Orchid to acquire 100 per cent in US drug discovery unit Bexel

01 August 2006

Mumbai: Chennai-based pharmaceutical major Orchid Chemicals & Pharmaceuticals Ltd is raising its stake in Bexel Parmaceuticals of the US from the current 74 per cent to 100 per cent as part of the company's efforts to consolidate its new drug discovery research activities under a common umbrella.

Orchid said it would pay $3 million for acquiring the remaining 26 per cent stake, bringing Orchid's total investment in Bexel to $18 million.

Under the arrangement, both the companies hope to bring all drug discovery activities under a unified structure, providing seamless integration of the several drug discovery programmes being pursued at Orchid and Bexel.

The acquisition will also help Orchid maintain a discovery front in the US and a discovery-cum-developmental back-end at Chennai. Orchid has already established a wholly owned subsidiary, Orchid Research Laboratories Limited (ORLL), to channel its drug discovery work.

Under the deal, Orchid will buy out the shareholding of the US promoters of Bexel Pharmaceuticals for cash consideration of $3 million. The promoters and key employees of Bexel would be granted an option to buy 650,000 shares as per standard Orchid ESOP guidelines.

In an independent arrangement, Bexel would provide an earn-out to the principal founder of Bexel in the event of an out-licensing deal for BLX-1002 materialising in a prescribed timeframe based on the Phase II clinical trials that are planned. The managerial and scientific organisation of Bexel will continue as an integral part of the new structure, providing continuity and commitment to Orchid's broader drug discovery thrust.