- US government to invest $75 million in new facility
- Company forecasts $200 million of sales by 2025
- Lipids vital for next-generation vaccines
Shares in specialty-chemical company Croda International (CRDA) moved higher following the announcement it had signed a deal with the American government to support the expansion of a new lipid manufacturing facility in Pennsylvania.
The US government will provide $75 million in funding while Croda will invest up to $58 million.
Construction of the new plant will start later this year, with operations expected to begin in 2025.
On completion, Croda will have three lipid production sites including its Alabama and UK facilities.
THE LIPID OPPORTUNITY
Only a handful of companies worldwide are capable of producing custom lipids (molecules which contain hydrocarbons that make up the building blocks of the structure and function of living cells) in significant quantities and which conform to the high-quality requirements needed for vaccine production.
There are currently over 200 lipid products in Phase 1, 2 or 3 clinical trials, the majority of which relate to oncology drugs.
The pipeline of mRNA therapeutics in clinical trial covers a wide number of indications including Alzheimer’s disease, Parkinson’s disease, cystic fibrosis and diabetes.
Croda has relationships with over two-thirds of the companies developing mRNA treatments.
Given the scale of the current clinical development pipeline, the market for lipid systems is expected to grow significantly over the next ten years.
At its full year results presentation in March, management restated their goal of $200m polar lipid sales by 2025.
Commenting on the new facility Daniele Piergentili, president of Croda Life Sciences, said: ‘The delivery technology based on lipid systems offers significant potential for the safe and efficient delivery of next generation vaccines and therapeutic drugs.
‘As a result of this investment, Croda will be able to expand its capabilities to develop and manufacture ingredients in support of this important technology.’
Shares in Croda have fallen by 37% over the last six months and according to estimates from broker Berenberg the stock is trading on a prospective 2023 price to earnings multiple of 25x.
The firm is due to post a further update along with its half-year results at the end of July.
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