Lifecore Biomedical announced financial results for the second quarter of fiscal 2025 with revenues of $32.6 million, an 8% increase compared to the prior year period, driven by higher sales from its largest CDMO customer.
CEO Paul Josephs, who last year took the reins of the Chaska, Minn.-based company, told analysts on a Thursday earnings call that Lifecore is well-positioned to achieve its “ambitious goals” including a 12% revenue compound annual growth rate (CAGR), as well as a more than 25% increase in earnings before interest, taxes, depreciation, and amortization (EBITDA) margins over the next few years.
“We continue to maintain 10 late-stage programs and all have the potential to achieve commercial approval status by 2028,” Josephs said. “While there is no guarantee that they will each reach the finish line, even a modest subset of this group could generate substantial and impactful growth for the company in the mid-term.”
Barrington Research analyst Michael Petusky in a Friday note to investors said that Lifecore’s “solid top-line result in CDMO was driven primarily by $3.8 million in higher sales volume from the company’s largest customer, which was somewhat offset by $1.9 million in lower sales volumes from the company’s remaining customer base.”
Petusky noted that Lifecore has identified 50 new business development opportunities, which include “significant multinational pharmaceutical representation of around 30%,” compared to “less than 10% just a few quarters ago,” according to management.
During the second quarter, Josephs said Lifecore completed installation and qualification of its high-speed, GMP-ready 5-head isolator filler, which is designed for fill/finish activities for vials, cartridges, and pre-filled syringes, effectively doubling the company’s capacity with revenue-generating potential of up to $300 million annually.
“The isolator technology is state-of-the-art and provides the capabilities and compliance that the world’s leading pharmaceutical companies would expect and demand,” Josephs added.
Stephens analyst Jacob Johnson in a note following Lifecore’s Investor Day in November 2024 said the additional capacity “now allows the company to target larger indications and companies that would typically look to larger CDMOs for capacity which would include products such as GLP-1s.” Johnson believes there are at least two GLP-1 products the company is pursuing. “It’s a good time to be a fill-finish CDMO which should position [Lifecore] for double-digit revenue growth and margin expansion over the coming years.”
Johnson highlighted Lifecore’s transformation over the last couple of years from a holding company with food businesses to a “pure-play” CDMO, which has increased its fill-finish capacity and “going forward will be focused on the injectables market,” as well as its legacy pharmaceutical-grade, non-animal-sourced hyaluronic acid (HA) capabilities.
Last month, Lifecore announced it was selected by biotech company Nirsum Laboratories to provide CDMO services supporting Nirsum’s clinical development of its lead development candidate, NRS-033, a novel treatment for opioid use disorder and alcohol use disorder. The work will include the assessment and technology transfer of the fill and finish process for NRS-033, which is currently entering Phase 2.
While Lifecore has signed a limited scope of work with Nirsum to start the NRS-033 program, Josephs told analysts on Thursday the company sees the potential for “ongoing development over the long-term through Phase 2 to Phase 3, and then ultimately to commercialization.” When it comes to commercial volumes, he said “we haven’t yet quantified those with the customer at this point, but we think it will be meaningful.”