Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

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<li>
<a href="https://www.smartkarma.com/entities/sumitomo-pharma-co" target="_blank" data-smartkarma-citation="entities:1935:1" rel="noopener">Sumitomo Pharma (4506 JP)</a> still expects FY24 revenue of ¥362 billion (down 35% YoY). This implies H2FY24 revenue of ¥209.4 billion, up 37% compared with H1FY24.</li>
<li>To achieve this target, North America needs to perform strongly. H1FY24 revenue from North America has shown a progress rate of just 35% against full-year FY24 revenue guidance.</li>
<li>With the absence of any strong catalyst, we expect recent rally in Sumitomo shares fueled by encouraging clinical trial result and new drug approval in China, will be short-lived.</li>
</ul>



Sumitomo Pharma (4506 JP) still expects FY24 revenue of ¥362 billion (down 35% YoY). This implies H2FY24 revenue of ¥209.4 billion, up 37% compared with H1FY24.
To achieve this target, North America needs to perform strongly. H1FY24 revenue from North America has shown a progress rate of just 35% against full-year FY24 revenue guidance.
With the absence of any strong catalyst, we expect recent rally in Sumitomo shares fueled by encouraging clinical trial result and new drug approval in China, will be short-lived.


Sumitomo Pharma (4506 JP): FY24 Guidance Seems to Be Aggressive; Downtrend Will Likely To Continue

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<a href="https://www.smartkarma.com/entities/sumitomo-dainippon-pharma-co" target="_blank" data-smartkarma-citation="entities:1935:1" rel="noopener">Sumitomo Dainippon Pharma Co (4506 JP)</a>'s flagship drug Latuda will loss patent protection in the U.S. in 2023. Latuda is already seeing revenue erosion.  </li>
<li>Sumitomo is expected to reap the benefit of new products launched in the U.S. market in 2020 and 2021. These are expected to gradually become next growth drivers.  </li>
<li>The company has a rich pipeline and targets to launch at least two new drugs in the U.S. in next two years.  </li>
</ul>



Sumitomo Dainippon Pharma Co (4506 JP)'s flagship drug Latuda will loss patent protection in the U.S. in 2023. Latuda is already seeing revenue erosion.  
Sumitomo is expected to reap the benefit of new products launched in the U.S. market in 2020 and 2021. These are expected to gradually become next growth drivers.  
The company has a rich pipeline and targets to launch at least two new drugs in the U.S. in next two years.  


Sumitomo Dainippon Pharma Co (4506 JP): New Launches Ensure Post-Latuda Growth Trajectory

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<li>
<a href="https://www.smartkarma.com/entities/sumitomo-pharma-co" target="_blank" data-smartkarma-citation="entities:1935:1" rel="noopener">Sumitomo Pharma (4506 JP)</a> recorded 53% YoY and 21% QoQ decline in Q1FY24 revenue to ¥75.7B, mainly due to the impact of the loss of exclusivity for Latuda in U.S.  </li>
<li>Sumitomo’s schizophrenia drug candidate ulotaront missed primary endpoints in phase 3 trial. Clinical setback on one of the two phase 3 drug candidates is quite a blow for the company.</li>
<li>Sumitomo reaffirmed FY24 guidance, which calls for revenue decline of 35% YoY to ¥362B. The company guided for adjusted operating loss of ¥62B and net loss of ¥80B in FY24.</li>
</ul>



Sumitomo Pharma (4506 JP) recorded 53% YoY and 21% QoQ decline in Q1FY24 revenue to ¥75.7B, mainly due to the impact of the loss of exclusivity for Latuda in U.S.  
Sumitomo’s schizophrenia drug candidate ulotaront missed primary endpoints in phase 3 trial. Clinical setback on one of the two phase 3 drug candidates is quite a blow for the company.
Sumitomo reaffirmed FY24 guidance, which calls for revenue decline of 35% YoY to ¥362B. The company guided for adjusted operating loss of ¥62B and net loss of ¥80B in FY24.


Sumitomo Pharma (4506 JP): Pain Continues with Dwindling Sales; Trial Setback Worsens Outlook

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Japan Petroleum Exploration / Event-Driven

<ul>
<li>Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.</li>
<li>The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.</li>
<li>In this insight I look at several possible rankings for potential large buyback targets.</li>
</ul>


Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.
The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.
In this insight I look at several possible rankings for potential large buyback targets.


JAPAN GOVERNANCE CHANGES II - Who Could Surprise on Buybacks? Quant Rankings

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<li>
<a href="https://www.smartkarma.com/entities/bristol-myers-squibb-co" target="_blank" data-smartkarma-citation="entities:1133:1" rel="noopener">Bristol Myers Squibb Co (BMY US)</a> is acquiring <a href="https://www.smartkarma.com/entities/karuna-therapeutics-inc" target="_blank" data-smartkarma-citation="entities:28720:1" rel="noopener">Karuna Therapeutics Inc (KRTX US)</a> for $330/share in cash for equity value of ~$14B. The transaction is expected to close in 1H24. </li>
<li>Karuna’s lead asset, KarXT has FDA action date of September 26, 2024 for the treatment of schizophrenia in adults. KarXT has peak annual sales potential of $6–7B.</li>
<li>Considering strong clinical efficacy and favorable risk profile of KarXT, the deal seems to be fairly valued. Current market price of Karuna shares of $318.41 represents absolute spread of ~3.6%.</li>
</ul>



Bristol Myers Squibb Co (BMY US) is acquiring Karuna Therapeutics Inc (KRTX US) for $330/share in cash for equity value of ~$14B. The transaction is expected to close in 1H24. 
Karuna’s lead asset, KarXT has FDA action date of September 26, 2024 for the treatment of schizophrenia in adults. KarXT has peak annual sales potential of $6–7B.
Considering strong clinical efficacy and favorable risk profile of KarXT, the deal seems to be fairly valued. Current market price of Karuna shares of $318.41 represents absolute spread of ~3.6%.


Karuna Therapeutics (KRTX US): BMS Acquisition Offers Decent Short-Term Trading Opportunity

Japan

Sumitomo Dainippon Pharma Co., Ltd. mainly manufactures and markets pharmaceuticals for human and veterinary use. The Company also produces and sells livestock feeds, food additives, and chemical products, as well as conducts clinical pathology tests for animals. Sumitomo Dainippon Pharma conducts businesses across worldwide.

Sumitomo Pharma (4506 JP)