Argent secures deal for Malta manufacturing facility, unlocking US$1m in cost savings

Argent secures deal for Malta manufacturing facility, unlocking US$1 million in cost savings.

Argent will transfer operations of its Malta manufacturing facility, saving significant costs. Pic via Getty Images

• Argent BioPharma enters deals to transfer operations of its Malta manufacturing facility for 49 years with option to sell

• Deal with David Trading has potential to save Argent US$1 million on its operational expenses

• Argent’s CimetrA compound will continue to be manufactured at the Malta facility

 

Special Report: Argent BioPharma has entered a collaboration with another party granting exclusive rights to operate its Malta manufacturing facility for 49 years with a significant cost saving of potentially US$1 million annually on its operational expenses.

Argent BioPharma (ASX:RGT) has entered a binding term sheet with David Trading, establishing a strategic collaboration to operate its manufacturing facility in Malta for a term of 49 years with the option to sell.

Developing cannabinoid-based treatments for difficult central nervous system disorders and immune-related conditions, Argent’s Malta manufacturing facility is a fully automated, EU-GMP-certified plant commissioned in May 2023 specialising in liquid-dose form production.

It is dedicated to the production of Argent’s CimetrA, a compounded, multi-targeted anti-inflammatory and immunomodulatory formulation designed to address severe inflammatory responses.

The facility was strongly supported by the Maltese government through multi-million-dollar grants and has capacity to manufacture thousands of CimetrA units per day.

Substantial costs savings for Argent

Under the deal David Trading will take full managerial and financial responsibility for operating the facility, including managerial decisions, maintenance, staffing, insurance and permit renewals.

Argent said David Trading would continue to provide and support the production of CimetrA at cost plus 25%.

And in some good news for Argent’s bottom line, the deal is set to significantly reduce its costs with up to US$1 million savings annually on its operational expenses.

Argent said further collaboration between the companies was being evaluated to expand production services to include both new internal products and external contract manufacturing partners.

The company said the deal with David Trading aimed to expand production capacity and generate  additional revenue streams, establishing  Malta as a competitive hub for pharmaceutical manufacturing.

Marching ahead with three-month deal

In March, Argent entered an exclusive three-month deal with SK-Pharma CEO Dr Shlomo Sadoun to facilitate a commercial transaction for the Malta facility as a contract manufacturing operations (CMO).

Argent said the aim for the facility was to cater to pharmaceutical companies seeking specialised, cost-effective, and boutique liquid dose manufacturing solutions within the EU.

Sadoun has also served as a corporate advisor to Argent BioPharma, leveraging his expertise in strategic partnerships and pharmaceutical commercialisation.

Under the agreement Sadoun, had three months to introduce a potential  investment, contract manufacturing, or supply and distribution deal for the Malta facility.

Argent said under the latest deal CMO opportunities would continue to flow to the facility under David Trading operations.

Option to buy Malta facility

Argent has confirmed that the proposed disposal of the Malta facility won’t have a material impact on its consolidated total assets, total equity interests, revenue, or earnings before interest, tax, depreciation, and amortisation (EBITDA).

David Trading has also been granted an exclusive, irrevocable option to acquire 100% of the manufacturing facility, pending approval from Maltese authorities and any other necessary regulatory requirements.

Argent said the option is valid for 49 years under the terms of the strategic collaboration.

It can be exercised through a share swap, valued at US$1m for Argent and US$500,000 for David Trading.

The option remains in place regardless of whether David Trading chooses to exercise it or if the required regulatory approvals are obtained.

Argent said both parties are committed to accelerating the approval process for a smooth transfer.

Final terms of the acquisition, including the number of shares to be transferred, will be outlined in a definitive purchase agreement if David Trading decides to exercise the option.

‘Enhancing operational efficiency and profitability’

Argent CEO and managing director Roby Zomer said the strategic collaboration marked a “pivotal step forward” for Argent BioPharma.

“By entrusting the operation of our EU-GMP facility in Malta to David Trading, we are ensuring the continued supply of CimetrA while significantly enhancing operational efficiency and profitability,” he said.

“This partnership not only allows us to streamline costs but also opens the door to expanded production capabilities and new  revenue opportunities.

“We are excited about the possibilities this collaboration presents and look forward to working closely with David Trading to build a robust and scalable manufacturing ecosystem in Malta.”

This article was developed in collaboration with Argent BioPharma, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.