■ Big forecast revenue upgrade
■ Trial data due
■ US launch for Voraxaze
A trading update from
That largely reflects better than expected royalties from its BenefiX haemophilia drug, which benefited from rapid de-stocking prior to the drug going off-patent. Alongside this was a strong performance from prostate cancer drug Zytiga, which will soon launch in the US. In addition, the upgraded sales forecasts include about £10m in one-off milestone payments.
BTG's development partners have also enjoyed a run of positive regulatory decisions this year – which has helped build momentum. As well as Zytiga, renal treatment Voraxaze was approved in January and will be rolled out in the US market by the end of this month. Meanwhile, Sanofi-Aventis expects to file Lemtrada (Campath) as a treatment for multiple sclerosis with US and EU regulators by the second quarter. First results are also expected from the self-funded Phase III trials for its Varisolve varicose veins product. BTG will announce full-year results on 21 May.
Peel Hunt says...
Hold. Significant upgrades in expected revenues for full-year 2012 has led us to improve our cash profit estimate from £32m to £52m – leading to a year-end net cash position in excess of £100m, with adjusted EPS anticipated to be 9.1p. However, we remain cautious about the outlook for 2012. For example, anticipated success for the next two Varisolve trials is largely in the price while, with AstraZeneca's Phase II trial for CytoFab, we think there's a strong chance the drug will fail to extend survival. The shares are now rated on an enterprise value to sales multiple of five times and we continue to think the risk/reward profile is fairly balanced.
Jefferies Securities says...
Buy. Newsflow momentum, in addition to impressive growth, is likely to drive significant outperformance. The group is now entering a period of considerable growth and sustained profitability and we believe that – when valuing the shares – it is unrepresentative to apply near-term multiples. Accordingly, we now value BTG by applying a discounted enterprise value to cash profits multiple for full-year 2019 – by which time the group should be in a more stable growth phase – and a PE multiple based on historic biopharma multiples. That yields a 410p price target and we retain our buy recommendation.
BTG's results are likely to be influenced by some one-off gains – but the group is now delivering a fundamentally robust underlying performance. Add that to expected newsflow from trial data and product launches, and the shares – at 349p – finally have a catalyst to re-rate. Buy.
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