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Research Tree provides access to ongoing research coverage, media content and regulatory news on Sanofi. We currently have 15 research reports from 1 professional analysts.
Sanofi continued to report a soft operating performance in Q4. While the headwinds in the diabetes space are widely known, the slower growth in the MS portfolio, poor fate of Dengvaxia and some one-offs weighed on the performance. The weak guidance, although masked by the recent two acquisitions, was a clear disappointment for 2018. The acquisition of Bioverativ (reminding us of the reaction ever since Shire acquired Baxalta) has also not gone down well with the market.
Sanofi has grabbed Ablynx from right under Novo Nordisk’s nose. It announced the acquisition of the the Belgian clinical-stage biotech company, Ablynx at €45 per share in cash, reflecting equity value of ~€3.9bn. Novo Nordisk had been pursuing Ablynx and was rebuffed twice for €28 per share in cash and €2.5 per share worth of contingent value rights, valuing the firm at €2.6bn. It was reported to be looking at sweetening the offer further, but has pulled out after this acquisition.
Sanofi is buying the hemophilia specialist, Bioverativ, for ~$11.6bn (~64% premium to Bioverativ’s share price of $64.11 on 19 January) in an all-cash deal. Spun off from Biogen in early 2017, Bioverative generated sales of $840m in nine months of 2017 and consensus estimates peg 2018 sales at $1.4bn. Sanofi’s management expects immediate earnings accretion (5% accretive in FY2019) and expects the ROIC to exceed the cost of capital within three years. Financing for the deal will come from both cash as well as debt.
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 15 research reports from 1 professional analysts.
|15Mar18 06:00||GNW||Sanofi successfully prices EUR 8 billion of bond issues|
|10Mar18 14:02||GNW||Sanofi and Regeneron announce plans to make Praluent® more accessible and affordable for patients with the greatest health risk and unmet need|
|10Mar18 14:00||GNW||Sanofi: Praluent® (alirocumab) significantly reduced risk of cardiovascular events in high-risk patients, and was associated with lower death rate|
|08Mar18 13:59||GNW||Sanofi Completes Acquisition of Bioverativ Inc.|
|08Mar18 06:46||GNW||Evotec and Sanofi in exclusive talks to create an Evotec-led Infectious Disease open innovation R&D platform|
|07Mar18 19:13||GNW||Sanofi: Filing of the 2017 U.S. Form 20-F and French « Document de Référence » containing the Annual Financial Report|
|06Mar18 14:56||GNW||Sanofi's Board of Directors Proposes Appointment of Emmanuel Babeau as New Independent Director|
Today’s FY results are in line with our expectations, and emphasise the recently announced shift in strategy in favour of partnered development of inhaled generics. The in–market performance of key value drivers flutiform®, Seebri®, Ultibro® and EXPAREL® has been in line with forecasts, and the ongoing VR475 and VR647 trials (Phase III/EU and Phase II/US respectively) are on track, with top-line data expected in H2. We reiterate our Buy recommendation (we upgraded to Buy on 27th Feb at 72p) and 120p target price.
Companies: Vectura Group
Full-year results were slightly ahead of forecasts, which had been revised following the company’s January trading update that reflected the impact of delays to the start of customer clinical trials. A 2% decline in revenues, due to lumpy contract wins in 2016, masks the underlying 2013-2017 13% CAGR (ex-lumpy orders) and the 33% increase in Service revenues, which were in turn driven by new product introductions (e.g. Cognition Kit/wearable technology for patient-centric real-time self-assessment). The intentional and well-flagged investment in R&D and full-year impact of 2016 sales & marketing increases resulted in the company being broadly EBITDA-breakeven with year-end cash of £1.9m – sufficient for its internal development programmes’ needs. Our new forecasts reflect the adoption of IFRS 15, which has almost no impact on cash projections. We maintain our 155p price target, which implies a FY2019 EV/Sales ratio of 3.1x.
Companies: Cambridge Cognition
Reckitt has pulled out of the race for Pfizer’s consumer health business, leaving GSK as the only reported bidder. It needs to be seen if new names crop up before today’s deadline for offers, but the likelihood is less, given that the likes of Nestle, J&J and Sanofi have reportedly pulled out already. If no other players turn up, Pfizer will have to sweeten its terms, or might decide to retain the business for now, or might be forced to look for newer options for disposing the business, including a part-sale. The business is currently being valued at $15-20bn.
EKF has reported a strong set of figures, slightly ahead of expectations. Revenues increased 8% to £41.6m and the margin profile of the business has been transformed, with gross margins significantly improved and EBITDA +52% to £9.3m. With the recovery phase now complete, attention is turning to driving the next leg of growth. We see a number of short and medium term growth opportunities over and above our published forecasts although, as ever, precise timing and quantum is uncertain.
Companies: EKF Diagnostics Holding
In the March 2018 edition of the Hardman Monthly Newsletter, Nigel Hawkins addresses the attractions of quoted infrastructure funds that maintain a low profile.
Companies: OPM ABZA AVO AGY APH ARBB AVCT BNO BUR CMH CLIG COS DNL EVG GTLY GDR INL MCL MUR NSF OBT OXB PPH NIPT PHP RE/ REDX SCLP SCE SIXH TRX TON VAL
Anpario’s full year results highlighted a period of strong growth with momentum reportedly continuing into 2018. The group remains focused on building strong commercial relationships with end users and we expect the initiatives to help the group deliver our 11% sales growth estimate in 2018. We make modest adjustments to our forecasts this morning and increase our Target Price by 2p to 434p. We remain at Hold.
- Genedrive's PLC (LON: GDR) HepC test just entered the commercial phase as partner Sysmex launched in EMEA and APAC territories in recent weeks - Re-design of the mTB test in progress, launch date to be announced in the next fiscal year - Discussions for the disposal of the Services business entered an exclusivity period, expect an update by the end of June - Careful cash management with a £3.9mln cash balance at the end of February, we would expect a capital raise in the second half of calendar year 2018
What with North Korean missiles whistling over Japan, supreme leader Kim Jong Un threatening nuclear war against America and numerous other terrorist attacks, the world is undoubtedly a dangerous place. Demonstrated again just a fortnight ago, after a ‘lone wolf’ ISIS extremist, managed to explode a home-made ‘pipe-bomb’ in a busy New York underpass near Times Square.
Companies: Kromek Group
OptiBiotix Health Plc (LON:OPTI) focuses on managing and treating widespread, chronic medical conditions, such as obesity and high cholesterol, through the modulation of the human microbiome.
Companies: Optibiotix Health
Oxford BioMedica’s full year results highlight the continued step up in bioprocessing and commercial development income, increasing 36% in the year, as the facilities operate close to capacity. The group announced on Friday that it had raised £20.5m to fund the expansion of its bioprocessing facilities as it continues to focus on establishing additional deals with its LentiVector® platform (as evident by the most recent deal with Bioverativ). The group’s partnered product pipeline continues to progress and we look forward to the additional expected approvals of Kymriah® later in the year.
Companies: Oxford Biomedica
Verona Pharma continues to announce highly encouraging trial results with RPL554 with the most recent in 10 Cystic Fibrosis patients. We note RPL554 has so far been evaluated in multiple Phase I and Phase II trials and over 700 patients. We update forecasts this morning following FY 2017 results and continue to look forward to the upcoming Phase IIb data in COPD in early Q2. Following which, we anticipate more detail on the development pathway for RPL554. We reiterate our Strong Buy recommendation and upgrade our Target Price from 327p to 348p.
Companies: Verona 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
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.
Pharmaceutical Services is a vast and varied landscape, reflecting the complexities in the discovery, development, manufacturing and monitoring of drugs and devices, all within a stringent regulatory environment. The overall growth prospects are highly favourable: drug development activity globally is on the up, led by smaller companies, which is driving demand for outsourced services. In this report we provide a breakdown of the sector into its main activity segments, and identify biologics, increasing service specialisation and consolidation as important value drivers. Finally, we present 15 companies (9 of which are publicly listed) that, in our view, are well placed to benefit from the sector’s secular growth trends.
Companies: ABZA BQE CSRT OXB INS UDG CLIN ABZA HZD ERGO
A fully integrated specialty pharma company, Midatech Pharma is rapidly progressing the development of three lead R&D programs. They have developed three proprietary drug delivery technologies (Q-Sphera, Gold Nano Particle and Nano Inclusion) to improve and expand the therapeutic potential of validated drug products. At the same time Midatech has built a US commercial unit focused on supportive care products.
Companies: Midatech Pharma