In February 2021, Charles River Laboratories Inc. reached an agreement to acquire Memphis-based Cognate BioServices Inc.
Charles River — a Massachusetts-based public company — completed the $875 million cash deal for Cognate on March 29.
Employing 18,400, Charles River provides products and services to pharma and biotech companies to accelerate research and drug development and had revenue of $2.9 billion in 2020.
Cognate is a contract manufacturer of cell and gene therapies. The biotech company employs about 300 locally and 500 in total across its locations in North America and Europe.
Cognate’s revenue for 2021 is projected at $140 million with the potential to grow 25% annually over the next five years.
Memphis Business Journal connected with Charles River corporate EVP Birgit Girshick to get her perspective on the deal for Cognate.
Girshick leads Charles Rivers' Discovery and Safety Assessment; Biologics Testing Solutions; and Avian Vaccine Services business lines and is a member of Charles Rivers' executive committee.
The following Q&A was edited for clarity and brevity.
MBJ: What about Cognate was most attractive as an acquisition partner?
Birgit Girshick: Over the last several years, we’ve made several acquisitions in the cell and gene therapy (C>) space, expanding our portfolio to provide clients the best support possible. The team at Cognate shares our goal of being the preferred single-source partner for our clients’ programs, and together we believe we have the most robust portfolio in the industry.
Cognate is already in the midst of a $212 million expansion in Memphis. How will Charles River sustain and further that growth? We believe Cognate will meaningfully enhance our long-term revenue and earnings growth potential because of the synergistic fit with Charles River, the market growth potential, and the emerging role of advanced drug modalities as treatments for oncology, rare diseases, and other therapeutic areas.
As the C> market expands, our goal is to grow our presence and capabilities by bringing on additional resources and infrastructure. A significant portion of cell and gene therapy programs are in the preclinical phase, meaning the demand for services like those Cognate offers is expected to intensify as more progress into late-stage development and commercialization. To date, Charles River has supported the development of 10 FDA-approved C>s and our partnership with Cognate will allow for continued growth and ability to bring these life-saving therapies to patients.
The addition of Cognate provides us with a one-of-a-kind portfolio that 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. Clients will also have access to cellular products as the starting point for their cell therapy programs and will be able to work with Charles River through every step of the research and early-stage development process before moving into cGMP production with Cognate, accelerating clients’ speed to market for advanced drug modalities.
Cognate is significantly expanding in Memphis but has operations in Europe, as well. What is the potential market for their services internationally? The addressable market for Cognate’s CDMO services is currently estimated at approximately $1.5 billion and expected to grow at least 25% annually over the next five years. As the demand for comprehensive manufacturing solutions for cell therapies and plasmid production increases, the acquisition of Cognate establishes us as a premier scientific partner for clients globally.
