Key Highlights :
Glenmark unit IGI signs $700 million licensing agreement with AbbVie for cancer candidate ISB 2001.
Deal supported by up to $1.2 billion of milestones and high-teens royalties.
Glenmark stock jumped nearly 10% to all-time highs on news.
Key Background :
Glenmark Pharmaceuticals has made significant strides in the global biotechnology space with its wholly-owned subsidiary, Ichnos Glenmark Innovation (IGI), signing a historic licensing agreement with AbbVie. The transaction is centered on ISB 2001, a first-in-class trispecific antibody in Phase 1 clinical trials for the treatment of relapsed or refractory multiple myeloma. ISB 2001 has been designed to bind BCMA and CD38 on myeloma cells and CD3 on T cells to induce killing of T cells and potentially cure patients who have exhausted available therapeutic options.
The economics of the transaction highlight its size and strategic aspect. Glenmark would receive an initial payment of $700 million, and to receive between $1.2 billion and $1.225 billion in milestone payments based on development, regulatory, and commercial milestones. Glenmark would also receive double-digit, staged royalties on subsequent worldwide net sales of ISB 2001, with a predictable source of earnings as the drug advances in the commercial space.
Commercial rights are being strategically allocated to both companies. AbbVie will have sole rights to sell ISB 2001 in developed markets such as North America, Europe, Japan, and Greater China. Glenmark will have rights in fast-growing emerging markets such as Asia (excluding Japan and China), Latin America, CIS countries, the Middle East, Africa, South Korea, Australia, and New Zealand. The transaction allows both companies to use each other's geographical strengths.
The news propelled Glenmark's share price to an all-time high in a rapid and comforting way, up by nearly 10%. The stock also hit the upper circuit band and was the top gainer on the Nifty Pharma index, which is viewed as an indication of optimistic investor sentiment towards the long-term value of the deal.
Brokerages were upbeat on the news, and HSBC and Axis Capital reinstated buy calls and raised target prices. They picked out the massive financial return and support for Glenmark's biologics R&D potential. Nuvama, in contrast, was conservative but maintained a neutral rating, suggesting much of the value in the transaction may already be priced in.
Not only will the deal enhance Glenmark's bottomline in the short term but also the international image as a cancer drug maker. ISB 2001 having shown promise to become a first-in-class therapy, the partnership places Glenmark and IGI on the path of long-term growth through innovation.