Korean PE firm to reap hefty returns from US bio investment

Medivate Partners, South Korea’s life science-focused private equity firm, is set to secure more than 2.5 times its investment of around 60 billion won ($54 million) in Cognate BioServices Inc., a US cell and gene therapy contract development and manufacturing organization (CDMO).

Charles River Laboratories International Inc., a US pharmaceutical company, announced the acquisition of Cognate BioServices for approximately $875 million in cash on Feb. 17.

Medivate Partners is the second-largest shareholder of the CDMO company, with a 17.7% stake. EW Healthcare Partners, a US private equity firm, is the majority shareholder of Cognate with an undisclosed stake.

Medivate Partners invested in Cognate in February 2018, along with BlackRock and State General Reserve Fund (SGRF), a sovereign wealth fund in Oman. The Seoul-based PEF made an additional investment in the CDMO firm in January 2020 when the latter acquired Cobra Biologics, a CDMO that provides manufacturing services for plasmid DNA and viral vector.

Established in 2002, Cognate BioServices is the only CMO capable of commercial scale manufacturing of cell therapies, with the world’s largest production capacity. It offers comprehensive manufacturing solutions for cell therapies, as well as for the production of plasmid DNA and other inputs in the CDMO value chain.

Last year, Cognate was prepared to list on South Korea’s junior stock market Kosdaq, which would have made it the first foreign biopharmaceutical company to go public on the Korean stock market. But its shareholders shelved the IPO plan after Charles River showed interest in Cognate late last year. It was Charles River’s third attempt to buy a CDMO.

“The addition of Cognate will be complementary to Charles River’s existing, non-clinical capabilities … Cognate will immediately enhance Charles River’s growth potential by expanding its comprehensive platform of high-growth cell and gene therapy solutions,” Charles River said in a statement.

The market for Cognate’s CDMO services – principally cell therapy and plasmid production – is currently estimated at $1.5 billion and expected to grow at least 25% annually over the next five years, it added.

The transaction is expected to close by the end of March.

Medivate Partners, founded in 2012, is a life science investment firm focusing on North Asia and the US. Its portfolio includes WindMIL Therapeutics, a US biotech company developing immune-oncology therapeutics; WCCT Global Inc., a global pharmaceutical contract research organization; and Artiva Biotherapeutics, a US arm of South Korea’s Green Cross Lab Cell Corp.

Write to Chae-Yeon Kim at why29@hankyung.com
Yeonhee Kim edited this article.