Repligen Corporation, a life sciences company focused on bioprocessing technology leadership, today announced that it has entered into a definitive agreement to acquire privately-held C Technologies, Inc. for approximately $240 million, comprised of $192 million in cash plus $48 million in Repligen common stock. C Technologies recorded revenue of $23.7 million in 2018, and is projected to generate $27-$29 million in revenue (pro forma) in 2019, led by the success of its SoloVPE product-line which is considered a gold standard for measuring protein concentration in biopharmaceutical manufacturing. We believe the acquisition of C Technologies will establish Repligen in the rapidly growing Process Analytics segment of bioprocessing with best-in-class protein measurement technologies and a strong foundation for next-generation product development.
C Technologies is an analytics company with a market-leading portfolio of spectroscopy products used primarily in biopharmaceutical manufacturing. Over the past 10 years, C Technologies’ SoloVPE platform has become a standard in quality control and process development labs and in production-scale manufacturing for off-line or at-line protein concentration measurement. Use of the VPE technology delivers accurate and consistent protein measurement results to customers, eliminating the need for manual and time-consuming sample dilution while reducing time to results. More recently, C Technologies introduced its FlowVPE technology, which features in-line protein concentration measurement in filtration, chromatography and fill-finish applications. A key benefit of this in-line solution is the ability to monitor a manufacturing process in real time.
Tony J. Hunt, President and CEO of Repligen said, “The addition of C Technologies is a major step forward in building out a Process Analytics franchise for Repligen. We are excited to have Craig and the C Technologies team join Repligen. We look forward to further developing the core Slope Spectroscopy® technology for real-time bioprocess applications. We also plan to invest in expanding C Technologies’ commercial team to support broader global adoption of SoloVPE and FlowVPE, while continuing to deliver on the exceptional customer service for which C Technologies is well known. We believe that our acquisition of C Technologies will contribute to our continued growth in upstream and downstream markets and build on our strong first quarter performance.”
Craig Harrison, President and CEO of C Technologies said, “We are very proud of the progress and impact we have made in biopharma over the past decade. Our culture of technology innovation and customer centricity is what differentiates us and where we feel a real affinity with Repligen. We look forward to driving expanded, global adoption of our products, and continuing to advance SoloVPE and FlowVPE as standards in the industry for off-line, at-line and in-line protein concentration measurement”.
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Strategic and Financial Benefits of the Transaction
- Establishes a key franchise for Repligen in the rapidly growing process analytics segment of bioprocessing
C Technologies adds a fourth franchise – Process Analytics – to Repligen’s bioprocessing portfolio, complementing our Filtration, Chromatography and Proteins businesses. As the industry implements single-use solutions and drives process efficiency with faster turn-around between production campaigns the need for off-line, at-line and in-line measurement technologies has become more critical. C Technologies’ SoloVPE and FlowVPE product lines address these needs with rapid, accurate and consistent results while significantly reducing overall time to results for customers. - Adds a market-leader in protein concentration measurement with novel spectroscopy technology to our portfolio
C Technologies is a technology and market leader in bioprocess analytics focused on protein concentration measurement in bioprocessing applications. C Technologies has established a spectroscopy portfolio – encompassing systems, consumables and services – based on its patented Slope Spectroscopy® solution with variable path length extension technology. C Technologies products have become widely adopted in process development, manufacturing and in quality control labs. - Significantly expands capabilities to enable real-time process monitoring in batch and continuous manufacturing
FlowVPE systems allow for in-line protein concentration measurement, improving overall chromatography performance and enabling real-time accurate final protein measurements in TFF filtration and final formulation. The FlowVPE system can be used in both batch and continuous manufacturing making it well-positioned for increased industry adoption. - Provides significant opportunity to expand global market reach through investments in C Technologies’ commercial infrastructure and in accelerated development of next-generation products
Repligen plans to expand C Technologies’ global presence by investing in its commercial organization across regions and increasing R&D funding to accelerate development of next-generation products, including technologies that align with Repligen’s filtration and chromatography systems strategy. - Positive projected financial impact
C Technologies recorded $23.7 million of revenue for 2018 and has grown its revenue at an annual CAGR of approximately 20% since 2015. Its products are expected to add $16-$17 million to Repligen revenue in 2019, assuming a 7-month period of Repligen ownership. For the full year 2020, C Technologies is expected to contribute $32-$34 million in incremental revenue, at gross margins well above Repligen’s corporate average of 56%-57% per Repligen’s most recent 2019 guidance. Repligen expects the transaction to be accretive to its overall EBIT margins and accretive to adjusted earnings per diluted share (EPS) in 2019.
Approvals and Financing
The transaction is expected to be completed during the second quarter of 2019, subject to the satisfaction of customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. To fund the transaction, Repligen intends to use its cash on hand, which totaled approximately $194 million at December 31, 2018 and potentially a committed debt financing of $125 million that it has obtained from J.P. Morgan Chase & Co.
Perella Weinberg Partners LP is acting as financial advisor and Goodwin Procter LLP is serving as legal counsel to Repligen. J.P. Morgan Chase & Co. is serving as lender, lead arranger and the sole administrative agent under the committed debt financing and Simpson Thatcher served as its legal advisor.
First Quarter Preliminary Financial Results
Repligen is today announcing preliminary financial results for its first fiscal quarter of 2019. For the three month period ended March 31, 2019, Repligen expects to report revenue in the range of $60-$61 million, representing organic growth of 35%-37%, compared to $44.8 million in revenue for the three months ended March 31, 2018. The Company expects to report fully diluted GAAP earnings per share (EPS) for the first quarter of 2019 of $0.16-$0.17, compared to $0.08 for the same period in 2018. Repligen expects to report adjusted EPS (non-GAAP) for the first quarter of 2019 of $0.27-$0.28, compared to $0.17 for the same period in 2018. Adjustments to preliminary GAAP EPS, reconciling to preliminary adjusted EPS, include the following estimated adjustments: acquisition and integration costs of $0.04, intangible amortization of $0.06 and non-cash interest expense of $0.02, and the tax effect of intangible amortization and integration costs (-$0.01), each per fully diluted share.
These financial results are preliminary estimates based on information available to management as of the date of this press release, and actual financial results could change. Repligen’s actual financial results for its fiscal first quarter ended, March 31, 2019 are subject to the completion of its financial statements for the quarter.
Use of Non-GAAP Financial Measures
The following non-GAAP measure of financial performance is included in this release and/or the slide deck that accompanies today’s webcast: adjusted earnings per diluted share (EPS). Adjusted EPS excludes gains or losses that are either isolated or cannot be expected to occur again with any regularity or predictability, tax provisions/benefits related to the previous items, benefits from tax credit carryforwards, and the impact of tax audits or events. In addition, our preliminary adjusted EPS estimates for the first quarter of 2019, as noted above, exclude: acquisition and integration costs, intangible amortization, non-cash interest expense and the tax effect of intangible amortization and acquisition costs. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods. We believe that the use of non-GAAP measures helps investors to gain a better understanding of our core operating results and future prospects, consistent with how management measures and forecasts the company’s performance, especially when comparing such results to previous periods or forecasts.
Conference Call and Webcast
Repligen management will host a conference call and webcast at 8:30 am ET today to provide more information on this announcement. The webcast and accompanying slides can be accessed in the Investor Events & Presentations section of Repligen’s website. An audio archive of the call will be available for a limited period of time following the event.
Date: April 29, 2019
Source: Yahoo Finance