Chad Moore, Leerink Partners LLC05.05.16
While transaction activity in the Pharma Services sector has been steady the pace seems to have accelerated recently. Below is a summary of select announced or closed 2016 transactions. In addition, I provide thoughts on what the remainder of 2016 may hold for the sector.
Select activity in 2016
Similar to the overall market the beginning of 2016 was challenging for the stock prices of the publicly traded CROs. However, the public clinical stage CROs have outperformed the market. Over the last twelve months ending April 7, 2016, the market-cap weighted index of the publicly traded clinical CROs moved higher by approximately 7.5%. Over the same period the S&P 500 lost approximately 1.7%.
inVentiv’s pending IPO—inVentiv Group Holdings, Inc. filed a Form S-1 with the SEC to potentially become a publicly traded company. The company’s private equity sponsor is Thomas H. Lee Partners.
Precision for Medicine announced its intention to acquire ACT Oncology—ACT is a full-service oncology specialty CRO with particular experience conducting studies across all tumor types and hematology. Precision for Medicine refers to itself as the first dedicated Precision Medicine Research Organization.
Charles River Labs acquired WIL Research—WIL is a leading provider of CDMO services to biopharma, agricultural and industrial chemical companies worldwide. Charles River said the acquisition enhances its “position as a leading global early-stage CRO by strengthening its ability to partner with global clients across the drug discovery and development continuum.”
Medidata acquired Intelemage—Intelemage provides medical image sharing and workflow management solutions. Its solutions ease the sharing of medical file image sharing in clinical trials as well as for hospitals, physicians, life sciences companies, research institutions and core labs.
LakePharma acquired BlueSky BioServices—The combination creates one of the largest, if not the largest, dedicated biologics CRO in the U.S. LakePharma is a provider of antibody development, protein expression and characterization, molecular biology and process development. BlueSky’s focus is bacterial and baculovirus systems, complementary molecular biology platforms and assay services. Together they provide end-to-end services for the biologics discovery research market.
WIRB-Copernicus acquired Clintrax Global—Clintrax provides outsourced services for negotiating clinical trial-related contracts and budgets between sponsors, CROs and investigator sites as well as payments between these parties. By streamlining these functions and processes Clintrax can realize efficiencies and reduce study delays.
Synexus acquired Research Across America (RAA)—The acquisition marks Synexus’s entry into the U.S. market. RAA is an independent site alliance where investigator sites are able to negotiate their own contracts and budgets and employ their own site coordinators and site managers.
BioClinica acquired Clinverse—BioClinica continued is transaction activity by acquiring Clinverse. The target’s technology platform and solutions improve the efficiency of investigator and site payments by standardizing clinical trial-related financial transactions.
Linden Capital acquired Chesapeake IRB and Compass IRB—In the span of a little over a month Linden acquired Chesapeake who then acquired Compass. Chesapeake is a cloud-based, paperless IRB with operations in the U.S. and Canada. The acquisition of Compass provides Chesapeake with additional accredited review professionals and geographic presence.
Outlook for the Remainder of 2016
Ongoing uncertainty with regard to the outcome of the U.S. presidential election cycle will continue to make healthcare-related headlines. As we approach November issues include the Affordable Care Act—will it remain or be repealed and replaced?; drug price scrutiny; and Medicare/Medicaid—overhaul, expand or trim?
Sector specific issues include whether the biotech funding environment improves; continued growth of biologics/biosimilars; will RFP volume remain favorable; pharmaceutical sponsor M&A; backlog growth and burn rate; and foreign exchange rate fluctuations and its impact on earnings.
Lastly, there are interesting and unique services/technologies in development by seasoned Pharma services executives that may significantly improve the speed and efficiency of clinical trials while enabling greater participation. More to come on this in the June issue.
Chad Moore
Chad Moore, CFA, is a Managing Director in Global Investment Banking at Leerink Partners LLC. He leads the firm’s Outsourced Pharmaceutical Services & IT Investment Banking effort. He can be reached at chad.moore@leerink.com or +1.703.216.7120. This article is not a product of Leerink Partners’ Research Department. It represents the opinion of the author and not necessarily that of Leerink Partners.
Select activity in 2016
Similar to the overall market the beginning of 2016 was challenging for the stock prices of the publicly traded CROs. However, the public clinical stage CROs have outperformed the market. Over the last twelve months ending April 7, 2016, the market-cap weighted index of the publicly traded clinical CROs moved higher by approximately 7.5%. Over the same period the S&P 500 lost approximately 1.7%.
inVentiv’s pending IPO—inVentiv Group Holdings, Inc. filed a Form S-1 with the SEC to potentially become a publicly traded company. The company’s private equity sponsor is Thomas H. Lee Partners.
Precision for Medicine announced its intention to acquire ACT Oncology—ACT is a full-service oncology specialty CRO with particular experience conducting studies across all tumor types and hematology. Precision for Medicine refers to itself as the first dedicated Precision Medicine Research Organization.
Charles River Labs acquired WIL Research—WIL is a leading provider of CDMO services to biopharma, agricultural and industrial chemical companies worldwide. Charles River said the acquisition enhances its “position as a leading global early-stage CRO by strengthening its ability to partner with global clients across the drug discovery and development continuum.”
Medidata acquired Intelemage—Intelemage provides medical image sharing and workflow management solutions. Its solutions ease the sharing of medical file image sharing in clinical trials as well as for hospitals, physicians, life sciences companies, research institutions and core labs.
LakePharma acquired BlueSky BioServices—The combination creates one of the largest, if not the largest, dedicated biologics CRO in the U.S. LakePharma is a provider of antibody development, protein expression and characterization, molecular biology and process development. BlueSky’s focus is bacterial and baculovirus systems, complementary molecular biology platforms and assay services. Together they provide end-to-end services for the biologics discovery research market.
WIRB-Copernicus acquired Clintrax Global—Clintrax provides outsourced services for negotiating clinical trial-related contracts and budgets between sponsors, CROs and investigator sites as well as payments between these parties. By streamlining these functions and processes Clintrax can realize efficiencies and reduce study delays.
Synexus acquired Research Across America (RAA)—The acquisition marks Synexus’s entry into the U.S. market. RAA is an independent site alliance where investigator sites are able to negotiate their own contracts and budgets and employ their own site coordinators and site managers.
BioClinica acquired Clinverse—BioClinica continued is transaction activity by acquiring Clinverse. The target’s technology platform and solutions improve the efficiency of investigator and site payments by standardizing clinical trial-related financial transactions.
Linden Capital acquired Chesapeake IRB and Compass IRB—In the span of a little over a month Linden acquired Chesapeake who then acquired Compass. Chesapeake is a cloud-based, paperless IRB with operations in the U.S. and Canada. The acquisition of Compass provides Chesapeake with additional accredited review professionals and geographic presence.
Outlook for the Remainder of 2016
Ongoing uncertainty with regard to the outcome of the U.S. presidential election cycle will continue to make healthcare-related headlines. As we approach November issues include the Affordable Care Act—will it remain or be repealed and replaced?; drug price scrutiny; and Medicare/Medicaid—overhaul, expand or trim?
Sector specific issues include whether the biotech funding environment improves; continued growth of biologics/biosimilars; will RFP volume remain favorable; pharmaceutical sponsor M&A; backlog growth and burn rate; and foreign exchange rate fluctuations and its impact on earnings.
Lastly, there are interesting and unique services/technologies in development by seasoned Pharma services executives that may significantly improve the speed and efficiency of clinical trials while enabling greater participation. More to come on this in the June issue.
Chad Moore
Chad Moore, CFA, is a Managing Director in Global Investment Banking at Leerink Partners LLC. He leads the firm’s Outsourced Pharmaceutical Services & IT Investment Banking effort. He can be reached at chad.moore@leerink.com or +1.703.216.7120. This article is not a product of Leerink Partners’ Research Department. It represents the opinion of the author and not necessarily that of Leerink Partners.
