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Selvita expands drug development capabilities through acquisition of PozLab and reports its financial results for 2023

Selvita expands drug development capabilities through acquisition of PozLab and reports its financial results for 2023

Kraków, Poland – 27 March 2024 –  Selvita S.A. [WSE: SLV] announced today that it has signed a conditional agreement under which it will acquire 100% of outstanding shares of PozLab, a contract development and manufacturing organization (“CDMO”) offering expert drug product development services and small pilot plant capabilities.

With a team of over 80 dedicated experts, PozLab provides drug product services through dedicated analytical, formulation and process development, followed by analytical and microbiological testing, including the analysis of APIs and excipients.  PozLab holds an EU GMP license for the manufacture of medical and investigational products. The Company is located in the state-of-the-art R&D facilities, in Poznan, Poland, which offer approx. 1700 m2 of research space.

With the acquisition of PozLab, Selvita is set to enhance its capabilities in the rapidly expanding pharmaceutical research sector. Selvita will extend its value chain beyond preclinical research, enabling in particular the provision of small molecule drug manufacturing services for early-stage clinical trials. This strategic move will enrich Selvita’s portfolio with additional valuable competencies, positioning the company as a comprehensive solution provider in the pharmaceutical industry.

  • In recent years, our Development and Contract Testing Department has emerged as the fastest-growing division within Selvita’s operations. This fact not only underscores the vast potential of this market but also attests to the exceptional quality of services delivered by Selvita in this domain. Therefore, the acquisition of PozLab represents a natural and strategically aligned move for us, seamlessly complementing both the market landscape and our expertise – comments Milosz Gruca, PhD, Executive Vice President at Selvita.

Through the acquisition of PozLab and the formation of a new site in Wroclaw focusing on therapeutic antibody research and development, Selvita ventures into promising new market segments. These expansions significantly broaden our service offerings as well as enhance its overall value proposition. – adds dr Gruca.

  • In recent weeks, we have successfully concluded two processes that mark significant milestones in Selvita’s corporate advancement. These transactions represent major strides towards establishing Selvita as a comprehensive partner of choice for our clients, as well as indicate a successful execution of our inorganic growth strategy. We anticipate the finalization of the Pozlab acquisition in the coming weeks. – comments Dawid Radziszewski, General Counsel and Management Board Member at Selvita.

In 2023, PozLab recorded revenues of PLN 15.3 million and estimated adj. EBITDA of PLN 1.7 million. The completion of the transaction is dependent on obtaining consent from the National Centre for Research and Development for the acquisition.

Financial Results

In 2023, Selvita Group(1) generated EUR 77.7 million of organic revenues, compared to EUR 77.8 million a year earlier, and the EBITDA(2) profitability amounted to 20.9% (29.1% in 2022). Profitability was positively influenced by cost-saving measures implemented early in 2023 and ongoing optimizations. At the same time, exchange rate fluctuations and underutilized resources increased costs, impacting EBITDA profitability by approximately 6 percentage points.

The organic backlog for 2024(3) reveals a record increase in contracting within the Contract Testing and Drug Development Department, totaling EUR 12.5 million* (88% y/y increase**). The total organic backlog for 2024 amounts to EUR 43.5 million*, compared to EUR 44.8 million* recorded the previous year. Exchange rate variances account for a reduction of approximately 5 percentage points in the current backlog, y/y.

  • In 2023, we laid the groundwork for Selvita’s next stage of development. Operationally, we bolstered our resources, including our sales force, expanded our offerings, enhanced scientific competencies, and upgraded significantly our infrastructure. Additionally, we implemented financial measures such as cost-saving initiatives and various optimizations, which will positively impact our future results. With two strategic transactions announced recently and the anticipated improvement of the market conditions, we expect to be able to scale up our business – commented Bogusław Sieczkowski, co-founder, significant shareholder and Chief Executive Officer at Selvita.
  1. Excluding Ardigen S.A., which is valued using the equity method.
  1. The results do not take into account the non-cash costs of the non-dilutive employee incentive program and the valuation of Ardigen S.A. made as of January 1, 2023.
  1. Backlog for 2024 as of March 26, 2024, and vs March 28, 2023.

* calculated with an average exchange rate for 2023: 4.5284 PLN : 1 EUR
**calculated from PLN