US contract research firm Charles River says its expanded manufacturing business will focus mainly on cell therapy production.

CEO Jim Foster outlined Charles River’s plan this week, telling analysts the firm’s recent acquisition Cognate BioServices would boost the contract research organization’s (CRO) biologics business.

“Cognate gives us the ability, and particularly in combination with HemaCare and Cellero, to provide the cells to do the process development, to do the clinical trial scale up, and ultimately, to provide commercial quantities specifically of cell therapy products.”

Image: iStock/Dilok Klaisataporn

He added that “we have some of the capabilities that are involved in and facilitate gene therapy manufacturing as well. But I’d say that the CDMO business will be primarily cell therapy-related.”

Charles River’s focus on cell therapy rather than gene therapy in part reflects competition in the market according to Foster.

“So in the cell therapy manufacturing space, we have smaller competitors who are around the same size as we are in cell therapy manufacturing but don’t have the large suite of services.”

Results

Charles River’s manufacturing revenue increased in the first quarter, growing nearly 20% to $146.5 million. The firm cited the positive impact of currency exchange rates as well as demand for biologics and microbial testing services.

Total revenue was $824.6 million, an increase of 16.6% year on year.

The contribution from Charles River’s core discovery and safety testing business was $501.2 million, up 14.2%, while research models generated $176.9 million, an increase of 21.2%.

The firm said recent acquisitions – including Cognate, Retrogenix and Distributed Bio – contributed 0.7% to first-quarter growth.

Expansion

Charles River is also likely to expand its manufacturing capacity in 2022 according to Foster.

He told analysts on the call that, “We obviously have to add and finish additional space for next year and beyond based upon both, not only the client demand but the nature of the demand.”

The firm revised its CAPEX guidance for 2021 by $40 million to approximately $220 million.

CFO David Smith said most of the increase would be focused on Cognate, telling analysts “The increase primarily reflects the investments we are making in Cognate to support its high-growth business.”