2025-05-29-Jefferies-卫材（4523）_因乐卫玛专利胜诉上调预期和目标价；重申持有_11页_231kb

Document Summary: Eisai and Related Companies

Core Content

This document provides a detailed analysis of Eisai's financial performance, future estimates, and investment outlook, particularly focusing on the implications of the recent patent win for Lenvima and the ongoing challenges with Alzheimer's treatment Leqembi. It also includes valuation models, financial forecasts, and insights on other companies like Dr. Reddy's Laboratories, Merck & Co Inc., and Torrent Pharmaceuticals Ltd.

Key Points

• Lenvima Patent Win:
  Eisai's New Jersey District Court has upheld the validity of the "547 patent" for Lenvima, preventing generics firm Shilpa from launching a generic version even after the basic patents expire in September 2026. This win has led to a price target (PT) increase from ¥3,600 to ¥4,200, representing a 4% potential upside, with the rating reiterated as Hold.

• Market Reaction:
  Eisai's shares rose by 3% (¥43) after the news, outperforming the Topix by 1.5%. The estimated value of the news is about ¥600 per share, which is added to the previous PT.

• Uncertainty and Sales Assumptions:
  While the patent win is positive, uncertainty remains due to:

  • The possibility of Shilpa appealing the decision.
  • Eisai's ongoing lawsuits against Dr Reddy's and Torrent.
  • The assumption that US sales of Lenvima will decline modestly at first and then sharply from 2036 onwards.
  • The substantial copro payments to Merck, which reduce profitability in the US market.

• Investment Thesis:
  Leqembi is the biggest swing factor for Eisai, with estimated global peak sales of ¥264bn by FY3/34, significantly lower than the Visible Alpha consensus of ¥519bn. The DCF-based PT of ¥4,200 assumes a WACC of 5% and terminal growth rate of 0%.

• Price Target Scenarios:

  • Base Case: ¥4,200 (+4%).
  • Upside Scenario: ¥5,000 (+24%) if WACC is 4%.
  • Downside Scenario: ¥3,700 (-8%) if WACC is 6%.

• Company Valuation and Multiples:

  • P/E: 24.7 to 11.4.
  • P/B: 1.4 to 1.2.
  • P/S: 1.5 to 1.2.
  • EV/EBITDA: 13.9 to 5.3.
  • EV/Sales: 1.4 to 1.0.
  • ROE: 5.4% to 12.2%.
  • Debt/Equity: 22.3% to 19.8%.
  • Net Debt/Equity: -9.3% to -26.7%.

• Sales Projections:

  • Neurology: Sales are expected to decline over time, with Leqembi being a major driver.
  • Oncology: Lenvima sales are projected to decrease, with US sales being particularly impacted by the patent win and copro payments.
  • Other Products: Sales of drugs like Aricept, Methycobal, and Dayvigo are forecasted with modest declines.

• Financial Performance:

  • Operating Profit (OP): Expected to grow significantly, reaching ¥134,711 million by FY3/34.
  • Pre-tax Profit: Projected to increase from ¥61,065 million to ¥137,563 million.
  • Net Profit to Owners: Expected to rise from ¥46,432 million to ¥100,072 million.

• Risks:

  • Leqembi Commercial Failure: The biggest risk to Eisai's share price.
  • Sales Estimates: Potential underperformance compared to forecasts.
  • Regulatory Changes: Affecting pricing in key markets like the US.
  • Competition and Legal Challenges: Ongoing lawsuits with generic firms.

• Other Companies Mentioned:

  • Dr. Reddy's Laboratories: Valued at INR1,243.30, rated UNDERPERFORM.
  • Merck & Co Inc.: Rated BUY at $76.17.
  • Torrent Pharmaceuticals Ltd: Valued at INR3,162.20, rated BUY.

Investment Recommendation

• Eisai (4523 JP): Hold at ¥4,200.
• Dr. Reddy's Laboratories (DRRD IN): UNDERPERFORM at INR1,243.30.
• Merck & Co Inc. (MRK): BUY at $76.17.
• Torrent Pharmaceuticals Ltd (TRP IN): BUY at INR3,162.20.

Analysts

• Stephen Barker and Miyabi Yamakita are the equity analysts who authored the report.
• Both analysts are employed by Jefferies (Japan) Limited, a non-US affiliate of Jefferies LLC and not registered with FINRA.
• The analysts are not subject to FINRA Rule 2241, which governs communications with subject companies.

Valuation Methodology

• Price Targets are based on DCF, EBITDA, EPS, and other financial metrics.
• The DCF-based PT for Eisai assumes a WACC of 5% and terminal growth rate of 0%.
• Ratings consider factors like market capitalization, growth, volatility, and expected total return.

Summary of Key Financials

Conclusion

The patent win for Lenvima has positively impacted Eisai's stock price and valuation, but the company faces ongoing challenges with Leqembi's commercial success and regulatory pressures. The analysts reiterate a Hold rating with a revised PT of ¥4,200, while also providing insights on other companies in the pharmaceutical sector.