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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.
|19Jan18 17:00||GNW||Sanofi Appoints Dominique Carouge Executive Vice President Head of Business Transformation and Member of the Executive Committee|
|08Jan18 12:00||GNW||Sanofi and Regeneron to accelerate and expand investment for cemiplimab and dupilumab development programs|
|07Jan18 20:00||GNW||Sanofi and Alnylam enter into strategic restructuring of RNAi therapeutics rare disease alliance|
|18Dec17 12:00||GNW||Sanofi and Alnylam submit Marketing Authorization Application to the European Medicines Agency for patisiran for the treatment of hereditary ATTR amyloidosis|
|15Dec17 12:00||GNW||Sanofi: FDA lifts clinical hold on fitusiran|
|13Dec17 06:15||GNW||Sanofi : Sanofi presents R&D strategy and innovative pipeline|
|13Dec17 06:01||GNW||Sanofi and Regeneron announce positive topline pivotal results for PD-1 antibody cemiplimab in advanced cutaneous squamous cell carcinoma|
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
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
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
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
Following Vectura’s recent trading and strategy update, we have updated forecasts principally to reflect lower expected R&D expenditure, partially offset in valuation terms by later expected VR315 approval and launch. We note that the stock has risen 29% since our upgrade to Buy on 10th November at 90.7p. Our revised target price of 120p (from 113p) leaves limited upside from current levels. We downgrade to Hold.
Companies: Vectura Group
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
BCA Marketplace and stevia sweeteners developer Purecircle are the latest former AIM companies to be moving into the FTSE 250 index. The changes take place on 18 December and will take the number of former AIM companies in the FTSE 250 to 20 – although Booker and Paysafe are being taken over.
Companies: CFHL TRAK BMN BXP TRCS SND
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
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.
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
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.
Overall Genedrive PLC (LON: GDR) reported a business and financial update for the six months to December 2017 in line with expectations Launch preparation of Genedrive® HCV test with partner Sysmex on track, expect sales to start coming through in CY2018 £1.3mln income from the ongoing collaboration with the US DoD, in line with expectations Discussions for the disposal of the Services business are in progress With £4.6mln of cash at end-2017, and given the company's expected cash burn, a capital raise in the next 12 months can't be ruled out Full financial results for the six months to December 2017 to be published on March 20th
Motif Bio (LSE: MTFB), is a late clinical stage antibiotic development company. This morning the company reported its final results for the year ended December 31st, 2015 with a cash balance of $28.6m. Motif’s lead drug candidate, iclaprim, is in phase III clinical trials for serious and life threatening bacterial infections, particularly those caused by drug resistant bacteria. Iclaprim, a next-generation antibiotic targeting an under-utilised mechanism of action, causes rapid killing of bacteria making it an attractive candidate for acute infections caused by antibiotic-resistant species. In total Motif raised £23m net of expenses in 2015 enabling it to advance iclaprim into phase III clinical trials. With iclaprim approval and launch on-track for 2018 our risk-adjusted fair value estimate for Motif Bio is £189m (174p per share).
Companies: Motif Bio