EUR 850.00 For Business Accounts Only

Morningstar | UCB Benefits From Label Expansion in Immunology and Epilepsy; Maintaining EUR 72 FVE

Our thesis remains unchanged for UCB, which reported 6% total revenue growth in the first half compared with last year after adjusting for currency headwinds. We are maintaining our EUR 72 fair value estimate and reiterating our no-moat and stable moat trend ratings.

While Cimzia sales came in softer than we expected, this was offset by a slower-than-expected decline in Keppra, the firm's maturing epilepsy product. Furthermore, future Cimzia sales, which accounted for one third of total sales in the first half, should see a modest boost thanks to label expansion into immunodermatology, as the drug's recent approval in psoriasis expands the eligible patient population in both the United States and the European Union. The firm is also due to benefit from this year's approval of Vimpat (up 20% in constant currency in the first half compared with last year) and Briviact (up 83%) in younger patients with epilepsy in Europe and the U.S.

While these epilepsy brands should help offset legacy Keppra, we continue to believe that UCB's sparse pipeline is an area of risk for the firm, with only a few late-stage candidates. Given the complexity of central nervous system diseases, we would like to see continued additions of early-stage candidates in addition to positive readouts from late-stage drugs before expressing confidence in the firm's ability to overcome declines from maturing products in the midterm. Important catalysts for UCB's pipeline include the phase 2b readout for bimekizumab for patients suffering from autoimmune diseases later this year, as well as pending approval from recently acquired midazolam, a nasal spray for patients with epilepsy that was granted a fast-track designation.