Lupin - R&D agreement with Medicis: Positive impact:: Standard Chartered Research,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


 Medicis to reimburse Lupin for Lupin’s proprietary
formulation technologies.
 Upfront milestone of US$20m with potential of US$38m
from further milestones.
 Medicis will have global rights (excluding India) for
products developed under agreement.
 Adds 6% to our FY12 net profit on a post tax basis.
 Unclear whether relates to recent Solodyn settlement
wherein LPC launches three strengths by Nov ’11.


LPC enters into R&D agreement with Medicis. Lupin has
entered into an R&D agreement with Medicis wherein
Medicis will reimburse Lupin for proprietary formulation
technologies for various therapeutic compounds. Medicis
will have global rights (excluding India) for products
developed under agreement.
Positive impact. We view this as a positive development.
Overall, as per the company, LPC will receive US$20m
upfront payment from Medicis with potential upside of
another US$38m in milestones. LPC is also eligible for
single digit royalties, post potential commercialisation of
products from these technologies. On a post-tax basis
(assuming 33% tax payout), US$20m will add ~5-6% of
additional upside to our FY12 estimates. We await more
clarity from management on accrual of above milestones
including such income from this deal.
Linked to Solodyn settlement? Interestingly, the above
agreement comes in the backdrop of a recent settlement
agreement with Medicis on LPC’s litigation on generic
minocycline (branded Solodyn) extended release tablets
(45/90/135mg) executed on 21 July ’11 wherein LPC (along
with five other generic players who settled earlier) will
launch above strengths by Nov ’11 and remaining strengths
by Feb ‘18/19. We are unclear on whether the above
settlement has any linkages to above R&D collaboration.