THE phase-III trials for Crofelemer for cure of HIV-associated diarrhoea have been completed successfully. And that is good news for Glenmark Pharma, since the drug's development and commercialisation rights in select markets have been in-licensed by the company. The drug, whose launch in India and the rest of the world is subject to regulatory approvals, is touted to become the first novel drug launched by the company.

   The company's announcement came at a time when its stock is trading at almost a two-year high, riding on the wave of a stellar financial performance during the second quarter ended September 2010. Glenmark's stock gained 4.4% during the day and closed 3.6% up for the day.

   Crofelemer is a first-in-class anti-diarrhoeal drug. Glenmark's partners — US-based Napo Pharmaceuticals and Salix Pharmaceuticals — have announced the completion of phase-III trials for the drug in the US. Glenmark has in-licensed the developing and marketing rights to the drug in 140 emerging markets, including India, for multiple diarrhoea indications. The company also has the exclusive rights to supply the active pharmaceutical ingredient for the drug globally, except China.

   Using the clinical studies conducted in the US, Glenmark is looking at seeking approval for the drug in India by 2012. It, typically, takes about two years post approval to achieve peak sales of the drug. Glenmark is looking at a peak sales opportunity of about Rs 400 crore across all the 140 markets by 2014-2015. The company, depending on how attractive the research findings are, can extend the launch of the drug for treating other kinds of diarrhoea indications like adult diarrhoea, paediatric diarrhoea, etc.

   This is good news for the company, but investors should be cautioned against bearing too much enthusiasm too early in the day. The monetary gains of this development will start trickling in only after two years from now. Moreover, achieving the peak sales opportunity is two years away. Investors must keep in mind that benefits from innovative R&D are not low-hanging fruits. It involves long gestation and execution risks, too. Though after a series of setbacks and out-licensing deals, Glenmark has finally got a novel drug at the final stage, it is still not advisable to discount all the estimated peak sales from its launch into the present valuations of the company – especially when it is the first-ofits-kind launch for the company.