Yesterday, Sanofi (SNY) got a boost when Regeneron (REGN) reported solid trial results for its anti-cholesterol drug alirocumab. Today, it’s getting a lift from a trial data on its dengue fever vaccine. Citigroup’s Peter Verdult and Andrew Baum explain:
Reuters A pest control worker sprayed insecticide to help control the spread of dengue fever in Kuala Lumpur. The second large scale Ph III study conducted in Latin America demonstrated overall efficacy of 61% (42-78% across the four serotypes), and 80% reduction in the risk of hospitalization. Ph III data from a study in Asia was presented earlier this year showing 56% efficacy (35-72% across the four serotyeps), a 89% reduction in dengue hemorrhagic fever, and 67% reduction in the risk of hospitalization. FDA has mandated an efficacy hurdle of >25% for Dengue vaccine candidates seeking approval. Consequently we see regulatory risks for Sanofi's Dengue vaccine as low…
We continue to argue Sanofi offers near term momentum. This is based on scope for pipeline expectations to rise (today's news on Dengue vaccine and recent PCSK9 data should help), coupled with an attractive valuation and earnings upside risk going into Q3. Sanofi trades at a >10% PE discount to the sector yet offers comparable growth (5YR EPS CAGR 10%). That said, we retain our Neutral rating as we have higher conviction on the LT fundamentals elsewhere in the sector, and remain concerned about the sustainability of growth for the diabetes franchise (>30% of profits) post 2017. Preferred Pharma plays include AstraZeneca (AZN), Bayer, Novo Nordisk (NVO) and UCB. Bristol-Myers Squibb (BMY) and Pfizer (PFE) are our preferred US plays.
Shares of Sanofi have climbed 1.1% to $55.58 at 10:30 a.m., while Regenron has gained 0.8% to $362.32, AstraZeneca has advanced 1.1% to $75.43, NovoNordisk has risen 0.9% to $45.79, Bristol-Myers Squibb is unchanged at $50.58 and Pfizer is up 0.4% at $29.37.
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