NCI backs out of a $34M deal with Charles River, putting jobs in jeopardy

The National Cancer Institute is terminating a $34 million mouse-model contract with Charles River Laboratories ($CRL), possibly imperiling jobs at one of the CRO's Maryland outposts.

According to The Frederick News-Post, a change in policy led NCI to back out of the deal, through which Charles River supplied rodents for oncology studies. More than three-quarters of the 96 employees at the company's Frederick, MD, office work primarily on the NCI deal, Charles River told the newspaper, adding that it's too soon to say if they'll be cut or reassigned.

NCI will walk away from the deal in September, ending a relationship that dates back to 2008, when Charles River opened its 52,000-square-foot Frederick operation. Beyond supplying test subjects, the agreement has tasked Charles River with maintaining NCI's tumor repository and taking care of the institute's animal models, according to the News-Post.

Once the deal's over, Charles River may transition its Frederick operation into a commercially focused outfit, selling animal models directly to sponsors instead of providing them in bulk to NCI.

The news is likely just a minor setback for Charles River, whose animal models and services business accounts for more than half of its revenue. Last quarter, the CRO boosted sales by 3% to $299.4 million, driven by 2% growth in models and services, which brought in $185.6 million, and a 5% jump for preclinical research, which grossed $113.8 million.

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