Investors seem to shrug off Glenmark’s crofelemer dispute

Investors seem to shrug off Glenmark’s crofelemer dispute
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First Published: Wed, Dec 14 2011. 10 09 PM IST

Glenmark Pharmaceuticals Ltd., Mhape R&D center, Navi Mumbai. File photo
Glenmark Pharmaceuticals Ltd., Mhape R&D center, Navi Mumbai. File photo
Updated: Wed, Dec 14 2011. 10 09 PM IST
Glenmark Pharmaceuticals Ltd’s shares rose by 4% on Wednesday, erasing losses made the previous day. The company’s shares had fallen sharply on Tuesday after Napo Pharmaceuticals Inc. ended an agreement to market anti-diarrhoeal drug crofelemer.
Glenmark Pharmaceuticals Ltd., Mhape R&D center, Navi Mumbai. File photo
Investors seemingly reacted on concerns about the delay in the medicine’s launch, earlier slated for 2012, and litigation-related uncertainty.
Glenmark had said this drug could fetch it $80 million, or Rs 430 crore, in sales for treating HIV-associated diarrhoea alone. The rise in its share price seems to be due to hopes that the firms may settle their disputes eventually.
The crofelemer story involves three companies. Napo Pharmaceuticals had out-licensed crofelemer to Salix Pharmaceuticals Inc. for regulated markets such as the US, Europe and Japan, and worldwide for select indications.
Salix would develop and launch the drug, and in return make milestone-related payments and give a share of sales to Napo. Salix has already made a small upfront payment.
Napo also licensed crofelemer to Glenmark for acute infectious diarrhoea, HIV-associated diarrhoea and paediatric diarrhoea in 140 other markets. Glenmark agreed to pay royalties on sales to Napo, and it was also agreed that Glenmark will supply the active pharmaceutical ingredient—the basic input—for crofelemer to Salix.
In November 2010, Salix announced crofelemer succeeded in phase III clinical trials in the US for HIV-associated diarrhoea. Glenmark announced success with its phase II clinical trials in India for multiple conditions.
The stage seemed set for a launch. Napo’s grouse is that the pace of development slowed subsequently. Alleging that Salix and Glenmark have not filed a single regulatory application, it has terminated its agreements with the two companies.
Salix’s management said in a recent investor conference that the regulatory filing for crofelemer will be done in December. Glenmark has contested the termination, and has asked an arbitration panel to rule that Napo’s claims are unfounded. Napo is perhaps miffed that the delays in the launch of the drug are postponing its cash flows.
Glenmark says regulatory submission depends on a complete data package, which includes elements in addition to the phase III data. “Also, a US dossier serves as important starting point for customization for rest of the world markets, and in most emerging markets, a developed market approval is also considered obligatory prior to approval,” said the company in an emailed response.
In other words, Salix appears to hold the key. Once it gets approval for the US market, approval for other markets will also follow.
Glenmark had earlier indicated that it expected to launch crofelemer in India in 2012. Now it says filings for rest of the world markets will begin in 2012 and it hopes to get approvals by the first half of 2013. But even this revised date assumes litigation is swift and in its favour.
The rise in the company’s shares on Wednesday suggests investors are perhaps hoping for a settlement, especially if Salix files for regulatory approval. Also, Glenmark’s performance is expected to benefit from growing contribution from generic product sales in the US market, similar to that of other Indian firms targeting a number of drugs going off patent.
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First Published: Wed, Dec 14 2011. 10 09 PM IST