Decent H1 overshadowed by future uncertainties

UCB reported a decent set of H1 results, with sales and profitability beating expectations. While the Neurology portfolio posted a mixed showing due to patent expiry for Vimpat, it was offset by the recovering Cimzia-driven Immunology. However, given the significant future uncertainties, pressure on profitability, timing of Bimzelx’s US launch and pipeline execution, the markets remain jittery. Nevertheless, given UCB’s dominant position in its target markets and Bimzelx’s industry-leading effic

2021 results: a major confidence reinforcing event

UCB ended 2021 on a strong note, largely driven by promising growth in the Neurology portfolio. While the top line is expected to witness some moderation as the firm enters a critical transition period, UCB seems well-prepared with Bimzelx’s US launch, expected in mid-2022, and Zogenix’s acquisition. Re-affirmation of the mid-term targets was all the more comforting. Our positive stock recommendation is reiterated.

Pricing & pandemic concerns impede upward revision to full-year outlook, despite strong H1

UCB reported strong H1 results with the core drug portfolio leading the pack. While momentum in the core portfolio should sustain and the upcoming launch of Bimekizumab provide an additional push, management refrained from upgrading the full-year outlook. In our view, increasing pricing pressure on Cimzia and resurfacing COVID-19 concerns held them back. Despite these near-term uncertainties and the upcoming patent expiry of key drugs, we remain confident of the group’s medium-to-long fortunes a

Encouraging long-term outlook

Despite the COVID-19-related disruptions, UCB’s core portfolio showcased resilience and the launch of new drugs further bolstered growth. However, higher marketing spend on new launches and higher R&D investments on the five late-stage drugs suppressed profitability. In our view, the upcoming approval of Bimekizumab should boost investors’ confidence. Furthermore, the healthy FY25 outlook, at a time when key drugs are set to lose exclusivity, is also encouraging.

Strong H1 20; Bimekizumab set to become new core-driver

UCB reported robust top-line growth led by a strong show in the core portfolio (except for Neupro). However, the EBITDA margin softened due to higher marketing spend on drug launches. RA Pharma and Engage Therapeutics have been fully integrated and their mid-to-late stage pipeline could keep R&D expenses on the high side, thereby pressuring the margin in H2. However, the upcoming launch of high-margin drug, Bimekizumab, should ensure that the mid-term profitability targets are met.

UCB’s psoriasis candidate is racing ahead of its rivals

UCB’s psoriasis candidate, Bimekizumab has shown promising clinical data vs. J&J’s Stelara. While this increases the probability that the drug could hit the market in Q1 21, its real competition in the overly-crowded space would come from Novartis’s Cosentyx. Bimekizumab should report head-to-head data with Cosentyx in the next few weeks and, if it is found to be superior, we will increase our peak sales potential for Bimekizumab by €500m to €2bn.

Strong performance in H2 19; peak sales guidance of key drugs upgraded

H2 19 sales and profitability beat was driven by the robust show of Cimzia and Vimpat. Given that the strong momentum is likely to continue and could be bolstered further with the geographic/label expansion, management has upgraded the peak sales potential of these drugs for the second time. Though the near-term margin could come under pressure, due to the integration of RA pharmaceuticals and increased investments into R&D, Bimekizumab (approval likely in 2020) should ensure that the mid-term p

RA’s acquisition expands UCB’s neuromuscular portfolio

UCB has broadened its neuromuscular portfolio with the €2.2bn acquisition of RA pharmaceuticals – blockbuster potential drug, Zilucoplan (expected launch in 2023), is RA’s key drug which complements UCB’s rozanolixizumab. As UCB will invest in R&D and marketing of the drug, the deal would be margin-dilutive until 2023. Nonetheless, we foresee EPS accretion thereafter as sales momentum picks up. The deal is all the more important at a time when UCB’s CVN drugs are about to hit the patent cliff.

CFO exit weighs on the performance in H1 19

UCB reported strong top-line growth, driven by the CVN portfolio and Briviact, partially offset by the off-patent Keppra. The EBITDA margin remained subdued due to higher R&D expenses, while the net results were further impacted by a higher tax rate. Evenity was approved in the US, Canada, South Korea, and Australia but rejected in Europe. Management maintained its FY 19 outlook, implying a weak H2 19 (sequentially). The CFO exit came as a big surprise, overshadowing the results.

Weak performance in Q4 and mixed guidance for 2019

UCB reported a weak quarter with a decline in top-line and margin, revenue getting impacted by a decline in Cimzia’s US sales and profitability further pulled down by high R&D expenses on the next wave of molecules. Evenity approval in US and Europe would be the next big trigger for the share price. Management upgraded Cimzia and Vimpat sales estimates but downgraded Neupro sales and short-term EBITDA margins.

Steady quarter but no assurance from the labs

UCB’s 9M 18 (trading update) performance came in line with our as well as consensus estimates, although variations were seen at the drug level. Revenue grew by 6% ytd at CER to €3.4bn, on the back of the continued strength in the core portfolio (+12% at CER) — Cimzia (+9%), Vimpat (+19%), Keppra (+5%), Briviact (+81%) and Neupro (+2%). FX had a negative impact of 3% on the group sales. NB all sales numbers are at calculated CER unless specified otherwise (the company does not report quarterly CE

Strong momentum in Q2

UCB reported strong quarter after a weak start in Q1 18. Cimzia, Vimpat and Briviact clocked strong performances, but Neupro continued to languish. Cost control and a significant decline in the effective tax rate boosted net profit by 33%. Evenity’s approval and biosimilar impact on Cimzia are likely to be the triggers in the upcoming quarters, however, given the lack of convincing drivers, including in the pipeline, makes us believe that the recent run-up is unlikely to continue.

CVN starts to lose

UCB reported a soft performance with a sales decline of 1% at CER in its Q1 18 trading update. Forex headwinds of 5% weighed further, resulting in a reported decline of 5% to €1.07bn. However, adjusting for the out-licensing of the allergy drug, Xyzal, which generated €56m in Q1 17, the CER growth came in at 4%. NB. All sales growth numbers are CER, unless specified otherwise. The five core products (accounting for ~78% of group sales) grew by 8% to €839m, led by the newbie Briviact (€27m), Vimp

Consensus beat; focus on pipeline delivery

UCB’s 9M 17 results (trading update) came in ahead of both ours and the Street’s expectations. Top-line grew strongly at 9% CER (9% reported as the 2ppt HY 17 currency tailwinds reversed in the quarter) to €3.33bn (c.3% ahead of consensus estimate of €3.24bn), driven by a sustained performance across the CVN portfolio, in particular, Vimpat (+20%). This was supported further by strong returns from the off-patent drug Keppra (+14%, driven by stocking benefits, Japan and international market). The

UCB outlook fractured by Romosozumab

In an unexpected development for UCB, the long-awaited results from the phase III ARCH study of its osteoporosis drug Romosozumab (trade name Evenity) – co-developed with Amgen – threw up serious side effects, sending the share down by c.18% (22 May 2017), the company’s worst single day performance in the last three decades. While the drug was able to meet both its primary and secondary endpoints – significantly reducing the incidence of new vertebral fractures over 24 months and non-vertebral f

Strong growth in core underpins FY expectations

EKF has reported a strong H1, with revenues of £37.5m and double-digit growth in underlying non-Covid related business. Management reports it is trading in line with expectations for the full year and we make no change to our profit forecasts at this stage. New growth initiatives are proceeding to plan and should lead to accelerated core growth from FY23 onwards. We continue to see substantial upside on successful execution with the shares trading on an FY23 P/E of 13.1x and an EV/EBITDA of just

Hybridan Small Cap Feast 09/08/22

Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a supplier of laminated steel tapes to the fibre optic cable industry in the US. Thixotropic gels and laminated steel tapes are essential components to the rapidly growing global fibre optic cable market. The Group exports

Morning Note – 3 August 2022

Hybridan Small Cap Feast 16/08/22

Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a supplier of laminated steel tapes to the fibre optic cable industry in the US. Thixotropic gels and laminated steel tapes are essential components to the rapidly growing global fibre optic cable market. The Group exports to over 40 count

LIBERUM: PureTech Health - Karuna hits Phase III ground running

Hybridan Small Cap Feast 05/08/22

Dish of the day Joiners: Inteliqo Limited has joined the Access Segment of AQSE Growth Market. Inteliqo Limited provides sales, marketing and distribution services to technology product owners. Leavers: Menzies (John) plc and Sanne Group have left the Premium Segment of the Main Market. What’s cooking in the IPO kitchen?** Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a sup

WHI First Light: Spectra Systems, ARC Minerals, KEFI Gold & Copper, Dekel Agri-vision, NetScientific & LifeSafe Holdings

Spectra, a leader in machine-readable high speed banknote authentication, brand protection technologies and gaming security software, has announced its first commercial sale of a Banknote Disinfection System (BDS) to an Asian central bank. The BDS system, utilising Spectra's patented technology, contributes to the safety of central bank staff who handle banknotes incoming from circulation, which may carry bacterial and viral pathogens. The system is a plug and play technology as it does not req

Morning Note – 5 August 2022

The Hardman & Co Monthly: August 2022

Feature article: Utility regulation – Changes afoot - Patching up a tainted model While the gas supply crisis – and its price implications – have dominated the UK price regulated sectors in recent months, other issues have arisen that have seriously tainted the price regulation system itself. Indeed, it is fair to ask whether it is ‘’fit for purpose’’. Back in 1984, price regulation, via an unsophisticated RPI-x formula, was introduced to prevent the privatised British Telecom (BT) from abusin

Hybridan Small Cap Feast 16/06/2022

*A corporate client of Hybridan LLP Dish of the day Joiners: No Joiners Today. Leavers: No Leavers Today. What’s cooking in the IPO kitchen? LifeSafe Holdings, a fire safety technology business with innovative fire safety products, intends to join AIM. LifeSafe has developed what the Directors believe to be market disrupting, eco-friendly fire safety protection products to both protect (via fire extinguishers) and detect (via carbon monoxide, smoke and heat alarms) fires. At the cent

WH Ireland: NetScientific (NSCI) - Portfolio company PDS Biotechnology provides a business update and Q2 2022 financial results

NetScientific is an active transatlantic life sciences, sustainability and technology investment and commercialisation group. Portfolio company, NASDAQ-listed PDS Biotechnology (PDSB), in which NSCI holds a 4.72% equity stake, announced on 8 August 2022, a business update along with Q2 2022 results to the end of June 2022.

Growth on an accelerating path

Smith & Nephew’s growth acceleration and margin expansion in Q2 should continue in H215, more reflecting internal changes than improvements in market fundamentals. Its c 13% premium on 2015 P/E to its global ortho peers is supported by its brisker growth and strategic value.

Hybridan Small Cap Feast 12-07-2022

*A corporate client of Hybridan LLP Dish of the day Joiners: Warehouse REIT (WHR.L) has transferred to AIM from the Main Market. Leavers: No leavers today. What’s cooking in the IPO kitchen? Georgina Energy, an early-stage resource company with a strategy of actively pursuing the exploration, commercial development and monetisation of helium, hydrogen and hydrocarbon interests located in the Amadeus and Officer Basins in Northern and Western Australia intends to join AIM. Georgina

Next Gen XPLOR and D2C

Belluscura has announced the launch of the next generation X-PLOR portable oxygen concentrator and expanded distribution through a D2C offering and partnership distribution plan for smaller DMEs.

Pfizer Inc.: The Biohaven Acquisition, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (05/22)

Pfizer had a phenomenal 2021 given the upside of the Covid-19 vaccine and medication. An estimated 1.4 billion patients have been reached by the company with its vaccines and medicines. Pfizer’s position has been upgraded from fourth to second over big bio-pharmacy companies. In R&D, its investments have been increased, and it has started 13 pivotal clinical studies. The company is increasing its investments in Covid-19 medication, Paxlovid and widening its distribution. The strength of the comp