What's changed
Glenmark announced that Melogliptin, its novel molecule for diabetes, is
set to enter global Phase III trials by end 2009. It stated that Phase IIb trials
were completed successfully and achieved 1% average HbA1c reduction
(comparable to Saxagliptin monotherapy) and a positive safety profile.
Implications
In the patient group with higher baseline HbA1c, the study reported a
reduction of 0.88% and 1.05% (at different doses) thus reducing HbA1c
levels to the range of 7.5%-9%. Note that for glucose control, the Intl
Diabetes Federation recommends HbA1c values below 6.5%.
anyhow i took 10 no.s @ 219 now. for investment purpose - wil buy @ dips around 203-208
Disappointing numbers, one offs impacted further
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Accumulate
CMP: Rs230 Target Price: Rs241
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Glenmark posted disappointing set of numbers, significantly below our/market estimates. Revenue fell by 14% to Rs 4911mn because of absence of NCE income (Rs609mn in Q4FY08) and a base business decline across all segment (decline by 4%), except its domestic formulation business (grew by 12%). Operating margins were affected because of a) Inventory write-down for the US and LatAm market (Rs700mn), b) Closure of operations in Australia and China (Rs600mn) and c) A charge back of Rs1.17bn on account of price erosion in Oxcarbazepine. This has resulted 21 percentage point contraction in EBIDTA margins to 17.7% in Q4FY09. Pressure in top-line and operating margins coupled with higher interest cost (up by 364%) has led to 96% decline in APAT to Rs91mn in Q4FY09. For FY09, Revenue was up by 6% to Rs20.9bn. excluding NCE income, revenue grew by 21%. Adjusted EBIDTA for FY09 de-grew by 27% to Rs5850mn. APAT de-grew by 55% to Rs2830mn. On the back of lower than expected performance, we have downgraded our FY10E earning estimates by 25% to Rs12.8 and introduced our FY11E earning estimates (EPS of Rs17.2 for base business). We are positive on the outcome of Melogliptin Phase IIb clinical data and have revised the NPV of R&D assets from Rs44 per share to Rs69 per share. However, we feel that monetizing of R&D opportunity in the near term will remain a key challenge for the company. Maintain Accumulate rating with a price target of Rs241 (10x FY11E EPS ex. R&D NPV). Positive data for Oglemilast and out-licensing deal for Melogliptin will be key upsides.
jus a follow up... sell @ top buy @ dip policy for glenmark & suntv stocks in this momentum condition
