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Research Tree provides access to ongoing research coverage, media content and regulatory news on Sanofi. We currently have 11 research reports from 1 professional analysts.
Sanofi’s Q1 numbers were largely in line with our expectations and incorporate the integration of Boehringer Ingelheim’s consumer health business and the full consolidation of Sanofi’s European vaccine operations (following the termination of the JV with MSD) and the sale of animal health. Sales came in at €8.6bn (+8.6% at CER and +11.1% reported), with the pharma business (excluding consumer health) growing by 2.2% to €3.7bn, consumer health by 42.7% to €1.3bn and vaccines by 22.2% to €784m; the underperformance in the US pharma business was offset by outperformance by the vaccines. NB all sales growth numbers at CER unless specified otherwise. Thanks to the consumer health business this growth in pharma was registered across all geographies – the US (+1.9%), Europe (+8.1%), Emerging markets (+11.3%) and ROW (+13.1%). However, the devil is in the detail. Barring the Genzyme business, the pharma franchise (excluding consumer health) has been growing only in the emerging markets as the developed markets have languished. The US, on the other hand, was the worst performer with its diabetes business (11% of group sales) declining by 11.5% and general medicines (5% of group sales) declining by 7.6%. Profitability came in ahead of our expectation, primarily due to an outperformance by the pharma business. Reported gross margin improvement of 130bp was countered to some extent by higher SG&A and R&D expenses, which are likely to accelerate further on account of the investments behind the recently-launched Dupixent and Kevzara. Reported business income increased by 15% to €2.4bn, with pharma contributing 97% (vs 91% to sales) and vaccines contributing just 3%. Relating this to the annual business earnings outlook of stable to -3% (at CER) indicates a weaker second half.
Sanofi and Amgen, which are already embroiled in a high-stake case, under review with a federal appeals court for their cholesterol drugs, have added one more to the patent battle. This time Amgen’s lawsuit, through its subsidiary Immunex, claims that Sanofi’s eczema drug (Dupixent) infringes upon a patent related to a failed asthma drug of Amgen. California-based Immunex has also reportedly asked the Boston federal court to transfer the case to California.
Not a good start to the new year – Sanofi has lost the final patent infringement case on its cholesterol-lowering drug, Praluent, to Amgen. The US district court has banned Praluent for 12 years for infringing the patents of Amgen’s Repatha. Both Sanofi and partner Regeneron have said they will be appealing against the verdict immediately.
Sanofi exceeded the street’s expectations in Q3, but met ours. Revenue for the quarter came in at €9.7bn (+3% vs Q2: -0.2%, Q1: +0.7%) and for 9M at €27.1bn (+1.2%), including the held-for-sale animal health business. All revenue growth numbers at CER unless mentioned otherwise. The currency impact eased during the quarter to c.1%. Vaccines grew by 14.4% to €1.8bn (vs Q2: €0.79m, Q1: €0.62m), solely driven by an early shipment of flu vaccines in the US (+19.1% vs -2.3% in Q2). Pharma grew 0.5% (vs -1.7% in Q2), as Genzyme (+18.5% vs 19.5% in Q2) and generics (1.3% vs -1.9% in Q2) shouldered other business-level miseries. The patent expiry of blood thinner Plavix (-9.9%) in Japan and the absence of Auvi-Q sales in the US (Sanofi withdrew commercialisation of the drug in 2015 due to dosage issues with the device) hampered Established products’ performance (-7.4% vs -9.7% in Q2) in the developed markets (-12.5%; -10.9% in Q2). Consumer health (-1.2%; -4.3% in Q2), on the other hand, was pulled down by emerging markets (-4.7%; -13% in Q2). Geographically, the main contributor was the US (+7% vs Q2: +1.3%), while Latin America (+8.5% vs -15.1% in Q2) drove growth in the emerging markets (+5.6% vs -0.5% in Q2). The adjusted operating profit came in at €2.57bn (+38%). The company reported business operating profit (which excludes impairments, amortisation, restructuring and includes share of associates and minorities) grew 11.3% to €3.1bn (vs -11.0% in Q2), reflecting a margin of 32.1% (vs 25.8% in Q2). Net profit grew by 9.7% (vs -8.7% in Q2) to €2.3bn. In effect, management nudged up its expectations on cost savings to >€1.5bn by 2018 (from about €1.5bn). The operating expenses for 2016 are expected to grow in low single-digits (vs previous guidance of mid single-digits) and the gross margin to be around 70% (vs previous expectation of above 69% and below 70%). EPS is expected to increase by 3-5% at CER, with a negative FX impact of 4%. The European business has been put on the block with the target of 12-24 months, while a €3.5bn share repurchase programme was initiated for 2017.
Sanofi and Actelion are reported to be involved in advanced merger talks after J&J pulled back earlier this week. Actelion’s two drugs for pulmonary arterial hypertension are Sanofi’s biggest interests. The speculated offer from Sanofi values Actelion at over CHF30bn (€28.4bn). We quickly ran the preliminary numbers on our M&A tool, but believe that a lot would hinge on the money being locked in the Contingent Value Rights (which are reportedly also part of the discussion). We currently do not assume CVR or synergies, but the M&A tool throws up EPS dilution in 2017 and marginal accretion of ~2-3% in 2018.
Not a strong quarter for Sanofi, as it has been pulled down by the weak pharma business and headwinds from Venezuela. Sales came in flat at €8.9bn (all revenue growth numbers in CER unless mentioned otherwise), further cornered by unfavourable forex, to a 4.3% decline in euros. These numbers were slightly behind our estimates. The Pharma business declined by 1.7% (-5.8% in €), Genzyme being the only area to report growth as diabetes fell by 2% (-5.4% in €), established products by 9.7% (13.3% in €), consumer health by 4.3% (-10.1% in €) and generics by 1.9% (-8.8% in €). The Vaccines business grew by 6.3% (+2.6% in €) and the held-for-sale animal health business grew by 9.1% (+4.9% in €). Adjusted operating profit came in at €1.7bn (-13%). The company reported business operating profit (which excludes impairment, amortisation, restructuring and includes share of associates and minority) declining by 11% to €2.3bn. The Pharma business reported a business operating profit of margin of 27.5% (vs 29.3% in Q2 15) and 11.9% for vaccines (vs 15.1% in Q2 15). The outlook was maintained at flat business EPS at CER.
Sanofi reported a weaker than expected Q1 16 performance. The top-line missed our expectations with sales growth of just 0.7% at CER to €8.5bn (all revenue growth numbers at CER unless specified otherwise). The slowdown in the conventional portfolio (diabetes & cardiovascular (-5.8%) and established Rx (-8.2%)) was shouldered just enough by Genzyme (+20.5%), Vaccines (8.2%) and the Animal Health (17.5%). In comparison to our estimates, the out-performance by Genzyme and Animal Health was more than negated by the under-performance by Vaccines and the mature portfolio. Negative impact of 2.6% points of unfavourable forex movements, emanating from volatility in emerging market currencies (offset to some extent by the dollar and Japanese yen weakness), pulled down the euro growth to -1.9%. Profitability was further dented by higher restructuring charges (which we do not consider as one-offs) and higher amortisation of intangibles than expected, despite savings from R&D and selling expenses. The underlying operating income came in at €1.4bn (-19% in €); this excludes amortisation of tangible assets related to the animal health business (since it was not disclosed).
Group sales declined by 1.6% at CER (all revenue growth rates at CER unless specified otherwise) to €9.3bn during the quarter. For the full year, sales grew by 2.2% to €37.1bn. The strong dollar against the euro, more than offsetting the negative impact from the Brazilian real and the Russian rouble, contributed 3.9% to the quarter and 7.5% to the annual sales growth. The worst performing segments included diabetes (-12.3% in Q4 and -6.8% for FY) and the mature portfolio (-10.4% in Q4 and -2.3% for FY). Genzyme (+28.2% in Q4 and 29.5% for FY) and vaccines (+15% in Q4 and 7.3% for FY) continued to shoulder the group-level miseries; vaccine performed particular well sequentially (Q1: -4.6, Q2: 8.6%, Q3: 5.5% and Q4: 15%). Underlying operating profit of €7.8bn for the year was ahead of our estimate of €7.4bn, but higher restructuring (which we do not consider as exceptional) charges and impairment charges (on Synvisc-One, rotavirus vaccine project, Afrezza and Auvi-Q) pulled down the EBIT to €6.3bn (vs our expectation of €6.9bn). Finally, net profit of €4.3bn fell short of our expectation. Geographically, the quarter was the worst for the US with an 8.2% decline (Q1: +1%, Q2: 2.1%, Q3: 2.3%), thanks to the Lantus wash-out and the Auvi-Q recall. Of the emerging markets, Asia drove most of the growth at 16.2% (+13.2% for FY), while LatAm declined by 3.9% (+4% for FY). Japan witnessed a 13.8% decline (-6.6% for FY) during the quarter. Management anticipates a 2016 business EPS (a non-GAAP measure) to be at 2015’s level (at CER).
Sanofi conducted its investors meet on Friday, 6 November, at which the new CEO, Brandicourt, announced the group’s new priority in the wake of a slowdown in its diabetes business. Key highlights of the meeting include: • Profit warning – this was the weakest point of the conference and garnered maximum attention. Due to the weakness in the diabetes business and higher expenses in R&D and product launches, the profit guidance has taken a hit, which is likely to stagnate until 2017; revenue is expected to grow at a CAGR of 3-4% over 2015-20, with a mid single-digit CAGR over 2018-20. • Re-assessing the non-core – the animal health business, Merial, and the European generics business have been put on the block for review. Focus areas include speciality care (multiple sclerosis, oncology, immunology and rare diseases), diabetes & cardiovascular, emerging markets and consumer healthcare. • Cost cuts – a group simplification and investment prioritisation will be implemented to extract cost savings worth €1.5bn by 2018, which will be used towards R&D on biologics and acquisitions. • R&D – a launch of 18 products up to 2020 is lined up, of which Sanofi expects six products to generate sales of €12-14bn by 2025.
The pain in the diabetes business took away all the sheen from Q3, which met our expectations at the top-line but was behind in terms of profitability. Total sales were up 3.4% (all growth at CER unless specified) to €9.6bn, with Genzyme rising by 32.6%, Vaccines by 5.5% and Animal Health by 9.3%, but the diabetes business declining by 6.6%. Operating income was up 2% to €1.9bn The outlook for business EPS for the year was maintained at stable to slightly growing at CER. The key takeaway from the earnings, however, was the update on the diabetes business. For the year, the outlook has been revised downs to 6-7% (from a mid single-digit decline), while for the period 2015-18, it has been downgraded from flat-slightly positive growth to a decline of 4-8%. Half of this decline is attributable to insulin glargine; the rest pertains to Afrezza, Lyxumia and a de-prioritisation of the blood glucose monitoring systems. Management also indicated that the impact of this downgrade on the business operating income will be mitigated by 2018, details of which are likely at the investors meeting on 6 November 2015.
Sanofi reported solid Q2 numbers driven by the same themes as in Q1 – a weak euro and a strong Genzyme. Both sales and business operating income were up 5% yoy at CER to €9.4bn and €2.6bn, respectively. While Pharma sales were up 4%, Vaccines and Animal Health sales grew by 9% and 14%, respectively. The weak euro bumped up sales growth to 16% and business operating income growth to 20% at the reported level. Despite a business EPS growth of 4% at CER, the reiteration of full-year guidance of stable to slight growth indicates a tougher H2 with headwinds from higher launch costs, generic competition to Plavix in Japan, etc., despite a moderation in R&D expenses.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Sanofi. We currently have 11 research reports from 1 professional analysts.
|20Sep17 11:58||GNW||Sanofi and Alnylam Report Positive Topline Results from APOLLO Phase 3 Study of Patisiran in Hereditary ATTR (hATTR) Amyloidosis Patients with Polyneuropathy|
|16Sep17 07:15||GNW||Sanofi and Regeneron Announce Positive Study Results for Dupixent® (dupilumab) in Patients With Moderate-to-Severe Atopic Dermatitis|
|11Sep17 05:58||GNW||Sanofi, Regeneron: Dupilumab Hits Main Objectives in Late-Stage Asthma Trial|
|08Sep17 05:58||GNW||Sanofi, Regeneron: Cemiplimab Receives FDA Breakthrough Designation for Advanced Cutaneous Squamous Cell Carcinoma|
|07Sep17 12:03||GNW||Sanofi Alliance Partner Alnylam Gives Update on Fitusiran|
|07Sep17 06:00||GNW||Sanofi rated AA by Scope Ratings|
|28Aug17 06:00||GNW||Sanofi completes the acquisition of Protein Sciences|
Keywords Studios (KWS): Ticking every box (except valuation) (HOLD) | OptiBiotix* (OPTI): SlimBiome commercial update (CORP) | Surface Transforms* (SCE): Steady progress (CORP) | Gem Diamonds (GEMD): Recovery of high quality 115 carat diamond (BUY) | ClearStar* (CLSU): Record H1 driven by direct sales and medical business (CORP)
Companies: KWS OPTI SCE GEMD CLST
President Energy* (PPC): Initiation of coverage: Argentina has the best stakes (CORP) | SCISYS* (SSY): ANNOVA’s success underpins a strong H1 (CORP) | Cambridge Cognition* (COG): Interims – looking behind the numbers (CORP) | Hurricane Energy (HUR): H1 2017 results (BUY) | Quixant* (QXT): Exceptional H1 performance with H2 caveat (CORP)
Companies: SSY COG HUR QXT
Imagination Technologies Group (IMG LN) Recommended offer at 182p | Lombard Risk Management (LRM LN) (VIDEO SUMMARY) Positioned for strong growth and cash profitability | MJ Gleeson (GLE LN) Dividend hike adds income to growth attractions | MJ Gleeson (GLE LN) Dividend hike adds income to growth attractions | PureTech (PRTC LN) Gelesis progressing to filing discussions with Gelesis100 | River and Mercantile Group (RIV LN) EPS in line, dividend ahead, emphasising quality | Trifast (TRI LN) Confident H1 trading update, reiterating expectations for FY18 |
Companies: TRI IMG GLE OXP PRTC LRM RIV
Anpario (ANP LN) Impressive growth highlights strategic initiatives bearing fruit | Augean (AUG LN) H1 results in line with expectations | Brady (BRY LN) Contract win | First Derivatives (FDP LN) Investment in Machine Learning | Northgate (NTG LN) In line AGM statement, but higher H2 weighting now expected | Sinclair Pharma (SPH LN) H1’s in line; growth expected to accelerate in H2 | Speedy Hire (SDY LN) H1 update slightly ahead of expectations driven by further cost savings | Swallowfield (SWL LN) Strong progress in FY17 and positive outlook | Yu Group (YU LN) Strong interim results – expectations increased
Companies: AUG NTG SPH SDY SWL FDP BRY ANP YU/
BEXIMCO PHARMACEUTICALS (BXP.L) | MOTIF BIO (MTFB.L) | VELTYCO GROUP (VLTY.L)
Companies: BXP MTFB VLTY
Ergomed’s interim results highlight continued progression and impressive growth (net service revenue +53%, 36% organic) propelled by Drug Safety Monitoring and Medical Information, which nearly doubled YoY. New service contracts worth £23m were signed through to 31 July with an impressive backlog of contracted work of over £70m, providing the group with a high degree of revenue visibility. Following patient recruitment into the group’s Phase IIb trial evaluating PeproStat™ completing around six months ahead of schedule we now look forward to top-line data in late October. We reiterate our highly positive stance on Ergomed.
Anpario’s interim results highlight a period of strong growth putting the group on track to beat our full year sales estimate. The strategic initiatives the group implemented in 2016 are bearing fruit with Asia, the Americas and the Middle East all reporting significant growth. The group has introduced an interim dividend, reflecting its confidence of growth continuing in the future. H2 has reportedly started well and we remain at Buy.
Interim results are in line with expectations, with a first significant contribution from US sales of Silhouette Instalift™. Top line growth of +6% YoY in constant currency is expected to accelerate in H2, and the Group continues to target EBITDA profitability for the full year. We reiterate Buy.
Companies: Sinclair Pharma
Headline performance at the H1’17 results illustrated total revenue growth of 7% from £2.7m to £2.9m continuing from H2’16 the export-led return to growth. As flagged, performance in RoW territories was affected by ordering patterns, with order flow £0.1m lower than during the last period. Cost savings in probe tip assembly contributed to an increase in gross margin from 64% to 76%, and to a narrowing loss from £1.7m in H1’16 to £1m in H1’17.
Companies: Deltex Medical Group
CareTech has announced in line interim results and the acquisition of an Adult Learning Disabilities business which adds circa £2.4m to EBITDA. Investment in management and infrastructure ahead of further scaling of the business tempers our upgrades but CareTech remains well positioned to take advantage of the consolidation in this expanding sector. We increase our target price to 470p (previously 458p) and reiterate of BUY recommendation.
SDI is acquiring Applied Thermal Control (ATC), a manufacturer and supplier of chillers, coolers and heat exchangers used within the scientific instrument support market and based in the UK. ATC is a growing, profitable business with c.30% of sales exported, mainly to the US. The maximum consideration is £1.2m, representing prospective EV/Sales and EV/EBIT of 0.8x and 4.0x, respectively. The acquisition is being funded by a mixture of shares (£200k to the vendor), cash (£550k, assuming the earn out is met) as well as a new five-year term loan of £450k. We expect the acquisition to be 6% accretive to adjusted EPS (excluding acquisition costs) in FY 2018 and 8% in FY 2019. We are raising our target price by 7% to 32p, which places SDI on a FY 2018 P/E of 16.5x, falling to 14.4x in FY 2019, and FY 2018 EV/EBITDA of 10.1x, falling to 8.9x in FY 2019.
Companies: Scientific Digital Imaging
AFC Energy (AFC.L) | Touchstone Innovations (IVO.L) | 4D Pharma (DDDD.L) | FairFX (FFX.L) | Versarien (VRS.L) | Abzena (ABZA.L) | MetalNRG (NEX:MNRG) | Valiant Investments ( N E X : V A L P ) | Vernalis (VER.L) | Satellite Solutions (SAT.L)
Companies: AFC IVO DDDD FFX VRS ABZA VER SAT
Futura Medical (FUM LN) All set for MED2002 Phase III trial start in H1 2018 | Horizon Discovery Group (HZD LN) Forecast update post Dharmacon acquisition | IndigoVision Group (IND LN) Strategic objectives progressing; strong H2 expected | Realm Therapeutics (RLM LN) H1 results and proposed £19m equity fundraise | St Ives (SIV LN) Trading update
Companies: SIV IND FUM HZD PURI
Abzena’s (ABZA) recent trading update indicated slower than expected revenues in H1 FY18. The primary reasons for this slower than expected start to the year include lower volumes in certain business areas as well as project delays causing revenues to be recognised in H218 and FY19. Our FY18 sales forecast of £30.2m is lowered to £24.7m with adj. LBT and adj. LPS also increasing from £9.3m and 4.2p to £13.0m and 5.9p, respectively. The long-term investment case for ABZA, however, remains intact. Forecasts are inherently sensitive to project timings with management perhaps having been too optimistic in scheduling new project starts with the existing capacity. As new equipment is brought online, these challenges should ease. We reinstate our Buy recommendation but lower our target price from 80p to 70p to reflect the near-term impact on forecasts.
Shield Therapeutics (STX) has released H117 interims that show in-market Feraccru sales of £0.2m (flat YoY) with an adj. net loss of £8.4m (+65% from H1-16). Sales & marketing costs have been increased in response to management identifying commercialisation headwinds. Net cash of £21.5m takes STX through to AEGIS-CKD readout in Q118, after which management will have clearer visibility on marketing cash outflows going forward. We revise FY17/18 sales forecasts down by 37% and 4% respectively, highlighting the strong investment outlook that remains given the significant opportunity within US-CKD. We reduce our target price by 2% to 265p and maintain our Buy recommendation post interims.
Companies: Shield Therapeutics