Prices of Glenmark Pharmaceuticals stock, once the most sought-after on Indian bourses, fell to Rs 119.15 last week from a 52-week high of Rs 736 after brokerages downgraded the scrip following the company’s disappointing third-quarter results. In an interview, the chief executive officer and managing director of the pharma company, Glenn Saldanha, tells P B Jayakumar that they may be able to crack a few drug outlicensing deals in the near future to maintain the growth momentum that the pharma major had in the last four years.
Your stocks have fallen after the announcement of the company’s Q3 results and all of a sudden many brokerages do not find any possibility for milestone income in the near future. Now, what is the status of your pipeline and when can we expect revenues from the outlicensing deals? If so, when and what could be the size of the deals?
With eight molecules (including Crofelemer) under clinical trials, we have clearly demonstrated that we have one of the best pipelines in the area of drug discovery. The molecules that are in the clinics are potential blockbusters with sales opportunity for each molecule being in the range of $1-3 billion.
On the outlicensing deal front, discussions are underway with multinationals for partnering our molecules. We remain positive that some of these discussions would be concluded in the near future. I would not like to comment on the deal sizes.
Do you think the return of molecules by Eli Lilly and Merck have created a sense of things going wrong for your R&D programme, especially among your investors and big pharma?
Regarding GRC 6211, the collaboration between Glenmark and Lilly covers all TRPV1 antagonist molecules discovered by either of the companies. So the collaboration agreement is still binding. We have announced that Eli Lilly has suspended further clinical development for GRC 6211 in osteoarthritis pain and that both organisations are currently in discussions on the way forward.
Under the terms of the agreement signed in October 2007, Lilly had acquired the rights to a portfolio of transient receptor potential vanilloid sub-family 1 (TRPV1) antagonist molecules, including GRC 6211, which was in the early clinical phase II development at the time.
Regarding the Merck Serono deal, Glenmark got the global rights back from Merck for Melogliptin in February 2008. The reason being Merck Serono’s decision to re-focus its portfolio and its intention not to invest further into diabetes research and development. Under the terms of the settlement, Merck Serono was responsible for successful transfer of all the activities at zero-cost to Glenmark.
Apart from payments by Merck Serono to Glenmark for completion of some on-going activities, no payments or refunds would be due from either party to the other for the termination of the agreement. In both the deals, we received a sizeable upfront payment, which was non-returnable.
Failure is a part of doing drug discovery research. Not every thing we do and every deal we cut would be successful. However, we will continue to keep playing for the one-two big wins. Also one must understand that the research we are doing is on molecules, which are best in class or first in class targeting chronic diseases. We have struck deals in the last five-odd years collecting Rs 500 crore in cash as milestone payments. So, in a sense, we have a proven track record.
One or two deals in the near future can bring back the investor confidence. But, what is the reason for the delay? Have you put both the molecules on the back burner or are you unable to find an interested partner?
We will out-license molecules at justified valuations. Because of the difficult financial environment, most partners are not able to conclude deals as expected by the company. We continue to remain optimistic regarding our pipeline and expect to conclude the out-licensing deals in the near future.
We have eight molecules (including Crofelemer) in clinics, two molecules entering phase-III, three more starting phase-II and the remaining in phase-I, all in calendar year 2009, making it a very promising year ahead for Glenmark in the area of discovery. We continue to explore opportunities to partner our available new chemical entity (NCE) pipeline and continue to witness a lot of interest from potential partners for our molecules.
What is the reason for asthma drug Oglemilast not progressing to the third phase? What about the results in the second phase? When do you expect the next milestone payment?
Oglemilast, our lead PDE4 inhibitor molecule, continues to progress well in the clinics. Multi-centric phase-II B studies in COPD and asthma are underway in the US and India and are progressing as per plan. Currently, Glenmark is in active discussions with European partners for licensing rights for that region. We believe that Oglemilast would progress into phase-III in the second half of the next financial year. We do not comment on milestone payments.
What are the prospects for Glenmark Generics? Your IPO plans have been stalled, are you looking at alternate options? What is your guidance on your generics business?
For the first nine months of this financial year, the generics business has registered growth of 57 per cent to Rs 577.4 crore. Also, one must take into account the 180 days shared exclusivity received in the third quarter of the previous financial year to market generic version of Trileptal (Oxcarbazepine). Despite the base effect of Oxcarbazepine, we have managed to grow the generics business in the third quarter. Given the current state of the equity markets, we have deferred our IPO for the generics subsidiary.
We are confident that the generics subsidiary will continue to register good growth in the next financial year. We will continue to focus on building a differentiated product portfolio. The process of filing marketing applications in the US will continue at the same pace because that is the key to our growth strategy for the generics business. The Europe region has also recorded its first sales in this financial year and this region will also enable growth for the generics subsidiary.
