Sobi Earnings: Immunology Business Drives Sales Decline, Shares Look Fairly Valued

Sobi reported first-quarter results that put it on track to meet our estimates for the full year, and we’re not making any changes to our SEK 252 fair value estimate. Solid performance for the firm’s hemophilia drugs Elocta (up 9% at constant currencies) and Alprolix (up 16%) helped support 5% overall hematology growth, but Kineret’s shrinking use as a COVID-19 treatment led to a 9% decline in immunology, swinging the firm to a 2% overall sales decline at constant currencies. Despite generic pressure to hematology drug Doptelet in China and pricing pressure to the firm’s core hemophilia drugs, we think Sobi has a solid mix of newer products to help support growth over the next few years, although we believe the firm needs to supplement its portfolio with tuck-in acquisitions in order to support long-term growth. While Sobi has made progress diversifying its portfolio and building a pipeline, we still think the firm is in the process of building a moat.