Glenmark Gets Licensing Deal Boost
Glenmark Pharmaceuticals Ltd. stock got a booster Monday after the company said it has agreed to license out development and commercialization rights of a biologic treatment to France’s Sanofi-Aventis S.A.
Shares in the company zoomed up almost 20% to 327.80 rupees ($7.31) – the highest price in a month – before paring some of the gains. In afternoon trade on the Bombay Stock Exchange, Glenmark was up 12% at 306.60 rupees, while the benchmark Sensex was down 0.7%.
This is the sixth such deal that the Indian drug maker has signed in its endeavor to create a new product under a licensing agreement with a foreign pharmaceutical company. The strategy is aimed at helping finance costly and lengthy research.
The difference this time is that Glenmark isn’t licensing out a chemicals-based molecule. It is selling the licenses for an experimental biological drug – complex proteins manufactured in living cells – aimed at treating Crohn’s disease and other conditions such as multiple sclerosis.
Under the deal, Sanofi could potentially pay Glenmark $613 million for the drug, code-named GBR500, achieving certain development, regulatory and commercial milestones, including $50 million as upfront payment.
Glenmark claims that it’s the first Indian company to have successfully sold a license for a biologic treatment.
“It’s the first novel biologic out-licensing deal coming from any Indian company,” Glenmark Chief Executive Glenn Saldanha told reporters in Mumbai Monday.
Macquarie Capital analyst Abhishek Singhal told television news channel CNBC-TV18 that the deal “reinforces the credibility of Glenmark’s innovation pipeline where they have been able to crack an out-licensing deal on a novel biological entity.”
Mr. Singhal said Glenmark is one of Macquarie’s preferred pharmaceutical stock picks. Macquarie has a target price of around 445 rupees on Glenmark, without valuing any upside from the Sanofi deal.
An analyst with a Mumbai-based brokerage said that the deal is positive for Glenmark as it will allay investor concerns over the company’s cash flow issues.
But the analyst, who declined to be named, said he doesn’t expect Glenmark stock to move up further from current levels as Monday’s bounce more than accounts for the upside from the Sanofi deal news.
Glenmark has experienced a turnaround since the fiscal year ended March 31, 2009, when its net profit plunged to 1.93 billion rupees from 6.32 billion rupees as sales fell across markets. Cash flows were further strained when financing costs shot up on loans taken to fund the company’s aggressive global expansion, while milestone payments from drug licensing partners dried up.
Glenmark has since focused on improving its cash flow position by controlling working capital expenditure, deferring non-essential spending and paring debt. At the same time, it has benefited from growth returning to most markets and renewed interest in its drug research and development programs.
The company last week reported net profit of 4.58 billion rupees for the fiscal year through March 2011. It added that this number conformed to International Financial Reporting Standards and may not be comparable with the previous fiscal year.
Mr. Saldanha told reporters Monday that the company will use the $50 million received upfront from Sanofi to repay part of its debt, which he said currently stands at about 19 billion rupees ($423 million).
Dennis Fenton, Ph.D. to Join Board of Napo Pharmaceuticals, Inc.
Napo Pharmaceuticals, Inc. (Napo) which focuses on the development and commercialization of proprietary pharmaceuticals for the global marketplace in collaboration with local partners, is pleased to announce the appointment of Dr. Dennis M. Fenton, Ph.D., to the Napo Board of Directors. Dr. Fenton has over thirty years of pharmaceutical and biotechnology experience including over 25 years at Amgen, Inc. where he coordinated the design, construction and expansion of manufacturing facilities for Epogen(R) (epoetin alfa) and Neupogen(R) (filgrastim), two of the premier products in the biotechnology industry. Dr. Fenton served in numerous positions at Amgen including executive roles in process development, manufacturing, sales and marketing and research and development, with his last position being Executive Vice President.
Dr. Fenton is a director of life science companies including Xenoport, Inc., Amira Pharmaceuticals, Inc., Genelux Corporation and Kythera Biopharmaceuticals. He is a Director/Trustee at Rutgers University and a Trustee of the Keck Graduate Institute, and the Biotechnology Institute.
Dr. Fenton holds 5 US patents in microbiology and has published over 50 papers and abstracts. Dr. Fenton has a B.S. in Biology from Manhattan College and a Ph.D. in Microbiology from Rutgers University.
“We are extremely pleased to announce the addition of Dr. Fenton to our Board of Directors. His expertise in manufacturing and the pharmaceutical industry in general is a very timely addition to Napo’s Board of Directors. Importantly, Dennis also shares our vision and goal of providing access to crofelemer to global populations,” said Lisa A. Conte, CEO of Napo Pharmaceuticals, Inc.
“I am thrilled to be joining the Board of Napo Pharmaceuticals, Inc. I think Napo has a great opportunity and I look forward to drawing on my experience in manufacturing and operations to help Napo continue its progress,” said Dr. Fenton.
About Napo Pharmaceuticals, Inc.
Napo Pharmaceuticals, Inc. focuses on the development and commercialization of proprietary pharmaceuticals for the global marketplace in collaboration with local partners. The company seeks partners in both traditional high-value markets as well as in the higher volume business models of emerging and developing economies. Napo was founded in November 2001 and is based in San Francisco, Calif., with a subsidiary in Mumbai, India.
Napo’s proprietary patented gastrointestinal compound, crofelemer, is a first-in-class anti-secretory agent extracted from Croton lechleri, a medicinal plant sustainably harvested under fair trade working conditions from South America. Crofelemer is in various stages of clinical development for four distinct indications:
1. Crofelemer for HIV-related diarrhea (CRO-HIV), completed Phase 3; highly significant data recently released, NDA filing targeted for mid-2011.
2. Crofelemer for diarrhea predominant irritable bowel syndrome (CRO-IBS), Phase 2
Teva buys Japanese drugmaker for $460m
Teva of Israel took a leap towards its ambition of becoming Japan’s largest generic drugs group with the purchase of the majority of Taiyo Pharmaceutical Industry for $460m.
The cash payment, for 57 per cent of the privately held company, gives it control of Japan’s third-largest generic drugs provider, even ahead of extending its offer to all other shareholders.
The deal marks the latest international step for Teva, already the world’s largest generic drugs group which recently acquired Cephalon in the US.
It indicates fresh interest in Japan, the second-largest market for pharmaceuticals and one where government policy is encouraging generic expansion to tackle the rising cost of medicines for its ageing population.
The latest deal gives Taiyo an enterprise value of $1.3bn, and Teva said the transaction was expected to be accretive to GAAP earnings within four quarters after closing.
Taiyo, which has a portfolio of over 550 drugs with a particular strength in hospital-prescribed injectables, reported sales of $530m last year.
Shlomo Yanai, Teva’s president and chief executive, said: “This acquisition will enable Teva to deliver on our strategic objective of becoming a leading player in the fast-growing Japanese generics market.”
He said the company now expected to reach a 2015 target of $1bn in sales in Japan ahead of schedule.
Low-cost, off-patent generics have traditionally struggled to gain a strong foothold in Japan with a penetration of just 23 per cent, reflecting the marketing strength of innovative companies and suspicions over the quality of generic drugs, a sector dominated by smaller businesses.
Larger groups are investing in the market, including Daiichi Sankyo which acquired Ranbaxy, of India. The Japanese government aims to expand the penetration rate domestically to 30 per cent initially by 2012.
The transaction will be funded through a combination of cash and bank debt.