Some Notes from Q1’FY18 Con call and Investor presentation:
Hepatitis C Franchise: Worldwide, Hepatitis C market was estimated to be ~$11.81bn in 2015, which is expected to grow at a CAGR of 15% to reach ~$27.63bn by 2021. Registrations filed in 40 countries and import permits and approvals received in 10. Key focus area is Philippine region. Domestic market has expended rapidly and they are number 1 with recent launches like Velpanet, Epclusa etc. however the segment is now short of stagnating on pricing front though volume growth is there. Evident from segment revenue:
RoW Subsidiary: Will primarily be about Hep-C and existing portfolio of Onco. Good uptick in short duration of time:
Canada - Filed 15 products with 11 approvals
Singapore - Filed 10 products with 5 approvals
Brazil - Filed 10 products with 5 approvals
Revlimed: is a BIG opportunity. A follow-up query to be answered to FDA. Expecting approval in FY’18. Possibility of early launch (under certain conditions) from FY’19 subject to other competitor product arrive in the market.
API: Recent capacity expansion to significantly improve API capacity. Even otherwise API export is growing at a faster pace from 212 MN USD on Q1’17 to ~800 MN USD by Q1’18.
Copaxone: Natco feels that Mylan will most likely will go for at risk launch since legal position is very strong. Though one PTAB hearing is still pending but company is positive about outcome.
brand sales for the 20 mg/mL dose of approximately USD 700 million and for the 40 mg/mL dose of approximately USD 3.64 billion for the 12 months ending July 31, 2017. Natco will receive 30 percent profit share from Mylan for the 20 mg product and 50 percent share for the 40 mg product.
Edelweiss projections: We were expecting launch (of 20 mg product) in Q4 FY18 (Jan-Mar) with USD11 million of revenue (for Natco) in FY18. Given the earlier-than-expected launch, this could now contribute USD 25 million-USD 30 million in FY18 and around USD55 million in FY19,” Edelweiss said in a note. “For the 40 mg product, the launch is likely to be in the second half of fiscal year 2018-19 due to certain patent issues. This product could contribute USD 125 million to Natco’s
FDA Approval status:
Export formulation facility Kother: Approval received in Jan’17.
Export formulation facility Vizag: Under development
API facility Mekaguda: US FDA approval Jan’15
API Chennai – US FDA Feb’16
New verticals: New C&D vertical will focus on niche products. First of kind types. So far 3 launches with more in the pipeline. Overall 10 Products targeted to be launched in FY18E (this number covers both domestic and Export formulation).
Fund raising: Fund raising of ~1,500 Cr. By cometary, they are very very clear not to pursue any me-too generic opportunity with the changing time. Rather would prefer to invest for complex generic where gestation period is long however the windfall more than well offset for the effort worth. Those opportunities may be in the area of Novel Drug Delivery Systems (NDDS) or complex chemistries. Will NOT go for Bio-similar/biological etc. Subtle expectation setting for beyond 2024-25 for complex generics.
Are there some surprises in store with the fund raising? Existing balance sheet is getting better riding on Hep-C, Copaxon etc profit flow. The cash flow is expected to improve further with Copaxone effect trickling in for full year in FY’19. On the other hand, Rajeev specifically commented that CapEx projection is for ~350Cr. only for FY19. Putting these two together, I am speculating that the fund to be used for some big ticket acquisition. Nirmal Bang security speculating about possibility of acquisition in the complex Onco space.
Any Natco experts got any insights/view specifically on the proposed fund raising of ~1500 Cr and implication of the same.