RBC says AI demand is emerging as drug supply-chain growth driver
Sanofi expanded its alliance with Regeneron Pharmaceuticals on terms that give the French drugmaker access to four drug candidates invented by its U.S. partner: $1 billion paid upfront, with up to $7 billion more subject to certain targets. J.P. Morgan analysts said the conclusion of the negotiations is positive for Sanofi and that investors are likely to switch their focus to the company’s moves to strengthen its business through dealmaking. Sanofi shares rose 2%, according to the note.
Jefferies analysts described the expansion as the first step toward addressing Sanofi’s long-term outlook and a clear sign of progress under new Chief Executive Belen Garijo. “While the assets are early-stage, the expansion should be viewed positively, as it signals the new CEO’s proactive focus on the most important yet addressable uncertainties investors face, as well as the speed of progress,” they wrote. Potential acquisitions and a settlement to delay the arrival of copycat versions of the alliance’s blockbuster drug Dupixent are other key steps Sanofi needs to take to address the sales hole left by that medicine’s patent expiration between 2031 and 2032, the analysts added. Jefferies, in a separate note, put the gain at 0.6%.
Investors are dialing up their bets on the life-sciences industry as AI-related demand emerges as a growth driver for lab-tools makers and other companies in the drug supply chain, according to RBC Capital Markets analysts. Recent comments from company executives suggest the AI demand is moving from theoretical to evidenced, and traditional pharmaceutical companies and AI-native drug discovery startups are investing at a scale that will require a jump in biological data generation, the analysts said. “The demand signal differs by position in the value chain: research and labs now, with instruments first and consumables a few quarters after, preclinical [contract research organizations] picking up volume as new assets progress faster through the research phase, and then [contract drug manufacturing organizations] and bioprocessing companies last,” they added.
AstraZeneca is hedging against a key threat to its antibody drug conjugate portfolio through its collaboration with Summit Therapeutics, Citi analysts said. The agreement has limited immediate impact but is a sensible move by the U.K. drugmaker in case medicines like Summit’s ivonescimab — known as PD-1/VEGF — become an alternative backbone therapy to existing treatments called PD-1 and PD-L1, the analysts said. AstraZeneca is testing its Datroway antibody drug conjugate in combination with its PD-L1 medicine Imfinzi for lung cancer in a late-stage clinical trial, and its stake in Summit gives it exposure to PD-1/VEGF in the event the drug class takes off, they added. AstraZeneca shares rose 0.1%.
Morgans analyst Scott Power said a more than 20% fall in the share price of Imricor Medical Systems since it entered the ASX 300 index in early September creates a buying opportunity for investors. Imricor shares closed at A$1.585 after trading as high as A$2.07 in August. Morgans suggested seasonal weakness and rising interest rates may have contributed to the decline, while recent news flow has been positive. “As we move into a seasonally stronger part of the year, together with our view that material news flow (NorthStar orders, submit clinical data, FDA approval) is expected, we believe the share price should move back over A$2.00,” Power said. Morgans holds a speculative buy call on the stock.