Orgenesis Inc (NASDAQ:ORGS), a developer of advanced cell and gene therapies, posted strong financial results for the year ended December 31, 2019, driven by its rapidly expanding point-of-care cellular therapy platform and new collaborations.
On February 11, the Maryland company completed the sale of subsidiary Masthercell Global Inc, a contract development manufacturing organization (CDMO), to Somerset, New Jersey-based Catalent Pharma Solutions, for 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.
Fiscal year 2019 financial highlights:
• Revenue jumped 78% to $33.3 million, compared to $18.7 million for fiscal year 2018;
• Similarly, gross profit soared 92% to $15 million in fiscal year 2019, compared to $7.8 million for FY 2018;
• The point-of-care (POCare) platform generated $3.1 million in sales, compared to nothing in FY 2018; and
• Cash and equivalents totaled $11.4 million as of December 31, 2019, which does not include the $127 million from the sale of the CDMO business in February.
In a statement accompanying the company’s latest numbers, CEO Vered Caplan outlined the company’s point-of-care strategy following the sale of Masthercell.
“2019 was a truly transformational year. While we achieved strong company-wide revenue growth, more importantly, we generated $3.1 million in sales through our newly launched POCare platform,” said Caplan.
Attractive pathway for the future
“We believe our POCare platform represents an attractive pathway for the future of the industry, and is poised for accelerated growth this year through industry partnerships that are currently underway with leading healthcare institutions around the world,” she added.
The Orgenesis boss also shared her business rationale for selling Masthercell.
“In 2019, we signed collaborations with several leading research and healthcare institutions. Given this traction, we successfully sold Masthercell Global for $315 million, generating approximately $127 million,” said Caplan.
Within five years of acquiring Masthercell, the CDMO segment revenue increased from a run-rate of just $3 million to a run-rate of around $30 million at the end of 2019, reflecting a compound annual growth rate of 59% under Caplan’s leadership.
“We determined it was the right time to sell Masthercell in order to maximize value for our shareholders and accelerate the rollout of our new business model,” said Caplan.
She pointed out that the cell and gene therapy market faces several “significant challenges” that the company’s new business model directly addresses. In most cases, the costs of cell and gene therapies are prohibitive, as illustrated by recent CAR-T therapies, which range in the hundreds of thousands of dollars per patient, per year.
Offering a localized point-of-care model
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.
“Our business model is designed to directly address and fundamentally transform the entire development, manufacturing, supply and commercialization of cell and gene therapies, which has the potential of accelerating the speed to market, lowering costs, and enhancing the delivery of cell and gene therapies,” said Caplan.
The therapies span a wide range of treatments, such as cell-based immunotherapies, treatments for metabolic and neurodegenerative diseases and tissue regeneration.
“Our therapeutic pipeline consists of proprietary and licensed Advanced Therapy Medicinal Products (ATMPs). Supporting this therapeutic pipeline is our POCare platform, which consists of both our POCare Solutions and our POCare Network,” she added.
The company’s point-of-care solutions integrate a suite of in-licensed technologies designed to enable onsite development, and administration of ATMPs in the patient care setting.
Meanwhile, Orgenesis’ point-of-care network is a web of affiliated pre-clinical and clinical-stage biopharmaceutical companies, research institutions and hospitals through which Orgenesis is able to in-license technologies or ATMPs and co-develop them with its partners.
“We support this network with regulatory, pre-clinical/clinical development and training services,” said Caplan.
Orgenesis plans to use the Masthercell transaction funds to accelerate the rollout of its therapeutic pipeline, as well as its point-of-care platform.
“We have established joint ventures with several leading universities and healthcare institutions in Asia, North America and Europe,” said Caplan.
“This has the potential to transform the cell and gene therapy market by lowering the costs and expanding availability of these life-saving therapies. We have built a highly scalable foundation poised for long-term growth.”
Contact the author Uttara Choudhury at [email protected]
Follow her on Twitter: @UttaraProactive