In today’s briefing:
- Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (04 Aug)
- Pre-IPO Heartflow (HTFL US – Thoughts on the Business and Valuation Outlook
- Sumitomo Pharma (4506 JP): Orgovyx, Gemtesa Strong; Promise in Oncology and Regenerative Line Up
- Bausch Health Strikes Bold With Durect Buy: A Strategic Bet On Liver Therapies?
- Innogen (银诺医药) Pre-IPO Update: Cuts in Market Forecasts
- Otsuka Holdings (4578 JP): Better-Than-Expected 1H Performance Leads 2025 Guidance Raise
Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (04 Aug)
- Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
- Highlight: Currently six pair trade opportunities across three markets and three sectors persist.
- Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.
Pre-IPO Heartflow (HTFL US – Thoughts on the Business and Valuation Outlook
- HeartFlow submitted its prospectus, targeting a valuation of up to US$1.32 billion in US IPO. Heartflow is seeking up to US$212.5 million by offering 12.5 million shares priced between US$15-17/share.
- HeartFlow’s moat includes a first-mover advantage, medical insurance network, and ecological cooperation with equipment manufacturers. However, the accuracy of its products is slightly inferior to that of similar Chinese products.
- Our forecast is revenue to up 35% YoY/30% YoY/25% YoY in 2025/2026/2027. HeartFlow may achieve breakeven in 2027. Comfortable valuation could be P/S of 7-9x if based on 2025E revenue.
Sumitomo Pharma (4506 JP): Orgovyx, Gemtesa Strong; Promise in Oncology and Regenerative Line Up
- Sumitomo Pharma (4506 JP) reported 19% YoY (negative Fx impact of 7%) revenue growth during Q1FY26 to ¥108B, mainly driven by North America.
- Orgovyx witnessed growth in medicare patients due to reduction in out-of-pocket caps and Gemtesa on the other hand improved market share employing price focussed strategy.
- Sumitomo Pharma is well on track moving ahead of the significant losses suffered in FY23 and FY24, focusing on expanding revenue, reducing costs, and securing future business drivers.
Bausch Health Strikes Bold With Durect Buy: A Strategic Bet On Liver Therapies?
- Bausch Health Companies has made headlines with its definitive agreement to acquire liverfocused biotech Durect Corporation (NASDAQ:DRRX) for $1.75 per share in cash, representing a ~217% premium to DRRX’s pre-announcement closing price and valuing the deal at approximately $63 million upfront.
- In addition, contingent milestone payments linked to commercial sales could push the total consideration to $413 million.
- The acquisition, expected to close in Q3 2025, adds Durect’s lead candidate larsucosterol to Bausch’s pipeline—a drug that has demonstrated encouraging Phase 2 data for alcoholic hepatitis (AH) and is preparing for a Phase 3 registrational program.
Innogen (银诺医药) Pre-IPO Update: Cuts in Market Forecasts
- Innogen, a China-based near-commercial stage biotech company, is looking to raise at least USD 100 million via a Hong Kong listing. CITIC Securities and CICC are the joint sponsors.
- In this note, we look at changes to the company’s PHIP prospectus.
- While there is no major update to the asset lists, we do see that the market forecasts provided in the prospectus scaled down significantly.
Otsuka Holdings (4578 JP): Better-Than-Expected 1H Performance Leads 2025 Guidance Raise
- Otsuka Holdings (4578 JP) sees 7% revenue growth in 1H25, despite negative Fx impact. Mainstay pharmaceutical business (+9% YoY) drove revenue. Rexulti and Abilify franchise were strong.
- Otsuka kept 2025 revenue guidance unchanged, the company raised guidance for business, operating, and net profits for 2025 mainly due to lower than anticipated operating expenses due to Fx impact.
- Otsuka stated that pharmaceutical business has no impact by additional US tariffs. Two top selling drugs are steadily gaining traction. Going ahead, new launches should further drive growth.
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