Shares of Strides Pharma Science Ltd. plunged as much as 7 percent on Wednesday after the Bengaluru-headquartered company announced that it was selling the multi-modal manufacturing facility of its biologics arm to Syngene International Ltd. for Rs 702 crore.
Strides Pharma informed the bourses that Stelis Biopharma Ltd, the company’s biologics unit and a biopharmaceutical contract development and manufacturing organisation (CDMO), has entered into a binding term sheet with Syngene to divest its Unit 3 multi-modal facility at Bommasandra Industrial Area, Bengaluru.
Syngene shall acquire the Unit 3 on a slump sale basis and the consideration for the transaction will be settled in cash. The transaction should conclude within 90 days, subject to customary conditions and regulatory approvals.
Syngene said that the acquisition will help strengthen its position in biologics CDMO. The site will add 20,000 litres of installed biologics drug substance manufacturing capacity for Syngene, with the potential for future expansion of up to a further 20,000 litres, after the completion of the transaction.
Syngene said that the Unit 3 facility, which was initially built to manufacture Covid-19 vaccines, will now be repurposed to manufacture monoclonal antibodies. The company added that it would invest up to Rs 100 crore for repurposing and revalidating the plant.
“We expect this facility to be operational in 2024, following completion of a programme of facility upgrades and re-validation,” said Jonathan Hunt, Syngene’s managing director and CEO.
Also, the acquisition will not materially impact Syngene’s current financial guidance given for fiscal 2023-2024, the company’s chief financial officer Sibaji Biswas clarified.
“In the short term, we expect minor dilution of operating margins as a result of costs to be incurred in this facility and we expect this plant to positively contribute to the bottom line from financial year 2027,” Biswas said.
For Stelis, the expansion plans will continue via Unit 1 and Unit 2. Stelis is planning induction of new drug substance and drug product programmes at its integrated drug substance and drug product flagship facility (Unit 2) in Bengaluru. The Unit 2 flagship site is approved by the US Food and Drug Administration, EU-GMP, Australia’s Therapeutic Goods Administration, amongst several other regulators.
Shares of Syngene are trading 2.1 percent higher at Rs 756.50, while those of Strides Pharma are trading 5.4 percent lower at Rs 457.50. Shares of Strides have recovered 70 percent from their 52-week low of Rs 268.4, while those of Syngene are up 41 percent from their 52-week low.
