Sun Pharma Advanced Research Company Limited — Q2 FY24 earnings call

Call held 6 Jan 2024

Management summary

SPARC provided an update on its Vodobatinib PROSEEK program, confirming enrollment completion and timelines for interim and full data readouts in 2024. The company outlined its strategy for moving into Phase-III development and seeking partnerships post-data. Management also transparently discussed inherent risks in neuroscience drug development and clarified the purpose of the interim analysis for partner engagement.

Highlights

  • PROSEEK enrollment completed in October 2023 with 513 evaluable patients globally.

  • Interim analysis for PROSEEK is planned for late March-early April 2024, covering 441 patients (85-86% of total).

  • Full top-line data for PROSEEK is expected in August-September 2024, with full disclosure.

  • SPARC aims to initiate Phase-III programs globally with minimal lag after Phase-II data and regulatory agreement.

  • The company plans to explore and execute a partnering strategy starting from interim analysis data availability.

  • Vodobatinib's IP coverage is expected to extend into the late second half of the 2030s.

  • Management highlighted significant risks including translatability of animal models, lack of target engagement markers, and reproducibility of early clinical studies.

Concerns

  • Full rejection of the primary mechanistic hypothesis

What they filed

Q1 FY27: revenue up 300.0%, net profit up 59.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue13 15 27 10 8 −38%8 −47%1,853 +6763%40 +300%
EBITDA-103 -74 -53 -52 -66 +36%-57 +23%1,773 +3445%-34 +35%
Net profit-107 -80 -60 -52 -76 +29%-80 +0%1,761 +3035%-21 +60%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Clinical Trial Milestones

  • PROSEEK Interim Analysis Data Clinical Trial Milestones · Q1 FY25 · High confidence late March-early April 2024
    And the interim analysis as communicated earlier is planned with 85%- 86% of patients. That's the enrollment cut off was May of 2023. So, we have 441 patients going into this interim analysis and that is planned for late March-early April of 2024.

    — Anil Raghavan, Chief Executive Officer

  • PROSEEK Full Top Line Data Clinical Trial Milestones · Q2 FY25 · High confidence August-September 2024
    The full top line data for PROSEEK is expected in August-September of 2024, that's when we will have full disclosure on the data.

    — Anil Raghavan, Chief Executive Officer

Clinical Trial Design

  • PROSEEK Total Patients Clinical Trial Design · Completed October 2023 · High confidence 513 patients

    From 506 evaluable patients today

    Our target was 506 evaluable patients, we ended up with 513 patients globally.

    — Anil Raghavan, Chief Executive Officer

Intellectual Property

  • Vodobatinib IP Coverage Intellectual Property · by 2040 · High confidence late second half of 2030s
    I don't have the exact dates in front of me, but I can indicate that he compensation of matter and the regulatory compensation for the development time, we will go into late second half of 30s from IP coverage and we may also have some additional patents which are covering this space in the method of treatment patent and also potentially formulation patent. So, we are confident that we may go into late second half of 2030s for sure.

    — Anil Raghavan, Chief Executive Officer

Partnership Strategy

  • Initiate Partnering Discussions Partnership Strategy · March-September 2024 · Medium confidence between interim data analysis and top line data
    We expect to initiate conversations with the potential partners. We may not be able to conclude that before a final data disclosure in August - September, but we intend to kind of use this time to engage and create interest and work towards a partnership as we kind of get to September.

    — Anil Raghavan, Chief Executive Officer

Risks & concerns

  • Full rejection of the primary mechanistic hypothesis

    high

    If PROSEEK data fully rejects the underlying hypothesis, there would be no justification for further exploration of the program in any setting.

    Management acknowledged

  • Translatability of animal models in neuroscience

    medium

    Animal models for Parkinson's disease carry a certain level of risk as their true validation comes only with clinical data and market entry.

    Management acknowledged

  • Lack of target engagement markers for human dosing

    medium

    Challenges exist in clearly getting appropriate doses in humans due to the inability to directly measure target engagement in the brain, relying on extrapolation from animal data.

    Management acknowledged

  • Reproducibility of early clinical proof-of-concept studies

    medium

    Early, smaller pilot studies often lack adequate powering, and results need to be reproduced in larger Phase-III studies, which is a known risk in drug development.

    Management acknowledged

  • Extensive additional work and resourcing for Phase-III programs

    medium

    Moving from Phase-II to Phase-III requires substantial additional investment, regulatory clarity, and scaling of competencies, which SPARC is preparing for.

    Management acknowledged

  • Market-related price volatility and lack of informed analyst coverage

    medium

    Early-stage biotechs face significant price volatility around data events, magnified by the absence of comprehensive analyst coverage.

    Management acknowledged

Q&A highlights

2 direct
Regulatory pathway and potential for accelerated approval post PROSEEK data Partial
If I answer that, it would be speculative, I mean because it requires the agreement with the agencies, but I want to highlight a couple of points. We have a significant number of endpoints in PROSEEK, both clinical endpoints and biomarker endpoints. The possibility of an accelerated approval would be based on how the data comes in where all the chips fall.

Analysts are probing for the fastest path to market, but management emphasizes the need for regulatory agreement and the current lack of validated biomarkers in Parkinson's compared to AD/ALS.

Asked by Tushar Bohra

Purpose of administrative interim analysis if not shared widely Direct
one of the key objectives of the interim analysis is to engage with the potential partners early on so that we can try and minimize the time that we require post the full data in September. So, it is not correct that we are not sharing this with anybody, we will share this with the potential partners under CDA at an appropriate level with a limited number of potential partners, that's the expectation at this point.

Clarifies that the interim data is crucial for early engagement with potential partners, even if not publicly disclosed, to streamline future development and commercialization.

Asked by Bino Pathiparampil

IP estate and patent life for Vodobatinib Direct
I don't have the exact dates in front of me, but I can indicate that he compensation of matter and the regulatory compensation for the development time, we will go into late second half of 30s from IP coverage and we may also have some additional patents which are covering this space in the method of treatment patent and also potentially formulation patent. So, we are confident that we may go into late second half of 2030s for sure.

Provides a clear timeframe for patent protection, which is critical for the long-term commercial viability and value of the drug.

Asked by Bino Pathiparampil

2 min read 5 chapters

Detailed narrative

PROSEEK Program Status and Timelines

SPARC's Vodobatinib PROSEEK program completed enrollment in October 2023, exceeding its target with 513 evaluable patients globally. The interim analysis, covering 441 patients (85-86% of the total), is scheduled for late March-early April 2024. The full top-line data for the program is anticipated in August-September 2024, at which point full disclosure will be provided. The study includes a long-term extension (Part-II) where patients are on the drug for an additional 40 weeks, bringing the total treatment period to almost 80 weeks without symptomatic therapy.

Future Development and Regulatory Pathway

The primary objective for the 2024-25 financial year is to transition to the next phase of development without delay, contingent on positive data. This involves securing agreement with global regulatory agencies on the nature of registrational studies, typically two additional Phase-III trials. SPARC intends to initiate pivotal Phase-III programs globally, aiming to minimize the lag between Phase-II completion and Phase-III initiation. Additional preclinical studies, particularly toxicity studies, and manufacturing scale-up will also be required for a registrational package.

Inherent Risks in Neuroscience Drug Development

Management transparently outlined several key risks. These include the translatability of animal models in neuroscience, where true validation only comes with clinical data. The absence of clear target engagement markers in humans poses challenges for precise dosing. There's also a risk regarding the reproducibility of early proof-of-concept studies in larger Phase-III settings, despite PROSEEK being powered at 80%. Furthermore, the extensive work and resourcing required for Phase-III programs represent a significant undertaking.

Partnership Strategy and Interim Analysis Purpose

SPARC plans to initiate conversations with potential partners between the interim data analysis (March-April 2024) and the full data disclosure (August-September 2024). The administrative interim analysis, while not publicly disclosed, will be shared with a limited number of potential partners under a Confidential Disclosure Agreement (CDA). This strategy aims to engage partners early to minimize the time required post-full data and to leverage external resources and competencies for aggressive program expansion across Parkinson's and other indications like Lewy Body Dementia and Alzheimer's.

Intellectual Property (IP) and Market Considerations

The company expressed confidence that Vodobatinib's IP coverage, including composition of matter and regulatory compensation for development time, will extend into the late second half of the 2030s. This includes potential additional patents covering method of treatment and formulation. Management also cautioned investors about market-related risks, such as significant price volatility for early-stage biotechs around data events, which can be magnified by a lack of informed analyst coverage.

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