Ranbaxy Labs-3QFY2015 Result Review

Results much lower than expected

Stock down by 1.0%

Ranbaxy Labs (CMP: `700/ TP: /Upside )

For 3QFY2015, the company posted a disappointing set of numbers. The revenues came in at `2,587cr V/s `3,570cr expected, posting a yoy de-growth of 9.5%. The sales were impacted by the dip in the US and currency depreciation in Russia and Ukraine. Its key regions like US region, posted sales of `896.3cr V/s `1,018.7cr, a yoy dip of 12.0%, India (`590.9cr) a yoy growth of 2.0%, East Europe & CIS (`372.5cr) – a yoy dip of 18.3%. The region that posted strong growth was, Asia Pacific and LATAM, which posted a yoy growth of 46.0%. On the operating front, the EBIDTA came in at 3.2% V/s 23.8% expected a yoy dip of 475bps. Apart from lower sales which impacted the gross margins which came in at 59.5% V/s 63.4% during the last corresponding period, which along with operating forex loss of `132.6cr, lead the OPM come in 3.2% V/s 7.9% in last corresponding period. This along with the tax expense during the period, which came in at`888.1cr, lead the company report a loss of `1030cr. On Adj. PAT, the company posted a loss of `966cr V/s profit of `112cr, in 4QFY2014, much lower than the `499cr expected. We maintain our neutral rating on the stock.

IPCA Labs- Update

IPCA Labs- Update: The U.S. Food and Drug Administration (FDA) has banned imports from Indian generic drugmaker Ipca Laboratories Ltd’s plant at Ratlam in Madhya Pradesh due to violations of standard production practices. The company had received a 483 earlier for this plant. Ipca had voluntarily halted shipments to the United States from the plant in July last year after the FDA outlined half a dozen violations including data integrity issues. We are not changing our estimates as we had already pruned the same when company got a 483’s. Thus we maintain our buy recommendation with a price target of `817.

Dr Reddy’s Labs- Curis and Aurigene Discovery Technologies enter into an exclusive agreement.

Dr Reddy’s Labs- Curis and Aurigene Discovery Technologies enter into an exclusive agreement: Curis Inc. & Aurigene Discovery Technologies announced that they have entered into an exclusive collaboration agreement focused on immuno-oncology and selected precision oncology targets.
Aurigene is a specialized, discovery stage biotechnology company, developing therapies to treat cancer and inflammatory diseases. Aurigene is an independent, wholly-owned subsidiary of Dr. Reddy’s Laboratories Ltd. Aurigene will have the responsibility for conducting all discovery and preclinical activities, including IND-enabling studies and providing Phase-1 clinical trial supply.
According to the agreement, Curis will have responsibility for all clinical development, regulatory and commercialization efforts worldwide, excluding India and Russia, for each program for which it exercises an option to obtain a license. Curis will have the option to exclusively license compounds once a development candidate is nominated within each respective program. In connection with the transaction, Curis has issued to Aurigene approximately 17.1mn shares of its common stock, or 19.9% of its outstanding common stock immediately prior to the transaction, in partial consideration for the rights granted to Curis under the collaboration agreement. The company noted that the shares issued to Aurigene are subject to a lock-up agreement until January 18, 2017, with a portion of the shares being released from the lock-up in four equal bi-annual installments.
The first two programs under the collaboration are an orally-available small molecule antagonist of programmed death ligand-1 (PD-L1) in the immuno-oncology field and an orally-available small molecule inhibitor of Interleukin-1 receptor-associated kinase 4 (IRAK4) in the precision oncology field. Curis expects to exercise its option to obtain exclusive licenses to both programs and file IND applications for a development candidate from each in 2015. We maintain our buy with a price target of ₹3,935

Lupin Receives USFDA Approval for Generic Celebrex Capsules

Lupin Receives USFDA Approval for Generic Celebrex Capsules: Lupin Limited (Lupin) has received final approval for its Celecoxib Capsules, 50 mg from the United States Food and Drugs Administration (FDA) to market a generic version of G.D. Searle LLC’s (a subsidiary of Pfizer Inc.) Celebrex® Capsules 50 mg. Lupin also received tentative approvals for its Celecoxib capsules 100 mg, 200 mg and 400 mg strengths from the FDA. Lupin’s Celecoxib Capsules 50 mg, 100 mg, 200 mg and 400 mg are the AB-rated generic equivalents of G.D. Searle LLC ‘s Celebrex® Capsules 50 mg, 100 mg, 200 mg and 400mg and are indicated for Osteoarthritis, Rheumatoid Arthritis, Juvenile Rheumatoid Arthritis in patients 2 years and older; Ankylosing Spondylitis, and Acute Pain. Celebrex® Capsules had annual U.S sales of US$ 2.44 billion (IMS MAT June, 2014). Currently there is a limited competition for the product and the company can, conservatively garner sales of US $50-60mn in sales for the 50 mg capsules. We maintain our neutral, on back of valuations.

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