SPARC rebound depends on trial outcomes of other assets, focused, lean R&D approach may help absorb setbacks

Sun Pharma Advanced Research Company (SPARC) may have to pivot towards late stage assets, look for external partners and further optimise costs, as it faces second major clinical disappointment in just over a year.

The company’s lead candidate, Vibozilimod (SCD-044), failed to meet primary endpoints in two Phase 2 trials for psoriasis and atopic dermatitis, dealing a blow to its ambitions in immunology and triggering a sharp investor selloff.

SPARC and its partner Sun Pharma said they would "evaluate the appropriate next steps", but the setback sent the SPARC stock tumbling nearly 18 percent on the BSE on Wednesday.

The drug, a selective S1PR1 agonist (a class of drugs that target a range of illnesses including myeloid leukaemia), was once hailed as a potential first-in-class therapy with broad applications across autoimmune diseases. Sun Pharma said it is discontinuing clinical trials of the asset and has no further plans for the development of the SCD-044 molecule.

This is the second snag the company has run into lately. In April last year, it had to abandon clinical trials of Parkinson's drug Vodobatinib following an interim analysis based on data from a 442=patient study that did not show evidence of treatment benefit in patients who received the drug.

What next for SPARC?

To be sure, drug discovery and development is a high risk business. But they do come with a cost.

Following the debacle of Parkinson's drug candidate, SPARC has narrowed its therapeutic focus to oncology and immunology, deprioritizing neurodegenerative programmes and doubling down on two lead assets: SBO-154, an antibody-drug conjugate targeting MUC1 (an anti-cancer vaccine being developed)in solid tumours, and SCD-153, a topical itaconate derivative for alopecia areata and other dermatological autoimmune conditions.

The company has slashed its workforce by over 20 percent, including a dramatic reduction in U.S. clinical staff, and is shifting more development to India to optimize costs.

“We’ve significantly increased the India clinical component to keep the overall costs to clinical PoC (proof of concept clinical trials) under check,” CEO Anil Raghavan said in a December 2024 conference call with analysts.

“It’s about doing more with less,” he added.

Pipeline priorities

SPARC’s next wave of assets include late stage PDP-716—a once-daily ophthalmic solution for glaucoma that is in Phase 3 trials—and SPD-316, a topical brimonidine formulation for atopic dermatitis.

There are also SUN-PH800, a Phase 2 candidate for nonalcoholic steatohepatitis (NASH) and SUN-PH900 (Taclantumab), a monoclonal antibody in Phase 1 trials for oncology.

The company is also exploring early-stage licensing and asset-specific spinouts, such as Tiller Therapeutics, to advance programmes without overextending internal capital. It is actively pursuing short-term cash-generating milestones, including a potential priority review voucher (a US Food and Drug Authority programme), orphan exclusivity enforcement (protection from competition) for Sezaby (for seizures in term and preterm infants), and licensing of its chronic myelogenous leukaemia candidate Vodobatinib.

Financial pressure mounts

SPARC reported a net loss of Rs 342 crore in FY25 on a revenue of just Rs 73.6 crore, with R&D expenses topping Rs 416 crore. A recent credit rating downgrade by Acuité to AA- Stable underscores the urgency to deliver clinical and commercial wins.

Backed by Sun Pharma’s promoters, who hold a 65.7 percent stake, SPARC is betting that a leaner structure and sharper focus will help it weather the storm and unlock value from its innovation engine.