Healthcare

• The victorious brothers plan to join forces with KKR to secure over 51% ownership of Hanmi Science. They aim to persuade the mother and daughter to part with their shares.
• Should this negotiation fail, KKR is prepared to initiate a tender offer in the open market, intending to acquire an additional 10-15% of Hanmi Science’s shares.
• KKR can target a maximum of 16%. With 10-15% aimed for, this tender offer will cause significant price impact.

• The 2024 AGM of Hanmi Science is over and the two Lim brothers have control of the company. Nonetheless, the fight for the control of Hanmi Science is not over.
• There is an increasingly probable scenario where the KKR private equity firm gets involved, joining hands with the Lim brothers.
• If mum and sister do not sell their shares (which seems to be the higher likely scenario), then KKR may issue a tender offer to the remaining minority shareholders.

• Johnson & Johnson (JNJ US) entered into a definitive agreement to acquire Shockwave Medical Inc (SWAV US) for $335/share in cash or an enterprise value of $13.1B.
• Offer price represents 4.7% premium over yesterday’s closing price or around 19% premium over the undisturbed price. The deal is expected to close by mid-2024.
• With no product overlap and competition concern, the deal is expected to get regulatory approval. With reasonable deal valuation, shareholders approval is also expected.

• Cochlear Ltd (COH AU) shares rallied 30%+ over the last six months. Shares are trading at NTM P/E of 51.3x, versus other Australia-listed medical devices companies’ P/E of 23–32x.
• The underlying business strength depicted by strong financial performance and guidance raise, and superior product offerings justify the pricey valuation.
• Cochlear lifted FY24 net profit guidance to A$385–400M (+26–31% YoY) from A$355–375M. The company expects FY24 cochlear implant volume growth of 10–15% YoY.

• Jinxin Fertility Group Ltd., China’s largest private provider of in vitro fertility (IVF) services, is buying a stake in an Indonesian peer, venturing into Southeast Asia as demand in China declines with more couples opting not to have babies.
• Hong Kong-listed Jinxin Fertility has signed an equity investment deal to become a “significant shareholder” of PT Morula Indonesia, an IVF specialist affiliated with PT Bundamedik Tbk, a major women- and children-focused health care services group in Indonesia, according to a joint statement Monday.
• It did not specify how much capital Jinxin will invest.

For the third consecutive time, Oryzon Genomics has received the INNOVATIVE SME Seal from the Spanish Ministry of Science and Innovation. This external recognition highlights Oryzon’s key R&D activities, including its lead central nervous system (CNS) asset, vafidemstat, and lead oncology asset, iadademstat, and overall contributions to the field of epigenetics. Along with the acknowledgement, the INNOVATIVE SME Seal may allow Oryzon to benefit from certain tax deductions and incentives, as well as potential access to certain financing facilities.

Basilea has announced the FDA approval of its second lead asset, Zevtera (ceftobiprole), for the treatment of severe bacterial infections (three indications), marking a major commercial win. The US is the most commercially lucrative market for Zevtera, accounting for 85–90% of its total market potential. Zevtera is already approved in several countries (including in Europe) and the FDA nod is based on three Phase III studies (including the ERADICATE and TARGET studies with R&D partly funded by the BARDA). Note that the drug holds the Qualified Infectious Disease Product (QIDP) designation, which will provide up to 10-years of market exclusivity following approval. As we await more details on the US commercial partner (expected by mid-2024), we upgrade our US probability of success (PoS) to 100%, bumping our valuation to CHF1,008.6m or CHF84.0/share (from CHF80.7/share).

• Major milestones with high expectations coming in the next 2-3 years: 1) Phase IIb US trials for H-1337 as “first choice as a second-line Glaucoma drug” for patients who do not respond to PGs
• 2) 2024 application/approval and 2025 launch of DW- 1002 in Japan, 2023 application and 2024 approval/launch in China, as well as orphan drug designation for combination formula MembraneBlue-DualⓇ (DW-1002 + trypan blue) in the US,
• 3) in Japan, start P2 clinical trials in 2024, P3 trials in late 2025 though 2026, and normal schedule application for approval for regenerative cell-therapy DWR-2206 in 2027

SIGA Technologies announced a strategic step in fortifying its distribution partner, Meridian, allowing greater control over planning and executing its international development efforts, a key growth pillar. The amended terms allow the company to actively manage future promotion activities outside the US (effective 1 June 2024). While Meridian will continue to administer existing international contracts, we expect the renegotiated terms to benefit the bottom line in the medium term as SIGA gains traction internationally. In a separate development, and one that could have a positive read-across for SIGA’s TPOXX, Bavarian Nordic, a key vaccine peer, has commenced the commercial launch of its mpox vaccine Jynneos in the US, which has only been available through the strategic national stockpile to date. We view this as a positive milestone for this therapeutic group and SIGA as TPOXX is the only approved anti-viral treatment for a range of orthopox viruses (including mpox) in Europe and is currently undergoing clinical trials in the US for expansion into mpox (presently approved for smallpox).

• Hansoh Pharmaceutical Group (3692 HK) reported a whopping 55% YoY net profit growth to RMB3 billion on just 13% YoY revenue growth to RMB6 billion in 2H23.
• Revenue from innovative drugs zoomed 52% YoY to RMB4 billion and its proportion to total revenue increased to 73% in 2H23 from 54% in 2H22 and 62% in 1H23.
• Although Hansoh is not expected to receive marketing approval for any in-house innovative product in 2024, existing portfolio of innovative drugs will continue to drive the growth of the company.

• Besides the core product Utidelone Injection, the rest pipelines are mostly related to the indications expansion/new formulations R&D for Utidelone Injection. Excessive dependence on single product is hard to improve. 
• We’re not optimistic about the future sales growth of Utidelone Injection due to fierce competition/inconvenient administration methods/expired patent protection. Biostar is facing survival risks if new financing cannot be obtained.
• Biostar’s post-investment valuation is already RMB4.49 billion. Given the gloomy sentiment and the concerns about the pipeline/prospects, we think it could fall below this valuation level after IPO in HKEX.

Immix Biopharma is continuing its strategic pivot towards exploring non-traditional indications for its CAR-T asset, NXC-201, leading with relapsed/refractory (r/r) amyloid light chain amyloidosis (ALA). This tactical approach targets opportunities with a potential first mover advantage and the strategy is expected to be consolidated in 2024 with the initiation of the Phase Ib NEXICART-2 study in the US and the selection of the first autoimmune indication for NXC-201. Readouts in ALA are expected in Q424, with a potential Biologics License Application (BLA) in 2025, both key catalysts for Immix. Pro forma cash of $33.5m includes the February 2024 $15.5m (net) raise and is expected to support operations to Q225, past several key readouts. We adjust our assumptions for the latest updates, which results in resetting our valuation to $142.2m or $5.4 per share (from $86.6m or $4.0/share previously).

• Soon-To-Be ex-healthcare technology platform play IntelliCentrics Global Holding (6819 HK) is a pseudo risk arb. 
• IntelliCentrics is selling its key ops, declaring a special dividend from the sale proceeds, subsequently being wound up, then delisted. 
• Shareholders have the option of voting on a raft of resolutions on the 18th April. Irrevocables total 72.1%. This is done. Just the final dividend amount needs to be confirmed.

• Aster DM Healthcare Ltd (ASTERDM IN) shares took a beating as Olympus Capital offloaded ~49M shares at a price range of INR405.00–406.72 (~7% discount to the last close price).
• GCC business separation is expected to complete in Q4FY24. Aster DM plans to consider distributing 70–80% of the upfront consideration of $903M as dividend to its shareholders.
• Stake sale by Olympus Capital is not a warning sign for the company. Despite CGHS rate overhang, we think recent pullback in Aster DM share provides an attractive entry point.

• Zadaxin is the biggest performance driver of SciClone. However, due to the challenge of generic drugs/VBP, sales of Zadaxin wouldn’t maintain strong growth momentum.  SciClone’s revenue/profit would face a significant decline.
• The capital participating the IPO had reduced their holdings or exit entirely. Considering the low valuation/poor liquidity in HKEX, we think this privatization provides investors with a great exit opportunity.
• For arbitrage investors, the annualized return depends on the time it takes to complete the privatization (e.g. about 5%-10%). If the privatization fails, share price could fall back to HK$14.

• The sBLA of Carvykti is under review by FDA with a target PDUFA date of April 5. If approved for 2L therapy, Carvykti would become “a game changer” in MM treatment.
• The peak sales of US$5 billion is becoming possible. From this perspective, as Carvykti advances towards earlier line treatment, the subsequent valuation leap of legend Bio is becoming more certain.
• However, considering lower gross margin and Legend Bio/J&J’s 50/50 split ratio, Legend Bio’s market value performance could be inferior to BeiGene. Investors should also closely monitor the changes in macro.

OSE Immunotherapeutics’ (OSE’s) FY23 update summarised an active period for its clinical pipeline that was capped by the post-period $713m deal with AbbVie for preclinical asset OSE-230. The company is anticipated to hit meaningful milestones in 2024 with its lead immuno-oncology asset, Tedopi, gearing up for the confirmatory pivotal Phase III trial in Q224 and lead immuno-inflammation programme, Lusvertikimab, set to report Phase II top-line results in mid-2024. OSE-230 (being developed as a treatment for chronic inflammation) is also anticipated to enter the clinic this year, potentially tiggering another milestone payment for OSE. Gross cash of €18.7m at end-FY23 was fortified by the AbbVie $48m upfront payment and expected €5.8m in research tax credit, extending the cash runway into 2026, past several key milestones. We update our estimates for the FY23 results and adjust the launch timelines for the partnered programmes (from 2028 to 2029). Our valuation adjusts to €317.1m or €14.6 per share (from €311.3m or €14.4/share previously).

• The IntelliCentrics Global Holding (6819 HK) IFA considers the terms for the disposal of assets to symplr software as fair and reasonable. The EGM vote is on 18 April.
• The consideration will be distributed to shareholders as a special dividend with a minimum and maximum of US$0.52 (HK$4.07) and US$0.55 (HK$4.30), respectively. 
• Irrevocables ensure that the EGM vote will pass. At the last close and for a 7 May payment, the gross and annualised spread of the minimum dividend is 2.8%/33.6%.

• CSPC Pharmaceutical Group (1093 HK) reported steady growth in finished drugs in 2023. New products including Mingfule, Yilouda, and Anfulike achieved rapid sales ramp-up due to inclusion in the NRDL.
• The company expects to launch 50 innovative drugs in the next five years, which will provide continuous momentum. The company further aims for 17 common generic launches during 2024–2025.
• CSPC Pharmaceutical shares are trading at a P/E of 11.3x, lowest level seen in last five years, and cheaper than peers. Dividend yield remains attractive at 4%+.

• WuXi Bio’s profit was disappointing.The 41 new orders added last December were small orders, which cannot contribute decent revenue/profits.The goal of gross margin to reach 45% by 2026 seems challenging.
• The management has become more cautious in its guidance for 2024. 2024H1’s performance could be disappointing. The key is to see whether the performance in 2024 full-year would meet expectations.
• Due to BIOSECURE Act, foreign CXOs are planning to seize WuXi Bio’s market share. We are not sure whether Europe (the US’s ally), will follow suit and enact similar legislation.

• This is our first report on biotechnology major, BioNTech.
• The company recently reported its fourth quarter and full-year 2023 earnings.
• BioNTech successfully advanced its clinical pipelines and improved its technology platforms, digital capabilities, and infrastructure while executing its key strategic initiatives.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Sciclone Pharmaceuticals (6600 HK), Qantm Intellectual Property (QIP AU), Genex Power Ltd (GNX AU), Southern Cross Media (SXL AU), China Traditional Chinese Medicine (570 HK), QV Equities.
• Lowest spreads: Tietto Minerals Ltd (TIE AU), Roland DG Corp (6789 JP), Chilled & Frozen Logistics Holdings (9099 JP), Pact Group Holdings (PGH AU), Mma Offshore (MRM AU). 

• After Sciclone Pharmaceuticals (6600 HK) was suspended on the 19th March pursuant to the Takeovers Code, I speculated a Scheme at the March 2021 IPO Price. And that’s what unfolded.
• Li Zhenfu (SciClone’s NED), Assicurazioni Generali (G IM) and concert parties (collectively controlling 36.61%) have made an Offer at $18.80/share, a 33.9% premium to last close. Terms are final.
• The long stop date is the 31 October. That’s too conservative. This could be wrapped up late July. 

• Licensing-Out deals of Chinese pharmaceutical assets are indeed significant milestones, but we should not exaggerate its significance. The product strength itself/subsequent progress are the true sources of clinical benefits/commercial value.
• In the field of weight loss drugs, first-mover advantage may not be that obvious. The possibility of latecomers to disrupt first-mover would not be that low or time-consuming.
• For Aier, 23Q4 results could show an obvious rebound, leading to relatively high growth in 2023 full year. However, Aier’s problems are still there, which means Aier is not undervalued.

• Theoretically, there’s no need to doubt WuXi XDC’s growth momentum. What needs to be proven is how large the actual ADC market is, which determines how much valuation it deserves.
• However, the biggest problem currently is geopolitical risks, which make performance forecasts groundless. In the context of Sino-US confrontation, there is “a hesitation” towards sustained high growth of WuXi XDC.
• If several pieces of news are put together, this is not just about China CXO/TikTok being sanctioned by US. New balance point in the game between great powers will emerge.

• Taidoc Technology is an attractive small cap health care stock in Taiwan. It has a solid dividend yield, strong balance sheet, and stable profits and free cash flow.
• The company’s core business includes clinical equipment and professional instruments including diagnostic, telehealth, and blood sugar and blood pressure monitoring devices.
• We found Taidoc Technology using Smartkarma’s Smart Score Screener system. It has top ranks in the Value and Dividend categories. However, it has lower rankings in the remaining categories.

• Sciclone Pharmaceuticals (6600 HK) disclosed a scheme privatisation offer from GL Capital at HK$18.80 per share, a 33.9% premium to the undisturbed price (HK$14.04 on 15 March).
• The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The Bank of China, which holds a blocking stake, should be supportive.
• The offer price has been declared final. It is reasonable, aligning with the all-time high and the IPO price. This is a done deal.

• On 27 March, Alteogen announced that Jeong Hye-shin, former Alteogen Chief Strategy Officer (CSO), sold 1.6 million shares of Alteogen stock in after-hours trading in block deal sale. 
• The block deal sale price was 197,770 won. Alteogen’s share price declined by 10.9% today to 195,600 won. Block deal sale amount was about 316 billion won. 
• This block deal sale combined with the sharp recent, share price increase are likely to result in a near-term consolidation of its share price in the next several months.

• The med-tech sector is ripe for consolidation. Smaller players like Hogy Medical (3593 JP) , and Eiken Chemical (4549 JP)  exhibit sub-par growth and lagging valuations
• Activist investors like ValueAct Capital, Dalton and Asset Value have recognized an opportunity for growth and potential M&A
• Both Hogy and Eiken trades at a deep discount to larger domestic peers and stand to benefit the most from any consolidation

• On the 22 December 2023, drugs maker/packager group Probiotec Ltd (PBP AU) entered into a Scheme with Indonesia’s Pyridam Farma (PYFA IJ).
• Pyridam is offering Probiotec shareholders A$3.00/share (in cash, or a 19% premium to the undisturbed price). An interim dividend of A$0.035/share was also added (now gone ex).
• The Scheme Booklet is now out. The Scheme Meeting will be held on the 29th May. The IE says terms are fair. I agree. Trading wide. Gross spread is 4.9%.

• The Probiotec Ltd (PBP AU) IE considers Pyridam Farma (PYFA IJ)’s A$3.00 offer fair and reasonable as it is within its A$2.79-A$3.28 per share valuation range.
• The scheme remains conditional on shareholders’ (Probiotec and Pyridam), FIRB, and OJK approvals. Probiotec can also pay a permitted dividend of up to A$0.04 per share.
• The gross spread of 4.9% (6.3% including dividends) reflects doubts about Pyridam’s funding credibility, as Pyridam’s market cap is 16% of Probiotec’s implied by the offer.

• This is our first report on Fortrea Corporation, a renowned contract research organization (CRO).
• The company reported its fourth quarter 2023 earnings, recording revenue growth of 1.8% year-over-year to $775.4 million.
• CEO Tom Pike praised the company’s transformation over 2023, managing to transition from a division within a larger parent company to a stand-alone entity.

• Despite Q3 being seasonally weak, HealthCare Global Enterprises (“HCG”) reported 11% YoY growth in revenues. Q3FY24 revenue came in at INR 470cr.
• HCG has been focusing on fortifying its clinical talent strength and increasing business promotion. This has been yielding positive result, with Kolkata and Mumbai seeing 57% and 17% YoY growth.
• With the operationalization of four radiation machines now behind us, Q3 saw improved mix of radiation oncology with its growth at 13% YoY vs 11% YoY in overall revenue.

• Beijing Wantai Biological Phar (603392 CH) announced that its net profit for 2023 declined 71–75% YoY to RMB1.20–1.35B mainly due to the market competition.
• China’s HPV vaccine market is highly competitive. Beijing Wantai has no presence in higher valent HPV vaccine segment, which dominates the domestic market.
• Although the company will be one of the early movers in domestically developed nonavalent HPV vaccines, at least three more players will follow soon, thereby making the space more competitive.

Recce Pharmaceuticals recently received A$11.18m as an R&D advance credit through an arrangement with Endpoints Capital for the R&D tax credit rebates that Recce expects to receive for FY23/FY24 and FY25. We believe this non-dilutive source of funding should extend Recce’s operating runway into FY25. Recce is also continuing to advance its intravenous (IV) R327 formulation in its ongoing Phase I/II study in healthy volunteers, having recently started the 20-minute (3,000mg) dosing cohort. We have made minor adjustments to our valuation and we now obtain a risk-adjusted net present value (rNPV) of A$644.4m (or A$3.16/share), versus A$652.6m previously.

• After the market close on 26 March, it was reported that NPS has decided it will side with Chairwoman Young-Sook Song (mother) and her daughter Ju-Hyun Lim. 
• As a result, Chairwoman Young-Sook Song (mother) and Ju-Hyun Lim have secured 40.86% of the shares, which is slightly higher than the ownership of her two sons (38.4%). 
• In the near term, this battle for the control of the company could have a positive impact on Hanmi Science’s share price. 

• FDA approval of Wegovy is overvalued at approx. $460 billion. Market exaggerated the worth without proper assessment of weight loss results and risks associated with the drug.
• Clinical trials showed a 14.9% weight loss with diet and exercise; real-world results would be lower. Impact on BMI for obese individuals won’t be significant. Long-term use is questionable.
• Competition in the GLP-1 market is fierce. Novo Nordisk faces challenges in India and China, increased capex spending, and risks from compounding pharmacies and potential legal issues.

• Siloam International Hospitals (SILO IJ) released a strong set of numbers in FY2023, with increasing inpatient admissions and treatment intensity despite a normalising environment coming out of the pandemic.
• The average revenue per occupied bed remained significantly above peers, whilst the company continued to focus on highly complex clinical programs across cardiology, neurology, oncology, and orthopaedic surgery. 
• Siloam International Hospitals takes a blended approach to premium, value-seeker, and BPJS patients, optimising  efficiencies around the latter. Valuations and growth stack up favourably versus its peers.

• Sigma Healthcare (SIG AU)‘s proposed merger with Chemist Warehouse Group is being reviewed by Australian Competition and Consumer Commission (ACCC), with decision expected in 2H24.
• Although Sigma is witnessing continuing momentum in its business (YTD sales are up by 6.6% YoY) and reaffirmed EBIT margin guidance, merger uncertainty overshadows the improved financial performance.
• We think near-term positives of the company have already been priced in, thereby limited room for upside potential. Merger uncertainty will remain an overhang on the share prices.

• MURA is a micro-cap, speculative, pre-revenue, and non-compounder company that spun off from Alkermes
• Despite a rough start, it is gaining attention and has a market cap of $74 million with $16/share in cash
• Morgan Stanley projects a trading value range estimate of $32-$63/share based on potential sales from their lead pipeline candidate; company is funded with $275 million in cash until 2025

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Immix Biopharma is closer to dosing its first US patient for lead CAR-T asset NXC-201, with the appointment of the Memorial Sloan Kettering Cancer Center as the main clinical site for the company’s US multi-site NEXICART-2 trial assessing NXC-201 in relapsed/refractory (r/r) amyloid light chain amyloidosis (ALA). NXC-201 targets B-cell maturation antigen (BCMA) and is differentiated by its low neurotoxicity and short cytokine release syndrome (CRS) duration to date, supporting Immix’s long-term aspiration to launch the first outpatient CAR-T therapy. The NEXICART-2 study will aim to reproduce the initial results from the Phase Ib/IIa NEXICART-1 study, which reported an overall response rate (ORR) of 100% for the first 10 patients treated. Top-line data from the first 40 patients in the NEXICART-2 trial are expected in 2025, which, if positive, will likely be followed by a biologic license application, a significant milestone for the Immix. The pipeline remains engaged, with IMX-110 in Phase Ib/IIa studies for solid tumors and NXC-201 also targeting multiple myeloma (MM) and, potentially, other autoimmune indications (starting H124).

• This is our first report on biopharma player, Legend Biotech.
• The company’s Q4 earnings call displayed a balance of positive and negative performance aspects for the company.
• Starting with positive highlights, the outlook is promising for their lead therapy, CARVYKTI, which has received a positive opinion from the Committee for Medicinal Products for Human Use for expansion into earlier lines of treatment.