Why 2016 is important: A recent acquisition will allow NeoGenomics to be at the forefront of personalized medicine.
The promise of personalized medicine is another step closer to realization thanks to a blockbuster $275 million acquisition by NeoGenomics of rival Clarient.
Fort Myers-based NeoGenomics provides cancer testing for oncologists, hospitals and other health care providers through its network of labs in Florida, Tennessee and California.
Now, with the acquisition of Clarient from GE Healthcare Life Sciences, NeoGenomics will also become a bigger player in providing pharmaceutical companies with test results from clinical trials. The tests will help drug companies identify the right kinds of therapies for individuals based on their genetic makeup.
Once the drugs are approved, the combined companies will provide physicians with tests that show the efficacies of certain therapies on patients, saving money and lives. The need for tests to demonstrate effectiveness is obvious: “The average cost of a new cancer drug is $10,000 per month,” says Douglas VanOort, chairman and CEO of NeoGenomics.
As NeoGenomics absorbs Clarient, a company equal in size, the Fort Myers headquarters will benefit from consolidation of duplicative administrative and lab functions and will result in employment gains. “In Fort Myers we are adding to our footprint,” says VanOort. “The workforce is very good here and we're able to attract good people.”
Under the terms of the Clarient deal, GE Healthcare will become a 32% owner of the combined companies. That's because in addition to $80 million in cash, NeoGenomics is paying GE Healthcare $110 million in preferred stock and 15 million shares of NeoGenomics common stock (symbol: NEO; recent price: $7.50). “It really is a transformative acquisition for us,” says VanOort.
In addition to having a seat on the board, GE Healthcare will collaborate with NeoGenomics on related projects. For example, one project involves combining GE's health imaging technology with NeoGenomics' cancer tests. “We've always thought that for certain tumors, the combination of imaging and genetic tests can lead to better diagnoses,” VanOort says.
While 2016 will be a big year for NeoGenomics, VanOort says the company has come a long way in just 10 years. From 2006 to 2016, the company's revenues grew 50 times and its market capitalization is 150 times bigger. “We're very proud of the team that we have,” VanOort says.
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