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Dr. Reddy’s Q2 & H1 FY20 Financial Results

On November 1, 2019 Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY) reported its consolidated financial results for the quarter and the half year ended September 30, 2019 under International Financial Reporting Standards (IFRS) (Press release, Dr Reddy’s, NOV 1, 2019, View Source [SID1234550168]).

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Commenting on the results, Co-Chairman and MD, GV Prasad said, "I am pleased with our performance across the businesses and strong cash generation during the quarter. We are progressing well in execution of our strategy and in our transformation journey on quality and efficiency."

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 70.64

Global Generics (GG)

Revenues from GG segment at Rs. 32.8 billion. Year-on-year growth of 7%, primarily driven by Europe, Emerging Markets and India. Sequentially declined by 1%.

Revenues from North America at Rs. 14.3 billion. Year-on-year revenues remained flat. Sequential decline of 13%, on account of price erosion and lower volumes. Further impact on account of voluntary recall of ranitidine and temporary disruption in supplies due to logistics issues faced during this quarter. We launched eight new products during the quarter, which are Carboprost, Ramelteon, Fosaprepitant, Pregabalin, Vigabatrin, Docetaxel 160mg, Bupropion SR and OTC Guaif / Psuedo.

As of 30th September 2019, cumulatively 99 generic filings are pending for approval with the USFDA (96 ANDAs and 3 NDAs under 505(b)(2) route). Of these 96 ANDAs, 55 are Para IVs out of which we believe 31 have ‘First to File’ status.
Revenues from Europe at Rs. 2.8 billion. Year-on-year growth of 44%, primarily on account of new products and volume traction in base business partly offset by lower realizations. Sequential growth is 15%.
Revenues from India at Rs. 7.5 billion. Year-on-year growth of 9%, driven by new products, improved realizations and volume traction in base business. Sequential growth is 8%.
Revenues from Emerging Markets at Rs. 8.3 billion. Year-on-year growth is 10%. Sequential growth is 13%.
Revenues from Russia at Rs. 4.1 billion. Year-on-year growth of 8%. Growth primarily driven by increase in volumes coupled with better realizations in some of the key molecules.
Revenues from other CIS countries and Romania at Rs. 1.7 billion. Year-on-year growth of 16% largely driven by new products and better realizations in some of the key molecules.
Revenues from Rest of World (RoW) markets at Rs. 2.5 billion. Year-on-year growth of 11%, primarily driven by new products, volume traction partly offset by price erosions in some of the key molecules.
Pharmaceutical Services and Active Ingredients (PSAI)

Revenues from PSAI at Rs. 7.1 billion. Year-on-year growth of 18% and sequential growth of 57%. Growth largely driven by increase in volumes from existing products.
Proprietary Products (PP)

Revenues from PP at Rs. 7.4 billion. It includes Rs. 7.2 billion towards license fee for selling US and select territory rights for two of our Neurology brands ZEMBRACE SYMTOUCH (sumatriptan injection) 3 mg and TOSYMRATM (sumatriptan nasal spray) 10 mg, to Upsher-Smith Laboratories, LLC. The costs associated with this transaction are Rs. 328 million.
Income Statement Highlights:

Gross profit margin at 57.5%, improved by ~590 bps sequentially and ~250 bps over that of previous year. Gross profit margin for GG and PSAI business segments are at 55.5% and 24.6% respectively.
gross margin is benefitted due to revenue recognition of the PP Neuro brands
partly impacted by certain one-off’s, including but not restricted to the impact of the voluntary recall of Ranitidine in the US market
adjusted for one-off’s, normalized gross profit margin is ~51.5%
on a normalized base, the year on year decline is primarily on account of price erosion in the US.
SG&A expenses at Rs. 16.8 billion, an increase of 36% on a year-on-year basis and 39% sequentially. This includes an amount of Rs. 3.6 billion recognized as an impairment charge on three product related intangibles (viz., Ramelteon, Tobramycin and Imiquimod). There have been certain additional one-offs including but not restricted to the costs associated with the sale of two neurology brands. Adjusted for the one-offs, the normalized SG&A expenses are lower compared to the previous quarter.
R&D expenses at Rs. 3.7 billion. As % to Revenues- Q2 FY20: 7.6% | Q1 FY 20: 9.4% | Q2 FY19: 10.8%. We continue to focus on building a healthy development pipeline across all our focused markets.
Other operating income at Rs. 135 million compared to Rs. 641 million in Q2 FY19 and Rs. 3,759 million in Q1 FY 20. Previous year includes gain of Rs. 464 million on account of sale of rights relating to Cloderm brand (including its authorized generic) and profit on sale of antibiotic manufacturing facility in Bristol, US. Q1 FY 20 includes Rs. 3,457 million received from Celgene pursuant to an agreement entered towards settlement of any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company’s ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health Canada.
Net Finance income at Rs. 231 million compared to Rs. 625 million in Q2 FY19 and Rs. 393 million in Q1 FY 20. The year-on-year decline is primarily on account of lower foreign exchange gain, partly offset by higher profit on sale of investments during the quarter.
Profit after Tax at Rs. 10.9 billion. The net tax for the quarter is a benefit of Rs. 3.3 billion; due to recognition of deferred tax assets of Rs. 5.2 billion, primarily related to the MAT credit.
Diluted earnings per share is at Rs. 65.8.
Capital expenditure is at Rs. 1.1 billion.
Earnings Call Details (06:30 pm IST, 09:00 am EDT, November 1, 2019)

The Company will host an earnings call to discuss the performance and answer any questions from participants.

Audio conference Participants can dial-in on the numbers below:

Universal Access Number:

+91 22 6280 1219

Secondary number:

+91 22 7115 8120

Local Access number:

+91 70456 71221

(Available all over India)

International Toll Free Number

USA

1 866 746 2133

0 808 101 1573

Singapore

800 101 2045

Hong Kong

800 964 448

Playback of call:

+91 22 7194 5757, +91 22 6663 5757

Conference ID:

31923

Transcript of the event will be available at www.drreddys.com. Playback will be available after the earnings call, till November 8, 2019.

Minomic and Sienna enter collaboration agreement to develop pancreatic cancer test

On November 1, 2019 Minomic International Ltd reported that it has entered into a research collaboration agreement with Sienna Cancer Diagnostics Ltd (ASX: SDX) ("Sienna" or "the Company"), a medical technology company developing and commercialising innovative cancer-related tests, to develop a proprietary test for the early detection of pancreatic cancer (Press release, Minomic, NOV 1, 2019, View Source [SID1234550126]).

This will be the first application of Sienna’s capture technology that was acquired in April 2019. The general capture technology is trademarked as SIEN-NET and the specific exosome capture technology as EXO-NET. Sienna will provide EXO-NET beads which rapidly and specifically capture exosomes (nanoparticles shed from cells into the bloodstream) from blood and other body fluids.

Several independent studies have indicated that exosomes from pancreatic cancer patients contain a protein called glypican-1 (GPC-1). Minomic holds a strong intellectual property position around GPC-1 with four families of patents already completing Patent Cooperation Treaty applications. Based on the data, the companies have agreed to enter into a collaboration to conduct research to determine the feasibility of producing an assay for the accurate screening, diagnosis and prognosis of pancreatic cancer.

About pancreatic cancer

Pancreatic ductal adenocarcinoma (PDAC) is the most lethal cancer in humans, with a five-year survival rate of less than 10%. Cancer Australia estimates that 3,599 new cases of pancreatic cancer will be diagnosed in Australia in 2019[1]. Notably, due to the asymptomatic nature of early-stage pancreatic cancer and the lack of a non-invasive early-stage diagnostic assay, approximately 80–85% of cases at initial diagnosis present with unresectable advanced or metastatic disease. The median survival time for these patients is only 3–14 months[2].

A biomarker assay that can specifically detect asymptomatic premalignant or early malignant tumours and predict the response to treatment would greatly benefit these patients[3]. Minomic and Sienna aim to deliver such an assay through this collaboration.

"Minomic International Ltd is excited to work with Sienna to develop this opportunity to extend the use of our GPC-1 antibody beyond prostate cancer detection", said Minomic’s Chief Executive Officer Dr Brad Walsh.

"We are pleased to have entered into this collaboration with Minomic, and we are very hopeful that it will result in the development of a novel and reliable assay for the detection of pancreatic cancer to add to the company’s pipeline of cancer diagnostic tests. It is a perfect first application for our proprietary biomarker capture technology, SIEN-NET", said Sienna’s Chief Executive Officer, Carl Stubbings.

The companies will share the costs of the proof of concept stage of the development.

_____________________________

[1] View Source

[2] Lu H, Niu F, Liu F, Gao J, Sun Y, Zhao X. Elevated glypican-1 expression is associated with an unfavorable prognosis in pancreatic ductal adenocarcinoma. Cancer Med 2017; 6(6):1181–1191

doi: 10.1002/cam4.1064

[3] Qi Z-H, Xu H-X, Zhang S-R, Xu J-Z, Li S, Gao H-L, Jin W, Wang W-Q, Wu C-T, Ni Q-X, Yu X-J, Liu L.

The significance of liquid biopsy in pancreatic cancer. J Cancer 2018; 9(18): 3417-3426. doi: 10.7150/jca.24591

Xspray receives FDA clearance of IND for HyNap-Dasa

On October 31, 2019. Xspray Pharma (Nasdaq First North Growth Market: XSPRAY) reported that the US Food and Drug Administration (FDA) has cleared the company’s IND application for the product candidate HyNap-Dasa (Press release, Xspray, OCT 31, 2019, View Source [SID1234649565]).

Xspray Pharma’s Investigational New Drug (IND) application, for permission to produce materials for and conduct clinical trials with the product candidate HyNap-Dasa, was accepted for review on September 30, 2019 by the US FDA. The application has now been given clearance by the FDA’s Division of Hematology Products (DHP).

"We are very pleased that the FDA has cleared our IND application. This is yet an important milestone that validates both our clinical data and the development of our production method. The commercial production of amorphous material is already up and running in Milan and preparations for our upcoming ANDA application are proceeding as planned. This sends clear signals to potential commercial partners for HyNap-Dasa. With the IND-clearance at hand, we now look forward to being able to start our pivotal study with HyNap-Dasa shortly," says Per Andersson, CEO of Xspray.

Three UCLA scientists receive grants totaling more than $18 million

On October 31, 2019 Three researchers at the Eli and Edythe Broad Center of Regenerative Medicine and Stem Cell Research at UCLA reported that have received awards totaling more than $18 million from the California Institute for Regenerative Medicine, the state’s stem cell agency (Press release, University of California at Los Angeles, OCT 31, 2019, View Source [SID1234553697]).

The recipients are Dr. Sophie Deng, professor of ophthalmology at the UCLA Stein Eye Institute; Yvonne Chen, a UCLA associate professor of microbiology, immunology and molecular genetics; and Dr. Caroline Kuo, a UCLA assistant clinical professor of pediatrics. The awards were announced at a CIRM meeting today.

Deng’s four-year, $10.3 million award will fund a clinical trial for a blinding eye condition called limbal stem cell deficiency. Limbal stem cells are specialized stem cells in eye tissue that help maintain the health of the cornea. Because of genetic defects or injuries caused by infections, burns, surgeries or other factors, some people do not have enough limbal stem cells, which results in pain, corneal scarring and blindness.

The approach she is testing involves extracting a small number of limbal stem cells from a person’s eye, multiplying them in a lab, and then transplanting them back into the eye, where they could regenerate the cornea and restore vision. The research will be conducted in collaboration with the UCLA–UCI Alpha Stem Cell Clinic, a partnership between UCLA and UC Irvine.

The grants awarded to Chen and Kuo are for projects that are heading toward the FDA’s investigational new drug application process, which is required by the agency before a phase 1 clinical trial — the stage of testing that focuses on a treatment’s safety.

Chen’s two-year, $3.2 million award will fund efforts to create a more effective CAR T cell therapy for multiple myeloma, a blood cancer that affects white blood cells. The research will evaluate a specialized form of CAR T therapy that simultaneously targets two markers, BCMA and CS1, commonly found on multiple myeloma cells. CAR T therapies that target BCMA alone have been effective in clinical trials, but the presence of BCMA on multiple myeloma cells is not uniform.

Previous research has shown that the marker CS1 is present in around 90% of multiple myeloma cells. A CAR T therapy that targets both markers could potentially help more patients and reduce the likelihood of a cancer relapse.

Kuo’s 2 1/2-year, $4.9 million award, will support the development of a stem cell gene therapy for a deadly immunodeficiency called X-linked hyper IgM syndrome, or XHIM.

The syndrome, which is caused by a mutation in the CD40LG gene, results in invasive infections of the liver, gastrointestinal tract and lungs. Currently, the only potential cure is a bone marrow transplant from a matched donor, which carries life-threatening risks and is often less effective for XHIM patients than patients with other forms of immune deficiency. Even with current treatments, only 30% of people with the syndrome live to age 30.

Kuo will evaluate a stem cell gene therapy that corrects the genetic mutation that causes XHIM. After removing blood-forming stem cells from a person with the syndrome, the therapy would use a genetic engineering technique called CRISPR to insert a correct copy of the affected gene into the DNA of the stem cells. The corrected blood-forming stem cells would be infused back into the patient, where they could regenerate a healthy immune system.

She will collaborate with Dr. Donald Kohn, a UCLA distinguished professor of microbiology, immunology and molecular genetics who has successfully treated two other immune deficiencies — bubble baby disease and X-linked chronic granulomatous disease — with a similar therapy.

HOOKIPA Pharma to Present at Upcoming Conferences in November

On October 31, 2019 HOOKIPA Pharma Inc. (NASDAQ: HOOK, ‘HOOKIPA’), a company developing a new class of immunotherapeutics targeting infectious diseases and cancers based on its proprietary arenavirus platform, reported its participation at two upcoming conferences in November (Press release, Hookipa Pharma, OCT 31, 2019, View Source [SID1234553430]):

6th BioCentury-BayHelix China Healthcare Summit in Shanghai: HOOKIPA will present on Tuesday, November 19, 2019, at 4:15 pm China Standard Time (CST) in Ballroom II and participate in 1×1 meetings

Jefferies 2019 Healthcare Conference in London, November 20, 2019: HOOKIPA will participate in 1×1 meetings with investors.
Additional information will be available within the Investors & Media section of HOOKIPA’s website at View Source