Stock Of The Day: Glenmark Pharma Shares Rally 16% Post Landmark Cancer Drug Deal; What’s Ahead For Investors?

Stock of the Day: Regardless of the bearish sentiment prevailing across the Indian stock market today, Glenmark Pharma shares skyrocketed 16% during Friday's intraday trading session. The pharma stock rally came a day after the company announced its landmark deal related to a cancer drug.

Glenmark Pharma shares surged 16.6% to an intraday high mark of Rs 2286.15 per share on BSE with a market capitalisation of Rs 61,563.52 crore. The stock ended 14.5% higher at Rs 2181.55 per share on BSE on Friday, July 11.

Glenmark Pharmaceuticals' Landmark Deal

Glenmark Pharmaceuticals, in its landmark deal on Thursday, announced that its unit Ichnos Glenmark Innovation, Inc. (IGI) is licensing its blood cancer drug to Chicago-based AbbVie Inc in a deal worth $700 million. The deal has been portrayed as the biggest outlicensing deal for any Indian drugmaker.

"Ichnos Glenmark Innovation, Inc. (IGI), a global, fully integrated clinical-stage biotechnology company focused on developing multispecificsTM in oncology, today announced its global commercialization strategy for its lead investigational asset, ISB 2001developed using IGI's proprietary BEAT® protein platform, for oncology and autoimmune diseases. This follows the execution of an exclusive licensing agreement with AbbVie (NYSE: ABBV), stated the company in its press release on Thursday.

Glenmark Pharma Drug Deal: Why It Is Important?

IGI's ISB 2001 is an undertrial asset to treat multiple myeloma, a type of blood cancer. Under the deal, AbbeVie will get the licence to sell the drug (once it completes its trials and receives mandatory approvals) in North America, Europe, Japan, and Greater China. Whereas, Glenmark will manufacture and supply the drug in India and other emerging markets.

"Our collaboration with AbbVie and Glenmark reflects IGI's mission to accelerate access to transformative multispecificsTM for patients worldwide," said Cyril Konto, M.D., President, Executive Director and CEO of IGI.

"AbbVie's reach in major markets combined with Glenmark's commercial strength in Emerging Markets, creates complementary access pathways for ISB 2001, a trispecific T-cell engager with promising potential in Multiple Myeloma," Konto added.

What's Different In Glenmark's Cancer Drug?

The undertrial ISB 2001 drug is likely to be used on cancer patients who don't respond to the current treatment or are prone to a recurrence of cancer. The drug, with its "tri-specific" antibody, targets three different markers on cancer cells at once. The drug can be used for treatment in cases even when T-cell therapy and other treatments have failed.

"The addition of ISB 2001 is a natural evolution of our oncology strategy. With our deep commercial footprint, strong regulatory capabilities, and experience in launching breakthrough assets like BRUKINSA® and TEVIMBRA® in India, and rights to commercialize QiNHAYO® (envafolimab), a PD-L1 checkpoint inhibitor, in Emerging Markets, we are well positioned to deliver impactful treatment option for patients with difficult-to-treat cancers through ISB 2001," said said Christoph Stoller, President - Europe and Emerging Markets, Glenmark Pharmaceuticals.

Glenmark Pharma Deal Sparks Rally: What's Next For Investors?

While Glenmark's stellar rally indicates a heightened investors' confidence in the pharma stock after the development, the stock may see a further bullish trend in the coming days. According to a Motilal Oswal report released on Friday morning before market opening, the stock is expected to see a 28% upside in its valuation. Despite its 14% rally, the stock is still likely to surge in the coming days, if the brokerage valuations are to be believed.

Glenmark Pharma Share Price Recommendation

The brokerage has indicated a target price of Rs 2,430 per share. The stock closed higher at Rs 2181.55 per share on BSE on Friday.

"Based on the contours of the deal, we add an NPV of INR470 per share to the 27x 12M forward base business earnings to arrive at our TP of INR2,430. Over the past two years, GNP has: a) reduced its financial leverage; b) improved the commercial prospects of innovative R&D; c) strengthened its ANDA pipeline for the US market; and d) undertaken a strategic reset in its domestic formulation business. Accordingly, we estimate 11%/17%/20% sales/EBITDA/PAT CAGR over FY25-27, reaching INR163b/INR33b/INR20b. Reiterate BUY," noted MOFSL in its report on Friday.