CHENNAI: Orchid Chemicals and Pharmaceuticals (Orchid) has decided to consolidate all research activities in the area of new drug discovery under the recently floated Orchid Research Laboratories.

As part of this exercise, it has decided to buy out the overseas stakeholders in the American joint venture, Bexel Pharmaceuticals.

Bexel has been focusing on drug discovery research in metabolic diseases (such as diabetes, obesity and auto-immune diseases). Orchid Research has been focusing on inflammation, cancer and anti-infective areas.

The share buy-out move in the joint venture, it is felt, would help to integrate the several drug discovery programmes being pursued independently at Orchid and Bexel. At the same time, it would also retain the advantages of having a discovery front-end in the U.S. and a discovery-cum-developmental back-end at Orchid in Chennai.

The buy-out arrangement with the American joint venture will see Orchid acquiring the foreign stake in Bexel Pharmaceuticals from the overseas partners for a cash consideration of $3 million. Orchid is currently holding 74 per cent in the partnership.

According to a release from Orchid, founders and key employees of Bexel will be granted 6.50 lakh stock options as per standard Orchid ESOP (employee stock option plan) guidelines. They would subscribe to the stock option at the `grant price'.

In an independent arrangement, Bexel would provide an earn-out to the principal founders of Bexel in the event of an out-licensing deal for BLX-1002 materialising in a prescribed timeframe based on the Phase II of the planned clinical trials. The managerial and scientific organisation of Bexel would continue as an integral part of the new structure, said the release.

Sources said the consolidation exercise was also aimed at creating value for Orchid Research as an independent entity and ensuring better funding possibilities.

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