Newly united RoslinCT-Lykan offers drug dev infrastructure

Just three years into its inception, WindRose Health Investors’ Lykan Bioscience combined with GHO Capital’s RoslinCT to create what the co-CEOs believe is the largest transatlantic pure play cell therapy CDMO.

Why it matters: A red-hot area of investment, cell and gene therapy is also a fast-growing pocket of science poised to transform medicine. In tandem, demand is growing for infrastructure to make drug development faster and more efficient and cost effective.

• Funding into cell and gene therapy-focused biotechs continues to rise, surpassing $20b in 2021, with well over 1,000 trials in the space ongoing.

What they're saying: “There's a lot of new business transformation translating into new product transformation,” says Lykan CEO Patrick Lucy. “The investor capital is there. The demand is there, [and] there is a need for innovation in the space, which gives us an opportunity to be a significant player.”

Zoom in: The merger, announced earlier this month, solves for the geographic logistics challenges that cell therapies commonly face, while also giving both companies a competitive advantage, Lucy and RoslinCT CEO Peter Coleman say.

• “The more material customers are looking for that dual-source supply and it usually goes to a number of different organizations,” Coleman says.
• With both a U.K. and U.S. source of supply, “it makes it a lot simpler for [customers], and for both organizations.”
• Combining RoslinCT's on the ground presence in Scotland (and direct access to Europe) with Lykan's capacity on the Eastern seaboard (and access to North America broadly) "is a solution for someone trying to solve for a global launch,” Lucy adds.
• Technically speaking, Roslin brings iPSC (induced Pluripotent Stem Cell) technology to the table as a compelling mid- to long-term play in the space, Lucy adds.

Behind the scenes: Lucy tells Sarah he took some 40 investor meetings — 3 times what he expected after hitting the market in Q1 via William Blair.

• The industry veteran says that, in his career, both as a customer to CDMOs and leading CDMOs, "I've never seen this kind of demand,"

By the numbers: Deal terms were not disclosed, but RoslinCT doubled in size with the merger, one source familiar with the deal says.

• RoslinCT increased manufacturing capacity by more than 100% and positioning the combined organization to grow at a more than 20% growth rate, that source said.

• RoslinCT's 40,000 sq. ft. of U.K. capacity (including 8 cGMP facilities) is absorbed almost completely by existing clients, while Lykan’s 64,000 sq. ft. (including 16 cGMP processing facilities) is newer and has more available capacity, the source said.
• The combined organization, which Coleman and Lucy now co-head, employs around 300.

What's next: Lucy says he'd love to find promising differentiated technologies to tuck into the businesses: "Any long-term sustaining CMO should have a technology play that actually provides value to its customer base."

Be smart: The combined company represents logical a play for large pharmaceutical manufacturer, one industry banker says.

• Eventually, “Lonza, Catalent, Pantheon [or another strategic] is going to buy it,” the source speculates.

Catch up fast: Both RoslinCT and Lykan have relatively short histories.

• GHO in January recapped RoslinCT, a new company formed via the spinout from the University of Edinburg's Roslin Institute — which is well known for its research in cell and gene biology.
• WindRose, meanwhile, recapitalized newly-launched Lykan in mid-2019 — providing the developmental capital to complete the build out of a manufacturing facility for cell therapies.
• GHO is now the majority entity of the combined organization, while WindRose reinvested.