Chugai's Full-Year 2022 Results and 2023 Guidance in Line With Expectations; Shares Undervalued

Narrow-moat Chugai Pharmaceutical’s full-year earnings and guidance were in line with expectations. Revenue for fourth-quarter 2022 and the full year, excluding the JPY 92 billion lump-sum settlement from Alexion in the first quarter, were JPY 439 billion and JPY 1.17 trillion respectively, or 36% and 17% year-on-year growth. The quarterly lumpiness is related to coronavirus-related sales, especially Ronapreve (neutralizing antibodies) and Actemra (IL-6 inhibitor) exports to Roche. The company expects to supply Ronapreve to the Japanese government in the first quarter of calendar 2023, after which we think further sales are unlikely given Ronapreve’s lack of efficacy against omicron subvariants.