Biolife buys CBS, turns focus on integrating cold-chain acquisitions

Biolife Solutions says cold storage tech firm Custom Biogenic Systems (CBS) is likely to be its last acquisition for a while as integration will be the focus in 2020.

The US cell and gene therapy tool firm announced the deal this week, citing CBS’ portfolio of liquid nitrogen lab freezers and cryogenic equipment as well as its design and manufacturing capabilities as motivations.

CBS CEO, founder, and sole shareholder John Brothers received $11 million (€10 million) in cash and $4 million worth of Biolife common stock. Brothers has also been appointed as Vice President, Advanced Freezer Technologies.

Biolife CEO Mike Rice told analysts CBS would contribute a “meaningful amount of revenue.” He also said the deal was “an opportunity to improve quality and reduce cost and our evo cold chain products by vertically integrating a US based supplier.”

Rice predicted demand for CBS’ tech from allogeneic cell and gene therapy firms, explaining “every one of these developing companies [will] need several of these freezers based on the volume of product they’re going to be manufacturing.

“So it’s all about the storage of the final manufacturing product and even upstream the stores of the incoming bulk source material are starting material and maybe some intermediates, but there is a huge market for this,” Rice said.

Can do attitude

In July Biolife acquired cold-chain services firm SAVSU citing its cloud-connected passive storage and transport containers for temperature sensitive biologics and regenerative medicines as the driver.

According to Rice, CBS’ offering is complementary to that gained through the SAVSU takeover.

“CBS’s product line is for stationary freezing containers that would be at cell and gene therapy manufacturing sites by repositories clinics and what not.

“The SAVSU evo line of dry vapor shippers and the other products are for transport at cryogenic temperatures and other temperatures of biologic therapies that are both time-sensitive and temperature sensitive. So, one is stationary one is for movement across time and space.”

Biolife CFO Roderick de Greef suggested CBS would play a role in production of SAVSU’s evo range of “smart shippers,” which are used by cell and gene therapy firms like Novartis’ AveXis unit.

“We believe that rather than sourcing the evo hardware from abroad, that we have the opportunity to have the products made in Detroit at CBS, because fundamentally the technology around building what is essentially a can in a can is absolutely doable at CBS.”

M&A slowdown

Last year Biolife said the cell and gene therapy sector was fragmented and ripe for consolidation. However, comments during the call suggest CBS is likely to be its last acquisition for the time being.

Rice told analysts, “Not to rule out any additional M&A as something remarkable comes our way. But no doubt our focus for next year will be on integration and so we’ve identified the obvious initial integration tasks that we want to do.”

Financials

Biolife’s total revenue for Q3 was $6.6 million, up 25% year on year.

Biopreservation media brought it $6 million which, although 15% up on Q3 last year, was below expectations as a result of lower than expected orders from two customers Biolife said.

The firm also used the call to revise its outlook for the year, citing its acquisitions.

De Greef said, “We expect total revenue for 2019 will be between $27.5 million to $31.5 million reflecting year-over-year growth of 39% to 60%.

“This includes $1.2 million from the thaw product line, 500,000 from the EVO technology and $1 million to $2 million from CBS.”

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