Tag: European Market
Business Strategy & Outlook
UCB emerged as a major biopharmaceutical player in the 1990s with the development of blockbuster drugs Zyrtec and Keppra. Throughout the 1990s and early 2000s, UCB transformed from a hybrid pharma/chemical firm into a pure-play biopharmaceutical company by shedding its packaging, film, and chemical businesses. Acquisitions of Celltech (2004) and Schwarz Pharma (2006) strengthened the biopharmaceutical pipeline, bringing in late-stage assets that would eventually be approved as Cimzia (immunology), Vimpat (epilepsy), and Neupro (Parkinson’s disease). These key products helped offset the impact of Zyrtec and Keppra patent losses, and the company has continued to shape its expertise in immunology and central nervous system disorders.
UCB’s current portfolio faces key patent losses over the next 10 years, but successful pipeline development could help the firm fill the gaps. Among UCB’s central nervous system therapies, the epilepsy drugs Vimpat and Briviact to be strong contributors until key patent expirations in 2022 and 2026, respectively. In immunology, the steady growth for Cimzia until its 2024 patent loss. Through UCB’s acquisition of Zogenix, it gained Fintepla, an oral solution for patients suffering from Dravet Syndrome and Lennox-Gastaut Syndrome, two severe forms of epilepsy. UCB received approval in the EU and Great Britain in August 2021 for Bimzelx, a drug targeting IL-17A and IL-17F for the treatment of moderate to severe plaque psoriasis. It has subsequently received approval in Japan, Canada, and Australia. It could reach the U.S. market by 2024. The immunology landscape is fairly crowded, but Bimzelx could carve out a slice of the market. The potential for label expansions into psoriatic arthritis and other immunology indications. Additionally, UCB has two other later-stage candidates in complement-mediated disorders, with rozanolixizumab and zilucoplan (through the Ra Pharma acquisition announced in 2019). The complement-mediated disorders landscape is also somewhat crowded, with many competitors vying to displace Alexion’s (since acquired by AstraZeneca) dominant position.
Financial Strengths
The UCB is in good financial health, with solid earnings and cash flow generation. UCB has deleveraged over the years, and it ended 2021 with about EUR 860 million in net debt on its balance sheet. Year-end cash and equivalents totaled nearly EUR 1.3 billion. The firm has historically relied on acquisitions to fill gaps left by patent losses and in late 2019 agreed to acquire Ra Pharmaceuticals for about EUR 2 billion, net of cash acquired. The large purchase was mostly financed with new debt, but one cannot have any concerns about the company meeting its financial obligations. In early 2022, UCB acquired Zogenix for EUR 1.7 billion. This acquisition is financed through a combination of cash and a new term loan. The acquisition of Zogenix brought Fintepla into UCB’s portfolio. Fintepla is an FDA-approved oral solution for patients suffering from Dravet Syndrome and Lennox-Gastaut Syndrome, two severe forms of epilepsy. This acquisition will be earnings accretive from 2023 onwards.
Bulls Say
- The immunology market presents a massive market opportunity for Cimzia and newer drug Bimzelx.
- UCB has taken steps to build out the pipeline in attractive therapeutic areas, such as complement mediated disorders.
- UCB should be able to leverage its commercial expertise to sell pipeline candidate bimekizumab, approved as Bimzelx outside the U.S. and on track for U.S. approval in 2024.
Company Description
UCB is a Belgium-based biopharma firm focused on the development of novel therapies for the treatment of central nervous system and immunologic diseases. Historically, revenue was derived from allergy medicine Zyrtec and epilepsy drug Keppra, which have both lost patent protection. The firm’s key products are Cimzia (immunology), Vimpat (epilepsy), Neupro (Parkinson’s disease and restless leg syndrome), Briviact (epilepsy), Bimzelx (psoriasis), Evenity (osteoporosis), Nayzilam (cluster seizures), and Fintepla (Dravet Syndrome and Lennox-Gastaut Syndrome).
(Source: Morningstar)
DISCLAIMER for General Advice: (This document is for general advice only).
This document is provided by Laverne Securities Pty Ltd T/as Laverne Investing. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.
The material in this document may contain general advice or recommendations which, while believed to be accurate at the time of publication, are not appropriate for all persons or accounts. This document does not purport to contain all the information that a prospective investor may require. The material contained in this document does not take into consideration an investor’s objectives, financial situation or needs. Before acting on the advice, investors should consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation, and needs. The material contained in this document is for sales purposes. The material contained in this document is for information purposes only and is not an offer, solicitation or recommendation with respect to the subscription for, purchase or sale of securities or financial products and neither or anything in it shall form the basis of any contract or commitment. This document should not be regarded by recipients as a substitute for the exercise of their own judgment and recipients should seek independent advice.
The material in this document has been obtained from sources believed to be true but neither Laverne and Banyan Tree nor its associates make any recommendation or warranty concerning the accuracy or reliability or completeness of the information or the performance of the companies referred to in this document. Past performance is not indicative of future performance. Any opinions and or recommendations expressed in this material are subject to change without notice and, Laverne and Banyan Tree are not under any obligation to update or keep current the information contained herein. References made to third parties are based on information believed to be reliable but are not guaranteed as being accurate.
Laverne and Banyan Tree and its respective officers may have an interest in the securities or derivatives of any entities referred to in this material. Laverne and Banyan Tree do and seek to do business with companies that are the subject of its research reports. The analyst(s) hereby certify that all the views expressed in this report accurately reflect their personal views about the subject investment theme and/or company securities.
Although every attempt has been made to verify the accuracy of the information contained in the document, liability for any errors or omissions (except any statutory liability which cannot be excluded) is specifically excluded by Laverne and Banyan Tree, its associates, officers, directors, employees, and agents. Except for any liability which cannot be excluded, Laverne and Banyan Tree, its directors, employees and agents accept no liability or responsibility for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. Recipients of this document agree in advance that Laverne and Banyan Tree are not liable to recipients in any matters whatsoever otherwise; recipients should disregard, destroy or delete this document. All information is correct at the time of publication. Laverne and Banyan Tree do not guarantee reliability and accuracy of the material contained in this document and are not liable for any unintentional errors in the document.
The securities of any company(ies) mentioned in this document may not be eligible for sale in all jurisdictions or to all categories of investors. This document is provided to the recipient only and is not to be distributed to third parties without the prior consent of Laverne and Banyan Tree.
Business Strategy & Outlook
Ipsen is a global biotechnology company headquartered in France that develops and commercializes medicines across three therapeutic areas: oncology, neuroscience, and rare diseases. Ipsen was founded in 1929 as a consumer healthcare company focused on prescription-based products for digestive disorders and neurological disorders. Ipsen has a global footprint and sells more than 25 drugs in 115 countries, with a direct commercial presence in 34 countries. Over the past nearly 100 years, the company has shifted its focus to its specialty care segment, which comprised 92% of its 2021 revenue. In early 2022, Ipsen announced the divestment of its consumer healthcare segment, which accounted for 8% of 2021 revenue. The strategic rationale for Ipsen’s divestment is to have a greater focus on its faster growing specialty care segment.
Approaching declines in economic profits due to Ipsen’s leading product, Somatuline, facing generic competition in Europe and the United States contributes to the negative moat trend rating. Somatuline accounted for 42% of total sales in 2021, and it will decline to 25% of sales in 2025 due to generic competition impacting sales. Growth from Ipsen’s other marketed products, which have patents that extend until the early to mid-2030s, will somewhat offset the negative impact from generic entry. However, patent expirations for Somatuline and generics gaining market share will likely nevertheless dampen returns by the end of the ten-year explicit forecast period. Thanks to Ipsen’s strong balance sheet, the company is well-positioned to continue funding its internal research and development efforts in addition to external innovation opportunities over the next decade in order to diversify its portfolio. Although the company’s advanced drug candidates are either in the filing stage or Phase 3 with relatively high probabilities of approval due to promising trial data, there is still a degree of uncertainty associated with Ipsen’s clinical and commercial success with these drugs.
Financial Strengths
Ipsen is in decent financial health, and the business continues to continue providing a steady stream of cash. Ipsen made a strategic decision to divest its consumer healthcare segment for EUR 350 million to Mayoly Spindler. This was a strong financial decision since the consumer healthcare segment only accounted for 8% of total revenue in 2021. The management will use the proceeds from the divestment to further expand and diversify its faster-growing specialty care segment. The management team has a history of returning cash to shareholders in the form of dividends. Over the past several years, management has paid a dividend between EUR 0.85 and EUR 1.00 to shareholders. Ipsen announced its 2022 dividend increased by 20% to EUR 1.20. The Ipsen’s shareholder distributions, as mixed as many other biotechnology companies under the coverage, do not pay dividends. The Ipsen’s revenue growth will be constrained by generic competition, so it may better serve long-term investors to reinvest in the company’s pipeline candidates instead of distributing dividends.
Bulls Say
- Ipsen has a sound financial structure and strong cash generation, which allows it to further develop and expand its pipeline.
- Ipsen has a strong and diversified portfolio spanning three key therapeutic areas: oncology, neuroscience, and rare diseases.
- The divestment of the consumer healthcare segment allows Ipsen to have an even greater focus on its faster-growing specialty care segment.
Company Description
Ipsen is a global biotechnology company headquartered in France that develops and commercializes medicines across three therapeutic areas: oncology, neuroscience, and rare diseases. Ipsen was founded in 1929 as a consumer healthcare company focused on prescription-based products for digestive disorders and neurological disorders. Over the past nearly 100 years, Ipsen has shifted its focus to specialty care, which comprises the vast majority of its total revenue. In February 2022, Ipsen announced the divestment of its consumer healthcare business, which accounted for 8% of 2021 revenue. Ipsen has a large global footprint and sells more than 25 drugs in 115 countries.
(Source: Morningstar)
DISCLAIMER for General Advice: (This document is for general advice only).
This document is provided by Laverne Securities Pty Ltd T/as Laverne Investing. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.
The material in this document may contain general advice or recommendations which, while believed to be accurate at the time of publication, are not appropriate for all persons or accounts. This document does not purport to contain all the information that a prospective investor may require. The material contained in this document does not take into consideration an investor’s objectives, financial situation or needs. Before acting on the advice, investors should consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation, and needs. The material contained in this document is for sales purposes. The material contained in this document is for information purposes only and is not an offer, solicitation or recommendation with respect to the subscription for, purchase or sale of securities or financial products and neither or anything in it shall form the basis of any contract or commitment. This document should not be regarded by recipients as a substitute for the exercise of their own judgment and recipients should seek independent advice.
The material in this document has been obtained from sources believed to be true but neither Laverne and Banyan Tree nor its associates make any recommendation or warranty concerning the accuracy or reliability or completeness of the information or the performance of the companies referred to in this document. Past performance is not indicative of future performance. Any opinions and or recommendations expressed in this material are subject to change without notice and, Laverne and Banyan Tree are not under any obligation to update or keep current the information contained herein. References made to third parties are based on information believed to be reliable but are not guaranteed as being accurate.
Laverne and Banyan Tree and its respective officers may have an interest in the securities or derivatives of any entities referred to in this material. Laverne and Banyan Tree do and seek to do business with companies that are the subject of its research reports. The analyst(s) hereby certify that all the views expressed in this report accurately reflect their personal views about the subject investment theme and/or company securities.
Although every attempt has been made to verify the accuracy of the information contained in the document, liability for any errors or omissions (except any statutory liability which cannot be excluded) is specifically excluded by Laverne and Banyan Tree, its associates, officers, directors, employees, and agents. Except for any liability which cannot be excluded, Laverne and Banyan Tree, its directors, employees and agents accept no liability or responsibility for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. Recipients of this document agree in advance that Laverne and Banyan Tree are not liable to recipients in any matters whatsoever otherwise; recipients should disregard, destroy or delete this document. All information is correct at the time of publication. Laverne and Banyan Tree do not guarantee reliability and accuracy of the material contained in this document and are not liable for any unintentional errors in the document.
The securities of any company(ies) mentioned in this document may not be eligible for sale in all jurisdictions or to all categories of investors. This document is provided to the recipient only and is not to be distributed to third parties without the prior consent of Laverne and Banyan Tree.
