US-based Veracyte has agreed to acquire minimal residual disease (MRD) test developer C2i genomics in a deal worth up to $95m, strengthening its range of cancer diagnostic products.

Veracyte will pay compatriot C2i $70m in shares as an upfront payment, with a further $25m in milestone sales-based payments via cash or additional shares for two years after the close of the deal. The transaction is expected to close in Q1 2024, according to an 8 January statement released at the ongoing J P Morgan Healthcare Conference.

MRD tests are used to determine whether a patient still has remaining cancer cells, even in very small numbers, after treatment. C2i, which has an R&D centre in Israel, uses artificial intelligence (AI) in its whole-genome MRD tests which provides oncological insights from blood samples more quickly, according to Veracyte. C2i’s tests need just a few millimetres of blood, with a result ready in two weeks.

Once Veracyte has its hands on C2i’s CE-marked tech, the company’s first port of call will be a muscle-invasive bladder cancer MRD test. Veracyte stated it will use its already strong urology commercial channels for product rollout and expects a “clear pathway” to reimbursement.

Veracyte said that the combination of C2i’s products with its range of prognostics and diagnostic tests will expand doctors’ abilities to track tumour progression. Veracyte plans to develop more MRD tests in other indications. Alongside bladder cancer, the company currently focuses on thyroid, prostate, and lung cancers.

Veracyte CEO Marc Stapley said: “The expected acquisition of C2i Genomics will enable us to expand our role across the cancer care continuum to help monitor the success of a therapeutic or surgical intervention and determine the best course of action for each patient.”

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In the same statement announcing the acquisition, Veracyte outlined its 2023 financial results. Compared to 2022, the company expects to have increased its revenue in 2023 by 21%, totalling between $358m and $359m.

Stapley added: “We had an outstanding fourth quarter and finished 2023 with continued growth driven by our Afirma and Decipher businesses.”

Veracyte acquired Decipher for $600m in 2021.

This week, Allogene Therapeutics partnered with Foresight Diagnostics to develop MRD tests for the pharma company’s clinical trials.