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Global medical diagnostics giant Sonic Healthcare (ASX: SHL) has agreed to acquire a substantial stake in biotech Microba Life Sciences for $17.8 million today, sending the latter’s price soaring by 72 per cent at the time of writing.
Under the agreement, Sonic will acquire a 19.99 per cent stake in Microba at 26 cents per share, and will also seek shareholder approval to acquire options for an additional 5 per cent holding.
The deal will see Sonic secure rights for microbiome testing distribution into seven countries, including Australia, Germany, the UK, Germany, Switzerland, New Zealand, Belgium and the US.
Brisbane-based Microba’s technology is used to measure the human gut microbiome, with the biotech also in the process of developing microbial cell therapies that address inflammatory bowel disease, cancer immunotherapy and autoimmune diseases,
“This strategic partnership with Sonic is set to accelerate international distribution of Microba’s microbiome testing into primary and specialist healthcare, and move our testing deeper into routine patient management,” Microba CEO Dr Luke Reid said.
“Sonic is globally respected for its leadership in delivering trusted medical diagnostic services, and our partnership deeply aligns the interests of both companies to bring microbiome testing and therapeutics into the hands of clinicians and patients globally to improve standard of care. “
Founded in 1934, Sydney-based Sonic Healthcare is one of the world’s largest medical diagnostics companies and employs more than 41,000 people across operations in Australasia, Europe and North America.
In FY22, the company - which has a market capitalisation of $15.2 billion - generated $9.3 billion in revenue, reflecting a year-on-year increase of 7 per cent.
Sonic also invested $638 million in acquisitions and joint ventures in the year, which includes the buy-out of Canberra Imaging Group and ProPath – a US based pathology in three states with 50 pathologists and 500 employees.
The latest deal will allow Sonic to exclusively distribute Microba’s microbiome testing products to its customers - including general practitioners and specialists - across Germany, Belgium and the UK for a one-year period commencing on 31 January 2023.
The terms will also allow Sonic Healthcare and its subsidiaries with non-exclusive distribution rights for Switzerland, the US, Australia and New Zealand.
Under the agreement, Sonic chief medical officer Dr Stephen Fairy will join Microba’s Medical Advisory Board.
Post transaction, Microba’s pro-forma cash balance will be $43.8 million - allowing the company to continue to significantly advance its microbiome therapeutics and testing into the hands of clinicians and patients globally.
Sonic Healthcare CEO Dr Colin Goldschmidt said the investment exemplified the company’s commitment to invest in cutting edge developments in laboratory medicine.
“Sonic Healthcare prides itself on delivering accurate, reliable medical diagnostics services using leading laboratory and informatics technologies,” Goldschmidt said.
“We see microbiome testing becoming a key part of pathology over coming years and are excited about the potential of this partnership and the opportunities that Microba's technology will provide for Sonic’s global operations, our referring clinicians, and our patients.”
Today’s news comes a month after Microba announced a partnership with Brisbane-based digital healthcare platform Midnight Health to roll out a precision prebiotics subscription service aimed at improving the gut microbiome.
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