Astellas (4503): Growth to Resume in FY17

With companies like Ono Pharmaceutical (4528) and Shionogi (4507) offering exciting near-term growth prospects, and with MOTHERS market hotshots such as Sosei (4565) offering exciting long-term growth prospects, the market has rather lost interest in Astellas. However, in Xtandi, Astellas has a drug whose potential is not all that different from Opdivo. This report looks at whether Xtandi, along with the rest of Astellas’s drug line-up, can drive revenues higher in both the near term and on a five-year basis.

Key Points

• Currency, NHI price cuts, plus an interlude for Xtandi development mean revenue growth is likely to stall in FY16. 
• Assuming TERRAIN data leads to label change for Xtandi, revenue growth should resume in FY17. 
• While Astellas’s near-term pipeline isn’t the best, it has been progressing; and should be contributing by FY20, along with the array of recently launched drugs. 
• Xtandi, though, remains key. Medivation reckons a positive FDA response to TERRAIN is worth an extra US$3.15bil. Even more exciting would be if the PLATO trial came good; then,  Xtandi could be used even after PFS ended. 
• Xtandi is now in Phase III for hard to treat TNBC. This is worth approximately 20% of the US$15bil BC market. 
• However, as well as application in TNBC, Xtandi is shown to be promising in the ER/PR+ market, which is 50% of the BC market. 
• Overall, we have FY20 revenue at ¥1.72tril and OP at ¥380bil, which puts the shares below 8x FY20 EV/OP.