Chugai Pharmaceutical’s Q2 Slightly Better Than Expected, FVE Unchanged

Narrow-moat Chugai Pharmaceutical’s second-quarter results were slightly better than expected, although first-half results are in line. After removing JPY 92 million of lump-sum patent infringement settlement from Alexion in the first quarter, revenue for the six months was JPY 504 million, or 29% growth year on year. The second quarter’s revenue was JPY 236 million, or 6% year-on-year growth, which is above our expectation after considering the fact that there was no revenue from Ronapreve (Regeneron’s neutralizing antibody cocktail for COVID-19 treatment). Although the firm has guided approximately JPY 200 million of revenue from Ronapreve in 2022, we are modeling no further revenue from this drug as it is not effective against omicron subvariants.