Natco Doubles Down On US With Ambitious ANDA Plan

One of India’s leading generic players, Natco Pharma, aims to file at least 10 ANDAs in the US in the next two years to expand its footprint in this key market as more medicines fall off the patent cliff, and analysts say the company - which is also considering new therapeutic areas - could be on the “verge of a breakout” in its US business.

Natco Pharma Ltd. made global headlines four years ago when India’s patent authority gave the mid-sized firm a compulsory license to produce a generic version of Bayer AG’s cancer drug Nexavar (sorafenib) at a price 97% below the patent-protected original.

Huge controversy ensued with pharma multinationals accusing India of flouting patent rights and predicting a wave of such licenses, which hasn’t materialized. In the meantime, things have been going well for Natco, which launched a reverse-engineered version of Nexavar for $171 month (still unaffordable for most Indians living on less than $2 a day), compared to the $5,000 a month for Bayer’s branded version.

Between fiscal 2012-16, Natco’s revenues have grown at a compound annual growth rate (CAGR) of 20%, and the 25 year-old firm, based in the southern city of Hyderabad, has been reporting a lot of good news lately. This has included first quarter net profit that soared 70% to INR476.5m ($7.1m) from a year earlier, on sales which jumped 38% to INR2.977bn, considerably overshooting brokerage forecasts.

The company , which tags itself as “resisting the usual” in finding affordable answers to complex medical problems, is now basking in buy recommendations for its shares, which closed flat on Sept. 22 at INR632.20 but well above their 52-week low of INR390. US investment firm Jefferies, initiating coverage of Natco last month, forecast US launches would drive 55% CAGR in earnings per share through fiscal 2019.

US Double-Down

Like other Indian pharma companies, vertically integrated Nalco is doubling down on the US market to exploit patent expiries worth tens of billions of dollars. It has an ample pipeline of high-value niche and complex generics for diseases ranging from cancer and multiple sclerosis to influenza, and with the US Food and Drug Administration clearing Indian generic applications at a fast pace, analysts are optimistic approvals will come sooner rather than later.

“We believe Natco is on the verge of a breakout in its US business with key launches in the next 12 months,” said Jefferies, which has a “buy” on the stock. “Its ‘known’ product pipeline would drive 20%+ earnings growth even post full-year 2019 estimate, in our view, a rarity in Indian pharma,” the investment firm added. India’s Ananth Rathi Institutional Research also says it sees product launches firing “better sales and profit in the next three-to-four years.”

Natco, one of India’s fastest-growing pharma companies with a presence in over 40 countries, said in a statement to the Bombay stock exchange Sept. 16 it expects to file 10 or more ANDAs (abbreviated new drug applications) in the US in the next two financial years. It already has 38 ANDA filings including 16 Para IV filings with the FDA, targeting a combined market of over $16.3bn.

21 ANDAS under review aim to tap a market of $15.4bn and it has 16 approved ANDAs, including three tentative ones, which target a total market of some $1bn.

The filings include: 20mg and 40mg formulations of multiple sclerosis drug glatiramer (a version of Copaxone), which has annual sales of $4.3bn; cancer drug imatinib (Gleevec; $2.37bn); fingolimod (Gilenya; $1.7bn); leukemia treatment bendamustine (Treanda; $710m); budesonide for Crohn’s disease (Entocort; $370.53m); kidney and liver cancer drug sorafenib (Nexavar; $300m); antidepressant armodafinil (Nuvugil; $82m); ovarian cancer drug doxorubucin (Doxil; $203m); and azacitidine for myelodysplastic syndrome (Vidaza; $239m).

Generic Tamiflu, Revlimid

Last December, Natco reached settlement on a patent infringement suit regarding the marketing of Tamiflu oral capsules in the US. Natco and US-based, privately owned partner Alvogen Inc. are the first generic players to win FDA approval for a copycat version of the formulation, which notched US sales of $403m in 2015, according to IMS Health data.

Under the settlement, Alvogen will be able to market the oseltamivir phosphate capsules before the Feb.23, 2017 expiration of the pediatric exclusivity period.

Natco has also settled pending litigation with Celgene Corp. over a generic version of multiple myeloma drug Revlimid (lenalidomide), which had nearly $3.4bn in sales in the 12 months to Sept. 2015. The Celgene agreement provides for a “limited volume” launch in March 2022 and unlimited generic Revlimid sales beginning in January 2026 - 15 months before patents on the drug officially expire in April 2027.

“The Tamiflu settlement agreement allowed us to launch before February 2017…We’re bound by confidentialities so unfortunately I am not able to disclose what day but definitely we will see it in this financial year,” Natco chief executive Rajeev Nannapaneni told analysts in a conference call. But “both products [Tamiflu and Revlimid] are significant opportunities and give certainty of monetization,” said Nannapaneni.

Also working to Natco’s advantage, the US Patent and Trademark Office has ruled in favor of its marketing partner Mylan NV and invalidated three patents for blockbuster MS drug Copaxone 40mg/mL held by Israel-based Teva Pharmaceutical Industries Ltd., the latest decision coming on Sept. 2, paving the way for generic competitors.

There are still a couple more cases to be settled, but the PTO declared the first three patents to be unpatentable.

Natco said in a Sept. 2 stock exchange filing that Mylan believes it’s one of the first companies to have filed a “substantially complete ANDA containing a Paragraph IV certification” for the three times per week glatiramer acetate injection 40 mg/mL, and that it is hopeful of qualifying for 180-day marketing exclusivity in the US upon final FDA approval.

Copaxone 40 mg/mL had US sales of $3.3bn, and “I think we’re confident we will get the approval in this financial year,” Nannapaneni said.

Partnerships

Natco has, like other Indian firms, been following a strategy of de-risking its business model through partnerships with experienced global generic players like Mylan and Alvogen, which it’s tasked with resolving litigation and regulatory issues, securing ANDA approvals and successfully commercializing products.

While it is making its presence felt internationally, the company has a wide portfolio in the Indian market with Indian formulation sales accounting for 53% of its total in this sector. Natco is also a leading oncology player with 27 drugs - up from half a dozen in 2003-04 - for the treatment of breast, brain and ovarian cancers.

Oncology revenues climbed by 17% in the first quarter year-on-year, and Natco said that with the cancer patient pool in India seen rising by a massive 20% annually, this segment will be a key focus.

Sofosbuvir

Natco last year launched a generic version of the hepatitis C drug Sovaldi (sofosbuvir) which was in-licensed from originator Gilead Sciences Inc. Natco has a non-exclusive licensing agreement with the US firm to manufacture and sell generic versions of its chronic hepatitis C medicines, which Natco can price on its own but must pay royalties to Gilead.

The license deal has been a huge revenue driver for Natco, which was the first company to launch sofosbuvir in India. Blockbuster launches of generic hepatitis C medicines helped drive the company’s first quarter branded pharma formulation revenue growth up by more than 300% from the same period a year earlier.

The deal with Gilead also allows Natco to market the hepatitis C medicines in 91 developing countries. “Our aggressive business development activity in the emerging markets for the licensed Hepatitis C drugs will create new channels for growth,” predicted Nannapaneni.

New Areas?

The company believes having a strong domestic presence is the key to balancing international risks. Right now it operates mainly in two segments - oncology and gastroenterology - but says it wants to diversify into a third “in the near future.”

“We are looking at diabetology or cardiology, we’re just weighing our options. But as you know, we like to do products where there’s not going to be too much competition or there’s some comparative advantage,” said Nannapaneni.

The domestic businesses has “hit a very good number now, I think, almost hitting INR8.5-9bn this year,” he added, “I think some smart ideas will play out in the next 12 to 18 months and I’m very positive we can take this business to INR11-12bn in the next one and a half to two years.”

From the editors of PharmAsia News.