Texas-based diagnostics testing company Castle Biosciences, Inc. (Nasdaq: CSTL) is set to acquire mental health diagnostics company AltheaDx, Inc.
According to the press release, AltheaDX is “a commercial-stage molecular diagnostics company specializing in the field of pharmacogenomics (PGx) resting services that are focused on mental health. IDgenetix is its PGx test for depression, anxiety and other mental health conditions.” As stated in the filings, in 2021, AltheaDX’s revenue was less than $1 million.
Pursuant to the April 4 deal, Castle Biosciences will acquire AltheaDx for $140 million. Upon closing, Castle Biosciences will pay $65 million as an initial consideration consisting of $32.5 million in cash, subject to adjustments for cash, debt, expenses and working capital and $32.5 million in Castle common stock. There will be up to another $75 million in cash and common stock with the achievement of certain milestones in fiscal years 2022 through 2024 and certain expansions of Medicare coverage of IDgenetix.
“As a company, we focus on transforming disease management through the personalized information our innovative tests provide,” Derek Maetzold, Castle’s President and CEO, said in a press release. “Similar to our acquisition of Cernostics in December 2021, the pending acquisition of AltheaDx enables us to offer a testing solution that we believe has the potential to accelerate our impact on patient care in an area of high unmet clinical need, significantly expand our in-market expected estimated U.S. TAM to approximately $8 billion and offer incremental value to patients and clinicians over standard of care. Further, this acquisition would enable us to potentially develop a mental health franchise, starting with a test that currently receives Medicare reimbursement for depression.”
“Castle Biosciences has strong expertise in providing advanced tests that improve health and guide patient care, and we are excited to join the team,” David Nikodem, Ph.D., CEO of AltheaDx, said in a press release. “Precision medicine solutions, such as IDgenetix, have great potential as clinical decision support tools by providing critical genetic information to healthcare providers in pursuit of personalized care.”
Upon closing, the executive management team and other AltheaDx staff are expected to stay with castle and AltheaDx’s laboratory and operations will remain in San Diego.
The reverse triangular merger is expected to close in Q2 2022, subject to customary closing conditions.
AltheaDX is represented by Foley & Lardner LLP and Castle Biosciences is represented by Cooley LLP.
Castle Biosciences previously acquired the Myriad myPath Laboratory from Myriad Genetics for $32.5 million where the myPath Melanoma test is offered as well as Cernotics and its TissueCypher Barrett’s Esophagus test in 2021 for $80 million. Accordingly, Cernotics “specializes in spatial biology and artificial intelligence-driven image analysis of tissue biopsies.”
Prior to the announcement, Castle Biosciences’ stock was valued at $45.98 on April 1. When it was announced on April 4, stock was valued at $45.99 and the day after stock dipped to $38.40 on April 5. About a week later, stocks closed at $30.92 on April 11.
