WOOD Flash – Richter: little clarity on Esmya, but no new negatives during conference call
Richter’s management was unable to give new insight into the EMA’s next steps regarding Esmya, following Friday’s (9 February) recommendation that, for now, no new patients should be started on Esmya and no patients who have completed a course of treatment should start another, but maintains that, following the final ruling in May, the product will remain on the market. Until now, we have valued the entire Esmya franchise (both Europe and the US) at c.HUF 1,280/share – about the same as the stock is off since the regulator raised the warning and, at current levels, we believe that this specific downside is priced in. If we take out half of our Esmya earnings for FY18E, we see the stock trading at 10x EV/EBITDA, vs. its peer group average of 9.7x; taking it out entirely, it would be at 11x EV/EBITDA. This still is not cheap, but the main earnings driver for FY18-19E is cariprazine, and Bemfola to a lesser extent, and the results have been in line for both. Analyst downgrades are certain to appear in the coming weeks, in our view, but we remain HOLDers at current levels, and eventually buyers on weakness.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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