Dr. Reddy’s to Launch $35.7M Public Offer for OctoPlus
The boards of Dr. Reddy’s Laboratories and OctoPlus are supporting a proposed €27.4 million (about $35.7 million) takeover deal which will involve Dr. Reddy’s launching a public offer to buy the Netherlands-based firm for €0.52 ($0.68) per share. The offer price represents a premium of 30% over the OctoPlus share price at close of trade on the last day before the takeover plan was announced.
OctoPlus offers formulation development and cGMP manufacturing technologies for controlled release and other complex injectable therapeutics, including synthetic and biologic drugs and vaccines. The firm’s marketed HCV drug Locteron™ is an alfa interferon developed in collaboration with Biolex, and formulated using OctoPlus’ PolyActive™ drug delivery technology. However, Locteron has been suffering in the market due to the emergence of oral HCV drugs, and OctoPlus has been looking at alternatives for its own future, despite reporting 40% growth in its fee-for-service revenues.
“The intended public offer price reflects the value of OctoPlus after the recent value erosion of Locteron,” admits Jan Egberts, OctoPlus CEO. “Over the last few months the value of Locteron has significantly eroded, due to the ongoing emergence of all oral hepatitis C treatments, which ultimately resulted in the recently initiated bankruptcy liquidation filing of Biolex. Over the last few months, we have reviewed a number of alternative strategies for our company. We have concluded that the intended offer by Dr. Reddy's best serves the interest of our key stakeholders, including our employees and shareholders.” Biolex filed for bankruptcy in July.
India-based pharma firm Dr. Reddy’s operates three core businesses: pharmaceutical services and active ingredients, global generics, and proprietary products. Egberts says if the acquisition goes ahead, OctoPlus will effectively become Dr. Reddy's center of excellence for complex injectables. The latter plans to expand the fee-for-service business, and establish OctoPlus as a specialist standalone entity to develop specialty generics.