Mumbai: Shares of Glenmark Pharmaceuticals Ltd rose 11.5% after the company sold the rights to develop and commercialize a new biological research molecule for the treatment of multiple sclerosis and Crohn’s disease to France’s Sanofi SA.
Sanofi will pay $50 million (Rs 225 crore) to Glenmark in about a month for the experimental drug, which is currently undergoing the first stage of trials on humans, Glenn Saldanha, chief executive of Mumbai-based Glenmark, told reporters.
The total value of the transaction could be as much as $613 million by 2017, if the molecule meets certain targets. The Indian company will also get royalties on sales if drugs based on the molecule clear clinical trials and regulatory hurdles, Saldanha said.
The molecule developed by Glenmark at its Switzerland research facility is targeted to treat multiple diseases, including multiple sclerosis and Crohn’s disease.
The molecule, GBR500, has a market potential of as much as $15 billion, according to Saldanha.
The announcement of the so-called out-licensing agreement came as a shot in the arm for a company whose core business has been flagging.
“The factors in the deal such as valuation, upfront payment and the double-digit royalty have brought back investor confidence to Glenmark scrip, though a final take would depend on the progress of the molecule through Sanofi’s development programme,” said a pharmaceutical analyst who asked not to be identified. “Since biological molecules are being increasingly scouted by multinational drug makers at present, Glenmark’s first such deal is important and it has made a positive impact on the stock.”
Glenmark shares, which rose as much as 19.55% in early trading on the Bombay Stock Exchange on Monday, gained 11.5% to close at Rs 305.85 each.
The exchange’s benchmark Sensex dropped 1% to 18,345.03 points.
Glenmark will also receive a “double-digit” royalty on sales of the drugs, Saldanha said, without giving a specific number.
Sanofi will have exclusive marketing rights for these drugs in North America, Europe, Japan, Argentina, Mexico, Chile and Uruguay. It may also have co-marketing rights in Brazil, Russia, Australia and New Zealand. Glenmark will, however, retain the right to sell the drugs that come out of this base molecule in India and the rest of the world.
“Glenmark’s research candidate brings an innovative approach to Sanofi’s immuno-inflammation portfolio, which may address a significant gap in treating inflammatory diseases,” Elias Zerhouni, Sanofi’s global research and development head, said in a statement.
Since the molecule has the potential to address different diseases connected to inflammation, Sanofi is free to develop all such possible targets from this molecule. “Sanofi is expected to invest another $300-400 million in developing the molecule further,” said a person familiar with the transaction, who did not want to be identified.
Multiple sclerosis affects around 2.1 million people worldwide, according to the National Multiple Sclerosis Society of the US. The disease affects the central nervous system and can cause loss in vision and paralysis. Around 500,000 people are affected by Crohn’s disease worldwide, especially in North America and parts of Europe. It causes inflammation of the digestive system.
This is the second licensing deal that Glenmark has signed with Sanofi. A year ago, it licensed out its portfolio of chronic pain-relief molecules to the company in a transaction valued at as much as $320 million. Glenmark had then received an upfront payment of $20 million.
“This collaboration on a novel first-in-class monoclonal antibody validates Glenmark’s research and development capabilities in the drug discovery arena,” Saldanha said.
Glenmark currently has a total of six biological molecules in its research pipeline. The company has licensed out at least half a dozen drug molecules from its novel drug research programme since 2004, receiving a total upfront payments of around Rs 200 crore. Two of the molecules have since been returned by the licensors, Forest Laboratories Inc. and Merck KgaA.