瑞信-生物科技行业-2019年下半年美国大型生物科技企业预览：回到校园-2019.9-60页.pdf

September 2019 Equity Research Americas U.S.Large Cap Biotechnology 2H19 Preview:Back 2 School Evan David Seigerman Senior Research Analyst+1 212 325 4463 evan.seigermancredit- DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse 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 could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.September 2019 Despite the removal of company specific litigation overhangs,and 2Q revenue and EPS beats across the board,Biotech investors are cautious heading into the remainder of 2019 Macro overhangs loomvolatility is expected to increase heading deeper into the election cycle,while some investors are cautious about the US broader economic health Investors are selective,focusing on events likely to move the needle Selected Catalysts to watch:Amgen:AMG 510(KRAS)update at World Lung this upcoming weekend,initiation of registrational monotherapy trial 2H19;the closest competitor,Mirati Therapeutics,plans to present Proof-of-Concept data in 4Q Regeneron:Potential approval and launch of Novartis brolucizumab in October(competitor to Eylea)Biogen:NDA filing of PTC/Roches risdiplam(oral competitor to Spinraza)in 2H19,phase 2 data for BIIB092(anti-tau antibody)expected 2H19 However,we remain positive on the sector,and reiterate our belief in a targeted approach to investing in biotech Evan David Seigerman|US Large Cap Biotechnology|evan.seigermancredit- Executive Summary 2H19 Preview 2 Coverage of Large Cap Biotech:Top Picks(Outperform):Vertex(among large caps),Neurocrine(among SMID caps)Other Outperform:Amgen,Aimmune,Galapagos Neutral:Gilead,Regeneron,Incyte,Alder Underperform:Biogen(most out of consensus call)How we think about stock selection and alpha generation:Targeted Therapy 1)Examining the state of the commercial business 2)Pipeline prospects 3)M&A positioning Key Macro Themes:M&A:Likely to remain a backdrop for the sector as sellers look to capitalize on premium valuations while buyers have high levels of cash,easy access to capital and valuable stock to use to transact Drug Pricing:Overhang into the 2020 US elections;potential for reform in Medicare Parts B and D 3 September 2019 U.S.Biotechnology 1H19 Review Litigation overhangs removed,investor focus shifting to the future Amgen won the Enbrel IP litigation,de-risking its largest single contributor of revenue ($4.6B US sales in 2019E)Regeneron won the US Praluent IP litigation,invalidating an Amgen patent protecting PCSK9s The decision maintains the status quo,Praluent and Repatha will still be sold in the US and Regeneron will not have to pay damages Focus on pipeline replenishment remains;late stage and commercial M&A viewed favorably by investors Amgen:Amgen announced the$13.4B purchase of Otezla;management guided to growth above consensus expectations while investors were positive on the near-term accretion of the deal Gilead/Galapagos:Gilead significantly expanded the terms of the Galapagos partnership,paying$5.1B for access to Galapagos inflammatory disease pipeline Transaction was tax-efficient and less expensive than a full take-out Biogen:In contrast,Biogen shares have continued to decline despite large-scale share repurchases,expected future competition in MS and SMA highlights the urgent need to transact for revenue growth Continued execution across our coverage universe 100%of covered commercial-stage companies beat consensus revenue and EPS expectations in 2Q Notably strong performance by Vertex and Neurocrine Regeneron/Sanofi collaboration now profitable ahead of previous guidance Pipeline progress continues ahead of earlier expectations Gilead/Galapagos announced filings of filgotinib;investors previously expected the need for long-term safety studies for US filing Amgen made steady progress in biosimilars,we saw the launch Mvasi and Kanjinti in the US;positive top-line data for ABP 798 and IPR proceedings were initiated against Alexions Soliris,supportive of ABP 959 Despite a solid 1H for biotech,the sector continues to underperform the S&P500 September 2019 Multiples are down:2019 forward P/Es for large cap biotech S&P500 setting up potential buying opportunities Sentiment around Large Caps seems poor,with concerns about drug pricing,growth,and macro trends Sentiment around SMid Caps is better,as specialists can position around catalysts Valuations are still relatively near all-time highs,and acquisition premiums are higher than ever LC Biotech stocks have recovered from the highs/lows of late 2018-early 2019,but investors seem more cautious in their approach Evan David Seigerman|US Large Cap Biotechnology|evan.seigermancredit- Source:FactSet Relative Performance 201819 YTD,Biotech vs.Key Indices/ETFs 4 1/184/187/1810/181/194/197/19708090100110120130140Price(indexed)FBT ETFS&P 500XBI ETFIBB ETFDRG ETF5 September 2019 Returns for 1H versus 2H have been inconsistent U.S.Biotechnology performance since 2015 Over the past 4 years,there have been uneven returns for Biotech from the front half to the back half of the year Looking towards 2H19,there are several important issues on investors minds that could have a strong impact on sentiment:(1)potential drug pricing legislation,(2)the 2020 presidential election,(3)inverted yield curves and speculation on a slowing economy Source:FactSet,Credit Suisse September 2019 Biotech has underperformed since the 2013-2014 boom Evan David Seigerman|US Large Cap Biotechnology|evan.seigermancredit- Gone are the days of buying a basket of all major biotech names to generate alpha We believe investors can still find upside but should be more discerning In our view,exposure to biotech should focus on a targeted and selective approach to picking stocks Source:FactSet 6 September 2019 Targeted Therapy:Our Approach to Analyzing the Sector 7 September 2019 Coverage Universe at a Glance Evan David Seigerman|US Large Cap Biotechnology|evan.seigermancredit- Source:FactSet,Credit Suisse estimates Top Picks Vertex Neurocrine Most Out of Consensus Biogen Market Cap8/26/2019Target%Upside/Short Interest(US$M)PricePrice(Downside)(%float)Outperform Rated Stocks1VRTXVertex Pharmaceuticals Incorporated$46,431$180.64$213.0017.9%1.7%1NBIXNeurocrine Biosciences,Inc.$9,081$99.16$110.0010.9%4.2%2AMGNAmgen Inc.$123,185$205.41$225.009.5%1.6%3GLPGGalapagos NV 9,174 148.80 174.0016.9%1.2%4AIMTAimmune Therapeutics Inc$1,238$19.76$30.0051.8%31.3%Neutral Rated Stocks1GILDGilead Sciences,Inc.$79,787$63.00$67.006.3%1.2%2INCYIncyte Corporation$17,810$82.81$85.002.6%1.9%3REGNRegeneron Pharmaceuticals,Inc.$30,746$284.73$325.0014.1%3.0%4ALDRAlder Biopharmaceuticals,Inc.$749$8.96$11.0022.8%22.3%Underperform Rated StocksBIIBBiogen Inc.$41,272$223.76$203.00-9.3%2.1%Top PickTickerCompanyRelative Ranking8 September 2019 Commercial business Targeted Therapy:Our Roadmap to Finding Alpha Evan David Seigerman|US Large Cap Biotechnology|evan.seigermancredit- Pipeline prospects M&A positioning Buyer Target Growing Slowing Leading Lagging We break down each company into three areas of analysis:Vertex Neurocrine Incyte Amgen Biogen Amgen Regeneron Aimmune Neurocrine Incyte Vertex Galapagos Alder Biogen Gilead Flat:Gilead,Regeneron N/A:Aimmune Amgen Regeneron Vertex Neurocrine Aimmune Incyte Galapagos Alder From Strength From Weakness Biogen Gilead 9 September 2019 Targeted Therapy for your portfolio:Overview of Coverage Source:Credit Suisse Estimates 1 Regenerons pipeline revenues are generally subject to collaboration profit sharing agreements;incremental end-user sales do not necessarily get booked as revenues by Regeneron Source:Company data,Credit Suisse estimates Evan David Seigerman|US Large Cap Biotechnology|evan.seigermancredit- RevenueCompanyRating2019E2024EM&AAmgenOPBase Business-Declining$21,882$20,936Buyer-from strength%of total revenue97%79%CS TP:Pipeline-Leading:Biosimilars,Oncology,Migraine;TBD:Allergy/Immunology$668$5,615Deal Capacity:$225%of total revenue3%21%$22B by 2020E;$54B by 2023EBiogen UPBase Business-Declining$13,558$8,909Buyer-from weakness%of total revenue98%88%CS TP:Pipeline-Leading:MS;TBD:Gene Therapy;Lagging:Neuroscience$239$1,175Deal Capacity:$203%of total revenue2%12%$19B by 2020E;$35B by 2023EGileadNBase Business-Flat$21,935$19,231Buyer-from weakness%of total revenue98%87%CS TP:Pipeline-Leading:Infectious Disease;Lagging:NASH,Oncology$495$2,907Deal Capacity:$67%of total revenue2%13%$31B by 2020E;$58B by 2023EVertexOPBase Business-Growing$3,763$5,309Buyer-from strength%of total revenue100%65%CS TP:Pipeline-Leading:Cystic Fibrosis;TBD:Gene Therapy,Pain,Hematology$0$2,839Deal Capacity:$213%of total revenue0%35%$9B by 2020E;$18B by 2023EIncyteNBase Business-Growing$2,021$3,024Target-from strength%of total revenue96%75%CS TP:Pipeline-Leading:Oncology;TBD:Dermatology$79$1,028$1,679M Net Cash as of 2Q19$85%of total revenue4%25%30%-70%Potential PremiumNeurocrineOPBase Business-Growing$748$2,156Target-from strength%of total revenue98%80%CS TP:Pipeline-Leading:Neuroscience;TBD:Gene Therapy$18$545$368M Net Cash as of 2Q19$110%of total revenue5%24%50%-100%Potential PremiumRegeneronNBase Business-Flat$7,510$8,030Buyer-from strength%of total revenueNMNMCS TP:Pipeline1-Leading:Allergy/Immunology;TBD:OncologyNMNMDeal Capacity:$325$15B by 2020E;$25B by 2023EAimmuneOPBase Business-NM$0$0Target-from strength%of total revenueNMNMCS TP:Pipeline-Leading:Peanut Allergy$0$1,091$212M Net Cash as of 2Q19$30100%50%-100%Potential PremiumGalapagosOPBase Business-NM$0$0Target-from strength%of total revenueNMNMCS TP:Pipeline-Leading:Inflammatory Disease$109$834 5.7B Net Cash as of 2Q19 174%of total revenue30%-70%Potential PremiumAlderNBase Business-NM$0$0Target-from strength%of total revenueNMNMCS TP:Pipeline-Leading:MigraineNMNM$221M Net Cash as of 2Q19$11%of total revenue50%-100%Potential Premium10 September 2019 TOP PICK-LARGE CAP:(1)Vertex Pharmaceuticals(VRTX)Outperform|Target Price:$213 Vertex has a differentiated growth profile that we expect will not only drive near-term cash flows,but also allow reinvestment in the business to support longer-term growth.We think that continued commercial execution,pipeline updates and guidance revision should support VRTX shares relative to peers.We expect that updates on the filing and full data set of the triple combination therapy as well as continued progress towards reimbursement in the UK,France and rest of world will drive further upside.Proprietary work to support thesis:Separate modeling of the UK and France opportunity and scenario analysis TOP PICK-SMID CAP:(1)Neurocrine Biosciences,Inc.(NBIX)Outperform|Target Price:$110 Neurocrine is a commercial-stage biotechnology company with two marketed assets,Ingrezza for tardive dyskinesia(TD)and Orilissa for endometriosis(EM),marketed by partner AbbVie.We think that Ingrezza is the best-in-class treatment for TD and expect it will drive revenue and earnings growth over the next few years.We see underappreciated upside potential from the pipeline focused on the central nervous system(CNS),with assets for Parkinsons disease(opicapone and a gene therapy)and congenital adrenal hyperplasia.Among our SMid-cap coverage,Neurocrine is our top pick due to our projected strong revenue growth namely from Ingrezza,additional revenue stream from Orilissa,and solid pipeline(with a favorable risk/reward).Proprietary work to support thesis supported:Expert physician discussions Top Picks(relative ranking)Evan David Seigerman|US Large Cap Biotechnology|evan.seigermancredit- 11 September 2019 (2)Amgen Inc.(AMGN)Outperform|Target Price:$225 We view Amgen as attractive relative to peers for its(1)underappreciated biosimilars business,which could help change the projected base business revenue decline;(2)relative stability vs.large-cap peers,(3)varied and promising pipeline(with novel assets in oncology and immunology),and(4)compelling valuation.Amgen has a good balance of returning capital to shareholders(repurchases,dividends),pipeline potential,and ability(yet not urgent need)to do M&A.(3)Galapagos NV(GLPG)Outperform|Target Price:174 We think the recent Gilead transaction was a good deal for Galapagos,allowing GLPG to realize much of the value from the earlier stage pipeline before further de-risking clinical trials.Beyond filgotinib,we think GLPG1690 has blockbuster potential in IPF.GLPG1972 for OA could be an interesting asset as well,given the large addressable market.With a healthy cash position and an experienced collaborator in Gilead,we see favorable risk/reward,as updates for filgotinib,1690,1972 and Toledo expected in 2H19-2H21 are all potential drivers of upside.(4)Aimmune Therapeutics(AIMT)Outperform|Target Price:$30 Aimmune is the current leader in the treatment of peanut allergy with its late-state asset AR101.We believe that AR101(an oral immunotherapy)is likely to be approved as a therapy to reduce risk from accidental exposure in children and adults with peanut allergy.The only competitor to Aimmune,DBV Therapeutics,is at least one year behind,following the voluntary withdrawal of its BLA for a competitive product(Viaskin peanut)in December 2018.Overall,we expect AIMT shares to continue to Outperform as we get closer to launch,which is expected by late 2019/early 2020.Beyond peanut allergy,Aimmune is also pursuing development of AR201 for the treatment of egg allergy.Outperform Rated Stocks(relative ranking)Evan David Seigerman|US Large Cap Biotechnology|evan.seigermancredit- 12 September 2019(1)Gilead Sciences(GILD)Neutral|Target Price:$67 Our Neutral rating is predicated on three main issues:1)we like the base HIV business,but do not see outsized growth that would significantly alter earnings projections,2)cell-therapy is an important platform,but sales from Yescarta are unlikely to generate revenues akin to Sovaldi/Harvoni in 2015,and 3)unlike Biogen(Underperform),we think the forward P/E multiple is somewhat protected from further contraction;however,with a new strategic vision or acquisition we could see expansion.(2)Incyte Corporation(INCY)Neutral|Target Price:$85 Incyte has begun to find its way back to pipeline execution after the failure of epacadostat in 2018.However,we need more clinical evidence and trial execution in its pipeline to be more positive on the stock.We like the Jakafi franchise and revenue growth profile but see this opportunity as fairly valued.We find it difficult to point to a specific pipeline asset on which we have high conviction from clinical and commercial perspectives.Relative to SMid-cap peers,we rate INCY Neutral,as we think there is better pipeline risk/reward and commercial business upside elsewhere (3)Regeneron Pharmaceuticals(REGN)Neutral|Target Price:$325 On th