Contract research organization ICON is set to acquire rival PRA Health Sciences in a $12 billion deal that will vault the combined company into second place among clinical trial services providers.

The PRA acquisition deal is a combination of cash and stock. According to terms announced Wednesday, PRA shareholders will receive $80 cash for each share of PRA that they own plus 0.4125 shares in ICON. The total payment represents an approximately 30% premium to PRA’s closing stock price of $127.73 on Tuesday. When the deal closes, ICON shareholders will own about 66% of the company while PRA shareholders will hold about 34%.

The combined company will be headquartered in Dublin, Ireland, where it will continue to be managed by ICON’s executive team, led by CEO Steve Cutler. Colin Shannon, the chairman and CEO of Raleigh, North Carolina-based PRA, will join the combined company’s board of directors along with one additional board member from that company.

Merger and acquisition activity is common in the CRO sector, as these companies try to expand customer base, broaden geographic reach, or add new service offerings that they don’t have in-house. Speaking on a conference call, Cutler acknowledged those motivations, but he said the deal was also driven by how the pandemic has pushed the CRO industry to conduct clinical studies in ways that enable patients to be monitored from home rather than making regular visits to a clinical site.

“The pandemic has accelerated the transformation of the clinical trial landscape and opened up significant opportunities to decentralize trials,” Cutler said on a conference call. “We believe this trend is here to stay.”

ICON’s search for a CRO acquisition predates the pandemic. Cutler said his company has been hunting for deals for the last three or four years. PRA offered complementary assets and services, he added.

PRA conducts clinical trials remotely via its mobile health platform, Health Harmony. That technology was developed by digital health services firm Care Innovations, which had been a partner to PRA since 2017. Health Harmony is a mobile app that supports patients throughout a clinical trial while also providing insights for clinicians. A year ago, PRA paid $165 million up front to acquire Care Innovations, according to the CRO’s 2020 annual report. PRA said the deal would enhance its own mobile health platform, expanding the ability to conduct virtual and decentralized clinical trials.

Last March, as the pandemic brought clinical testing to a halt, PRA made the Care Innovations technology the foundation of its Covid-19 monitoring program. The program later expanded with the addition of new tools.

ICON has also been expanding its ability to remotely conduct clinical trials. In 2018, the company partnered with Intel to use that company’s artificial intelligence technology, which enables remote patient monitoring and employs wearable devices to continuously capture clinical data from study volunteers. The Intel technology applies machine-learning techniques to measure symptoms and quantify how experimental therapies are working. Last September, ICON launched Accellacare, a global clinical research network.

“PRA brings some different technology and data opportunities and innovation, to fit very nicely with ICON’s site, patient, and data strategy,” Cutler said. “Our global site network, our home health services, fit very well with their mobile and healthcare platform. We believe those combinations really offer us a huge opportunity to come out of this pandemic with a whole new way of doing clinical trials.”

Of the two companies, PRA is slightly larger. The Raleigh CRO reported nearly $3.2 billion in revenue last year, a 3.8% increase over the prior year. Net income for 2020 was $197 million. ICON reported $2.8 billion in 2020 revenue, a 4.8% increase over the prior year. The Irish CRO’s net income for 2020 was $348.2 million. PRA has 19,000 employees in 42 countries compared to the 16,000 that ICON employs in 41 countries.

According to an investor presentation, ICON ranks as the sixth largest CRO measured by revenue while PRA is the fifth largest. The combined company would rank as the second largest CRO, trailing the approximately $5.8 billion that IQVIA generates from contract services. (IQVIA’s technology and analytics business unit, comprised of cloud-based software offerings, adds another $4.8 billion to the company’s $11.3 billion total 2020 revenue.)

The combined company’s customer base would be 53% large biopharma firms and 43% small, mid-size, and emerging companies. Oncology would be the biggest part of the combined portfolio at 30%, followed by anti-infectives and vaccines at 15% and immunology at 14%.

ICON said it will pay for the cash portion of the acquisition with cash on hand and debt financing. The boards of both companies have already approved the transaction, but shareholder and regulatory approvals are still needed. The deal is expected to close in the third quarter of this year.

Photo: AndreyPopov, Getty Images



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here