CoreRx strikes $130M deal to snap up struggling small-molecule specialist Societal CDMO

Several months after Societal CDMO launched a restructuring campaign that led to 26 layoffs, the small molecule contract manufacturer has announced it’s being bought by one of its production peers in Florida.

Privately held manufacturer CoreRx has entered a definitive agreement to purchase Societal for $1.10 per share in cash, leading to a total deal value of roughly $130 million, the companies said in a press release late Wednesday.

Societal’s board of directors unanimously approved the deal, which is expected to close early in 2024’s second quarter.

Both Societal and CoreRx specialize in small molecule drugs, according to their websites. Societal’s services run the gamut from pre-investigational new drug development to commercial manufacturing and packaging, while CoreRx tackles both clinical- and commercial-stage projects across formulation development, analytical services, drug product manufacturing and packaging.

CoreRx operates out of two sites—one in Clearwater, Florida, and the other in Bend, Oregon. Societal, for its part, manages a total of 145,000 square feet of manufacturing space between sites in Gainesville, Georgia, and San Diego, California.

“The prospects for this combined entity to establish itself as a preferred CDMO partner in the small molecule space are bright and we look forward to the opportunity to contribute to the new company’s success,” Societal’s CEO, David Enloe, said in a statement.

According to a note from analysts at William Blair, a Societal buyout has “long seemed like the mostly likely outcome for the company,” given the CDMO’s difficulties over the past several years. Even still, there may be some “potential disappointment with the takeout price,” William Blair’s Max Smock wrote, caveating that it’s unlikely there will be enough resistance to scupper the deal.

Back in September, Societal unveiled a restructuring plan that led to layoffs for 9% of its staff, or 26 employees, which the company said would result in annualized savings of approximately $5.5 million. At the time, Societal noted the majority of the cuts would affect portions of its business focusing on earlier-stage services.

Given plans to discontinue certain programs and services, Societal in November revised its full-year revenue guidance for 2023 from a prior range of $94 million to $100 million to a new window of $92 million to $94 million. The company also said it expected to incur a net loss of $12.1 million to $13.6 million.

Recro Pharma rebranded as Societal CDMO in early 2022, several months after snapping up San Diego-based contract manufacturer Irisys for $50 million.

Prior to the acquisition, Recro was a specialist in oral solid dose drugs, and Irisys’ core businesses spanned formulation development to commercial manufacturing for a range of delivery formulations.

Meanwhile, Societal isn’t the only CDMO to line up for a sale this week.

Telix Pharmaceuticals recently announced it’s acquiring Texas-based CDMO IsoTherapeutics in a cash and stock deal worth $13.6 million. The deal is expected to help expand Telix’s manufacturing footprint in the U.S.