Germantown biotech Orgenesis will expand its Baltimore footprint with a new subsidiary, Morgensis, that will be based in the city and focus on manufacturing cell therapies for other companies and startups.
Morgenesis will be located at the Maryland Center for Cell Therapy Manufacturing, a 7,000-square-foot facility the company is building with Johns Hopkins Medicine at its East Baltimore medical campus. To spur the creation of the subsidiary, New York private equity firm Metalmark Capital gave Morgenesis a growth investment of up to $50 million, which is based on a valuation of $125 million by Metalmark. The investment will consist of one upfront investment of $30 million and two future investments of $10 million each. Metalmark will own 22.31% of Morgenesis, according to U.S. Security and Exchange Commission documents.
Orgenesis CEO Vered Caplan said she created the subsidiary as a way to receive outside investment from investors who only want to invest in companies that sell services. The subsidiary will focus on point-of-care services, such as manufacturing cell therapies created by startups that need to undergo a critical trial, or serving universities and hospitals that need to manufacture treatments. Orgenesis uses mobile processing facilities to automate some parts of the drug manufacturing process, further reducing the cost. Caplan said the company already has a strong presence in the Middle East, Europe and Asia, and hopes to use the subsidiary to expand in the United States, with a focus on Maryland, Boston and California.
The new subsidiary is part of a wave of investment in the local cell industry. Baltimore cell therapy startup Vita Therapeutics raised a $31 million series B round earlier this year and the Maryland Stem Cell Research Fund's budget has almost doubled in a year because of increased government investment.
Morgenesis hopes to help the burgeoning industry grow even more by alleviating the large upfront cost of building the facilities necessary to create large amounts of cell therapies for a clinical trial or hospital treatment. Instead of spending tens of millions to build a lab to produce a drug for clinical trials, a company can work with Morgenesis to manufacture the therapy for a fraction of the cost.
“You see some of these companies investing upfront $30 or $50 million to build a facility,” Caplan said. “They still don't need that big of a facility if they’re just doing clinical trials of maybe 10 patients a year and it's sitting there empty. It's a huge cost issue.”
Even companies that already have centralized manufacturing can benefit from a Morgenesis location that is closer to a hospital since cell treatments often require materials from patients that are difficult to transport over long distances through freezing or other methods.
