VTRS Details

Viatris Inc. (NASDAQ: VTRS) is a healthcare company that focuses on providing patients in over 165 countries with access to medicines and long-term treatments. Its portfolio, which is separated into Brands, Complex Generics and Biosimilars, and Generic divisions, contains approximately 1,400 authorized compounds across a variety of therapeutic areas that tackle both communicable and non-communicable disorders. VTRS was formed in November 2020 through the combination of Mylan N.V. and the Upjohn business (previously part of Pfizer Inc.) and was listed on the NASDAQ on November 17, 2020. As of October 05, 2021, the company's market capitalization stood at USD 16.24 billion.

Dismissal of EpiPen Class Action: On July 27, 2021, VTRS announced that the US District Court for the District of Kansas issued a decision to dismiss the class-action lawsuit against Mylan (and Pfizer) relating to its EpiPen products. The court sided with the company, stating that KPH lacked legal standing to assert the claims in its lawsuit and dismissed the case entirely, with KPH having 30 days to file a limited amended complaint.

Semglee Receives FDA Approval: On July 28, 2021, the company, along with Biocon Biologics Ltd., announced that Semglee (insulin glargine-yfgn) injection had been approved by the US Food and Drug Administration (FDA) as the first interchangeable biosimilar medicine under the 351(k) regulatory pathway. The interchangeable Semglee product will be made available by the end of FY21, allowing Semglee to be substituted for the reference product, Lantus, at the pharmacy counter. Before the FDA may approve another biosimilar interchangeable with Lantus, VTRS is eligible for exclusivity for 12 months.

Q2FY21 Results: The company's total revenues in Q2FY21 (ended June 30, 2021) were USD 4.58 billion, representing an increase of 67.61% compared to USD 2.73 billion generated in Q2FY20, resulting from USD 1.63 billion sales from the Upjohn business, plus additional new product sales during the current quarter. Net loss for Q2FY21 was USD 279.2 million vs. a net income of USD 39.4 million reported in Q2FY20. VTRS exited the quarter with a cash balance (including fixed income and equity securities) of USD 762.0 million, with total debt amounting to USD 24.36 billion.

Q2FY21 Key Product Sales (Source: Q2FY21 Earnings Presentation, August 09, 2021)

Key Risks: The supply of pharmaceutical medicines is exposed to counterfeit versions being distributed illegally, particularly over the internet. Such illicit counterfeit VTRS treatments, which are often unsafe/ineffective, could harm the company's brand and business. Furthermore, if VTRS' products fail to meet regulatory standards, past approvals may be suspended or withdrawn, thereby impacting the company's financial situation.

Outlook:

FY21 Guidance (in millions) (Source: Q2FY21 Earnings Presentation, August 09, 2021)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

VTRS Daily Technical Chart (Source: REFINITV)

Stock Recommendation: VTRS stock declined 25.41% in the past nine months and is currently leaning towards the lower end of the 52-week range of USD 12.94 to USD 18.86. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 42.05. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 16.82. Considering the significant correction in its stock price, decent fundamentals, extensive product portfolio, and encouraging outlook, we recommend a "Buy" rating on the stock at the closing price of USD 13.50, up 0.52% as of October 05, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.