Quest Diagnostics is diving into a quickly growing segment of liquid biopsy with its latest M&A prospect.

The Secaucus, NJ-based company announced a definitive agreement to acquire Haystack Oncology in an all-cash equity transaction. Quest will pay $300 million in cash at closing and Haystack has the potential to obtain up to an additional $150 million in performance milestones.

If the deal were to close, then Quest would inherit Baltimore, MD – based Haystack’s minimal residual disease testing technology. MRD testing is a specific category of liquid biopsy that identifies circulating tumor DNA (ctDNA) in the bloodstream of patients following surgery and treatment for cancer. 

In a prospective, multi-institution study published in the New England Journal of Medicine in June 2022, an earlier version of the Haystack technology demonstrated the ability to better identify patients with residual disease for adjuvant chemotherapy after surgery for stage II colon cancer, thereby reducing chemotherapy use in the overall patient population without compromising recurrence-free survival.

"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," said Jim Davis, Chairman, CEO and President, Quest Diagnostics. "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."

The deal is further proof that the M&A scene is waking up in 2023. (Editor’s note: For a comprehensive look at the M&A scene last year check out MD+DI’s special report: Top Medtech Deals of 2022.)

There have been some significant announcements of acquisitions including Zimmer Biomet announcing it would acquire Embody in a deal valued at $275 million.

In February, Abbott announced it was acquiring Cardiovascular Systems, a company that has long been considered one of the most attractive medtech M&A targets. The Abbott Park, IL-based company recently closed on the $850 million deal.

One of the biggest deals came from an announcement of the merger between Globus and NuVasive. Such a merger would rearrange the landscape in the spine market.