Sun Pharma has in-licensed SPARC’s opthalmic product Xelpros (Latanoprost BAK Free) for the US market. As part of the licensing deal, Sun Pharma will pay $3 million in upfront payment to SPARC (Sun Pharma Advanced Research Company). Sun Pharma will pay an additional $16 million in milestone payments to SPARC. SPARC will also receive royalty on sales and other sales related milestone payments. The details of royalty and sales related milestone payments have not been disclosed.
SPARC filed NDA in January 2014 and received a CRL (Complete Response Letter) in December 2014. SPARC has replied to the CRL and a response from the FDA is awaited. The announcement of the deal with Sun Pharma makes us believe that the management has high confidence of gaining an FDA approval in the near term.
Sun Pharma’s move to establish an ophthalmology specialty business is a right strategic move, in our view. The lifecycle of opthalmics, derma and respiratory products are generally higher compared to oral solids and injectables. Therefore, we believe the focus on these segments for the specialty business is the right move.
We don’t expect any significant near term financial implications for Sun Pharma. The profitability of the business to start with will be low as Sun Pharma would invest in front end infrastructure and the business will be subscale.