Charles River closes $380m HemaCare cell therapy takeover

By Nick Taylor

- Last updated on GMT

(Image: Getty/Iamnoonmai)
(Image: Getty/Iamnoonmai)

Related tags Charles river laboratories HemaCare Cell therapy

Charles River Laboratories closes $380m takeover of cell therapy specialist HemaCare to expand in fast-growing sector.

In November 2019, Charles River singled out cell and gene therapies as the fastest growing component of its biologics business. The following month, the big preclinical contract research organisation (CRO) revealed a $380m (€340m) deal to buy HemaCare.

HemaCare provides biomaterials, such as human cell types, and processing services to developers and manufacturers of cell therapies. According to analysts at William Blair, HemaCare worked on the three cell therapies approved in the US, namely Kymriah (tisagenlecleucel), Yescarta (axicabtagene ciloleucel) and Provenge (sipuleucel-T), and still provides leukapheresis process development materials for the products.

Charles River has now taken control of the business, with the deal closing last week.

To buy HemaCare, Charles River put together a deal that valued the cell therapy specialist at more than 40 times earnings before interest, tax, depreciation and amortisation. The multiple is well above what is typical for takeovers by contract research organizations (CROs) but the William Blair analysts think it is explicable.

Writing in a note to investors, the analysts stated, “While these multiples appear very high, we note that HemaCare grew 49% in the first half of 2019, is profitable on a GAAP basis and serves a rapidly expanding market. We therefore believe that despite the elevated purchase price, Charles River should benefit from increased exposure to the cell therapy market​.”

In July, Charles River said units across its organisation were generating around $100m of revenue from cell therapies. HemaCare generated sales of around $35m in the 12 months before news of the Charles River deal broke.

With the US Food and Drug Administration predicting it will approve up to 20 cell and gene therapies a year by 2025, the addressable market for Charles River and HemaCare is set to grow, creating an opportunity for both organizations to increase revenues.

There are also potential opportunities for Charles River to profit from its newly acquired connections to HemaCare’s customers.

William Blair analysts wrote, “We suspect that Charles River will attempt to convince clients to use its genetic manipulation and related cell therapy discovery services, in addition to purchasing the T cells from HemaCare​.”

Charles River’s acquisition of HemaCare comes shortly after the preclinical CRO suggested that it has the capacity to step up the pace of its dealmaking activity​. The CRO has signaled an interest in using its $1bn takeover capacity to strike multiple deals that give it access to new technologies.

Related topics Markets & Regulations Consolidation

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