Glenmark Pharmaceuticals Ltd has entered a unique royalty deal with Paul Capital Partners Royalty Fund (Paul Royalty), a leading, international healthcare investment fund, through its US based wholly owned subsidiary Glenmark Pharmaceuticals Inc (GPI).
Under the terms of the arrangement, Paul Royalty will invest up to US$ 27 million to finance the development of 16 dermatological products by the company for the US market.
In return Paul Royalty will receive undisclosed royalties on net sales following US FDA approval, and launch of each product. The products in the portfolio currently have a total US market revenue of about US$ 1 billion. DSP Merrill Lynch and Greenberg Traurig LLP were the Company's financial and legal advisors respectively for the deal.
Glenn Saldanha, managing director and CEO of the Company remarked, "This deal marks many firsts including first time an Indian company is entering the US market with an entire portfolio of dermatology products, a unique deal structure and the first risk-sharing financing deal of its kind. Sharing clinical and operational risks inherent in the portfolio and reducing the impact of generic R&D expenditure on the P&L are among the key reasons we have entered into this deal. We have chosen Paul Royalty to partner with us in this risk-sharing deal for their deep experience in healthcare investment and understanding of the process evolved. Along with our strength and experience in dermatology formulations, we believe that this partnership combine is well equipped to take on record on the challenge."
Terrance Coughlin, President of Glenmark Pharmaceuticals Inc., USA stated, "Developing a dermatological range fits into the niche products strategy that Glenmark is pursuing and will give us an edge in the US generics space."
Under the agreement, the Company will be responsible for pre-clinical development, will manage, the clinical trial and manufacture the products; GPI will be responsible for filing the abbreviated new drug applications (ANDAs) and, upon approval, marketing the products in the US. The Company will also supply active pharmaceutical ingredient [API] for some of the products. Paul Royalty will finance product development through milestone payments to GPI over the next two years. In return, Paul Royalty will receive a royalty on net sales for these products, with the percentage varying by product and performance.
This dermatological portfolio ranges from the easier to more complex product development, near and medium term revenue opportunities, and a mix of Para I-III and Para IV filings. Clinical trials for two of the products have already been initiated and ANDA filings will commence from the end of 2006 and continue over the next two years. All 16 products are expected to be launched over the next five years with the first product launch occurring in 2007.
The Company's previous efforts to accelerate its portfolio build have involved in-licensing generics from US based manufacturers, collaboration agreements for joint development with other Companies and also acquisition of ANDAs. The Company Closed FY 2006 with a portfolio of 17 ANDAs filed with the US FDA; the Company's partners have filed 3 ANDAs till date. The company had also purchased 2 ANDAs from Colonel Healthcare Ltd. in FY 2005. GPI is currently marketing six generics in the US and is expecting to launch 7-8 more over the next 6 months, including niche controlled substance generics recently in-licensed from Aspen and Lehigh Valley Technologies.