It has been roughly a year since taking this bet. It has played out way better than we initially expected. It was so complex a topic that we did not expect the market to understand and reward the way it has done. Our market is more mature than we give it credit for. Now, taking stock of what has happened in the past year – a few important things have changed that we should account for.
- Diabetes portfolio strength – Insulin glargine is seeing tailwinds due to WHO push towards biosimilars as well as capacities shifting towards GLP-1. This seems to be helping Wockhardt with exports picking up considerably of late
- CLSI 64 mg/mL susceptibility breakpoint for 10 gram negative pathogens which has potential to increase market size. Its nice to see an esoteric subject like AST breakpoints being understood by the market
- Capital raised in QIP 1 and QIP 2 gives strong institutional validation to the thesis
- Successful execution of trial so far both in US and in India for 5222. This the market has incrementally priced in alongside trial completion (One of the fears was a slippage based on past behavior but so far things have gone smooth with near 100% enrolment completion for 5222 in global trials and 100% recruitments for meropenem resistance trial in India as per recent Chairman’s letter to shareholders)
- Compassionate use in 38 patients with 100% success rate. To put this in context, we knew of only 2 cases based on papers published in our initial post.
- Significantly bigger market sizes being thrown around for 5222
- QIP2 money raised will be used to pare debt which will help strengthen balance sheet and also reduce interest outgo and thereby help the PnL become PAT positive
- Research costs should come down post completion of WCK 5222 phase 3 which will also help improve profitability
- MIQNAF (Nafithromycin) has had a soft launch this week. The market size in India for this could be 500 Cr as per the talks. The talks in the first half are very good to understand AMR while the chairman speaks around 2:30:00 mark
It could not have gone down any better than this in this past year. While our initial valuation of the company was 25k Cr when it was trading at 4k Cr levels, it may not be outlandish to consider further upside based on all the things that have transpired in the past year. Seen together, the seemingly small changes over the year completely change the overall dynamic of the business.
Disc: Invested
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