BioArctic (Buy, TP: SEK350.00) - Positive CHMP opinion

With the positive CHMP opinion after the Q3 report, the quarterly results were a non-event. Leqembi can now be launched in the first markets in Europe in H1 2025. On the development side, BioArctic highlighted the pre-clinical data on its Brain Transporter (BT) technology, which showed the mechanism significantly increases the transport of large molecules (mAbs) across the blood brain barrier (BBB). We reiterate our BUY and have raised our target price to SEK350 (270), adding the EU market oppor...

Western Bulk Chartering (Buy, TP: NOK25.00) - Encouraging signs needed

Q3 marked the company’s seventh consecutive quarter with no dividends, and reflected soft recent performance given its policy of paying out 80% of net profits. However, our reduced normalised TC margin implies a 2025 dividend yield of ~16%, with upside potential to margins converging towards 2020–2022 levels. Also, the share price has fallen ~20% since the Q3 update, removing much of the downside risk, in our view. We reiterate our BUY, but have cut our target price to NOK25 (32).

BioArctic (Buy, TP: SEK270.00) - Negative CHMP opinion fully reflected...

Q2 earnings included slightly higher R&D costs than we forecast. While royalties from Leqembi sales were known, the positive sales trend was overshadowed by the negative opinion for lecanemab from the CHMP earlier in Q3. We have removed our European estimates (until we know the outcome of the re-examination). However, we believe the share price reaction is overdone and reiterate our BUY, but have cut our target price to SEK270 (350).

Western Bulk Chartering (Buy, TP: NOK32.00) - Navigating towards smoot...

Western Bulk’s H1 report marks the sixth consecutive quarter with no declared dividends, reflecting its suboptimal results over the same period. However, on improving TC margins into 2025, we forecast a ~15% dividend yield for the year, with further upside potential to improving TC margins and an increasing vessel count. We reiterate our BUY and NOK32 target price.

BioArctic (Buy, TP: SEK350.00) - Limited news on EU approval

The Q1 report was in line with expectations, with a small beat on the operating loss. The cash position at end-Q1 was nearly SEK1bn. There was limited news on the delayed EU approval (waiting on a SAG meeting). Eisai recently guided for Leqembi sales of JPY56.5bn (year to March 2025), implying royalties to BioArctic of cSEK360m. We reiterate our BUY and SEK350 target price.

Yard response and dry bulk qualms

Our trip to South Korea and China revealed Chinese shipbuilders are seeking growth to take on Korea’s established yards who are facing constraints. An eagerness to add capacity is one of our takeaways, as well as a gloomy outlook for Chinese real estate, which in our view should inevitably weigh on dry bulk demand.

A brewing challenge for the yards

Our 17th Annual Energy & Shipping Conference was well attended by investors and industry executives showcasing the still-growing interest for the sectors. Limited yard capacity is fuelling high newbuilding prices and raising freight rate expectations for the vast fleet renewal necessary in the coming decade. Long lead times underpin a bullish supply story for much of shipping in the coming years, albeit exposed to geopolitical risks affecting trade patterns. Our overall impression was general op...

Western Bulk Chartering (Buy, TP: NOK32.00) - Time to perform

Despite a weak 2023 (after-tax net loss of USD15.6m), we expect earnings to move towards our tweaked ‘normalised’ estimate in 2024 assuming historical TC margins. We see c70% upside potential to our 2024–2026e EBITDA from applying a net TC margin of 9% (midpoint of historical 7–11%) to the current FFA curve, implying a share price of cNOK50 at an EV/EBITDA of 5.0x. We reiterate our BUY, but have cut our target price to NOK32 (41).

BioArctic (Buy, TP: SEK350.00) - Focus remains on Leqembi

The Q4 report was a non-event as Leqembi royalties had already been published. We believe investors will continue to focus on the Leqembi launch trajectory; however, we believe BioArctic’s pipeline will come into greater focus with the approaching start of the phase IIa trial for exidavnemab in Parkinson’s disease. We reiterate our BUY but have lowered our target price to SEK350 (365).

BioArctic AB: 1 director

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BioArctic (Buy, TP: SEK365.00) - Launch progressing in the US

Q3 earnings were slightly below our estimate, as the milestone received from Eisai was less than we expected. We have adjusted our uptake trajectory for Leqembi to reflect the complex infrastructure needed to administer the drug (multiple MRIs and i.v. infusions) and have significantly reduced our short-term sales forecasts. Longer-term, we expect Leqembi to be a game-changer for Alzheimer’s patients. We reiterate our BUY, but have cut our target price to SEK365 (410).

Western Bulk Chartering (Buy, TP: NOK41.00) - Normalisation set to com...

Western Bulk Chartering reported a lower-than-expected H1 in a soft market; however, we believe the company will improve its earnings in a slightly better H2, and trending towards normalised net TC margins in 2024. We expect the average vessel count to rise in H2 and see additional c20% upside potential to our estimated net TC result for 2024e by increasing the vessel count to 165, utilising the vessel potential at the current cost base, with normalised margins. We reiterate our BUY and have rai...

BioArctic (Buy, TP: SEK410.00) - Approvals in focus; sales ramp-up adj...

The Q2 report was fairly undramatic, coming just after the most important event in the company’s history – full FDA approval of Leqembi. BioArctic is turning its sights to possible approval in Japan in September as well as a full launch in the US by its partner Eisai. The pipeline of new projects looks solid, although there was no more detail. We reiterate our BUY but have lowered our target price to SEK410 (430) on our view of a slower sales ramp-up.

Northern Lights

BioArctic (Buy, TP: SEK430.00) - Leqembi fully approved in the US

The FDA announced on 6 July that it had converted the accelerated approval for Leqembi to a full approval. As a result, we expect the CMS to grant the drug full reimbursement under the condition that patients take part in a data registry for the real-world outcomes of treatment with Leqembi. We note that the FDA recommends patients to be typed for ApoE4 status prior to initiation of treatment and that there is a Boxed Warning added to the label. We do not see this as something that should negati...

Swedish Small - caps - summer 2023

Swedish Small - caps - summer 2023

Northern Lights

BioArctic (Buy, TP: SEK430.00) - AdCom ‘yes’ vote on Leqembi

The FDA advisory committee (AdCom) voted unanimously that the Clarity AD trial data confirmed the clinical benefit of Leqembi for the treatment of Alzheimer’s disease. The discussions in the panel circled around safety and the use of Leqembi in ApoE4 homozygotes and use in combination with anti-coagulant treatment. We believe the FDA will give full approval for Leqembi on 6 July and thus the drug should receive full reimbursement from the CMS soon after full approval.

Western Bulk Chartering (Buy, TP: NOK40.00) - Discounted to normalised...

Western Bulk Chartering indicated a minor negative result for H1 in its market update in May. However, the FFA curve should offer earnings support – indicating a net time-charter margin of ~USD1,000/day for H2 and 2024 on historical margins, in line with our modelling for normalised markets long-term. Hence, we find the stock overly discounted following the recent share price drop, and have upgraded to BUY (HOLD), while we have lowered our target price to NOK40 (45).

BioArctic (Buy, TP: SEK430.00) - Closing in on PDUFA date

The Q1 earnings beat was driven by EUR35m in milestones for initial US approval of Leqembi (substance name lecanemab) and filing in Europe and Japan. The next key event in our view is the PDUFA date (6 July), when we expect full FDA approval of Leqembi in the US. We reiterate our BUY and SEK430 target price.