Daily Brief Health Care: PolyNovo Ltd, Sumitomo Pharma, Ping An Healthcare and Technology Company Limited, ADICON Holdings Limited, SIGA Technologies, Oryzon Genomics and more

• Changes to the S&P/ASX indices, VanEck Vectors Rare Earth/Strategic Metals ETF, VanEck Vectors Junior Gold Miners ETF, Vaneck Aus Equal Weight ETF, and other indices will be implemented 17 March.
• There are plenty of stocks with multiple days of ADV to trade. Some pre-positioning would have taken place prior to announcement and positions adjusted in the last couple of weeks.
• There has been a reversal in stock performance over the last few weeks and short interest has moved a lot in some stocks.

• Sumitomo Pharma (4506 JP) completed the acquisition of Myovant Sciences. Myovant’s marketed drugs Orgovyx and Myfembree are on strong growth trajectory and have the potential to become blockbuster drugs.
• Sumitomo’s flagship drug Latuda lost patent protection in Feb’23 and has already started seeing revenue erosion. For FY23, Sumitomo has guided for Latuda revenue of $1,565 million, down 14% YoY.
• Post Latuda, newly added drugs will not be able to fully offset the effect of Latuda revenue loss. the company is not expected to launch in-house new drug before FY25.

• PAGD intends to switch from 2C model to 2B model and to reduce losses ASAP at the expense of revenue scale, so as to prove its profitability to the market. 
• B-End corporate customers with high quality and sufficient budget are limited. Once the growth of B-end corporate customers meets a bottleneck, its performance may face another decline.
• Despite the improving financial performance in 2022, we still think that we need to further observe the effect of strategic transformation and future performance of PAGD before making judgments.

• ADICON Holdings Limited (ADI HK) is looking to raise about US$400m in its upcoming HK IPO. The deal will be run by Morgan Stanley and CICC. 
• Adicon Holdings is one of the top three independent clinical laboratory (ICL) service providers in China in terms of total revenue during the Track Record Period, according to F&S.
• It offers comprehensive testing services primarily to hospitals and health check centers through an integrated network of self-operated laboratories across China. 

SIGA’s FY22 results highlighted underlying revenue diversification and clinical progression during the year. Results were broadly in line with our expectations. Growth was driven by the material uptick in international orders due to the mpox (monkeypox) outbreak ($71m of $77m orders delivered in FY22), supported by orders from the US Department of Defense (DoD) and BARDA for IV TPOXX. Consistent with prior periods, variability in replenishment of government stockpiles is a key consideration in reported revenues and margins. For FY23 and FY24 we estimate replenishment of government stockpiles will continue to remain a pillar, driven by BARDA deliveries for oral ($225m in total over FY23 and FY24 for expiry replenishment) and IV TPOXX. SIGA remains well-capitalized, with net cash of $98.8m at FY22. We adjust our estimates for the Q422 results and near-term operational visibility (introducing a slower international sales ramp-up) resulting in our valuation adjusting to $17.70/share (from $19.64).

Oryzon Genomics has nominated a new central nervous system (CNS) clinical development candidate, ORY-4001, for the treatment of rare CNS disorders including Charcot-Marie-Tooth (CMT) disease and amyotrophic lateral sclerosis (ALS). The decision follows positive data in which ORY 4001 demonstrated both an encouraging selectivity and safety profile as well as efficacy signals, triggering a strong anti-inflammatory response in preclinical in vivo models; the compound also showed positive responses in a validated CMT1A peripheral neuropathy in vivo model, which reliably recapitulates many of the symptoms of this condition in humans. In July 2022, Oryzon collaborated with the CMT Research Foundation, which helped fund the preclinical studies for ORY-4001 in CMT and, in our view, highlights the positive impact Oryzon’s partnerships can have on expediting development. The company now intends to start investigational new drug enabling studies as it progresses ORY-4001 towards clinical trials, the initiation of which would represent a future catalyst for investor attention.