There was a healthcare and life sciences valuation bubble that was steep and fairly shortlived, around 2021. This affected the biotechnology industry generally - not just companies making COVID vaccines (or drugs). It also effected the genomic industry generally - not just companies like Fulgent (with a huge COVID testing business) but companies like Invitae or Myriad (with no infectious disease business.) For example, Myriad moved $12 to $33 to $16 from summer 2020 to summer 2022, though it had no direct contact with COVID testing (or drugs).
(One can also point out that over 28 years, Myriad has generally traded up and down in a band from around $20 to $40, with repeated excursions up and down).
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| Myriad - since 1998 in $20-$40 band up and down |
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| Myriad - One of many in Covid valuation bubble |
Two questions. How do we explain the genomics bubble - both upward and downward - around 2021, for companies in genomics with no direct contact with COVID tests or drugs.
Second, for companies funded during the bubble, but running out of cash now 3 years later, what strategies are possible for them? What strategies can be used by investors (including, for example, scooping up ailing companies).
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Linked In essay by Jenny Fielding on fundraising today here.
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You're absolutely right in observing that Myriad Genetics (MYGN) — a company without any COVID-19 test or drug exposure — still experienced a major boom and bust cycle from 2020 to 2022, consistent with broader genomic sector dynamics. Let's tackle your two questions in turn:
1. Explaining the 2021 Genomics Valuation Bubble (and its deflation)
Even for companies like Myriad, which weren’t directly linked to COVID testing, the 2020–2021 genomic stock surge was driven by macro-level sentiment and sector-wide optimism, not company fundamentals.
🚀 Bubble Expansion: Drivers of the 2020–2021 Surge
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General COVID-Era Market Euphoria: Massive stimulus (monetary + fiscal), near-zero interest rates, and a retail investor boom (e.g., via Robinhood) created a highly speculative environment.
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"COVID Halo Effect": Investors poured money into any healthcare or life science firm, under the assumption that biotech = pandemic relevance = growth. Genomic firms were lumped in, even without infectious disease programs.
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Rise of Retail and Thematic Investing: Genomics became a buzzword via ARK Genomic Revolution ETF (ARKG) and other thematic ETFs. This pulled retail interest into names like Invitae, Pacific Biosciences, and Myriad.
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Narratives Over Numbers: Investors focused on long-term transformative potential (AI + genetics, personalized medicine, NIPT, liquid biopsy) rather than profitability or current market share.
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SPAC Boom and Cheap Capital: Private genomics startups and smaller public firms could raise large amounts of capital easily, fueling valuations regardless of cash flow metrics.
💥 Bubble Deflation: Why the Crash?
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Return of Fundamentals: As inflation rose in 2021–2022 and interest rates followed, high-multiple growth stocks with distant or unclear paths to profitability rapidly lost appeal.
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Poor Earnings Follow-Through: Companies like Myriad failed to deliver revenue growth or margin improvement to match the lofty expectations baked into their valuations.
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Overcapacity and Dilution: Many genomics firms overhired or overbuilt during the boom; with revenue stagnation, burn rates became unsustainable.
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ETF Outflows: Thematic ETFs started hemorrhaging assets as performance deteriorated, creating forced selling pressure across the genomics sector.
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Narrative Collapse: Without catalysts like new reimbursement coverage or tech breakthroughs, investor narratives fell apart.
In short, even companies not benefiting directly from COVID saw their valuations pulled up by sector momentum, only to crash when reality reasserted itself.
2. Strategies for Genomics Companies Running Out of Cash (3 Years Later)
For firms funded during the bubble but now facing a liquidity crunch, the next steps depend on their IP value, burn rate, and core assets. Common strategies include:
🧬 Company Strategies
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Asset Sales / IP Monetization: Sell non-core assays, platforms, or IP. Example: Invitae has offloaded business units.
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Partnering: Seek pharma or diagnostics partnerships that bring in cash and reduce R&D costs.
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Cost-Cutting and Restructuring: Streamlining operations, facility closures, layoffs.
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Going Private: PE or strategic acquirers may buy at low valuations and restructure privately.
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M&A as Target: Be acquired by a better-capitalized peer or consolidator. Attractive for firms with strong tech but poor cash runway.
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Bridge Financing / PIPE Deals: Private investments in public equity (PIPEs), though often at painful dilution.
💸 Investor Strategies (Opportunistic or Strategic)
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Distressed Asset Scooping: Buy undervalued firms at cash value or near liquidation value, especially if they have valuable tests, FDA approvals, or reimbursement codes.
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Roll-ups and Consolidation: Acquire multiple distressed genomics firms to create a diversified platform, spread fixed costs, and optimize commercial infrastructure.
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Reverse Mergers / SPAC Cleanup: Use these platforms to bring private assets public more efficiently — or merge distressed firms with stronger private firms.
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Reimbursement Arbitrage: Some firms may hold valuable payer contracts or CMS codes (e.g., ADLT or MolDx), which are under-monetized. Investors can acquire them to capitalize on that embedded value.
📉 Summary View of Myriad (MYGN)
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Historically Rangebound: Your note that MYGN has mostly oscillated between $20–$40 is borne out on the chart, aside from the early 2000s biotech bubble and the recent post-pandemic boom.
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Now Trading at 20+ Year Lows: At $6.10, this is a price level not seen since the late 1990s, even though the company still generates revenue and maintains some payer relationships.
Would you like a breakdown of specific distressed genomic firms today that investors are eyeing, or a case study comparison (e.g., Myriad vs. Invitae vs. Veracyte)?
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Yes, first comment on "when reality reasserted itself." Surely investors are extremely smart people not detached from reality. second, please break down specific distressed firm that investors are eyeing.
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“When Reality Reasserted Itself”—A Clarification
You're absolutely right: investors are not so detached from reality. The phrase refers less to investors suddenly recognizing fundamentals, and more to a shift in macro conditions that made speculative valuations untenable:
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Higher interest rates and inflation returns shifted investor preference from long-duration, speculative growth to companies with clearer near-term revenue or profitability (Finro Financial Consulting, BioSpace).
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The collapse of broad sector momentum—triggered by ETF outflows and underperformance—weakened valuation multipliers even for companies not tied to COVID (BioSpace, Barron's).
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In short, the narrative-driven froth of 2020–2021 came under pressure from a macro-driven valuation reset—not a failure of investor savvy, but a change in environment.
Distressed Genomics & Biotech Firms Investors Are Eyeing
Here’s a breakdown of companies currently drawing investor interest—mostly those facing financial headwinds but offering upside via assets, IP, or turnaround potential:
1. Concentra Biosciences – “Zombie biotech acquirers”
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Cargo Therapeutics recently accepted a takeover by Concentra after safety setbacks and layoffs. Concentra pays a premium to the stock price, keeps some cash, and returns the rest via contingent rights (BioPharma Dive).
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Concentra applies this model repeatedly—targeting companies trading below cash value with impaired pipelines.
2. Alis Biosciences – Rationalizing Failed Biotechs
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A new initiative from biotech financier Nick Johnston and ex-Merck R&D leader Annalisa Jenkins, Alis aims to buy struggling public biotech companies—especially those with cash on the books—at around 90% of market cap.
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They plan to return capital to shareholders and consolidate promising early-stage assets across acquisitions (Financial Times).
3. Strive Asset Management – Biotech to Bitcoin
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Founded by Vivek Ramaswamy, Strive is acquiring underperforming biotech firms valued between $5M and $100M for their cash reserves, which it’ll convert into Bitcoin.
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Shareholders may receive contingent rights tied to any remaining drug assets (marketwatch.com).
4. 23andMe – Consumer Genomics in Freefall
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Once a $6B darling, 23andMe filed for Chapter 11 bankruptcy in early 2025 after a data breach, declining sales, and strategic missteps.
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It’s now being auctioned, with co-founder Anne Wojcicki bidding to steer the company’s revival; ultimately sold to investors aiming to preserve its DNA data and rebuild trust (businessinsider.com).
5. Deep-Value Picks Among Public Biotech Stocks
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Many small- and mid-cap biopharma names are now trading below their cash, making them targets for value investors.
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Examples: Moderna, BioNTech, Editas, Ginkgo Bioworks, Fate Therapeutics, Viking Therapeutics, Nuvation Bio, and Structure Therapeutics (Barron's).
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These could be snapped up by investors betting on pipeline potential or acquisition upside.
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Summary Table
| Strategy / Investor Type | Approach |
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| Concentra | Buy distressed biotech, return cash, keep upside via asset liquidation. |
| Alis Biosciences | Acquire distressed firms at slight discount, consolidate early pipelines. |
| Strive Asset Management | Acquire biotechs for cash, convert to Bitcoin, return CVRs to shareholders. |
| Turnaround/BK Paths | Bankruptcy-auction recoveries (e.g. 23andMe) to salvage assets or IP. |
| Value Investors (Public Stocks) | Purchase cash-heavy, underperforming biotechs for long-term gains. |
In essence, the market is composting underperforming genomics assets, while investors with capital and strategy are selectively harvesting value—whether via asset sales, IP consolidation, or capital conversion. Let me know if you’d like to model outcomes for any individual firm or investor strategy.
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Here’s what’s going on with Bio‑Techne and the Exosome Diagnostics chapter—and what it tells us in the broader context of biotech valuation cycles:
Bio‑Techne's Exosome Diagnostics: A Steep Value Descent
[BQ: Prior to 2017, Exosome Dx raised $80M in Series A and B, and in July 2017, it raised an additional $30M in Series C. This suggests its exit-by-acquisition in 2018 for $250M may have been an up-round for earlier investors.]
In 2018, Bio‑Techne acquired Exosome Diagnostics—a company focused on liquid‑biopsy and exosome-based tests—for up to $250 million in cash and potential milestones (Wikipedia).
Fast forward to August 2025, Bio‑Techne divested Exosome Diagnostics to Mdxhealth in a deal worth just $15 million (comprising $5 million in Mdxhealth stock at closing, plus up to $10 million more over four years, partially in cash and partially in stock or cash at Mdxhealth’s discretion) (mdxhealth).
This marks a staggering loss of approximately 94% of the upfront value in under seven years—an outcome that illustrates how rapidly valuation and strategic fit can collapse in the genomics/diagnostics space.
Bio‑Techne booked this as a significant impairment—an $83.1 million charge—in its Q4 FY2025 financial results (Investing.com, Bio-Techne Corporation).
Lessons from the Acquisition and Divestiture
1. Sentiment-Driven Premiums Aren’t Durable
The 2018 acquisition likely reflected inflated expectations for emerging liquid biopsy technologies—a bit like the broader 2020–2021 genomics bubble mania. When those lofty expectations didn’t pan out, valuation collapsed.
2. Strategic Realignment as Value Recovery
Bio‑Techne’s move to sell the unit wasn’t just a cut-your-losses decision. It was also strategic: the divestiture helps the company refocus capital on its core strengths—namely, high-margin reagents, protein sciences, and cell-therapy tools—immediately boosting its operating margin profile (Bio-Techne Corporation).
3. Opportunity for Agile Investors
For Mdxhealth, acquiring ExoDx Prostate for a fraction of prior cost is a transformative deal. The unit is expected to generate more than $20 million in revenue by 2026 and to be accretive to adjusted EBITDA by Q4 2025 (mdxhealth).
So while Bio‑Techne realized a loss, an investor with complementary capabilities sees a high-potential asset at a bargain—classic value capture.
In Context: How This Mirrors Broader Genomics Trends
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When macro sentiment turns, companies overvalued on narratives—like liquid biopsy hype—can face brutal corrections.
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Asset reallocation is powerful: selling misaligned divisions can sharpen focus, improve margins, and fund core business growth.
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Distressed or misfit assets become opportunities: for buyers with strategic alignment or synergistic platforms, these assets can be strong value generators—if managed smartly.
In summary: The Bio‑Techne → Exosome Diagnostics → Mdxhealth saga neatly encapsulates how speculative valuations can blow up, and how cycles of strategic buying and selling can refresh or retraumatize corporate valuations—depending on timing, alignment, and execution.
Let me know if you'd like to analyze Mdxhealth’s playbook or compare similar cases where acquirers snapped up underperforming diagnostics assets.
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Here’s a structured breakdown of MDxHealth’s strategy in acquiring Exosome Diagnostics, followed by comparisons to similar acquisitions of underperforming diagnostics assets:
1. MDxHealth’s Playbook: Acquiring Exosome Diagnostics
Strategic Fit & Synergy
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Complementary Diagnostics Capabilities: MDxHealth, already strong in prostate cancer diagnostics with tissue-based tests like GPS and Confirm mdx, adds ExoDx Prostate—a non-invasive, urine-based liquid biopsy—extending coverage across the diagnostic continuum from screening through risk stratification.(BioSpace)
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Operational Leverage: The acquisition comes with a CLIA-certified lab and allows MDxHealth to cross-sell across its existing urology provider base, reducing marginal customer acquisition costs.(Stock Titan)
Financial & Growth Drivers
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Accretive to EBITDA: MDxHealth has achieved 17 consecutive quarters of >20% revenue growth and positive adjusted EBITDA ($1.4 million in Q2 2025), positioning it to immediately absorb and leverage the new asset.(mdxhealth)
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Low-Cost Acquisition with Upside: At just $15 million (a mix of stock and deferred payments), MDxHealth picks up an asset that is expected to add >$20 million in annual revenue by 2026, significantly boosting growth and margins.(BioSpace, Bioworld)
Strategic Takeaway
This deal exemplifies smart acquisition strategy: picking up a mispriced yet relevant asset at bargain terms, integrating it efficiently, and accelerating growth—all while capitalizing on operational synergies.
2. Comparative Cases: Outcomes of Acquiring Underperforming Diagnostic Assets
A. Regeneron & 23andMe (2025)
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Scenario: 23andMe—once a booming consumer genomics firm—filed for bankruptcy and had its key assets acquired by Regeneron for ~$256 million. This includes its research database, biobank, and direct-to-consumer testing lines.(darkdaily.com)
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Rationale: Regeneron leverages 23andMe’s vast genetic dataset to boost drug discovery pipelines, especially via population genetics. The acquisition aligns with Regeneron’s long-term strategic focus on genetics-driven R&D.
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Outcome Aim: Transforming distressed consumer-oriented genomic assets into high-value, pharma-grade research tools.
B. Pharma Scale-Ups & M&A Performance
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Insight: According to L.E.K. consulting, acquired diagnostic assets far from the acquirer’s core tend to underperform. However, those that align closely with existing infrastructure and expertise often thrive, especially when integrated into more scaled commercial operations.(darkdaily.com, lek.com)
C. General M&A Turnaround Lessons (BCG)
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Best Practices for Integrations:
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Target "full potential" value—seek improvements both in the acquired entity and the acquirer.
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Execute with speed and discipline, starting integration planning early.
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Focus on cost rationalization first, then invest in growth initiatives.
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Address cultural integration proactively.(bcg.com)
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Relevance: These principles are essential especially when buying distressed or underperforming assets—not just for MDxHealth but for any strategic acquirer aiming for turnaround success.
Summary Table
| Case | Strategy & Leverage | Outcome Potential |
|---|---|---|
| MDxHealth + ExoDx | Portfolio & lab synergy; accretive growth | High upside; deep urology coverage |
| Regeneron + 23andMe assets | Genetic data integration for R&D | Long-term drug discovery value |
| General Diagnostics Acquisitions (L.E.K.) | Core-fit assets perform better in scale acquirers | Higher success likelihood |
| BCG M&A Turnaround Principles | Structured integration, cost-first then growth | Better execution, improved results |
In Essence: MDxHealth’s acquisition exemplifies a textbook turnaround play—buy low, integrate smart, and grow fast. Similar acquisitions—like Regeneron’s strategic buy of 23andMe assets—highlight how distressed diagnostics or genomic holdings can be repurposed into serious R&D and commercial value plays when fit and execution align.
Let me know if you’d like to dive deeper into any of these strategies or explore other biotech acquisition case studies.
