Cancer Genetics (CGI) is buying cancer drug discovery and preclinical services company vivoPharm, for $12 million in cash and shares. CGI said it expects the acquisition to strengthen its position as a provider of services for oncology discovery, in vivo and in vitro drug development, and early-phase clinical trials testing, and expand its presence in Europe and Australia. The acquisition, which has been approved by both companies’ boards, is projected to close today.
“This accretive acquisition immediately strengthens our market position as the premier partner for oncology therapeutic and diagnostic development…,” said Panna Sharma, president and CEO at CGI. “Partnering with biotechnology and pharmaceutical companies to continue advancing our market share in oncology testing and diagnostics has been a proven approach in the development of CGI. vivoPharm furthers our biopharma strategy and adds capabilities to enable our strategy to rescue and repurpose oncology drugs while providing us enhanced revenue-generating capabilities across a broad and globally diverse client base.”
CGI’s $12 million purchase price for vivoPharm will include $1.2 million in cash and the remaining 90% in shares of CGI common stock, based on the volume-weighted average price (VWAP) over the last 20 business days. CGI confirmed that within the last day it had signed an equity financing arrangement for up to $16 million over two years, which will fund the acquisition and provide working capital.
With 32 full time staff, vivoPharm is based in Melbourne, Australia, and has operations in Hershey, PA, and a presence in Munich, Germany. The firm’s specialist expertise spans immuno-oncology models, tumor microenvironment studies, specialized pharmacology services, and PDx (patient-derived xenograft) model studies to support basic discovery, preclinical, and Phase I trials, together with target validation and biomarker analysis. vivoPharm studies have supported more than 200 investigational New Drug (IND) submissions across a range of therapeutic indications, including lymphomas, leukemia, gastrointestinal cancers, liver cancer, pancreatic cancer, non-small-cell lung cancer, and noncancer rare diseases.
vivoPharm projects achieving revenues of approximately $5 million in the most recent fiscal year (to June 30) and has reported compound annual revenue growth of 14% during the past three fiscal years. CGI said the acquisition will provide new opportunities to broaden its relationships with existing biopharma customers through the provision of additional discovery and downstream molecular work, as well as helping to springboard an initiative aimed at early-phase drug repurposing and drug rescue.
“We are looking forward to making significant market impact by combining vivoPharm's unique value proposition of integrated preclinical, safety, and biomarker profiling, both in vitro and in vivo, with Cancer Genetics and a team at the forefront of precision oncology development,” commented Ralf Brandt, Ph.D., CEO and managing director at vivoPharm. “Our teams are dedicated to working closely together to deliver a complete end-to-end solution from discovery and early development through companion diagnostic development and patient monitoring.” On completion of the acquisition Dr. Brandt will be appointed president of Discovery & Early Development Services at CGI, and 32 vivoPharm personnel will also be integrated into the firm.
CGI yesterday reported total revenues of $6.6 million in Q2 2017, including $3.3 million from its biopharma services, $3.1 million from clinical services, and $0.3 million from discovery services. Total revenues were down 6% on Q2 2016 figures, which the firm said was primarily due to delays in its clients' clinical trials. Revenues from biopharma partners and customers were also down 22%, although clinical services revenues were up 20%, and the number of clinical studies the firm is supporting has also increased to 140, which is up 12% “We also achieved record demand from biotech and pharma customers as demonstrated by $7.1 million in new contracts and bookings,” Mr. Sharma stated.
In June, the firm launched Thermo Fisher Scientific’s newly FDA-approved Oncomine™ Dx Target next-generation sequencing (NGS)-based companion diagnostic, which screens for biomarkers associated with three non-small-cell lung cancer drugs. At the time, CGI was one of only three laboratories in the U.S. to offer the test.