Illustration: Rebecca Zisser/Axios
Just three years into its inception, WindRose Health Investors’ Lykan Bioscience combined with GHO Capital’s RoslinCT to create what the co-CEOs believe is the largest transatlantic pure-play cell therapy CDMO, Sarah writes.
Why it matters: A red-hot area of investment, cell and gene therapy is also a fast-growing pocket of science poised to transform medicine. In tandem, demand is growing for infrastructure to make drug development faster and more efficient and cost-effective.
- Funding into cell and gene therapy-focused biotechs continues to rise, surpassing $20 billion in 2021, with well over 1,000 trials in the space ongoing.
What they’re saying: “There’s a lot of new business transformation translating into new product transformation,” says Lykan CEO Patrick Lucy. “The investor capital is there. The demand is there, [and] there is a need for innovation in the space, which gives us an opportunity to be a significant player.”
Zoom in: The merger, announced earlier this month, solves for the geographic logistics challenges that cell therapies commonly face, while also giving both companies a competitive advantage, Lucy and RoslinCT CEO Peter Coleman say.
- “The more material customers are looking for that dual-source supply and it usually goes to a number of different organizations,” Coleman says.
- With both a U.K. and U.S. source of supply, “it makes it a lot simpler for [customers], and for both organizations.”
- Combining RoslinCT’s on-the-ground presence in Scotland (and direct access to Europe) with Lykan’s capacity on the Eastern Seaboard (and access to North America broadly) “is a solution for someone trying to solve for a global launch,” Lucy adds.
- Technically speaking, Roslin brings iPSC (induced Pluripotent Stem Cell) technology to the table as a compelling mid- to long-term play in the space, Lucy adds.
Behind the scenes: Lucy tells Sarah he took some 40 investor meetings — three times what he expected after hitting the market in Q1 via William Blair.
- The industry veteran says that, in his career, both as a customer to CDMOs and leading CDMOs, “I’ve never seen this kind of demand.”
By the numbers: Deal terms were not disclosed, but RoslinCT doubled in size with the merger, one source familiar with the deal says.
- RoslinCT increased manufacturing capacity by more than 100% and positioned the combined organization to grow at a more than 20% growth rate, that source said.
- RoslinCT’s 40,000 square feet of U.K. capacity (including eight cGMP facilities) is absorbed almost completely by existing clients, while Lykan’s 64,000 square feet (including 16 cGMP processing facilities) is newer and has more available capacity, the source said.
- The combined organization, which Coleman and Lucy now co-head, employs around 300.
What’s next: Lucy says he’d love to find promising differentiated technologies to tuck into the businesses: “Any long-term sustaining CMO should have a technology play that actually provides value to its customer base.”
Be smart: The combined company represents logical a play for large pharmaceutical manufacturers, one industry banker says.
- Eventually, “Lonza, Catalent, Pantheon [or another strategic] is going to buy it,” the source speculates.
Catch up fast: Both RoslinCT and Lykan have relatively short histories.
- GHO in January recapped RoslinCT, a new company formed via the spinout from the Roslin Institute at the University of Edinburgh — which is well known for its research in cell and gene biology.
- WindRose, meanwhile, recapitalized the newly launched Lykan in mid-2019 — providing the developmental capital to complete the build-out of a manufacturing facility for cell therapies.
- GHO is now the majority entity of the combined organization, while WindRose reinvested.