Charles River Laboratories International Inc. said it plans to acquire a provider of automated digital imaging software and also announced a strategic partnership with a venture capital firm that could add nearly four dozen early-stage pharmaceutical and biotech companies as contract research clients.
Other deals also may be on the way, as the Wilmington, Mass.-based contract research firm filed a shelf registration late Tuesday to sell stock and other securities. Proceeds would be intended for “general corporate purposes, including including working capital, acquisitions and retirement of debt,” the company said.
The new acquisition and strategic partnership were disclosed late Tuesday in conjunction with the reporting of a 12.5 percent drop in sales for the three months ended June 30. Total revenues for the second quarter fell to $308.2 million from $352.1 million a year ago.
Executives at the company said sales dropped in both of its reporting segments — preclinical services and research models and services — reflecting the negative impact of foreign exchange and softer market demand as clients retool their drug development pipelines and restructure their operations.
Foreign currency translation reduced net sales by 5.1 percent, they added.
As would be expected, the revenue declines dragged down the bottom line, with Charles River Labs posting a $34.2 million second-quarter profit, or 52 cents per share, compared with a $49.1 million, or 70 cents per share, gain during the same quarter in 2008.
The company also trimmed its revenue and profit forecast for the rest of the year. It now expects sales will be off between 7 percent and 9 percent compared with 2008 levels and net income to be in a range of $1.78 and $1.90 a share, down from as high as $2.16 a share in its earlier projections.
During the second quarter, Charles River Labs tried to rein in expenses through selective layoffs and by reducing performance-based compensation and benefits.
CEO James Foster said acquisitions and the new strategic partnership should help drive future growth by matching client trends to outsource certain research operations and improve efficiency and outcomes.
The company will pay $24 million to acquire Systems Pathology Co. LLC, a Seattle-area firm that provides automated digital imaging software used in toxicological pathology practices. The deal is expected to close by the end of August and also includes additional payments if Systems Pathology reaches certain milestones.
Charles River Labs also said it recently completed a $9 million acquisition of Cerebricon Ltd., a Finnish company providing discovery services to therapy providers for diseases of the central nervous system.
Foster said the strategic partnership with Boston-based MPM Capital offers his company “the opportunity to establish itself as a provider of choice for a unique client group.” Under the deal, Charles River Labs will have exclusive rights to provide contract research services to MPM portfolio companies as they pursue investigational new drug applications and other preclincial filings with federal regulators.
Specific terms of the partnership were not disclosed.