UCB: Expanded Indication of Bimzelx Supports Growth as Generics Weigh on Portfolio

We appreciate that no-moat UCB remains focused on evaluating Bimzelx in additional indications, and it received approval from the US Food and Drug Administration for the treatment of adults with moderate to severe hidradenitis suppurativa, a chronic inflammatory skin disease. This marks the fifth approved indication for Bimzelx in the US. We anticipate UCB will reach about EUR 5.65 billion in revenue in 2024, representing over 7.5% growth. We forecast a five-year compound annual growth rate of 10%; however, our long-term view of mid-single-digit sales growth toward the latter half of our 10-year forecast remains unchanged, as many of UCB’s drugs face patent expirations and generic competition. We maintain our fair value estimate of EUR 99 per share, and we view shares as currently overvalued, so we recommend waiting for a pullback in the stock price before investing.