Dr Reddy’s in pact with CHD Bioscience: Will get $30 million in equity post CHD IPO

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Published: July 28, 2017 12:07:29 PM

Dr Reddy's will receive an equity in CHD Bioscience valued at $30 million after the IPO of CHD or a minimum of USD 30 million in cash within 18 months of execution of the agreement after the Hyderabad-based company has signed a global licensing pact with CHD Bioscience.

Dr Reddy’s will also receive additional milestone payments of $40 million upon USFDA approval. (Image: Reuters)

Dr Reddy’s will receive an equity in CHD Bioscience valued at $30 million after the IPO of CHD or a minimum of USD 30 million in cash within 18 months of execution of the agreement after the Hyderabad-based company has signed a global licensing pact with CHD Bioscience for commercialisation of Dr Reddy’s phase III clinical trial DFA-02.

DFA-02 which would be used to prevent surgical site infections. Phase II studies for DFA-02 have been successfully completed and the product will now be transitioning to Phase III registration studies. Dr Reddy’s will also receive additional milestone payments of $40 million upon USFDA approval. In addition, CHD Bioscience will pay Dr Reddy’s double-digit royalties on sales and commercial milestones.

CHD Bioscience Director and CEO Michael Handley said the transaction advances company’s strategy to become a world leader in the targeted prevention and treatment of drug-resistant infections.

“DFA-02 potentially extends our ability to help patients in the surgical setting who may be at high risk of infections without exposing the patient to large amounts of systemic antibiotics,” he added. CHD Bioscience Inc is a privately-held biopharmaceutical company based in the USA. 

Shares of Dr Reddy’s Laboratories were the worst performer on the benchmark Sensex down 5.77% to Rs 2,470 after the company yesterday reported a decline of 53% Rs 59.1 crore (as per IFRS) in the consolidated profit after tax for the April-June quarter, compared to the profit of Rs 126.3 crore a year ago in the same period. Revenues for the first quarter was up by three per cent to Rs 3,316 crore against nearly Rs 3,235 crore during the April-June quarter of FY 17.

About DFA-02

DFA-02 is a novel bioresorbable (biodegradable) extended-release phospholipid-based gel of gentamicin and vancomycin, intended to be applied within the surgical incision at the time of closure to potentially reduce the risk of surgical site infection. The gentamicin component and vancomycin are intended to provide coverage for gram-negative and gram-positive organisms respectively.

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