Can anyone help me here.
I also see a new drug called “obicetrapib” from “NewAmsterdam Pharma Co” on the final stages of approvals.
https://www.sec.gov/Archives/edgar/data/1936258/000119312524135293/d791796dars.pdf
NewAmsterdam's CETP inhibitor meets primary endpoint in Phase 3 trial?
Assuming this new drug gets an approval this year, there will be chances of clash right?
(Invested)
Linking another post on the comparison and capability of Bluejet vs Neuland in Bempedoic Acid.
I am not an expert at this but the mechnisms by which the two drugs work are different.
Its good to track the efficacy but few things to keep in mind are :
Continuing with the work I’ve done here, here, here and here. Those posts were specifically about Bempedoic Acid. This one is about the Contrast Media side of the business.
BlueJet supplies contrast media intermediates to 3 of the top 4 CM majors that hold 75% market share (GE Healthcare, Bracco, Guerbet). Bulk of the revenues today though come from ABA HCl. However, the company is doing few things
The most detailed of reports I have seen on BlueJet is this from Sanjesh Jain which is phenomenal. I am going to be borrowing some of the data from this. Giving credit in advance.
1& 2. ABA HCl (intermediate used in iodinated contrast media like iohexol) has contributed to bulk of the topline for BJ in the past. Still continues to be the case but its dramatically reducing in recent quarters as BA grows.
The quantity has remained more or less constant at around 3million MTPA. However, the use of most crucial RM used in the manufacture of ABA HCl, which is APD, has declined steadily over the years possibly due to improvements in yields - but the margins have been at the mercy of APD prices which vary between $7 to $9 or so roughly.
This is the entire value chain from the ICICI report
BJ does upto Step-3 at present. In this now, BlueJet is now backward integrating into APD which has been a pain for its margin stability and Iodinated ABA HCl which is one step ahead in the value chain.
How does this affect margins? This snippet gives a good idea
Imagine doing 16x value addition in-house! The other interesting thing I learnt is that iodine chemistry is very expensive due to Iodine prices and so if you manage to do it large scale, you get two advantages 1. You get to tie up with cheap supply of Iodine (BJ has tied up with SQM, a mining company in Chile) 2. You improve processes for recovery of Iodine which is better done on large scale. Both these make you very cost competetive in Iodinated ABA HCl (fwd integration). APD backward integration makes you unbeatable in ABA HCl. Combine both and you have the lowest cost producer catering to bulk of the world’s demand of the product to a niche industry dominated by a handful of players. (Divis is attempting to enter this business and has imported its first shipment of APD, just as BJ is backward integrating into APD).
To me it looks like BJ does few things and does them really well. It will probably even do TosMIC backward integration when Bempedoic Acid volumes stagnate in the future (my speculation).
Other than the BA, there are few other pharma intermediates as well which sound promising - mainly the Nilotinib intermediate which is used in chemotherapy for Chronic Myeloid Leukemia (Novartis drug).
Like its expertise in 5-NIPA, they also seem to have an expertise in dealing with Vanillic Acid based intermediates which are mainly used in CNS therapies. IAA (Indol-3-Acetic-Acid) also appears to be a very high value molecule. Not sure what this NCE being referred to is. They seem to be shipping this to a subsidiary of Thermo-Fisher Scientific. Some of these might turn out big as well in the future but needs further work
Disc: Invested
I am trying to understand how the investors are viewing this company. Is this a trade where one can expect 2-3 good qtrs or is there a structural story that can play out here beyond a few quarters
The numbers that we are seeing right now is a function of inventory build by the innovator. Usually periods of such build up are followed by lesser procurement numbers. How are we asusming the sustainability of the exports we are witnessing right now?
Favera seems to be possibly beniffiting as NEulands capacity hasa peaked. I would assume NEuland is a primary supplier due to its old association with this product. Even if this isnt true, Neulands capacity ramp up by 3x should have some impact on bluejet as well?
What beyond? Sweetners is an avg business. While contrast media is decent margin , it will not grow exponentially, impact of peers coming in anyway has to be seen. What do they have beyond bempodoic and a few qtrs of growth after which base readjusts, neulands capacity comes in and inventory pile up normalises? How are we valuing a 450 odd cr PAT that may not be sustainable?
In my very humble amatuer opinion, I think it’s impossible to get more than maybe 1 FY future earnings visibility in the pharma businesses for Indian companies.
At least an innovator pharma company has a patent so there is some visibility on earnings till patent expiration. Plus, you can use the option pricing model to value the company’s pipeline of drugs under R&D using your own subjective judgements of probability and degree of success of each drug in the pipeline.
For CDMO companies, there are no patents and there are usually no long term contracts. Innovator companies can “shop” around every few years and this is field of fierce competition (as evidenced by Neuland and Favera coming up as competitors for BA and its intermediates, plus who knows who else).
To maintain high earnings over a longer term, say 7-8 years there are probably 3-4 cycles of where the pharma company finds its big earners ramp down and hope that a new big earner comes up. So really, investing long term into the pharma space is pretty much a bet on promoters. It’s more faith than analyses.
If there is any sort of strategy to be followed here, its probably to value the company at its core businesses only (for e.g. in Blue Jet, it would be sweeteners and contrast media) and invest whenever the price declines to close to that value.
For me, as tempting as the whole CDMO sector is - after lots of analyzing and thinking, I am staying clear.
Disc - Not invested
Two things I found recently. One on Gadopiclenol scope and another on TosMIC backward integration possibility.
Gadopiclenol (for which BlueJet supplies the intermediate BGB - or ButylBromoGlutarate) was approved for sales in US in Sept '22 and in Europe in Dec '23. It is sold by both Bracco (as Vueway) and Guerbet (as Elucirem). Currently Guerbet manufactures for both as per their agreement.
Bracco has already reached 1 million injections in the US alone.
The link also mentions that the Gadolinium dose is 0.05 mmol/kg. We can do some back of the envelope calculations. For an avg. person weighing 70 kgs, we would need
0.05 mmol/kg x 70 kg = 3.5 mmol of gado per MRI. Considering the molecular weight of 970.mg/mmol, this works out to
3.5 mmol x 970 mg/mmol = 3395 mg or 3.4 gms of API per adult per MRI.
In terms of formulation, the injection is available in different formulations
Very likely, something like the 3rd bottle would have ~3.5 gms of API and would be the one sold mostly.
The manufacturing process is patented (filed by Bracco). The first thing that comes to mind is that the amount of gadopiclenol at 3.5 gms is quite high (to compare, bempedoic acid as per earlier calculations was 5.4 gms for entire year!). So this is very high volume drug when compared to oral tablets. This also means the amount of intermediate used will be equally high (Not proficient enough to work that out from the patent doc). The value of BGB seems to be $50/kg. The current installed capacity (120 MTPA as per EC) should contribute to around 50 Cr per year (ABA HCl sales is ~400 Cr/yr, so this isn’t a bad start for a new NCE in year 1). The run rate as per exports is already at 6 MT per month.
The second thing - @GourabPaul found a BlueJet patent on TosMIC manufacturing. I had speculated that this was a possibility in my previous post.
The patent seems to have been granted on 31st Jan '25 (filed in July '23)
TosMIC backward integration should be highly value accretive and should make BA very cost competetive for BlueJet and we should look out for any announcements of capex for the same.
Disc: Invested
