James C. Foster, Chairman, President & Chief Executive Officer, Charles River
Mr. Foster began his career at Charles River in 1976, and has held a variety of positions. He was named President in 1991, Chief Executive Officer in 1992, and Chairman in 2000. As CEO, Mr. Foster has transformed Charles River into a full service, early-stage drug development partner, growing the company’s revenues from approximately $160M to more than $1.1B.

Mr. Foster serves on the Board of Directors of Cell Signaling Technology. He is a member of the New England Chapter of CEOs Against Cancer, and a member of the Visiting Committee and the North American Executive Board of Massachusetts Institute of Technology (MIT) Sloan School of Management.

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With drug development costs exceeding $5 billion, and a 95% failure rate for new drug candidates, according to recent analysis by Forbes, the pharma and biopharma industry is setting its sights on greater efficiencies in discovery and early development. The goal is to succeed, but, if not, to “fail fast,” and eliminate unpromising molecules earlier in the drug development process. Rather than see a drug fail in Phase II or III, efforts are increasingly focused on early discovery and development methods and processes, such as medicinal chemistry, target discovery, and in vitro biology.

Charles River Laboratories recently acquired the CRO services division of Galapagos NV, which includes both Argenta and BioFocus, for $179 million and future performance payments of as much as $7 million. These businesses provide integrated drug discovery services, with a predominant focus on in vitro capabilities.

Argenta and BioFocus will add more than 340 scientists to Charles River’s scientific team and the acquisition positions Charles River as a full service, early-stage CRO, with in vitro and in vivo capabilities, from target discovery through preclinical development.  
In a recent interview, Charles River’s president and chief executive officer, James C. Foster discussed the recent acquisitions, future plans, changing R&D needs, and market trends in preclinical outsourcing.  –KB

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Contract Pharma: What were the motivating factors behind the acquisition?
James Foster: We have spoken about our goal to move further upstream in the drug discovery process, and believe that Argenta and BioFocus are an exceptional fit for this purpose.  The acquisition allows us to offer a full range of services from target discovery to IND filing, including significant capabilities in medicinal chemistry and in vitro discovery.

CP: Will the companies operate under a single business model or continue to operate separately?
JF: Argenta and BioFocus will be integrated under the Charles River Discovery Services umbrella, joining our existing in vivo pharmacology services business. The Argenta and BioFocus names will be retained for a period of time in acknowledgement of their excellent reputation and recognition in the marketplace. 

CP: How do the service offerings differ and/or complement existing capabilities for each company?
JF: Argenta and BioFocus are leading CROs with expertise in integrated drug discovery, from target discovery to delivery of clinic-ready candidates. They focus on the earliest stages of discovery, with extensive capabilities in medicinal chemistry, target discovery, and complex in vitro biology. They also have significant in vitro therapeutic expertise in respiratory, oncology, inflammation and CNS diseases.  This is an exceptional fit with our in vivo therapeutic expertise, and will create a valuable service capability for those clients who want to outsource integrated drug discovery and early-stage development programs to a single provider.

CP: In what areas do you expect to gain scope/scale as a result of the acquisition?
JF: We believe that this acquisition will give us a significant competitive advantage in addressing the discovery services market, because the alignment of in vitro and in vivo services absolutely distinguishes us from the competition. As a result of the acquisition, we will be able to offer a much more comprehensive suite of discovery services to clients. And when combined with our in vivo capabilities, our portfolio should be very attractive to clients because of the efficiency they can gain by outsourcing their drug discovery and early-stage development programs to a single provider.

CP: In what other areas is CRL looking to grow, either internally or via acquisition?
JF: We are continuously looking to strengthen our existing capabilities and identify adjacencies and other opportunities that will enhance our portfolio and enable us to support a broader segment of our clients’ early-stage drug development efforts. Targeted acquisitions are an important part of our growth strategy.

CP: Are you seeing any market trends in preclinical outsourcing?
JF: All of our clients are looking to eliminate unpromising molecules earlier in the drug development process, and our broader testing capabilities will enable us to provide the support they need to make earlier go/no-go decisions.

CP: How are services evolving to adjust to changing R&D needs?
JF: We believe that our upstream capabilities will enable us to engage with clients earlier in the discovery process. We believe this is important because it will enhance our ability to support the ongoing virtualization of discovery across the spectrum of entities that are involved in the process of discovering new drugs. 

This includes large biopharma, which is increasingly opting to outsource in lieu of maintaining in-house infrastructure, and choosing to do so with a smaller number of research partners who have greater capabilities. It also includes biotech companies, which are increasingly virtual, and academia. Additionally, as large biopharma increases partnering activities with academia, there is an opportunity to provide support to academics.

CP: What growth do you see in demand for in vitro testing, and what’s driving it?
JF: Our clients are increasingly relying on us to provide the services required to make earlier go/no-go decisions as to which molecules progress through the development process. With the addition of Argenta and BioFocus to Charles River, we will be able to engage with clients earlier in the process, providing support from target discovery to IND filing. This also meets our clients’ preference for outsourcing to larger CROs.

CP: CRL pioneered rapid LAL testing. Are you making any changes to the platform?
JF: Biopharma manufacturers are creating highly targeted therapeutic products utilizing very sophisticated manufacturing processes. These state of the art processes require immense understanding and microbiological control. Our rapid LAL test system provides a real time endotoxin monitoring solution. Our evolving platform will not only add speed and accuracy to endotoxin detection but will also provide the means to track and trend in-process and final product endotoxin testing results.

CP: Do you see the company moving out of animal testing entirely in the future?
JF: No, that’s unlikely. We will continue to identify opportunities to enhance the research models available to better mimic human disease. CP