Healthcare

• BrainStorm Cell Therapeutics Inc. (Nasdaq: BCLI) develops NurOwn® stem cell therapy for NDDs – BCLI’s first target is ALS (MND/Lou Gehrig’s).
• BCLI on Friday confirmed its reverse stock split (R/S) to become effective today 30 Sept 2024 (to maintain Nasdaq listing).
• Reverse stock splits are often (though not always) an effective mechanism and often lead to an upwards re-rating as psychological market factors come into play.

Biocon Biologics launched a roadshow last week to market its USD 5NC2 144A/RegS notes offering. The expected issue rating is BB/BB by S&P/Fitch. The proceeds will be used to refinance an outstanding syndicated loan facility obtained for the acquisition of Viatris’ global biosimilars business for USD 3.335 bn in May 2022.

We see fair value for the proposed 5NC2 bonds at 7%.

• On September 30, 2024, MediciNova, Inc. (MNOV) announced that MN-166 (ibudilast) will be evaluated in a National Institutes of Health (NIH) – Neurological Disorders and Stroke (NINDS) sponsored Expanded Access Protocol (EAP) trial that will be supported by a $22 million grant to an academic group.
• The EAP trial will enroll approximately 200 patients with amyotrophic lateral sclerosis (ALS) and will measure MN-166’s effect on neurofilament light, a biomarker for neuron damage.
• MediciNova will provide investigational drug, regulatory support, and safety monitoring support.

• McKesson Corporation reported its earnings for the first quarter of fiscal 2025, showcasing continued growth and strategic progress across various aspects of its diversified healthcare services.
• With a reported revenue of $79.3 billion, the company exhibited a 6% increase year-over-year, and an adjusted earnings per share increase of 8% to $7.88.
• These figures surpassed initial expectations, prompting an upward revision of full-year adjusted earnings per share guidance from $31.25-$32.05 to $31.75-$32.55.

• GSK has reported a strong performance for its second quarter of the year, with a 13% increase in sales to GBP 7.9 billion.
• Highlighting the company’s effective operational execution and a diverse portfolio, GSK’s core operating profit improved by 21% to GBP 2.5 billion, and core earnings per share increased by 17% to 43.4p, all figures adjusted to exclude contributions from COVID solutions.
• This demonstrates GSK’s ability to achieve profitable growth driven by both its longstanding and newly launched products.

• Chemed Corporation, a diversified company primarily engaged through its subsidiaries, VITAS Healthcare Corporation and Roto-Rooter, recently provided updates in their Second Quarter 2024 Earnings Call.
• The overview pulls into focus a mixed performance within its distinct operations.
• Starting with VITAS Healthcare Corporation, there’s a pronounced positive trajectory witnessed in the segment, particularly off the back of the acquisition of Covenant Health.

• Labcorp Holdings Inc. delivered a robust performance in the second quarter of 2024, showcasing a continued upward trajectory in its business operations.
• The company reported impressive figures with revenues totaling $3.2 billion, reflecting a 6% increase compared to the same period in 2023.
• Adjusted earnings per share (EPS) also saw an appreciable rise, reaching $3.94, signifying a 15% increase.

• The medical insurance statistics reflected that medical insurance funds are facing increasing pressure. If income/expenditure maintain average growth rates in recent years, there would be a deficit state in 2024.
• Due to increasing pressure on medical insurance fund, the entire process of innovative drug evaluation/NRDL negotiation this year will be more strictly enforced, but Hansoh (3692 HK) is an exception.
• For Henlius’ privatization, completing Pre-Conditions in 24Q4 looks tight. Considering Chinese New Year holiday, the privatization may not be completed until at least mid-to-late February 2025.The deal will get up.

• Global Health (Medanta) (MEDANTA IN) reported double-digit growth in revenue in Q1FY25, while sluggish developing hospitals was a drag on the margins.
• The company plans to add 1,000–1,500 beds in next 2–3 years, with most of the planned bed addition being at greenfield projects entailing higher capex per bed.
• Medanta does offer synergy as a possible takeover candidate for a leading hospital operator.

• MA Financial (13.43% of shares out) and Alison Hughes (9.94%) said they will reject Genesis A$1.8675/share offer for Pacific Smiles (PSQ AU); therefore the 90% acceptance condition cannot be met.
• Separately, PSQ’s board also rejected terms, as Genesis Offer is below NDC’s A$2.05/share Offer; plus terms are “opportunistic” as they do not account for PSQ’s recent strong financial improvement. 
• What now? Genesis has the flexibility to bump. Expect that to occur. They won’t fold their tent in response to this latest development.

• Mirati Therapeutics reported its second quarter 2023 earnings and had a decent performance.
• During this period, Mirati launched KRAZATI, reflecting a significant milestone as it transitioned to a commercial-stage company under the guidance of then CEO, David Meek.
• However, in a noteworthy change announced during the call, Dr. Chuck Baum has taken on the role of interim CEO, following Meek’s departure.

• Upstream Bio, a biotech company focused on developing therapeutics that address severe asthma, CRSwNP and COPD, will price its IPO in October.
• Upstream Bio has raised ~$400M to date. Their last round was a $200M Series B led by private equity firm Enavate Sciences and Venrock Healthcare Capital Partners.
• My DCF analysis suggests that Upstream Bio’s core U.S. business (ex. COPD) may be worth ~$1.8B. The severe asthma and CRSwNP markets represent a potential $10B+ opportunity.

• Kyowa Kirin Co Ltd (4151 JP) announced top-line results of the Phase 3 trial of rocatinlimab targeting moderate to severe Atopic Dermatitis (eczema), which affects 6.6M patients in the U.S.
• The trial met co-primary endpoints and reached statistically significant differences from placebo for all key secondary endpoints. However, efficacy data was less compelling compared to current standard of care.
• Kyowa Kirin shares nosedived mainly on the concern over competitive strength of rocatinlimab. Amid gloomy outlook, Kyowa Kirin shares will need time to recover.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Voyage Care’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Weak”.

• Growing Player in Medical Aesthetic Market SBC Medical Group Holdings (SBC- NASDAQ), headquartered in Irvine, California, provides end-to-end solutions for aesthetics clinics, including back office support, purchasing, branding and marketing services (see below), that enable clinics to focus on offering their customers high quality treatments and services at affordable rates.
• SBC Medical Group first began operations in 2000 when its founder and largest shareholder, Dr. Yoshiyuki Aikawa, opened the Shonan Beauty Clinic (SBC) in Fujisawa City, Japan.
• SBC subsequently has expanded its footprint as it continues to grow its network and revenue base.

• Rigaku Holdings (268A JP) is looking to raise US$762m in its Japan IPO.
• Rigaku engages in developing, manufacturing, sales and servicing scientific instruments specializing in X-ray technologies.
• In this note, we will talk about the not so positive aspects of the deal.

• We are initiating coverage of Cadrenal Therapeutics, Inc. (CVKD) with a valuation of $30.00.
• Cadrenal is a clinical stage biopharmaceutical company developing tecarfarin, a novel oral and reversible anticoagulant intended to prevent deaths due to blood clots in patients with rare cardiovascular conditions, including those with left ventricular assist devices (LVADs), end-stage kidney disease (ESKD) with atrial fibrillation (AFib), and mechanical heart valves with difficult to control time in therapeutic range (TTR).
• The company will be meeting with the FDA to discuss the design of a Phase 3 clinical trial of tecarfarin in patients with LVADs. Cadrenal has also been in discussion with Abbott, the maker of the only LVAD for sale in the U.S., regarding the Phase 3 trial, which we anticipate initiating in the first half of 2025.

• EVAX is a clinical stage company that has proprietary AI models designed to more efficiently and more accurately target much-needed treatments.
• The company has two streams of possible revenue: from the treatments themselves and from the licensing of the AI technology.
• The company announced an agreement with MSD to two preclinical vaccines that provides upfront payments and potential substantial revenue in the future.

• On the 18th July, diagnostic imaging provider Capitol Health (CAJ AU) entered a Scheme with Integral Diagnostics (IDX AU). IDX will issue 0.12849 new IDX shares for each Capitol share
• Upon completing the transaction, Integral would hold ~63% in the MergeCo. They key risk is the ACCC signing off. A decision is expected on (or around) the 28th November.  
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 31st October. Expected implementation on the 14th November. The IE says fair & reasonable.

• Rigaku Holdings (268A JP) is looking to raise US$762m in its Japan IPO.
• Rigaku engages in developing, manufacturing, sales and servicing scientific instruments specializing in X-ray technologies. 
• In this note, we will talk about the positive aspects of the deal.

• Rigaku Holdings (268A JP) provides cutting-edge analytical solutions centered on X-ray technology globally. The company is one of the largest players globally in X-ray diffraction instrument market.
• The company has filed for an IPO on the Tokyo Stock Exchange and plans to raise proceeds of around US$900m from the IPO at a potential valuation of US$2bn.
• In this insight, we discuss Rigaku’s business model, key drivers, financials and outlook for the company.

• Clinuvel Pharmaceuticals (CUV AU)’s Scenesse is the only approved erythropoietic protoporphyria (EPP) treatment. Patent protection and orphan drug status solidifies Clinuvel’s market position.
• Clinuvel is expanding Scenesse’s (afamelanotide) use and developing and testing additional products for clinical and photo-cosmetic use. 
• Profitability metrics and growth are solid and cash position strong to support R&D for trials and new product development.

• Varex Imaging Corp (VREX US) reported 10% YoY drop in revenue and a squeeze in profits as well in Q3FY24, driven by weakness in Medical segment business.
• China market softness continues to drag the operating performance of the company. The woes faced in China does not appear to subside quickly in the near foreseeable future.
• The company has guided for Q4FY24 sales and EPS in the range of $190-210M and $0.00-0.15, respectively, representing significant drop from year-ago quarter.

• The Capitol Health (CAJ AU) IE considers Integral Diagnostics (IDX AU)’s merger proposal (0.12849 Integral shares per Capitol share) fair and reasonable. 
• While ACCC informal clearance is an overhang, the evidence suggests that clearance should be secured. The shareholder vote risk is low.
• The offer terms are attractive. At the last close and for the 14 November payment, the gross/annualised spread is 4.7%/37.3%.  

• Green Cross (006280 KS) has gained access to 80% of privately insured members in the U.S. for blood product Alyglo, which has been included in formularies of three major insurers.
• Green Cross targets to generate $50M revenue from Alyglo this year. The target seems to be conservative. The company further aims to sustain annual growth of 50%+, which is achievable.
• The company reported sequential improvement in 2Q24, with 17% QoQ revenue growth and significant improvement in gross margin. Revenue growth of 7–8% is expected during 2024–2026.

• Upstream Bio, a clinical-stage biotech company developing novel therapies for inflammatory and allergic diseases, filed for an IPO in the United States.
• The biotech firm was backed by premier investors, including OrbiMed, Access Industries, Maruho Co., Samsara BioCapital, Omega Funds, and Enavate Sciences, among others.
• I believe that company’s lead compound, verekitug (UPB-101), has a broader commercial opportunity than many investors appreciate.

• Taiwan Veldona human study to start in Sjogren’s.
• Ainos will initiate a Veldona clinical study in Taiwan for primary Sjogren’s syndrome in December 2024.
• This follows the announcement of an oral warts in HIV+ clinical study planned for November 2024. 

• Medicus Pharma Ltd. (TSXV:MDCX) is focused on acquiring or partnering with life-science companies that are developing novel therapeutics for unmet healthcare needs that are already in the clinical trial stage.
• Management plans fast-track these specific therapies through FDA clinical trials toward commercialization.
• The company’s first acquisition was SkinJect, which has a novel, patented transdermal patch for the treatment of BCC.

• The imagination brought to the market by Kelun’s traditional businesses (infusion business, antibiotics and bulk pharmaceutical chemicals, generic drugs) is not high. So, the only highlight is Kelun-bio’s ADC pipeline.
• Considering that Kelun has lost pricing power due to VBP, and both Chuanning and Kelun bio have been spun off and listed independently, Kelun’s valuation will not be too high.
• Our forecast is net profit attributable to shareholders in 2024-2026 is in the range of RMB3-5 billion. Reasonable market value is RMB30-50 billion. Subsidiary Kelun Bio is a better bet.

• On September 13, 2024, ESSA Pharma Inc. (EPIX) announced that updated dose escalation data for the ongoing Phase 1/2 clinical trial of masofaniten (EPI-7386) in combination with enzalutamide (Enz) was presented at the 2024 European Society for Medicinal Oncology (ESMO) Congress.
• With 15.2 months of follow up, neither the median radiographic progression free survival (rPFS) or time to PSA progression (TTPP) have been reached.
• Additionally, since the last trial update at ASCO-GU, one more patient has achieved PSA90, bringing the total to 14/16 (88%).

• AEMD has three sites in Australia that are moving towards near-term patient enrollment.
• In Australia, Royal Adelaide is ready for enrollment and Kinara is expected to be open for enrollment shortly.
• A third site in Sydney has submitted a request to be added to the study.

Basilea has bagged a multi-year agreement with the Biomedical Advanced Research and Development Authority (BARDA), potentially worth US$268m, to advance its anti-infectives franchise. The Other Transaction Agreement (OTA) will include an initial payment of US$29m to support clinical development work for fosmanogepix and BAL2062 as they prepare to enter the next phase of clinical development. The agreement will last up to 12 years and management expects it to cover 60% of its development costs related to the covered programmes over the period. These expected inflows have triggered another guidance upgrade for FY24 (revenue of CHF203m, from CHF196m previously) with a significant uptick in the bottom line on increased deferred taxes (net profit guided to be CHF60m vs CHF42m previously). We have adjusted our estimates to reflect the potential non-dilutive funding from BARDA, with our valuation increasing to CHF95.3/share, from CHF89.7/share previously.

• AEMD has three sites in Australia that are moving towards near-term patient enrollment.
• In Australia, Royal Adelaide is ready for enrollment and Kinara is expected to be open for enrollment shortly.
• A third site in Sydney has submitted a request to be added to the study.

• Zacks Small-Cap Research Note for Lexaria Bioscience Corp. (LEXX)

Newron Pharmaceuticals’ H124 results reflect a period of positive traction for lead clinical asset evenamide, with stellar clinical data as an add-on treatment in schizophrenia, building a strong foundation for the upcoming, potentially pivotal Phase III programme (study 017). While the Phase III trial will initially focus on treatment-resistant schizophrenia (TRS), we note the likelihood of the trial expanding to cover patients with poorly managed symptoms, as evaluated in the prior Phase II/III 008A study, which we have reflected in our estimates. With discussions focused on securing the most beneficial partnering option, management expects the trial to initiate in H125, with funding in place to achieve this milestone. Our valuation adjusts to CHF245.8m or CHF12.8/share (previously CHF219.1m or CHF12.3/share).

Oryzon has presented the results of the final analysis from the Phase IIb PORTICO trial, which evaluated the efficacy and safety of vafidemstat in borderline personality disorder (BPD). While top-line results were initially published in January, the final data (presented at the 37th ECNP 2024 congress) show notable improvements across key efficacy measures, reaffirming the potential of the candidate to deliver meaningful benefits to patients with BPD, a highly underserved condition with no approved drugs. Management also confirmed that the data, and a registrational Phase III programme, have been discussed with the FDA at an end-of-Phase II (EoP2) meeting. We view this update as highly encouraging for Oryzon and await the announcement of a formal outcome from the FDA on the proposed Phase III programme, which we anticipate in early-Q424.

• TRX is focused on the development and commercialisation of two proprietary processing technologies for the repair of soft tissue (dCELL®) and bone (BioRinse®).
• It has a broad portfolio of products used in biosurgery, orthopaedics and dental markets.
• Investment in tissue processing, manufacturing capacity and strong commercial partners, together with its “4S” strategy, has generated seven consecutive reporting periods of strong growth, with TRX becoming profitable in 1H’24.

• HLB Therapeutics (115450 KS) will replace Jeisys Medical (287410 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) next week.
• Passive trackers will need to buy 1.8 days of ADV in HLB Therapeutics (115450 KS) and sell over 4 days of ADV in Jeisys Medical (287410 KS). 
• Recent ad hoc inclusions to the KOSDAQ 150 Index (KOSDQ150 INDEX) have jumped post announcement of index inclusion but have sold off after the inclusion.

• 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: Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), China Traditional Chinese Medicine (570 HK). 
• Lowest spreads: Tohokushinsha Film (2329 JP), Dyna Mac Holdings (DMHL SP), Fuji Soft Inc (9749 JP), Trancom Co Ltd (9058 JP), Seven & I Holdings (3382 JP). 

• 90% of the way through the review period, there could be 1 change for the SSE STAR50 (STAR50 INDEX) and 5 changes for the STAR100 Index.
• We estimate turnover of 1% for the STAR50 INDEX and 5.5% for the STAR100 Index. The net round-trip trade is CNY 3.2bn (US$453m).
• The forecast add to the SSE STAR50 (STAR50 INDEX) has massively outperformed the forecast deletion from the index over the last two months.

• CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.
• In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
• We expect up to five ADDs and five DELs for the CSI Medical Service index during this index review event based on the latest available data.

• HCG reported a decent Q1FY25 with revenue growth of 16.7% YoY, adjusted for a discontinued center in Bangalore. Growth was robust across both established and emerging centers.
• Emerging centers (Kolkata, Borivali and South Mumbai) grew strong at 33% YoY while established centers also grew healthy at 14% YoY. All emerging centers, but South Mumbai center, are profitable.
• We estimate that HCG could post a PAT of around INR 280cr+ by FY27. An investment in HCG at the current level has potential to provide an upside of 85%+.  

• I tally 42  – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Four new deals: scrip mergers forAuswide Bank (ABA AU), Latin Resources (LRS AU) & Platinum Asset Management (PTM AU); and the Tender Offer for Trancom Co Ltd (9058 JP).
• Key updates took place on: Pacific Smiles (PSQ AU), China TCM (570 HK), Greatview Aseptic Packaging (468 HK), Shin Kong Financial Holding (2888 TT), and Seven & I Holdings (3382 JP).

• STAR 50 index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
• In this insight, we take a look at the potential ADDs/DELs for the STAR 50 and STAR 100 indices for the December 2024 index rebal event.

• Anhui’s new VBP included OTC TCM for the first time, which poses a big challenge to the pricing autonomy of CR Sanjiu. This makes Sanjiu’s acquisition of Tasly more important/urgent. 
• Novo Nordisk’s performance has raised concerns. The capacity bottleneck for weight-loss drugs seems resolved. Could this signal that the market for weight-loss drugs is reaching its peak?
• Keymed Biosciences (2162 HK)’s CM310 will miss this year’s NRDL negotiations, putting the company at a disadvantage. Considering the competitive landscape, we are concerned about Keymed’s performance.