Chugai's Third-Quarter Results in Line With Expectations; Fair Value Estimate Unchanged

Narrow-moat Chugai Pharmaceutical's third-quarter results were in line with our expectations. Revenue of JPY 225 million was down 21.6% year on year. The decline was due to the lumpiness of COVID-19-related sales, namely Ronapreve (neutralizing antibodies) and Actemra (IL-6 inhibitor) exports to Roche. The company expects to supply Ronapreve to the Japanese government in the fourth quarter and said Actemra exports were delayed due to manufacturing timing. The company’s guidance suggests a JPY 140 million order for Ronapreve in the fourth quarter, although we are more conservative since this cocktail does not seem to have strong efficacy against omicron subvariants.