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Arrotex, India’s Stelis Biopharma in the race for mRNA facility

Carrie LaFrenzSenior reporter

Sep 27, 2021 – 5.00am

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Arrotex Pharmaceuticals has partnered with India’s Stelis Biopharma in its $500 million pitch to build a technology park in Victoria that can manufacture multiple types of vaccines including mRNA.

According to its expression of interest put to the government and viewed by The Australian Financial Review, Arrotex will lead an international partnership with the Bangalore-based global vaccine specialty manufacturer, which will be an equity investor in the facility capable of producing about 460 million doses of mRNA vaccines and 205 million doses of synthetic protein or viral vector vaccines annually.

Arrotex founder and CEO Dennis Bastas has partnered with India’s Stelis Biopharma in a $500 million plan to build a multi-vaccine facility in Victoria. Louie Douvis

The government received about a dozen bids to manufacture mRNA vaccines in Australia – including from listed players CSL and IDT – all of which expected a decision to have already been made public. The government has also been in direct talks with Moderna about making its vaccine in Australia.

Arrotex founder and chief executive Dennis Bastas is concerned that with the sudden exit of Christian Porter as Minister for Industry, Science and Technology the process could grind to a halt given Energy and Emissions Reduction Minister Angus Taylor has taken the crucial innovation portfolio only on an interim basis.

Mr Bastas told the Financial Review there was little interest since Mr Porter took over the technology portfolio from Karen Andrews, whom he called “active” with the process.

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“Christian Porter took it on and to be honest, there was no engagement, either from his department or from him. So I think all of this fell into a gap at that point,” Mr Bastas said.

“We had no clarity as to what was happening with the submissions.”

Earlier in September Mr Porter said the government was carefully assessing all submissions in the approach to market process and was also continuing discussions with Moderna.

Manufacturing capability

“This will take time to ensure that we secure the best deal for taxpayers and have access to, and seek to develop, the next generation of medicines to fight future disease as well as future pandemics,” he said.

Arrotex is the nation’s largest privately owned pharmaceutical company, providing 25 per cent of all PBS prescriptions dispensed in Australia. Stelis is partially owned by India-listed Strides Pharma Science. Other Stelis investors include TPG Growth. Stelis will bring the initial mRNA manufacturing capability to the partner group.

According to their proposal, the plant will support hundreds of highly skilled jobs and more than 1000 direct and flow-on jobs throughout the construction. It will be established within 12 to 15 months, enhancing Australia’s medical sovereignty and its ability to respond to pandemics and other medical emergencies.

The facility will be made available to all Australian-based researchers, with key foundational members including Professor Nikolai Petrovsky from Flinders University representing Vaxine Pty Ltd, University of Melbourne, Monash University and the Doherty Institute.

These medical research partners will access the facility to undertake trials of new mRNA (and other vaccine and drug) formulations.

Mr Bastas is preparing an initial memorandum of understanding with Professor Petrovsky, who has just started phase-three human trials for his COVID-19 vaccine, COVAX-19 – the first COVID-19 vaccine developed in the southern hemisphere to enter human trials. If approved, Professor Petrovsky will be invited to manufacture his protein vaccine in Australia.

Until there is success with a local vaccine candidate, Australian manufacturers need the government to help broker licence deals to make the Moderna or Pfizer/BioNTech mRNA vaccines since they are the only drug makers in the world that hold the intellectual property.

Mr Porter said they did not want to licence or sub-contract to a local manufacturer.

However, it is understood that Stelis has a strong relationship with Moderna and Pfizer which may help local partner Arrotex in those talks.

Mr Porter previously said discussions with Moderna on establishing its own facility were continuing. The federal government was also looking to companies or collaborations locally that were developing their own or had access to developmental IP and would be capable of completing all the steps in mRNA production.

Public-private partnership

To gain contracts to manufacture other companies’ drugs, Mr Bastas believes the facility needs to be completely independent.

“Our view was to build a facility that was well funded, with terrific infrastructure, but was going to be agnostic as to whose products it produced,” he said.

“The CSL and IDT propositions were much more about them funding their own business interests and maybe identifying and working with select parties in competition to others.”

The funding strategy of Arrotex was structured in a public-private partnership in which the Victorian government would provide $50 million to $100 million and the federal government would provide another $100 million to $150 million.

“Once the enterprise had realised profits from the the export opportunities that would be available from the excess capacity, then those funds would be repaid to the government – to taxpayers – as a percentage of those profits,” Mr Bastas said.