Press Release

Covington Associates Announces Advisory Role in Sale of Allegro Diagnostics to Veracyte

Covington continues its active advisory role in the Diagnostics sector

September 22, 2014 (Boston, MA) – Covington Associates LLC today announced its role as exclusive financial advisor to Allegro Diagnostics Corp. (“Allegro”), a privately-held molecular diagnostics company focused on developing genomic tests to improve the preoperative diagnosis of lung cancer, on the sale of its business to Veracyte, Inc. (Nasdaq: VCYT), a molecular diagnostics company pioneering the field of molecular cytology.  Veracyte acquired Allegro for $21 million in cash and stock.

Allegro’s lead lung cancer test is designed to help physicians determine those patients with lung nodules that can be safely monitored with CT scans rather than undergoing invasive procedures following a non-diagnostic bronchoscopy result. The gene expression test is based on Allegro’s proprietary “field of injury” genomic technology platform to circumvent the traditional challenge of obtaining accurate lung nodule samples for testing without surgery or other invasive, risky and expensive procedures.

Allegro’s technology detects molecular changes that occur throughout the respiratory airways in response to smoking – the cause of almost all lung cancers – and that are correlated with disease. These changes can be detected in a gene expression signature from cytologically normal airway cells and indicate the presence of malignancy or disease processes from distant sites in the lung. The lung cancer test is performed on cytology samples obtained through bronchoscopy, a minimally invasive procedure that enables a physician to access airways in the lung. The molecular classifier’s performance has been established in two prospective, multicenter clinical validation studies involving 25 centers and nearly 1,000 patients.

“With Allegro and its novel, clinically validated lung cancer test, we plan to accelerate our entry into the pulmonology market, enabling us to improve care for patients with lung nodules while creating long-term growth opportunities,” said Bonnie H. Anderson, Veracyte’s President and CEO. “Allegro is a natural fit for us and we believe this move further establishes our leadership in molecular cytology, using genomics to resolve diagnostic ambiguity preoperatively and thus spare patients from unnecessary invasive procedures and reduce associated healthcare costs.”

“The acquisition combines Allegro’s novel lung cancer test and “field of injury” platform with Veracyte’s proven abilities in commercializing novel molecular tests,” commented Steven A. Mermelstein, Managing Director at Covington Associates and lead advisor on the merger.  “We are excited to have had a key role in completing this highly strategic transaction, which we believe will enable broad availability of a much needed diagnostic to help reduce unnecessary surgeries and other invasive procedures among the estimated 250,000 patients in the US today who present annually with lung nodules and undergo bronchoscopies.”


About Covington Associates LLC

Covington Associates is an investment banking firm offering advisory services in the areas of mergers and acquisitions (“M&A”), capital raising, strategic advisory, fairness opinions, and valuations to middle-market companies across the Healthcare, Business Services, Consumer & Industrial, and Technology verticals.  Founded in 1991, with offices in Boston, Chicago, and New York, the vision for Covington has been to provide clients with the highest caliber of senior-level attention and to remain an advice driven and results focused organization.  Since its inception, Covington Associates has completed more than 200 transactions globally for both private and publicly traded companies totaling over $15 billion.

Within Healthcare, Covington’s Life Science Tools & Diagnostics practice has executed numerous transactions over the past few years with clients that offer a range of products and services for the life sciences research, drug discovery, and clinical diagnostics markets.  Covington recently has completed M&A transactions with market leaders, including Thermo Fisher Scientific (NYSE: TMO), Genoptix/Novartis (NYSE: NVS), Life Technologies (since acquired by Thermo Fisher), and Sanofi (NYSE: SNY).

For more information, visit www.covllc.com.


About Veracyte

Veracyte (Nasdaq: VCYT) is pioneering the field of molecular cytology, focusing on genomic solutions that resolve diagnostic ambiguity and enable physicians to make more informed treatment decisions at an early stage in patient care. By improving preoperative diagnostic accuracy, the company aims to help patients avoid unnecessary invasive procedures while reducing healthcare costs. Veracyte’s first commercial solution, the Afirma® Thyroid FNA Analysis, provides a comprehensive approach for assessing thyroid nodules, centered on the proprietary Gene Expression Classifier (GEC) to resolve ambiguity in diagnosis.

For more information, visit www.veracyte.com.


About Allegro

Allegro, based in Maynard, MA, is a venture-backed molecular diagnostics company focused on developing tests using its proprietary “field of injury” genomic technology platform to improve the preoperative diagnosis of lung cancer.  Allegro was co-founded in 2006 by Jerome Brody, M.D. and Avrum Spira, M.D., MSc., faculty members at the Boston University School of Medicine and thought leaders in the field of pulmonology genomics.  The Spira-Lenburg Lab at BU has maintained an active collaboration with Allegro around the field of injury platform.  Allegro’s lead investors are Boston-area VC firms, Kodiak Venture Partners and Catalyst Health Ventures.

In addition to Covington’s role as financial advisor, Allegro’s legal team was led by Mintz Levin Cohn Ferris Glovsky and Popeo PC.

Allegro Diagnostics to Veracyte

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