Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Ipsen. We currently have 9 research reports from 1 professional analysts.
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 9 research reports from 1 professional analysts.
The latest Office for National Statistics (ONS) survey, ‘Ownership of UK quoted shares: 2016’, shows that retail investors are more important than most company managements realise or most capital markets professionals admit. When it is also appreciated that the data shows that retail investors set the share price for most quoted companies, most days, it becomes clear that engaging with such an audience enhances a company’s standing, whilst ignoring them courts disaster.
Companies: OPM ABZA AVO AGY APH ARBB AVCT BUR CMH CLIG COS DNL EVG EHP INL MCL MUR NSF OBT ODX OXB PPH NIPT RE/ REDX SCLP SCE SIXH TRX TON VAL
A look back at our 2017 ideas In aggregate our analyst picks outperformed the FTSE All Share last year by 9% and the cumulative performance of our portfolio over 6 years would have given a total return of 300% (almost double the return on the FTSE All Share). In addition, many of our top-down themes played out very well such as our focus on secular growth in Tech, Life Sciences, Healthcare and Financials, an increase in M&A, our cautious stance on the Consumer and especially our bet on continued strength in the Industrials last year and solid growth in the global economy. What does 2018 have in store? We continue to play ongoing secular growth themes in Tech, Life Sciences, Healthcare and Financials. In addition, we tap into domestic areas of cyclical strength such as regional construction and house building, plus self-help initiatives and potential market share gains. We maintain a favourable view of Industrials given the global economic backdrop but think this could moderate during the year. Other changes of nuance include the potential for a better H2 in the Consumer sectors, which remain under pressure for now, and a better outlook in Media from a mini-quadrennial year in 2018.
Companies: AMO AVG CBP CVSG DNLM EKF FENR IOM SAA GLE PURI SFR PGIT PURI SFR SOG VRP
Today’s update confirms a financial performance for H1 in line with expectations. We continue to believe that the recent acquisition of Quantum Pharma added a number of growth opportunities, and that the Group’s mid-teens growth is sustainable over the medium term, backed up by strong cash generation, which again was ahead of expectations for the period. We reiterate our Buy recommendation and 1,225p target price.
Companies: Clinigen Group
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
In its healthcare conference, Shire slashed its 2020 sales forecast from $20bn (given two years back) to $17-18bn and also pushed out the strategic review of the neuroscience (ADHD) business to H2 18. Until the final decision on the review, it will be restructuring the group into two businesses – rare diseases (accounting for 70% of the group sales) and neuroscience. Post the review, Shire will decide whether to keep the businesses under one roof or go for other options such as a separate listing. It also announced a more specific debt target – a Net Debt to EBITDA (non-GAAP) ratio of below 2.5x by the end of 2018 vs 5x in 2016.
A further strong trading update for FY17 has prompted further double digit PBT/EPS upgrades this morning, adding to the strong forecast momentum experienced in recent months. The core Biodecon activities are benefitting from the improved commercial focus and this is now being seen strongly in the reported financials, which are beginning to look increasingly attractive in terms of growth, margins and cash generation. Net Cash reached £14.5m at the year end, increasing the scope for some kind of further returns to shareholders. We see intrinsic value of 300p+, with further upside scope on growth, forecast outperformance and possible cash returns.
In our third edition of Trend spotting we stick with our suggestion at the end of March to up European exposure and we review the recent market moves and macro trends. We comment on the recent strong performance of our growth, quality and momentum styles which we expect to continue and we examine what happened to sectors around the last general election period in 2015, adding some new colour.
Companies: AUG GNS IQE NTG SDL SPH SDY TRI VEC XAR GHT BOY CRW EMIS VCT ECK GLE GHH DATA AVON CHH DPH HILS SDM ZYT MUR RPS LWB EKF SUN UDG SYNT CINE DOTD MPM FUM CLIN RENE ATQT SERV ERGO BCA BUR DRV SCS JUP FDP GBG GTLY HW/ EAH SFR PHD CXENSE KNOS NETD G4M GFIN ULS RHL RAT FEN LOOP MYSL FUTR
CVS Group (CVSG LN) - Move to strengthen the Board CVS has moved to strengthen the Board by appointing Deborah Kemp as a Non-Executive Director from immediate effect. Deborah brings a wealth of experience of working in multi-site consumer facing businesses both from an operating, M&A and property development perspective – features which are all relevant to CVS going forward. Notably, her career has involved serving as CEO of Laurel Funerals from 2010-15, Chief Operating Officer at De Vere Hotels & Resorts from 2009-10 and a lengthy period at Punch Taverns plc culminating in being the MD of the leased business. Since 2015 she has been a director of Vennco Limited, a consultancy specialising in consumer businesses and in September 2017 became interim CEO of private equity backed Synseal Group. Overall, we view this as a positive appointment in light of CVS’s rapid growth in recent years and as it looks to move to the next phase of development. Following this appointment the Board of CVS now comprises two Executive Directors and two independent Non-Executives and a Non-Executive Chairman. We continue to be positive on CVS and see the recent share price weakness as a rare buying opportunity into a structural growth story. We anticipate LFL sales newsflow to improve in 2018 as it laps softer comps and self-help measures kick in. This is an important catalyst. Fundamentally the veterinary industry is attractive and CVS is very well positioned to capitalise on its leading market position and service/geographic diversity to double earnings over the next 5 years. We see a cal’18 P/E of 22x (ex further consolidation) as attractive and argue for fair value >1300p on a 12m view. Gresham Technologies (GHT LN) - Significant CTC win in the Nordics Gresham Technologies won a significant contract win with one of the largest financial services groups in the Nordic region. The bank will use Clareti Transaction Control (CTC) as part of a modernisation programme in its wholesale banking operations The contract has an initial value of approximately €2 million, around half of which is immediately recognisable (contributing in 2017), with the remainder to be recognised over the initial five-year term of the contract. This is another good win for CTC, following on from a number of significant wins in 2017, leaving us confident of its prospects. Summit Therapeutics (SUMM LN) - Discuva acquisition enhances infectious disease offering Summit has acquired Discuva and its research and development platform for the generation of differentiated antibiotic compounds for a total consideration of £10m in cash and shares. Summit will aim to generate a pipeline of new mechanism of action antibiotics to address serious infectious diseases and expand its pipeline in this area. The group’s infectious disease pipeline currently includes its flagship antibiotic candidate ridinilazole for the treatment of C. difficile infection (CDI). Summit is on track to commence two Phase III trials evaluating ridinilazole vs. vancomycin in H1 2018. We remain very excited about Summit’s potential and welcome this sensible bolt-on.
Companies: CVSG GHT SUMM
Another strong update from Dechra, leaving the group on track to hit our full year expectations. Growth in North America in particular continues to impress as the group benefits from the increased critical mass from the Putney acquisition, new product registrations and cross-selling opportunities. The more mature European segment remains solid. No change to estimates at this stage, although US tax reform is likely to benefit the bottom line and should lead to useful EPS upgrades at the interims in late February. For now, we stay at Hold with a 2050p TP.
Companies: Dechra Pharmaceuticals
A strong set of interims this morning, with revenues +14% and a move back into sustainable profits confirmed. Ahead of the acquisition of Elemental in August, net cash increased to £1.2m. We make no changes to our forecasts at this stage after upgrading materially for the Elemental deal, which we continue to view as transformational for the group. We see plenty of mileage in the story and reiterate our Buy recommendation.
Companies: Surgical Innovations Group
ECO Animal Health has received its seventh Aivlosin® marketing authorisation of the year with the most recent being in the Philippines in chickens laying eggs for human consumptions in a water soluble formulation. The Philippines is the fourth most important egg producing country in South East Asia and seventeenth globally. ECO Animal Health continues its global roll out of Aivlosin® for commercial layers after it was first approved in a water soluble formulation for the treatment of layers in Europe in 2016. We re-iterate our positive stance and continue to expect Aivlosin® to generate strong growth in multiple geographies.
Companies: Eco Animal Health Group
BMK has updated on overall FY17 sales being c. £138m – in line with market expectations and equivalent to 26% growth over FY16.
Cambridge Cognition (COG) has released a trading update highlighting delays in the signing of two large clinical trial contracts that were expected to contribute to FY17 results (to be announced 22/03/17). FY17 sales are now expected to be in the region of £6.7m (expected £8.2m), leading us to downgrade our FY17 and FY18 sales forecasts by 18.0% and 13.1%, respectively. We now expect COG to breakeven at an adj. EBITDA level for FY17 and a cash balance of c.£1.9m is sufficient to pursue existing business strategies and growth opportunities. Whilst clearly disappointing, we believe these trial contracts will be signed in the first half of 2018 and have correspondingly chosen to push our original FY17 forecasts out by a year (now forming FY18 forecasts). As a result, we lower our target price to 155p (from 180p) based on a forward EV/Sales multiple of 3.5x and FY18 year-end cash of £3.3m.
Companies: Cambridge Cognition
In January Glycotest announced that it had completed a 149-person Chinese retrospective study of its test for hepatocellular carcinoma (HCC). It demonstrated 93% sensitivity at 92% specificity, which is superior to the commonly used alpha-fetoprotein (AFP) test. Additionally, ProAxsis announced continued commercial progress with the CE mark of a ProteaseTag research kit for a new enzyme, plasmin, which may have utility in inflammatory conditions of the lung.
Deltex has announced the addition of a major new hospital account in the US. The hospital is a well-known and highly regarded university teaching facility ranked in the top ten hospitals in the US and is the flagship site of a six-hospital healthcare network so this is an important strategic step for Deltex in the US.
Companies: Deltex Medical Group