Company Reports

Sobi’s top line grew 19% in a particularly strong first quarter, and we’re maintaining our SEK 252 fair value estimate. Management maintained its full-year forecast for high-single-digit revenue growth at constant exchange rates and an adjusted EBITA margin in the mid-30s, and we think the firm looks on track to maintain this level of growth and EBITA margin for the next several years. However, we do not assign Sobi a moat, given competitive pressures in the hemophilia market and Sobi’s lack of internal innovation to support its intangible assets beyond our 10-year explicit forecast.

We’re maintaining our Sobi fair value estimate at SEK 252 following a mixed quarter, with solid launches for royalty-generating drugs in hemophilia (Sanofi’s Altuviiio) and RSV (Sanofi’s Beyfortus), but also a quarter-over-quarter sales decline for new myelofibrosis drug Vonjo (acquired with CTI in 2023), a counterweight to Beyfortus from shrinking sales of older RSV drug Synagis, and a smaller opportunity for rare disease drug Aspaveli due to competition. We assume 6.5% revenue growth and a 37.4% EBITA margin for 2024, which we see as in line with company guidance of high-single-digit revenue growth and a mid-30s margin. Sobi’s own launch of Altuviiio in international markets should begin this year, and potential filings for gout drug SEL-212 as well as a nephrology-related label expansion for Aspaveli could help Sobi maintain solid long-term growth. However, we’re concerned with the firm’s reliance on acquisitions to build its portfolio as well as competition, and we don’t think the firm has established a moat. We still see uncertainty around the Vonjo launch as we sort through the effects of new competition, disrupted commercial momentum as the CTI acquisition closed, and price discounts.

Sobi reported third-quarter results that were in line with our expectations, and we’re maintaining our SEK 252 fair value estimate as shares remain relatively fairly valued. Sobi saw 23% constant currency revenue growth (29% as reported) in the quarter, driven by very strong constant currency growth in core hematology (25%) and immunology (27%) divisions. Hematology benefited from solid single-digit growth of hemophilia drugs Elocta and Alprolix as well as the recent CTI acquisition, which brought the launching myelofibrosis drug Vonjo. We expect the upcoming launch of once-weekly hemophilia drug Altuviiio in Europe in 2024 and Vonjo’s uptake, partly countered by pricing pressure in hemophilia, will support continued high-single-digit growth at constant currencies over the next few years in hematology. We’re closely watching the launch of GSK’s competing myelofibrosis drug Ojjaara to gain clarity on doctor preferences in this setting. In immunology, royalties on new RSV antibody Beyfortus from Sanofi more than offset declines in sales of older RSV antibody Synagis as the RSV season saw a late start, and rare disease drug Gamifant continued to see strong gains in new patients and duration of therapy. We’re more cautious on immunology growth in 2024, given Beyfortus shortages and volatility in Gamifant sales, although we expect sales in this division are also capable of reaching a high-single-digit growth rate in the midterm. EBITA growth in the quarter was slightly lower than top-line growth at 16%, as Sobi plans for the launch of Altuviiio and as it digests the CTI acquisition. We assume EBITA margins of 33% for the year, consistent with guidance in the low 30s, with margins increasing into the high 30s over the next several years. However, the competitive landscape in hemophilia as well as the uncertainty around ongoing launches beyond hemophilia prevent us from assigning the firm an economic moat.

As recently as 2016, Swedish Orphan Biovitrum, or Sobi, was largely a specialty pharmaceutical firm in-licensing rights to market drugs in Europe. Since then, the successful launches of hemophilia drugs Elocta and Alprolix in Europe and other international markets and several acquisitions and collaborations have expanded Sobi's business geographically (to the U.S.) and into new therapeutic areas (in immunology and hematology). Sobi's acquired immunology drugs (Astra's Synagis and Beyfortus, Novimmune's Gamifant, Apellis' Aspaveli/pegcetacoplan) and hematology drugs (Dova's platelet drug Doptelet, ADC's blood cancer drug Zynlonta, and CTI's Vonjo) help bolster long-term growth prospects. We think Sobi is taking the right steps to diversify and boost long-term growth.

Sobi’s 16% constant-currency top-line growth and steady operating profit margin drove an in-line second quarter, and we’re not making any changes to our SEK 252 fair value estimate. With the recent close of the $1.7 billion acquisition of CTI BioPharma and the expected start of royalties on newly approved respiratory syncytial virus antibody Beyfortus in the United States, management boosted revenue growth expectations for 2023 to high single digits from low to mid-single digits but maintained EBITA margin guidance in the low 30s. The firm is seeing some encouraging signs of growth with newer franchises, although we still think it is in the process of establishing an economic moat.

We’re not making any changes to our SEK 252 fair value estimate for Sobi following the announcement that the firm plans to expand its hematology business with the acquisition of CTI BioPharma. Sobi will acquire CTI for $9.10 per share ($1.7 billion), a 95% premium to the firm’s prior month’s average price, with the deal expected to close in the third quarter. The acquisition brings myelofibrosis drug Vonjo into the firm’s hematology portfolio. Vonjo was approved in early 2022 in the U.S. and is poised to serve myelofibrosis patients who also have severe thrombocytopenia (low platelet counts), creating a parallel to Sobi’s own thrombocytopenia drug Doptelet and a pathway to strong leverage and higher margins. The drug already serves 1,000 patients with this rare blood disorder, with more than $20 million in sales in the fourth quarter, and at least another 5,000 could be good candidates for therapy in the U.S. We assume that the drug will not face generic threats over the next 10 years, as management expects U.S. protection through 2034 (beyond orphan drug exclusivity expected to last until 2029). We’re more cautious modeling sales outside the U.S., where we think Sobi could need data from a confirmatory phase 3 study for approval, and it could be several years before this data is available. We think Sobi is paying a fair price for CTI, although we don’t think this serves to help Sobi build a moat, as we think the price already incorporates an assumption of improved operating leverage with Sobi’s hematology sales force. We think the deal will reduce Sobi’s EBITA margin for 2023 but increase margins starting in 2024, with long-term margins rising into the high 30s.

As recently as 2016, Swedish Orphan Biovitrum, or Sobi, was largely a specialty pharmaceutical firm in-licensing rights to market drugs in Europe. Since then, the successful launches of hemophilia drugs Elocta and Alprolix in Europe and other international markets and several acquisitions and collaborations have expanded Sobi's business geographically (to the U.S.) and into new therapeutic areas (in immunology and hematology). Sobi's acquired immunology drugs (Astra's Synagis and nirsevimab, Novimmune's Gamifant, Apellis' Aspaveli/pegcetacoplan) and hematology drugs (Dova's platelet drug Doptelet, ADC's blood cancer drug Zynlonta, and the pending deal for CTI's Vonjo) help bolster long-term growth prospects. We think Sobi is taking the right steps to diversify and boost long-term growth.

Sobi reported first-quarter results that put it on track to meet our estimates for the full year, and we’re not making any changes to our SEK 252 fair value estimate. Solid performance for the firm’s hemophilia drugs Elocta (up 9% at constant currencies) and Alprolix (up 16%) helped support 5% overall hematology growth, but Kineret’s shrinking use as a COVID-19 treatment led to a 9% decline in immunology, swinging the firm to a 2% overall sales decline at constant currencies. Despite generic pressure to hematology drug Doptelet in China and pricing pressure to the firm’s core hemophilia drugs, we think Sobi has a solid mix of newer products to help support growth over the next few years, although we believe the firm needs to supplement its portfolio with tuck-in acquisitions in order to support long-term growth. While Sobi has made progress diversifying its portfolio and building a pipeline, we still think the firm is in the process of building a moat.

We’re raising our Sobi fair value estimate to SEK 252 from SEK 203 following solid 2022 results that beat our expectations as well as an outlook for 2023 ahead of our prior forecast. Sobi’s total revenue grew to SEK 18.8 billion in 2022, up 8% at constant currencies, and management is guiding for low- to mid-single-digit revenue growth for 2023, with EBITA margin expected to shrink slightly to the low-30s (from 35%, adjusted for restructuring, in 2022). Overall, Sobi’s hemophilia revenue continues to hold up better than we had anticipated despite a crowded competitive landscape. Hematology sales surpassed SEK 10 billion for the year (15% growth), as sales of hemophilia A therapy Elocta were stronger than we had expected (5% growth), thanks to continued demand growth despite some pricing pressure. With Sobi expecting to file for approval of next-generation hemophilia A treatment efanesoctocog alfa in Europe later this year, we think the firm is well positioned to at least maintain its hemophilia sales in the long run. Some newer products—like hematology drug Doptelet—are poised to grow more strongly than we had predicted, and in immunology, RSV antibody nirsevimab is likely to launch in the U.S. late this year, helping drive our forecast for mid-single-digit top-line growth over the next several years. While we think Sobi’s reliance on hemophilia revenue has made it difficult for the firm to establish a moat, we see progress with newly launched drugs and the firm’s late-stage pipeline indicating that it is moving closer to building a narrow moat in hematology and immunology. We think shares look roughly fairly valued at recent prices.

As recently as 2016, Swedish Orphan Biovitrum, or Sobi, was largely a specialty pharmaceutical firm in-licensing rights to market drugs in Europe. Since then, the successful launches of hemophilia drugs Elocta and Alprolix in Europe and other international markets and several acquisitions and collaborations have expanded Sobi's business geographically (to the U.S.) and into new therapeutic areas (in immunology and hematology). Sobi recent deals to acquire rights to immunology drugs (Astra's Synagis and nirsevimab, Novimmune's Gamifant, Apellis' Aspaveli/pegcetacoplan) and new hematology drugs (Dova's platelet drug Doptelet, ADC's blood cancer drug Zynlonta) help bolster long-term growth prospects. We think Sobi is taking the right steps to diversify and boost long-term growth.

We’re maintaining our SEK 203 fair value estimate for Sobi following third-quarter results that put it on track to meet our estimates for the year, although we continue to see significant competition on the horizon that could prevent the firm from establishing a moat. Sobi’s overall third-quarter revenue of around SEK 4 billion represented 6% growth as reported, and a 6% decline excluding currency tailwinds, as coronavirus-related sales and trends from the prior year have declined. Sobi’s biggest division, hematology, saw 14% revenue growth in the quarter (3% at constant currencies), with growth for Doptelet and Aspaveli countering pricing weakness for hemophilia drug Elocta. Immunology revenue fell 7% (22% at constant exchange rates) due to the absence of Covid-related sales for Kineret as well as a later start to the RSV season (reducing year-over-year comparisons for prophylactic antibody Synagis). In addition, Gamifant’s growth appears stagnant, with revenue flat for the first nine months of the year on a constant currency basis, and we think future growth will be reliant on new indications. That said, we still think the firm is on track to meet management’s confirmed guidance for EBITA margin in the low thirties (we model 31%) and constant currency growth in the mid-to-high single digits (we model 16% growth as reported, with currency tailwinds).

Sobi reported solid second-quarter results that were in line with our expectations, and we're slightly increasing our fair value estimate to SEK 203 from SEK 192 per share after making small tweaks to our model and adjusting for the time value of money. Sobi saw a strong currency tailwinds in the quarter, with 21% reported top-line growth and 10% constant currency growth. Immunology franchise growth was flat, as summer demand for RSV prophylactic Synagis has been low (in keeping with normal seasonal sales) and there has been lower COVID-19-related demand for immunology drug Kineret. As a result, Sobi's revenue growth was driven by 16% hematology franchise growth in the quarter. Established hemophilia drugs Elocta and Alprolix saw mid-single-digit growth based on increased demand, and the launch of rare disease drug Aspaveli and significant sales of platelet drug Doptelet to China partner Fosun further boosted growth. Doptelet sales patterns and duration of growth in China are less predictable and add uncertainty to our forecast, but we're encouraged by global demand for the drug. In addition, while the launch of Aspaveli is still in early stages, Sobi and partner Apellis are making good progress moving the drug into additional phase 3 trials to expand its reach into new indications. We think Sobi is still in the process of building an economic moat.

As recently as 2016, Swedish Orphan Biovitrum, or Sobi, was largely a specialty pharmaceutical firm in-licensing rights to market drugs in Europe. Since then, the successful launches of hemophilia drugs Elocta and Alprolix in Europe and other international markets and several acquisitions and collaborations have expanded Sobi's business geographically (to the U.S.) and into new therapeutic areas (in immunology and hematology). Sobi recent deals to acquire rights to immunology drugs (Astra's Synagis and nirsevimab, Novimmune's Gamifant, Apellis' Aspaveli/pegcetacoplan) and new hematology drugs (Dova's platelet drug Doptelet, ADC's blood cancer drug Zynlonta) help bolster long-term growth prospects. We think Sobi is taking the right steps to diversify and boost long-term growth.

Swedish Orphan Biovitrum's first-quarter results put it on track to meet our expectations for the year, and we're not making any changes to our SEK 192 fair value estimate. We think shares look relatively fairly valued at recent prices. The firm faces hemophilia competition and potential declines in COVID-19-related sales of immunology drug Kineret, but these should be countered by growth in newer products like hematology drugs Doptelet and Aspaveli. In addition, the firm's RSV antibody Synagis had another solid quarter, and next-generation antibody nirsevimab has the potential to serve as prophylaxis for a broader group of infants (partners Sanofi/AstraZeneca are filing in the U.S. in the second half of 2022), which we think should support long-term revenue growth in RSV despite the potential approval of competing RSV vaccines in the next couple of years and cannibalization of Synagis sales. Overall, we think the firm is in the process of building a moat tied to its rare disease business and immunology and hematology expertise.

We're not making any significant changes to our model following Sobi's fourth-quarter results, as Sobi's performance and 2022 guidance both closely matched our forecast. Sobi's top line grew 9% in the fourth quarter at constant currencies, with solid 8% growth in hematology despite slower 3% growth in the hemophilia subset. Hemophilia represented 40% of sales in the fourth quarter, and we expect this percentage to decline as Sobi's newer products in hematology and immunology continue to launch. Pricing pressure in hemophilia particularly weighed on Elocta sales in 2021 due to price changes in Germany; we expect continued, milder pricing pressure on both Elocta and Alprolix going forward, partly countered by continued low-single-digit patient growth. In immunology, Kineret's expanded prescribing label (now includes Covid) boosted fourth-quarter sales above our expectations, and Gamifant's launch also drove growth, countered by a 5% decline in sales of RSV prevention drug Synagis. The firm's outlook for mid to high-single-digit sales growth and an EBITA margin in the low 30s appears reasonable, as Sobi achieved a 36% EBITA margin in 2021, and additional investment in late-stage clinical trials could put pressure on near-term margins, in exchange for potential long-term sales growth.

As recently as 2016, Swedish Orphan Biovitrum, or Sobi, was largely a specialty pharmaceutical firm in-licensing rights to marketing drugs in Europe. Since then, the successful launches of hemophilia drugs Elocta and Alprolix in Europe and other international markets and several acquisitions and collaborations have expanded Sobi's business geographically (to the U.S.) and into new therapeutic areas (in immunology and hematology). Sobi recent deals to acquire rights to immunology drugs (Astra's Synagis and nirsevimab, Novimmune's Gamifant, Apellis' Aspaveli/pegcetacoplan) and new hematology drugs (Dova's Doptelet) help bolster long-term growth prospects.

No-moat Swedish Orphan Biovitrum announced third-quarter results on Oct. 11 that were ahead of our expectations, with total third-quarter revenue around SEK 3.76 billion, EBITA of SEK 1.17 billion, and a 31% EBITA margin. These strong results were driven by an early start to the RSV season, which led to earlier use of the firm's RSV prevention antibody Synagis in the U.S., as well as sales of hematology drug Doptelet to China partner Fosun. That said, these sales are not necessarily sustainable, and our SEK 14.9 billion revenue and 35% EBITDA margin forecast for 2021 is still in line with the firm's new, narrowed guidance of SEK 14.5-SEK 15 billion in revenue and 33%-35% EBITA margin. While Sobi will release full details of the quarter's results on Oct. 22, the acceptance period for its acquisition by Agnafit Bidco (which represents the combined interests of U.S. private equity firm Advent and Singapore sovereign wealth fund GIC) ends on Oct. 21. We continue to assume the deal will go through and maintain our SEK 235 fair value estimate (consistent with the offer price).

No-moat Swedish Orphan Biovitrum has received a cash offer of SEK 235 per share, and the board has unanimously recommended that shareholders accept the offer. Given the confirmed support of two of Sobi's largest shareholders, which own a combined 43% of shares, as well as the support of the board, we're inclined to think the deal will go through, and we're raising our fair value estimate to match the offer price. The offer comes from Agnafit Bidco, which represents the combined interests of U.S. private equity firm Advent and Singapore sovereign wealth fund GIC. Sobi's shares traded above the SEK 235 per share offer price on Sept. 2, which could incorporate the expectation for competing bids. We previously cited Sanofi as a likely acquirer for Sobi, given its 2018 acquisition of Sobi's hemophilia partner Bioverativ, and had incorporated a 50% likelihood of such a deal into our Sobi fair value estimate in July 2018. However, pressure on hemophilia sales, lower international pricing in Sobi's international hemophilia markets, and pipeline disappointments led us to remove the acquisition premium from Sobi's valuation in July 2019. That said, Sobi's pipeline has evolved significantly since then, and Sobi's immunology and hematology pipeline--with a focus on rare diseases--could still be a good fit for Sanofi.

As recently as 2016, Swedish Orphan Biovitrum, or Sobi, was largely a specialty pharmaceutical firm in-licensing rights to marketing drugs in Europe. Since then, the successful launches of hemophilia drugs Elocta and Alprolix in Europe and other international markets and several acquisitions and collaborations have expanded Sobi's business geographically (to the U.S.) and into new therapeutic areas (in immunology and hematology). Sobi recent deals to acquire rights to immunology drugs (Astra's Synagis and nirsevimab, Novimmune's Gamifant, Apellis' pegcetacoplan) and new hematology drugs (Dova's Doptelet) help bolster long-term growth prospects.

Sobi reported second-quarter results in line with our expectations, and we're not making any changes to our SEK 181 fair value estimate. Specialty care and immunology divisions grew 5% and hematology grew 4%, with double-digit growth for all segments at constant currencies compared with a weak second-quarter 2020 (largely due to last year's COVID-19-related declines in hemophilia product demand and inventory levels). Hemophilia patient growth of 3% (Elocta) and 16% (Alprolix) reflect Sobi's continued solid market share in Europe, despite continued strong share gains from Roche's competing product Hemlibra and Elocta's double-digit pricing pressure (driven by price mandates in Germany). Management maintained guidance for SEK 14 billion-SEK 15 billion in revenue and EBITA margin of 30%-35% despite significant currency headwinds, and our estimates are near the high end of this range. We see 2021 as a transitional year, with price pressure on core hemophilia franchises but new product launches either still early (immunology drug Gamifant and hematology drug Doptelet) or still to come (immunology drug candidates SEL-212 and pegcetacoplan). We do not award Sobi an economic moat, although the firm's recent acquisitions and collaborations have revealed a solid strategy and could begin to drive a positive moat trend if trials and launches are successful.