Is T2 Biosystems (TTOO) a possible acquisition target?

T2 Biosystems (TTOO) could be a possible acquisition target, I dig deeper into the background of the company and unearth some interesting findings.

T2 Biosystems is still an early-stage biotech developer, based on cutting edge research done at Harvard University. It was founded in 2006, and had its IPO in August 2014.

It has a proprietary diagnostic platform– the “T2Dx Instrument”– which is currently used in 200 hospitals and labs.

The machine, incorporating established RT-PCR (Reverse transcription polymerase chain reaction) technology, uses “nuclear magnetic resonance” along with nanoparticles to target specific molecules for detection.

This allows them to directly detect and measure pathogens, such as bacterial microbes, in whole blood (along with other liquid forms, such as plasma, saliva, sputum, etc)– without the need to purify or extract molecules from the sample first.

T2 has the only diagnostic platform that can make that claim.

The T2Dx Instrument was initially focused on sepsis-causing microbes, both in bacterial and fungal form, so the first panels which have been FDA-authorized are T2BacteriaT2Candida — both of which are first-of-their-kind diagnostics, cutting down detection time to hours from the “standard” blood culture method, which takes up to 5 days or longer.

Future developments include an ongoing contract from the Biomedical Advanced Research and Development Authority (BARDA), part of the Department of Health and Human Services, to develop new testing protocols for blood-borne bacteria.

In it’s pipeline is a direct test for the Borrelia bacteria– the cause of Lyme disease from tick bites– which has already been shown to be the most accurate diagnostic yet available.

Imagine being able to get into Apple when it first came out with the Macintosh: a revolutionary computer on a proprietary platform, that cost more than the competition, leading it to be a niche player– but one that would influence the rest of the market.

That’s how important I think T2 is.

The tech that powers T2’s miniaturized “nuclear magnetic resonance” (NMR) only became possible in the last decade. T2 Biosystems refers to it as “T2MR” without the “nuclear” part, to reduce confusion that there’s anything radioactive about it.

T2 holds over 70 patents, which include the fundamental technology behind its instrument. The latest one, granted just a couple months ago, “NMR methods for monitoring blood clot formation” indicates possible future uses for the T2 platform to diagnose blood clots.

Beyond T2, I cannot find any other commercialized applications of miniature magnetic resonance for diagnostics at this level.

One company I came across is WaveGuide but their device is very different, and the company appears to be in developmental, private stage of their technology.

T2 Biosystems (TTOO), QIAGEN (QGEN), & Thermo Fisher (TMO)

Follow along, because this is about to get interesting.

For those who remember, QIAGEN (QGEN) was set to be acquired by industry giant Thermo Fisher (TMO) in a huge deal that had been worked out pre-pandemic. According to a July open letter by hedge fund known as Davidson Kempner Capital Management, one of QIAGEN’s largest shareholders, the offer was renegotiated up by 10% to nearly $13 Billion.

Davidson Kempner Capital Management remained unsatisfied with the revised offer and wrote that the company should be worth much more. They upped their stake to 8% and withheld approval.

On August 13, Thermo Fisher failed to get the required number of QGEN shareholders to agree to the buy-out offer, and thus the offer was terminated.

A week later, the chairman of QIAGEN’s supervisory board Dr. Håkan Björklund stepped down, effective immediately, and was replaced by American Lawrence A. Rosen.

This leaves QIAGEN free to pursue its own direction.

And so it has, on the same day as the Thermo Fisher deal fell through, QIAGEN announced that it would be completing an acquisition of privately-held molecular biotech NeuMoDX, in a deal worth about $234 Million. The agreement was originally announced two years ago, but had been on hold while the Thermo Fisher merger played out.

NeuMoDx produces a large-scale PCR-based diagnostic machine that automates much of the process– and incorporates “proprietary affinity magnetic microspheres” used for purification of the samples, a technology which only started getting developed in the early 2000s.

How does this relate to a possible buyout?

Well, which other company do we know of that has specialized technology dealing with magnetics, but from the resonance side?

That’s right — T2 Biosystems, which holds 70+ patents dealing with all manner of magnetics & molecular diagnostics.

And there’s a big hole in QIAGEN’s diagnostic line-up, with limited technology for diagnosing sepsis microbes– although they have been attempting to adapt their various “PCR-based” technologies to do so.

So there’s where things are: the CEO of the now-free QIAGEN sits on the board of a diagnostic company which he competes with– both now sell SARS-CoV-2 tests, for example… which only makes sense, if he’s really there to assess the valuation of T2’s proprietary technology as a potential target to add to QGEN’s stable of patents, or to work out a licensing arrangement for parts of the IP portfolio.

Is purchasing shares in T2 Biosystems (TTOO) a viable investment?

Shares of T2 Biosystems (TTOO) appear to be a very good investment option, the Money Midnight Indicator is expecting its price to increase considerably in the next several years. The majority of the metrics point to this investment being highly attractive.

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Tim Rolle
Investor of 6 years and Managing Editor of Money Midnight, a news outlet focused on highly profitable investment ideas and bold underground research.
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