Macquarie that has outperform rating with a target price of Rs 1,140 on the stock, says GBR 1302 data in 2HFY17 will help validate BEAT platform and pave the way for a potential out-licensing deal in next 12 to 18 months.
Glenmark Pharma shares rallied 2.6 percent intraday Monday. Brokerage houses expect company's likely debt reduction post FCCB issue, cash flow from Zetia exclusivity and possibility of licensing deals will be drivers in FY17.
After its meeting with Glenn Saldanha, chairman and managing director of Glenmark, IIFL believes the foreign currency convertible debentures (FCCB) issuance will help the company to reduce forex volatility in its debt obligations and bring down the cost of debt.
About 95 percent of Glenmark's current debt is forex denominated, which is subject to currency volatility.
Glenmark has also minimised potential dilution by pegging the FCCB conversion to the stock price 18 months down the line.
"The company also intends to use cash flow from the generic Zetia exclusivity to retire the remaining debt. It expects Zetia to fetch additional cash of USD 150 million," says the brokerage.
Zetia is cholesterol-lowering drug.
Saldanha believes that FY16 one-off expenses, which consumed the cash raised through last year’s equity dilution, will not recur.
Glenmark expects price controls on its India portfolio to have an impact of Rs 25-30 crore, largely due to cuts in Telma, its largest cardiovascular product but it expects to continue growing at 15 percent in the domestic market on the back of an improving franchise in diabetes, says IIFL that has a buy rating on the stock with a target price of Rs 936.
The company's Teneligliptin - advanced diabetes treatment molecule - has achieved monthly sales run-rate of Rs 9 crore.
Glenmark also expects to launch the inhaler (licensed from Celon) in a couple of Nordic countries by FY17-end, and it will expand to larger markets in FY18, says the brokerage.
Meanwhile, Macquarie that has outperform rating with a target price of Rs 1,140 on the stock, says GBR 1302 data in 2HFY17 will help validate BEAT platform and pave the way for a potential out-licensing deal in next 12 to 18 months.
GBR 1302 is a bispecific antibody using BEAT platform that binds CD3 and HER2. Its advantage over existing HER2-targeting therapies like Herceptin (cancer medication) is that they are also effective in remaining 70 percent of breast cancer patients who express low levels of HER2 or are resistant to Herceptin," says the brokerage.
In FY17, Glenmark reports 2 significant data points on the innovative new biologics entity (NBE) business phase 1/ 2a data on GBR 1302 and phase 2 data on GBR 830.
BEAT, a proprietary bispecific antibody platform of Glenmark, means engaging two targets with one bispecific antibody.
Macquarie says company's BEAT platform antibodies stand apart from other bispecifics because of their half-lives, glycosylation patterns, cytotoxic functions and other key properties that mimic natural antibodies. BEAT’s heterodimerisation method has the potential of low immunogenicity risk against Xencor’s XmAb platform.
According to the brokerage, catalysts are incremental US approval and Zetia launch in Q3FY17.
At 14:32 hours IST, the scrip of Glenmark Pharma was quoting at Rs 820, up Rs 19.55, or 2.44 percent on Bombay Stock Exchange.
Posted by Sunil Shankar Matkar