Biocon- FDA advisory panel for Fidaxomicin:: Macquarie Research,

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Biocon
FDA advisory panel for Fidaxomicin
Event
 Optimer’s (OPTR, NR) new drug application (NDA) of fidaxomicin is due
to be reviewed by a USFDA advisory committee on April 5, 2011. The
FDA decision on approvability of fidaxomicin is expected in May 2011.
While not compulsory, the FDA usually follows the recommendation of its
advisory panel and hence the event early next week holds significance for
Biocon. Biocon has a long-term supply agreement with Optimer for the
commercial manufacturing of the active pharmaceutical ingredient
Fidaxomicin. If approved, Optimer expects launch in 2HCY11.
Impact
 Opportunity for Biocon: Optimer expects fidaxomicin to have global
peak sales potential of anywhere between US$300m and US$ 600m.If
fidaxomicin commercially is only used for vancomycin-resistant
enterococci (VRE) infections — then the product may track at the lower
end of the company’s sales guidance. Management indicated that this
could potentially add US$50m to the top-line. Management expects the
supply to start from 1QFY12 if the product is approved by USFDA.
 Phase 3 trial data was positive: Fidaxomicin is an orally administered
macrocyclic antibiotic with a new mechanism and narrow spectrum of
action being developed for the treatment of CDI (clostridium difficile
infection). In two Phase 3 trials for the treatment of CDI, fidaxomicin was
equally effective in clinical cure compared to vancomycin, the only FDA
approved product for CDI. Fidaxomicin was statistically superior to
vancomycin in global cure and in reducing recurrences of CDI by up to
47%. While the market’s expectations are high for FDA approval, we
believe the competitive scenario will be tough given presence of
vancomycin generics in market.
 Pfizer Biosimilar Insulin deal –: Pfizer (PFE; NR) said post its due diligence
that Biocon is way ahead of competition for the development of entire family
of insulin bio-similar product. PFE has exclusive rights to commercialize
Biocon’s Recombinant Human Insulin, Glargine, Aspart and Lispro globally.
Biocon will remain responsible for the clinical development, regulatory
approval, manufacture and supply of the products globally. Substantial
investments are required by Biocon over the next couple of years to put
additional capacity and conduct clinical trials to get regulatory approval in
developed markets, according to the management. Global insulin market is
currently worth US$14 b.
Outlook
 PFE deal has been a significant positive development for BIOS. Given PFE’s
global marketing footprint they are ideal partners to leverage Biocon’s insulin
franchise. Management expects out-licensing of in-house developed novel
molecules (oral insulin and anti CD6), Syngene listing, Optimer API deal and
global launch of bio-similars to unlock value for shareholders going forward.
Biocon (BIOS IN) currently trades at 16x FY12E consensus earnings.