Sun Pharma Invests $280M For In-Licensed Psoriasis Drug Deal

The Economic Times (ET) in India reports that Sun Pharma plans to invest $280 million in an experimental psoriasis drug in-licensed from Merck, Sharp, & Dohme (MSD) and hopes to market the drug globally by 2018.

Sun’s Merck deal was finalized a month ago and stipulated that all further clinical development and regulatory processes for the drug tildrakizumab would continue at MSD while Sun foots the bill. In exchange, Sun will acquire global marketing rights for the drug and will be responsible for commercializing the product if it passes regulatory inspection, according to Reuters.

The $280 million price tag is earmarked principally for stage 3 development with $80 million set aside for the in-licensing fee. ET reports that this deal estimate does not include any royalties MSD might be entitled to at a later date.

This is a part of relatively new strategy to push Sun beyond generics in 2018 and into branded drug opportunities.

According to Sanjiv Kaul, managing director at Chrys Capital, a private equity firm, it is more typical for Indian companies to out-license early development compounds to other pharmaceutical companies.

Kaul characterized this venture of in-licensing a late clinical stage compound as a “bold move,” one which may “pave the way for other cash-rich large pharma companies in India to follow.”

In-licensing late clinical stage compounds can be expensive. While the risk is much lower than with earlier stage, untested compounds, the more costly investment in later stage research is still not guaranteed to pay off.

Ramesh Adige, an industry expert who spoke with ET, warns it may take several costly investments for Sun to find a candidate that will ultimately yield a substantial return.

Dennis Schafer, COO of U.S.-based Somatocor wrote about this growing trend of in-licensing and the advantages and pitfalls of the business model in an article published in bioentrepreneur, an offshoot of Nature.com.

In Schafer’s opinion, this strategy is useful for big pharma but has lasting value for smaller start-ups in that it offers a newer company a chance to grow quickly. As such, Schafer claims this is likely to become the dominant model for companies entering into a new sector of business, as is the case with Sun Pharma.

Schafer writes, “Slow to become popular, in-licensing is now fashionable with some investors, mainly because of its ability to accelerate the corporate development process. However, the model has been slow to mature, because it is difficult to find products suitable for in-licensing, and most scientists still ask, ‘Why bother?’”