Perkinelmer Inc. is looking to bolster its life sciences offerings with the purchase of cell engineering company Horizon Discovery Group plc for $383 million. The all-cash acquisition will add gene-editing and gene-modulation tools to Perkinelmer’s existing portfolio of discovery and applied genomics solutions.

Headquartered in Cambridge, U.K., Horizon provides CRISPR and RNA interference (RNAi) reagents, cell models, cell engineering and based editing products to aid in drug discovery and development. The company employs about 400 people worldwide, with offices in the U.S. and Japan. In 2019, it reported revenue of $75.5 million.

Perkinelmer’s discovery and applied genomics line includes immunoassay platforms, high content screening and in vivo imaging, as well as microfluidics, robotic liquid handling technologies and next-generation sequencing library preparation kits.

Strategic fit

“One of the key fundamentals for molecular research and drug discovery is being able to knock down a gene or function and explore the results to discover actionable insights and new clinical trial candidates faster,” said Prahlad Singh, Perkinelmer’s president and CEO. “We’re excited to team up with Horizon to not only add CRISPR and RNAi capabilities into our existing portfolio but also to leverage our combined life sciences screening and applied genomics solutions to help propel the next phase of cell and gene research for precision medicine.”

Alan Fletcher, vice president and general manager of life sciences at the Waltham, Mass.-based company, said the planned acquisition represents “a direct investment into high-growth, new complementary areas such as CRISPR in the drug development space that will enable Perkinelmer to better address evolving market needs.”

The deal, which has a total enterprise value of about $368 million, is expected to close in the first quarter of 2021, pending regulatory approvals.

Once finalized, “Horizon’s innovative reagents will come together with Perkinelmer’s high content screening (HCS), detection, automation and Labchip platforms to provide scalable workflows and high-quality capabilities when working with engineered cells for drug discovery and development,” Fletcher told BioWorld. “It will also enable us to create a complete solution for scientists studying changes in gene expression by using our imaging systems alongside a full range of supporting assays and in the future move us towards precision medicine solutions.

Cowen analyst Doug Schenkel called the deal a “solid strategic fit,” noting it increases Perkinelmer’s biopharma exposure, is accretive to top line growth and leave the company’s coffers with plenty of money for future deals.

“As a standalone company, we believe HZD was limited by its scale to fully capitalize on its growth opportunities despite having a solid product portfolio that includes RNAi/CRISPR reagents (~45% of total 2019 revenue), cell lines used in bioproduction applications (~15% of total revenue), and screening services (CRISPR-based; ~20% of total revenue),” he wrote. “We expect PKI to leverage its global footprint and relationships with customers to better serve the addressable market.”

Discovery rebounding from COVID-19

Perkinelmer’s discovery and analytical solutions (DAS) business declined 3% to $423.6 million in the third quarter of 2020, compared with the same period the prior year, as strength in life sciences was offset by pressures in food and applied markets.

Total revenue for the quarter climbed 36% to $964 million, bolstered by $288 million in COVID-19-related products – in particular, PCR tests and RNA extraction solutions.

During an Oct. 28 earnings call, CFO James Mock noted pharma biotech grew mid-single digits, fueled by strong performances in informatics and enterprise services. “Academic and government declined high single digits, a 10% sequential improvement. And discovery reagent utilization improved to positive organic growth, pointing to increased reopening activity for benchtop researchers,” he said.

Asked about prospects for future bounce back in DAS, Singh said the discovery business “is now positive, and I think we will continue to see that moving forward.” DAS-related research and development was up 10% in the third quarter, and there is a fair amount of new product introduction, he noted.

Additionally, “we’ve started seeing some increased investments from governments and CDC around life sciences research, looking at viral path and immune responses, so I think that will bode well for the life sciences business on the research side,” he said.

According to Smithers, the global tissue engineering and cell therapy market is expected to surpass $171 billion by 2028, up from nearly $12.68 billion in 2017.

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