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 80.00 price target.

Abstract
Formycon has published H1/24 results and held a conference call for analysts. Revenue was in line with our expectations at €26.9m (H1/23: €43.8m) while adjusted EBITDA of €-2.1m (H1/23: €1.1m) matched the number published in the FY/24 guidance upgrade of 6 August. In its 6 August press release Formycon raised FY/24 guidance for adjusted EBITDA (EBITDA + the at-equity result) to €-5m to €5m (previously: €-15m to €-5m) due mainly to a stronger than expected contribution from FYB201 (Lucentis biosimilar) to the result of the at–equity accounted bioeq AG. The company also upgraded its guidance for FY/24 working capital from €10m-€20m to €35m-€45m because of an earlier than expected positive opinion from the EMA’s CHMP (Committee for Medicinal Products for Human Use) which indicates that FYB202 (Stelara biosimilar) will be approved in the EU in early rather than late Q4. This means that Formycon will receive a cash milestone in 2024 rather than in 2025. Formycon has also negotiated better payment terms for the clinical development costs of FYB206 (Keytruda biosimilar). FYB201, which was launched in the EU, UK and US in 2022, is only the first of six biosimilars which we expect Formycon to have launched by the end of this decade. Forthcoming biosimilars have higher reference product sales and royalty rates than FYB201. In our view, the most important near-term launch will be the Stelara biosimilar, FYB202, which is expected to receive FDA approval next month. Stelara generated worldwide sales of USD10.9bn in 2023. This compares with USD3.6bn of sales for Lucentis in 2021, before the launch of biosimilars of the drug. Furthermore, Formycon will earn a royalty of 30-40% on FYB202 sales. The current royalty on FYB201 sales is 7-8%. We recommend investors pick up Formycon stock ahead of the lucrative FYB202 launch. We retain our Buy recommendation and price target of €80.