Key points from this report:
- Buy Biocon. Buy as the stock is forming the right side of a cup base with a pivot at INR 446.95. Recent momentum is driven by the launch of Semglee (insulin glargine injection) with its partner Mylan (MYL). Management targets $1B in biosimilar revenue by FY22 from $270M in FY20, with expected earnings growth of 30% through FY22.
- Strong pipeline. Biocon is the first company from India to have three FDA-approved biosimilars. The company has a rich pipeline of 28 biosimilar products, of which 11 are co-developed with Mylan. As of December 2019, Biocon biosimilars reached 1.29M patients, and the company aims to reach 5M patients by FY22.
- Recent news. Equillium (EQ) has completed a pre-IND meeting with the FDA for the clinical development plans for itolizumab for the potential treatment of hospitalized COVID-19 patients. A phase 3 study is expected to begin in Q4. Itolizumab is an in-licensed drug from Biocon.
- Looking forward. The company will announce Q2 FY20 results in October. For FY20 and FY21, consensus expects EPS growth of 50% and 43%, y/y, respectively