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Research Tree provides access to ongoing research coverage, media content and regulatory news on Sanofi. We currently have 12 research reports from 1 professional analysts.
Q3 wasn’t a strong quarter for Sanofi – its 4.7% CER growth or rather 0.2% decline on constant exchange rate/constant structure (CER/CS) basis was behind our as well as the street’s expectations. Sales reached €9.1bn vs the consensus average estimate of €9.3bn. NB All revenue growth numbers at CER/CS unless mentioned otherwise. The under-performance (vs our estimates) came not only from the higher-than-expected decline in the diabetes business (-10% at CER), but also from the gradually waning established Rx products (-6.5%) and the ongoing slowdown in the consumer health business (+48.5% at CER but merely 1% at CS/CER). The vaccine business (+7.2%), however, was marginally ahead of our expectations. Currency had a negative impact of 4.4% on the group sales. Genzyme’s business grew by 12.5%, with a strong contribution from Dupixent (€75m in the US), 5% growth in oncology, 2.7% growth in rare diseases and 15.7% growth in the Multiple Sclerosis (MS) franchise. However, the MS franchise lagged behind our expectation, perhaps attributable to increased competition by Roche’s Ocrevus. The established Rx business was negatively impacted by a weak Europe (-4.4%), onset of generic competition for Renvela/Renagel in the US and generic competition for Plavix in Japan, offset to some extent by strong emerging markets (+4.4%). In vaccines, Polio/Pertussis/Hib franchise reported the highest growth of 20.7%, while influenza (€951m; +1.8%) was the biggest contributor. Geographically, emerging markets (+7.3%) single-handedly drove sales, while both the US (-3.7%) and Europe (-1.6%) languished. With 20% growth in Q3, China was the biggest contributor to the emerging markets’ growth. Business operating profit grew by 1.7% at CS/CER to €2.9bn. As a reminder, the company-calculated business operating profit excludes impairment, amortisation, restructuring and includes the share of associates and minorities. The business operating margin in pharma business declined by 120bp to 27.4%, while that for the vaccines business improved by 40bp to 51.1%. Business EPS grew by 1.1% at CER to €1.71. Management maintained its guidance of stable business EPS in 2017 and, given that for nine months the business EPS number reflects a CER growth of 2%, it signals weaker Q4.
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 12 research reports from 1 professional analysts.
|09Nov17 11:59||GNW||Sanofi, Principia agree to develop multiple sclerosis drug candidate|
|02Nov17 14:45||GNW||Sanofi and Alnylam present positive complete results from APOLLO Phase 3 study of investigational patisiran in hereditary ATTR (hATTR) amyloidosis patients with polyneuropathy|
|02Nov17 06:29||GNW||Sanofi : Q3 2017 Business EPS up 1.1% at CER FY 2017 Guidance Confirmed|
|31Oct17 10:58||GNW||Sanofi : Dupilumab Significantly Reduced Steroid Use, Asthma Attacks, and Improved Lung Function in a Phase 3 Study of People with Severe Steroid-Dependent Asthma|
|24Oct17 21:05||GNW||Sanofi Files Suit in the U.S. to Defend Its Patent Rights on Lantus® and Lantus® SoloStar®|
|16Oct17 13:01||GNW||Sanofi and Regeneron Announce Positive Phase 2 Study Results for Dupilumab in Patients With Active Moderate-to-Severe Eosinophilic Esophagitis|
|12Oct17 06:01||GNW||Sanofi invests €170 million in new vaccine production facility in France|
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
Future (FUTR LN) Results underline change and opportunity | IndigoVision Group (IND LN) Trading behind expectations; Chief Exec leaves | James Fisher & Sons (FSJ LN) Outlook unchanged; Offshore Oil recovery delayed | Sanderson Group (SND LN) Scaling up the Enterprise division | Speedy Hire (SDY LN) Earnings enhancing acquisitions | Vernalis (VER LN) Reduction in cough cold forecasts | WYG (WYG LN) UK challenges prompt further downgrades
Companies: SDY VER FSJ IND WYG SND FUTR
GSK has received the FDA approval for its HIV two-drug combo in a single tablet called Juluca. It is a fixed-dose tablet containing two previously approved (active ingredients) drugs, dolutegravir from GSK and rilpivirine from J&J, and will be given to patients who have been on an anti-retroviral therapy for at least six months.
Tuzistra XR prescriptions (Rx) grew threefold to ~35k in FY16/17 (2nd year on the market) vs ~12k in FY15/16. Investment into addressing the barriers to higher Tuzistra XR prescribing is translating into higher Rx rates, although this has not been matched by revenue growth due to higher inventory stocking in the same period last year. In H217 FDA issued partner Tris with two complete response letters to Vernalis’s CCP-07 and CCP-08 NDAs and we now model launch during the 2018/19 cough cold season. Our updated forecasts reflect this and lower Tuzistra XR revenues due to a slower than anticipated sales trajectory in the near term.
Alpha Financial Markets Consulting— Global provider of specialist consultancy services to the asset and wealth management industry. Due Oct. Revenue of £6.7 million for the year ended 31 March 2011 to £43.6 million for the year ended 31 March 2017. Offer TBA. Due 11 Oct. Cora Gold— West African focused gold exploration business, significantly enlarged by the amalgamation of the gold exploration assets in Mali and Senegal of Hummingbird Resources and Cora Gold's former parent, Kola Gold. Due 9 Oct. Offer TBA Springfield Properties—Scottish housebuilder. “Our turnover exceeded £100 million for the first time this year and now we employ around 500 people. This IPO is the next step in our growth.” Expected Mid October. Offer TBA. OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. SolGold—Publication of prospectus regarding transfer from AIM. Due 6 Oct Glenveagh Properties— Dual Dublin and London IPO. Irish homebuilder with a principal focus on the Greater Dublin Area. The Group will combine an attractive land bank with a Gross Development Value of c.€1.1 billion. Seeking to raise gross proceeds of up to €550 million. Due 10 Oct People’s Investment Trust—Objective of sustainable wealth creation. Also to list on the Social Stock Exchange. Targeting £125m raise on 17 Oct. No performance fees or executive bonuses in order to focus on long term rather than short term performance. ContourGlobal LP—Report on Bloomberg that the thermal energy power generator is considering a London listing.
Companies: SBTX SRON NSCI MTFB NBB MERC AGL
Belluscura— Provider of premium medical devices at value prices to address part of the global unmet need for affordable, premium quality medical devices. Raising £7.5m to £10m. Offer TBA. Due early Dec Miriad Advertising—Global video advertising company incorporated in 2015 and is engaged in the development of native invideo advertising . 2016 rev £0.7m and £7.3m operating loss. Offer TBA Keystone Law Group— full service law firm with over 250 self-employed lawyers . Due 27 Nov. Raising £10m at 160p. Mkt Cap £50m. Revenue of £25.6 million and EBITDA of £2.1 million. In FYJan17. Beeks Financial Cloud -niche cloud computing and connectivity provider for automated (algorithmic) trading in Forex and Futures financial products . Raising £7m. Mkt Cap c.£24.5m. Due 27 Nov. FYJun17 rev £4m. Profitable at operating level. City Pub Group - owner and operator of an estate of 34 premium pubs across Southern England. £30m raise. Consistent track record of strong revenue and EBITDA growth, with a three year CAGR from FY14 to FY16 of 34.9% and 44.8% respectively, and an EBITDA margin of 14.7% in FY16. Due late Nov. Offer raising £46.6m at 170p with market cap £96m. Ten Lifestyle Hldgs. Technology-enabled lifestyle and travel platform providing trusted concierge services to the world's wealthy. Net revenue increased from £20m in the year ended 31 August 2015 to £33m in the year ended 31 August 2017, a compound annual growth rate of 29%. Offer TBA, expected 27 Nov 2017. OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. OG Graphite, brownfield development-stage graphite company focused on the reactivation of its wholly-owned Kearney natural flake graphite mine and mill located 280 km north of Toronto, Canada. Offer TBA, expected mid November.
Companies: NMRP STR IKA BMN AERO GYG MPM NSCI KETL
Prescient Therapeutics is planning a clinical trial of PTX-100 in RhoA-mutant lymphomas, a niche indication where the company could potentially conduct a pivotal study before out-licensing. It has resumed recruitment in the Phase Ib component of trials of lead anti-cancer compound PTX-200 in acute myeloid leukaemia (AML) and ovarian cancer, and is working with the FDA to recommence its Phase II breast cancer study. The company had A$6.9m cash on 30 September, sufficient to fund operations into FY19. We value Prescient at A$62m or A$0.29 per share.
Companies: PRESCIENT THERAPEUTICS LTD
BB Biotech (BION) is a long-established (since 1993), Switzerland-based global investor in the innovative area of biotechnology. It is differentiated from peers by its short list of stocks (typically 30-35) and high-conviction approach, with five to eight core holdings accounting for half to two-thirds of the portfolio. While the fund can be vulnerable to short-term sentiment dips (such as in the period immediately before and after the US presidential election in 2016), its performance record is impressive in both absolute and relative terms, with a NAV total return of c 270% over five years, and NAV and share price outperformance of the benchmark NASDAQ Biotechnology index over three, six and 12 months, and three, five and 10 years to 31 October 2017 (all in Swiss franc terms). A high distribution policy of 5.0% underpins the current dividend yield of 4.3%.
Companies: BB BIOTECH
BILBY (BILB.L) | PREMIER AFRICAN MINERALS (PREM.L) | GENEDRIVE (GDR.L)
Companies: BILB PREM EHP
In the November edition of the Hardman Monthly Newsletter, Nigel Hawkins assesses the achievements of AIM – and how it has thrived, despite a challenging financial environment, in recent years.
Companies: SPH AVO SCLP VAL AGY CLIG TRX AVCT APH CMH MCL MUR
In the October edition of the Hardman Monthly newsletter, Chief Executive, Keith Hiscock analyses the much misunderstood – but highly important – issue of stock liquidity. In particular, he focuses on the lower echelons of the Main Market and of AIM.
Companies: OPM ABZA AVO AGY APH ARBB AVCT BUR CMH CLIG COS DNL EVG GTLY MCL MUR NSF OBT ODX OXB NIPT PHP PURP RE/ RGD SCLP SPH SCE TRX VAL
Dechra’s AGM update confirms all is in line with growth across all business areas. It is still early in the year, but this is reassuring nonetheless. We have been a bit overly cautious with our estimates and are upgrading our EPS forecasts by ~7-8%, bringing us more in line with consensus. The shares now trading on a Cal'17 P/E of 30x, EV/EBITDA of 20x, falling to 27x/17.5x in Cal’18. The FCF Yield is still 4% however so whilst the shares are certainly not cheap, the valuation is not completely out there. Dechra remains a core mid cap holding, but we move to Hold on valuation grounds.
Companies: Dechra Pharmaceuticals
GlaxoSmithKline (GSK.L) reported Q3-17 Core earnings some 3% above consensus estimates back on 25 October-17, and reiterated its guidance for 3- 5% EPS growth at constant exchange rates (CER) for FY-17. That said, two other factors spooked the stock market; firstly, higher SG&A spend for the coming two years will probably lead to flat earnings growth out to 2020 and secondly, GSK has openly stated that it is interested in purchasing Pfizer’s Consumer division (which could cost cUS$ 13bn). As a result it may revise its dividend policy i.e. cut the dividend in future years to fund such an acquisition. Unquestionably this is a risk, but today’s share price is partially factoring this in. We downgrade our recommendation to Long term Buy (Buy) and reduce our target price to 1450p (1800p) given the dividend risk, but GSK remains a very strong business which investors should keep in mind.
Data presented at the European Society for Medical Oncology (ESMO) congress by third parties has positive implications for Prima Biomed’s LAG3 pipeline, both its in-house IMP321 APC activator and the anti-LAG3 program out-licensed to Novartis. Prima itself presented encouraging data from ongoing studies of IMP321 in FY17, including a 47% response rate in the run-in phase of its AIPAC breast cancer Phase II. Prima earned a $1m milestone from Novartis in August, showing that the partnered anti-LAG3 program is progressing. The company guides that the ~$5m raised from US investors in July extends the funding runway to Q4 CY18. We increase our valuation to $206m (vs $192m) or $8.75/ADR.
Companies: Prima BioMed
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.