- Thermo Fisher Scientific will pay $1.7 billion in cash to buy Brammer Bio, a contract manufacturer of viral vectors, the companies said Sunday.
- Since forming in 2016 through the merger of two companies, Brammer has grown into a top CDMO for cell and gene therapy-focused biotechs, with nearly 600 employees. Thermo said the company is expected to post $250 million in revenue for 2019.
- Thermo will fold Brammer into its pharma services business, a unit that has grown substantially since the life sciences giant's multi-billion dollar acquisition of Patheon in 2017.
Thermo's buy comes as industry research in cell and gene therapy booms.
Leaders of the Food and Drug Administration recently predicted a "turning point" in development of the complex treatments, releasing a plan in January detailing how the agency plans to keep pace with an expected surge in clinical and product applications.
Agency head Scott Gottlieb, speaking in an interview with BioPharma Dive earlier this month, said the field is at an "inflection point."
The FDA isn't alone in its bullish attitude. Pharma and biotech companies have paid up to enter into or expand in the space. Just this year alone, Roche bought Spark Therapeutics for $4.8 billion and Biogen paid $800 million to acquire Nightstar Therapeutics, while Pfizer inked a deal with Vivet Therapeutics.
Such deals stem, in part, from increasing research activity and clinical progress from smaller biotechs in the space — something CDMOs have noticed in searching for new business opportunities.
Now, Thermo is stepping up its presence too.
"Gene therapy is an area of increasing focus for our customers and is fast-evolving given its potential to treat a range of genetic disorders," company CEO Marc Casper said in a statement.
"The combination of Brammer Bio's viral vector capabilities with our GMP production expertise and proprietary bioprocessing and cell culture technologies uniquely positions us to partner with our customers to drive the evolution of this incredibly fast-growing market," Casper added.
Viral vectors — Brammer's specialty — are a key element to the plans of many cell and gene therapy companies. Used to deliver the genes which underpin the potentially one-time treatments, viral vectors have also become a rate-limiting step in the manufacturing of experimental therapeutics.
Thermo isn't alone in attempting to meet that demand. Last year, Lonza opened a 300,000-square-foot plant in Texas dedicated to cell and gene therapy production. And Oxford BioMedica, which supplies lentiviral vector, works with a number of the top companies developing the products, including Novartis, Boehringer Ingelheim and Axovant.
Since buying Patheon, Thermo has ramped up its investment in CDMO offerings for pharma. Earlier this month, Casper called the current moment "truly the golden age for the CDMO space," and has backed that statement up with plans to invest $150 million in Thermo's existing pharma services business.
Among the sprawling segments of Thermo's business, the laboratory products and services unit, which includes pharma services, is its breadwinner.
Lab products and services made up more than $10 billion of Thermo's $24 billion in revenue for 2018. Even before incorporating Patheon in 2017 and 2018, the unit earned Thermo the most of its four main business arms.
In a note to investors, Evercore ISI analyst Ross Muken said the deal for Brammer would help Thermo cross-sell its services to customers, similar to when it bought Patheon in 2017.
"This is a prime example of Marc and Co. looking at how they would like to be positioned in the next 5-10 years and adding to the existing portfolio to build out exposure and maintain leading positions in the market," Muken wrote.
M&A has been a key element of Thermo's expansion into pharma. In addition to the Patheon deal, the company bought Affymetrix for $1.34 billion in 2016 and has acquired two companies focused on bioproduction for nearly $700 million combined since 2017.
Muken expects more M&A activity from Thermo and said this deal does not impact that, given the modest size of the acquisition.
Brammer will become part of Thermo's pharma services business. The deal is expected to complete by the end of June.