First Berlin – Formycon AG Research Update (19/05/2020)

First Berlin Equity Research has published a research update on Formycon AG (ISIN: DE000A1EWVY8). Analyst Simon Scholes reiterated his BUY rating and maintained his EUR 39.00 price target. Abstract Formycon's 2019 results were close to our forecasts. Revenue was €33.2m (FBe: €35.0m; 2018: €43.0m) while EBIT came in at €-2.3m (FBe: €-2.0m; 2018: €7.1m). The 2018 numbers were boosted by an €8.5m credit relating to FYB's investment in FYB202 during 2013-16. As in 2018, revenue stemmed from fees for development work on the outlicensed biosimilar candidates FYB201 and FYB203 and also from payments for the provision of development services to the FYB202 joint venture. Costs related to the development work on these projects as well as on Formycon's unpartnered biosimilar candidates. We expect an increasing volume of clinical development work on FYB202 and FYB203 to push revenues to €40m this year while increased investment in preclinical projects widens the EBIT loss to €4m. However, resubmission of the FYB201 Biologics License Application remains on track for H2/20, which suggests that the company will enter the royalty phase from 2021/22. We maintain our Buy recommendation and price target of €39.0.