Think Research Announces Definitive Agreement to Acquire BioPharma, a Leading Global Clinical Research Organization

Toronto, ON, July 15, 2021 – Think Research Corporation (TSXV:THNK) (“THINK” or the “Company”), a company focused on transforming healthcare through digital health software solutions, today announced that it has entered into a definitive share purchase agreement (the “SPA”)  to acquire all of the issued and outstanding shares of Bio Pharma Services Inc. (“BioPharma”), a leading contract research organization (“CRO”) to pharmaceutical companies globally.

This transaction (the “Transaction”) is expected to nearly double the Company’s pro forma 2021 revenue and presents significant new technology-driven revenue synergies for the combined entity.

Transaction Highlights

  • Adds significant scale to THINK with meaningful revenue synergies – The Transaction is expected to nearly double THINK’s pro forma 2021 revenue to $82 million1;
  • Strong Adjusted EBITDA – The Company is forecasting pro forma Adjusted EBITDA (see “Cautionary Note Regarding Non-IFRS Measures”) of $1.4 million2 for fiscal 2021;
  • Attractive Valuation – Transaction consideration of approximately $44.6 million consisting of cash and equity, plus an annual earnout based on EBIT (see “Cautionary Note Regarding Non-IFRS Measures”) through December 2025, implying a revenue acquisition multiple of ~1.0x3;
  • Establishes THINK as a digital leader in the CRO industry – The CRO industry is a $44 billion market with an estimated 7.8%,, six-year forward compound annual growth rate4 (“CAGR”); and
  • Equity Financing – A portion of the cash consideration for the Transaction is being financed through a non-brokered private placement to raise minimum gross proceeds of $12 million and up to $15 million, including a $5 million anchor investment by NorthWest Value Partners Inc. (“NorthWest”), the private investment firm founded by Paul Dalla Lana, Chairman and CEO of NorthWest Healthcare Properties REIT, Canada’s largest healthcare REIT. Mr. Dalla Lana is an Advisory Board Member of the Dalla Lana School of Public Health and is on the President’s Advisory Council at the University of Toronto. THINK has received subscriptions for the minimum gross proceeds of the financing. The remaining cash consideration for the Transaction is expected to be satisfied through additional financing by way of debt. 

Cost and Revenue Synergies

  • THINK and BioPharma currently reach a combined network of more than 300,000 global healthcare professionals, 2,800 hospitals, clinics and long-term care facilities, and 200 research and pharmaceutical companies, with only partial overlap;
  • Transaction expected to present significant new revenue streams for the combined company by using THINK’s proven ability to collect and monetize data from health systems;
  • Further digitization of BioPharma’s core clinical business expected to be rapidly accelerated leading to cost savings by using THINK’s existing Software as a Service (“SaaS”) products including: electronic data capture, digital referral software for trial recruitment, learning management software for trial participants, and telemedicine software for conducting remote trials;
  • Management plans for BioPharma data and products to be converted to SaaS revenue streams;
  • High growth potential by expanding BioPharma’s capabilities and products from Phase I clinical trials into Phase II – IV clinical trials; and
  • The acquisition provides further expansion into the U.S., which is expected to facilitate growth across business lines.

Note 1: Based on midpoint of the forecasted range of pro forma revenue for fiscal 2021
Note 2: Based on midpoint of the forecasted range of pro forma Adjusted EBITDA for fiscal 2021
Note 3: Based on pro forma revenue for fiscal 2022 and excludes EBIT earnout
Note 4: Source: Global Market Insights Inc.

Sachin Aggarwal, Chief Executive Officer (“CEO”) of THINK, said, “We expect this transaction to be beneficial to THINK and BioPharma’s shareholders, clients and employees. The COVID-19 pandemic has clearly demonstrated the urgent need for CROs to digitize and apply technology to the work they carry out for their pharmaceutical clients.”

THINK’s proven capabilities in digital transformation are expected to create value in the near term. Our ability to digitize BioPharma’s services will improve the offering for clients and create new SaaS revenue streams further setting us apart from our digital health peers. The data needs and capabilities of THINK and BioPharma are highly complementary and position us to play a unique role in both the creation and sharing of clinical knowledge that will ultimately ensure patients get better care.”

Renzo DiCarlo, CEO of BioPharma, said, “BioPharma is extremely excited about the opportunity presented by this Transaction. Our research and pharmaceutical clients are hungry for technology solutions that not only drive faster, more accurate results but ultimately get new research where it is meant to be – at the patient point of care.”

“THINK’s proven ability to forge meaningful digital change in highly regulated health systems is exactly what’s needed to make that happen. By combining these companies, we see immense potential for change in our industry that will drive revenue and improve healthcare.”

About BioPharma

  • Founded in 2006, BioPharma is a leading contract research organization that specializes in clinical trials, bioequivalence studies and bioanalysis, and serves pharmaceutical, medical device and biotechnology companies globally;
  • BioPharma conducts approximately 100 studies per year for leading global pharmaceutical and research clients;
  • BioPharma specializes in conducting Phase I clinical trials as well as Bioequivalence and Bioanalysis studies. BioPharma operates in two locations: St. Louis, Missouri and in Toronto, Ontario;
  • Both sites have been successfully inspected by all major regulatory agencies including the FDA, Health Canada, Agence nationale de sécurité du médicament et des produits de santé (ANSM) of France, U.K. Medicines & Healthcare products Regulatory Agency, Brazillian Agência Nacional de Vigilância Sanitária (ANVISA), OECD Good Laboratory Practice, Danish Medicines Agency (DKMA) and The World Health Organization; and
  • Supported by a business development team in Canada, the U.S. and Europe, BioPharma has a diversified and highly reoccurring revenue stream as a result of having more than a hundred global blue-chip customers and global operations.

Fiscal 2021 and Fiscal 2022 Targets

Based on the Company’s and BioPharma’s preliminary unaudited financial results for the current fiscal year to date, management estimates pro forma Revenue and pro forma Adjusted EBITDA (see “Cautionary Note Regarding Non-IFRS Measures”) as follows for the fiscal years ending December 31, 2021 and 2022:

 Fiscal 2021Fiscal 2022
Pro Forma Revenue                                            $76.0 million to $88.0 million$90.0 million to $100.0 million
Pro Forma Adjusted EBITDA                                           $1.5 million to $4.5 million$7.0 million to $10.0 million


The Transaction

Pursuant to the SPA, THINK has agreed to acquire all of the issued and outstanding shares of BioPharma for total consideration of approximately $44.6 million, plus annual earnout consideration. The purchase price will be satisfied as follows:

  • Approximately $20.1 million payable in cash1 consideration on closing of the Transaction (“Closing”);
  • $18 million in share consideration based on the twenty-day volume-weighted average price of the common shares of the Company ending on the trading day immediately prior to the date of Closing;
  • Deferred equity consideration of $3.25 million due six months after Closing;
  • Deferred equity consideration of $3.25 million due twelve months after Closing; and
  • An annual earnout equal to 10% of BioPharma’s EBIT through December 31, 2025, payable in cash or common shares of the Company, at the Company’s discretion.

Other Key Deal Terms

  • BioPharma is being acquired on a debt-free1, cash-free basis;
  • Customary representations and warranties in the SPA;
  • Customary indemnities for breaches of representations and warranties and breaches of covenants in the SPA;
  • Two-thirds of the closing share consideration will be held in escrow by THINK for indemnity purposes, and will be released as follows: 50% upon the six-month anniversary of Closing, and the balance on the twelve-month anniversary of Closing;
  • Key personnel, including the CEO, Executive Vice-President, Business Development and other members of the executive team of BioPharma will continue their employment, with updated employment agreements;
  • Non-competition and non-solicitation agreements will be entered into as a condition of Closing with Renzo DiCarlo (CEO), Fathi Abuzgaya (Principal Investigator and Sub-Investigator) and Esmat Dessouki (Chief Medical Officer);
  • Voting Support Agreements will be entered into as a condition of Closing with the following BioPharma shareholders: Mahy Investments Ltd., Moske Investments Ltd. and Renzo DiCarlo, together with any other shareholder who will beneficially own 1% or more of the total issued/outstanding common shares of the Company on Closing;
  • Each of BioPharma and the BioPharma shareholders are arm’s length parties to the Company;
  • The purchase price is subject to working capital and other adjustments on Closing;
  • Closing of the Transaction is expected to occur in Q3 of fiscal, 2021, subject to receipt of all applicable approvals, including approval of the TSX Venture Exchange (“TSXV”), the satisfaction of applicable conditions to Closing, and is conditional on the Company having received sufficient financing to complete the Transaction; and
  • The other Closing conditions in the SPA are customary, which include obtaining any required consents from the Company’s lenders and from the TSXV, including approval from the TSXV as a “reviewable acquisition” in accordance with Policy 5.3 of the TSXV.

Note 1: The Company has the option to assume existing indebtedness of BioPharma, which would reduce the cash consideration at Closing dollar-for-dollar.

Non-Brokered Equity Financing

As noted above, the Company will undertake a non-brokered private placement for minimum gross proceeds of $12 million and up to $15 million (the “Equity Financing”) through the issuance of between 5,454,546 and 6,818,182 common shares of the Company (the “Common Shares”) at a price of $2.20 per Common Share (the “Issue Price”), as part and parcel of the Transaction. This represents a premium of  ~6% based on the closing price of the Common Shares on the TSXV on July 14, 2021. The Equity Financing includes an anchor investment by NorthWest of $5 million. The Company has received subscriptions for the minimum gross proceeds of the Equity Financing.

The proceeds of the Equity Financing will be used to fund a portion of the cash consideration for the Transaction, integration, costs and expenses related to the Equity Financing. The Equity Financing is integral to the proposed Transaction and therefore the Company expects to rely on the “part and parcel pricing” exemption outlined in Section 1.7 of TSXV Policy 4.1.

The Company may pay a finder’s fee (in cash and/or securities) to eligible parties in connection with the Equity Financing, subject to the approval of the TSXV and compliance with applicable securities laws.

Closing of the Equity Financing is expected to take place in Q3, 2021, immediately prior to Closing of the Transaction. The Equity Financing is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSXV. There is no assurance that closing of the Equity Financing will occur on the terms currently proposed, or at all. The Common Shares issued pursuant to the Equity Financing will be subject to a four month hold period in accordance with applicable Canadian securities laws, in addition to such other restrictions as may apply under applicable securities laws of jurisdictions outside Canada.

The securities offered have not been, and will not be, registered under the U.S. Securities Act of 1933,as amended (the “U.S. Securities Act“) or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Think Research Corporation

THINK is an industry leader in delivering knowledge-based digital healthcare software solutions. The Company’s focused mission is to organize the world’s health knowledge so everyone gets the best care. Its evidence-based healthcare technology solutions support the clinical decision-making process, standardize care, and improve patient outcomes. For over a decade, THINK’s cloud-based, EMR-agnostic digital tools have empowered clinicians around the world and positively impacted millions of patients across the continuum of care – including primary physician care, acute care hospitals and surgical suites as well as community and seniors care. THINK is proud to serve as a trusted health system partner to a rapidly growing, global client base that spans five continents and more than 2,800 healthcare facilities.

About BioPharma Services Inc.

BioPharma is a full-service CRO specializing in the conduct of Phase I/IIa and Bioequivalence clinical trials for international pharmaceutical companies worldwide. BioPharma has clinical facilities both in the U.S. and Canada with access to healthy volunteers and special populations. Headquartered in Toronto, Canada, BioPharma’s comprehensive services also include Bioanalysis at their GLP Certified Laboratory, Scientific and Regulatory Affairs, Biostatistics and Safety Data Analysis (CDISC), Data Management and Medical Writing. BioPharma has been successfully inspected by all major regulatory bodies including the World Health Organization, U.S. FDA, Health Canada, EMA (ANSM & DKMA), UK MHRA & ANVISA. With a commitment to building long-lasting relationships, BioPharma serves a global client base focussing on superior quality service and timely, reliable research results.

Caution Regarding Forward Looking Information

Certain statements in this news release, other than statements of historical fact, contain “forward-looking information” within the meaning of Canadian securities laws and are based on certain assumptions and reflect the Company’s current expectations with respect to such matters. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Company and its business, operations, prospects and risks at a point in time in the context of historical and possible future developments and the reader is cautioned that such statements may not be appropriate for other purposes. Statements containing forward-looking information are not historical facts, but instead represent management expectations, estimates and projections regarding future events or circumstances. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “budget,” “believe,” “project,” “estimate,” “expect,” “scheduled,” “forecast,” “strategy,” “future,” “likely,” “may,” “to be,” “could,”, “would,” “should,” “will” and similar references to future periods or the negative or comparable terminology, as well as terms usually used in the future and the conditional. Examples of forward-looking statements include, among others, business goals and strategy of the Company, the Transaction, expectations regarding synergies from the Transaction and the ability to integrate BioPharma into the Company’s business, pro forma financial figures and estimates, including revenue, EBITDA and Adjusted EBITDA, the Company’s total addressable market, the opportunities presented by the Transaction, including unlocking new revenue with new products and services and the associated savings, revenue synergies and expansion opportunities, the expansion of the Company’s knowledge lifecycle and library; expansion into the United States; organic growth; EBITDA contribution from the Transaction, the expectation that the remaining cash consideration for the Transaction will be satisfied through additional financing by way of debt, the expected closing of the Transaction, the projected impact of completion of the Transaction on the Company’s business, financial conditions and results and the closing of the Equity Financing.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions, including but not limited to those assumptions described in the Company’s public filings on www.SEDAR.com and: COVID-19 does not materially shift the long-term strategic priorities of prospective and existing customers over the next two fiscal years; the Company does not experience material delays in accounts receivable over the next two fiscal years; the global political climate does not change the purchasing patterns of current and prospective international clients; the Company’s solutions remain accessible to existing and potential customers 24 hours a day, seven days a week, without interruption or degradation of performance, over the next two fiscal years; the evolution of the Company’s solutions over the next two fiscal years enables the Company to enter new jurisdictions with enhanced product suite; and there being no material variations in the legislation and regulation of healthcare and healthcare professionals in Canada and the regulation of electronic medical records as it affects the business of the Company.

Forecasted revenue and Adjusted EBITDA contained in this press release is also based on the following key assumptions, in addition to those discussed elsewhere in this press release:

  • The technology portion of the business including acquired companies and excluding any acquired clinics, grows at a CAGR of approximately 9%, using 2020 as a base year largely driven through strong organic growth;
  • Clinic 360 Inc. continues to have strong results largely driven off of increased demand due to the backlog created in the healthcare system due to COVID-19, which demand is expected to continue through fiscal 2022; in addition to renovations completed in fiscal 2021 which are expected to increase revenue and EBITDA;
  • Capital expenditures for the business continue to be minimal, except for the recently completed renovations for Clinic 360 Inc. completed in Q2 of fiscal 2021; 
  • BioPharma revenue increases as a result of expanding electronic data capture as a SaaS offering to pharmacy clients for the continuous analysis of stored data; virtual visits are adopted using telemedicine software of the Company, and other revenue synergies are created as a result of cross-selling opportunities and gaining larger share of customer wallet; 
  • Management anticipates that the trend towards digitalization will continue to be a strong driver in adoption of healthcare technology providing a positive backdrop for growth;
  • The CRO industry grows at an estimated 7.8% CAGR based on data from Global Market Insights; 
  • No significant churn occurs with any customers of the Company;
  • All aspects of the Company remain open and are not shutdown by the effects of COVID-19 having a negative impact on the business;
  • Cost savings with respect to previously completed acquisitions of approximately $3.0 million of which the Company is implementing to take effect in fiscal 2021, and be at a full run-rate by the end of fiscal 2022;
  • Cost savings totaling approximately $2.8 million with respect to BioPharma are completed by the Company after Closing and are at a full run-rate by fiscal 2022, based on headcount reduction efficiency savings and vendor cost reductions largely through the use of superior technology and automation; and
  • EBITDA and margins naturally increase as revenue increases and general overhead costs remain fixed. 

This press release may also contain information which could be considered to be in the nature of a “financial outlook”. Such financial outlook was approved by the Company for the purpose of providing the Company’s reasonable estimate of financial metrics for the Company and BioPharma on a combined basis on the assumptions set forth in such estimates. The Company cautions that such financial outlook reflects the Company’s current beliefs and is based on information currently available to the Company and on assumptions the Company believes are reasonable. The Company’s actual financial position and results of operations may differ materially from management’s current expectations and, as a result, the Company’s revenue, EBITDA and Adjusted EBITDA may differ materially from the revenue, EBITDA and Adjusted EBITDA profiles provided in the financial outlook as they are subject to a number of significant risks and uncertainties. Certain of these risks and uncertainties are beyond the Company’s control. Consequently, all of the financial outlook is qualified by these cautionary statements, and there can be no assurances that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effect on, the Company.

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the Company’s control, affect the operations, performance and results of the Company, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, fluctuations in interest rates, inflation and foreign exchange rates, monetary policies, business investment and the health of local and global equity and capital markets, changes in technology, management of market liquidity and funding risks, risks associated with financial instruments, changes in accounting policies and methods used to report financial condition (including uncertainties associated with significant judgments, estimates and assumptions), reliance on third party services, the effect of applying future accounting changes, privacy and confidentiality risks, product and service defects, medical liability claims, business competition, operational and reputational risks, technological changes, cybersecurity risks, changes in government regulation and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, man-made disasters, terrorist attacks, wars and other conflicts, or an outbreak of a public health pandemic or other public health crises (such as COVID-19), the Company’s ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Company’s success in anticipating and managing the foregoing factors. 

The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management’s perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances and that the list of factors in the previous paragraph, collectively, are not expected to have a material impact on the Company. While the Company considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

These forward looking statements are made as of the date hereof and, other than as specifically required by applicable Canadian securities laws, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties of the Company’s business and material factors or assumptions on which information contained in forwardlooking statements is based is provided in its disclosure materials, including the Company’s most recently filed annual information form and any subsequently-filed interim MD&A, which are available under our profile on SEDAR at www.sedar.com.

There is no guarantee that the BioPharma acquisition will close at all, or in the time frame anticipated, or on the terms as originally negotiated. See ‘‘Risk Factors — Risks related to the acquisitions and integration of new businesses” in the Company’s MD&A for the year ended December 31, 2020.

Cautionary Note Regarding Non-IFRS Measures

This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. The Company’s definitions of non-IFRS measures used in this press release may not be the same as the definitions for such measures used by other companies in their reporting. Non-IFRS measures have limitations as analytical tools and should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company uses non-IFRS financial measures, including “EBIT”, “EBITDA”, “Adjusted EBITDA”, “pro forma revenue”, “pro forma EBITDA” and “pro forma Adjusted EBITDA” to provide investors with supplemental measures of its operating performance and to eliminate items that have less bearing on operating performance or operating conditions and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. Specifically, the Company believes that Adjusted EBITDA, when viewed with the Company’s results under IFRS and the accompanying reconciliations, provides useful information about the Company’s business without regard to potential distortions. By eliminating potential differences in results of operations between periods caused by factors such as restructuring, impairment and other charges, the Company believes that Adjusted EBITDA can provide a useful additional basis for comparing the current performance of the underlying operations being evaluated. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. The Company’s management also uses non-IFRS financial measures in order to facilitate operating performance comparisons from period to period.

Adjusted EBITDA” adjusts EBITDA for non-cash stock-based compensation expense, gains or losses arising from redemption of securities issued by the Company, asset impairment charges, gains or losses from disposals of property and equipment, foreign exchange gains or losses, impairment charges on property and equipment, business acquisition costs, and restructuring charges.

EBIT” means net income (loss) before finance and interest costs, and provision for income taxes.

EBITDA” means net income (loss) before amortization and depreciation expenses, finance and interest costs, and provision for income taxes.

Pro forma Adjusted EBITDA” means Adjusted EBITDA for the twelve months ended with respect to the fiscal period being referenced, adjusted for the impact of Adjusted EBITDA earned by companies and cost savings, as if the Company had acquired such companies at the beginning of the fiscal period.

Pro forma EBITDA” means EBITDA for the twelve months ended with respect to the fiscal period being referenced, adjusted for the impact of EBITDA earned by companies and cost savings, as if the Company had acquired such companies at the beginning of the fiscal period.  

Pro forma Revenue” means revenue for the twelve months ended with respect to the fiscal period being referenced, adjusted for the impact of revenue earned by companies, as if the Company had acquired such companies at the beginning of the fiscal period.

See “Select Information and Reconciliation of Non-IFRS Measures” for a reconciliation of each non-IFRS measure to its most directly comparable IFRS measure in the March 31, 2021 MD&A.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibilities for the adequacy or accuracy of this release.

For Further Information:

Genevieve Tomney
VP, Communications & Investor Relations
Think Research
Direct: 416-460-5784
Email: Genevieve.Tomney@thinkresearch.com