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Spark Capital : Glenmark Pharmaceuticals: 'FDA approves crofelemer – NCEs back in focus for Glenmark'




Spark Capital Advisors(India) Private Limited


02 Jan 2013





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FDA approves crofelemer – NCEs back in focus for Glenmark Glenmark today announced USFDA approval for Salix Pharmaceuticals’ NDA for crofelemer 125mg delayed-release tablets (to be marketed under the brand Fulyzaq) for the treatment of HIV-associated diarrhea. Salix holds the rights to commercialize crofelemer in North America, Europe and Japan. Glenmark holds the rights for crofelemer in ~140 countries and is also the sole API supplier for the drug (ex-China). We believe FDA approval for Salix’s NDA almost guarantees approval for the drug in Glenmark’s territories Details: Crofelemer, derived from the sap of the South American plant - Croton lechleri, is only the second botanical drug approved by USFDA. Approval for crofelemer has arrived a few months ahead of expectations. Earlier, FDA had deferred its final decision on Salix’s NDA from the scheduled PDUFA date of Sep 5th, 2012, post-which Salix announced its expectation of receiving approval by the end of Q1 CY13 Crofelemer was originally developed by Napo Pharmaceuticals. In July 2005, Napo out-licensed the rights to develop and commercialize crofelemer for HIV-associated diarrhea and adult acute diarrhea in 140 emerging countries to Glenmark. In Dec 2008, Napo out-licensed crofelemer-rights for North America, Europe and Japan to Salix for 3 indications including HIV-associated diarrhea In Dec 2011, Napo Pharmaceuticals announced the termination of its agreements with Salix and Glenmark for developing and commercializing crofelemer citing failure to make timely regulatory filings for approval. In Jan 2012, an arbitration panel issued a favorable interim order for Glenmark, prohibiting Napo from terminating the collaboration. In Aug 2012, Glenmark received a favorable verdict from the International Centre for Dispute Resolution (ICDR) allowing it to sell the drug through relief agencies According to Salix, ~15% of the 1.2 million HIV-positive/AIDS patients in the US suffer from chronic diarrhea. In a Nov 2012 conference call, Salix guided for peak annual sales of $150-200mn for the drug. We estimate ~$10mn peak sales (by 2018) for Glenmark from API supplies to Salix Glenmark is currently in the process of filing for regulatory approvals in the HIV-associated diarrhea indication in its territories, which the company plans to accelerate now (post USFDA approval for Salix’s NDA). Peak sales from Glenmark’s territories for the HIV-associated diarrhea indication alone is estimated at ~$80mn. Additional indications including adult diarrhea (currently recruiting patients for phase III trial in India and Bangladesh) and pediatric diarrhea (finalizing clinical development plan) could provide upside to this estimate In Q2 FY12, Glenmark received $15mn from Salix, as an advance fee for upgrading Glenmark’s manufacturing facilities to meet Salix’s anticipated demand for crofelemer. The company will now receive an additional $6.6mn in five equal annual installments

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