Neuland Labs Share Price Hits Record High As KarXT Gains Focus After AbbVie Drug Setback

Shares of Neuland Laboratories Ltd. surged to a record high on Tuesday, driven by developments in the neuroscience pharmaceutical space. This spike followed AbbVie’s recent announcement that its schizophrenia drug candidate, emraclidine, underperformed in Phase 2 trials. The setback has shifted focus to other drug candidates, notably KarXT from Karuna Therapeutics.

Emraclidine is a new daily pill in development for treating schizophrenia and Alzheimer’s-related psychosis. It’s designed to be taken at a fixed dose, without needing gradual adjustments.

KarXT, approved by the FDA in September 2024, has a projected peak sales forecast of $7-10 billion across its patent period, indicating significant market potential. Neuland Laboratories stands to benefit significantly as the exclusive manufacturing partner for KarXT’s active pharmaceutical ingredient, Xanomaline.

Xanomeline is a type of cholinergic drug that may avoid the serious side effects seen with current schizophrenia medications.

The partnership between Neuland and Karuna Therapeutics dates back to 2019 during KarXT’s Phase 3 trials. The relationship strengthened recently with Bristol Myers Squibb’s acquisition of Karuna in the third quarter of previous financial year for $14 billion. This acquisition granted BMS exclusive marketing rights for KarXT over the next five years, coupled with an extended patent period to secure the drug’s market position, thus enhancing Neuland’s growth potential as demand for Xanomaline increases.

Although Neuland Laboratories expects the ongoing financial year to be flat compared to the previous financial year, its growth outlook is strong beyond that period. The company is completing new manufacturing facilities this year and plans to launch additional CMS (Custom Manufacturing Solutions) molecules, positioning it for significant growth from April 2025. The CMS segment is projected to grow over 50% in the coming years, with heightened interest from clients considering Neuland as their Contract Development and Manufacturing Organisation (CDMO) partner.

The share price of Neuland Laboratories has risen for two consecutive trading sessions, climbing 20% to a record high of Rs 16,560.75. The stock has rallied by 193% so far this year. Among the analysts tracked by Bloomberg, two have a ‘buy’ rating on the stock, with none issuing a hold or sell recommendation. The consensus 12-month price target for Neuland shares, as tracked by Bloomberg, stands at Rs 17,625, implying a potential return of 13.4% from the last closing price.

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