Aspen Shares Plunge After Surprise R770 Million Dispute Over mRNA Contract

Shares in Aspen Pharmacare took a dramatic nosedive on Wednesday, dropping by as much as 35% — the biggest intraday fall since March 2019 — after the pharmaceutical giant revealed a surprise contractual dispute that could result in a R770 million financial charge.

The issue, tied to a manufacturing and technology agreement with a client producing mRNA-based products, caught both markets and Aspen’s top leadership off guard.

“It really did come from left field,” said CEO Stephen Saad during a call with investors. “Management wasn’t aware of the dispute until just a few weeks back.”

By 1:30 p.m. in Johannesburg, Aspen’s stock had tumbled to R111.59, a 31% decline, as investors reacted to news that could significantly affect the company’s bottom line and long-term strategy.

Dispute Centers on Aspen’s French Facility

The dispute involves Aspen’s production facility in France, which was a cornerstone of its expansion into advanced biologics, including mRNA vaccines. Saad noted the contract was structured under take-or-pay terms, meaning financial exposure remains even without product uptake.

“This development is clearly a significant disappointment,” Saad said, “exacerbated by the loss of the value of our investment we have made to access the mRNA technology.”

The company is also facing the potential loss of intellectual property access to the mRNA platform—one of the deal’s most strategic elements, according to Group CFO Sean Capazorio.

Aspen’s Plan B: Shift to Obesity and Diabetes Drugs

Despite the setback, Aspen is not giving up on the facility. It has already redirected some of its available 120 million-unit capacity towards manufacturing GLP-1 drugs used to treat obesity and diabetes—two of the pharmaceutical industry’s fastest-growing markets.

“We’re talking to third parties about using the site,” Saad added. “A few new contracts at the facility can have a material impact on group profitability.”

Still, no new deals have been finalized, and timing remains uncertain.

Investor Sentiment Turns Sour

JPMorgan Chase & Co. was quick to react, downgrading Aspen’s rating to underweight from overweight and cutting the target price to R128. The bank also slashed its earnings forecast for 2026 by 20%, citing reduced confidence in Aspen’s near-term earnings potential.

Absa analyst Rendani Magalela warned that further consensus downgrades could follow if no swift resolution is reached.

Despite the negative headlines, Saad sought to reassure stakeholders:

“Aspen’s foundations are all intact and opportunities remain, although not immediate. While recent geopolitical turbulence like US tariffs and aid cuts has disrupted things, it’s also prompted much-needed urgency from some of our partners.”

Aspen’s unexpected mRNA contract fallout has raised red flags among investors and analysts. The pharma giant now faces a race to repurpose its French facility and restore confidence in its long-term strategic vision.

{Source: Daily Investor}

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