Stock corner: Ongoing trial could push back launch; ‘Sell’ on Biocon

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Published: December 13, 2019 3:19:18 AM

Post Fulphila and Ogviri launches in the US, the next key launch for MYL/BIOS is Semglee (biosimilar insulin glargine), which we expect to be triggered in 1HFY21 post expiry of the 30-month stay.

Stock corner, push back, launch,Sell Biocon, market news Stock corner: Ongoing trial could push back launch; ‘Sell’ on Biocon

Post Neulasta and Herceptin US launches, the next key launch expected for BIOS/MYL in the US is biosimilar Lantus, where the market is assuming an FY2021 launch. However, our analysis suggests that the ongoing trial covering the ‘844 SoloStar patent could potentially push back the larger ‘pen’ formulation (80% of glargine US market) launch to 2HCY21 or even CY2024, exposing potential risks to the commercial story. SELL.

Post Fulphila and Ogviri launches in the US, the next key launch for MYL/BIOS is Semglee (biosimilar insulin glargine), which we expect to be triggered in 1HFY21 post expiry of the 30-month stay. However, we believe the assumption could be at risk given the ongoing litigation in the District Court of NJ on ’844 patent covering the Lantus SoloStar device (CY2024 patent expiry), where Sanofi has asserted claims 21, 22, 25, and 30 of the ’844 patent. We expect a verdict on the litigation in 1QCY20, and believe that infringement is a close call, with the Court likely to uphold the validity of the patents. We note that the ‘844 patent has also been challenged by MYL at IPR (IPR2018-1680 and IPR2018-1682) where a decision is expected in April 2020. We see three launch scenarios emerging (1) MYL obtains a favourable verdict in the District Court judgment, and launches at risk in 1HFY21, (2) Sanofi prevails in the District Court, though, MYL prevails in Federal Court in invalidating the patent or proving non-infringement, which would push back the launch to 2HFY21, and (3) Sanofi prevails in both District and Appeals Court, and obtains injunction against MYL until CY2024. While this litigation is only applicable to the pen device, we note that the alternate vials market is down to <20% of the total glargine market, and rapidly declining with volumes down 50% over past three years, and we expect vials volumes to continue to erode rapidly given the premium 2-3X pricing over pen.

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