Cash from out-licensing GBR 830 will be used for repayment of debt: Glenmark

Glenmark Pharma has announced positive data from a phase 2a study of the molecule GBR 830, which was being studied for moderate-to-severe atopic dermatitis. In an interview to CNBC-TV18, Glenn Saldanha, CMD of the company spoke at length about the molecule.

GBR 830 is a novel biologic and a significant drug for the company, said Saldanha.

He further said that completion of phase 2a clinical trial of GBR 830 is an exciting opportunity.

"This data provides great opportunity for us to partner this molecule and from now we will start getting active in trying to close an out-licensing deal," Saldanha added.

According to him, Glenmark will get significant upfront payment for licensing deal.

Cash from out-licensing GBR 830 will be used for repayment of debt, said Saldanha.

Below is the verbatim transcript of the interview:

Latha: Can you tell us what this data means and whether we should expect some licensing opportunities pretty quickly?

A: GBR 830 is a novel biologic. It's an OX40 antagonist. It is very unique because we are the only company currently that has an OX40 antagonist and clinical development. This drug has a broad array of applications across various indications. So atopic dermatitis is one of them but we think it will also work in other indications like lupus SLE - systemic lupus erythematosus (known simply as lupus), graft versus host, rheumatoid arthritis. I think it is a big drug and the fact that we have got a positive proof of concept validates a completely novel target in developments. So I think it's an exciting opportunity.

Anuj: Could you tell us the market size and what kind of revenues do you target from this?

A: Atopic dermatitis itself is estimated at being USD 8-9 billion market and there is one drug which is recently launched which is Sanofi India's dupilumab or Dupixent which is already trending at being a multibillion dollar drug. So there are several others in development but OX40 being a novel target for atopic dermatitis and 830 not having any significant side effects, we think it could be a blockbuster.

Ekta: In the conference call you had indicated there are seven companies which are interested with regards to GBR 830. Is that correct?

A: Being such an exciting target and we being the only guys in clinical development, makes it a very interesting molecule. So there is a lot of interest from multiple companies to look at this opportunity.

Ekta: When according to you, you think that you can probably close an out-licensing deal for GBR 830. Could it be by the end of this fiscal, could it be by the next couple of weeks considering all of the companies were waiting for this phase 2a data?

A: This data provides great opportunity for us to partner this molecule and from now we will start getting very active in trying to close an out-licensing deal. And also the goal of bringing on a partner on board quickly is to get the partner to also explore some of the other indications like lupus, graft versus host, rheumatoid arthritis in addition to atopic dermatitis. So a licensing deal should happen pretty quickly.

Latha: How will this work. Will it work in terms of milestones over a period? How long a period? I am just trying to assess profit and loss (P&L) impact?

A: Any licensing deal, we will get a significant upfront payment and then we will continue to get milestones as the drug progresses. This time around we want to be much more involved in the development of atopic dermatitis indication, so we are looking at more of a core development partnership. However, we will license exclusively some of the other indications to a potential partner. I think the structure will be a little different but it will continue to be a similar structure where you will get a large upfront and then milestones as we go along.

Ekta: While we cannot put a number to what exactly the out-licensing opportunity could be for this drug, what happens to your debt guidance if in case there is an out-licensing deal?

A: Whatever cash comes in, will go towards repayment of the debt. So very clearly we have guided to the debt coming down by almost Rs 300 crore by the end of the year and in addition whatever licensing revenues comes, will go towards further bringing down the debt.

Latha: The drug is finally expected to hit the market only by FY22, does it take that long or could we be surprised positively?

A: It will take us till FY22 to get it to market because we still have to run multiple studies. So I don't think that timeline can be crunched.

Ekta: You have mentioned that you expect at least one out of four molecules in terms of an out-licensing deal this fiscal. So this probably seems as though it is getting some amount of headway so can you up the target in terms of out-licensing deals to say at least two by FY18, would that be a fair assumption?

A: I think we will stick to just doing one deal but clearly, with 830 getting a positive result here changes a lot because clearly this can be a transformational deal for Glenmark.

Ekta: Since we have you with us, I wanted to touch upon what is happening with US pricing pressure because yesterday in the Torrent Pharmaceuticals conference call, they did describe it as almost being catastrophic, is that your experience as well?

A: We are seeing almost 10-12 percent price reduction coming out of the base business and going forward, the pricing pressure will continue, so companies will continue to see significant pricing pressure. So I think the generics business as a whole will be under pressure for some time.