Glenmark Pharma shares jump 10% after mega ISB 2001 deal; Analysts see levels above ₹2,400

Shares of Glenmark Pharmaceuticals Ltd. surged as much as 10% on Friday, July 11, after the company's subsidiary Ichnos Glenmark Innovation (IGI), signed an exclusive licensing agreement with AbbVie for ISB-2001.

Analysts who track the company are projecting the stock to rise another 26.5% from current levels after the deal.

While Glenmark Pharma will retain commercialisation rights for its lead investigational asset, ISB 2001, in India and emerging markets, AbbVie will take over development and commercialisation across the US, Europe, Japan, China and other developed markets.

ISB 2001 is a tri-specific antibody against the development for multiple myeloma. It is still in Phase 1B of testing.

"Clearly, this is a huge moment for us. We've been working on this for 25 years in the innovation space, and I think ISB 2001 really is a world-class asset which can be transformational for patients,” Glenmark Pharma CMD Glenn Saldanha told CNBC-TV18 in an exclusive interview on Thursday.

Brokerage firm Motilal Oswal has a "buy" rating on the stock with a target price of ₹2,430 apiece. The stock ended the previous session at 1,919.6 apiece.

The brokerage said the AbbVie partnership signals a new era for Glenmark Pharma.

Motilal Oswal said the deal validates several aspects of Glenmark Pharma such as the strength of IGI's BEAT protein platform for oncology and auto-immune diseases, the potential of ISB-2001 to treat relapsed/refractory multiple myeloma and the commercial viability of ISB-2001 following successful clinical trials and subsequent commercialisation.

Motilal Oswal said oncology accounts for the majority of global licensing deals. This agreement ranks as the fourth-largest worldwide in terms of upfront payment, it said.

Motilal Oswal said over the last few years, Glenmark Pharma has reduced its financial leverage, improved the commercial prospects of innovative F&S, strengthened its ANDA pipeline for the US market and undertaken a strategic reset in its domestic formulation business. Accordingly, it estimates 11% sales, 17% EBITDA and 20% PAT CAGR over FY25-27 for the stock to ₹16,300 crore, ₹3,300 crore and ₹2,000 crore, respectively.

Meanwhile, HSBC has raised its price target on Glenmark Pharma by over 32% to ₹2,275 per share from ₹1,720 apiece.

On the flip side, Nomura has a "neutral" rating on Glenmark Pharma with a target price of ₹1,500 per share. The stock ended the previous session at ₹1,919.6 apiece.

Glenmark Pharma cracked a mega deal with AbbVie, it said.

Nomura said the deal involves an upfront $700 million, with up to $1.225 billion in development, regulatory and commercial milestone payments, along with tiered double-digit royalties on net sales.  The deal is the largest licensing deal by an Indian pharma company and its value is ahead of expectations, the brokerage added.

Glenmark Pharma stock was around ₹1,430 apiece on March 17, when CNBC-TV18 first reported about this story. Since then, it has rallied nearly 36% to around ₹1,900 per share.

Of the 12 analysts that have coverage on the stock, eight have a "buy" rating, three have a "hold" rating and one has a "sell" rating.

Shares of Glenmark Pharma gained 10% in early trade on Friday, July 11.  It ended previous session 5.5% up. The stock has gained over 28% in the past month.

Also Read: Zee Entertainment in focus as it fails to get 75% shareholder votes for promoter warrants