OneSource in talks to raise Rs 1,670 crore in pre-listing round

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The promoters of OneSource, a TPG Growth-backed specialty pharma contract development and manufacturing organisation (CDMO), are in discussions with a clutch of investors including White Oak Capital, Swiss fund HBM Healthcare Investments, Tybourne Capital and 360 ONE, to raise about $200 million (₹1,670 crore), said sources.

OneSource (formerly Stelis Biopharma), promoted by Strides Pharma and its promoter Arun Kumar, got demerged from Strides Pharma, and renamed as OneSource last year. The company will now seek final approval from the NCLT for the demerger, and listing approvals from BSE and NSE. The company expects listing in the next 12 months.

In September 2023, the board of directors of Steriscience Specialties, Strides and OneSource Specialty Pharma (formerly Stelis Biopharma) proposed to combine the CDMO business of Strides and Steriscience under OneSource.
Mails sent to Strides, Arun Kumar, White Oak, HBM Healthcare, Tybourne Capital and 360 ONE did not elicit any responses. A TPG Growth spokesperson declined to comment. OneSource is a biologics and CDMO, which has capacities for clinical and commercial manufacturing to various pharma companies.

Set up in 2007 as a subsidiary of Strides, the company covers the entire CDMO value chain from clinical development to technology transfer to commercial manufacture and regulatory assistance. OneSource has two manufacturing units-unit 1 is the R&D facility and the unit 2 is the manufacturing facility. The multi-modal unit (primarily intended for vaccine production) was sold to Syngene International in December 2023. Using the proceeds OS has reduced total debt to the extent of ₹293 crore.

Post the restructuring, OneSource has plans to raise equity to finance the existing debt, consequently the current corporate guarantee (CG) given will reduce. As of June 2024, the amount outstanding against which Strides has extended CG to OneSource is ₹450 crore. Around 70% of the promoters’ shares are pledged; this is also expected to reduce over 90%, according to a recent CARE Ratings report.OneSource has total revenue of $145 million and a net debt of $115 million in FY24. It is expected to post $190 million in FY25 with an Ebitda margin of 30% and the net debt to be reduced to $50 million.

The company has derived around 50% of sales from one product Semaglutide and around 40% from one customer. This restricts the operational flexibility of the company and exposes the company to product and customer concentration risk, as the revenue loss from one company may impact its revenue and profitability significantly, added the report.

In 2021, Stelis Biopharma raised $195 million (₹1,400 crore) from investors led by TPG Growth, at a post money valuation of $350 million (₹2,537 crore). Besides TPG, other investors, Route One, Think Investments and the Mankekar Family also invested in Stelis.

OneSource will focus on manufacturing biologicals, complex injectables, and oral soft-gelatin capsules, aiming to be among the top 5 pure-play CDMOs in the country. OneSource wants to become debt free by the end of FY26, according to the latest annual report.

Strides shareholders hold 44% in OneSource. Post restructure, Strides promoters will own 39% in OneSource, and the public will hold the rest. Strides shareholders will receive 1 share of OneSource for every 2 shares of Strides, with a swap ratio of 1:2. “OneSource has the potential to double its scale in 3-4 years mainly from the momentum from biologics and high-end drug device combinations in GLP-1 products,” Strides said in its Q1FY25 investor presentation. OneSource consists of a workforce of 1,200 employees, including more than 200 scientists.

Credits – Source – https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/onesource-in-talks-to-raise-rs-1670-crore-in-pre-listing-round/articleshow/113677721.cms

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