Analysis of PharmaMar
Revenues and profits decline in 3Q 2023 but less than expected
The main figures for 3Q 2023 are:
- Revenues 37.5 million euros (-15.1% YoY, consensus 34.5 million euros).
- Which break down into: Yondelis €6.3 million (-61.3%), Zepzelca €5.1 million (+88.9%), Raw materials €4.3 million (+77.4%), Royalties €15.5 million (+11.2%), Licenses and others €6.3 million (-28.6%).
- EBITDA 1.3 million euros (-86%, consensus -0.6 million euros).
- EBIT -0.2 million euros (+11.9 million euros in 3Q 2022, consensus -1.5 million euros).
- BNA +1.5 million euros (-82%, consensus -2.8 million euros).Free cash flow -11.5 million euros (+3.8 million euros in 3Q 2022).
Therefore, in 9M 2023 sales are €117.6M (-19.2% YoY), break down as follows: Yondelis €20.5M (-60.7%), Zepzelca €26.1M (+89%), Raw material €12.5M (-29.9%), Royalties €38.3M (+7.9%), Licenses and Others €20.3M (-22.7%). EBITDA 5.5M€ (-87%), EBIT 1.3M€ (-96%), BNA 8.0M€ (-82%), free cash flow -21M€ (+37.8M€ in 9M 2022) net cash 145.9M€ (-24.3% in 2023). It has dedicated
6.2M€ to buy back 1% of its shares as part of a buyback program covering 3% of its capital, the shares will not be redeemed.
Our assessment of the results is neutral
Sales declined due to the appearance of a generic competing against Yondelis. The evolution of Zepzelca (lurbinectedin), Raw Materials and Royalties is positive. This decline in sales together with an increase in R&D spending (+19% in 9M) is reflected in a decrease in EBITDA, EBIT and BNA. R&D expenditure is related to (i) the confirmatory Phase III LAGOON trial with lurbinectedin in small cell lung cancer, which is progressing in patient recruitment; (ii) an upcoming Phase IIb/III trial (lurbinectedin) for first-line treatment of leiomyosarcoma; (iii) development of other molecules; (iv) Phase III clinical trials with tivanisiran in dry eye associated with Sjögren’s syndrome; (v) age-related macular degeneration.
Recommendation on PharmaMar shares
Neutral recommendation, we adjust our target price to 41.00 €/share.
The shares offer value at these prices, but this depends on the results of the trials expected in 2024 (lurbidictan + irinotecan; Imforte:
lurbidectedin + atezolizumab) and which should progress towards final approval of Zepzelca in the U.S. and other geographies, which we believe could come in 2025. We reiterate our Neutral recommendation with a target price of €41.00/share (unchanged).