Xbrane – Our Top Trade Idea for 2023/24

Xbrane is a leading Swedish biosimilar with a 1.9 billion SEK market capitalization and 1.6 billion SEK enterprise value. Xbrane has an EU approval for launch of Ximluci, a Lucentis Biosimilar. The product lunch is scheduled for 1Q2023. Expect material re-rating as the sales come in. 3-4x times return candidate over 2 years horizon.

Norweigan brokers are bullish on Xbrane:

1. DNB has a price target of 160-180 SEK. DNB forecasts 2023 Revenues of 349 million SEK and EBITDA of 100 million SEK.
2. Pareto has a price target of 245 SEK. Pareto forecasts 2023 Revenues of 898 million SEK and EBITDA of 550 million SEK.

Pareto summary of their case for Xbrane:

1. the European launch of Ximluci ahead in Q1 2023,
2. a differentiated platform,
3. outstanding partners,
4. a growing pipeline without growing costs (due to partners),
5. 5-10x undervalued compared to peers Formycon and Alvotech and
6. a good cash position, we see green times ahead for Xbrane’s share price.

We thus reiterate our Buy rating on XBRANE with a target price of SEK 245.

Summary from recent presentations/Capital markets day:

Xbrane product launch strategy for Ximluci (Lucentis biosimilar)

1. Stada is doing all the sales, marketing, and Sales support in Europe
2. Xbrane supports Stada and ensures Stada prepares and invests adequately in the lunch
3. Stada is PE owned, its owners are very commercial. Communication is very good.
4. Xbrane is responsible for the production
5. Xbrane started production already in July (post-patent expiry)
6. The launch is in Q1 next year
7. By then, Xbrane will be in a position to supply Stada with the quantity they require
8. Stada will not start selling in all countries at the same time – the product will be available gradually in all EU countries
9. Lucentis is reimbursed; therefore, its biosimilars are automatically reimbursed in all EU countries where  Lucentis is reimbursed
10. Xbrane presentations include graphs of biosimilars market share penetration in time
11. In general, biosimilars reach market share 60-70% market share within three years
12. Xbrane believes Lucentis will lose 40% of its volumes to biosimilars within 12 months of the launch (as has happened in recent launches of biosimilars in Europe)
13. Xbrane’s base case is that Biosimilars will have 75% share of Lucentis volumes within 3 years. Xbrane believes they will have 1/3 of that = 25% share of Lucentis volumes
14. Xbrane will file the US application before end of this year. It will take 12 months to get it approved. Start of US sales expected in early 2024.
15. Xbrane has a very strong partner for the US – Bausch and Lomb.

Our strategy

We are very bullish on Xbrane. We have a small position now. We will build a material position by the end of Q1. We have made material profits on trading Xbrane in 2021. I believe we will make more significant profits in 2023/24.

Disclosure: 

The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.