Originally Published as The Niche Podcast
Charles River acquires Retrogenix, IQVIA fully acquires Q2 Solutions, Agios sells $1.8B in oncology, and Alloy forges a $75M series C.
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Story References
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Music by Luke Goodson
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Life Science Today is your source for stories, insights, and trends across the life science industry. Expect weekly highlights about new technologies, pharmaceutical mergers and acquisitions, news about the moves of venture capital and private equity, and how the stock market responds to biotech IPOs. Life Science Today also explores trends around clinical research, including the evolving patterns that determine how drugs and therapies are developed and approved. It’s news, with a dash of perspective, focused on the life science industry.
Introduction
Welcome to The Niche Podcast – Your weekly rundown of the biotech, clinical research, and life science industries. I’m your host, Dr. Noah Goodson. This week, Charles River acquires Retrogenix, IQVIA fully acquires Q2 Solutions, Agios sells $1.8B in oncology, and Alloy forges a $75M series C.
Charles River Acquires Retrogenix
Charles River Laboratories has acquired the clinical research organization (CRO) Retrogenix Limited in a $48M deal. Retrogenix is a small focused CRO with significant pre-clinical expertise in bioanalytics. They’ve built most of their brand around a proprietary microarray solution that improves target receptor identification, off-target profiling, and target deconvolution.
At $48M, this is hardly the biggest deal Charles River has done, even just this year. Remember, the purchased Cognate Biosciences for $875M (we reported on that back in Episode 035), then they raised a billion dollars in senior notes. All of the capital is getting funneled into preclinical preparations for Charles River to provide services to the burgeoning personalized medicine market. Cognate is a CMDO and this latest acquisition of Retrogenix mixes in early screening and preclinical research with the rest of what Charles River does. Now, this doesn’t quite put them into the LabCorp Space, who purchased Covance to run end to end lab and CRO services, but it does mean that Charles River has meaningfully expanded capabilities from start to finish in high end development, testing, and delivery of novel therapeutics.
For Retrogenix, this a great sale, and is another example of niche technical solutions getting gobbled up in the clinical development space. What made Retrogenix stand out? From my perspective they combined service targets with a proprietary technology. This let them blend their valuation between that of a small service provider and that of a biotechnology company. From Charles River’s perspective, even if the company and personnel end up being lower value (they probably won’t), the technology has inherent value. My guess is we will see at least 20 more acquisitions like this across the clinical development space in the next 6-9 months. They won’t all be $50M deals, but there are a lot of instances like this when it’s cheaper for larger companies to buy, rather than build a solution and these small companies have created these solutions for them.
IQVIA Fully Acquires Q2 Solutions
IQVIA has fully acquired the remaining stake in Q2 for $760M in cash deal from their partner Quest Diagnostics. Q2 was started in 2015 when LabCorp scooped up Covance. Basically it was a way for Quest and IQVIA (then Quintiles) to compete with the super CRO-Lab Services giant. With Quest getting the COVID19-bump in diagnostic testing, they are ready to refocus on that space. This sees Q2 come fully under IQVIA ownership and continue work as a CRO-Lab partner. It’s clear that IQVIA thinks there will be added value in maintaining Q2 solutions. What is not clear to me is if Q2 is a very profitable venture in and of itself, or if it is a means of “keeping it in the family” for IQVIA as they offer services. Yes, at $760M for 40%, it’s clearly not worthless. But a low profit venture may have higher than cover charge value if it keeps capital funneled internally rather than externally. This, in-the-family total service solution will certainly be part of IQVIAs strategy to stay near the top of the food chain. Alternatively, Q2 solutions may just be a very profitable and a great value-added solution that IQVIA is happy to own.
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Agios Sells Oncology Wing for $1.8B
Agios has sold their entire oncology wing to Servier Pharmaceuticals for $1.8B in cash plus potential downstream milestones and royalties. The deal, announced back in December, also sees Agios hand over $344.5M to Brystol-Myers Squibb to purchase back their portion of stocks. This shift of capital away from oncology is based on the significant promise Agios sees in their lead product Mitapivat.
Mitapivat is in mid to late-stage studies for PK deficiency, Adult Thalassemia, and Sickle Cell Disease (see Episode 20 for more). They are planning on spending nearly another billion across this year to repurchase stocks. They have a vision for Mitapivat to be a block-buster. Before they get there, strengthening their financial position is a major part of what they are doing with this cash infusion. Down the line, I imagine they could sell for enormous double-digit billions, do a mega-billions market roll-out deal, re-sell the shares with a much higher market cap, or some combination of these moves. But this is all speculation. The specific reasoning behind the buy-back is not totally clear to me. Regardless of their corporate strategy, it’s clear that Agios is banking on Mitapivat and they want to be a financial position to capitalize when it comes to market.
Alloy Therapeutics Raises $75M Series C
Alloy Therapeutics has raised a $75M Series C. Alloy is working to democratize the drug development process. What does this mean and how do you raise $75M to do that? I’m not sure if I know. But they are providing access to their ATX-Gx platform. ATX-Gx is an affordable (in scientific terms) suite of immunocompetent transgenic mice that provide a range of value in developing medications. So are transgenic mice now worth billions? Well not exactly, I think what they are really trying to do is create a collaborative ecosystem that maintains value through users and works as a power broker. This ultimately can funnel partners into their service or consulting wing to work in contract development. Optionally, they may want to be a platform service where they value is people use them and therefore they are valuable. If that all sounds very silicone valley in model, that’s because it is, and that’s who is backing them predominantly. That’s not to suggest there isn’t some real value in what Alloy is doing, more that their B2B business model currently reads a bit more B2I (that’s I for investor). With this round of funding, I’d expect to see more form and clear delineation articulated in their public face in the coming months. Until then, we’ll just have to read between B2I lines, and assume they are a preclinical CRO lab solution.
Closing Credits
Thanks for joining me on The Niche Podcast; your weekly summary of top news in the biotech, clinical trials, and life science industries. You can learn more at thenichepod.com or find us on your favorite podcast app. Like, comment, subscribe, and most of all share with your friends. If you like what you hear, please rate and review, it really helps us. Once again, I’m Dr. Noah Goodson, I’ll see you next week.