Fast-growing Charles River trades $36M for a drug discovery outfit

Charles River Laboratories ($CRL), on the heels of some M&A-driven revenue growth, acquired another early-stage research company, paying $36 million for a German provider of drug discovery services.

The Massachusetts CRO acquired Oncotest, a Freiburg-headquartered company offering discovery and validation services in the field of oncology, using proprietary tumor models to help clients choose which cancer-treating molecules to move forward. Charles River has promised up to $2 million more to Oncotest's shareholders tied to future performance, expecting the acquisition to add about 1% to company revenue starting next year.

Charles River plans to fold its latest buy into its existing portfolio of human-derived xenografts and research models for cancer development, creating what the company said is a completive suite of oncology offerings for drugmakers in one of biopharma's fastest growing fields.

The deal marks the latest acquisition for a CRO that has repeatedly used its checkbook to expand its capacity and global reach. In July, Charles River traded $212 million for Celsis, a company focused on quality-control testing. Last year, the CRO paid $179 million for Argenta and BioFocus, two discovery-focused service providers formerly owned by Galapagos. And months before, the company shelled out $52 million for ChanTest, an Ohio outfit that specializes in ion channel testing for early-stage drug development.

All that M&A has helped bolster Charles River's financial performance. Last quarter, the company grew revenue 6.7% to $349.5 million, as double-digit increases in discovery and manufacturing helped offset a slump in its research models business. The company raised its 2015 revenue projection by about 11% at midpoint.

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