Healthcare

• Jeisys Medical’s getting booted from the KOSDAQ 150, and HLB Therapeutics is stepping in as the new addition. This change will officially hit the book on Wednesday, September 25.
• HLB Therapeutics, with a ₩0.70T market cap and 87% float, is set for a 0.51% weight in KOSDAQ 150, triggering over 2 million shares in passive buying: 3.26x 30-day ADTV.
• With today’s after-hours volume spike in HLB Therapeutics, we’re likely to see some price action from early movers spilling into Monday’s open, similar to what we saw with Webzen.

• Since Brookfield’s July 8 takeover interest for Grifols was announced, the situation has become complicated, with unclear pricing, funding challenges, and uncertainty about whether an offer will materialize or when.
• Grifols operates in a consolidated plasma-derived therapies market with high entry barriers, and its current valuation of 8.6x NTM EBITDAe significantly undervalues it compared to CSL’s 19.2x.
• B shares closed on September 20 in Madrid at a 17.3% discount to A shares. Paying this spread would be my favored approach to gain exposure to a potential offer.

• SanBio Co Ltd (4592 JP) received conditional and time-limited marketing approval for Akuugo suspension for intracranial implantation in Japan, for improving chronic motor paralysis resulting from traumatic brain injury.
• The company will run two or so rounds of commercial production to accumulate inventories in preparation for launch. The earliest possible timing for shipment is assumed to be Q1FY26.
• SanBio has a cash runway through H1FY26. However, operating expenses will decrease and Akuugo will start generating revenue by H1FY26, thereby providing some more cushion to cash runway.

• M3 Inc (2413 JP) will buy 50.1-55.0% of Elan Corp (6099 JP). Three principals+family have agreed to tender 50.1%. The premium is not huge. This is not an ATH. 
• There will be synergies. I am a little surprised by the deal+price (CEO is young, why sell so cheaply so early?) but it should be good for the TargetCo.
• There are possible post-tender complications on a high participation rate. I expect those can be cured relatively easily. 

• Elan Corp (6099 JP) announced a partial tender offer and capital and business agreement with M3 Inc (2413 JP). M3 aims to make Elan a consolidated subsidiary.  
• The offer is for a minimum of 30.4 million (50.10% ownership ratio) and a maximum of 33.3 million shares (55.00% ownership ratio) at JPY1,040, 24.0% premium to the undisturbed price.
• Irrevocable from tendering shareholders will satisfy the minimum acceptance condition. The offer is unremarkable, suggesting a final proration materially above the minimum of 56.07%.

• BioAge Labs launches roadshow and sets terms for an IPO: a company offers 7.5M shares at the price range of $17.00-$19.00, implying a market cap of ~$580M at the midpoint.
• Sofinnova Venture Partners plans to purchase ~$15M worth of BioAge Labs shares in this offering. The shares are expected to begin trading on Nasdaq on September 26, 2024.
• I view IPO valuation (post-offering EV ~$280M and runway into 2028) as attractive and expect BioAge Labs shares will outperform during first trading day next week.

• Japan Eyewear Holdings (5889 JP) reported 30% YoY revenue growth in H1FY25. Profit margins also remained high, with operating profit margin exceeding 33% and operating profit reaching ¥2.7B, 1.5x YoY.
• The company has left FY25 guidance unchanged. The company’s cautious stance, yen appreciation, and darkening outlook of China amid weak economic data are the major downside risks.
• We think reactions are overdone. Limited downside is expected from here. Encouraging SSS growth through continuous increases in unit price and accelerated store expansion will remain the key growth drivers.

• India has become one of the most expensive markets globally, trading at a PE of close to 28. Quality stocks now trade consistently around 50-90x PEs. 
• We have screened 80 names (market cap agnostic) that trade at PEs between 5 and 45, with an average PE of 20 and an average ROEs of 26%. 
• We treat this only as a filter and aim to do due diligence on all these stocks over the next few months. 

• The S&P 500 (SPX) is back to test YTD highs and important resistance in the 5670-5783 range. This is an important target/resistance area we have discussed for weeks.
• Using the 2007 SPX topping analog suggests a 2% or less move above the prior all-time high set in July at 5670 before topping, which gives the 5783 number.
• As long as SPX does not have a weekly close above 5783 we continue to recommend reducing risk and shifting to defensives,and this is the ideal time to do so.

• In reviewing the latest results from Edwards Lifesciences, notable elements of growth and development paired with challenges shed light on the company’s financial and operational trajectory during the second quarter of 2024.
• With total company sales reaching $1.6 billion, this marked an 8% increase on a constant currency basis compared to the same period last year.
• While Transcatheter Aortic Valve Replacement (TAVR) growth was not as robust as expected, increasing by 6% globally, the Transcatheter Mitral and Tricuspid Therapies (TMTT) segment demonstrated impressive growth, with a 75% increase in sales.

• MIRA Pharmaceuticals(MIRA) Company Sponsored Research Report

• In its latest monthly update, China Traditional Chinese Medicine (570 HK) fleshes out the latest on the various PRC regulatory applications. 
• Comparing the two most recent monthly updates side-by-side, apart from modifying the documentation for the MOC and NDRC process; the SAMR filing has been formally accepted, as previously flagged. 
• The upshot? These regulatory approvals will be secured. The key question is whether this can take place before the 18th October pre-condition long stop date. Or an extension is required.

• KOSDAQ stocks are expected to make up 10-15% of the Value-Up Index, with 10-15 names benefiting. Even with smaller passive funds, the impact on these stocks could be significant.
• KOSDAQ Global Index criteria overlap with the Value-Up Index, and KRX’s push suggests many KOSDAQ Global stocks will also appear in the Value-Up Index.
• In the past 30 days, the KOSDAQ Global Index dropped 5.14%, but 5 of the top 10 gainers either announced value-ups or received value-up picks from brokers.

• The biosimilar market is forecast to grow three to four times faster than the generic drug market over the next five years.
• However, we believe that this high growth will not necessarily imply good profitability, given the early stage of the biosimilar market, complications and competition.
• We also believe that the company’s guidance is too optimistic resulting in an expensive multiple. We prefer some room for error.  

• BioAge Labs, a clinical-stage biopharma company backed by a leading syndicate of biotech investors, filed to go public in the United States.
• Anti aging and obesity biopharma startup is purely focused on chronic metabolic diseases and established partner agreements with Amgen and Eli Lilly.
• I have a positive view of upcoming BioAge Labs IPO and expect a strong first-day return above the IPO offer price.

• The sudden high growth in 2023 was benefited from the cooperation with related party Shandong LinkChem. Is the performance growth driven by LinkChem’s reliance on related party transactions sustainable?
• LinkChem relies heavily on limited number of customers to contribute performance but the customer stability is not strong.Due to “low voice” in front of customers, cash flow is under pressure.
• The barrier of terbium chloride product is not high and LinkChem will face fierce competition in the future, leading to decreasing YoY growth revenue. Valuation should be lower than peers.

• In 1H FY01/25, the company reported no operating revenue, an operating loss of JPY1.6bn, and R&D expenses of JPY1.0bn.
• Non-operating income was JPY401mn, primarily from foreign-exchange gains, while non-operating expenses totaled JPY16mn, resulting in a recurring loss of JPY1.2bn.
• The company received conditional marketing approval for SB623 in July 2024, with expected sales to begin in Q1 FY01/26.

• On the surface, it seems that Hengrui’s performance growth in 24H1 is very high, but if excluding the upfront payment from Merck, the Company’s performance actually falls short of expectations.
• Our forecast of revenue growth in 2024, 2025, 2026 (excluding Merck’s upfront payment) is 12% YoY, 8% YoY, 15% YoY, respectively. By 2026, Hengrui may still suffer from VBP.
• Hengrui is overvalued and reasonable P/E is about 30 (or lower). We also don’t think Hengrui’s valuation should be higher than that of BeiGene. Current high valuation cannot be justified.

• Max Healthcare Institute (MAXHEALT IN) to acquire controlling stake in Jaypee Healthcare (JHL), which owns 3 hospitals in Uttar Pradesh, including the renowned 500-beds Jaypee Hospital, Noida.
• JHL reported revenue of INR4.21B and EBITDA of INR70M in FY24. With an EV of INR16.6B, the deal values JHL at EV/EBITDA of 23.7x, which seems reasonable.
• This acquisition will significantly enhance Max Healthcare’s network and strengthen its leadership position in NCR, a region which is home to around 46M people.

• 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.

• After Crescent Capital ‘s National Dental Care’ (NDC) A$2.05/share Offer, by way of Scheme, failed on the 9 August. it was just a question of when Genesis re-loaded its Offer.
• Genesis has now announced a A$1.90/share off-market Offer ( its 29 July A$1.90/share approach was a Scheme), conditional on a 90% minimum acceptance. Pricing falls within the IE’ fair value range.
• Pacific Smiles (PSQ AU)‘s board previously gave unanimous support for NDC’s prior A$1.90/share Offer. The question is whether the 90% hurdle is met. I think it will.

• 23andMe, the renowned genetic testing and health data company, has recently garnered significant attention with its co-founder and CEO, Anne Wojcicki, expressing openness to considering third-party acquisition offers.
• This comes on the heels of her ongoing efforts to take the company private, despite the board’s rejection of her initial proposal.
• With a combination of promising proprietary assets and a shaky financial trajectory, 23andMe finds itself at a crossroads.

• Sagility India (2058883D IN) is looking to raise US$500m in its upcoming India IPO.
• Sagility India is a pure-play healthcare focused solutions and services provider to Payers  and Providers.
• In this note, we look at the firm’s past performance.

• 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: Yichang HEC Changjiang Pharma (1558 HK), Raysum Co Ltd (8890 JP), Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK), China Traditional Chinese Medicine (570 HK). 
• Lowest spreads: Fuji Soft Inc (9749 JP), Dyna Mac Holdings (DMHL SP), Seven & I Holdings (3382 JP), Tohokushinsha Film (2329 JP), Alps Logistics (9055 JP). 

• Pro Medicus Ltd (PME AU) will be added to the MV Australia Equal Weight Index while IGO Ltd (IGO AU) and nib holdings (NHF AU) will be deleted.
• Constituent changes, float changes and capping changes result in a one-way turnover of 6.9% leading to a round-trip trade of A$330m.
• Shorts are pretty big in Pro Medicus Ltd (PME AU) while there has been a recent spike in short interest for IGO Ltd (IGO AU). 

• Tiantan plans to acquire 100% equity of Zhongyuan Ruide from CSL Behring ASIA PACIFIC LIMITED for US$185 million, so as to consolidate its leading position in blood products industry.
• BeiGene is accused of trade secrets theft by AbbVie. Considering AbbVie is good at using legal means to profit for itself, this lawsuit may become full of uncertainty in US.
• The House passed BIOSECURE Act to make drug companies stop doing business with Chinese CXO.The probability of this Bill passing is high. We recommend prepare for worst-case scenario in advance.

• Insulet Corporation has demonstrated robust financial performance in the second quarter of 2024, aligning with the company’s primary goal of enhancing diabetes management through its Omnipod products.
• Jim Hollingshead, the CEO, highlighted the significant demand for Omnipod 5, which has been central to the company’s growth both domestically and internationally.
• The company’s innovation trajectory remains strong with numerous product launches, including the full market release of Omnipod 5 integrated with Dexcom’s G7.

• Operating revenue increased 79.6% YoY to JPY1.5bn, driven by strong sales of TDM-621 across multiple regions.
• Operating loss narrowed to JPY317mn, with SG&A expenses rising 16.0% YoY to JPY1.2bn and R&D expenses up 1.7% YoY.
• Recurring loss of JPY787mn, including foreign exchange losses of JPY449mn and interest expenses of JPY21mn.

• Revenue: JPY3.3bn (-1.9% YoY), Operating profit: JPY388mn (-62.8% YoY), Recurring profit: JPY496mn (-52.3% YoY), Net income: JPY374mn (-44.6% YoY).
• Contract processing services revenue: JPY2.0bn (-12.9% YoY), Consulting services revenue: JPY161mn (-54.9% YoY), Medical device sales: JPY711mn (+35.4% YoY), Cosmetics sales: JPY419mn (+145.0% YoY).
• Revised earnings forecast for FY10/24: Revenue JPY4.4bn (-3.0% YoY), Operating profit JPY420mn (-65.6% YoY), Recurring profit JPY527mn (-55.9% YoY), Net income JPY417mn (-54.8% YoY).

• Duality Biotherapeutics, a China-based clinical-stage biotechnology company, plans to raise up to US$300m via a Hong Kong listing.
• In this note, we examine the company’s two core products, namely DB-1313 (HER2 ADC) and DB-1311 (B7-H3 ADC). We think the company’s products are not yet convincing.
• While the management has expertise as biotech investors, biotech-related operational experience seems to be lacking.

• HealthEquity recently shared its fiscal second quarter 2025 results, showcasing strong growth driven by strategic initiatives and integration gains from the BenefitWallet asset acquisition.
• The company, under the leadership of President and CEO Jon Kessler and CFO James Lucania, outlined its current position and future direction during the latest discussion.
• The company posted impressive financial results, with a 23% year-over-year revenue increase.

• Terumo Corp (4543 JP) was able to hang in well after the announcement, up until the day or two before pricing date, then the shares were walloped into Pricing. 
• After pricing, they have fallen and erased most of the discount. That’s an opportunity. 
• The shares have underperformed Peers, and there is flow to come. This deal was, as advertised, smaller than it first appeared. 

• 2024 would be the low point in performance/valuation of Sinopharm. Due to the low base in 2024, revenue/net profit in 2025 is expected to rebound (e.g. high single-digit positive growth).
• Declining financial cost ratio is key driving force for profitability.Since the Fed would cut interest rate, a low interest rate environment helps Sinopharm reduce financial costs, thereby increasing profit margin.
• Since China hopes to establish a valuation system with Chinese characteristics, it would help drive up valuation of SOEs.Thus, there’s valuation repair opportunity for Sinopharm (e.g. P/E return to 8).

• Shield is a commercial-stage pharma company delivering specialty products that address the unmet medical need of patients with iron deficiency (ID).
• Since its July 2021 US launch, Shield and Viatris have increased physician awareness of the differentiating characteristics of ACCRUFeR® as an oral ID drug, in order to generate sales traction.
• 1H’24 results have confirmed that sales continue to progress well, while costs have been closely controlled.

OSE Immunotherapeutics has announced the initiation of its Phase III registrational study (Artemia) for lead cancer vaccine Tedopi, with the trial launching in the US, Canada, Europe and the UK. Artemia is a confirmatory pivotal trial designed to assess the efficacy and safety of Tedopi as a monotherapy versus the standard of care (SoC) in HLA-A2 positive patients with metastatic non-small cell lung cancer (NSCLC) and secondary (acquired) resistance to immune checkpoint inhibitors (ICIs). The primary endpoint is overall survival (OS) and we expect top-line results in 2027. If the data are positive, this should support a regulatory registration in the second-line setting in Europe and North America.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Teva’s ESG as “Adequate”, in line with its “Adequate” Environmental and Social scores. The company has “Strong” Governance. Controversies are “Material”, but Disclosure is “Strong”.