IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a> recommended <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a>’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price. </li>
<li>The timing looks opportunistic as Fancl's shares are down 20% YTD. The offer period is from 17 June to 29 July.</li>
<li>While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light. </li>
</ul>



Fancl Corp (4921 JP) recommended Kirin Holdings (2503 JP)’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price. 
The timing looks opportunistic as Fancl's shares are down 20% YTD. The offer period is from 17 June to 29 July.
While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light. 


Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/eisai-co-ltd" target="_blank" data-smartkarma-citation="entities:21001:1" rel="noopener">Eisai Co Ltd (4523 JP)</a> has guided for FY25 Leqembi revenue of ¥56.5B (~$366M), with ¥43.5B from U.S., and ¥10.0B from Japan. In FY24, Leqembi reported worldwide revenue of ¥4.2B.</li>
<li>Leqembi is expected to grow significantly due to increase in prescriptions following the progress in the development of AD diagnosis and treatment pathways in the U.S. and Japan.</li>
<li>The current rally can be short lived, as the competitor drug is expected to get FDA approval in 3Q24.</li>
</ul>



Eisai Co Ltd (4523 JP) has guided for FY25 Leqembi revenue of ¥56.5B (~$366M), with ¥43.5B from U.S., and ¥10.0B from Japan. In FY24, Leqembi reported worldwide revenue of ¥4.2B.
Leqembi is expected to grow significantly due to increase in prescriptions following the progress in the development of AD diagnosis and treatment pathways in the U.S. and Japan.
The current rally can be short lived, as the competitor drug is expected to get FDA approval in 3Q24.


Eisai Co Ltd (4523 JP): Leqembi Is Gathering Momentum; Imminent Competition May Spoil the Party

<ul>
<li>
<a href="https://www.smartkarma.com/entities/astellas-pharma-inc" target="_blank" data-smartkarma-citation="entities:6091:1" rel="noopener">Astellas Pharma (4503 JP)</a> reported ¥85B revenue increase in FY24 over FY23, while Fx impacted the revenue positively by ¥96B. In local currency terms, the U.S. revenue declined 5% YoY.</li>
<li>FY24 operating and net profit declined 80%+, due to amortization and impairment loss of intangible assets. Astellas is changing accounting policy to smoothen core operating and net profits in FY25.</li>
<li>For FY25, Astellas guided for just 3% revenue growth. Core operating profit is expected to decline 10%, while net profit is anticipated to take a bigger hit and decrease 17%.</li>
</ul>



Astellas Pharma (4503 JP) reported ¥85B revenue increase in FY24 over FY23, while Fx impacted the revenue positively by ¥96B. In local currency terms, the U.S. revenue declined 5% YoY.
FY24 operating and net profit declined 80%+, due to amortization and impairment loss of intangible assets. Astellas is changing accounting policy to smoothen core operating and net profits in FY25.
For FY25, Astellas guided for just 3% revenue growth. Core operating profit is expected to decline 10%, while net profit is anticipated to take a bigger hit and decrease 17%.


Astellas Pharma (4503 JP): Fx Drives FY24 Revenue; Impairment Loss Dents Profits; Pain to Continue

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bristol-myers-squibb-co" target="_blank" data-smartkarma-citation="entities:1133:1" rel="noopener">Bristol Myers Squibb Co (BMY US)</a> is acquiring <a href="https://www.smartkarma.com/entities/karuna-therapeutics-inc" target="_blank" data-smartkarma-citation="entities:28720:1" rel="noopener">Karuna Therapeutics Inc (KRTX US)</a> for $330/share in cash for equity value of ~$14B. The transaction is expected to close in 1H24. </li>
<li>Karuna’s lead asset, KarXT has FDA action date of September 26, 2024 for the treatment of schizophrenia in adults. KarXT has peak annual sales potential of $6–7B.</li>
<li>Considering strong clinical efficacy and favorable risk profile of KarXT, the deal seems to be fairly valued. Current market price of Karuna shares of $318.41 represents absolute spread of ~3.6%.</li>
</ul>



Bristol Myers Squibb Co (BMY US) is acquiring Karuna Therapeutics Inc (KRTX US) for $330/share in cash for equity value of ~$14B. The transaction is expected to close in 1H24. 
Karuna’s lead asset, KarXT has FDA action date of September 26, 2024 for the treatment of schizophrenia in adults. KarXT has peak annual sales potential of $6–7B.
Considering strong clinical efficacy and favorable risk profile of KarXT, the deal seems to be fairly valued. Current market price of Karuna shares of $318.41 represents absolute spread of ~3.6%.


Karuna Therapeutics (KRTX US): BMS Acquisition Offers Decent Short-Term Trading Opportunity

<ul>
<li>
<a href="https://www.smartkarma.com/entities/otsuka-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12292:1" rel="noopener">Otsuka Holdings (4578 JP)</a> ended 2023 on a mixed note. Both revenue and business profit were ahead of guidance. However, operating and net profits missed guidance, dragged by impairment loss.</li>
<li>Four global pharmaceutical products as well as the nutraceuticals business led the business performance. Even after excluding the impact of foreign exchange, the business remained above plan.</li>
<li>The company has guided for 6% YoY growth in 2024 revenue and business profit to ¥2,140B and ¥330B, respectively. 2024 net profit is expected to jump 106% YoY to ¥250B.</li>
</ul>



Otsuka Holdings (4578 JP) ended 2023 on a mixed note. Both revenue and business profit were ahead of guidance. However, operating and net profits missed guidance, dragged by impairment loss.
Four global pharmaceutical products as well as the nutraceuticals business led the business performance. Even after excluding the impact of foreign exchange, the business remained above plan.
The company has guided for 6% YoY growth in 2024 revenue and business profit to ¥2,140B and ¥330B, respectively. 2024 net profit is expected to jump 106% YoY to ¥250B.


Otsuka Holdings (4578 JP): Impairment Charges Bite 2023 Profit; 2024 Guidance Initiated

Japan

Otsuka Holdings Co Ltd is a pharmaceutical company. The Company manufactures, sells, imports and exports pharmaceutical products, clinical testing, and medical equipment for intractable diseases.

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Otsuka Holdings (4578 JT)

Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

The timing is opportunistic. While the offer is attractive compared to peer multiples, it is light compared to historical trading ranges. Securing...

Arun George

Eisai Co Ltd (4523 JP): Leqembi Is Gathering Momentum; Imminent Competition May Spoil the Party

Eisai expects 13x jump in Leqembi revenue for FY25 to ¥56.5B, driven by progress in AD treatment pathways in U.S. and Japan, and China launch. A...

Tina Banerjee

Astellas Pharma (4503 JP): Fx Drives FY24 Revenue; Impairment Loss Dents Profits; Pain to Continue

For FY25, Astellas Pharma guided for just 3% revenue growth. FY25 core operating profit is expected to decline 10%, while net profit is anticipated...

Tina Banerjee

Karuna Therapeutics (KRTX US): BMS Acquisition Offers Decent Short-Term Trading Opportunity

BMS is acquiring Karuna Therapeutics for $330/share in cash, with the deal expected to close in 1H24. Current market price of Karuna shares...

Tina Banerjee

Otsuka Holdings (4578 JP): Impairment Charges Bite 2023 Profit; 2024 Guidance Initiated

Otsuka missed 2023 operating and net profit targets due to impairment loss. 6% YoY growth is expected for 2024 revenue and business profit. Net...

Tina Banerjee

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

The timing is opportunistic. While the offer is attractive compared to peer multiples, it is light compared to historical trading ranges. Securing...

Arun George

Eisai Co Ltd (4523 JP): Leqembi Is Gathering Momentum; Imminent Competition May Spoil the Party

​Eisai expects 13x jump in Leqembi revenue for FY25 to ¥56.5B, driven by progress in AD treatment pathways in U.S. and Japan, and China launch. A...

Tina Banerjee

Astellas Pharma (4503 JP): Fx Drives FY24 Revenue; Impairment Loss Dents Profits; Pain to Continue

For FY25, Astellas Pharma guided for just 3% revenue growth. FY25 core operating profit is expected to decline 10%, while net profit is anticipated...

Tina Banerjee

Karuna Therapeutics (KRTX US): BMS Acquisition Offers Decent Short-Term Trading Opportunity

​BMS is acquiring Karuna Therapeutics for $330/share in cash, with the deal expected to close in 1H24. Current market price of Karuna shares...

Tina Banerjee

Otsuka Holdings (4578 JP): Impairment Charges Bite 2023 Profit; 2024 Guidance Initiated

​Otsuka missed 2023 operating and net profit targets due to impairment loss. 6% YoY growth is expected for 2024 revenue and business profit. Net...

Tina Banerjee

Eisai expects 13x jump in Leqembi revenue for FY25 to ¥56.5B, driven by progress in AD treatment pathways in U.S. and Japan, and China launch. A...

BMS is acquiring Karuna Therapeutics for $330/share in cash, with the deal expected to close in 1H24. Current market price of Karuna shares...

Otsuka missed 2023 operating and net profit targets due to impairment loss. 6% YoY growth is expected for 2024 revenue and business profit. Net...