Global Healthcare Analyst

Tina Banerjee

Thematic (Sector/Industry)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/samsung-biologics-co-ltd" target="_blank" data-smartkarma-citation="entities:22932:1" rel="noopener">Samsung Biologics (207940 KS)</a> signed a contract manufacturing agreement worth KRW1.7T ($1.2B) with an Asian pharmaceutical company. <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> has announced KRW100B ($72M) share buyback, starting October 28.</li>
<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> received FDA approval for Vyloy for gastric cancer. <a href="https://www.smartkarma.com/entities/shionogi-co-ltd" target="_blank" data-smartkarma-citation="entities:19535:1" rel="noopener">Shionogi &amp; Co (4507 JP)</a> received FDA Fast Track designation for its RSV drug candidate, S-337395.</li>
<li>
<a href="https://www.smartkarma.com/entities/zai-lab-ltd-94df40cf-c15e-462f-b3de-8d2d434ae935" target="_blank" data-smartkarma-citation="entities:36261:1" rel="noopener">Zai Lab (9688 HK)</a> announced positive topline data from global Phase 1a/1b study of ZL-1310 in small cell lung cancer. <a href="https://www.smartkarma.com/entities/legend-biotech-corp" target="_blank" data-smartkarma-citation="entities:28963:1" rel="noopener">Legend Biotech Corp (LEGN US)</a> sheds Genscript Biotech as its majority shareholder.</li>
</ul>



Samsung Biologics (207940 KS) signed a contract manufacturing agreement worth KRW1.7T ($1.2B) with an Asian pharmaceutical company. Celltrion Inc (068270 KS) has announced KRW100B ($72M) share buyback, starting October 28.

Astellas Pharma (4503 JP) received FDA approval for Vyloy for gastric cancer. Shionogi &amp; Co (4507 JP) received FDA Fast Track designation for its RSV drug candidate, S-337395.

Zai Lab (9688 HK) announced positive topline data from global Phase 1a/1b study of ZL-1310 in small cell lung cancer. Legend Biotech Corp (LEGN US) sheds Genscript Biotech as its majority shareholder.


APAC Healthcare Weekly (Oct 27)- Samsung Biologics, Celltrion, Astellas, Otsuka, Legend, and Zai Lab

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sumitomo-pharma-co" target="_blank" data-smartkarma-citation="entities:1935:1" rel="noopener">Sumitomo Pharma (4506 JP)</a> reported double-digit revenue growth in Q1FY25, driven by North America. Operating loss narrowed. Net profit stood at ¥16B in Q1FY25 (Q1FY24 net loss: ¥39B).</li>
<li>Robust performance of key products, gross margin expansion, achievement of sizable benefits from the North America business restructure, and streamlining R&amp;D initiatives are the key positives in Q1FY25 result.</li>
<li>Sumitomo is expected to revise FY25 guidance during H1FY25 result announcement. Better-than-expected performance from key drugs as well as favorable Fx should lead to upward revision of revenue guidance.</li>
</ul>



Sumitomo Pharma (4506 JP) reported double-digit revenue growth in Q1FY25, driven by North America. Operating loss narrowed. Net profit stood at ¥16B in Q1FY25 (Q1FY24 net loss: ¥39B).
Robust performance of key products, gross margin expansion, achievement of sizable benefits from the North America business restructure, and streamlining R&amp;D initiatives are the key positives in Q1FY25 result.
Sumitomo is expected to revise FY25 guidance during H1FY25 result announcement. Better-than-expected performance from key drugs as well as favorable Fx should lead to upward revision of revenue guidance.


Sumitomo Pharma (4506 JP): Q1FY25 Result Shows Early Sign of Performance Reversal

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

<ul>
<li>Sumitomo Chemical issued new guidance in-line for 3/24 and xx% ahead of consensus for 3/25 EBIT, yet, the shares promptly declined by 10%.</li>
<li>Traders were probably spooked by the company’s booking of ¥340bn in impairments that was ¥200bn more than published consensus, but we argue that this was more than already priced in.</li>
<li>The only reasonable explanation for the reaction is that the market doesn't believe the new guidance for 3/25. This could prove to be a huge mistake.</li>
</ul>


Sumitomo Chemical issued new guidance in-line for 3/24 and xx% ahead of consensus for 3/25 EBIT, yet, the shares promptly declined by 10%.
Traders were probably spooked by the company’s booking of ¥340bn in impairments that was ¥200bn more than published consensus, but we argue that this was more than already priced in.
The only reasonable explanation for the reaction is that the market doesn't believe the new guidance for 3/25. This could prove to be a huge mistake.


Sumitomo Chemical (4005): To Believe Or Not To Believe, That Is the Question

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sumitomo-pharma-co" target="_blank" data-smartkarma-citation="entities:1935:1" rel="noopener">Sumitomo Pharma (4506 JP)</a> cut FY24 revenue guidance by 1% to ¥314.6B (-43% YoY) and raised operating loss guidance by ¥199B to ¥355B. Impairment loss of ¥180B negatively impacted bottomline.</li>
<li>Sumitomo has set FY25 revenue guidance at ¥338B (down 27% from MTBP 2027) and core operating profit at ¥1B (down 98% from MTBP 2027). The company suspended FY25 dividend.</li>
<li>The company will announce FY25 guidance for operating and net profits during the announcement of FY24 result, scheduled for May 14, 2024.</li>
</ul>



Sumitomo Pharma (4506 JP) cut FY24 revenue guidance by 1% to ¥314.6B (-43% YoY) and raised operating loss guidance by ¥199B to ¥355B. Impairment loss of ¥180B negatively impacted bottomline.
Sumitomo has set FY25 revenue guidance at ¥338B (down 27% from MTBP 2027) and core operating profit at ¥1B (down 98% from MTBP 2027). The company suspended FY25 dividend.
The company will announce FY25 guidance for operating and net profits during the announcement of FY24 result, scheduled for May 14, 2024.


Sumitomo Pharma (4506 JP): FY24 Guidance Revised Lower; Further Cost Cuts in FY25 to Turn Profitable

<ul>
<li>Sumitomo issued new guidance for the year to 3/25 that was 40% higher than consensus estimates, but the stock cratered almost 5%.</li>
<li>We were able to think of at least 6 explanations for this odd reaction - all of them irrational.  </li>
<li>A reasonable person listening to the call should have been pleased by almost all that was new information. </li>
</ul>


Sumitomo issued new guidance for the year to 3/25 that was 40% higher than consensus estimates, but the stock cratered almost 5%.
We were able to think of at least 6 explanations for this odd reaction - all of them irrational.  
A reasonable person listening to the call should have been pleased by almost all that was new information. 


Japan

Sumitomo Dainippon Pharma Co., Ltd. mainly manufactures and markets pharmaceuticals for human and veterinary use. The Company also produces and sells livestock feeds, food additives, and chemical products, as well as conducts clinical pathology tests for animals. Sumitomo Dainippon Pharma conducts businesses across worldwide.

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Sumitomo Pharma (4506 JP)

APAC Healthcare Weekly (Oct 27)- Samsung Biologics, Celltrion, Astellas, Otsuka, Legend, and Zai Lab

Samsung Biologics secures largest ever contract, Celltrion announced KRW100B buyback, Astellas Pharma got label expansion approval for Vyloy,...

Tina Banerjee