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Strides Board approves incremental investments in Stelis

Posted On: 2019-09-20 13:58:02

Strides Pharma Science Limited (Strides or Company) today announced that the Board of Directors of the Company have approved an additional investment up to a maximum of ~US$ 40 million over a period of 24 months for a controlling stake in Stelis Biopharma Private Limited (Stelis).

The proposed new investments will be a primary infusion into Stelis which will enable Stelis to achieve its objective of becoming a compelling global player in the biopharmaceutical space and also accelerate Strides' re-entry into sterile injectables business post the completion of the Company's non-compete period in December 2019.

BACKGROUND

Stelis was set up to pursue a global biopharmaceutical business with a strategy to develop competitively priced biopharma products and offer high-end CDMO services covering endto-end biopharmaceutical value chain.

As on date, Stelis has invested over ~US$160 million, of which ~US$ 91 million is represented by equity capital infused by Strides and its equity partners. Strides has invested ~US$ 35 million for a ~43% ownership in Stelis. With the aforementioned infusion up to ~US$ 40 million by Strides and pending equity commitments from the other partners, Stelis would have attained a critical size to break even at the operational level which is expected in the next 18 months.

STELIS BUSINESS AND OUTLOOK

Stelis's business and future growth will thrive on three strategic domains viz. Biopharmaceuticals, CDMO & High-end biologics research services and Sterile injectables.

Biopharmaceuticals

Stelis's portfolio includes biosimilars produced from microbial production technology. Its portfolio has now attained a reasonable position with significant investments already made into product development and commercial readiness of its compelling biopharma pipeline.

Early Stage Assets

Stelis is building an integrated insulin and insulin analogue platform with proprietary technology. Stelis believes that the platform is one of its kind and has the potential to disrupt the industry paradigm in insulin accessibility and affordability. Stelis's R&D and clinical strategy for insulins are designed for the global markets.

CDMO & High-end biologics research services

CDMO services for drug product and drug substance

Stelis has completed the construction of its modern fully integrated state-of-the-art biopharma manufacturing facility at Bangalore. While the Drug substance block is under installation and validations, the Drug Product block has been validated and now ready for commercial operations. The Drug Product CDMO services have started seeing traction from global players for aseptic fill-finish in various injectable formats and Stelis recently concluded its maiden CDMO contract for fill-finish services with commercial revenues starting from FY20.

Biologics research services

Stelis is now also equipped to offer biologics research services to focus primarily on the development and commercialization of biosimilars, bio betters and New Biological Entities. It has the necessary infrastructure to support microbial and mammalian process developmental activities in therapeutic proteins and monoclonal antibodies both for the early stage and late development which also includes scale-up, preparation of clinical material and stability studies. Stelis is in early discussions with leading global players for offering these services, and the business is expected to commence commercial revenues from FY21.

Sterile Injectables

From December 2019, the envisaged investments will facilitate and accelerate Strides' reentry into sterile injectables domain with a basket of niche products leveraging the group's proven experience and strong capability in the space.

This three-pronged growth strategy is expected to result in meaningful outcomes with Stelis generating operational cash flows to drive its future growth. Stelis is expected to have a positive EPS from FY22 and is well on its course to create significant value in the long-term for all its stakeholder.

Shares of Strides Pharma Science Ltd was last trading in BSE at Rs.359.35 as compared to the previous close of Rs. 366.2. The total number of shares traded during the day was 71010 in over 1085 trades.

The stock hit an intraday high of Rs. 368.35 and intraday low of 355.45. The net turnover during the day was Rs. 25635084.


Source: Equity Bulls

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