Avesthagen revives IPO hopes; plans to raise Rs 6-7 billion

Avesthagen’s IPO scheduled for the first-half of 2010

Indian bio firm Avesthagen Ltd is planning to raise Rs 6 billion to Rs 7 billion from the local and international markets through an initial public offering of its shares, according to reports.

Avesthagen would commence its IPO in 2010. The draft red herring prospectus for the public issue would be filed early next year with the IPO scheduled for the first-half of 2010.

“Funding is going to be on two channels. In addition, we are also looking at raising a PE or pre-IPO overseas fund of $50 million, perhaps early next year, and have appointed U.S. investment bankers to look into it,” said Villoo Morawala-Patell, chairman and managing director of Avesthagen was quoted as saying.

Avesthagen plans to use thee money from the IPO to commercialize 40 products that are under development.

Avesthagen was looking at raising funds on earlier occasion also. Avesthagen has requirement of Euro 100-125 million (Rs 670-837 crore) for its next phase of growth.

“Our products are close to the market now and w e have many products coming out of innovative research efforts. Our banks, investors have stood w ith us and the government has supported us. And now w e must get the company ready for the public as the funding needed to make sure all the hard work that has been done comes to the fore. Under the current market scene which is show ing positive signs, we intend to close our audit, announce a couple of deals and start the preparations for a listing,” Morawala-Patell stated.

Avesthagen has four strategic business units: bioPharmaceuticals, bioNutrition, bioAgriculture and Science & Innovation.

Under bioPharmaceuticals, a pipeline of biosimilars is being developed in partnership with Cipla Ltd. Avesthagen focuses on pathway engineering and development of novel expression systems, development of product specific bioassays and design of novel animal component free production media, generation of over-expressing stable cell lines, development of proprietary expression platforms and novel, scalable processes in microbial and mammalian systems. Scale-up, manufacturing and supply of commercial scale material is done through a joint venture. 200 – 1,000L cGMP facilities have been set-up

Avesthagen has recently been given clearance from the Review Committee for Genetic Manipulation (RCGM) for its AVDESP — biosimilar of Amgen’s Aranesp. Avesthagen may soon start clinical studies for AVDESP –a therapeutically equivalent generic version of darbepoetin alfa in India.

Darbepoetin alfa differs from recombinant human erythropoietin (rHu-EPO) in that it contains 5 N-linked oligosaccharide chains and has a molecular weight of 37,100 Daltons and a carbohydrate composition of 51%. These additional chains in darbepoetin alfa result in longer half-life,increased biologic activity, and decreased receptor affinity.

Darbepoetin alfa has a half-life approximately 3 times longer than that of rHu-EPO (erythropoeitin) when given as a single dose by the intravenous route in humans, studies show.

bioNutrition focuses on developing scientifically validated, nutritional bioactives from traditional Indian medicinal plants, for prevention or treatment of degenerative conditions such as diabetes, obesity, CVD and bone health.

Avesthagen also received a license for production of its bio-actives at its facility Dhanvantri Botanicals in Bangalore w ill take up manufacture of dietary supplements for all age groups. It w ill also be available as cereal bars and cracker categories.

Through bioAgriculture, Avestagen stresses on resistance and nutrition enhancement in plants. It hosts two wholly owned subsidiaries as well as large collaborations with the Groupe Limagrain and sees itself as a vehicle of seed transmutation, wherein the seeds for the future will be developed through a combination of genetics, breeding, natural and artificial variation and transgenics.

Avestagen currently holds 560 patents.

Avesthagen, which is expected to touch a turnover of Rs 100 crores this fiscal, is yet to decide on the bankers and would like to hold on to the promoter stake, which is currently at 32% while PE players hold up to 28%. PE investors include ICICI Ventures, Fidelity and New York Life Investment Management India Fund.