Sun Pharma shares: Emkay Global says 'Buy' stock amid Leqselvi launch developments

Emkay Global has issued a 'Buy' rating for Sun Pharma following a US Court of Appeals decision to vacate a preliminary injunction that had previously blocked the launch of Leqselvi. This injunction had been granted by the US District Court of New Jersey in November 2024. The court's decision now technically opens the path for Sun Pharma to proceed with the launch, although the ongoing litigation with Incyte presents a risk if launched before Incyte's '335 patent expires in December 2026.

According to Emkay Global, Sun Pharma has yet to disclose its launch plans. The brokerage firm anticipates that Sun Pharma will likely engage in a royalty-based settlement with Incyte. Such a development is viewed as a material positive for Sun Pharma, enhancing its negotiation and potential settlement stance.

Emkay Global's base case forecasts suggest that Leqselvi will be launched in FY26, with anticipated US sales of $40 million in the same fiscal year. By FY27, sales are expected to reach $124 million. While the EPS contribution of Leqselvi is expected to be marginally dilutive in FY26 and 0.5% in FY27, the costs associated with the launch have been factored in.

The opportunity for Leqselvi is projected to be as significant as Sun Pharma's product Ilumya by FY30. Emkay Global estimates that combined US and ex-US sales could exceed $500 million by then. This aligns with the expectations set during the concert acquisition, which anticipated $500 million in annual sales by CY29.

The addressable market for Leqselvi in the US is estimated at 0.3 million patients. Emkay predicts that Leqselvi will gain market share from competing JAK inhibitors. Sun Pharma also plans to introduce Leqselvi to markets outside the US through a phased approach.

Looking beyond FY30, Emkay anticipates that global sales for Leqselvi could surpass $600 million, with an EBITDA margin exceeding 45%. Furthermore, Sun Pharma intends to explore 2-3 additional indications for the medication, broadening its market potential.

The broader implications of these developments suggest that Sun Pharma's strategic moves regarding Leqselvi could significantly enhance its market positioning. The anticipated royalty-based settlement with Incyte would mitigate risks associated with an at-risk launch and could strengthen Sun Pharma's financial performance in the long run.

Emkay Global's endorsement of Sun Pharma with a 'Buy' rating reflects confidence in the company's prospects amid these legal and strategic manoeuvres. The projected financial gains from Leqselvi, coupled with potential market expansions, position Sun Pharma favourably in the pharmaceutical landscape.