Cohance Lifesciences Limited (COHANCE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Suven Pharmaceuticals Limited Q3 FY '25 Earnings Conference Call. Before we begin, I would like to mention that some statements made in today's discussion may be forward-looking in nature and a statement to this effect has been included in the invite, which was shared with everyone earlier. I would also like to emphasize that while this call is open to all invitees, it may not be broadcasted or reproduced in any form or manner. We will commence the call with opening remarks from the management, followed by an interactive question-and-answer session. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Ms. Cyndrella Carvalho, Head, Investor Relations. Thank you, and over to you, ma'am.

Thank you, Darwin. Good evening, everyone, and welcome to Suven's Quarter 3 and 9 Months' FY '25 Earnings Call. It is our pleasure to have you all here with us today. I am pleased to introduce to you all through our management team who is present here with me today. Our Executive Chairman, Mr. Vivek Sharma; our Managing Director; Dr. Prasada Raju, our CEO, Dr. Sudhir Singh; and our Chief Financial Officer, Himanshu Agarwal. After our remarks, we will open the floor for Q&A. I will now hand over the call to Vivek to share his insights on the quarter and the recent developments.

Thank you, Cyndrella. Good morning, good afternoon, and good evening, everyone. Thank you for joining us, and we sincerely appreciate your time and continued interest. The global CDMO landscape continues to be on a transformation path with supply chain derisking efforts by innovators and growing demand for specialized capabilities, driving significant opportunities, especially for the Indian CDMO market. Suven and Cohance platform continues to strengthen its position and excited about the immense potential as innovator companies discount for reliable science and technology-based partners. We at Suven and Cohance continue to receive higher number of RFPs. It's about 2x in the 9 months versus last year, which is a reflection of the confidence of leading global pharma and select biotech companies have enough capabilities. In the last few months, we have made significant progress in line with our strategic vision of becoming a technology-led CDMO with a global footprint with the acquisition of Sapala and NJ Bio in Pinkston, New Jersey. This is strengthening our position in the fast-growing niche technology market of Oligo and ADCs. Our vision, as shared recently is to become a USD 1 billion revenue company with a significantly higher share of CDMO and higher mix of niche technologies. Our vision story will be driven by a diversified growth strategy from 3 key pillars of pharmacy DMO, specialty chemicals CDMO and APIs, ensuring steady and predictable growth. B, by increasing mix of differentiated modalities, including ADCs, oligonucleotides and other emerging technologies to accelerate growth and enhance business defensibility. A programmatic M&A approach to acquire differentiated assets and the professionally management organization with a strong leadership. Over the past few quarters, we have prioritized team building by strengthening our R&D capabilities, establishing global commercial presence across the U.S., EU and Japan and by streamlining back-end operations. We are confident in the foundation we have built to drive long-term growth. We have recently been honored with the title as World's Best Company for sustainable growth for 2025 that was awarded by TIME and Statista and I'm thankful to our team for the efforts that they have put in getting us to that goal. Our facilities have been recently audited for SA8000 certification, we expect to receive this steps very soon. And lastly, on the ESG front, we have submitted our SBTI commitment for all 3 type of emissions. And with all these drivers, we are really excited with the potential that we have to create value. With that, I will ask Dr. Prasada to kind of give an update on the quarter 3 as well as for the first 9 months results. Dr. Prasada.

Thank you, Vivek. A warm welcome to all of you. Wish to take this opportunity to take you through Q3 and the 9 months of FY '25 performance highlights. Our financial performance is in line with our communicated expectations of growth in 3 of H2 of FY '25 and on a full year basis. On a pro forma combined basis, subject to regulatory approval of the merger, our revenue has grown by 40% year-on-year in Q3 FY '25 and by 5% year-on-year in 9 months of FY '25. As communicated earlier, due to the industry lumpy nature, reviewing the business performance on an annual basis provides a better assessment. We continue to build granularity in our business, diversifying different modalities to deliver steady growth throughout the year. Regarding Pharma CDMO, revenue growth segment grew by 101% year-on-year in Q3 and 11% year-on-year 9 months of FY '25 on a pro forma combined basis. Our RFQ moment continues to remain strong with a 2x year-on-year increase in inbound inquiries. We expanded our commercial team presence across U.S. and Japan. Our strategic focus on increasing laterals is delivering results reflected in the expansion of our Phase III pipeline we have added new molecule -- sorry for the disturbance in the line -- to our Phase III pipeline, one molecule has advanced to Phase III and one we have directly added to Phase III. This brings us the Phase III projects to with 9 active molecules, which was 12 at 7 molecules when we spoke last quarter. We are excited about the faster progress for some of the products and look forward to updating you more in the FY '26. Further, as previously highlighted, there has been a positive readout on 1 of the Phase III molecules of our strategic partner. We also wish to take you through some of the key milestones in our customer engagement, and we have onboarded 1 of the top 5 global pharma leaders for early to mid-phase projects, which solidifies our strategic value. Further, as Vivek has mentioned, in 9 months FY '25, we have accelerated our market position in niche technology capabilities through to strategic acquisitions, which enables us to differentiate ourselves as a platform technology led CDMO. Sapala Organics, which establishes our expertise in oligonucleotide chemistry allowing us to expand into high-growth nucleic acid therapeutic segments. NJ Bio, this establishes our end-to-end CRDMO leadership in antibody drug conjugates through our ability to support global pharma from early-stage development to full-scale commercial manufacturer as well as across the entire value chain, covering payload, linker synthesis and bioconjugation, which is unique by itself. This acquisition of NJ Bio has also built a global footprint for Suven platform enabling onshore capabilities in the U.S.A. and capturing a larger share of the high-growth antibody truck conjugates. This has also been driven by a deeper penetration into the Camptothecin-based space with existing and designer payloads, along with very encouraging clinical progress as we are speaking around 40% of the clinical candidates are in a Camptothecin based when the payload is disclosed. And supply at a commercial scale to existing and new customers, which will propel the growth for future to have a dominance in the CDMO play. We remain focused on integration efforts to benefit from business front-end synergies. We are also investing our time and effort cGMP facilities to scale up both the businesses. These technology additions have actually enabled us to stay relevant to our customer position ourselves as a valuable partner for our customers for niche and specialized drug development needs. Moving to Specialty Chemicals CDMO. In line with our communication in Q2, the challenges have bottomed out, and we have started seeing the recovery trend with early signs of demand stabilization. Our strategic investments made during the downturn are yielding results strengthening our position for accelerated growth in FY '26 as a dedicated strategic business unit. We also have felt the need of strengthening our team with the seasoned leaders who will support our execution excellence and growth of the strategic business unit. Regarding APA+ business, this segment has seen 29% of year-on-year revenue growth in Q3 and 17% year-on-year growth in 9 months of FY '25 on a pro forma combined basis, underscoring our thesis and a competitive advantage in achieving global leadership with a curated portfolio. We are also continuing our focus in pipeline expansion with the new product additions to foster long-term and sustainable growth. Thank you, everyone. And now I will hand over the floor to Himanshu to share some more details about our financial performance. Thank you, and over to you, Himanshu.

Good evening, everyone. We're excited to share that quarter 3 have seen strong growth as expected. Revenue growth in quarter 3 has been 40% year-on-year, driven by robust demand across all business units, and our adjusted EBITDA margins are at 38.7%. For the 9 months of FY '25, our revenue growth is 5% year-on-year, reinforcing our residence and long-term scalability with adjusted EBITDA margins at 34.8%. In the 9 months ending December '25 (sic) ['24], our CapEx investment is $2.3 billion, which has been allocated to capacity expansion ensuring that we stay ahead of demand curve. And cash generation remains good with $3.2 billion being generated during the same period. We continue our strategic investment strategy focused on scaling R&D, manufacturing and specialized CDMO platforms. With respect to Cohance merger, the shareholder approval was received with 99.99% votes in our favor. The final NCLT meeting is scheduled for February 18. Subject to regulatory approvals, the merger is expected to be effective within the next 2 to 4 months. I'll now hand it over back to Dr. Prasada for sharing our outlook.

Thank you Himanshu. As committed, we used to cover briefly guidance and long-term growth aspirations. We reaffirm our FY '25 guidance with year-on-year growth on a pro forma combined basis for the full year and with an accelerated growth trajectory in FY '26. The pillars of this growth shall be strengthening our global customer relationships, and we are deepening ties with top-tier global innovator companies, reinforcing our leadership as a trusted and preferred CDMO partners of choice. Expanding leadership in antibody drug conjugates with end-to-end capabilities along with NJ Bio and oligonucleotides, our acquisitions position us as a dominant player in these high-growth areas, and we have a first more advantage while growing RFQs validate our expertise and hypothesis. Enhancing specialty business, CDM book, leveraging our differentiated technology platforms to create new opportunities and unlock long-term value, including agrochemical side of the business. Regarding API+, we will still leverage our cost leadership position and backward integration capabilities with global capacities and regulatory track record that we have to expand market share and global leadership in the existing molecule, continuous new product development will fuel the further growth. With this, I wish to say thank you all of you, and we'll hand out the session to Cyndrella. Thank you.

Thank you, Dr. Prasada. With that, I now request Darwin to open the floor for Q&A.

[Operator Instructions]. We have the first question from the line of Swapnil Gupta from White Pine Investment Management Private Limited. Swapnil Gupta, your line has been unmuted. You may proceed with your question. As there is no response from the current participant, we will move to the next participant. The next question is from the line of Darshit Shah from Nirvana Capital.

Congratulations for a good set of numbers. Sir, I have a couple of questions. One is on the last call, you had mentioned that there were a few molecules that kind of cleared Phase III, one from the Suven side and one from the Cohance side. Just wanted to know, were there any revenues from those molecules in this quarterly results?

Himanshu, you want to say that?

Yes. So at this stage, we haven't seen any acceleration in the growth from those 2 commercial molecules. But yes, we are expecting that as the innovator continues to expand the molecules and continues to -- because they would have obviously taken some extra material in preparation of the penetration of the [indiscernible] and therefore, we expect the demand to come back shortly.

Got it. And one of the molecules you mentioned is also kind of shown I mean, for second indication. So does that mean that -- I mean, it would be kind of used for some other treatment apart from what it was initially trialed for?

That's what we learned. I think it has cleared the primary endpoint study, and it's quite exciting the results what we have learnt. As you understand, we can supply some initial developmental quantities and customers prefer to maintain some stocks for their launches as well, but it's a process that we have to undergo.

Got it. And for the Cohance molecule, would you want to throw some light on that?

So one molecule last time we said it is commercial, and we are able to supply quantities regularly. And between H1 and H2 at least 2 lots, we could have submitted to them. And we expect the same kind of growth momentum next year as well.

Got it. And sir, lastly, I understand we were the only company who kind of participated in the JP Morgan Healthcare Conference sometime back. So would that to throw some color on how was -- I mean, response from the Indian CDMO side? And what kind of response did we get from the U.S. clients?

Vivek, can you take this.

No, I think thank you. So it was a pleasure to participate. And I think we're really proud to present the country in the -- but the response is very positive. We are getting a lot of traction, a lot of meetings. I was on the call to very late last night to explain our capabilities and some customers are visiting us very quickly. But overall, we are excited with the participation. We are excited with the traction we are seeing, and we are excited with the engagement we are having with customers.

[Operator Instructions] We have the next question from the line of Gagan Thareja from ASK Investment Managers.

So my question pertains to the NJ Biopharma acquisition. Is it possible for you to explain the accounting of the acquisition in the current reported financials, the financing of the acquisition and also your outlook on the business?

Himanshu, can you take this question?

Yes. So Gagan, thanks for the question. So there are 3 parts to the question. So first is the financing. I think during the acquisition call, we had explained that it is completely self-funded. There is no loan that we have taken to fund the entire acquisition. Number 2, the acquisition was completed on the 21st of December. And so there is -- as you know, that it is a U.S.-based client. So we've kind of practically had very few working days in the -- 21st December to 31st December. In terms of an outlook, I think we will continue to share the outlook as a consolidated platform. Unfortunately, we don't give outlook of entity or a business separately. And accounting-wise, I think if that is the question, then accounting-wise, it will be consolidated. It's a subsidiary for us and with a 56% ownership. So it is completely accounted and consolidated with Suven Pharma.

So it will be 100% consolidated and then netted out from minority share?

That's correct. That's correct.

Right. And my second question is on the working capital. For Suven standalone, the working capital has gone up from 108 to 130 days, if I read it correctly, whereas for Cohance it has gone down 9 months this year. Anything you can elaborate on the increase in working capital for Suven.

Yes. So I think from a stand-alone perspective, the higher sales is increasing the debtors because there are all these not due debtors that kind of comes in and so that's -- from that perspective and from a consolidated perspective, there would be NJ Bio that also gets added to the entity.

The next question is from the line of Kunal Dhamesha from Macquarie.

Congrats on good set of numbers. First one on our guidance -- long-term guidance that we have put out on $1 billion kind of revenue by FY '30. I would like to understand when do we start seeing that kind of acceleration in our top line while you are seeing that in Q3. But on a 9-month basis, we are still kind of low growth because of issues in Spec Chem business, et cetera. So is it more, let's say, in the near term where we should see the acceleration or, let's say, at the later part of the time line rate. How should we think about it?

Thank you, Kunal, a few comments from outside. It's always important to understand this method of the business is cyclical in nature. Quarter-on-quarter, we'll always be counterproductive to assess the business. However, long term, we definitely feel quite excited about it. As we have been saying at a combined platform level this year, we will grow, but definitely '25, '26 onwards, you will see the traction of the growth.

And sir, for this traction to happen, I mean whatever you're building potential projects that we might need to execute for that traction? Will you say they are already more or less in place and then it would not build a lot of any new project expectation? How is your expectation there?

It's a combination of both because we also have seen almost 2x of RFQs that itself is a very comforting factor. Second important strategic initiative, what we have taken around year back, which is definitely yielding us well is on the focus on laterals. If we have to say X is a number on a full year basis of last year, that has actually almost become 1.6 to 1.8x currently within 9 months. So our strategic intent of lateral is also expanding the pipeline. It's only a question of how soon we will see the improvement in the overall RFP conversion. Second, we also need to understand the highest growth driver is going to be on the antibody-drug conjugates payload coupled with both existing Cohance, Suven, along with NJ is also going to propel the growth.

Sure, sir. And for this new segment, I know NJ is not there in this quarter. But when you look at on a pro forma basis on a 9-month basis NJ, ADC, Cohance ADC platform and maybe [indiscernible] as well, how has that 3 segments on a year-on-year basis in first 9 months would have done? A broad range would be fine in terms of the top line growth.

So as Himanshu was rightly mentioning, we have internally agreed that we should only focus on the overall segment level. We will be constrained to give a specific each line item wise numbers to you, Kunal.

Sorry, I'll just supplement what Kunal is asking. So Kunal, in the presentation that we've uploaded, we have shared the segment-wise growth, right? And we have called out, like, for example, pharma CDMO is at 100% for the quarter, API is around 29% for the quarter on a combined basis. So we have called it out. I don't want to waste everyone's time in terms of reading those numbers, but we've called it out in the presentation. Secondly, I think what's also important is that as Dr. Prasada alluded, the NJ Bio will give us a significant synergy, which has not been called out as yet. I think Dr. Naresh Jain who was in India and he is again coming to India. We are kind of working very extensively on the entire ADC strategy and the ADC synergy that we will work together. And as Vivek had mentioned, even in the JPMC that there is the East and West combination that we're trying to work through. You are aware that we've given a growth CapEx to NJ Bio and we are keen to kind of create a commercial facility in New Jersey to accelerate the growth and to create this synergy aspect. The third thing, which is also important is that while you're looking at CapEx, we should also consider the fact that Suven has in last year added INR 400 crores almost of PPE, which has come through the inorganic acquisition. And that's also a growth CapEx, the way we consider that.

[Operator Instructions] We have the next question from the line of Chirag Shah from White Pine.

Congratulations for good set of numbers. Sir, I have a very basic question. Once you start the commercial supply. If you can explain the process of ramp-up from the client side. So ideally, the ramp-up should be at an expected pace in the initial phase at least. If you can just explain the process, how does the client approach the ramp-up. And is it after the initial batch of commercial, does it take another 6 months for the further ramp up? Or how does it work if you can help us understand.

So let me explain this [indiscernible]. Please go ahead. Please go ahead.

Okay. I mean, since we both are [indiscernible], that's why the confusion. So let me tell you that the way it works that you all know how we travel with the molecule, we start sometime Phase I and Phase II. We move to Phase III as the molecule moves. But it's a very dynamic situation, sometimes you get the enough information that how the molecule is moving, how the data coming out, sometimes you don't get it. However, we have our own way of finding out from the different reports, how the molecules are moving. But generally, the customers start planning, material pile up probably a year before the launch. And as you see some of the Phase III, which has a good readout this year, -- and for next year, they already have a material. So probably calendar year '26, they will be requiring the materials for some of these launches. So that's an example basically on, but every customer has a different philosophy. Some of the customers does the final API in their own site, some of them does with the some CDMO in Europe and the U.S. So their sourcing strategy remains different.

Okay. Okay, helpful. And sir, secondly is on the Oligo side, generally, ADC is the most spoken about space. If you can just help us understand where are we in terms of -- we know the capabilities from a ramp-up perspective, where are we -- is it a 3-year out story for Oligo to play out for us? If you can just give a broad perspective on how to think about all this.

So Oligo is a broader term. Oligo has many components, [indiscernible]. And these are the stages when people go. Our expertise lies in mostly constant -- when you look at the chemistry, [indiscernible] is that we are getting ready for GMP manufacturing of [ amidas, ] which is the first step for Oligo. And that facility should be ready sometime towards the end of this calendar year. And we have already started talking to our customers, the customers who were involved with us in a discovery phase and any development phase and they have a release in GMP scale. So we have already started engaging those customers.

We have the next question from the line of [ Karthi from Suyash Advisors.]

Dr. Prasada, I'm just following up what Chirag asked. It seems that the approvals for one of your clients is coming through reasonably rapidly for additional indications. Where exactly do you stand in terms of capacity availability? And therefore, how soon would you have to think in terms of expansions?

Since Dr. Sudhir has actually explained, I'll add a few more points. The real ramp up, we will get to know once it is at the Phase III level. And the quantities ramp up, we have a visibility for launch preparation and of course, once the launch is happening, then the acceptance of the material and the market once the launch happens, there again ramp-up happens. So we are at the stage where we supply launch quantities then followed by the commercial quantities. It is normally a few quarters of activity, nothing beyond.

Right. So would you want to address the constraint aspect, sir? Would there be a possibility of running into capacity constraint?

On the capacity side, as you understand, when the cyclical nature was slightly hitting us, we don't have any capacity challenge right now. And we have enough investment in the existing site and also an additional site of Suryapet and these molecules are predominantly manufactured in our Pashamylaram. Normally, we have volumes for the commercialization ahead of the commercialization. Hence, we don't seem to have any challenge as far as the capacity is concerned.

Sure. One broader question, sir. If -- now that you are an integrated entity on the ADC platform, you have a linker also through NJ, what is the process involved for transitioning the customer to multiple -- availing of multiple services, assuming he was only availing of one. How exactly can you transition? I'm asking this because there may be an incumbent whom you may have to replace or supplement. So how exactly does that process work? And what are the time lines involved in achieving this? Some indication would be interesting.

There are 2 ways to look at it. Existing customers, normally when they are doing it, they have payload and linker and bioconjugation. Currently, hypothetically, NJ Bio is doing everything. But what they're not able to do here is under GMP manufacturing of the payload, which the synergy comes from outside of Cohance and Suven.

Sure.

Number two, some of our customers where we have on the payload side of it, they also need a linker capability and the bioconjugation capability. It's a solid example of cross-pollination on both the sides. Timing-wise, it all depends. For example, if the product is at early stage, switch happens much faster. If the product is of about IIa/IIB on Phase III level, it's 3 to 6 quarters of time where the qualification has to happen, samples are to be submitted, site has to be submitted. That's where one can look at it.

So for your existing commercial, if you had to plug in the linker part, it's a 3 to 6 quarter kind of a time line. Is that a reasonable thing to take away?

That's right.

[Operator Instructions]. The next question is from the line of Kunal Dhamesha from Macquarie.

Just following up on the last participant's question about the cross-pollination that you mentioned on the linker and bioconjugation side. Do we have a GMP certified facility where we can do it on a much bigger scale for a commercialized molecule? Or can NJ Bio handle the kind of volume at this point? Or are we going to put some CapEx there?

For linker and bioconjugation, it has been upfront captured as a part of our acquisition of NJ Bio. Our aspiration is to create that CapEx in U.S. Second, for making the payload, we already have invested sufficiently and based on the project progress and the business progress, we might extra invest on the payload, where we have enough competencies from USFDA-approved site, we can manufacture from 5 grams to 5-kilo to 50-kilo. That's a linear scale of competencies that are already available. So as such, we don't seem to have any kind of a capacity constraint because we have a clear plan of action to expand the capacities along with the business progress.

Sure, sir. And since there is no plan for capacity expansion as of now, does it mean that the capital expenditure over the next 1 year is expected to come down for us? And if yes, how is -- what's the outlook there? What are we kind of baking in at this point?

So it's very early to comment, Kunal, because this is very exclusively expanding space and if a customer comes in with a large volume product, we might have to commit. So we wanted to be extremely flexible on the capacity expansion. For our few quarters of needs, we don't seem to have any challenge. And for a commercially approved products, for example, we supply 2 payloads to existing approved products. There, in the next 3 to 4 years, we don't seem to have any kind of a challenge, there -- enough created the capacity. For the new products, which we are getting into Phase III and which are getting into commercial, we have to keep calibrating and accordingly commit the CapEx. It's very early for us to commit that we don't want to do anything on the ADC part of it. We want to be open minded.

Sure, sir. And just one on -- more understanding on these latter projects that we're getting. How do you see these projects? Are these kind of supply chain derisking at this point or more like a substitution of existing CDMO with Suven and then what is in your view is driving with a substitution. Obviously, the geopolitical risk, but is it more like substitution? Or is it additional source derisking the supply chain?

You yourselves, you have well answered, Kunal. I'll only add one component which you have not covered, which is if a new acquisition happens by a large pharma to a small biotech company, it is not necessarily that they have to follow the same supply chain. They always look at their own supply chain as a large pharma and we come into play. This is one more reason, along with supply chain derisking and along with the creating alternative approved vendor site. Combination of all these reasons, we are able to see the traction. Not just that, we also have changed the gear in analyzing the pipeline and prospectively talking to the innovators, saying that we have relevant expertise with us, because we also have proven experience of handling more than 1,000 products. And more than 5,000 chemistries that we have handled on scale, that gives a comfort to the customer that we can handle their requirements at a GMP scale. On top of it, we have an experience of handling the projects at commercial scale supplying consistently for the last 2.5 decades from USFDA approved sites. All these things plays an important role.

Sure, sure. One for Himanshu on the increase in the depreciation and amortization this quarter, what is driving this and is this a sustainable run rate that we should look at?

So Kunal, I think the depreciation would also, as I mentioned, that there is a INR 400 crores of PPE, which gets added by virtue of the acquisition. So there is a growth CapEx that comes in by virtue of inorganics. There is an increase in depreciation on account of that INR 400 crores, which I believe is not being factored in from a normal organic CapEx that we added.

So basically, the PPE is coming, but revenue is not because of the last couple of weeks of consolidation. Is that the fair way to understand?

Yes. I mean because NJ Bio is only -- I mean it's hardly there. So it's only 4, 5 days, which is there. So I think once the revenue comes in, then it will kind of flow in from that perspective.

The next question is from the line of Nishant Vass from 361 Asset Management.

Congratulations on the good numbers. Just 2 questions. First, on the ADC side. And I'm obviously not asking you talk about customers, but there has been obviously a paradigm shift change in terms of how FDA has approved one of your -- one of the global customers, ADC as a primary, let's say, primary method of going against some of the breast cancer issues. From an opportunity landscape, do you think this kind of -- if this kind of progress is made on the technology standpoint, this can be a paradigm change in terms of potential addressable opportunity for some of customers which might or might not be -- you might not have it, but from a therapy standpoint that can be a big change. And if the success rate of this is more and much higher on Camptothecin-based payloads, if -- please correct me if I'm wrong, that you guys are one of the best in terms of doing [indiscernible] and SN-38. So effectively with NG and the specialized linker capabilities, shouldn't your success rate with customers potentially who are in different phases in different ADCs go up? And how are you seeing customers -- new customer addition pipeline probably progressing in the next 12, 24 months on this account?

Thank you, Nishant. I'll address the first point. As you rightly mentioned, the latest 2 approvals have happened in the ADC space where the approved products and Camptothecin has become from 13 to 15. Both of them are related with Camptothecin only. One is with one large pharma company. And second one is a bit of a change on the monoclonal antibody side of it. The key lesson for us is Camptothecin-based products are actually moving well. And the product what we have been supplying to the innovator, that the range is becoming a gold standard within the same therapy segment. That's the first key evening. Second, they're also carrying several clinical trials where we are already a qualified supplier for them. From an important point on the second element, what you mentioned, when we compare last year same time to now, the extent of the Camptothecin-based from a topoisomerase standpoint, from a clinical stage, it has actually substantially increased from 25% to 30% to where the payload names are undisclosed, if you can remove that. In the rest, it is 40% of the current pipeline is with Camptothecin-based payloads, where we have a substantial advantage of abilities to manufacture the key fragment of both [indiscernible] and SN-38. Not just that, we have a capability of expanding to designer payloads. That's where we are able to onboard a couple of more customers as well. Combination of these 2 will certainly be of help to us. The third element, which you are trying to mention is as you understand the overall space, earlier, there used to be a lot of research on all 3 segments on the payload, on the linker and the monoclonal antibody and bioconjugation. But what is happening right now is predominant research is happening on the linker and bioconjugation rather than having deeper expertise and deeper research on the payload. Payloads are more or less standardized. Currently, upwards of 70% is constituted by tubulin inhibitors and topoisomerase. That's where NJ Bio plays an important role where they have a solid 500-plus linker database with them, abilities to do the bioconjugation. And from this side, we have a gold standard Camptothecin-based designer payload capability. With all these factors, we strongly feel we will definitely be able to foster the growth through our existing customers and new customers as well.

Perfect. And my second question is, obviously, you seem to be getting strong commercial success in late stage and even Phase III commercial molecules. Some of your peers are not seeing the same success at least on the commercial grid when we kind of have a conversation with others. Like what -- you touched upon in the previous question, but can you delve more into detail as to why is customer coming to you for a Phase III substitution vis-a-vis others? Like what's -- what are you bringing to the table, which is much more different than others who are not seeing the same thing come to them?

Well, I'll add a few points then hand over it to Sudhir as well. First and foremost thing is, as an organization, we have unique proven competency for the last 2.5 decades of supplying these registered starting materials and key starting materials to the innovator companies from GMP capabilities, abilities to do the consistent scale up and supply. Our [indiscernible] have already been more than 98%, 99-plus percentage and customers have actually seen our proven competencies. Number two, because we are present in the value chain of our abilities to supply this consistently on a commercial scale from Phase III to -- our Phase, I, II, III to commercial, along with the patent life cycle, which is not the case with many of the companies that you must be referring to. They are at a very early stage discovery phase, but we have a proven competency of getting into clinical phase travel all the way to the commercial phase. This is the second differentiation that we learned that is actually helping us. Because of some of the latest acquisitions and our proven competency of demonstrating the chemistry on scale for more than 4,000 plus, that is also matching with our competencies and customer able to see that there is nothing called this company has to learn, it is just they have to reproduce what they have done it. These are all the 3 major reasons which are helping us to have more successes on the lateral side of it. I'll also request Sudhir to add, if at all I'm missing something.

I think Nishant, I have covered most of the things. But one thing I would like to add that when we took over this journey from the PS management and our strategy was very clear to go after the customers with a later approach. Of course, it takes time, it's time consuming. So that strategy has paid off. We are seeing some fruits of that. Second, also, our track record of delivery, as Prasada said, the type of chemistry we have done, the delivery what we have done. So the track record, the flexibility, and that's what everybody looks after that, how good you are in terms of solving problems and flexibility. And these things are paying off. I think we are still a long way to go, but I think our strategy of going after big pharmas and going after our laterals that strategy is showing the results.

Nishant, we also wanted to share our excitement to you the last year in full, because our changes have actually started reflecting only in H2 of last year, if the number is X, in 9 months we are almost at 3x level. So you can imagine, as Sudhir has rightly mentioned, what is the conscious effort that we are keeping to ensure that we secure more opportunities.

That's quite clear.

The next question is from the line of Gagan Thareja from ASK Investment Managers.

If I look at the balance sheet that you put in your presentation of Suven and Cohance pro forma. This is an entry forward liability was INR 651 crores. Can you elaborate on that? And also in the intangible assets of INR 745 crores, can you segregate out the goodwill?

Yes. So Gagan, there are -- the forward lability is on account of the liability to acquire the balance equity of both Sapala and NJ Bio. So in the agreement that we have, we have the right to purchase Sapala and as well as for NJ, we have the right to call as well as for the them [indiscernible] option. So that's essentially that leads to our future liability that is there. The PPA purchase price allocation right now at this stage, it is -- it is -- I mean, it is still to be finalized. So these are tentative numbers out here because the law allows us to kind of finalize by the end of the year. However, from where it exists right now, there is I mean these numbers may change, but I'm still giving you that there's around INR 550 crores of goodwill, which is sitting there. And so that's how the goodwill...

On the forward liability, as and when you exercise your rights -- what impact -- I mean, how does the accounting treatment of that happen? And how does it change your balance sheet? And what is the corresponding asset side entry of this one? I'm sorry, I'm unable to understand that -- can you explain that?

Yes. You want to do it over call. I can try to give you a tentative perspective.

Sir, sorry to interrupt. You're not very clear, sir. May I request you to come a little closer to the mic?

I'm actually quite close to the. Okay, is it better now?

Yes, sir, much better.

Himanshu, I have a suggestion, Himanshu. So if you can communicate back to him, might be difficult for us to explain in detail. We noted him. I think his...

We will come back to you, Gagan...

Gagan ji, if it is okay with you, we'll come back to this specific matter, that would be helpful.

[Operator Instructions]. We have the next question from the line of Karthi from Suyash Advisors.

A couple more of questions. One is how do you see the specialty business shaping up? Have you seen sufficient recovery? I mean I saw the numbers, of course. But can you talk about what 2025 calendar looks like? And some color would be helpful. I have one more question, but if you can answer this first.

Even last quarter also, we were actually mentioning this, Karthi. What we learned from our key partner is the recovery is better. And the current quarter, we see that much more stabilization is happening. Next year in full we see that the growth is going to come back to us fully. On top of it, there are a couple of products which are in pipeline and for our partner approval is taking a little longer time. For one product, the approval also has come in. That's what we learned. So all in all, next year is going to be an accelerated growth for ACHEM Specialty Chemical BU.

Interesting. So if that approval comes through, you would have 5 approved molecules, right, which are in commercial stage, in the portfolio. Is that correct, Doctor?

Fourth.

Sorry, I'm sorry, fourth is it. is it. Fourth, fourth. okay. Fine. The other -- if you had to hazard a guess, I don't want to use that word whatever, if you had to visualize. When exactly could Sapala have a commercial molecule? Is there any kind of visibility at all because that would make it even more interesting.

So this business, as Sudhir has rightly mentioned, it is going to take a little longer time because the products as such are at a very nascent stage. But full-scale commercialization, we need to have a GMP facility, which we don't have it today. And we are actually making it ready by financial year -- current calendar itself, which will be fully up and running and we have some customer qualifications coming. Unless we have the GMP facility ready, qualification happens, predominantly it's going to be a development to sale. It is midterm phenomenon, if I have to say. However, there are few opportunities which we have been working. We might end up supplying some of the very basic raw materials to them, yet it can be commercial. So you should allow us for some time to come back with a specific answer. Otherwise, we're working on both. One, a basic chemical you supply it to somebody, somebody makes the product. Finally, it goes to the innovative. You are still a commercial supplier. Number 2, you become the GMP supplier. Second, takes a little longer time, which we feel it is a midterm phenomenon. First should be a short-term phenomena for us. That's how team is focused right now.

[Operator Instructions] 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, sir.

Thank you, everyone, for joining. Thank you, Darwin, and we'll see you on our next earnings call. Thanks a lot, everyone. Have a good night.

Thank you. Thank you, everyone.

Thank you.

Thank you, everyone.

Thank you. On behalf of Suven Pharmaceuticals Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.