Hikma signs agreement for marketing of anti-cancer compound

FTSE 250 group Hikma Pharmaceuticals has signed an agreement for the registration and marketing of Lutrate 1 month, GP Pharm's anti-cancer compound, for the Middle East and North Africa (MENA) region.

Lutrate 1 month is a hormonal androgen deprivation therapy used to prevent tumor growth in patients with advanced prostate cancer.

Under the terms of the agreement, Hikma will have the licensing rights to register, market and distribute Lutrate 1 month in 23 countries across MENA. Hikma will also become the partner of choice in the MENA region for GP Pharm's pipeline of oncology products.

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Cancer is one of the leading causes of death in MENA. Prostate cancer is the third most prevalent type of cancer in the region, with an estimated 25,000 new cases diagnosed each year. With men over 60 most often affected, the incidence of prostate cancer is expected to increase dramatically as the population in MENA ages.

Mazen Darwazah, Hikma's Vice Chairman and Chief Executive Officer of MENA said: "Hikma is committed to improving the treatment of cancer in the region through the development of our oncology product portfolio. We are pleased to be licensing this innovative injectable treatment, which has excellent potential and complements our portfolio and pipeline. It is in line with Hikma's aim to deliver a reliable supply of high quality pharmaceutical products to MENA that reduce patients' dependency on a single source for treatment."

UBS cut its recommendation for the pharmaceuticals group from 'neutral' to 'sell' on Monday, saying that the market is pricing in a 'blue sky scenario'.

The broker said that it is hard to justify Hikma's valuation "as we believe that the market is pricing a blue sky scenario with the US Injectables supply issue continuing in 2013 and beyond, a strong EBIT [earnings before interest and tax] margin recovery in the Branded Generic division and a come back to 15-20% EBIT margin for the generic division.

"The likelihood of all of these happening appearing rather slim to us and setting Hikma up for disappointment."

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