Formycon AG: Transforming deal with ATHOS, next stage of evolution ahead - Buy

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Formycon and ATHOS, the family office of Hexal founders Andreas and Thomas Strüngmann, have reached an agreement that will have a profound transformational impact on Formycon. In a ca. EUR 650m valued transaction, Formycon regains large parts of rights over the biosimilar projects FYB201 and FYB202 it had outlicensed to ATHOS in the past. Moreover, the company strengthens its capabilities in development, approval and commercialization of biosimilars. For a consideration of 4m new Formycon shares and an earn-out component, ATHOS will become a new anchor investor. The transaction reshapes Formycon’s setup and strengthens its position in the biosimilar market with the necessary funds and know-how for further development. As a result of the new license structures, the company can expect higher royalty income from FYB202. Accordingly, the company expects to generate an EBITDA in the tripledigit million range in the mid-term. With the patent expiry of FYB202’s reference product Stelara (2023 in the US, 2024 in Europe), we continue to expect a timely market launch with materially higher royalty income. We come to a new DCF-based PT of EUR 84.00 (old: EUR 75.00). Our recommendation remains BUY.

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