Biocon

03 Sep

Insulin Glargine is $2.2bn opportunity in the insulin segment – Biocon

Update on Indian equity market:
After the steep fall on Monday, markets were in a recovery mode for the second straight day as Nifty50 rose 65 points higher at 11,535. Among the index, ZEEL (+7.5%), M&M (+6.1%) and TATAMOTORS (+5.1%) were the top performing stocks while BAJAJAUTO (-2.4%), HEROMOTOCO (-1.4%) and ASIANPAINT (-1.4%) were the laggards. The negative market reaction to two-wheeler stocks came as a surprise as companies delivered good performance in the monthly volumes. Within the sectoral indices, MEDIA (+3.4%), METALS (+1.8%) and IT (+1.5%) were the top performing sectors whereas PSU BANK (-0.4%) and FIN SERVICES (-0.03%) were the only the sectors closed the day in red.
Excerpts of an interview with Kiran Mazumdar Shaw, Executive Chairperson, Biocon published on CNBC TV18 dated 2nd September 2020:
Biocon and Mylan announced the launch of Semglee (Insulin Glargine injection) in the U.S. to expand access for patients living with Diabetes. Ms Mazumdar Shaw said that the commercialization of insulin glargine in the U.S. represents another milestone achievement for the company in making insulin based therapy globally.
The company is leveraging science and global scale manufacturing expertise to expand affordable access of biosimilar insulins to patients in Japan, Australia, Europe, India and key emerging markets. The U.S. launch of Semglee takes the company closer to realizing its aspirations of reaching ‘one in five’ insulin dependent people with diabetes worldwide.
The company expects Semglee to contribute significantly to the company’s goal of impacting 5 million patients’ lives and achieving $1bn revenues by the end of FY22E.
The company rigorously compared Semglee to the reference insulin glargine in participants with type-1 and 2 diabetes and found similar glycemic results in both groups. As a result, this insulin was approved by the FDA for the same indications as its reference product Lantus, thus expanding access for millions of people within this important patient community.
Semglee has an identical amino acid sequence as Sanofi’s Lantus and is approved for the same indications. This product has now received regulatory approval in more than 45 countries around the world and is the third product approved by FDA through the Mylan- Biocon collaboration.
She mentioned that this product already has a $6bn market opportunity in terms of Lantus sales and the company expects it to be $2.2bn opportunity.
Consensus Estimate: (Source: market screener website)
The closing price of Biocon was ₹ 410/- as of 24-Aug-2020. It traded at 46x/ 31x/ 26x the consensus EPS estimate of ₹ 8.9/ 13.4/ 15.8 for FY21E/ FY22E/ FY23E respectively.
Consensus target price of ₹ 413/- implies a P/E multiple of 26x on FY23E EPS of ₹ 15.8.
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27 Feb

Expect to address FDA observations in time to launch Glargine: Christiane Hamacher, Biocon Biologics

Update on the Indian Equity Market:

On Wednesday, NIFTY closed lower at 11,678 (-1.0%). The worst sectoral performers were Auto (-2.1%), Realty (-1.7%) and IT (-1.4%). There were no sectoral gainers. The top gaining stocks for NIFTY50 were YESBANK (+4.9%), SBIN (+0.4%) and HCLT (+0.2%) while the losers were GAIL (-5.1%), SUNPHARMA (-3.8%) and TATAMOTORS (-3.6%).

Excerpts from an interview with Dr. Christiane Hamacher, MD and CEO of Biocon Biologics aired on CNBC18 TV on 24nd February 2020:

  • They have received three observations from US FDA under form 483 and they are procedural in nature. They largely aim at process improvements.
  • They don’t have any repeat observations and they will be submitting an action plan very soon to address these observations.
  • They are expecting to address all the observations well in time to meet the target action date for their biosimilar Glargine in June 2020 and they expect to be in a position to launch in 2nd half of this calendar year in the US by their partner Mylan.
  • So, there is no delay when it comes to launching in the second half of 2020.
  • As a transition from New Drug Application (NDA) to Biologics License Application (BLA) for certain biologics will not actually affect their submission for biosimilar Glargine.
  • That was submitted another pathway and they are very clear that they expect their biosimilar will continue to be reviewed under the same pathway. So, they don’t foresee any delay when it comes to this review process.
  • Biosimilar Glargine together with their biosimilar Trastuzumab, and their biosimilar Pegfilgratim in the US, in the near future will be a very important component to achieve the revenue guidance of USD 1 billion that they have given for FY22.
  • They see much less competition compared to other areas like oncology and they have a huge portfolio. Along with their partner Mylan, they are very well positioned to be a leading player in the insulin biosimilar space.

Consensus Estimate: (Source: market screener website)

  • The closing price of Biocon was ₹ 298/- as of 26-February-2020.  It traded at 40x/ 30x/ 23x the consensus earnings estimate of ₹ 7.5/ 10.1/ 13.1 for FY20E/ FY21E/ FY22E respectively.
  • Consensus target price is ₹ 313/- which implies a PE multiple of 24x on FY22E EPS of ₹ 13.1/-
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10 Jan

‘Biocon optimistic about hitting $1 billion in revenue by FY22 on back of new launches’ – Kiran Mazumdar Shaw, Chairperson and Managing Director, Biocon

Update on the Indian Equity Market:

On Wednesday, NIFTY closed at 12,025 (-0.2%). Among the stocks, Bharti Airtel (+3.1%), Yes Bank (+2.2%) and TCS (+2.15%) were the gainers. Eicher Motors (-4.3%), Coal India (-2.5%), and LT (-2.2%) were the top losing stocks. IT (+0.4%) and FMCG (+0.1%) were the sectoral gainers. All the sectors ended in the red.

‘Biocon optimistic about hitting $1 billion in revenue by FY22 on back of new launches’ – Kiran Mazumdar Shaw, Chairperson and Managing Director, Biocon

Excerpts from an interview with Kiran Mazumdar Shaw, Chairperson and Managing Director- Biocon published in Livemint on 08th January 2020:

  • They would get a benchmark valuation through some private equity investment before they take it to the market for an initial public offering (IPO) and according to her this is the first step where True North has invested in Biocon’s Biologics and they set a base level benchmark valuation.
  • They might raise little more private equity prior to the IPO. This gives them an idea of where they believe they can unlock the value in terms of Biocon Biologics in the next few years.
  • They have been in discussion with several private equity forums and of course True North has been first of the block and they will be socializing and entertaining other investment opportunities from other private equity firms.
  • In 2020, hopefully they will see private equity funding complete before they go for an IPO. The plan is obviously to invite private equity and use it for many of their current funding needs.
  • They have set up a very expensive biologics facility. So private equity funding will actually come in very handy instead of raising extra loans, debt finance.
  • They plan to extend the private equity funding to $200-300 million or more levels and True North is expected to take up additional stake along with others.
  • The opportunities are very well marked out, and she feels optimistic about hitting the target of $1 billion of revenue in biologics by FY22.
  • They are now in the US market with both Trastuzumab and Pegfilgrastim. Both have had pretty strong entries.
  • They have also got Glargine and Bevacizumab that will make an entry into the market by FY22 and we also expect insulin Aspart to be in the US market by that time.
  • There are many launches that are planned by FY22 and she believes that they have worked out a fairly conservative kind of metrics to get them to that FY22 billion dollar target. So that is why they remain quite confident that they will be able to hit that target.
  • She believes that they have a very robust pipeline; they have 28 molecules, either in the market or under development. They have just commissioned first expansion of their very large biologics facility in Bengaluru.
  • Biocon has to be viewed as a balanced portfolio with small molecules, biologics and research services and those who want a pure play investment opportunity in either biologics or research services can opt for either Syngene or Biocon Biologics. She thinks they have made it into an interesting investment opportunity by structuring it this way.
  • Biocon will continue to be a very strong performer considering the fact that it intends to have majority stake in both Syngene and Biologics.
  • As capex needs of biologics business are very high both in terms of manufacturing capacity as well as R&D investment, they will use the funding across the board.

Consensus Estimate: (Source: market screener website)

  • The closing price of Biocon Ltd was ₹ 282/- as on 08th January-20. It traded at 37x/ 28x/ 21x the consensus earnings estimate of ₹ 7.5/ 10.1/ 13.2 for FY20E/ FY21E/ FY22E respectively.
  • Consensus target price is ₹ 294/- which implies a PE multiple of 22x on FY22E EPS of ₹ 13.2/-
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