Retain ‘hold’ on Sun Pharma, target Rs 940: Religare

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Published: May 6, 2016 5:19:43 AM

On factoring this in as well as losses from cessation of Keveyis sales (halted recently), our March 2017 TP remains broadly unchanged at Rs 940. Retain hold.

Sun Pharma’s in-licensed molecule from Merck, Tildrakizumab, evaluated for treating moderate-to-severe plaque psoriasis, has met primary endpoints in phase-3 clinical trials. This is an important milestone for SUNP and paves the way for its NDA filing in CY17. We think SUNP can generate $ 600 million peak sales from Tildra, which translates into a NPV of Rs 18/sh. On factoring this in as well as losses from cessation of Keveyis sales (halted recently), our March 2017 TP remains broadly unchanged at Rs 940. Retain hold.

The $5 billion-6 billion US biologics psoriasis market is crowded by TNF-alpha blockers (Enbrel, Humira, Remicade), IL-12/23 (Stelara) and Cosentyx (IL-17A inhibitor); Tildra is the first IL-23 inhibitor to show positive phase-3 results for psoriasis. Its molecule targets cytokine IL-23 and needs less frequent dosing vs. brands like Cosentyx ($1.5 billion drug, once-a-month dosing). Biologics has a <10% share (growing at 10% pa, as per industry reports) in the US plaque psoriaris market, and can ramp up faster with safer biological drugs.

Apart from the five approved products, there are at least two IL-17s — AstraZeneca’s Brodalumab (completed phase-3 trials in November 2014) and Eli Lilly’s Ixekizumab (phase-3 earlier this year) — and a few IL-23s such as J&J’s Guselkumab (phase-2b) and Boehringer Ingelheim’s BI 655026 (phase-2) under development. Tildra would thus be the 7th or 8th player to enter the market.

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