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ROVI: ANNOUNCES AGREEMENT WITH MODERNA FOR THE FILLING AND PACKAGING OF A POSSIBLE COVID-19 VACCINE (ANÁLISIS BANCO SABADELL)

The company has just announced it has closed a collaboration agreement with Moderna for the filling and packaging of a potential Covid-19 vaccine 19 (ARNm-1273) outside of the US. The agreement would imply the production of million of doses starting in early 2021, as well as ROVI investing in a new production line. Positive news, the impact of which is difficult to assess. It was already known that ROVI’s third-party manufacturing business (~17% of sales’20 BS(e)) might benefit from the large-scale production of a Covid-19 vaccine, as there are few players in this market. In any case, we welcome the agreement with Moderna, as its vaccine is one of the most advanced in terms of development (with phase III trials starting in July’20), and this would not be a one-off (but a long-term agreement that would imply the production of vaccine vials on a recurring basis). The company has not given any details on the agreement or its potential impact on its business due to the uncertainties weighing on (i) the success of the vaccine; (ii) the expected sales if coexisting with other vaccines; and (iii) other factors such as its duration and the number of doses needed. If the deal is successful, which is difficult to predict, the impact for ROVI would be positive on the margin level, as this division has the highest gross margins (>65% BS(e) vs. 55% OVI 2020 BS(e)). After this announcement made news, the stock has risen by +6%, pricing in a recurring positive impact of €~6 M in EBITDA (10% of EBITDA’19). If we assumed ROVI’s EBITDA margins on the consolidated level, this would mean some € 30 M in sales (+7% vs. sales’19), although this would be premature considering the current level of uncertainty.