Ladies and gentlemen, good day and welcome to the Q2 and FY 2025 Earnings Conference Call of Gufic Biosciences Limited. As a reminder, all participants will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Ami Shah, Company Secretary. Thank you, and over to you, ma'am.
Thank you, Faisal. Good evening, everyone. I welcome you all to Gufic Biosciences Limited Earnings Conference Call for the Q2 of financial year 2024/2025. We have with us today Mr. Pranav Choksi, CEO and Director; Mr. Devkinandan Roonghta, CFO; and Mr. Avik Das from the Investor Relations team, to give the highlights of the business and financial performance of the company and to take questions, if any. Before we begin, I would like to state that some of the statements that will be made in today's discussion may be forward-looking in nature.
They are subject to inherent risks and uncertainties, and the actual results could materially differ. The company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information or future events or otherwise. We will now begin the call with the opening remarks from Mr. Avik, followed by a financial overview from Mr. Roonghta. Thereafter, we'll have the forum open for the interactive Q&A sessions. Over to you, Avik. Thank you.
Thank you, Ami, and welcome everyone to our quarterly conference call. I will quickly update all of you all on our strategic business units, and I'll begin with the Indore facility. The commissioning of the Indore facility marks a transformative milestone for us. The immediate focus for this facility is a carefully calibrated strategy where we aim to ramp up the production in a phased manner. In this approach, we try and balance operational readiness with our long-term objectives and ensuring efficiency, regulatory alignment, and most importantly, quick market responsiveness. In the short term, the strategy centers on transferring select high-demand products from an outside facility to Indore. By moving these products, we aim to optimize production capacity while maintaining seamless supply chain operations.
The process will involve rigorous validation protocols to ensure that the high standards of quality and consistency that we are known for are preserved. This targeted transition will allow an outside facility to focus on backlog export orders while leveraging Indore's capacity to scale production progressively. Simultaneously, we will...
Mr. Avik? We are not able to hear you. Mr. Avik?
I think, as you can see, he might be in Indore e n route, there might be an issue. So, what we can do, we can go to Roonghta, sir, and then let Avik join back once he gets connected again.
Sure, sir.
I will just highlight the financial results for Q2 of 2024/2025 versus Q2 of 2023/2024. The total revenue for the current quarter of Q2 is INR 204.2 crore. Last year, Q2, it was INR 214.9 crore. The EBITDA for the current quarter of Q2 is INR 38.7 crore. Last year, it was INR 39.7 crore. The EBITDA margin for Q2 of the current year is 18.9%. The previous quarter Q2 was 18.47%. Profit before tax for Q2 of this quarter is INR 29.3 crore. The previous year Q2 was INR 30.9 crore. The PAT margin for Q2 of the current financial year is 14.13%. Last year, Q2, it was 14.38%. Profit after tax for the current Q2 is INR 21.8 crore. Previously, it was INR 23.2 crore. PAT margin for the current Q2 is 10.68%. Last year, it was 10.80%. Now, I will highlight the six-monthly result of 2024/2025 versus 2023/2024.
The total revenue for the current half-yearly is INR 407 crore. The previous half-yearly, it was INR 409.9 crore. The EBITDA for the current half-year is INR 79.8 crore. Last year, it was INR 76.1 crore. The EBITDA margin for the current half-year is 18.62%. Last year, it was 18.57%. The profit before tax for the current half-year is INR 57.4 crore. Last year, it was INR 59 crore. PBT margin, profit before tax margin for the current half-year is 14.10%. Last year, it was 14.39%. Profit after tax for the current half-year is INR 42.6 crore. Last year, it was INR 43.8 crore. The PAT margin for the current is 10.44%. Last year, it was 10.69%. Thank you.
Should we begin the question-and-answer session?
Avik has joined. Earlier, he joined. He had some network issues. Avik, can you continue with the business details?
I'll do that. I'll restart by giving you all an update on the Indore facility. What I was touching upon is our short-term strategy and the long-term strategy. I'll first begin. I hope I'm audible now. Can someone confirm that?
Yes, sir, you're audible.
Thank you so much. So, our short-term strategy for the Indore facility will be centered around transferring some of our high-demand products from outside. By moving these products, we aim to optimize the production capacity while maintaining seamless supply chain for these products. The process will involve rigorous validation protocols to ensure that we are able to sustain and maintain our high standards, which we are very well known for. Now, this targeted transition will allow the outside facility to focus on backlog export orders while leveraging Indore's capacity to scale production progressively. Simultaneously, we will initiate audits of the Indore facility by our domestic contract manufacturing partners. These audits are intended to validate that the Indore plant adheres to the stringent quality standards required for manufacturing their products for the domestic market.
Over the next two to three months, these audits will be undertaken, followed by a phased initiation of production for these partners. This collaborative approach will not only position the Indore facility as a trusted manufacturing hub for complex injectables for our partners, but also facilitate a gradual scale-up of the operations. Now, as you all know, a critical pillar of our long-term strategy is leveraging the Indore facility to gain a foothold in the regulated markets. The facility's advanced infrastructure positions us as a very competitive player, capable of meeting the stringent requirements of most of the regulatory bodies.
We've shortlisted high-potential molecules that align with the market opportunities in these regulated markets, and we're in the process of finalizing collaborations with partners to facilitate registrations. The production of exhibit batches for these molecules will commence shortly, laying the groundwork for regulatory dossier submissions and future approvals. This phased approach to scaling production offers heavy risks by allowing the facility to gradually ramp up....
Ma'am, we lost Avik, sir, again.
Okay, so I think we'll wait for a minute and then go to it.
Avik, sir, is back, ma'am. Sir, please continue.
Right, so I was saying that the phased approach to scaling production will offer several advantages. It minimizes operational risks by allowing the facility to gradually ramp up capacity while addressing potential challenges during the transition. Additionally, focusing on exhibit batch production and regulatory preparation ensures that the Indore facility is well-positioned to meet the expectation of international markets, which will be the way ahead for our long-term growth. The gradual scaling also optimizes resource allocation, ensuring that our investment in manpower, infrastructure, and materials are used effectively in the short term. The Indore facility's strategic role extends beyond its immediate operational goal, which represents a key component of our vision to establish ourselves as a leading player in both domestic and international markets.
By balancing the need to ramp up production immediately with our long-term objectives of regulatory alignment and market expansion, we are hoping to set a robust foundation for sustained growth and meaningful market impact not only domestically but also in select international markets. Now, I'll quickly update you all on all our business divisions. To begin with, in the Critical Care division, this remains the backbone of our operations: supplying lifesaving injectable solutions to hospitals across India. With a strong focus on addressing critical challenges in antifungal and antibacterial therapy, this division has further made it a priority to combat sepsis, which is one of the leading causes of hospital mortality. We've done a lot of product development.
We've relaunched one of our products, especially targeting towards sepsis, and we've definitely taken it as a cause that we are rallying around to control the rise of sepsis in hospitals. For this, we've engaged more than 3,000 healthcare professionals through more than 100 scientific activities nationwide, raising awareness about sepsis management and, moreover, the judicious use of antimicrobials. These initiatives will aim to equip clinicians with tools and knowledge for early detection and effective intervention. This reinforces our commitment to improving patient outcomes and working with hospitals more as a partner than only a supplier.
On the product front, we are expanding our pipeline with innovative molecules in advanced antibacterial and antifungal classes. These products are uniquely positioned to address therapeutic gaps while offering complex manufacturing processes at very competitive prices. By aligning scientific education with cutting-edge product development, Critical Care is not just providing solutions.
We believe we are shaping the future of cost-effective hospital-based care. We've also given a brief of the kind of pipeline we have in this division in our investor presentation. Now, coming to the Ferticare division, Ferticare is addressing the rapidly growing need for assisted reproductive technologies in India. While infertility rates are rising at an unprecedented pace, we are committed to being a comprehensive solution provider in this domain, for which we are expanding our pipeline of products towards recombinant hormonal products such as rFSH and rHCG. Additionally, we are also introducing very differentiated products like niacinamide-based vaginal gels and Coenzyme Q10 supplements to support the reproductive health holistically. The division recently also launched 30MAX, a specialized task force focused on deepening engagement with gynecologists and IVF centers. It offers a very niche and specialized hormonal product offering.
These initiatives have already begun driving market penetration and further strengthening our relationships with leading IVF chains, IVF centers, and boutique practitioners across the nation. Coming to Aesthaderm, Aesthaderm is at the forefront of creating a category for aesthetic dermatology in India. Stunnox, our flagship botulinum toxin brand, aims to democratize the access to aesthetic treatments and expand the user base among dermatologists and cosmetologists. Stunnox has become the second most used botulinum toxin in India, with acceptance driven by its quality and performance. And over the past six months, we've trained nearly 300 doctors through specialized workshops and onboarded several trainers to conduct knowledge vaccination nationwide.
These efforts, combined with clinical studies on new indications such as hyperhidrosis, are building confidence among practitioners. Additionally, we are expanding our cosmetic portfolio to include solutions for concerns like melasma, wrinkles, and dry skin. This comprehensive approach should position us as an early mover in the fast-growing aesthetic dermatology space, which is poised for growth as awareness increases, incomes rise, and the population ages gradually. Now, on the neuro care division, the focus over here is on the therapeutic application of botulinum toxin, which is addressing an unmet need in conditions like spasticity and chronic migraines, to name a few. Zarbot is India's first botulinum toxin Type A of international pedigree. It has gained acceptance with more than 100 neurologists within a year of its launch.
Here, we are doing targeted scientific activities and interacting with user groups. We're creating a robust ecosystem of knowledge sharing and best practices. This should position Gufic as a pioneer in therapeutic botulinum toxin applications, and we're also offering hope to patients with very complex neurological conditions.
Now, coming to the Sparsh division, the Sparsh division is designed to serve a broader spectrum within the injectable market, a wide basket of essential and specialized injectables for smaller and mid-sized hospitals across India. Now, unlike Gufic's critical care division, which targets high-intensity critical care needs, Sparsh provides cost-effective solutions to cater to the day-to-day therapeutic requirements for smaller hospitals and nursing homes. These include essential treatments for gastroenterology, nephrology, radiology, and even critical imaging support. We have some niche products in our basket over here, such as S-Pantoprazole, which is a unique alternative to the widely used pantoprazole. We are also soon to tap.
Ma'am, we are getting.
Model is...
Yes, sir, please continue.
Yeah. So, Sparsh is a direct-to-hospital approach that enables deeper engagement with hospitals. It provides us visibility into their purchasing trends and their therapeutic requirements. This strategic advantage allows us to identify emerging needs quickly, and it also allows us to introduce relevant products, which effectively expands our portfolio and deepens our relationship with our hospital partners. Now, one of the short-term challenges of this approach is an increase in the debt levers due to the direct credit to hospitals. However, the long-term benefits significantly outweigh the downsides, in our opinion. By fostering direct relationships with hospitals, especially in India's growing healthcare infrastructure space, Sparsh will position itself as a reliable partner in their journey.
This model not only builds loyalty and trust but also offers the ability to scale the product portfolio strategically. That should ensure comprehensive coverage of hospital needs as they grow. Additionally, Sparsh's wide therapeutic coverage, from dual-chamber bags to niche products like contrast media soon, should position it to capture a significant share of the hospital budgets, and this approach aligns with our vision of becoming an indispensable partner for hospitals, offering both value and convenience. Now, in Spark, Stellar, and Healthcare division, these divisions continue to drive growth through innovative product launches and strategic initiatives in their domains. Stellar's recent introduction of Vanza, which is a novel PPI, has gained significant traction, reflecting our ability to capture market opportunities in niche segments.
Spark's patented stretch mark meter is revolutionizing how gynecologists approach stretch mark prevention, boosting our brand StretchNil, and Healthcare division, with its Sallaki range, has achieved top market rankings, cementing its leadership in orthopedic and pain management. Now, on the International business front, our International business division is seeing growth driven by our strategy of investing in regulated market registrations. We very recently received approvals in Thailand, Sri Lanka, Lithuania, and we also won a tender with U.K. NHS. By owning registrations, we enhance market visibility, ensure supply chain stability, and gain better control over tender participation. This strategy positions us as a reliable global player with plans to scale production at the Indore facility to support further international expansions. With this, I'll open the call up for questions. Yeah, thank you.
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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, you may press star and one to ask a question. A reminder to all the participants, you may press star and one to ask a question. Ladies and gentlemen, you may press star and one to ask a question. The first question is from the line of Bhavya from Samaasa Capital. Please go ahead.
Yeah, thank you for the opportunity. Hope I'm audible.
Yes, sir, you are.
Yeah. So just had two questions. My first question is, I wanted to understand, has there been loss of revenue because of the transfer from Navsari to Indore?
Hi, Bhavya, Pranav here. So there has been no loss of revenue as such during the transfer process. There has been a loss of revenue in the quarter because Indore started in October, October 3rd, to be precise. So that's why the capacity, which was not available at Navsari, could not be met by Indore in the last quarter because the production started in the first week of October. So that is the thing. Also, during the transfer, there will be three batch validations for the batch size. Have been kept in such a manner that the orders do not get lost. Whatever validation samples have to be removed, those will be kept on the side. So there will be no loss in the transition process.
Okay, understood, and my second question, I think in the presentation, you had mentioned that the board took a decision to do further USFDA documentation. So just want to understand, what percentage of this procedure have we already completed in terms of documentation? If that's possible to answer.
Yeah, so what we mean by that statement, that if you see a year ago in October, the facility was ready for commissioning, subject to limited tests. So at that time, when we had some external audits done by, I would say, experts from the pharma industry and ex-regulatory chiefs or ex-regulatory inspectors, they gave us a lot of suggestions about improvement and certain process parameters and certain utility parameters. I'll just give us a few examples. Electricity, steam, and what do you call electricity steam primarily, and then water. These are the main three factors which come in the injection pack. We are normally based on the background, what we have, and details what we have. We had started the designing in 2021.
EU Annex 1 had come up, and now also U.S. guidelines will be changing in the next two years as per what the draft copy is available online for everyone to see. There are certain modifications which we needed to be done to ensure that we comply with this not only now, but in the years to come. Assuming there will be no further guideline change in the next two to three years, to incorporate that, if we started the production, it would be a little bit difficult for us to revalidate the entire process using the new guidelines. Hence, we took it on ourselves to spend those six, eight months, finish those modifications and requalifications and answering your question, as of now, all those things have been done, and hence, on October 3rd, 2024, we have started the production from the Indore facility.
Okay, understood. Just a clarification, I think Avik mentioned that whichever high-demand products that we had, and that's being shifted to Indore. So did we need any approval for this? And going ahead, what is the timeline and procedure for EU GMP and all the other, just to start up a CDMO and also International?
Yeah, so I'll answer your first question. So the FDA license of most of the products as tech transfer already has been taken in the last, I would say, eight to nine months as the side-by-side qualification studies were going on because of the R&D data and the tech transfer data which we have from Indore. Plus, we had taken some batches, like I said. That's the reason we got delayed in terms of commercial production. So all the molecules licensed are in place. The EU, I mean, let's say the first thing for a CMO or a CDMO option, we have audits which started all the way in May, June, July, and audits are ongoing. Even today, as we speak, as Avik is there in Indore, is there where we have another big Indian MNC also getting the audit done. Plus, we have a visitor from Saudi Arabia also.
So all the audits are in place right now going on. We assume that Gufic's own manufacturing will happen October onwards. We foresee that the CMO, CDMO business will be initiated in November and December to start off with, and then go on so on, and then go on. We are hoping that the EU audit will be triggered. I mean, we already have triggered the EU audit with two molecules, and we're hoping that they would come and visit us by around June-September 2024 based on their dates. We should have an EU, I would say, approval hopefully before the end of next year. That is 2025. Coming to the U.S., like I said, our focus is purely CMO, CDMO based.
That would be depending on our clients in terms of their investments and their timelines for validation batches. So even if we take the validation batches from the next month till March, when they will trigger it will be depending on their regulatory department's thing. But we are looking at a calendar year of 2026 where we see some action in the USFDA front.
Okay, understood. So is it fair to assume there wouldn't be much of a revenue contribution from Indore, at least for this year?
Yeah, bare minimum would be because, like I said, validation batches would still contribute something. Yes, but the real potential of the Indore facility would be seen in the next two to three years. Yes.
Okay, thank you so much. That was helpful. Thank you.
Yeah.
Thank you.
Yes, thank you.
The next question is from the line of Mithun James from Kuber India Investments . Please go ahead.
Hi, thanks for the opportunity. Am I audible?
Yes, sir.
Yeah, so I think the big elephant in the room is Indore. So I think even in the last con call also, we had given a projection of Indore starting operations and contributing to the revenue from the current quarter, which we have not seen happen. So my first question is, when do you see Indore contributing to some revenue? Is it from the current quarter, the running quarter, or from the next quarter? When can we see some revenues from Indore happening? Because without that, the overall revenues is stagnant for almost 4/5Qs .
Yeah, so answering your first question, the revenue would be captured from Indore from this quarter itself. And already, like I said, from October 3rd, the manufacturing has started. So the revenues of Indore would be seen in the books financially from 2024 December quarter. Answering your second question, yes, if you see last year, there were multiple factors. Apart from the capacity constraints which we have, there were also around 20% of our revenue is contributed by around six to eight molecules. Now, the six to eight molecules, what we had in the last three, four years, they actually got eroded by almost 35%-50% in terms of API pricing in the last one year from China. And that's why what you see right now also, there has been a unit increase in terms of these 20% of our revenue. But yes, you're absolutely right.
They are not reflecting in the value, again, because of the reason mentioned above, because the erosion of the API and that goes through. At the same time, yes, the capacity constraint would be the reason, the primary reason why the flat revenue is there. However, with Indore, convenience is not actually, I would say Indore is not only the elephant in the room. There has to be other things like the botulinum toxin and the Penems and other things also start kicking in. We were a little bit more guarded in terms of our revenues in this first, Q2. Reason being also the data cycle, we did not want to push out. So one of the reasons that we were a little bit more, I would say, conservative, and we'll continue to do so going forward without affecting the revenue or the profitability point of it.
There's something in certain institutions in India. We have taken a strategic role because if you also see other companies in our same sector, the data window has almost blown up by almost 35-45 days extra than what was the normal norm. That is something which we are taking up and to ensure that not go through that level of credit. I would say, credit spread out at the cost of revenue. So that's the reason it's there. But yes, Indore definitely plays a big role apart from other factors.
Okay, got it. My next question is regarding the botulinum toxin product. So recently, I think there was a filing wherein which there seems to be some arrangement between Dr. Balram Singh's entity. I think he has moved out from the board. So can you give some more clarity on what has happened on that regard? And how did it impact you as a company?
Dr. Balram Singh was a Board of Director of Gufic Biosciences. You must have also read in the news that we formed a separate subsidiary where Gufic and Prime Bio, that is Dr. Balram Singh's entity, came together to form a subsidiary of Gufic Biosciences. In order to make the Board a little bit more clean and in terms of governance, since he was also the board of director of Gufic Prime Bio, which is a subsidiary of Gufic Biosciences, we had asked him to resign from the board of Gufic Biosciences and attend and become like a little bit more aggressive board of Gufic Prime Bio. The relationship and the entire arrangement doesn't change. It's just to keep the because apart from botulinum toxin, there are some other projects which we are working on.
And for that matter, we are looking at some movements happening in that sector in the next three to six months, which we will announce in due time. So for us to make a separate clean entity for the projects which we are doing overall with Dr. Balram Singh made sense. And hence, he's still full-fledged with us. But he's just right now on the board of Gufic Prime Bio, which is a subsidiary of Gufic Biosciences. So that is just the change that we have done.
Okay, so meaning there is no difference in basically the working arrangement. It's just okay, I understood the point. And last next question is regarding the Selvax. Can you give some color on where are we on Selvax? What is the research going on in that front, please?
Right, so I think Selvax, firstly, just for people who might not be aware, was an investment which we had done in the oncology space. I think to be more precise, immuno-oncology space, which is a very interesting mechanism in terms of treating certain solid tumors where it's a combination of anti-CD40 antibodies and interleukins come together, and the results in, I would say, canines, that is dogs, and also another animal species has been very, I would say, promising. Currently, if you see the update as Avik has also, I mean, I would say in our presentation, in the company presentation we have given them, there have been some additional studies which have been done, which further, I would say, clarify that the product has some significant role. However, this is on a very small scale, where the dose determination studies are still pending.
We are clear that Selvax is sort of, I would say, a five-year, six-year window. However, it provides a very unmet need in terms of treating certain solid tumors. Just to summarize the entire development as of today, in the last two quarters, there have been some additional studies done on mouse which have shown positive results. Now, the main question was the scalability. The initiation of the scalability of these studies has been done where, like I think if you read the I'm just reading out a line from that expert that out of 24 animals, around 92% have the cure rate of 92% was achieved, which is something unheard of in oncology. However, like I said, I would not like to put our hopes very high.
I think, no, I have my hopes very high, but just let the data come out on a little bit single-page large study, then I think I can comment on that further. And we also have now, I mean, the company, Selvax, has started working on the cell line in terms of the scalability in terms of the production on a big scale. So the expression was done on a small scale and a lab scale. Now, the expression of the same vector of the anti-CD40 antibodies will be done on a bigger scale to see whether this technology can be actually scaled and show relevance over making it in commercial production scale. This is where the current update is of Selvax.
Okay, thank you. That's all from my side. Thanks.
Thank you. A reminder to all the participants, you may press star and one to ask a question. As there are no further questions from the participants, I would now like to hand the conference over to Ms. Amisha, Company Secretary. Thank you. And over to you, ma'am.
Thank you. Thank you, everyone. We apologize for the internet connectivity issue. I appreciate all of you joining us today, and if you have any questions which have remained unanswered, you can get back to our investor relations team, and we'll be happy to take those separately. With that, we conclude today's call. Thank you.
On behalf of Gufic Biosciences Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.