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Orgenesis stock flies as it completes sale of Masthercell subsidiary to get $127M pay day

It will use the sale proceeds to grow its point-of-care cell therapy business and develop advanced therapy medicinal products

Orgenesis - Orgenesis stock flies as it completes sale of Masthercell subsidiary to get $127M pay day
Masthercell helps companies shorten lead times and lower costs in getting cell therapies and products to market

Orgenesis Inc (NASDAQ:ORGS), a developer of advanced cell therapies, said Tuesday that it had completed the sale of subsidiary Masthercell Global Inc, a contract development manufacturing organization (CDMO), to Catalent Pharma Solutions, a multinational headquartered in Somerset, New Jersey. 

In a statement, the company said that on closing the deal, Orgenesis received net proceeds of around $127 million. It expects to use the proceeds to grow its evolving point-of-care cell therapy business and develop advanced therapy medicinal products. 

Investors responded well, sending its shares nearly 11.3% higher to $5.50 before the opening bell.

READ: Orgenesis to get $127M from sale of Masthercell subsidiary

The acquisition adds to Catalent’s network Masthercell’s 25,000 square-foot clinical services facility in Gosselies, Belgium, and its 32,000 square-foot facility in Houston, Texas, which is focused on development-scale projects and is scheduled to open later this quarter.

Masthercell, which is also backed by healthcare-investment firm Great Point Partners and Belgian-government backed investment group SFPI-FPIM, helps companies shorten lead times and lower costs in getting cell therapies and products to the market.

In a statement, Orgenesis CEO Vered Caplan said that in 2015, the company acquired Masthercell, having identified an industry trend and unmet demand for cell and gene therapy CDMO services.

“Since acquiring Masthercell, the CDMO segment revenue has increased from a run-rate of just $3 million to a run-rate of approximately $30 million at the end of 2019, reflecting a compound annual growth rate of 59% under our leadership, and a sale price of more than five times our initial purchase price of approximately $25 million,” said Caplan.

“Meanwhile, the market opportunity and value proposition for Orgenesis’ point-of-care solutions has continued to increase, as these solutions uniquely enable localized cell and gene therapy development, processing and supply within the patient care setting. As such, we decided it was the right time to sell Masthercell to maximize value for our shareholders, and focus our efforts around our point-of-care solutions,” said Caplan.

The company has established joint ventures with top universities and healthcare institutions for its point-of-care cell therapy platform, which is designed to provide cell and gene therapy capabilities in a “cost effective, high quality and scalable manner”, using closed systems and other advanced cell processing technologies at the point of care.

“In addition, our platform enables us to advance our therapeutic pipeline, and to identify additional in-licensing and acquisition opportunities from biopharmaceutical companies, research organizations and healthcare institutes, while providing continuous development support for these partners, including regulatory services and clinical studies,” said Caplan.  

“We can aid in the delivery of these therapeutic developments through our international point of care network, as a one-stop-solution for the onsite collection, processing and administration of cell and gene therapies for patients within the hospital setting,” she added.

By switching from a high-cost centralized manufacturing model to a localized point-of-care model, Orgenesis believes it can “dramatically reduce costs” and “accelerate the path” to bringing life-saving drugs to patients.

The therapies span a wide range of treatments, such as cell-based immunotherapies, treatments for metabolic and neurodegenerative diseases and tissue regeneration.

“As a result of the sale of Masthercell and the infusion of capital that this transaction generated, as well as the tremendous progress of our evolving point-of-care platform, I truly believe Orgenesis is now positioned at the forefront of this rapidly emerging industry,” said Caplan.

Contact the author Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive 

Quick facts: Orgenesis

Price: 4.18 USD

NASDAQ:ORGS
Market: NASDAQ
Market Cap: $76.75 m
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