Was Fujifilm CDI acquisition a good move by the companies?

The big stem cell news already this week is the acquisition by Fujifilm of Cellular Dynamics International (CDI) for a whopping $307 million dollars or about $16.50 per CDI share. You can read the press release here.

It was less than two years ago that CDI did its IPO with an initial offering of about $46 million.Cellular Dynamics

Fujifilm reportedly has a multibillion-dollar war chest for buying into the life sciences sector and a growing interest in regenerative medicine. Note that there’s some fun, but perhaps over the top speculation going on in terms of whom they might snap up next.

CDI is an unusual company in the sense that it began about a decade ago with a very sexy idea of using human pluripotent stem cells to cure disease, but now as xconomy.com refers to it is focused more in the “unsexy” business of manufacturing cellular products from stem cells.Fujifilm Logo

Although the production side of regenerative medicine may not sound very innovative, it turns out that the reality is that making high-quality, functional, and pure differentiated cell products from pluripotent stem cells is no easy task. Throw in making such products from human induced pluripotent stem cells (IPSC) and it starts to become very exciting and important.

So was this a good move by Fujifilm and CDI?

Good news for the stem cell/regenerative medicine field overall?

My sense is an initial “yes” all around overall, but with some remaining questions.

If Fujifilm wants to grow a presence in IPSC and more generally the regen med arena, it now has made a big step forward. CDI has worked with CIRM, NIH, and a number of biotech companies. Again, the process of making the “real deal” pure, functional cellular products from IPSC is very important and valuable. The evolving CDI “superdonor” IPSC bank is very cool and could have huge value.

Perhaps something we could learn more about is how Fujifilm will make use of the unique IP of CDI specifically. Also how does the fact that CDI has to license IPSC technology via the Yamanaka Patents come into play? What about the overall price tag just over $300 million?

From the press release comes the Fujifilm perspective:

Commenting on the transaction, Shigetaka Komori, Chairman and CEO of Fujifilm, said, “We are delighted to be able to pursue the business from drug discovery to regenerative medicine with CDI, which develops and manufactures iPS cells. We have optimal scaffolding material, ‘recombinant peptides’, for cell generation and technologies useful for regenerative medicines such as material science and engineering. Our group company, Japan Tissue Engineering, markets regenerative medicine products in Japan. By welcoming CDI to the Fujifilm Group and by combining the technologies and knowhow of both companies, we will seek synergies and efficiencies to be more competitive in the field of drug discovery and regenerative medicine.”

From a CDI perspective, this seems like a major win for their team, who will benefit greatly financially from this deal. Although Fujifilm intends to maintain CDI as a Wisconsin-based subsidiary, as xconomy.com points out it’s not clear what this deal means for the employment of the 150+ CDI workers there longer term. “Synergies” and “efficiencies” after an acquisition can mean reductions in employees. It seems likely that Fujifilm will continue the momentum of CDI and help to give clinical meaning to the efforts of the CDI scientists:

Robert J. Palay, Chairman and CEO of CDI, added, “CDI has become a leader in the development and manufacture of fully functioning human cells in industrial quantities to precise specifications. CDI and Fujifilm share a common strategic vision for achieving leadership in the field of regenerative medicine. The combination of CDI’s technology with Fujifilm’s technologies, know-how, and resources brings us ever closer to realizing the promise of discovering better, safer medicines and developing new cell therapies based on iPSCs.”

For the field overall, this deal is good news. It would seem a clear, strong indicator of the great, concrete value of regenerative medicine and cellular therapies. Nearly a third of a billion dollars is nothing to sneeze at. Notably, this is not about clinical trials or that kind of specific pipeline, but more about concrete cellular products and technology. That’s an important distinction because in this sector oftentimes most of the value and growth emphasis is placed on rapid bedside potential.

Disclaimer: this post is not financial advice and the author has no financial interest in either company.

4 thoughts on “Was Fujifilm CDI acquisition a good move by the companies?


  1. Hi Paul

    I’m glad you put up a post on the Fuji CDi deal – was rolling around thoughts on the subject since it was announced. It also nicely coincides with my Blog summary I published on Friday on Riken & their iPS Eye program > http://msemporda.blogspot.com.es/p/rik-ip.html.

    One could look at the deal from various perspectives I suppose but the overarching conclusion I take away from it is a sense of consolidation.

    I agree it’s generally positive for the sector that iPS players are aligning and that deals are being made. In this case with a premium to present market value – future value? You mention that CDi “was” working with CIRM and the NIH – is that not still the case? This opens up a few observations as to a strategic value in the East West tie-up so early in the subsector’s development. Also is CIRM a supporter of such ex-US ownership of IP they clearly are relying on in their iPS biobanking project? Not to say that’s a problem at all cellular wise or commercially but for PR reasons perhaps CA Tax dollars will be seen as now driving foreign profits? What of the NIH funding for the iPS Eye project – I assume that is still a go project and maybe a value add for the deal? Another aspect of the resulting interwoven relations…

    I wonder whether this part of an opening move to concentrate assets in the iPS space as a prelude to further developments in the space rather than an all out battle of technology positioning? I trust there is a market segmentation potential & cross-licensing opportunity here given the “thicket” IP issues…

    I’ve followed closely the Eye space and commented in the above referred to Blog summary of Riken’s program that there seems to be a strategic component to what is happening. CDi and iPS Academia Japan, as you mention, have a working relationship that CDi has now bridged successfully by proving their manufacturing capabilities. Buy selling out now they obviously felt there was a requirement to do so rather than establish further value independently or via a JV understanding. Remember they just recently went public in an IPO which already enabled the partners in the venture a partial exit opportunity. The timing and outright purchase seems curious and may be the key to understanding the deal.

    Interesting to discuss.

    Cheers


  2. Hi Paul, Interesting article, so far as I can understand it. Perhaps this is the dumbest question I have ever asked:
    What do you mean by “cellular products”?
    Are these cells? Or are they chemicals (peptides?) that cells produce? Or are they all of the above and other things as well?

    Sorry, but I’m just not up to speed with what must seem obvious to an insider.


  3. @msemporda
    These are very insightful points. The timing is notable. It’s also interesting that Fujifilm bought this particular company. It would seem it has cash to make some other major plays in this area.
    As to the verb tense related to NIH, CIRM, etc. I guess it was reflective in my mind of possible uncertainty over how those relationships might continue or change because of this purchase. Maybe there will be no effect. Yes, and it is also worth considering how this could impact CIRM’s iPS cell bank.


  4. @Brian
    I use that term “cellular products” out of habit these days just because so often folks do not realize that cells can be a product and also to distinguish it from cells simply used in vitro for research. I should be clearer when I use that term.

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