Some generic manufacturers lack the expertise to enter the specialty sector and OctoPlus plans to support these firms, providing an extra revenue source for its portfolio of controlled release technologies.
“Our team has identified a number of high-value opportunities in specialty generics, where we can co-invest and leverage our world-class expertise in formulation development”, said Jan Egberts, CEO of OctoPlus, in a press statement.
OctoPlus generates revenue from royalty and milestone payments associated with use of its proprietary technologies and by performing fee for service formulation and manufacturing work.
Additional royalty and milestone payments could be generated by entering the specialty generic sector. “We think [specialty generics are] a very attractive opportunity where we can retain significant economic upside”, Egberts said in a conference call with investors.
Performance in Q2
OctoPlus signaled its intent to target the specialty generic sector in its second quarter results. Revenue from drug delivery technologies increased year-on-year but gains were partly offset by a €0.5m ($0.7m) drop in earnings from services in support of Locteron (controlled release interferon).
Despite this mixed performance OctoPlus cut its operating loss as efforts to control costs began to come into effect. Egberts has prioritised lowering costs since becoming CEO and now thinks most of the big improvements have been made.
“There is a certain amount of fat we can cut before we start to hit muscle”, Egberts said. OctoPlus is now approaching this point meaning, while efficiency gains can still be achieved, major changes to cost structure are very unlikely.
Shares in OctoPlus closed down eight per cent on the day results were released.