Glenmark to out-license molecule for pain management; Maintain HOLD with PT of Rs775 :: IndiaNivesh

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http://www.business-standard.com/article/companies/glenmark-to-out-licensemolecule-for-pain-management-114122900018_1.html
Glenmark Pharmaceuticals, the Mumbai-based pharmaceutical major with a large
research and development pipeline, is set to out-license its molecule for pain
management. The molecule, GRC 17536, is expected to have a market potential
worth $1 billion. According to people in the know, Glenmark is in talks with a few
multinational giants and a deal is likely in a couple of months. (for details, please
click on the link above)
Our view: Glenmark Pharmaceuticals (GNP IN) had announced successful
completion of phase-II trials on 138 patients in Europe and India in September 2014.
Given the history of GNP signing out-licensing deals for its molecules after reaching
appropriate stage, we believe that GNP’s GRC 17536 may be out-licensed. The outlicensing
buzz may keep positive sentiment on the stock till the deal is signed by
GNP. However, the financial impact would depend on the deal size and further
developments in the molecule.
Valuation: At CMP of Rs779, the stock is trading at 23.4x FY15E EPS of Rs33.2 and
20.1x FY16E EPS of Rs38.8. We maintain price target of Rs775 based on 20x FY16
earnings. We maintain HOLD rating based on valuation.