medical conditions. Tests are of all types, including histology and molecular testing to immunoassays; or equipment-intensive testing such as mass spectrometry or flow cytometry. The largest segments of this market in are oncology, genetic (inherited) disorders, and infectious disease, but laboratory developed tests can be developed and used for virtually all disorders. The finding was made in Kalorama Information's report, The Worldwide Market for Laboratory-Developed Tests.

"Assays are being developed that may have the potential to transform certain aspects of healthcare," said Bruce Carlson, Publisher of Kalorama Information.

Laboratory developed tests (LDTs) have been attracting a lot of attention in recent years, but they are not a new or recent phenomenon. Historically, these tests were called "home-brew tests" or "in-house tests." Also historically, these tests were low-volume, simple and well characterized tests for low-risk diagnostic applications. Today, high-risk, complex tests have been developed as LDTs, and are being used to provide clinical results to physicians and their patients.

Much of the focus and attention in recent years has been on the emergence and growing use of complex LDTs based on technologies such as polymerase chain reaction (PCR), microarrays, next generation sequencing, or other complex technology. To generate test results that were not previously possible, LDTs are being developed and used in many different applications. 

This significant activity in the development of new LDTs, growing revenues from current LDTs, and large addressable markets for many of the emerging LDTs has attracted the interest of investors and also other companies looking for acquisitions. For example, in 2016, companies included in this report raised over $750 million. But this total is dwarfed by the over $2 billion raised between January and August 2017. The total for 2017 includes the approximately $900 million raised by GRAIL this year. However, other companies have already raised approximately $1 billion this year, which already surpasses the total investments for 2016. 

Recent investments include:

• August 2017 Freenome Inc. Raised $7 million as an extension a previously announced Series A funding, making a total of nearly $72 million raised.
• August 2017  Raised $73.5 million in a stock private placement.
• August 2017 Rosetta Genomics Ltd. Announced pricing of a $2.73 million financing.
• July 2017 BGI Genomics Announced the pricing of 40.1 million shares at a list price of RMB 13.64 per share, and that IPO would raise approximately $80 million (US dollars).
• July 2017 Eurofins Scientific Raised €650 million in senior unsecured Euro bond public issuance.
• June 2017 CENTOGENE AG raised €25 million in a Series A financing.
• March 2017 Illumina's GRAIL, Inc., with ARCH Venture Partners, others Raised over $900 million through the first close of a previously announced Series B financing. Reported GRAIL anticipated a second close that would include additional institutional investors globally.
• December 2016 NeoGenomics, Inc. Closed a  five year, $150 million credit facility that included a $75 million revolving loan and a $75 million term loan.

There have also been a significant number of acquisitions in recent years. Consolidation among companies and laboratories offering LDTs is expected to continue in the future. This is not a new trend in the clinical laboratory market. Major companies such as Quest Diagnostics and LabCorp have made numerous acquisitions to reach their current market positions. Smaller clinical laboratories have also been making acquisitions. In the segment of this market focusing on companies and laboratories offering services based on LDTs, many new companies continue to be founded – providing a continuing stream of smaller companies trying to grow, and that may grow by acquisitions or may be acquired.

Detailed lists of investments, partnerships and M&A related to the lab-developed test industry is available in Kalorama Information's report.

About Kalorama Information

Kalorama Information, a division of MarketResearch.com, supplies the latest in independent medical market research in diagnostics, biotech, pharmaceuticals, medical devices and healthcare; as well as a full range of custom research services. Reports can be purchased through Kalorama's website and are also available on www.marketresearch.com and www.profound.com.

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Press Contact:                                                        
Bruce Carlson
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SOURCE Kalorama Information