Key Highlights

  • S&P Dow Jones Indices said BioLife Solutions will be removed from the S&P SmallCap 600 because Repligen is acquiring it.
  • Freshworks will take BioLife's place in the index before the market opens on October 8.
  • Repligen makes filtration and chromatography products for Manufacturing biologic drugs, while BioLife makes biopreservation media.
  • Health care was the only S&P 500 sector to decline the same day, with life-science tools makers broadly lower.

Repligen (NASDAQ:RGEN), a supplier of equipment and consumables used to manufacture biologic drugs, stayed in focus on Tuesday, October 6, because of its agreement to acquire BioLife Solutions (NASDAQ:BLFS). Repligen is generally counted among S&P MidCap 400 companies, and its deal has had a knock-on effect one tier down the size ladder.

S&P Dow Jones Indices said BioLife Solutions will be removed from the S&P SmallCap 600 because Repligen is acquiring it. Freshworks (NASDAQ:FRSH), the customer-service and IT software company, will take BioLife's place in the small-cap index before the market opens on October 8. Freshworks shares jumped to a 52-week high on the news.

The financial terms of the Repligen-BioLife transaction and the two companies' share moves on Tuesday were not detailed in the reports available, so the index change is the clearest concrete development.

How the Businesses Fit Together

Repligen makes filtration systems, chromatography products and other tools that drugmakers use to produce antibodies, vaccines and cell and gene therapies at scale. BioLife Solutions is known for biopreservation media and related products that help keep cells and tissues viable during storage and shipping, an important step for cell and gene therapy developers.

Both companies sell to the same broad and growing customer base of biotech and pharmaceutical manufacturers. Deals of this kind usually aim to offer customers a wider range of products from one supplier, though the companies' own stated rationale was not included in the material available on Tuesday.

How Index Changes Work

When a member of an S&P index is acquired, S&P Dow Jones Indices typically announces a replacement so that the index keeps its full complement of companies. Funds that passively track the index must then sell the departing stock and buy the incoming one on the effective date. That mechanical buying is why additions such as Freshworks often rise when they are announced, while departing companies usually trade in line with the Takeover terms instead.

A Weak Day for Life-Science Tools

The news landed during a difficult session for Repligen's peer group. Health care was the only S&P 500 sector to decline on Tuesday, and life-science tools makers including Danaher (NYSE:DHR), Thermo Fisher (NYSE:TMO), Agilent (NYSE:A) and Bruker (NASDAQ:BRKR) fell. Illumina (NASDAQ:ILMN) also slid, and only 48 of 428 Russell 2000 health-care stocks advanced.

Elsewhere, the mood was upbeat. The S&P 500 rose 44.98 points to a record close of 7,818.93, the Nasdaq Composite set a record just under 27,600, and the Dow Jones Industrial Average gained 253.38 points to 51,521.28. Small caps lagged, with the Russell 2000 slipping to about 2,830. Treasury yields eased, with the 10-year near 5.28, and the VIX Volatility index settled around 15.

Deal activity was a theme in health care too. McKesson (NYSE:MCK) and Clayton Dubilier & Rice agreed to take Option Care Health (NASDAQ:OPCH) private at $32.05 a share in cash, in a transaction valued at about $5.8 billion including debt.

October 8 Marks the Index Rebalance

The Freshworks-for-BioLife swap in the S&P SmallCap 600 takes effect before the open on October 8, so index-related trading could show up in both stocks around that date. For Repligen, investors will look for updates on the expected closing timeline, any regulatory reviews and how management describes the integration.