Charles River to Acquire Vigene Biosciences for $292.5 Million in Cash

Charles River Laboratories International confirmed signing a definitive contract to acquire Vigene Biosciences, a leading gene therapy contract development and manufacturing organization (CDMO) headquartered in the U.S., specializing in viral vector-based gene delivery solutions.

Vigene acquisition price is estimated to be $292.5 million in cash plus $57.7 million upon reaching milestones

Subject to standard closing conditions, the acquisition price is estimated to be $292.5 million in cash. In addition to the original sales price, the deal includes up to $57.5 million in contingent additional payments depending on potential results. The transaction is scheduled to close at the beginning of Q3 of 2021, subject to regulatory approvals and standard closing conditions.

This acquisition is planned to strengthen Charles River’s gene therapy capability in the high-growth, value-added cell and gene therapy CDMO sector, when combined with the integrated portfolio of manufacturing support services, which includes biologics safety monitoring, cell supply, and release testing.

James C. Foster, Chairman, President and Chief Executive Officer of Charles River Laboratories, commented:

“The addition of Vigene Biosciences’ extensive gene therapy expertise will enable us to expand our comprehensive cell and gene therapy portfolio to span each of the major CDMO platforms – cell therapy, viral vector, and plasmid DNA production. In these emerging, high-growth, value-added segments, we intend to continue to differentiate ourselves by bringing our high-science, customizable approach to support the complex needs of cell and gene therapy developers and innovators worldwide. Our goal is to become our clients’ scientific partner of choice for advanced drug modalities from discovery and non-clinical development to CGMP manufacturing. We look forward to welcoming Vigene’s dedicated employees to the Charles River family.”

Charles River expands gene therapy CDMO capabilities for viral vectors and plasmid DNA

Expanding Charles River’s gene therapy CDMO capabilities for viral vectors and plasmid DNA the companies potential to satisfy its clients’ emerging scientific needs is boosted by Vigene’s contract manufacturing strategies across several crucial gene therapy platforms. Its main area of expertise is the manufacture of CGMP viral vectors, which are used for gene therapies and gene-modified cell therapies. Vigene has extensive experience in CGMP production of adeno-associated virus (AAV), the most widely used delivery solution for gene therapies, as well as other large viral vectors such as lentivirus. Vigene also provides high-quality, research-grade, and CGMP plasmid DNA, which is a key component in the development of viral vectors for gene therapies, gene-modified cell therapies, and vaccine production.

The acquisition complements Charles River’s existing non-clinical development and manufacturing portfolio

Vigene’s acquisition would supplement Charles River’s existing non-clinical research and manufacturing resources, giving customers access to a complete cell and gene therapy solution. Vigene’s operations will be headquartered in Rockville, Maryland, and will expand geographically to supplement Charles River’s current gene therapy CDMO capabilities in the United Kingdom and Sweden, which were developed in March 2021 through the acquisition of Cognate BioServices.

Vigene will also help Charles River’s existing cell therapy manufacturing capabilities in the United States to develop a complete gene-modified cell therapy solution. Clients will now be able to perform analytical research, process advancement, and production of innovative modalities with the same scientific partner, allowing them to accomplish their goal of accelerating innovation.

Increasing exposure in the high-growth market sector

Charles River’s growth prospects will be boosted by Vigene’s addition of viral vector and plasmid DNA manufacturing to its suite of robust cell and gene therapy solutions. The global addressable market for cell and gene therapy CDMO services, primarily for cell therapy, plasmid DNA, and viral vector processing, is currently valued at $2.5 billion, with an annual growth of at least 25% anticipated over the next five years.

Expected to drive profitable growth and shareholder value

The agreement is meant to enhance favorable financial returns that meet Charles River’s specific investment requirements. It is also projected to boost Charles River’s sales and earnings per share performance and long-term revenue. Vigene is anticipated to produce $30 to $35 million in annual sales in 2021, with annual growth of at least 25% for the next five years.

Additional Financial and Transaction Details

Vigene is projected to contribute approximately 50 basis points to Charles River’s reported sales growth rate in 2021, based on the acquisition’s expected completion at the beginning of Q3.

In the first full year since the acquisition closes, the transaction is supposed to be non-GAAP earnings per share neutral, then accretive. Both acquisition-related expenses, namely amortization of intangible assets, consultant fees, certain performance program costs, and certain third-party costs, are required to be exempt from non-GAAP earnings per share. The purchase and related payments are planned to be funded with cash and Charles River’s current credit facility. Vigene is also expected to be reported as part of Charles River’s Manufacturing segment.

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