Charles River Laboratories said it has acquired the German CRO Oncotest, which specializes in providing discovery services for oncology, for approximately up to €36million cash (about $38 million), in a deal the buyer said would create a top-tier oncology portfolio for validation of new cancer therapies.
Oncotest markets an integrated portfolio of target discovery and validation services for preclinical oncology researchers. The company specializes in in vivo pharmacology services, applying a collection of more than 400 patient-derived xenograft (PDX) tumor models, as well as a range of in vitro assays using both commercially available and proprietary PDX-derived cell lines.
Oncotest will be operated as a unit of Charles River’s In Vivo Discovery business, within the Discovery and Safety Assessment business segment. Oncotest will be integrated, Charles River said, with its broader portfolio of human xenografts, syngeneic, and humanized immunotherapy research models, flow cytometry, and IVIS® imaging services.
Charles River said the enhanced capabilities—which include facilities in North America and Europe—will enable the company to better support clients’ drug discovery programs, including: compound design and synthesis, hit-to-lead, high-throughput screening (HTS), and lead-to-candidate services. Combined with its safety assessment services, Charles River said, the combined companies can offer support from early discovery through preclinical development, enabling clients to bring new oncology therapies to market faster and more efficiently.
“Global biopharmaceutical clients are increasingly demanding a full suite of oncology capabilities from a single partner, including PDX tumor models, cell lines, imaging services, and immuno-oncology tools. With Oncotest GmbH, Charles River Discovery Services now has one of the most comprehensive and translational portfolios of oncology discovery services in the early-stage CRO industry,” Charles River Chairman, president and CEO James C. Foster said in a statement.
Charles River agreed to shell out approximately €34 million cash (approximately $36 million) upfront for Oncotest, plus a potential additional payment of €2 million (about $2 million) based on future performance. The purchase price is approximately 11x adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) based on the 12 months that ended in September.
Charles River said the acquisition will have a “negligible impact” on its revenue and non-GAAP earnings per share in the fourth quarter. Next year, Oncotest is expected to represent about 1% of Charles River’s consolidated revenue and be neutral to slightly accretive to non-GAAP earnings per share, the buyer said.
Non-GAAP earnings per share are expected to exclude all deal-related costs, which primarily include amortization of intangible assets and certain third-party integration costs, Charles River added.