Fresh off a year full of multibillion-dollar acquisitions, CRO conglomerate PRA is looking to make its Wall Street debut, filing for a $375 million IPO.
PRA is riding a wave of investor interest in companies that handle the clinical and logistical legwork for drugmakers, following last month's roughly $1 billion debut for Catalent ($CTLT) and Quintiles' ($Q) $947 million IPO in 2013.
The CRO, headquartered in North Carolina, is an amalgamation of smaller contractors brought under one roof by private equity magnate KKR. PRA's evolution began last year when KKR outbid its rivals and took the CRO off Genstar Capital's hands for $1.3 billion. A month later, the company signed a deal to pay an undisclosed sum for ReSearch Pharmaceutical Services and merge its two acquisitions. By year's end, the company had acquired CRI Lifetree to bolster its CRO conglomerate's early-stage know-how, completing a buy-and-merge plan that created what it said is the world's fourth-largest pharma contractor.
With those deals finally closed, PRA has settled into a new identity as a CRO with a particular affinity for biotech companies. In the first 6 months of 2014, PRA got 20% of its revenue from small- to mid-sized pharma companies, 26% from Big Biotech and 14% from emerging drug developers, the company said. In that same period, the company boosted its revenue by about 80% over 2013, bringing in $622.8 million.
And, with biotech valuations soaring thanks to a boom in IPOs and industry venture capital, PRA figures it's in the right space to keep growing.
Meanwhile, the CRO industry is on pace to grow about 8% a year, according to Industry Standard Research, reaching $32 billion by 2018. ISR estimates that about 31% of all clinical development spending is outsourced to CROs, a number the firm expects to reach 43% in the next 5 years.
PRA hasn't disclosed how many shares it intends to offer or at what price, and the company could substantially increase the size of its IPO. The CRO, planning to trade on the Nasdaq as "PRAH," said it doesn't expect to see any of the proceeds from its offering, earmarking the funds for payment of debts and redemption of senior notes.
- read the filing