Fresenius Med.Care: One overhand is removed – Bardoxolone stopped

Fair Value EUR64 (+8%)      BUY
News published on October Friday 19, 2012
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ANALYSIS

  • Abbott and Reata announced yesterday afternoon that the Bardoxolone phase III trial BEACON has been stopped by the Independent Data Monitoring Committee (IDMC) due to serious adverse events. Given this announcement, we basically see no chance of the product ever reaching the market.
  • This investigational drug was in-licensed from Reata by Abbott for USD450m for ex-US rights and looked promising in a phase 2b, with a statistically significant positive effect on GFR. Despite these attractive clinical results, the phase III design was much more challenging, looking at outcomes such as time to dialysis or death. Results were due to be published during H1 2013.
  • We acknowledge that there is no direct financial impact on FME but this is clearly good news as positive results could have  aused uncertainties on the impact of the product on FME's business.
VALUATION
  • Our DCF valuation points to a Fair Value of EUR64.
NEXT CATALYSTS
  • Q3 results: 31st October 2012
  • H2: Request for Proposal from CMS on Integrated Care
Mathieu Chabert, mchabert@bryangarnier.com

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