Cancer Genetics, Inc. (CGI) acquired vivoPharm for approximately $12m. The acquisition was funded by an equity financing arrangement for up to $16m.
“The acquisition was heavily driven for us to get more into preclinical and discovery services,” Panna Sharma, CEO and president of Cancer Genetics, Inc., told Outsourcing-Pharma.com.
According to Sharma, the company’s discovery business was about 5% of revenue prior to acquiring vivoPharm. Going forward, Sharma said he expects discovery services to be north of $6m.
Dr. Ralf Brandt, CEO and managing director of vivoPharm, will lead CGI’s discovery services offering as the new President of CGI Discovery and Early Development Services.
As for vivoPharm’s other employees, Sharma said CGI plans on keeping all jobs in place and doesn’t expect any redundancies. “If anything we’ll be investing more because we would like discovery services to be a double digit figure on our PNL [profit and loss],” he said.
Sharma also noted that the acquisition fills a gap for the company in Asia Pacific where many of the CGI’s clients are running clinical trials.
vivoPharm operates approximately 14,000 square feet of AAALAC-accredited and GLP-compliant laboratories in Melbourne, Australia, and Hershey, Pennsylvania. It also has a location in Munich, Germany, which is dedicated to project management, client services, and clinical affairs.
“From a customer mix it was actually quite perfect,” Sharma added. “Because our customers are heavily big biotech and pharma [and] their customers tend to be smaller pharma and medium sized biotech.”
“So very synergistic from a customer and geography standpoint beyond the capabilities,” he said.
In addition to providing near term revenue growth, Sharma said the acquisition also diversifies the CGI’s business model – “from being a fee for service provider … to try and migrate into being a fully integrated drug discovery company.”
By bringing these capabilities in house Sharma said it allows CGI to be a fully integrated discovery company and to then partner out with pharma and biotech for later phases. “We’ll be looking for programs that we can license,” he added.
Racing to find new indications
CGI sees a lot of demand from immune-oncology (IO) companies, Sharma explained, as well as from companies that have targeted therapy programs in oncology.
“They are both looking at taking existing patient or clinical data and going back to efficacy models, vivo work, PDx [patient derived xenograft] models, and beginning those studies to see what are those extensions they can do for their existing IO programs or potentially new IO targets,” he said.
“There’s a lot of very good agents now that are in Ph IIb or Ph III … that everyone is basically racing to find new indications for,” he said, adding that “the new indications are going to come from preclinical, efficacy models, and maybe some in silico work.”