Charles River Laboratories will acquire Cognate BioServices in an $875 million cash deal that will significantly expand the company’s capabilities in the high-growth cell and gene therapy sector.
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Charles River Laboratories will acquire Cognate BioServices, a cell and gene therapy contract development and manufacturing organization, in an $875 million cash deal that will significantly expand the company’s capabilities in the high-growth cell and gene therapy sector.
In addition to expanding Charles Rivers’ capabilities in the cell and gene therapy space, the company said the acquisition of Memphis, Tenn.-based Cognate will also establish a comprehensive solution from discovery and non-clinical development through CGMP manufacturing in advanced drug modalities. Cognate has a global presence with more than 500 employees. In January, Cognate announced plans to significantly expand cell and gene therapy manufacturing capacity, laboratory space, warehousing capabilities, and increase office support at its facilities in the United States and Europe.
The company has extensive experience producing various cell types and technologies used in cellular immunotherapy and immuno-oncology, regenerative medicine and advanced cell therapy. Its primary area of expertise is in CGMP cell therapy manufacturing, which processes a variety of cellular products and other starting materials to develop and produce allogeneic (donor-derived) and autologous (patient-derived) cell therapies. Cognate also produces plasmid DNA, which is a foundational tool used in the development of gene-modified cell therapies and gene therapies, as well as other CDMO inputs, Charles River said.
James C. Foster, president and chief executive officer of Charles River Labs, said Cognate provides a “synergistic fit” for Charles River. He said bringing Cognate under the company’s umbrella presents a unique opportunity to expand the company’s capabilities and also enhance its offerings to clients in emerging areas of scientific innovation.
Additionally, Charles River said the addition of Cognate will complement its existing Biologics Testing Solutions business. Cognate’s capabilities will enable clients to “seamlessly conduct analytical testing, process development, and manufacturing for advanced modalities with the same scientific partner, enabling them to achieve their goal of driving greater efficiency,” the company said.
The addition of Cognate is also expected to provide a significant financial boost to Charles River. Cognate is expected to generate annual revenue of approximately $140 million in 2021, and is expected to grow at least 25% annually over the next five years, the company said.
“This acquisition will be an exceptional strategic fit, adding to our comprehensive suite of early-stage research and manufacturing support solutions and enabling us to achieve our goal of establishing a single scientific partner to provide biopharmaceutical clients with an integrated solution to help accelerate their cell and gene therapy programs from discovery and non-clinical development through commercialization,” Foster said in a statement. “Because of the synergistic fit with Charles River, the market growth potential, and the emerging role of advanced drug modalities as treatments for oncology and rare disease, we believe Cognate will meaningfully enhance our long-term revenue and earnings growth potential.”
The acquisition is expected to move quickly. Charles River anticipates the closing of the deal by the end of the first quarter of 2021. Based on the anticipated completion of the acquisition by the end of the first quarter, Cognate is expected to add approximately $110 million to Charles River’s 2021 consolidated revenue for the partial year.
