Glenmark Shares Drop To Six-Year Low As U.S. FDA Approval For Nasal Spray Delayed
The adverse U.S. FDA letter is seen delaying launch of Glenmark’s Ryaltris nasal spray till the first half of 2020-21.
Shares of Glenmark Pharmaceuticals Ltd. fell to their lowest in six years on Monday after the company said the U.S. Food and Drug Administration didn’t approve its key nasal spray—a move that will delay the launch of the product in one of the biggest markets for most Indian drugmakers.
The U.S. FDA issued a complete response letter regarding the new drug application for Ryaltris—used for treating seasonal allergic rhinitis or swelling of mucous membrane of the nose—citing deficiencies in the drug master file pertaining to one of the active pharmaceutical ingredients and in the manufacturing facilities of Glenmark, according to the Maharashtra-based company's exchange filing.
Glenmark, however, expects the issue to be resolved in the next six to nine months. The drugmaker was earlier targeting to launch this nasal spray in the U.S. in October this year.
The adverse U.S. FDA letter may delay the launch of the product till the first half of financial year ending March 2021, according to Macquaire analyst Alankar Garude. Due to the absence of a partner, Glenmark will have to incur the launch expenses, Garude wrote in a note.
Glenmark in an earnings call had said it will invest in marketing and promotions for Ryaltris once the product is approved by the U.S. FDA. Macquarie, however, said Glenmark’s search for a partner for Ryaltris might not be impacted much as there are no deficiencies with the clinical data supporting the new drug application.
Amey Chalke, pharma analyst at HDFC Securities, who anticipated peak sales worth $70-100 million from the drug once its launched, said the company will need to spend more to scale up the product unless it finds a marketing partner to share costs. Citi had expected U.S. sales of the drug to increase to $60-65 million over three to four years.
On Monday, Glenmark shares dropped as much as 7.6 percent to Rs 462.10 apiece—the lowest since April 2013—reacting to the announcement. Eight of the 32 analysts covering the stock have a ‘Buy’ recommendation, while 18 suggest ‘Hold’ and six ‘Sell’. The Bloomberg consensus target shows a return potential of 28 percent to the current price.