Biocon stock zooms over 8% on Psoriasis drug approval from Japan, Jefferies rating upgrade

Shares of Biocon popped up 8.5% in trade on Tuesday, January 07, to hit ₹389 apiece, a level not seen since mid-September, driven by multiple positive developments. The company informed investors through an exchange filing on Monday that its subsidiary, Biocon Biologics, has received approval from the Japanese drug authority for a drug used in the treatment of psoriasis.

The Pharmaceuticals and Medical Devices Agency (PMDA) of Japan has approved Ustekinumab BS subcutaneous injection [YD], a biosimilar to the reference product, Stelara® (Ustekinumab). The biosimilar Ustekinumab has been developed and manufactured by the company and will be commercialised and marketed in Japan by the company’s exclusive commercial partner, Yoshindo Inc.

Ustekinumab, a monoclonal antibody, is approved for the treatment of Psoriasis Vulgaris and Psoriatic Arthritis (PsA).

Biocon Biologics previously notified the stock exchanges on August 29, 2024, that the company had entered into a settlement and licensing agreement with Janssen Biotech Inc., Janssen Sciences Ireland, and Johnson & Johnson (collectively known as Janssen) to commercialise Ustekinumab in Japan, upon regulatory approval.

In late November, Biocon Biologics announced that its ‘Embedding Specialist Nurses in Diabetes Care’ project—undertaken in collaboration with Diabetes Africa and St. Paul’s Hospital Millennium Medical College in Ethiopia—was progressing smoothly.

“The first phase of this multi-year project, supported by Biocon Biologics, has harnessed the expertise of key stakeholders in Ethiopia’s diabetes ecosystem to develop a replicable model of upskilling nurses to become diabetes specialists and enhance diabetes care nationwide,” the company said in November’s filing

Jefferies double upgrade

In another positive development, global brokerage firm Jefferies, in its latest note, upgraded its rating on Biocon’s stock to ‘Hold’ and revised its target price to ₹400 apiece, citing positive news flow around the regulatory approval of its Bengaluru manufacturing unit.

The US Food and Drug Administration (USFDA) granted Biocon Biologics’ Bengaluru facility “Voluntary Action Indicated” (VAI) status, indicating that while minor issues were noted, they were not significant enough to warrant regulatory or enforcement action. VAI is a favourable designation, allowing business operations to continue without additional regulatory hurdles.

Additionally, Jefferies highlighted the USFDA approval for Biocon Biologics’ biosimilar Stelara, which is expected to launch in February 2025. According to the brokerage, this approval enhances growth visibility for Biocon’s biologics business.

Stock recovered 87% in 22 months

Bicon share price over the last 21 months has maintained a strong upward trend, moving from ₹206 apiece to the current level of ₹385, resulting in a gain of 87%. This recovery follows a steep decline between January 2021 and March 2024, during which the stock lost nearly 57% of its value.

Despite this stellar recovery in recent months, the stock remains 21% lower than its all-time high of ₹487 apiece, which it reached in December 2020.

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