Dr. Reddy's Secures 6.46% Stake in Edity Therapeutics for $2M

Dr. Reddy's Laboratories Ltd, a leading pharmaceutical company based in India, has expanded its footprint in the biotechnology domain. On 29 December 2023, the company acquired a 6.46% stake in Edity Therapeutics Ltd, an Israeli biotechnology firm, for $2 million.

Details of the Investment & Overview

Dr. Reddy’s Laboratories, Inc., a wholly-owned subsidiary, successfully acquired 1,014,442 preferred A-1 shares of Edity Therapeutics Limited. This transaction represents 6.46% of Edity's shareholding on a fully diluted basis. The investment aims to support Edity's breakthrough platform technology, which focuses on the intracellular delivery of therapeutic proteins using immune cells.

Edity Therapeutics is currently in the developmental phase and is recognized for its innovative platform technology. This technology has applications across various therapeutic areas, including gene editing, rare genetic disorders, oncology, and inflammation. While Edity has not commercialized its technology or products yet, its platform shows great promise.

Utilization of Funds

Funds from Dr. Reddy's Laboratories will be directed towards crucial aspects of Edity's development, including supporting pre-clinical studies for safety and efficacy evaluation, ensuring intellectual property protection through patent filings, collaborations, exploring licensing opportunities and market entry strategies to optimize the commercial viability of Edity's technology.

No additional governmental or regulatory approvals are required for this investment. The cash consideration for the investment involves the conversion of a Simple Agreement for Future Equity (SAFE) investment of $2 million into preferred A-1 shares at $1.9715 per preferred A-1 share.

Dr. Reddy's Performance

As of the latest trading update, Dr. Reddy's Laboratories is currently trading at ₹5,804. Over the past month, the stock has been trading flat, up 0.95%. Looking at a broader timeframe, in the past 6 months, stocks increased by 13.84%, while the past year has shown a rise of 37.05%. Taking a longer-term perspective, the stock has grown by 123.23% over the past 5 years.

On 27 October 2023, the financial report revealed a 33% year-on-year increase in Dr. Reddy's Laboratories' consolidated net profit for the quarter ending September 2023, reaching ₹1,480 crore. Total revenue for the quarter grew 9% YoY, totaling ₹6,880 crore, with contributions from North America and Europe. This marks an increase from ₹6,305.7 crore in the same period last year.

EBITDA for the quarter increased by 12.9% to ₹2,181 crore, compared to ₹1,932.2 crore in the previous year. The operating margin expanded to 31.7% in the reporting quarter, up from 30.6% in the corresponding period.