Quest Diagnostics to acquire Haystack Oncology for $300M

Secaucus-based Quest Diagnostics on Thursday said it plans to acquire Haystack Oncology for $300 million in cash at closing, net of cash acquired, and up to an additional $150 million on achieving future performance milestones.

Haystack Oncology is an early-stage oncology company based in Baltimore that has established a liquid biopsy technology that helps identify cancer recurrence after surgery and treatment. Founded in 2021, Haystack Oncology developed a circulating tumor DNA minimal residual disease technology, based on 20 years of research and development by world-renowned luminaries from Johns Hopkins University.

Together, Quest and Haystack hope to improve patient outcomes by enabling early, accurate detection of minimal residual disease.

Assuming the close of the acquisition, Quest expects to introduce one or more MRD tests based on the Haystack technology to providers beginning in 2024. Development efforts will focus initially on MRD tests for colorectal, breast and lung cancers.

“We are excited by the opportunity to work together with Haystack Oncology, a company that we believe has developed a best-in-class ctDNA MRD technology,” Jim Davis, chairman, CEO and president, Quest Diagnostics, said. “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. Working with Haystack, we have an opportunity to broaden access to MRD insights and potentially improve favorable long-term outcomes from cancer.”

“Combining Haystack with Quest is a major step forward in translating two decades of world-class liquid biopsy research & development into clinical laboratory services that are highly reliable and broadly accessible. Like looking for a needle in a haystack, accurately detecting MRD has been very challenging to date,” Dan Edelstein, CEO and president, Haystack, said. “With Quest, we expect to increase and accelerate access to important tests that will improve the quality of cancer MRD detection and recurrence monitoring for patients. Working together, we have the potential to greatly transform the patient journey and save lives.”

The company expects the acquisition to be modestly dilutive to earnings over the next three years and accretive by 2026. The transaction is expected to be completed in the second quarter, subject to customary regulatory review.

J.P. Morgan Securities LLC acted as exclusive financial adviser to Quest, and Weil, Gotshal & Manges LLP acted as Quest’s legal adviser. Goldman Sachs & Co. LLC acted as exclusive financial adviser to Haystack, and Goodwin Proctor LLP acted as Haystack’s legal adviser.