Charles River Snaps up Vigene Bio for $292.5M; Street Says Buy

The provider of preclinical and clinical laboratory services for the pharmaceutical, medical device, and biotechnology industries, Charles River Laboratories (CRL), has agreed to acquire Vigene Biosciences for a cash consideration of about $292.5 million.

Vigene is a U.S.-based gene therapy contract development and manufacturing organization (CDMO) that provides vector-based gene delivery solutions.

Apart from the initial cash consideration, the acquisition also involves future payments of up to $57.5 million based on performance and is expected to close in Q3.

Charles River Chairman, President, and CEO James C. Foster said, “The addition of Vigene Biosciences’ extensive gene therapy expertise will enable us to expand our comprehensive cell and gene therapy portfolio to span each of the major CDMO platforms- cell therapy, viral vector, and plasmid DNA production.” (See Charles River stock analysis on TipRanks)

Foster added, “In these emerging, high-growth, value-added segments, we intend to continue to differentiate ourselves by bringing our high-science, customizable approach to support the complex needs of cell and gene therapy developers and innovators worldwide.”

The acquisition enhances the gene therapy expertise of Charles River, complements its present non-clinical development and manufacturing portfolio, and increases its exposure to the high growth market sector of cell and gene therapy CDMO services.

Furthermore, the acquisition is expected to be accretive to Charles River’s long-term topline as well as bottom-line growth. For 2021, Vigene is estimated to generate revenue of $30 to $35 million. It is expected to record annual growth of at least 25% over the next five years.

On May 14, KeyBanc analyst Donald Hooker reiterated a Buy rating on the stock and increased the price target to $360 (9.4% upside potential) from $340.

Charles River’s Investor Day is scheduled for May 27. Hooker expects management to revise its long-term growth target upwards at the event, which might act as “a potential catalyst” for the stock.

Based on 10 Buys and 1 Hold consensus among analysts is that Charles River is a Strong Buy. The average analyst price target of $325.27 implies the stock is almost fairly priced at current levels. Shares have gained 91.6% over the past year.

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