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> cut FY24 revenue guidance by 1% to ¥314.6B (-43% YoY) and raised operating loss guidance by ¥199B to ¥355B. Impairment loss of ¥180B negatively impacted bottomline.</li>
<li>Sumitomo has set FY25 revenue guidance at ¥338B (down 27% from MTBP 2027) and core operating profit at ¥1B (down 98% from MTBP 2027). The company suspended FY25 dividend.</li>
<li>The company will announce FY25 guidance for operating and net profits during the announcement of FY24 result, scheduled for May 14, 2024.</li>
</ul>



Sumitomo Pharma (4506 JP) cut FY24 revenue guidance by 1% to ¥314.6B (-43% YoY) and raised operating loss guidance by ¥199B to ¥355B. Impairment loss of ¥180B negatively impacted bottomline.
Sumitomo has set FY25 revenue guidance at ¥338B (down 27% from MTBP 2027) and core operating profit at ¥1B (down 98% from MTBP 2027). The company suspended FY25 dividend.
The company will announce FY25 guidance for operating and net profits during the announcement of FY24 result, scheduled for May 14, 2024.


Sumitomo Pharma (4506 JP): FY24 Guidance Revised Lower; Further Cost Cuts in FY25 to Turn Profitable

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<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

Japanese Equities, Azabu Research

Michael Allen

Japanese Equities

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

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<li>Sumitomo issued new guidance for the year to 3/25 that was 40% higher than consensus estimates, but the stock cratered almost 5%.</li>
<li>We were able to think of at least 6 explanations for this odd reaction - all of them irrational.  </li>
<li>A reasonable person listening to the call should have been pleased by almost all that was new information. </li>
</ul>


Sumitomo issued new guidance for the year to 3/25 that was 40% higher than consensus estimates, but the stock cratered almost 5%.
We were able to think of at least 6 explanations for this odd reaction - all of them irrational.  
A reasonable person listening to the call should have been pleased by almost all that was new information. 


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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

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)