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Cipla generates four-fold returns from Chase Pharma stake sale

23 November, 2016

Drugmaker Cipla Ltd has sold its entire stake in the US-based Chase Pharmaceuticals to a unit of Allergan Plc, making handsome returns from its investment of a little more than two years.

Cipla had acquired a 16.7% stake in Chase Pharma in tranches for $5.12 million. This included a $3 million infusion in March this year.

Allergan has now agreed to make an upfront payment of $125 million for Chase Pharma. This translates into $20.8 million for Cipla’s stake, or a four-fold return on investment. 

Besides the upfront payment, Allergan has agreed for potential regulatory and commercial milestones of up to $875 million to the shareholders of Chase, Cipla said in a stock market disclosure. It didn’t disclose the company’s share of this milestone payment. A company spokeswoman sought more time to respond to VCCircle queries in this regard.

Cipla had made the investment through unit Cipla New Ventures. Chandru Chawla, head of corporate strategy at Cipla and chief of Cipla New Ventures, said the investment helped Chase in advancing an Alzheimer’s lead drug to an advanced stage of development where the product has now concluded Phase 2 study.

“We believe that Chase’s pipeline will be successful at Allergan, given their strength as a leading CNS (central nervous system) commercial franchise,” he added.

In an interview with VCCircle in October, Chawla had said that an exit from Chase would eventually happen as that was its goal.

Chase is led by CEO and president Douglas Ingram, formerly the president of Allergan Inc. Chase has raised more than $24 million in funding to date, including about $22 million through a Series B financing led by New Rhein Healthcare Investors, LLC, Edmond de Rothschild Investment Partners, Cipla UK and Brain Trust Accelerator Fund. The original venture funding for Chase was provided by the Brain Trust Accelerator Fund in 2010.

Cipla New Ventures and Cipla acquisitions

Cipla New Ventures focuses on investments in innovation-led businesses such as research laboratories, young biotech and research and development (R&D) firms. It has been scouting for companies in Boston, California and London besides the home market. In the past, it has also backed Manipal Group-promoted Stempeutics Research besides MabPharm and BioMab.

Cipla New Ventures is also interested in investing in startups in the digital health space, Chawla told delegates at the VCCircle Healthcare Investment Summit in Mumbai recently.

Cipla clocked revenue of Rs 12,034 crore in the year through March 2016 against Rs 10,131.78 crore the previous year. Its net profit rose to Rs 1,398.03 crore from Rs 1,181.09 crore.

Cipla has been growing its footprint internationally through acquisitions. In July, Cipla and Aurobindo Pharma Ltd agreed to acquire some generic drugs from Teva Pharmaceutical Industries Ltd in the US to strengthen their presence in the world’s largest pharmaceutical market.

In November, Cipla said its subsidiary in Uganda, Cipla Quality Chemical Industries Ltd, planned to float an initial public offering.

Last September, Cipla agreed to acquire two US companies—InvaGen Pharmaceuticals Inc and Exelan Pharmaceuticals Inc—for around $550 million. 

In August, Cipla revamped its management team naming Umang Vohra its new managing director and global CEO and elevating promoter group scion Samina Vaziralli as executive vice chairman.

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Cipla generates four-fold returns from Chase Pharma stake sale

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