Angling for greater independence, it appears the time has come for WuXi’s bioconjugation offspring to leave the nest.
WuXi Biologics has unveiled a proposed spinoff and separate listing of WuXi XDC Cayman—a joint venture between WuXi Bio and WuXi STA bred to tackle contract research, development and manufacturing of bioconjugates, including antibody-drug conjugates (ADCs), antibodies and other biologic intermediates.
Should the spinoff come to fruition, WuXi XDC will be listed on the main board of the Hong Kong Stock Exchange while maintaining its identity as a consolidated subsidiary under the greater WuXi banner, the companies said in a press release Monday.
With the proposed separation, WuXi XDC would take up position on an independent playing field where it could “fuel and realize” its growth potential, Chris Chen, CEO of WuXi Bio and chairman of WuXi XDC, said in a statement. At the same time, WuXi Bio would be freed up to focus on its global CRDMO business, Chen added.
Shareholders should get excited about the spinoff for a number of reasons, WuXi Bio figures.
For one, WuXi XDC would be able to hone its business to become a “global leading CRDMO” focused on bioconjugates. This plan would see the company focus on ADCs to start, followed by “all bioconjugates” such as peptide conjugates, oligo conjugates and chemical conjugates, according to the company.
The refocusing comes at an “inflection point” for the ADC and bioconjugate market, according to WuXi Bio. Problem is, as the business stands, some of those market opportunities are “beyond the business scope of WuXi Biologics.”
Further, the proposed spinoff would give WuXi XDC an independent fundraising platform to help meet capital needs to build itself out and realize the growth potential of the ADC and bioconjugate market.
What’s more, the proposed spinoff is expected to help management more directly align responsibilities and accountability with the operating and financial performance for both WuXi Bio and Wuxi XDC.
WuXi Bio expects the move will also help WuXi XDC attract and recruit talent, improve its governance and permit investors to better appraise and assess the values of the separated companies.
As a WuXi Bio subsidiary, WuXi XDC’s financial performance will continue to fall under the umbrella of WuXi Bio’s earnings statements. For the year that ended Dec. 31, 2022, WuXi XDC’s revenue only accounted for some 6.5% of WuXi Bio’s sales haul, suggesting that the separation would have no adverse effect on the finances and operational performance of the parent company.
WuXi XDC says it’s successfully brought multiple ADC projects to Investigational New Drug filings in 15 months or less, which it argues nearly halves traditional development time. As of May 2023, WuXi XDC boasted more than 102 ongoing projects.
Meanwhile, there’s been a recent spinoff frenzy across the biopharma industry.
Back in April, Glenmark reignited plans to pawn off its drug ingredients business, Glenmark Life Sciences. Glenmark said it had already contacted potential buyers and hired Kotak Mahindra Capital to oversee the potential sale.
And Dublin-based Alkermes recently telegraphed plans to split in two, with the goal of separating its oncology sector from its neuroscience business to create an independent publicly traded company.
Meanwhile, the new CEO at German conglomerate Bayer, Bill Anderson, is keeping an “open mind” around calls to sever the company’s consumer health or crop science divisions. And last year, Sanofi spun off its pharma ingredients business into a new company called EUROAPI.
But perhaps most notably, Novartis last summer said it would spin its generics arm Sandoz into a publicly traded, standalone company, which it figures will become Europe’s largest generics outfit.