Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Ipsen. We currently have 11 research reports from 1 professional analysts.
Driven by sustained growth in Somatuline and ramp-up in demand for recently-launched oncology drugs, Cabometyx and Onivyde, Ipsen started FY18 on a promising note (+23.1% at CER). We anticipate the robust growth momentum to continue and thus upgrade our target price by c.2%.
Ipsen released a strong set of FY17 results which were ahead of our estimates as well as market consensus. Revenue at CER surged 21.1% (100bp above AV’s estimate) led by strong growth momentum in the Specialty Care/SC segment (+25.9% vs guidance: >+24%; c.83% of sales). Within the segment, Somatuline continued to be the principal growth contributor (+31.9%; c.37% for sales) benefiting from robust volume growth in North America (+62.1%; c.47% of drug sales). Neurosciences drug ‘Dysport’ grew 14.5% (c.17% of sales) was supported by good performance in the aesthetics business in North America. Note that the good manufacturing practices certificate for Dysport was reissued in Brazil in January 2018. Prostate cancer drug ‘Decapeptyl’ recorded 3.6% growth (c.18% of sales) driven by volume growth across Europe (notably in France and Spain which benefited from the new indication). Sales for the recently-launched renal cell carcinoma/RCC drug ‘Cabometyx’ came in at €51.7m (Q4 17: +44% qoq) on the back of a good performance in Germany, France, the Netherlands and the UK. However, sales for pancreatic cancer drug ‘Onivyde’ were slightly below expectations (€56.9m; Q4 17: +10.8% qoq). Consumer Healthcare/CH segment ended the year in the black (+1.4% vs guidance: >0%; c.17% of sales) as the OTx business model strategy started to bear fruit. The momentum was led by a strong performance in Smecta (+4.1%) and Fortrans/Eziclen (+16.5%). In addition, increased contribution from the newly-acquired OTC products (including Prontalgine and Buscopan) bolstered growth further. Geographically, North America snowballed 74.5% during the year (c.25% of sales) aided by strong demand for Somatuline (partially attributable to new contracts) and Dysport. Major Western European countries grew 13.7% (c.34% of sales) on the back of robust performance in France (+9.8%), Germany (+23.5%), Italy (+11.8%) and the UK (+17.9%). Other European countries surged 10.9% (c.21% of sales) while the ROW region was up 3.7% (new contractual set-up for Etiasa in China had a negative impact). After taking into consideration currency headwinds, total revenue increased by 20.5% in FY17. Despite investments in sales and marketing to support new product launches, the core operating profit grew 38.4% (26.4% margin vs guidance: >25%) on the back of robust operational leverage. However, after accounting for amortisation, impairments and restructuring charges, the reported EPS came in at €3.28 per share (+c.20%). Management has proposed a dividend of €1 per share for the year (vs FY16: €0.85). For FY18, Ipsen targets revenue growth of >16% at CER (double-digit growth in SC and low single-digit growth in CH) while currency is expected to have a headwind of c.4%. The core operating margin is likely to exceed 28% in FY18.
With an acceleration in sales momentum in Q3 17 relative to the first half (Q3: +22.6%; Q2: +18.5%; Q1: +19.1%), Ipsen remains on track to achieve its revenue and profitability guidance for FY17. However, with mounting competition in NET, botulinum toxin and the first-line RCC marketplace, the company will need to work hard to maintain its trajectory of market share gain in the mid-term.
Ipsen released Q2 17 results slightly ahead of our estimates as well as market consensus. Revenue at CER increased by 18.5% (vs AV’s estimate: +17.2%) on the back of strong growth in the Speciality Care ‘SC’ segment (+21.1% vs AV’s estimate: +21.2%; accounts for c.83% of Q2 17 sales). Within the segment, Somatuline was once again the primary growth contributor (+27.6% vs AV’s estimate: +25%; accounts for c.36% of Q2 17 sales) driven by volume growth and market share gain in North America. After a weak start to the year (Q1 17: -0.5%), Decapeptyl returned to growth (+5.1% vs AV’s estimate: +3%; accounts for c.19% of Q2 17 sales), benefiting from a good performance in Europe and the Middle East. Sales for the kidney cancer drug ‘Cabometyx’ improved sequentially to €9.3m (Q1 17: €7.6m; Q4 16: €7.2m; accounts for c.2% of Q2 17 sales) with an increased contribution from Germany. Following the completion of the Merrimack acquisition in April 2017, Onivyde recorded its first sale during the quarter (€19.3m vs AV’s estimate: €17m; accounts for c.4% of Q2 17 sales). However, sales for the neurosciences drug ‘Dysport’ slumped to -1.2% (vs AV’s estimate: +3%; accounts for c.16% of Q2 17 sales) which was affected by importation issues in Brazil (good manufacturing practice ‘GMP’ certification temporarily suspended), more than offsetting the good performance in the aesthetics business in North America. The Consumer Healthcare ‘CH’ segment recorded growth of +7.6% (vs AV’s estimate: +0.1%; Q1 17: -5.3%; accounts for c.17% of Q2 17 sales), benefiting from the new retail strategy for Smecta in China (+17.1% vs AV’s estimate: +2%; accounts for c.6% of Q2 17 sales). Moreover, increased contribution from the recently acquired OTC products further bolstered growth. Geographically, North America was once again the primary beneficiary (+77.2%; accounts for c.24% of Q2 17) driven by the strong growth of Somatuline and the good performance of Dysport in the aesthetics business. The upward growth trajectory continued in major western European countries (+12%; accounts for c.34% of Q2 17 sales) led by a rapid uptick in the demand for Cabometyx. Sales in other European countries were up 5.7% (accounts for c.20% of Q2 17 sales) and ROW also returned to growth (+1.2% vs Q1 17: -6.7%; accounts for c.22% of Q2 17 sales). For H1 17, the total revenue was up 20.4% (vs AV’s estimate: +18.6%) after taking into consideration currency tailwinds (+1.6%). The adjusted operating margin improved to 26.2% (+120bp yoy), reflecting the strong growth momentum in the SC segment, thereby offsetting the increased launch investments for Cabometyx and Onivyde. Given the strong H1 17 performance, management has revised its revenue and profitability guidance for FY 17. The company now targets organic sales growth of >24% for the SC segment (vs earlier guidance: >18%) and an adjusted operating margin of >25% for the firm (vs earlier guidance: >24%). However, despite the upturn in Q2 17, the company has lowered the revenue guidance for the CH segment due to regulatory headwinds in France (>0% vs earlier guidance: >4%). The long-term guidance for the CH segment has been halved to +2-3%.
At its Investors Day held in May 2017, Ipsen increased its financial targets for FY20. The company now targets sales in excess of €2.5bn (vs AV’s estimate: €2.5bn; earlier guidance: €2-2.5bn) with the Specialty Care ‘SC’ segment expected to grow at a CAGR of more than 14% between FY16-20 (accounts for c.80% of FY16 sales). The Consumer Healthcare ‘CH’ segment is projected to grow 4-6% per year until FY20 (accounts for c.20% of FY16 sales) after taking into consideration the impact of recent acquisition of assets from Sanofi and Akkadeas Pharma. More importantly, Ipsen anticipates the underlying operating margin to now exceed 30% in FY20 (vs AV’s estimate: 25.3%; earlier guidance: >26%). The company will continue to invest in business development (focus on early/ mid-stage assets) alongside transforming its internal R&D model.
Ipsen released Q1 FY17 trading results which were ahead of our estimates as well as the market consensus. Revenue at CER increased by 19.1% (vs AV’s estimate: +17.7%), on the back of a robust performance in the speciality care segment (+25.4% vs AV’s estimate: +22.4%; accounts for c.84% of Q1 17 sales). Within the segment, the primary growth contributor was Somatuline (+36.6% vs AV’s estimate: +25%; accounts for c.39% of Q1 17 sales), led by strong volume growth in Europe and market share gains in North America. The biggest surprise was the neurosciences drug, Dysport (+31.3% vs AV’s estimate: +8%; accounts for c.20% of Q1 17 sales), benefiting from good volume progression in the aesthetics business (in partnership with Galderma). However, the growth momentum turned negative for Decapeptyl (-0.5% vs AV’s estimate: +3%; accounts for c.18% of Q1 17 sales), as it was pinned down by a change in the distribution scheme and continued pricing pressure in China. Note that Ipsen has changed the name of its primary care segment (c.16% of Q1 17 sales) to ‘Consumer Healthcare’ from Q1 17 onwards. The segment’s dismal performance continued in the quarter (-5.3% vs AV’s estimate: -7%), being adversely impacted by stocking issues in Vietnam for Smecta (-2.4%; accounts for c.7% of Q1 17 sales). Moreover, the poor performance of Tanakan in Russia and France (-37.9%; accounts for c.1% of Q1 17 sales) suppressed the segment’s top-line further. Geographically, the prime beneficiary was North America (+86.3%; accounts for c.23% of Q1 17 sales), supported by the robust performance of Somatuline and Dysport. The growth momentum accelerated in major western European countries (+11.5% vs Q4 16: +8.6%; accounts for c.36% of Q1 17 sales), benefiting from strong demand for Somatuline and the rapid adoption of Cabometyx in France and Germany. Revenue was up 15.9% in other European countries (accounts for c.22% of Q1 17 sales), on the back of the strong demand for Dysport in Turkey, Ukraine and Greece. However, a lacklustre performance in ROW (-6.7%; accounts for c.19% of Q1 17 sales) partially softened the top-line momentum. For FY17, management expects the speciality care and consumer healthcare segments’ revenue to grow above 18% and 4% (at CER), respectively. The adjusted operating margin is expected to surpass 24% for the year.
Ipsen reported yet another strong quarter. The revenue for Q3 FY16 (at CER unless specified otherwise) increased by 12.2% (vs Q2 16: +14.5%), fuelled by strong growth in the speciality care ‘SC’ segment (+17.8% vs Q2 16: +18.6%; accounts for c.82% of Q3 16 sales). Within the segment, Somatuline was the largest growth contributor (+34.1% vs Q2 16: +37.4%; accounts for c.35% of Q3 16 sales), and once again drove the robust volume growth and favourable pricing trend in the North America. Moreover, the good overall performance in Europe (notably Germany, France, and the UK) further underpinned the sales of the drug. The impressive performance continued for ‘Decapeptyl’ (+6.3% vs Q2 16: +6.7%; accounts for c.22% of Q3 16 sales), aided by a strong volume uptick in Europe. Growth for Dysport decelerated to +9.3% (vs Q2 16: +12.2%; accounts for c.19% of Q3 16 sales) as the solid performance in the US aesthetics market was slightly offset by volume declines in Brazil and Russia. The dismal performance continued in the primary care ‘PC’ segment (-7.5% vs Q2 16: -0.1%; accounts for c.18% of Q3 16 sales), mainly due to the slower ramp-up of the new commercial strategy in China for Smecta (-1% vs Q2 16: +1.7%; accounts for c.6% of Q3 16 sales). Moreover, the challenging market environment for Tanakan in Russia and for Forlax in Algeria, suppressed further growth in the segment. Geographically, revenue was up 6% in major western European countries (vs Q2 16: +9.2%; accounts for c.35% of Q3 16 sales) and +4.4% in other European countries (vs Q2 16: +12.2%; accounts for c.21% of Q3 16 sales). Sales in North America increased by 72% (vs Q2 16: +75.3%; accounts for c.18% of Q3 16 sales), driven by the solid performance of key drugs – Somatuline and Dysport. ROW was up 1.8% (Q2 16: +1.1%; accounts for c.26% of Q3 16 sales). The total reported revenue grew by 10.2% (vs Q2 16: +10.5%), reflecting a -2% currency effect. Management has raised the FY16 revenue guidance for the SC business (+15% vs earlier guidance of +12%) subsequent to the strong performance witnessed in 9M FY16. Although the revenue guidance for the PC business has been lowered to c.-5% (vs slight growth earlier), Ipsen’s core operating margin guidance has been revised upwards by 100bp (vs earlier guidance). In August 2016, the US FDA approved Dysport for the treatment of paediatric lower limb (PLL) spasticity and, in September 2016, the European Commission approved cabometyx as a second line of treatment for renal cell carcinoma (RCC). Moreover, in October 2016, Ipsen (along with partner Exelixis) announced positive clinical data from its ‘Cabosun’ phase 2 trial (for use of Cabometyx in the frontline setting for RCC). In January 2017, Ipsen acquired US commercialisation rights for oncology drug ‘Onivyde’, from Merrimack Pharma. The drug is approved as a second-line of treatment for metastatic pancreatic cancer and is the only FDA approved drug in this indication (post gemcitabine-based therapy). The deal (expected to close in Q1 17) involves payment of $575m in cash and up to $450m in additional milestones, contingent upon the approval of Onivyde for other potential indications in the US.
Q1 sales grew 4.7% at CER and 3.4% as reported, including +9.7% at CER for speciality care and -11% for primary care. Sales increased by 74.7% at CER in North America (c.15% of total sales) and by 3.7% in major Western European countries (39% of total sales). The significant decrease in the RoW accounts for 24% of total sales (-16.1% at CER and -18.6% as reported).
1/ Q4 sales were up 21.3% at CER (FY15 +10.4%). Operating income increased by 10.2% and the group’s net income by 23.7%. Operating cash flow decreased by 9% to 15.5% of sales (vs. 19.3% in FY14). 2/ Management announced the in-licensing of the global rights ex North America and Japan of cabozantinib for the second-line treatment of advanced renal cell carcinoma, for which commercial launch is expected in 2017 in Europe.
Q3 sales rose 7.7% (+5.2% at CER). Yoy, growth was respectively +10.4% and +7%.
1/ Q2 sales increased by 9.3% (+4.5% at CER). H1 increase was 11.8% (+7.9% at CER). H1 current operating income increased by 3.2%. Operating CF fell by 33.8% (+11.2% before changes in working capital). 2/ Ipsen’s partner, Lexicon Pharmaceuticals, announced positive results from the TELESTAR phase 3 study showing that telotristat etiprate is effective in the treatment of carcinoid syndrome caused by neuroendocrine tumors not adequately controlled by somatostatin analogs
Research Tree provides access to ongoing research coverage, media content and regulatory news on Ipsen. We currently have 11 research reports from 1 professional analysts.
A highly statistically significant dose response from the Phase II Grass MATA MPL/PQ Grass trial in Europe enables the company to confidently select a dose to take into a pivotal Phase III trial for US and European registration purposes. This is the first of two material clinical trial readouts this year. The Phase III Birch allergy study is expected in H2 2018, safety data from which might be able to be included as part of the safety package needed by the FDA for Grass MATAMPL. We maintain a target price of 47p and expect to upgrade on positive PQ Birch results. Further upside (33p) exists for the Pollinex Quattro Grass programme in the US.
Companies: Allergy Therapeutics
Prior to the financial crisis of 2008/09, it was widely believed in the stock market that certain sectors – most notably utilities, pharmaceuticals, food retailing and tobacco – were far less vulnerable to market downturns.
Companies: OPM ABZA AVO AGY APH ARBB AVCT BNO BUR CMH CLIG COS DNL EVG GTLY GDR INL KOOV MCL MUR NSF OXB NIPT PHP RE/ REDX SCLP SCE SIXH TRX TON VAL
Ergomed’s new strategy is to become a global leader in pharmacovigilance and orphan drug development services by 2020. This refocusing of the business moves Ergomed away from its reliance on the risk/reward profile of development deals, towards repeatable and sticky contracts across various geographies and therapy areas. This offers a much better, more visible, cashgenerating story. Our headline valuation has been revised to centre on the Services businesses only, giving a fair value of 266-292p. The Development and Haemostatix businesses add a further 120p to that range.
Two product acquisitions fit with the company’s buy-and-build strategy and are forecast to be 2-6% EPS-enhancing in 2018-2020. Alliance paid £18.7m ($25m) for the two products, representing c.2.7x EV/Sales, up to $4.5m of which is deferred until 2019/2020. The larger acquisition of Vamousse is the company’s first acquisition with significant US sales, signalling perhaps the direction of its future M&A strategy. Net debt is expected to rise to c.£75m at year-end 2017 (2.6x leverage), We increase our target price to 70p, implying 2018 P/E and EV/EBITDA of 14.7x and 11.9x, respectively.
Companies: Alliance Pharma
2018 is the year of the Great Exhibition of the North. This summer, Newcastle and Gateshead will play host to a government-sponsored, 80-day marathon of events. Billed as the largest event in England this year, the Great Exhibition will showcase the best of the North East’s art, culture, design and innovation and we expect it to highlight the region’s ongoing success in high-end engineering, technology and life sciences. It may also reflect on the success of the North East’s plcs, the most striking example of which is Sage’s transition from 1980’s start-up to £9bn FTSE100 stalwart. We remain on the look out for the next Sage and expect the region to continue to produce attractive IPO candidates following Ramsdens’ success last year. Overall 2017 was a positive year for the region’s listed companies, one highlight of which was the takeover of Quantum Pharma, an N+1 Singer client, by Clinigen for £150m. We are confident that 2018 will be another successful year. Our top regional picks this year are Hargreaves Services, Zytronic and Applied Graphene Materials.
Companies: AGM BWY GRI GRG HSP IDH KMK NTG RFX UTW VNET ZYT
Totally has published its twelve-month results, or second set of interim results, to 31 December 2017 as the Group moves to a new March year end. Thus, the current financial period will be of 15 months duration. This follows the reverse takeover of urgent care provider Vocare in October 2017. The twelve-month results came in slightly better than our forecast which augurs well for the full fifteen-month results which remain unchanged. However, our forecast for net cash has been raised from £4m to £9m which ties in with the higher level of cash enjoyed in the business as at December of £11.3m.
Full-year results were 7% ahead of the August trading update. Revenue growth of 27% was driven by Vitamin D, up c55%, and sterling's depreciation, which contributed c11% to growth. A higher final dividend together with a 20p special dividend implies a combined yield of 2.9%. Management is confident that Siemens will launch its troponin-based assay contributing to and largely replacing lost NT proBNP royalties in FY 2018. We have increased our target price to 1450p to reflect a 5% EPS upgrade to 2017 earnings and introduced a 2018 forecast, calling for EPS of 72.7p.
Bioventix reported a strong set of interim results with revenues increasing by 32% (c.12-17% at constant exchange rates (CER)), driven largely by the continued roll-out of its customers’ Vitamin D assay products. This, in turn, led to a 41% increase in pre-tax profits and a 40% increase in adjusted EPS; which is reflective of the operational gearing of the business. We are upgrading our adjusted EPS to 78.7p (+5%) and, consequently, are raising our target price to 1750p. At this price level, the shares would trade on a 22.4x FY 2018 P/E and an EV/EBITDA of 17x. We await confirmation of Siemen’s high sensitivity troponin assay launch, expected in FY 2018.
Siemens Healthineers announced yesterday that it has introduced its high-sensitivity troponin I test (TNIH) into certain markets outside the US. The test incorporates Bioventix’s antibody, for which it will receive royalties on Siemens’ product sales. This removes one of the market’s main concerns and downside risk to the share price – how to bridge the potential gap between the loss of a c.£0.9m royalty stream from a customer using its NT-proBNP antibodies, which ceases in August 2017. Our forecasts assumed that Siemens’ TNIH test would be available from 1 July 2017 with royalty revenues of c.£0.4m in FY 2018, leaving open the potential for upgrading PBT and target price by c.10% to 1925p if one assumes higher Year 1 sales.
Inspiration Healthcare (IHC) is a global supplier of medical technology for neonatal intensive care units (NICUs) and operating theatres. With excellent customer service relationships built up over many years, IHC has unique selling channels in both domestic (i.e. NHS) and international markets. Current product mix comprises IHC’s own branded neonatal intensive care and operating theatre warming devices with sales to over 50 countries and third-party distributor agreements in the UK and Ireland. We expect FY18 & FY19 sales growth of 8% and 10% respectively due to global sales expansion, own product sales and future M&A activity. IHC trades on a forward EV/EBITDA multiple of 9.4x (against a peer group of 11.5x). We value IHC at £21m and initiate coverage with a Buy recommendation and 68p target price.
Companies: Inspiration Healthcare Group
FY results were marginally ahead of July’s trading update, boosted by FX tailwinds and stronger-than-expected gross margins. Revenue growth of 19% was driven by overseas markets (+42%), despite intentional declines in non-ClO2 chemistry-based products. We make only minor changes to our FY 2018 forecasts, with EPS 2% higher than previously forecast and representing c.2% growth (+10% if adjusted for 2017 lower tax charge) during a period of higher investment ahead of the US launch expected in FY 2019. We re-introduce a target price of 275p, underpinned by a DCF analysis, which depends on the timing and success of the company’s entry into the US market.
The AIM Healthcare index has shown positive returns in all but three out of the past 11 years (2007, 2008 and 2011), growing at a CAGR of 7.6% over the period. This compares with a CAGR of -0.3% for the broader FT AIM All Share, +0.6% for the AIM 100 and +3.5% for its more senior FT All Share Health index. Sector growth and relative performance to the AIM All Share index has accelerated over the past five years; the sector having risen 19.19% CAGR since 1 Jan 2012. This compares with 6.8% growth in the AIM All Share and 6.1% in the FT All Share. This outperformance can be attributed to the increasing success amongst the Healthcare constituents which have progressed their business plans to a point where substantial value has been/is being created and where many companies have successfully scaled their businesses to sustain future growth. We highlight four companies that have different business models but exemplify the opportunities that are increasingly becoming evident within the sector.
Companies: ABZA AKR AGY APH AGL AVCT BVXP COG CTH IHC LID MTFB ODX OPTI NIPT PRM SDI STX SNG TSTL
Since April, our growth style screen has performed very strongly, outperforming the main small-cap index by 20pp and 24pp on an unweighted and weighted basis respectively, also comfortably outpacing microcap. In this note we provide more detail on the constituent and basket performance in the period and present the new screen constituents. As usual we focus on 10 of the current constituents, providing brief summaries and financials for clients to consider. We will refresh again in 5-6 months time and report back on performance.
Companies: SUN DOTD ERGO TEF AVG SOG IDE FEN LOOP YU/
GSK’s Q4 results were ahead of our as well as the street expectations. Forex had a negative impact of 3ppts on sales and 4ppts on adjusted EPS. All segments outperformed sequentially, but vaccines stood out with 9% growth (vs flat Q3). The main drivers included HIV in pharma, flu and meningitis in vaccines and international markets in the consumer health business. Management maintained interest in consumer health assets but ruled out a compromise on the pharma focus.
A relatively minor 2.3% EPS downgrade has prompted a 13% share price fall in Clinigen’s share price. Issues in the small CTS division and FX headwinds have been partially offset (though not sufficiently) by strength in Commercial Medicines, where much of the value lies, in our opinion. Importantly, our FY19/20 estimates are largely unchanged. We continue to see latent potential in the Quantum Pharma pipeline in particular and investors should be reassured by positive commentary around its integration and performance since acquisition. For these reasons we stay positive and believe the recent weakness will be temporary and is a good buying opportunity. We reiterate our Buy recommendation with a TP of 1157p (from 1225p).
Companies: Clinigen Group