Ladies and gentlemen, good day and welcome to the Suven Pharmaceuticals Limited conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Cyndrella Carvalho, Head of Investor Relations at Suven Pharmaceuticals Limited. Thank you, and over to you, ma'am. Thank you, Darwin. Good evening, everyone. I welcome you all to today's conference call to update on the acquisition of a strategic controlling stake in Sapala Organics. Our management team present here with us today includes Mr. Annaswamy Vaidheesh, Executive Chairman, Dr. Prasada Raju, Managing Director, and Mr. Himanshu Agarwal, Chief Financial Officer. Let's delve into the key highlights of the transaction and open the floor for Q&A. Now I'll invite Mr. Annaswamy Vaidheesh, our Executive Chairman, to share his thoughts on this acquisition. Thank you, Cyndrella. Good evening, everyone. We are pleased to announce that Suven has entered into a definitive agreement for the acquisition of a controlling stake in Sapala Organics. To give you some background, Sapala is a Hyderabad-based CDMO that specializes in oligonucleotide drugs and nucleic acid building blocks. Dr. P. Yella, the promoter and CEO of Sapala, Sapala, was deep domain expertise in the space and 20+ years of working experience in Japan, has built this company into a unique CDMO player over the last two decades. I feel extremely delighted to welcome Dr. P. Yella Reddy and the Sapala's team to the Suven family. We are very much delighted to partner with Sapala, as it represents a strategic fit for Suven. Oligonucleotide space is a niche yet rapidly growing space with immense potential. As you may be aware, nucleic acid-based therapies target diseases at the genetic level, offering hope for conditions that were previously deemed incurable. With Sapala's acquisition, we are enhancing our technology platforms, which now include ADCs, oligonucleotides, and more. This aligns with our strategy of investing in high-growth, high-impact areas, both organically and inorganically, and marks another stride in our journey towards establishing a deep domain-led, integrated CDMO platform in India. I'll now request Dr. Prasada to say a few words and explain to you more about the rationale. Thank you. Thank you, Mr. Vaidheesh. Very good evening to all of you. It's a quite exciting times for us. Sapala has actually built unique capabilities in the oligonucleotide, the building block segment. This market is currently valued at approximately $750 million, and it is expected to grow at an impressive 20%+ CAGR. The segment has seen increasing interest and investments from large pharmas and also oligo-focused biopharm companies, with many of our customers are also looking to expand in this space. The segment currently has 17 approved drugs, with a very healthy pipeline that is expected to quadruple the approved drugs by 2030. It is supported by the fact that a very interesting number on both, Phase IV, Phase III stage, which is in phase three, as well as similar or double the number in a preclinical to clinical as well. Sapala's capabilities in LNA and BNA nucleic acid, tricyclic DNAs, and GalNAc positioning, it's one of the few players globally capable of delivering such specialized solution which market is looking for. Combining Sapala's R&D depth and experienced team with our customer access and expanded manufacturing capabilities will certainly drive meaningful synergies across our platform. I will now hand over to Himanshu to discuss the financial and structure-related aspects of the deal. Thank you. Over to you, Himanshu. Thank you, Dr. Prasada. So from a financial perspective, the acquisition is structured to deliver long-term value. In FY 2024, Sapala revenues were over INR 670 million, and the adjusted EBITDA margins being at 45%+. As shared in the investor deck, the adjusted revenue has been growing at a CAGR of 18% for the last three years. Subject to the customary adjustments for net cash and working capital, the initial consideration is INR 2,295 million, for an acquisition of 51% stake on a fully diluted basis. We expect the 100% acquisition to be valued at 13-15x EBITDA multiple. ... contingent on the financial performance, there might be EBITDA over the next three years, which ensures alignment of interest and sustainable growth. Therefore, the overall EBITDA multiple for the 100% business will likely to be 13-15x EBITDA multiple range. This is expected to be financed through cash reserves or internal accruals of Suven Pharma, and the initial acquisition is expected in quarter two of the current year, while the balance stake acquisition is expected to be in three years, subject to the necessary regulatory approvals. We plan to operate this business collaboratively with the current promoter, working as the CEO of Sapala Organics for the next few years, as well as the strategic advisor for Japan region before we fully acquire 100% of Sapala. The transaction is expected to be EPS accretive in the first year of acquisition, and we do not expect this acquisition to affect the current merger scheme with Cohance. We will now open the floor for any questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amey Chalke from JM Financial. Please go ahead. Yeah. Thank you so much for giving me the opportunity. So the first question I have is, considering the market is growing at 20% CAGR, what will be expectation from Sapala's business going ahead, for this segment? Yeah. Yeah. Thank you, Amey. Thank you for your question. In a midterm to long term, it will match or exceed the current market growth. That's our internal view that we have, because the base is lower and smaller. Sure. Sir, is it possible for us to give some color on, apart from the oligonucleotide, any other segment currently are they working on, on any other projects or segments they are present in? So the predominant area for focus is on oligonucleotides only, but as you understand, within the oligonucleotides, there are multiple varieties of compounds that they have. One is specialized building blocks, which includes tricyclic DNA. Number of projects are also getting used, using that as a core, and the bridged nucleic acid is one more type of compounds. GalNAc compounds are another division. So there are variants and designer-level oligonucleotides which Sapala is able to build the competency within the segment of oligonucleotides and nucleosides. Is it possible for us to give us some color on the number of projects currently we are working in, specifically phase three or any commercial project in the future? So as you understand, currently, most of the Sapala projects are in early to mid-stage development, and there are a couple of projects in phase one as well. But again, as we go deeper and deeper, we should be able to really get more color on it. As we know, definitely we'll communicate back to you. Sure, sir. Just the last question: How does this acquisition gel with the Suven capability? If you can. Thank you Thank you so much, and I will join the next. Sure. So as we also have communicated in our previous earnings calls, one of the key driver of our strategic intent is to invest in niche and unique technologies which are evolving as emerging trends in the small molecule space, which helps us to stay relevant and close to our customers. And, ADC warheads has proven it right, and therefore, we thought we should invest in additional adjacencies, including the oligonucleotides. Thereby, it will also help us to be a preferred partner of choice for our existing customers and also for the new customers. Sure, sir. Thank you, sir. Thank you. Yeah. Thank Yeah. Thank you, Amey. Thank you. The next question is from the line of Surya Narayan Patra from PhillipCapital. Please go ahead. Yeah, thanks for this opportunity, and, congratulations for the great acquisition, sir. So my first question is on, let's say, about the, since it looks like it is a targeted acquisition, since there was some sense of acquisition that was there. So, is there any target in terms of the business opportunity that is also been there, so that's why it was a targeted acquisition, or how is it, sir? So partially, first of all, Suryanarayan, thank you for your compliments, and it's a really exciting times for all of us. As I partially explained to Amey, it's a part of our strategic assessment of... To accelerate our Suven growth, we have decided to invest in niche and newer technologies which are unique and emerging as the future trends.... With this intent, we have been scouting for opportunities, and very few and limited are available, and it has so happened that Sapala is found to be one. So that is the primary driver of what we are doing. Okay. So given the fact, given the understanding that both the oligonucleotides as well as the ADC, these are like very complex areas. So what would be the kind of the formula for success here, whether it is to be closer to the customers? That is one condition, and what we are not having here, having the operation here in India. So or what could be the formula for success in these two areas? Okay. So the confidence on antibody-drug conjugates has actually taught us several aspects. One is you have to travel along with the innovative firm and be a partner along with the development. As you understand, it's not just a service sale, it is a more of a technology and a design the molecule in line with what they expect. So definitely, your chemistry skill and abilities to scale up and provide the material on time are the three important drivers for us to be able to partner with the innovative companies, which we feel strong about, Sapala as well. We would be able to replicate the same model. That's how success looks like. Okay. Having operation outside of advanced world is not a kind of impediment, that is what one should think. Is that right, sir? It's not definitely, because what happens is majority of our customers are taking either inorganic approach of getting into this space, or they are also looking for a product level select deals, or they are looking for a complete in-licensing of the molecule. They're also wanting somebody to be a part of their GMP manufacturing, which we secure the highest chance because for the last two decades, we are with most of innovative companies. That's how our strength is going to be really helpful for us to really accelerate the qualifications with some of these customers, while we try and work with some of the bio firms which are active in this space as pioneers in oligonucleotides. Okay. Sir, given the complexity that is there about customer acquisition for such complex areas and the timeline required also to get or to progress the molecule to the commercialization levels, so what is the timeline that you are thinking when you think that the synergetic benefit from these acquisitions will really be supplementing the combined business of Suven going ahead? Whether it is FY 27 onwards or it is even beyond that, when should we really see the benefit of these efforts really contributing to the overall earnings for the company? So what we actually decided was to really go deeper on the existing customers and also start looking for new customers. More importantly, some of our Suven customers are extremely critical for having this competency. But as you understand, our success is depending on the clinical success of the pipeline, which means anywhere a visible case studies can be built with synergies between at least first within 2-4 years time frame is what we see. So which comes back to the same time period or which can be little early also. 2-4 years is the time frame that we see to have the synergies coming in. Okay. And just last one check from my side. If the kind of, the size of the business, what it has been acquired now, so is it fair to believe that now the oligo is very larger than the ADCs what we have been having? Our wish is to grow both, to highest level, and, that comparison might be little difficult to comment right now. Okay. Oligo is relatively at an early stage, because we don't have any commercial products, but in case of antibody-drug conjugates, as you understand, the two warheads are being supplied for commercial pipeline molecules. Which is different than what we are in Sapala. Mm. To your first question, 2-4 years down the line, probably oligo also will start seeing the similar kind of a texture, but not right now. It's an evolving field at this stage. Sure, sir. I'll join back in the future. Thank you. Thank you. Thank you. Ladies and gentlemen, to ask a question, you may please press star and one on your touchtone telephones. The next question is from the line of Ritu Kumari from LK Investment. Please go ahead. Yeah. Good evening, gentlemen. Hello? Good evening, ma'am. You are audible to us. Please go ahead. Okay. Yeah, so I have a couple of questions. My first question is, what is the contribution from the top five products or maybe customers, if you could just help with that? It's fairly diversified in terms of product, as the products are customized for specific customers and requirements. Okay. Today, top five customers contribute for 11%-50% of the revenue on an average in last four years, on last few years. ... last few years. Okay. And, what is the current market growth, drivers, and how do we see it evolve? So, as we have explained, that definitely we have to travel along with existing customers, and also I was answering to Surya Narayan's question. While the synergies are relatively midterm to long term, but immediate onboarding of the existing customers of Suven is one of the important priority that we kept it for us. And, most of the customers are actually asking for the new technologies and capacities coming in. So that is one of the growth driver. However, we also try to continue with the existing relationship of Sapala between US., Europe, and Japan. Also, we have over 20+% of our revenue exposure. We try to grow existing with the leverage of Suven customers as well. These are all the two priorities which can drive the growth. Okay. Got it. Okay, thank you. I'll join back. Thank you. Thank you. The next question is from the line of Darshit Shah from Nirvana Capital. Please go ahead. Darshit Shah, the line for you has been unmuted. You may proceed with your question. As there's no response from the current participant, we will move to the next question, which will be from the line of Hrishikesh Patole from BNK Securities. Please go ahead. Hi, am I audible? Yes, you are audible, sir. Just from the customer profile side, so can you briefly highlight, what is the customer profile like? Like, what are our key customers or emerging biotech firms or well-established big pharma players? Like, can you give a broad split, that would be helpful. Sure. Thank you, Hrishikesh. Today, Sapala has innovative customer base across U.S., Europe, and Japan. Broad geography, average sales split in the last few years between U.S., Europe, and Japan is around 40, 30, and 20, which also means there's a good mix of big bio firms, which includes oligo-focused CDMO players. That's how the current business mix is around the country. Just to add on that, have you been adding clients regularly? What has been the trend on that? The question is bit unclear. Can you just, elaborate? What I wanted to ask is, have you been adding clients regularly for the past few years? Yes. Addition of the customers is happening. On top of it, addition of molecules for the same line of customers is also happening. Finally, product progress is actually seen, and Sapala is along with the product progress as well. And now with Suven, you expect that to be faster going ahead, or like remaining intact? That's right, because we have a long relationship with the top innovative companies, and majority of them are extremely active on oligonucleotide basis. Because we are actually qualified suppliers for them, our existing relationship can be properly leveraged with Sapala's competencies. Sure, sure. That's, that's very helpful. Thank you. That's it from my side. Thank you. Thank you. Thank you. Ladies and gentlemen, you may press star and one if you wish to ask a question. We have the next question from the line of Jainil Shah from JM Financial. Please go ahead. Hi, thank you for the opportunity, and congratulations on the acquisition. I have two questions. One is on, you know, what is the current capacity utilization? And second one is if you can, you know, elaborate a little bit more on how the current competitive landscape is and, you know, who are we competing with in India and outside India? Sure. Thank you, Jainil. From a capacity standpoint, I just wanted to clarify, this is predominantly R&D-led activity, and, today, the basic analogs are some of the compounds that we do the manufacturing in kiloliters capacity. Otherwise, from a capacity standpoint, it is predominantly on R&D side of it. However, when the molecule grows into the clinical phase, from preclinical into commercial, what we need is GMP facilities. And one of the important element as a part of the deal is, we end up supporting the growth of the organization by creating a GMP manufacturing facility. Hence, we don't have any capacity constraint right now, and, as it is a predominantly R&D, we have enough capacities. However, in view of the future growth, we have plans to create a GMP manufacturing site in one of our expanded platform sites. Second question is on the competition landscape. As you understand, there is a very unique combination of having the bridged nucleotides and the GalNAc compounds and tricyclic compounds.... So it's very hard to decide. However, there are some companies who are closely related, but not exactly comparable. Hence, we'll be able to exactly define who is our right competition, because that's a struggle for us itself, which we are not able to come to a conclusion. They are closely related, but no way comparable, because the extent of competencies Sapala has built, all the competencies are not existed as one roof solution in any of the firms that what we have assessed. Sure, this is helpful. Thank you. Thank you, Jalal. Thank you. Ladies and gentlemen, you may press star and one to ask a question. We have the next question from the line of Surya Narayan Patra, from PhillipCapital India Private Limited. Please go ahead. Yeah. Sir, if you can just add something about Mr. Yella Reddy's strength and his likely contribution to them? Yeah. As our Chairman, Mr. Vaidheesh, has briefly touched upon in the opening remarks, he has close to four decades of technical experience. Worked in Japan and lived in Japan, and he speaks Japanese language, and we have a very strong connect, and he's a product of Toyota. Also, by training, he did his entire science in sugar-based chemistry. As you understand, oligonucleotides comes with organic chemistry, inorganic chemistry, physical chemistry. Combination of all, only somebody can really isolate. So he has a blend of technical experience and expertise, and a deeper understanding about the science of oligonucleotide, coupled with exposure in Japan. While he runs Sapala business as a CEO of the company, what we have also decided is we wanted to leverage his network in Japan, and he will serve as an advisor for Japan market entry at an overall Suven and Cohance platform. That's the view that we have it today, Surya Narayan. Okay. And whether that association will be a kind of beneficial effect so far as CDMO, chemical, specialty chemical, and all that also? That's right. Because his strength is on that CDMO space only, predominantly. Okay. In fact, in the opening remark, you have alluded about the kind of acquisition cost. There are some disturbance, so I could not catch the... So if you can share your view, can you repeat it, please? Sure. Himanshu, can you just take up this question? Yeah, sure, sir. I think what said, I'll just kind of repeat, what we had articulated. Mm-hmm. Essentially, as you would have read, we acquired at an initial consideration of INR 229, 229 crores, and that's 41% stake. We're expecting to acquire 100%- Mm. - in a period of 3-4 years, is, which again, would be valued at 13-15 EBITDA multiple, in the next three to... That's effectively what... Does that help you? Yeah. Yeah. So that means 13-15, you said, for the EBITDA, whatever that you will be getting in the time and on a future date? That is correct. Okay. Okay. Sure. Yeah. Thank you, sir. Thank you. Thank you. We have no further questions, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you. Thank you, Robin, and thank you everyone for your time, and we look forward to hear and learn more with you all. Thanks a lot. Thank you. Thank you, everyone. On behalf of Suven Pharmaceuticals Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.