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1、COREU.S. Biopharmaceuticals1Q19 Earnings PreviewAfter a challenging 2018, overall sector sentiment continued to improve throughout 1Q19, with the trends observed in early Januaryi.e., outperformance of Biotech,INDUSTRY UPDATEU.S. BiopharmaceuticalsPOSITIVEUnchangedEquity Research12 April 2019lagging

2、 of Pharma (YTD NBI: +15%, DRG: 4%, SPX: +15%)maintained through April. While biopharma was not without headwinds, including additional pricing rhetoric (i.e., the Senate hearing) and clinical/regulatory setbacks (e.g., aducanumabs phase 3 failure; the Opdivo CM-227 filing withdrawal), in our view d

3、eal speculation supports sentiment, with the number (13 total; +30% YTD vs. 2018 YTD) and volume well above 2018 corresponding levels to date. Looking ahead to earnings, although 1Q is typically weak given seasonal reimbursement headwinds (e.g., the Medicare donut hole, commercial deductible resets)

4、, conservative FY guidance (consensus 2019: +4% revenue, +5% earnings) has resulted in lowand in our view, very manageable expectations. We dont see a broad risk of lowered guidance this early in the year. Together, with a number of late-stage catalysts set to read-out over the next 6-9 months, new/

5、expanded product cycles, and favorable sentiment following what should be a supportive vote for Bristol/Celgene, we continue to be positive on the sector. Join us for a call today at 11 am ET TODAY with slides to discuss our outlook for 1Q. Dial-in: 800.706.8249(US); 706.634.5881(OUS); Passcode: 726

6、4318.Positive positioning for Lilly and Gilead: For the second straight quarter, we are highlighting Lilly and Gilead as our preferred picks into the quarter. For Lilly, we are raising our PT to $140/share (vs. $130 prior) given our confidence in the diabetes franchise and are also providing an upda

7、ted model that excludes Elanco from 2019 and beyond; we continue to model strength in Trulicity ($939M vs. cons $929M), driven by continued growth in the GLP-1 class and Trulicity share expansion. For Gilead, we continue to remain bullish on prospects of returning to growth in 2019. Typically, 1Q is

8、 seasonally weak in HIV, which is mostly reflected in sentiment / consensus, but a new strategic vision from CEO Dan ODay and an emerging growth driver in filgotinib should be the main focus for the call and going into 2H19.Negative positioning for Regeneron: With upcoming competition in 2H19 from N

9、ovartis brolucizumab, we believe the Street is under-appreciating the threats to concentrated revenue for Regeneron ($995M Barclays estimate, -63M vs. consensus). Indeed, we believe Eyleas expansion into diabetic retinopathy (PDUFA date May 13) may have incremental benefits, but uptake will be chall

10、enging. We also expect discussions on the Dupixent rollout in asthma and the strategy behind the recent Alynylam collaboration will be key topics for the call.PT changes: raising LLY to $140 (vs. $130 prior); raising MRK to $85 (vs. $82 prior), increasing INCY to $90 (vs. $85 prior).For a full list

11、of our ratings, price target and earnings changes in this report, please see table on page 2. U.S. Biopharmaceuticals Geoff Meacham, Ph.D.+1 212 526 2795 HYPERLINK mailto:geoffrey.meacham geoffrey.meacham BCI, USScott Puckhaber, MD+1 212 526 5157 HYPERLINK mailto:scott.puckhaber scott.puckhaber BCI,

12、 USGreg Harrison, CFA+1 212 526 1544 HYPERLINK mailto:greg.harrison greg.harrison BCI, USJason Zemansky, PhD+1 212 526 6608 HYPERLINK mailto:jason.zemansky jason.zemansky BCI, USOlivia Brayer+1 212-526-5914 HYPERLINK mailto:olivia.brayer olivia.brayer BCI, USKristen Stewart, CFA+1 212 526 6965 HYPER

13、LINK mailto:kristen.stewart kristen.stewart BCI, USal n rten I-d e tc itr sReBarclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that coul

14、d affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 84.Summary of our Ratings, Price Targets and Earnings Changes in this Report (all

15、 changes are shown in bold)CompanyRatingOld NewPrice11-Apr-19OldPrice TargetNew%ChgOldEPS FY1 (E)New %ChgOldEPS FY2 (E)New %ChgU.S. BiopharmaceuticalsPosPos HYPERLINK /BC/composite/GER_COMPANY?ticker=ABBV AbbVie Inc. (ABBV)EWEW81.7786.0086.00-8.568.6009.489.40-1 HYPERLINK /BC/composite/GER_COMPANY?t

16、icker=ALXN Alexion Pharmaceuticals (ALXN)OWOW137.42180.00180.00-9.019.27310.3010.472 HYPERLINK /BC/composite/GER_COMPANY?ticker=AMGN Amgen Inc. (AMGN)EWEW192.11195.00195.00-13.2514.10614.0014.856 HYPERLINK /BC/composite/GER_COMPANY?ticker=BIIB Biogen (BIIB)EWEW233.83250.00250.00-29.0029.90330.0034.4

17、015 HYPERLINK /BC/composite/GER_COMPANY?ticker=CELG Celgene Corp. (CELG)OWOW94.23102.00102.00-10.7010.70-12.7912.750 HYPERLINK /BC/composite/GER_COMPANY?ticker=LLY Eli Lilly & Co. (LLY)OWOW125.15130.00140.0085.705.8536.656.752 HYPERLINK /BC/composite/GER_COMPANY?ticker=GILD Gilead Sciences (GILD)OWO

18、W66.3190.0090.00-7.056.72-57.257.05-3 HYPERLINK /BC/composite/GER_COMPANY?ticker=INCY Incyte Corp. (INCY)OWOW81.0685.0090.0062.201.90-143.152.85-10 HYPERLINK /BC/composite/GER_COMPANY?ticker=JNJ Johnson & Johnson (JNJ)EWEW135.21135.00135.00-8.558.5609.059.080 HYPERLINK /BC/composite/GER_COMPANY?tick

19、er=MRK Merck & Co. (MRK)OWOW79.8482.0085.0044.704.7205.255.281 HYPERLINK /BC/composite/GER_COMPANY?ticker=NBIX Neurocrine Biosciences (NBIX)OWOW86.28110.00110.00-0.10-0.05501.953.0154 HYPERLINK /BC/composite/GER_COMPANY?ticker=PFE Pfizer Inc. (PFE)EWEW42.2740.0040.00-2.882.88-2.953.002 HYPERLINK /BC

20、/composite/GER_COMPANY?ticker=REGN Regeneron Pharmaceuticals (REGN)UWUW393.48325.00325.00-16.1016.85514.5015.9510 HYPERLINK /BC/composite/GER_COMPANY?ticker=SGEN Seattle Genetics (SGEN)OWOW78.3190.0090.00-0.85-0.8320.450.487 HYPERLINK /BC/composite/GER_COMPANY?ticker=UTHR United Therapeutics (UTHR)U

21、WUW109.9195.0095.00-8.358.12-38.507.68-10 HYPERLINK /BC/composite/GER_COMPANY?ticker=VRTX Vertex Pharmaceuticals (VRTX)OWOW185.12200.00200.00-3.884.50167.357.25-1Source: Barclays Research. Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the rep

22、orting currency. FY1(E): Current fiscal year estimates by Barclays Research. FY2(E): Next fiscal year estimates by Barclays Research.Stock Rating: OW: Overweight; EW: Equal Weight; UW: Underweight; RS: Rating Suspended Industry View: Pos: Positive; Neu: Neutral; Neg: NegativeU.S. BiopharmaceuticalsV

23、aluation Methodology and RisksAbbVie Inc. (ABBV)Valuation Methodology: We value ABBV using a discounted cash flow analysis that assumes a WACC of 10.8%, implying an intrinsic value of$86 per share.Alexion Pharmaceuticals (ALXN)Risks which May Impede the Achievement of the Barclays Research Valuation

24、 and Price Target: If biosimilars make greater headway into the market and cannibalize further share Humira could potentially face additional downside risk. As Humira currently comprises over 60% of total sales, a decline in the drugs outlook could severely impact ABBVs earnings. In addition, the HC

25、V portfolio could fail to capture share from existing competition. Also, Imbruvica could be limited in its label expansion and oncology growth may not meet expectations. Pipeline failures could also drive downside for AbbVie.Valuation Methodology: Our price target of $180 is based on a sum-of-the pa

26、rts NPV analysis. We forecast sales to 2028 for Soliris and Ultomiris, 2026 for Strensiq, and 2031 for Kanuma, and include a terminal value. We use a discount rate of 12% for our forecast period, which we think appropriately reflects the risk of the portfolio. For our terminal value we assume a less

27、 than 1% growth rate and a discount rate of 12%. We derive a value of $45/share for Soliris, $113/share for Ultomiris, $16/share for Strensiq and $2/share for Kanuma, with net cash of $4/share. This results in a total NPV for ALXN shares of $180.Amgen Inc. (AMGN)Risks which May Impede the Achievemen

28、t of the Barclays Research Valuation and Price Target: Downside risks include: 1) Commercial: Lower than expected sales of Soliris (especially with the launch of the gMG indication), Strensiq, or Kanuma; We also see potential for biosimilars to Soliris (and other complement competition) given the nu

29、mber of firms working on assets 2) Development risk: Ultomiris development failure in gMG or NMOSD would significantly impact shares, 3) Regulatory risk: even if Ultomiris is successful FDA or EMA could require additional studies, delaying launch.Valuation Methodology: Our $195/share price target is

30、 based on a P/E multiple analysis and supported by our sum-of-the-parts NPV analysis. We view significant upside to the forward multiple as unlikely given the lack of compelling growth, priced in competition expectations in the near term for Kyprolis and Repatha, and biosimilar risk to established f

31、ranchises. Our price target assumes that Amgen can trade at approximately 14x our 2019E EPS.Risks which May Impede the Achievement of the Barclays Research Valuation and Price Target: 1) Biosimilar risk: Any delays or failuresrelated to companies developing biosimilars to Amgens legacy products (Neu

32、pogen, Neulasta, Aranesp, Epogen, Enbrel) would reduce the anticipated erosion of product sales, and benefit Amgen shares. However, the Street is generally anticipating modest erosion in the sales of these Amgen products over the balance of this decade. The entry of multiple biosimilar entrants may

33、hasten this decline. 2) Competitive risk: Amgen faces meaningful competition to its key growth products from other branded products, namely in multiple myeloma and hypercholesterolemia. Delays or failures in the development of these competing agents (e.g., Takedas ixazomib, Bristols elotuzumab, or R

34、egeneron/Sanofis Praluent), would improve the growth outlook for Amgen. On the other hand, successful phase 3 studies and launches of these products could pressure Amgen sales growth more than currently anticipated by the Street. 3) Regulatory risk: Amgen currently has three products (Ivabridine, T-

35、Vec, evolocumab) under review by FDA. Based on phase 3 data, we see risks to the approval of Ivabridine and T-Vec. If these products are approved, it could further boost Amgen shares. With regards to evolocumab, the drug is widely expected to be approved by its August 2015 PDUFA date. However, there

36、 remains uncertainty over the exact label and how this will be perceived by clinicians. A stricter label focused on narrow population could negatively impact Amgen shares. 4) Financial risk: Amgen has provided guidance on margins through 2018 (52-54%). This represents a meaningful over recent perfor

37、mance (37% in 2013, 44% in 2014e). At the same time, the company has highlighted significant SG&A expense related to the projected launch of evolocumab, meaning that most of the margin improvement is likely back-weighted in the 2014-2018 period. Faster improvements to margins in 2015/16 (with no det

38、riment to the product launches) could see Amgen shares accrete additional value. Biogen (BIIB)Valuation Methodology: We now value Biogen at $250/sh using an NPV sum-of-the-parts analysis. We forecast sales across the portfolio to predicted LOE dates, and assume an 11% discount rate, in-line with bio

39、tech peers, and zero terminal value. Based on these assumptions, we derive a value of $140/sh for MSincluding $86/sh for Tecfidera, $33/sh for Avonex/Plegridy, and $20/sh for Tysabriwith $28/sh for Spinraza, $41/sh for the unconsolidated JV, $14/sh for biosimilars business, $3/sh for the pipeline, a

40、nd $24/sh in net cash.Risks which May Impede the Achievement of the Barclays Research Valuation and Price Target: 1) Commercial Risk: Biogen has successfully launched multiple MS drugs; however, it may face commercial pressure as the MS field becomes more saturated. 2) Regulatory Risk: Although Biog

41、en has a broad pipeline that could result in positive late stage data, positive data is no guarantee that the FDA or EMA will grant approval. Delays in timelines or an inability to gain approval could significantly impact Biogens future sales. 3) Clinical Risk: Biogen is developing multiple drugs fo

42、r a broad range of diseases. The majority of these drugs are in the early to mid-stages of development and could fail to demonstrate any benefits. As such, Biogen may be unable to sustain its revenue stream. 4) Patent Risk: Biogen relies on patents to protect its investment in drug development; howe

43、ver, generic entrants into the MS market, such as generic Copaxone, could limit pricing power. Separately, other companies could challenge Biogens patents, similar to Forward Pharma and Tecfidera. Patent risk could significantly reduce Biogens future sales. Bristol-Myers Squibb (BMY)Valuation Method

44、ology: We value BMY using a blended average of a price/growth basis based on the average for the large cap global therapeutics group, which we view as appropriate given that BMYs primary focus as a specialty drug/biotechnology-oriented company, and our discounted cash flow analysis. By assigning equ

45、al weighting to the two methodologies, we derive our price target of $53 per share.Risks which May Impede the Achievement of the Barclays Research Valuation and Price Target: As BMYs growth prospects increasingly depend on the delivery of its immuno-oncology pipeline, any setbacks or delays could po

46、se risk to the stock. The field of immuno-oncology is getting increasingly competitive and Bristols leadership is being challenged by other major players (particularly Mercks Keytruda). Any competitive disadvantage in terms of clinical development or regulatory timelines could put pressure on the st

47、ock. Celgene Corp. (CELG)Valuation Methodology: Our price target of $102 is based on a P/E multiple and is supported by our sum-of-the parts NPV analysis, using a WACC of 10.5%. For the base business, we assign $53/sh to Revlimid, $13/sh to Pom/ Thal/ Vidaza, $15/sh to Otezla, and $6/sh to Abraxane.

48、 For the pipeline we assign $13/sh for JCAR017, $6/sh for luspatercept, $9/sh for ozanimod. Combined with equity/ platform value of $6/sh and YE18 net cash of $(20), supports of PT of $102.Risks which May Impede the Achievement of the Barclays Research Valuation and Price Target: 1) Commercial risk:

49、 Increasing prevalence in MM and Revlimids strong competitive positioning provide significant tailwinds that could drive upside to our forecasts. 2) Reimbursement RiskMany products in the biotech industry have high price points and some of Celgenes products, including Revlimid, are no different. As

50、such, it is not surprising that in certain regions or for selected payor segments that there is pushback on these costs or that a decision is made to use less expensive treatments as an alternative. Increased adoption of such strategies could negatively impact Celgenes operating performance or share

51、 price. 3) Clinical Risk: Celgene has a deep pipeline of drug candidates, both internal and partnered, that the company is developing across a range of diseases. Many of these drugs are in the early-to-mid stage of development and could fail to meet their targeted endpoints in trials, or fail to dem

52、onstrate a meaningful clinical benefit. Such outcomes could put impair of Celgenes ability to launch new drugs and could pressure share performance. 4) Litigation and Patent Risk: Patents related to Celgenes key product, Revlimid, are the focus of ongoing litigation which could lead to the market en

53、try of a generic Revlimid prior to the companys expectations. If a generic Revlimid enters the market prior to Street expectation, Revlimid sales could fall, and Celgene shares would be negatively impacted. More generally, Celgene relies on patents to protect its investments in drug development. Gen

54、eric entrants against Celgenes branded products could harm future sales. 5) Regulatory Risk: Celgene has a broad pipeline that could result in positive late stage data. However, positive data is no guarantee that the FDA or EMA will grant approval.Delays in timelines or an inability to gain approval

55、 could significantly impact Celgenes future sales. Eli Lilly & Co. (LLY)Valuation Methodology: Our $140 price target reflects the blended average of a price to earnings multiple analysis that assumes the current year multiple is sustained on forward year earnings and our DCF analysis. By applying eq

56、ual weighting to the two, we arrive at an intrinsic value of $140 per share.Risks which May Impede the Achievement of the Barclays Research Valuation and Price Target: LLYs intermediate-term outlook depends largely on commercial execution on successfully launching its new diabetes, immunology, and o

57、ncology assets. These markets are highlycompetitive and adoption may be not as strong as we forecast. Additionally, pipeline failures from high risk, high reward pipeline assets may leave only early and intermediate stage assets to drive future growth. Gilead Sciences (GILD)Valuation Methodology: Ou

58、r $90/share price target is based on a sum-of-the-parts approach for the estimated NPV value of each of its key franchises using a WACC of 12% and different growth rates for the major products. Under these assumptions, we value HIV at $57/share, HCV at $6/share, CAR-T at $4/share, other products at

59、$7.50/share, the pipeline at $4/share, and 2019E net cash at $12/share.Risks which May Impede the Achievement of the Barclays Research Valuation and Price Target: 1) Commercial Risk: competition is intense in the hepatitis C and HIV markets with payors influencing the market by preferences for speci

60、fic products that could negatively affect price. This could put further downward pressure on the HCV and HIV businesses, which would have a negative impact on share performance. 2) Regulatory Risk: Gilead has a broad pipeline that has produced positive late stage data. However, positive data is no g