Charles River jumps into cell and gene therapy manufacturing with $875M Cognate buy

Cognate's buyout-to-be comes shortly after the company plotted cell and gene therapy manufacturing expansions in Europe and the U.S. (Cognate BioServices)

Just a few weeks after Cognate BioServices moved to beef up its cell and gene therapy manufacturing, the company has attracted a buyer eager to tap that expertise.

Charles River Laboratories agreed to throw down $875 million cash for Cognate in a deal designed to create a one-stop-shop in cell and gene therapies. Cognate's production muscle will complement Charles River's own work in the field to bring development, testing and manufacturing under one umbrella, the companies said Wednesday.

The move comes shortly after Cognate laid out plans to upgrade manufacturing in Europe and the U.S. And with a slew of drugmakers advancing cell and gene therapies, Charles River figures demand for the CDMO’s services will only grow with time.

Charles River estimates the current market for Cognate’s manufacturing operations—mainly in cell therapy and plasmid production—is somewhere in the vicinity of $1.5 billion now and could grow at least 25% annually for the next five years.

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Meanwhile, Cognate is expected to pull annual revenue of about $140 million this year and is on track to grow 25% per year over the next half-decade, Charles River said. If the deal closes in the first quarter as planned, it could boost Charles River’s 2021 revenue by $110 million, the company said.

The takeover will help Charles River offer clients "a single scientific partner" to speed cell and gene therapy work from discovery all the way to market, CEO James Foster said in a release.

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Memphis, Tennessee-based Cognate boasts production know-how for various cell types and technologies used in immunotherapy, immuno-oncology, regenerative medicine and advanced cell therapy, the company said. Its dedicated gene therapy unit, Cobra Biologics, operates a DNA, microbiota and fill-finish facility in Matfors, Sweden, and it cranks out DNA and viral vectors at its Centre of Excellence for Advanced Therapies in Keele, England.

Charles River is snapping up Cognate shortly after the CDMO plotted its own cell and gene therapy expansion. In January, Cognate unveiled plans to expand its global manufacturing facility and headquarters in Memphis, teeing up 500 new hires over the next four years, a Cognate spokesperson said at the time.

The upgrade will add a new cellular- and advanced-therapy-focused commercial manufacturing plant at the site as well as a new distribution center.

At the same time, Cognate’s gene therapy unit Cobra charted its own multiphase upgrade of its plasmid DNA services, with plans to add new clinical and commercial DNA facilities at its existing European sites.