Thanks a lot, Monk, will surely try to read that report.
You are right, that we cannot post it here, in public domain; it’s not allowed. But we can definitely make a small summary of same (in a few lines and own words) and share it here. I shall read and get back.
Who is Mylan’s partner for Advair?
Sorry don’t have details on Advair partner. Would Epipen settlement ( negotiations going on) impact FDA approval on Copaxone or delay in launch by Mylan
When is Copaxone PDUFA? DR Reddys and Natco both are up 3 - 5% each on June 8th indicating that the date is near. Will be helpful if someone can share some light.
On another note - A US Broker has highlighted that they expect between $180 - 300 M of revenues for Mylan Natco combine from Copaxone 20/40 in CY17. this would mean $90 - 150M of revenue for Natco. This would translate into a PAT of $70 - 105M or 400 - 650 Crore. this is more than what the street expects NAtco’s full FY 18 PAT to be. If this scenario plays out expect a major outperformance. - https://www.streetinsider.com/Analyst+Comments/Barclays+Upgrades+Mylan+(MYL)+to+Overweight%2C+Sees+Approval+for+Generic+Copaxone/12929373.html
Thoughts?
More power to Natco!
Hi @naishadh - as investor I would love to see all of the big numbers coming true, however, realistically have a different mental maths around this.
before assigning any projection for CY17few things need to materialize… PTAB favorable verdict , 20mg approval, Mylans call on ‘at risk’ launch. So, I am not assigning a ‘significant’ number for 'CY’17.
on revenue sharing, don’t think Copaxone will have 50% arrangement. Mylan and Natco joined hands around good 8-10 years back knowing itis technically and legally complex. As indicated in recent Concall, old agreements were in 30-35%revenue share model, primarily since by own admission they lacked legal teeth to ward off decades long law suits etc. Only recent they found the strength to ask for 50%share.
Your Calc has ~80% PAT margin. In general, best of the pharma players has ~35ish% EBIDTA. Sun/Torrent/DRL have been through these type of blockbuster FTFs, however I am not aware if even they clocked 80%type PAT
Thought to put across so that we can evaluate it with 360 degree view.
Thanks,
Tarun
Disc: invested
Thanks for the reply. I have a few thoughts.
before assigning any projection for CY17few things need to materialize… PTAB favorable verdict , 20mg approval, Mylans call on ‘at risk’ launch. So, I am not assigning a ‘significant’ number for 'CY’17. - Chance of favorable verdict at PTAB - >80%, 20 MG approval - especially given the push by FDA commissioner Gottlieb - >80%, Whether Mylan/ NATCO is FTF - >80%, Mylans call for At risk launch - Rajiv Malik, Heather Bresch have in the past mentioned they are very very confident of the IP of their Generic - I would put this probability at about 60%. As such I would assign a good chance of revenues this year, at least the FY
on revenue sharing, don’t think Copaxone will have 50% arrangement. Mylan and Natco joined hands around good 8-10 years back knowing itis technically and legally complex. As indicated in recent Concall, old agreements were in 30-35%revenue share model, primarily since by own admission they lacked legal teeth to ward off decades long law suits etc. Only recent they found the strength to ask for 50%share. - you are probably right so lets us assume 30% - so the projection falls to $55 - 90 M
Your Calc has ~80% PAT margin. In general, best of the pharma players has ~35ish% EBIDTA. Sun/Torrent/DRL have been through these type of blockbuster FTFs, however I am not aware if even they clocked 80%type PAT - I am only talking about the Contribution of the product - Fixed overheads remain as they were hence flow through on PAT in my opinion will be higher.
Apart from this, I don’t want to jinx it but I believe Natco is going to be a dark horse in the Indian pharma space. I just love how Rajeev Nannapaneni has his nose on value - He is going after those spaces where there are only MNC brands present, only where the value per dose is very high, niche opportunities such as only particular molecules rather than entire therapy areas using a strong field force to build out. On the regulatory front - The DCGI has made its approval process more stringent where there is a compulsory plant visit before approval )of course, I am aware of the greasing of palms that can happen, but for whatever this is worth). This approval process is especially important given the administration’s push towards doctors prescribing only generics rather than brands.
I am sensing great amount of euphoria around Natco on different forums including our very own VP, more so due to some big opportunity just round the corner (literally).
However, to me, a true balanced view comes from KNOWING, ACKNOWLEDGING and FACTORING-IN (use of caps is intentional) risks – evident or latent – to the story.
In this entire story, FDA compliance is one of the variable that is a REAL RISK. No matter how good the prospect may be from launch pipeline perspective however negative FDA observation can spoil the party big time. Its as severe as a death blow.
Looking at the industry landscape, most of the pharma majors are facing the wrath of stringent scrutiny from FDA. Take the examples of Sun pharma, (just for example purpose, it may have few others things going on as well), visionary leader, best in class execution and envious launches in its own segment however post FDA issues it never came back to its glorious past. Still struggling. Another example, IPCA, been 2.5 years and no respite in sight.
Request all to go through the attached Jan17 EIR report.
FDA EIR_Natco Pharma, Kothur, India.pdf (949.9 KB)
Observation #1 and #2 are procedural in nature… From pharmacovigilacne and clinical data management perspective the incident and complain investigation are critical and adherence to procedures has to be established sufficiently.
For Natco, situation can become tricky as well since they dont have a back-up facility at this moment. Kothur facility is the only plant catering to US formation and this went through two successive inspection within short 6 months duration (Aug '16 and Jan’17). Vizag plant is also meant for US market however commencement and regulatory clearance are still away.
This is meant just to be cognizant of the latent risk embedded with the underlying story.
Tarun
Disc: Invested
From market expectation perspective, not so good news :
Mylan said it received an information request for its application for 20mg generic of Copaxone. Bresch said it can respond in a very timely manner and was confident it can answer everything, but it was totally in the FDA’s hands if it is approved in June.
Disc: Invested
Natco Pharma Limited (NSE: NATCOPHARM; BSE: 524816)is pleased to announce final approval ofAbbreviated New Drug Application (ANDA)from theU.S. Food and Drug Administration (FDA) forAzacitidine for Injection, 100mg per Vial, Single-Dose Vial, a generic version of Vidaza® by Celgene Corporation. NATCO and its marketing partner BreckenridgePharmaceutical, Inc. (BPI)plan to launch this product in the USA market in the near future. Vidaza® is a prescription anti-cancer chemotherapy drug that is indicated to treat myelodysplastic syndrome (MDS). Vidaza® generated total combined sales of $188 million for the twelve-month period ending April, 2017, based on industry sales data.
Copaxone is here guys. Heather Bresch said it right when she said right before June end. Cheers
Can you please post the official post where this got confirmed.
Appreciate it.
Regards,
Bharat
Also, on a dramatic twist of events, Mylan and Teva has worked out the issue related to the patent infringement suit out of court.
Fineprints of the deal and implication are yet to emerge. Going by Natco’s way of doing things, I am expecting some press-release/ filling with exchange from their side.
Tarun
The timing of the withdrawal of the suit and the message posted by @Pegasus seems more than a coincidence.
Heard the same from one of my friends, wanted to post and check here. Looks like approval may indeed be coming soon. It will be a very good news for natco and us shareholders indeed.
Cheers
G1
NATCO RECEIVES ESTABLISHMENT INSPECTION REPORT (EIR)
FROM U.S. FOOD AND DRUG ADMINISTRATION (FDA):
Natco Pharma Limited (NSE: NATCOPHARM; BSE: 524816)is pleased to announce the receipt of successful Establishment Inspection Report (EIR) from the U.S. Food and Drug Administration (FDA) for the inspection conducted at its drug formulations facility at KothurUnit, Telangana, India, during the period Jan 16th–24th, 2017.
This Kothur formulation facility predominantly caters to regulated international markets, including USA.
Decent results:
Q1 result announced today morning. Pretty much on expected lines with top line of 4487mil as against 3455 year back. PAT 937M against 475m same quarter last year.
Interim dividend of 62.5%on Fv Rs. 2!!!
Q4FY17 had significant component of profit share from gTamiflu, so not apt to draw comparison.
Looking forward to some new insights in concall tomorrow morning.
Tarun
Disc invested, no transaction in last 60 days
Some quick notes from todays concall:
Broadly segment wise revenue split (in Cr.):
Copaxon opportunity:Target action date was in June. One ‘minor’ follow-up questions was replied to FDA. Currently no action pending for Natco. Are ‘Ready to Launch’ subject to approval. Is still an FY’18 opportunty.
US pipeline: The message is getting re-enforced since last 2 concall. Natco want to be very selective about US opportunity. They DONT WANT to chase any opportunity where possibility of 4/5 players competing. With buyer consolidation, there is nothing left worth the compliance risk if there are too many players. Rather, they find better proposition in putting energy chasing interesting prospects in India market.
One apt example quoted by Rajeev during the call was related to Pomilomide. Here for India filling they are expecting ~18Cr worth business vs. USD1mil, that too with all regulatory issues involving FDA.
R&D: Was in the range of 6.5% and maintain the same for FY’18. Broadly 50% towards domestic opportunity. rest equal split for US and Lat-Am.
Cardio and Diabitic (C&D) opportunity: July launched first generic, Artrotrovan (hope i have got the name/spelling correct), niche launches planned for 12-18 months.Bullish for India portfolio.Projection for 150Cr for FY19. overall 20% domestic growth projection.
Pipeline: Vidaza to be launched this quarter. Not much juice left for Natco. DRL/Mylan/Shilpa (with possible three sub-licence agreement) is a crowded place. Doxil is exciting opportunity.
CapEx: Projection of 400 Cr. So far done with ~86 Cr. Primary focus on Vizag formulation plant followed by Assam and Dehradun capacity ramp-up.
gTamiflue Suspension: So far no generic for suspension. can be ~250-500 mil opportunity over and above current tablets HOWEVER will depend on competition landscape at that point in time.
Personally, most important take away is related to they being extremely choosy on ANDA opportunity going forward. Can turn out to be prudent move or a growth halter. No easy evaluation at this moment. Can be assessed only in hindsight.
Thanks,
Tarun
I attended the concall (missed the last part though due to disconnection), my rough notes:
Consolidated revenue 448 (30% growth)
NPAT - 93.7(97% growth)
EPS - 5.58
Segments API - total 86 cr, domestic 6.7 and exports 79 cr
Formulations - Domestic 182 cr(oncology 73 cr, branded 84, 3rd party 24 cr)
Exports - 43.6 and 133 cr (Tamiflu 72 cr, Doxil 8.5 cr minimal sales, next quarter will be more meaningful) other exports 43 crores
question/answers
Copaxone - management still tight lipped, expecting an outcome this FY
Domestic - few niche launches and many first generics
R&D spend 6-6.5% of sales (more India focussed than US)
Tamiflu suspension - no other filers so far
Hep C - 100 crore revenue in India (price erosion stabilised, consolidation of competitiors, only 4 firms now competing, sales approx 40 crores/month)
Hep C exports 3.7 crores, sale in 12 countries, approval sought in total 30 countries
Debt - 156 crores, Cash 209 crores
Capex for this year in India - 400 crores, 86 crores spent so far (India focussed)
ANDA - will be selective from now on, focus on profitable products, aim 4-5 filings this year
American business very competitive, several players. Hence focus will be on India and other markets such as canada, brazil, singapore and philippines
Oncology growth > Hep C
Azacitidine will be launched this year in US, not expecting much profit since many players already present
Pomalidomide - 18 crores sale or profit in India, doing well
15-20 niche launches in India this year.
Disconnected…
