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Really good news, only 7 months on this review.

I dont expect it will read across to the other approvals. We could expect Sovlep and Savo in Q1, and Taz in Q3 at best.

Now we need to see how they go to market and how they price with Innovent on a joint treatment regime……I hope they go for the NRDL prices for each drug to maximise the patient uptake - there is little point in pricing at a significant premium for up to 2 years if they want to have the best reputation in China.

If you want to bet on the CMA review, then it may be better to buy CKHH (HK:0001) which is available on many platforms. The deal sets up their exit from the UK mobile market in a couple of years time (the buy/sell options) and they get nearly £2bn cash repaid immediately.

If you look at their mcap, the telecoms entities are not valued at very much so an exit the frees up a lot of capital could have much more effect than on Vod.

Canada is close to final pricing approval.

Interestingly their value assessment states the incremental cost per Quality Adjusted Life Year is CAN 326k over their best supportive care and an 87% reduction is needed to get to their Can$50k value point. We know from the recent assisted death debate that Canada is big on this….so maybe the Canada market will not prove to be a good one for Takeda.

Germany - the IQWIG reported in October there is considerable benefit. The Federal Joint Committee (G-BA) will consider this opinion after three months (mid Jan to early Feb). Not sure if this has a further price negotiation element.

UK - NICE has its second committee meeting about F on 12 December, it is committed to published its determination in late March 25.

The Europeans go slowly…….JP has launched despite receiving its NDA package after Europe.

Amones

The other regulatory issues have been with Amdizalisib which they withdrew from the approvals process in 2023 and the Fruq Gastric supplementary NDA which was withdrawn shortly after the HY results. I know that quite a few NDAs are rejected, but if mgmt trumpet successful regulatory trials they have a problem if they dont get through the regulatory process. I consider it essential that the current batch of approvals all get through. They are either a confirmatory trial (with extension to 1L treatment for Savo) or have a priority review designation which presumably means there is a strong clinical need. Sovlep seems to be the biggest ticket item….although the results are not significantly better than others (durable response) Sovlep is additive for the patients who have already started to not respond to earlier treatments resulting in a large available target market with a need but few alternatives — importantly they have expressed a positive view for it being suitable for a global licence deal, another item for management to deliver - but they may have to do the global trial first.

The CMA has a statutory duty to report its stage 2 investigation on Saturday 7 Dec,

I assume it will publish on Friday before the market opens.

The noises have been positive, so let’s assume the deal is allowed….surely most of this is priced in already? So I dont see that much immediate upside - if the deal works commercially then there may be more upside in 2026/7.

75p close?

Amones,

I think the market just does not know how to value the future assets of the company and it is blown up a down by general market influences surrounding China, interest rates etc. I suspect we will only see price stability once the company has more solid profitable revenues and a wider portfolio of drugs on sale globally.

There are models suggesting a much higher valuation, but these contain many material assumptions which may not come to pass.

The company has failed to gain approval on several occasions despite having achieved a positive registrational study result hence even at this stage can we say with any confidence there will be significant revenue from Sovlep? Or the Fruq+combinations, or what the pricing structure will be for Savo should AZ get approval to launch in the US next year. The Company seems to be confident there will be. So there is still a lot of hope in the price even at these levels….while not forgetting what competitors are getting approval for which is fragmenting and complicating the market.

Not sure what IR can do about it…..they did hold a separate R&D day which came up with the PDAC and Sovlep market analysis….

The other catalyst for a re-rating would be signs of consolidation in the market but I have not seen Beigene / Innovent /others make a move. We have had the fashions of global expansion followed by focusing the pipeline and cost control - surely consolidation will come soon and once one deal emerges others will get FOMO. (Well it is a comforting hope).

Landing the large deal with G4S shows Just can play with the big boys.

It clearly needs some support on such large deals, but it would be good to see them retain more of the business on their next large deal.

Retaining £700m is one of the largest deals in their history on its own. The funded reinsurance provider Brookfield was looking to launch its own UK insurance subsidiary to write such business…..I wonder if they might change their strategy to remain as a financial reinsurer to Just (and others?) or whether they might bid for Just as a quicker way into the market.

The JP launch has triggered another milestone payment, I assume this will be booked at 2024 revenue.

The $300m revenue target would appear secure.,,,,next news will be a Savo NDA acceptance in the US and presumably another milestone payment from AZ.

FT pushing a message of eat or be eaten in the UK asset management market and suggesting SDR can be a consolidator.

There are few deals being made across the industry, but plenty that would benefit from greater scale.

Scale implies more of the market but SDR seems to be suggesting it wants the top slice of the market rather than more of the market which would move them lower in the market…..if SDR is to remain exclusive then it will not be the consolidator, but it might end up the high end purveyor of services to clients of a big bank….ie Eaten bite sized.

This is a sound business that knows what it is about. It seems the acquisition is bedding in well and like for like sales continued the post covid recovery.

£11m of additional costs are a significant % of profit, so price rises of 2-3% are required to cover these costs….

Debts are significant but the burden will ease if the BOE can cut interest rates and this is probably the major driver of the SP for the next couple of years as it increases cash flow and property valuations.

6% increase in the dividend is welcome and a sign of confidence in the business.

Hope they have a decent Christmas trading period. For a long term buy the Non voting shares are my preference.

Hard to say the effect until the big pools are created and how the admin/asset management is parcelled out which may well take 2-3 years to play out.

The insurance side of MNG is likely to lose out for the admin of the DC pots, while it is a large player in the Local Govt schemes it has largely abandoned corporate pensions which I suspect will drive the admin to others.

The asset management side (esp infracap) may gain additional mandates but likely to be quite competitive fee structures.

So lose a low margin admin business and potentially gain a low margin asset pool….I doubt there will be much net effect.

I know that is the official company position…..but is it credible in the medium term? Today’s Q3 sales and upgrade to expectations would have pushed the shares up strongly in normal conditions. Surely if the market believed then the SP would not be where it is?

I expect this will rumble on for a while and if the Chinese authorities have sufficient evidence a substantial fine will follow in due course.

We must assume they are under investigation, why arrest the China CEO (he is the public face of the company) if not to build the case and put pressure on the company….

I expect a large fine but it could take a while to emerge.

Hang Seng increasingly projects what is happening in China and US.China relations.

China needs to refocus its economy inwards as Trump unlikely to favour imports, its stimulus efforts need to be delivered and perhaps increased.

Trump wants China hawks in State and Defense…..

HSI will be buffeted from both sides and will experience higher volatility is my guess.

Strong sales, upgraded forecast for 2024.

Without the China problems this would deserve £130 again.

No sign of a plateau yet.

The cash/capital generation of this company continues to be strong with MCAP rising even as the number of shares shrinks with buy backs.

Looking at marketscreener, would suggest that the SP has run ahead of expectations, ave SP target is 94, but under covered by analysts (only 5). AOP run rate is $14 pa which suggests a PE of 8.

AZ reported Orpathys sales of 11m in Q3 and $36m for the 9m to end September.

Tracking to just under $50m for the full year - as anticipated with increased volumes offset by NRDL pricing. Consistent with AZ statements about China being a lower margin market.

The Savannah result was one of the key pipeline developments in Q3. HCM expects AZ to submit the US NDA later this year which should mean a licensing decision late in 2025 (I would expect both events trigger milestone payments and hopefully lead to significant sales in 2026.

Dadean is right…..the non-voting shares were converted to voting shares and there was an associated share split. The share services I use with charts have managed to recalculate the share price so there is no discontinuity in the price as a result of those changes, but we remember the much higher price……performance has been generally down since 2022 with the shares less that half their recalculated 5 year peak.

The family will not want continued decline which looks like failure, however M&A will also feel like a failure if they lose effective control.

The new CEO is reducing the executive committee, and will update in March about re-organisation work, but he is reiterating the premium service that he wants SDR to be known for. He is taking the high road, going for premium ultra wealthy clients.

AZ has results on Tuesday that I expect will continue to show strong sales in Oncology. The CFO held an analyst call on 6 November which makes some interesting reading….they wanted to address three ongoing Chinese legal actions.

1 Some of their staff seem to have colluded in falsifying genetic screening tests that gave access to Tagrisso off label. Approx 100 staff have been charged of a sales force of 1700 selling Tagrisso.

2 HK gave approval of Tagrisso in earlier lines of treatment ahead of PRC. Again it seems that AZ staff colluded in smuggling HK product for unapproved treatment lines in the mainland,

3 Their PRC CEO is detained - no details given.

Issues 1 and 2 must be generic risks when there are sales targets and differences in regulatory regimes. HCM will need to review their policies and practices.

AZ noted that PRC remained a key market but tried to play down the profitability impact by saying that there were big discounts from NRDL inclusion and difficulties of covering clinical settings across the country resulted in relatively higher sales and marketing expenses. I think this has two (old) implications:

1 China biopharma needs consolidation to improve productivity.

2 Other markets are going to push for further margin reductions.