Agilent on ‘rich’ RNA outsourcing space as Biovectra buy beckons

For the third quarter FY2024, life science services firm Agilent reported total sales of $1.58 billion, down 5.6% year-on-year. The company attributed this to difficult market conditions, with pharma – its largest end market – down 8% overall. Within this, biopharma was down low double-digits or down mid-single digits, excluding its Nucleic Acid Solutions Division (NASD), while small molecules performed slightly better, led by growth in Europe.

CEO Padraig McDonnell said there are “steady signs of improvement” over previous quarters, and his firm is investing in its most promising growth opportunities. “We are mobilizing the organization to accelerate value creation through strategic transformation initiatives, which will drive margin expansion and growth—and increase our execution capabilities.”

One major ‘mobilization’ of the quarter is the definitive agreement to acquire Biovectra, a Canada-based contract development and manufacturing organization (CDMO) with a focus on  lipid nanoparticle (LNP) formulation, highly potent active pharmaceutical ingredient (HPAPI) development, GLP-1 services, antibody drug conjugates (ADCs) and biologics production capabilities for $925 million.

On the firm’s conference call last week, McDonnell described the deal as part of a “strategic fit in faster-growing markets” and hinted at further acquisitions ahead. “Biovectra ticks all of those boxes and it's an area where we're building out more capabilities for customers, so we see that continuing,” specifically in NASD.

The deal, set to close by the end of this year, will add to Agilent's two facilities in Colorado that produce grams to kilograms of siRNA, antisense, aptamers, sgRNA, and other oligonucleotides. Biovectra also brings sterile fill-finish services to Agilent.

“We do see that this business has a lot of runway. It's a business that's growing well, very well-run, of course and has had a lot of capital investment over a number of years. And I think this is only the start of our ambition in continuing to grow Biovectra and NASD.”

Agilent’s M&A activity in the CDMO space mirrors that of a number of fellow bioprocess vendors. Big vendor Thermo Fisher plays a major role in the outsourced manufacturing space after buying several CDMOs, including Patheon and Brammer Bio. Danaher Corporation, which owns Cytiva, added CDMO Aldevron for $9.6 billion in 2021.

Bank of America analyst Michael Ryskin asked on the call whether the Biovectra deal would bring Agilent the “benefits of having both the instrument, the consumables, and the services business on the tail-end,” as spoken about by fellow bioprocess tool vendors.

Management skirted the question but reiterated the major driver behind the planned acquisition, the build-out and advancement in the nucleic acid space.

“We've got a very strong existing position in the RNA modality,” Simon May, president of the Agilent Diagnostics and Genomics Group, added on the call. “I'd say up until this point, it's been a relatively narrow capability position and Biovectra builds on that quite nicely as we look at future optionality around complementary capabilities and modalities, we think it's a rich space and that's probably all we can say at this point.”

Updated 28 August: The original article described Biovectra's focus on oligonucleotides and CRISPR therapeutics. The CDMO does mention oligonucleotides on its website, but these are capabilities in processing various drug types including oligos as part of their fill/finish services. According to Agilent, this is not something that is active currently. The CDMO also does not have any CRISPR therapeutics activities currently, as suggested in the original piece.