Jefferies sees healthy upside for Sun Pharma shares after recent acquisition
Sharing its takeaways from the call with Jefferies US analyst on Concert Pharma Acquisition until its recent acquisition by Sun Pharma, Jefferies in a note said that the analyst Dr Maurice Raycroft Ph.D Maury provided insights on the positioning of Concert’s lead drug Deuruxolitinib for treatment of alopecia areata.
“He discussed potential ramp-up, profitability, drug usage and IP challenges for Deuruxolitinib. On profitability, Maury added that COGS for Deuruxolitinib can be 6-12% of sales value, marketing costs can be $50-100 m (if the product reaches ~USD500m sales) and the current open-label studies and initial opex for the product may require $20-40 m of annual costs (we modeled USD50m cost for Deuruxolitinib NPV calculation),” the note stated. The brokerage house has maintained Buy rating on Sun Pharma shares with a target price of ₹1,200 apiece.
Drug major Sun Pharma earlier this month completed the acquisition of US-based Concert Pharmaceuticals, after inking a pact to acquire the firm in a $576 million deal in January.
On reason why Sun got a good deal on Concert, the brokerage highlighted that Concert Pharma’s clinical trials were indicating that it would trump competing products from Eli Lilly and Pfizer, and this was confirmed by Phase III data. Concert Pharma’s market cap just before trading stopped was less than $1 bn.
“The company had a best-in-class product, but Big Pharma gave it miss, perhaps because of IP issues around the product and some of them such as Lilly, Pfizer and BMS having their own program for alopecia areata. Also, Concert Pharma did not have a cash runway beyond 2023 and was in need of a partnership. Low competitive intensity for acquisition and Concert’s depleting cash reserves may have helped Sun Pharma get a good deal for the Concert acquisition,” it added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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