Eisai: Margin Of Safety From Very Modest Penetration Expectations

seekingalpha07-04

Eisai's story revolves around Leqembi and Lenvima, with Leqembi launching in Japan and expected to reach 10% of necessary revenue for fair value by end of year.Leqembi sales projected to hit 50 ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2448440644?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1450703720/image_1450703720.jpg","is_english":true,"pubTime":"2024-07-04 20:16","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2448440644","market":"hk","top_or_hot":-1,"title":"Eisai: Margin Of Safety From Very Modest Penetration Expectations","media":"seekingalpha","content":"<div>\n<p>Eisai's story revolves around Leqembi and Lenvima, with Leqembi launching in Japan and expected to reach 10% of necessary revenue for fair value by end of year.Leqembi sales projected to hit 50 ...</p>\n\n<a href=\"https://seekingalpha.com/article/4702431-eisai-margin-of-safety-from-very-modest-penetration-expectations\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Eisai: Margin Of Safety From Very Modest Penetration Expectations</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEisai: Margin Of Safety From Very Modest Penetration Expectations\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-04 20:16 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4702431-eisai-margin-of-safety-from-very-modest-penetration-expectations><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Eisai's story revolves around Leqembi and Lenvima, with Leqembi launching in Japan and expected to reach 10% of necessary revenue for fair value by end of year.Leqembi sales projected to hit 50 ...</p>\n\n<a href=\"https://seekingalpha.com/article/4702431-eisai-margin-of-safety-from-very-modest-penetration-expectations\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4007","symbol_name":"制药","start_time":0,"source_url":"https://seekingalpha.com/article/4702431-eisai-margin-of-safety-from-very-modest-penetration-expectations","article_id":"2448440644","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1450703720/image_1450703720.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2448440644","pubTimestamp":1720095364,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Eisai's story revolves around Leqembi and Lenvima, with Leqembi launching in Japan and expected to reach 10% of necessary revenue for fair value by end of year.Leqembi sales projected to hit 50 billio","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4007":"制药","ESAIY":"Eisai Co., Ltd.","ESALF":"Eisai Co., Ltd.","VTS":"Vitesse Energy","BK4213":"石油与天然气的勘探与生产"},"translate_title":"卫材：渗透率预期非常温和的安全边际","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ESAIY":1,"ESALF":1,"VTS":1},"content_text":"Eisai's story revolves around Leqembi and Lenvima, with Leqembi launching in Japan and expected to reach 10% of necessary revenue for fair value by end of year.Leqembi sales projected to hit 50 billion JPY by March 2025, contributing to fair value target of 572 billion JPY for Eisai.Assuming only 3.4% penetration in two years' time to get to fair value, assuming no foreign markets for Leqembi and no other revenues besides Lenvima.The margin of safety is quite apparent.Naeblys Eisai (OTCPK:ESALF)(OTCPK:ESAIY) continues to be a story of Leqembi and Lenvima. Since our last coverage of the financials ended December, Leqembi has launched in Japan. The company expects to be able to reach 10% of the revenue runway that we believe would be necessary to achieve fair value by the end of this year. Our calculations assume that only 3.4% of the US market for Leqembi would need to be penetrated in order to achieve fair value, and this is assuming 0% penetration in other geographies including Japan where they just launched, and a host of other European geographies, as well as targets being hit for their other major drug Lenvima. Eisai is looking rather attractive. Latest Earnings As a reminder, Leqembi received approval in the US in July 2023. Japan came through in December 2023. Applications are still outstanding in Europe, Canada, Britain, Australia, Switzerland, South Korea, Singapore, Brazil, Saudi Arabia, HK, India and Russia - but all these will eventually contribute to the typical \"rest of the world\" market that usually comes after the US and before Japan alone. It is really just getting started. Inventories are up as they are getting ready to bring Leqembi to the market. They are a bit behind schedule in getting the drug in patients' hands, although not for lack of demand. There is a waiting list, but physicians and institutions needed to get into the expansion phase of actually making prescriptions. Additionally, with getting past approval barriers in the US and Japan, we would hope for the beginning of declines in organic R&D expense related to these major launches. This should free up some margin, as Leqembi is heavy for the moment in R&D. Overall Leqembi Trajectory (FY Pres) Quite a lot of the revenues are in Japan at this point, which has a large elderly population. At around 600 million JPY over 2.83 billion JPY, it's around 20% which is the typical representation of the Japanese geography in any pharmaceutical mix. Leqembi Japan Trajectory (FY Pres) The company expects Leqembi sales to hit around 50 billion JPY by the end of the next fiscal year ended March 2025, which is around 10% of the sales we forecast are necessary for fair value. Lenvima is also growing thanks to major upticks in EMEA and the Americas, offsetting some weakness in China. It's well on track for 2025 targets of around 500 billion JPY. Revenue Snapshot (FY Pres) Bottom Line We have a sanity check valuation for the company. On the face of it, Eisai is very expensive with a PE above 40x. But that is only because of imminent earnings incoming from Leqembi. Lenvima + Leqembi Valuation Baseline (VTS) Lenvima is currently at 300 billion JPY while Leqembi has just started with 4.3 billion JPY, hoping for 50 billion JPY in one year's time. They have two years to hit the 500 billion target for Lenvima, and what we calculate at the 572 billion JPY fair value target for the emerging Leqembi. Fair Multiple (VTS) As discussed in our previous coverage, this is based on the idea that a fair value for Eisai would be around a 10x EV/Fe 2025 EBITDA multiple. That will require, at typical margins, 572 billion JPY from Leqembi. We took the market for the US as a benchmark for the sanity check. We assume the market size is 8 million patients in total in the US. For fair value, Leqembi only needs to achieve 3.4% penetration into that market, which would not be a great commercial success. So the bar is actually quite low which is a good sign for value investors. Moreover, this is not including revenues coming from Japan and EMEA. Currently, Japan is 20% of Leqembi sales, which gives even more margin for the US-alone 3.4% penetration figure. Then EMEA still needs to be approved, which will almost certainly have a double-digit representation in the mix, creating even more margin. This is also assuming that there are no revenues from Dayvigo, an insomnia treatment, which is currently quite relevant at 41 billion JPY and growing. Also, Halaven is being ignored in our sanity check, which still has relevant share. Same as Fycompa, although it is in decline. They have quite a lot of early-stage stuff in the oncology pipeline as well. They don't have a dead pipeline. With languishing prices, it actually looks like a decent buy right now.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.28.3","shortVersion":"4.28.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2448440644"}