Suven Life Sciences - Embedded triggers


(kanvgarg123) #122

Can somebody tell me how much does it averagely takes for the molecule to reach from Phase 2 Clinical trials to the FDA approval. I checked Cadila’s website for Lipaglyn Development(for Indian markets) after Phase 2 Clinical trials it took them 5 years to get the final approval. Can somebody guide me?
Here is the link for Lipaglyn
http://lipaglyn.com/key_milestones.html

Disc- I am Invested in Cadila and it forms 10% of my portfolio.
Not Invested in Suven as I see it a jackpot which might or might not hit.


(Amit Aggarwal) #123

It may give you some insights


(kanvgarg123) #124

So we can assume that still it might take 5 years for SUVN-02 to get approved by FDA taking assuming it takes 1.5 yr for Phase 2, 2 for phase 3 and 1.5 for final approval and building manufacturing capacities.


(Amit Aggarwal) #125

As per management commentary in AR 2014-15, the Phase-Ib trials for SUVN 502 is completed and commenced preparations for the Phase-IIa (POC) trial. The management hope to initiate patient trials during the second half of the current year and are hopeful of monetising this molecule post successful completion of the study in fiscal 2017.


(kanvgarg123) #126

What about Phase 3 trials and the Global trials ?


(Ravindra Mutyala) #127

Suven 502 may pass Phase 2 or not.
As far as I know Suven is only Indian company taking initiative in drug discovery ( Correct me if I am wrong)
I strongly feel that Suven 502 should not be monetized after Phase 2, instead it should go through Phase 3 which will give good experience to company.
Suven has strong line of clinical trails. One day it will hit the bull.

Disc: Invested from lower levels


(kanvgarg123) #128

Cadila (lipaglyn) and biocon are doing it. I am invested in both because their business is not entirely dependent on new molecules and they trade at fair valuations w.r.t. their current business!


(Ravindra Mutyala) #129

How many of Cadila and Biocon drugs reached Phase 2.
By the way… Suven is not only in drug discovery, its also in CRAMS business.


(kanvgarg123) #130

Biocon has many and Cadila has 3 I think and main being Lipaglyn with market potential of $30Bn and with Biocon you can’t even quantify.


(manjushree) #131

“Suven Initiates Phase 2A trial of SUVN-502 in USA in Alzheimer’s Disease”
SuvenLifeSciencesLimited (2).pdf (103.5 KB)


(nabendu) #132

Suven has been granted a patent each by Eurasia, Europe, Israel and Macau for neuro-degenerative drug.
http://www.thehindubusinessline.com/companies/suven-life-gets-patents-for-neurodegenerative-drug/article7976497.ece


(JKS) #133

for what it is worth, here is the latest corporate presentation from Suven
http://www.bseindia.com/corporates/ann.aspx?scrip=530239&dur=A&expandable=0
While I am in the group that is waiting for a jackpot (slide 32) with one of the molecules of Suven, I also know for a fact that 502 is a long way from getting there…I also saw decent news analysis of how close Lilly got there, only to be slapped with a failure notice during Phase 3 trials of a similar drug for Alzheimer disease. The failure rate is almost 99% since no one has succeeded in this frustrating journey…long, long way to go for Suven but as Tim Robbins will say in the movie Shawshank Redemption " hope is a good thing, maybe the best of things, and no good thing ever dies"


PS - invested; views may be biased


(vivek bothra) #135

Suven begins phase-2 trials for Alzheimer’s in US, See management interview here

Also, listening to last concall - Picked up something interesting.

About 6 months back, Suven created a subsidiary in US by funding it with USD $25mn. The objective of subsidiary is to take their in house molecules through advanced phases and work on out licensing opportunities.In the last call the mangement clarified that the whole USD $ 25 mn would be used for Suvn 502 their lead molecule and this $25 mn would be spent in next two FY (16 and 17)
Interesting bit is whatever they are spending in US out of this USD 25 mn, is currently not charged to PL as Suven is reporting standalone results.

What does that mean ?
When FY16 consolidated results are reported approximately USD $12.5 mn would come as charge in PL from US subsidiary, as management is expecting about USD $15 - 16 mn from standalone numbers there final net figure could go down to as low as USD $1 - 2 mn.

How will stock market react ? Only time will tell

PS - I could be completely wrong, if Suven’s capitalises this cost

Disc - I remain invested, About 5% of Current Portfolio no transaction in last 30 days


#136

Yes vivekbothra,
Your calculation is correct. Suven has raised these 200 crores last year thru QIP route only for this purpose. And most probably, considering the accounting policy they follow, they will charge it in PandL only in next two years. Say 100 crores per year. And surely profit will go down to that extent. That’s how it normally works. If successful, it will give multifold gains, else again at normal profit of 125-150 crores from years thereafter.

But the best and most important part, which I liked the most is they raised capital for it and didn’t go for debt route. They diluted some 10% capital for raising 200 crore, so effectively if the project fails, we all shareholders will lose 10% of our value. Had they taken debt, there would have been burden repay the same with interest and that could have spoilt balance sheet structure. In event of success, it will be multi fold profits and again we will be parting 10% of that profit to QIP shareholders. But that’s ok. Right??

Happy investing.

Disclosure - Invested from level of Rs. 30 and with price appreciation, its nearly 30% of my portfolio.
Wont sell single share till final outcome of SUVN-502.


#137

well, interest on debt is tax deductible so how can that be bad for investors? Raising equity is all about conservative financial management by promoters.


(reacher) #138

Suven will charge it to P& L as is their stated policy is my view ( if they capitalise this it will be taken as bad governance by market in any case is again my view ) - Which means the final EPS on consolidated basis for next 2 years ( 31.03.2016 and 31.03.2017 ) is going to be bad/flat - Can anyone confirm their estimates of such likely eps for 31.03.2016 and 31.03.2017 ?


#139

Sumit,
Imho, equity raising was very prudent decision. Had they taken debt, thought interest on debt is tax deductible, but along with interest principal will also have be to repaid in due course, that would take away minimum 300 crores (200 cr debt and 100 cr approx. interest) from balance sheet of suven. And in case of failure, this would be too huge burden.

Think it in other way, though as per accounting practice they will be debiting this research expense in PL, but actually it is not being paid from profits of suven. They have issue fresh equity of Rs. 200 crores and this is being used. Thus there is not strain on Balance sheet for that expense.


#140

My estimate of PAT for 2016 is 125-135 crores and for 2017 is 150-160 crores on conservative basis, so after deducting research expense say 85 crore in 2016 and 115 crore approx. in 2017, PAT for both years would be 40-50 crores. These R&D expense of so huge amount would be one time and done in subsidiary, so it will be reflected in consolidated figures only.


(vivek bothra) #141

Please don’t forget they have a pipeline of molecules and each of them when it moves to advanced stage would require 200-250 crore spent, Consider that in your long term calculations


(JKS) #142

There is no free lunch. Suven’s best bet is to hope that some biggie will help them monetize one of their discoveries and will release the much needed cash and future royalty clause may be their savior, if the jackpot is hit