Glenmark in $613-mn deal with Sanofi

Enters outlicensing agreement for GBR 500 molecule.

Exactly one year after Glenmark Pharmaceuticals announced the failure of its outlicensed asthma drug in clinical trials, the company has signed a similar deal.

Glenmark entered an outlicensing deal on Monday with French drug major Sanofi for GBR 500, its molecule for treatment of Crohn’s Disease and other inflammatory conditions such as Multiple Sclerosis. Under the deal, signed by Glenmark Pharmaceuticals SA, a wholly-owned subsidiary, the company will receive $50 million as upfront payment. The combined upfront and potential development, regulatory and commercial milestone payments will come to about $613 million.

The upfront money will be used to repay debt. The net debt of the company stood at Rs 1,900 crore on March 31. On Monday, Glenmark shares went up as much as 20 per cent on the Bombay Stock Exchange (BSE) and closed at Rs 305.85, up 11.54 per cent over the previous close.

Sanofi will have exclusive marketing rights on products developed using the GBR 500 molecule in North America, Europe, Japan, Argentina, Chile and Uruguay, while it will co-market the products with Glenmark in Russia, Brazil, Australia and New Zealand. Glenmark will retain exclusive marketing rights in other parts of the world, including India.

Bringing out the implication of outlicensing deals, an analyst pointed out that for the last couple of years, pharmaceutical MNCs were cutting down the cost of drug development process, which takes a minimum of 10-12 years. The cost ranges between $500 million and $1.5 billion. Instead of developing drugs, companies prefer to buy potential molecules that are in early stages of development, at cheaper rates.

In a similar deal, Glenmark Pharmaceuticals SA had entered a pact with Sanofi-Aventis in May 2010 to grant a licence for the development and commercialisation of GRC 15300 molecule to treat chronic pain. The deal was pegged at $325 million. Glenmark received an upfront payment of $20 million then.

On May 15, 2010, Glenmark Pharmaceuticals announced that clinical trial of Oglemilast, which was outlicensed to US-based Forest Labs, on patients with Chronic Obstructive Pulmonary Disease (COPD) and asthma failed to generate positive results. Prior to that, in October 2008, Glenmark had suffered a setback when Eli Lilly suspended clinical trials of its pain drug molecule, GRC 6211.

Glenmark had outlicensed GRC 6211 to Eli Lilly as potential treatment for arthritis in a $260-million deal signed in 2007. It had received about $45 million in the deal.
 

MAJOR OUTLICENSING DEALS
Year	Drug	Therapeutic area	Innovator	Partners	Status
1997	Balaglitazone	Anti-diabetes	Dr Reddy’s	Novo Nordisk	Dropped
1998	Ragaglitazar	Anti-diabetes	Dr Reddy’s	Novo Nordisk	Dropped
2001	DRF 4158	Anti-diabetes	Dr Reddy’s	Novartis	Dropped
2004	Oglemilast	COPD/ Asthma	Glenmark	Forest Labs, Tejin Pharma	Dropped
2006	Melogliptin	Anti-diabetes	Glenmark	Merck KgaA	Dropped
2007	GRC 6211	Arthritis	Glenmark	Eli Lilly	Dropped
2010	GRC 15300	Osteoarthritis	Glenmark	Sanofi	Phase I

On failure of molecules in clinical trials, experts argued that there was no need of major concern over such setbacks. Sriram Rathi of Anand Rathi Financial Services said, “These are part of the R&D business. There is lesser probability for a molecule to get launched in market. However, in the backdrop of MNCs cutting down their R&D costs, Indian companies can use the outlicensing option for future growth.” The continuous outlicensing business would boost the confidence of companies like Glenmark, he added.

Glenn Saldanha, MD and CEO of GPL, said, “We are pleased to have this second licensing collaboration with Sanofi, one of the largest pharmaceutical companies in the world, and the first one from Glenmark in the field of novel biologics.”

Dr Reddy’s Labs, the first Indian company to outlicense a drug molecule, partnered with Novo Nordisk in 1997 and 1998 to out license their anti-diabetes molecule and with Novartis in 2001 for another molecule in the same therapeutic area. Ranbaxy Laboratories, subsidiary of Daiichi Sankyo, had out licensed a prostate enlargement drug candidate to Schwartz in 2002. Sun Pharma Advanced Research Company (SPARC), the demerged drug R&D arm of Sun Pharma, also plans to license out some of its new chemical entities (NCE) and novel drug delivery systems (NDDS) under development to multinational companies.

In its note, Nomura said, “We currently build in an average income of $20 million per year for Glenmark from its novel pipeline. We note that this is the first biologic out licensing deal by any Indian company. The auto-immune disease market worldwide is expected to be $25 billion by 2014. The competitive landscape is also intense given the size of the opportunity.”

The Phase 2 of GBR 500 molecule will begin as soon as the deal is completed.