Morningstar | Maintaining Our Sobi FVE as Hemophilia Competition Enters Market
We're maintaining our SEK 240 fair value estimate for Sobi following first-quarter results, reflecting a stand-alone fair value estimate of SEK 182 per share and a 50% probability of an acquisition (at 7 times 2019 sales). Sobi maintained its 2019 guidance following a solid first quarter, with strong hemophilia revenue (continued growth in Europe) and initial Gamifant revenue (partly helped by initial stocking) countering Orfadin's generic erosion. Management emphasized the dual focus on hemophilia (Elocta and Alprolix) and immunology (Gamifant, Synagis, and Kineret) as the core of the business. However, we continue to see the firm's rapidly growing hemophilia business as exposed to disruptive threats in the near term, as Roche's Hemlibra was approved in Europe as a direct competitor to Elocta in March, and royalty revenue from partner Sanofi dropped in the first quarter, which could indicate pressure from Hemlibra's U.S. launch. This competitive landscape drives our no-moat rating for Sobi. However, we continue to think that Sobi could be an acquisition target for a firm building a novel hemophilia business, such as Sanofi.Sobi's business mix changed in the first quarter, as the firm closed its acquisition of U.S. rights to Synagis (SEK 665 million for a partial first quarter) and saw its first full quarter of the U.S. launch of Gamifant, a treatment for HLH (primary hemophagocytic lymphohistiocytosis), which generated SEK 89 million in sales in the quarter. The firm's older rare-disease drug Orfadin appears to be succumbing to generic competition, however, with sales declining 16% in the first quarter (23% at constant currency). As expected, gross margins benefited from the acquisition of Synagis, growing to 76% in the first quarter. Synagis sales appear to have been slightly disrupted during the transition in ownership, and the product is seeing some pricing pressure, but we still think the franchise is capable of low-single-digit growth in the long run.
Swedish Orphan Biovitrum AB is a healthcare company focused on rare diseases. Co. develops, manufactures and commercializes treatments with a particular focus on four therapeutic areas: Inflammation, Genetics & Metabolism, Haemophilia and Neonatology. Co. also markets a portfolio of rare disease products for partner companies. Co.'s pipeline programmes include research and development focused on recombinant protein drugs in late preclinical and clinical phase for indications.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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