Lifecore Biomedical gets the attention of Wall Street as it positions for growth

Lifecore Biomedical’s star appears to be rising on Wall Street. William Blair analyst Max Smock initiated coverage last week of the Minnesota-based contract development and manufacturing organization (CDMO) with an “outperform” rating, given that the company is in his words at the intersection of a turnaround and market opportunity.

“Strong development pipeline, enhanced business development strategy and resources, and industry tailwinds should enable Lifecore to execute against its midterm revenue guide and deliver low-teens top-line growth over the longer term,” Smock wrote in a May 21 report to investors.

Lifecore’s midterm guide calls for revenue to grow at a roughly 12% compound annual rate from between $126.5 million and $130 million in fiscal 2025 to between $178 million and $205 million over the next 36 to 48 months.

“While we are primarily focused on Lifecore’s ability to execute against its midterm guide, it is worth noting that even beyond the next 36 to 48 months, there is significant room for further growth longer term as the company works to aggressively fill its $300 million of maximum revenue generating capacity, which was enabled by the company’s recent addition of a new five-head filler,” according to Smock.

Earlier this year, CEO Paul Josephs told Pharma Manufacturing that Lifecore has been turning its attention to business development to drive revenue and take advantage of its new capabilities and capacity.

However, last month, Lifecore announced financial results for its third quarter of fiscal 2025 with revenues of $35.2 million, a decrease of 2% compared to the prior year period, which was primarily due to a $1.5 million decrease in CDMO revenues. At the time, the company’s stock dropped more than 25% but has since recovered.

Still, Smock told Pharma Manufacturing that Lifecore is “at an interesting potential inflection point” for a company “that’s coming off a transition period” with “a whole new management team” and “a lot of capacity and compelling capabilities.”

Adding capacity, pipeline

While the inflection point might be a longer-term opportunity, Smock said he met in Minnesota with Lifecore executives who “have a lot of conviction in their ability to put their plan in place and execute against that plan over the next couple of years.”

Currently, Lifecore’s development pipeline includes 30 programs with the potential to generate an incremental $100 million to $200 million in commercial revenue, including 10 late-stage candidates which have the potential to achieve commercial approval by calendar 2028.

Alcon, the Swiss pharmaceutical and medical device company specializing in eye care products, represents a “solid foundation” for Lifecore’s achievable midterm revenue guide, according to Smock.

“Thanks to encouragement from its top customer, Alcon, Lifecore expanded into the fill-finish space in the late 2000s,” Smock wrote in his report last week. “Given that Alcon’s other fill-finish CDMO is located outside the U.S., we see potential upside to our near-term estimates if Alcon accelerates its shift toward Lifecore in an effort to minimize the potential impact of tariffs.”

Smock noted that two of Lifecore’s customers in fiscal 2024 combined accounted for approximately 58.4% of total revenue, with 39.4% of total revenue from Alcon which he pointed out is also one of the CDMO’s primary lenders.

“Alcon is very invested in Lifecore — it’s a very tight relationship,” Smock commented. “I think they’re going to do everything they can to make sure that Lifecore is successful in terms of handling this additional volume.”

The competitive landscape

When it comes to the competitive CDMO landscape, Smock contends that Lifecore’s available fill-finish capacity and five-head isolator filler “put the company in great position to capitalize on several notable industry tailwinds, namely a healthy outlook for biologic drug sales, increased outsourcing (particularly among smaller innovators), the ongoing shift toward injectables, increased demand for U.S. manufacturing capacity due to tariffs, and, to a lesser extent, Novo Nordisk’s recent acquisition of Catalent.”

Smock sees Lifecore as well-positioned to take advantage of Novo Holdings’ $16.5 billion acquisition of Catalent, which he anticipates “will steer biopharma customers concerned about potential operational disruptions, intellectual property privacy, and long-term available capacity away from Catalent and toward CDMOs with ample commercial capacity, like Lifecore.”

At the same time, Smock noted that Novo Holdings’ Catalent and Thermo Fisher Scientific’s Patheon are the market leaders in the fill-finish drug product space, with Vetter and Ajinomoto representing other notable players.

While Lifecore competes with such significantly larger global CDMOs, Smock said the company has made strategic capital investments in its CDMO business “focused on extending its aseptic filling capacity and capabilities and currently has significant available fill-finish capacity to attract new contract filling opportunities.”

Given Lifecore’s “strong” regulatory record and available capacity, he expects the company to benefit from increased demand for reshoring manufacturing to the U.S.

“Clearly, they’re not competitive with the larger players — they just don’t have the scale,” Smock said. “But I do think that there’s a lot of opportunities for them moving forward to soak up some of this demand on the back of the reshoring narrative.”