Altasciences and QPS, PE-backed pharma-service companies on the block

Altasciences Clinical Research and QPS Holdings, two private-equity-backed pharmaceutical-services companies focused on early-phase drug development, are exploring potential sales, according to sources.

Wells Fargo has the mandate to sell Argentum Group’s QPS, three sources said. Two said Kilmer Capital Partners’ Altasciences is the midst of its own process via middle-market investment firm Fairmount Partners.

QPS was said to be on the market as early as last fall, one of the sources said, while Altasciences is also understood to have been on the auction block for some time now.

The companies are contract research organizations. CROs offer services to support discovery, preclinical and early-stage-clinical drug development for pharmaceutical and biotech companies.

QPS is considered more lab-focused and has a greater international presence. The demand for such services continues to be fueled by drugmakers, which are eager to deploy the huge sums of capital they’ve raised to develop innovative therapies.

In both cases, the assets are viewed as more logical sponsor plays, though a bolt-on for a large strategic might not be off the table.

Altasciences says it is one of the largest early-stage clinical CROs in North America. The company encompasses three clinical research facilities: Algorithme Pharma in Montreal; Vince and Associates Clinical Research in Overland Park, Kansas, and Algorithme Pharma USA in Fargo, North Dakota.

Kilmer, a Toronto PE firm, took its initial majority stake in Algorithme Pharma in 2007, later adding Vince and Associates in May 2013 for an undisclosed price.

Altasciences, Laval, Quebec, generates north of C$100 million (US$74 million) in revenue and C$20 million (US$15 million) of EBITDA, one of the sources estimated. QPS also likely generates $100-million-plus revenue with margins in the 12 percent to 18 percent range, this person said.

QPS was founded by Chairman and President Benjamin Chien in 1995. In 2008 it combined with Bio-Kinetic Clinical Applications, a portfolio company of Chicago’s First Analysis Venture Capital and New York’s Argentum Capital Partners. Each firm continues to list QPS in its portfolio.

Both QPS and Altasciences are considered peers of Celerion Holdings, the CRO that MTS Health Investors snapped up in October 2014 from former backers Bain Capital Ventures and SV Life Sciences.

Thomas H. Lee-backed inVentiv Health also has a unit focused on early-stage studies for drug candidates. InVentiv in August 2016 opted out of an IPO and instead gained Advent International as another backer.

Among other notable investors in the early-phase space is Dennis Gillings, the founder of publicly traded CRO behemoth QuintilesIMS. Gillings in 2014 co-founded GHO Capital, and the London firm has since invested in assets including Quotient Clinical and Envision Pharma Group.

Officials with Argentum Group, QPS, Wells Fargo, Kilmer Capital, Altasciences didn’t immediately return requests for comment, while Fairmount declined to comment.

Action Item: Kilmer Capital managing partner William Blackburn:

Science-lab workers. Photo courtesy sanjeri/E+/Getty Images