Icon eyes growing virtual clinical trial market with $12 billion PRA Health deal

(Reuters) - Icon Plc said on Wednesday it will buy rival PRA Health Sciences Inc in a deal valued at about $12 billion, to create a contract drug research firm that can tap into the growing demand for virtual clinical trials due to the pandemic.

PRA’s shares rose about 18% to trade at $150.50, below the cash-and-stock offer of $166.06. Icon fell about 5%.

The coronavirus crisis disrupted clinical trial enrollments and forced companies to adopt virtual trials that use new methods of patient data collection and monitoring such as video calls, wearables and activity trackers.

“I don’t think we are going back,” Icon Chief Executive Officer Steve Cutler said on a conference call.

“We’re seeing unprecedented ... interest in our offering on the decentralized trial ... even in areas like oncology, where you wouldn’t naturally think there’s a decentralized trial opportunity.”

Cutler, who will serve as the CEO of the combined company, said the new company will benefit from PRA’s mobile-based health platform.

The platform uses an app to enroll patients, collect clinical outcome data and conduct virtual patient visits.

Ireland-based Icon will pay about $166 per PRA share, $80 in cash and 0.4125 of an Icon stock, representing a premium of nearly 30% to PRA’s closing price on Tuesday.

“Despite their relative sizes, the small amount of customer overlap between the two should help lower the integration risk,” Evercore ISI analyst Elizabeth Anderson said in a note.

The combined business, to be headquartered in Dublin, will have an expanded global footprint and partnerships with most of the top 20 biopharma companies, Icon said.

Icon expects double-digit growth for the combined company in the first year, and more than 20% growth thereafter.

Reporting by Manojna Maddipatla in Bengaluru; Editing by Bernard Orr and Shounak Dasgupta