First Berlin Equity Research has published a research update on Formycon AG (ISIN: DE000A1EWVY8). Analyst Simon Scholes reiterated his BUY rating and decreased the price target from EUR 130.00 to EUR 105.00.
Formycon has launched one biosimilar (FYB201; reference product: Lucentis) and has five disclosed biosimilar candidates under development, which we expect to reach the market over the period 2025-2030. We forecast the sum of expensed and capitalised development costs to decline from 2023 and free cashflow to climb as revenues from the new products ramp. We expect the current portfolio to generate free cashflow of over €500m in 2030. This compares with the current enterprise valuation of ca. €930m. We maintain our Buy recommendation, but have reduced the price target from €130 to €105. The two reasons for our price target reduction are firstly that we no longer include the covid antiviral drug candidate FYB207 in our valuation model, and secondly that we now forecast a slower sales ramp for the biosimilar candidates to reflect a longer timelag between drug approval and implementation of reimbursement than we had previously modelled.