Health Care Archives | Page 76 of 137 | Smartkarma

• The closing date of the Eoflow (294090 KS)/Medtronic Plc (MDT US) transaction has been extended from 25 October 2023 to 3 January 2024. All other terms are unchanged.
• The bull view is that despite the preliminary injunction and share suspension, Medtronic’s move underscores its commitment to the transaction on current terms.
• The bear view is that the extension was Medtronic’s best move as it retains option value should Insulet’s lawsuit start floundering in court and KRX reinstate trading in Eoflow shares. 

• On 25 October, Eoflow announced that the M&A of Eoflow by Medtronic has been postponed. 
• The closing date for Eoflow’s stock transfer agreement with Medtronic has now been changed to 3 January 2024. 
• Although we believe Medtronic will continue to pursue Eoflow, the M&A tender offer price could be lowered to about 26,000 won, which would be nearly 20% higher than current price.

• We must acknowledge that the acquisition contract has not been withdrawn, signifying that we have averted the worst-case scenario.
• During the shareholders’ meeting on November 15th, it is crucial for us to pay attention to whether personnel from Medtronic are included in the list of new board candidates.
• If that’s the case, we can infer that Medtronic intends to go through with this deal, regardless of the litigation issues in the United States.

• When EOFlow (294090 KS) was suspended on the 11th October, and ceased global sales, either the Medtronic (MDT US) deal was (largely) toast; or it was a tactical move. 
• I’m firmly in the latter camp. Insulet‘s lawsuit was expected. And completing the transaction enables the more financially and legally resource-rich MDT to become the party to the litigation.
• The SPA between Jesse Kim and MDT was expected to complete on 25 October. That was not a hard date. It has now been pushed out to 3 January 2024. 

• WuXi XDC Cayman Inc (1877628D HK) is looking to raise around US$500m in its upcoming Hong Kong IPO.
• WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
• In our previous notes we looked at the company’s past performance and peer comparison. In this note, we discuss our thoughts on valuation.

• The early-stage clinical data of Hansoh’s B7-H4 ADC showed good potential, thus attracting GSK’s attention. This would allow GSK to re-enhance the layout of ADC pipelines after its previous setbacks.
• However, if future clinical data fail to meet expectation, GSK could return the product to Hansoh. After all, US$85 million upfront is more likely to test the waters for GSK.
• Hansoh is already one step ahead of Hengrui in terms of internationalization. This short-term catalyst would no doubt help lift share prices, but the logic behind the rebound is shaky.

• Curexo Inc (060280 KS) has been showing sales growth for five consecutive quarters since Q1 2022, mainly driven by the medical robot business, which accounts for nearly 50% of sales.
• In 2Q23, Curexo’s medical business sold 29 units and recorded highest quarterly sales of KRW9,744M (up 173% YoY and 15% QoQ), driven by strong demand in domestic and Indian market.
• Curexo raised 2023 sales guidance to KRW74 billion from KRW70 billion. Medical business is expected to sell 100 units and register revenue of KRW35 billion in 2023.

• The groups with over 30% female board members and 25%-30% have higher percentage of foreign shareholders, suggesting that overseas investor engagement drives raising the ratio and that awareness is high.
• Groups with 0% female board members include small companies and are distant from overseas investor engagement, but are unlikely to improve practices substantially, given that they have no female executives.
• The group with over 30% female board members had noticeably higher ROE and Tobin’sQ than those with 25%-30%, which suggests that the high ROE was highly valued by overseas investors.

Actinogen is refining the design of its XanaMIA Phase IIb study of lead candidate Xanamem in patients with cognitive impairment (CI) associated with mild-to-moderate Alzheimer’s disease (AD). The study will forego the 5mg dose group and will concentrate on the 10mg dose, which has already shown effectiveness in the subgroup analysis of XanADu as reported in Q422. The XanaMIA Phase IIb study will continue to assess c 110 AD patients in the 10mg dose cohort, as well as a placebo arm, and will concentrate on Australian test sites for the first 100 enrolled patients. These measures are expected to significantly reduce study costs, as Actinogen expects c A$30m in cost savings between now and June 2025 compared to its initial plan. Given that US sites may not begin recruitment for another c 12–18 months, we are pushing back our projection for study completion until CY26 (from H2 CY25 previously) and our timeline for potential Xanamem commercialisation in AD to CY29 (from CY28 previously). In September, Actinogen completed a A$10m rights offering and we now expect the company to be funded into Q424 (Q2 CY24). We determine a new risk-adjusted net present value (rNPV) of A$528m, versus A$645m previously.

Paradigm reported favourable quantitative MRI data from the six-month analysis of the Phase II trial (PARA OA 008) evaluating a single six-week course of injectable pentosan polysulfate sodium (iPPS) treatment at 2mg/kg twice weekly in knee osteoarthritis (kOA) patients. This analysis provides more precise numerical measurements from the semi-quantitative analysis shared in April. In both studies treated patients exhibited increased cartilage thickness and volume in knee joints in patients, while the placebo group experienced reductions in both. The reversal of structural changes in the cartilage (structural changes in the knee joint are associated with the natural course of kOA) resulted in reduced bone marrow lesions and synovitis intensity as well as enhanced joint function. While the range of responses was not shared, and the number of treated patients is small (n=15), the recent data, coupled with the 12-month durable clinical responses disclosed last week, support iPPS as a potential disease-modifying treatment for kOA and address an unmet need. The company reiterated its plans to file a Provisional Approval application to the Australian regulatory authority and use the identified optimal dose of iPPS in the registration programmes.

• Hansoh Pharmaceutical Group (3692 HK) entered into a license agreement with GlaxoSmithKline PLC (GSK LN) for a B7-H4 targeted antibody-drug conjugate candidate, HS-20089, targeted toward gynecological cancers.  
• Hansoh will receive an upfront payment of $85M and be eligible to receive milestone payments of up to $1.485B subject to achievement of relevant milestone events with respect to HS-20089.
• Currently, HS-20089 is in phase 1 clinical trial in China. GSK plans to begin phase 1 trial of HS-20089 outside of China in 2024.

• WuXi XDC Cayman Inc (1877628D HK) is looking to raise around US$500m in its upcoming Hong Kong IPO.
• WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
• In our previous note we looked at the company’s past performance, in this note we will undertake a peer comparison.

• Angelalign’s internationalization strategy requires significant ongoing marketing spending. Lower-tier market expansion in China requires Angelalign to continuously reduce product prices to cope with the low-price strategies of other domestic competitors.
• Angelalign is in a period of business transformation. High SG&A expenses help increase market share, but may not necessarily result in improvement in profit margin. Angelalign actually lacks core competitiveness.
• We remain conservative on Angelalign’s outlook at this stage. It’s difficult for Angelalign to make significant improvements in financial performance or reversal of fundamentals in the short term. 

• Celltrion Chairman Seo made a public statement, affirming that they are prepared to bear the entire cost, even if it exceeds the ₩1T ceiling, and proceed with the merger. 
• The relatively substantial cost risk associated with Celltrion Inc. due to the involvement of NPS is causing the merger swap spread to widen once more in comparison to Celltrion Healthcare.
• If the prices persist above the appraisal rights exercise prices, the relative cost risk for Celltrion Inc. could escalate, leading to a significant widening of the swap spread.

• 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 – 111 Inc (YI US), Eoflow (294090 KS), Hollysys Automation Technologies (HOLI US), JSR Corp (4185 JP), Haitong International Securities Group (665 HK), Lithium Power International (LPI AU). 
• Lowest spreads – Healius (HLS AU), Pact Group Holdings (PGH AU), Origin Energy (ORG AU), T&K Toka Co Ltd (4636 JP), Kenedix Retail REIT (3453 JP), Chindata Group (CD US).

• In 3Q23, Intuitive Surgical (ISRG US) recorded 12% YoY revenue growth to $1.74B, driven by growth in da Vinci procedure volume and an increase in the installed base of systems.
• 3Q23 procedure growth was 19%, versus 20% in 3Q22 and 22% in 2Q23. Systems revenue declined 11%, due to higher number of systems placed under lease and lower China demand.
• The company now expects 2023 procedure volume growth of 21–22%, up from previous estimates of 20–22%. Significant material supply chain disruptions or hospital capacity constraints are not expected.

• While the number of companies with majority of independent directors is still small (15.7% of the Metrical Universe as of September 2023), the number of those companies is steadily increasing.
• The group of companies with over 50% independent director are superior in market capitalization, ratio of foreign shareholders, ratio of female board members, ROE, ROA, Tobin’s Q, and Metrical Score.
• Given that the presence of overseas investors remains high, profitability, share price valuation, and corporate governance practices such as independent director ratios will continue to improve in the future.

• 3Q23 is expected to achieve over 40% YoY growth. 2023 overall performance would be better than previous guidance- Revenue up 40+% YoY and adjusted net profit up about 45% YoY.
• With abundant cash flow, Gushengtang has increased dividend payouts and share buyback, indicating that the current stock price is undervalued and has not yet reflected its high growth expectations/healthy fundamentals.
• Gushengtang has cross-regional expansion capability. The “sustainability” + “high growth” of performance are worth noting. Depressed sentiment/complex external environment provide a good buying opportunity. Rebound in stock price is expected.

• Weight loss and Alzheimer’s disease (AD) have been ranked among the top indications in the pharmaceutical history and are undeniable opportunities, but they are expected to generate different investment returns.
• We have noticed that some companies have started developing GLP-1 gene therapy. We would be cautious about this.
• Without strong fundamentals but is eager to go public on A-share market, AIM Vaccine (6660 HK) seems more enthusiastic about capital operations to make quick money.We consider this company risky.

• Managers self-analyze the factors that lead to P/B of below 1x, as companies fail to appreciate their growth potential and to ensure profitability in excess of their cost of capital.
• This seems to be dilemma in that companies’ failure to realize sufficient profitability, along with insufficient growth investments, prevents them from sharing the image of corporate value growth with investors.
• Managers believe that the first step is to improve ROE by reshuffling business portfolios and promoting profitability improvement, but reducing excess cash and increasing shareholder returns should be pursued simultaneously.

• Blue Jet Healthcare Ltd (BJHC IN) is a CDMO focusing on specialty pharmaceutical and healthcare ingredients and intermediates. The company targets to raise $100M from its upcoming India IPO.
• The IPO, which will open for subscription on October 25, consists of OFS of 24.3M shares by two of the promoters. The price range has been fixed at INR329–346/share.
• Blue Jet enjoys a competitive advantage in the global contrast media market through established customer relationships with the top contrast media manufacturers. The company is on a capacity expansion spree.

Basilea has announced an expansion of its portfolio to foster long-term growth, a key strategic priority for management, leveraging expertise in the commercialisation of its two key anti-infective products, Cresemba and Zevtera. The company will in-license GR-2397, a clinical-stage antifungal compound targeting invasive mould infections, mainly caused by the Aspergillus species. The Phase II-ready asset has Qualified Infectious Disease Product, Orphan Drug and Fast Track designations from the US FDA for invasive aspergillosis, which often leads to priority review post a New Drug Application (NDA) filing and grants 10 years of US market exclusivity. Basilea will make an upfront payment of $2m, followed by ~$69m in milestones and tiered royalties. Our valuation of Basilea remains unchanged, and will be reassessed once additional information becomes available.

• Many of the companies that didn’t meet the listing criteria for the prime market still failed to gain market recognition over an 18-month period and moved to the standard market.
• It is believed that TSE expects more companies to gradually drop out of Prime Market by raising the hurdle for effort targets that aren’t explicitly stated in the listing criteria.
• As quality differences gradually emerge between the Prime and Standard markets, the rift between management awareness and shareholders of Standard market-listed companies is likely to deepen in the future.

• Telix Pharmaceuticals (TLX AU) reported net operating cash inflow for 3Q23 of A$21.4M, a A$10.6M improvement on the prior quarter and fourth consecutive quarter of positive operating cash flow.
• In 3Q23, revenue from U.S. sales of Illuccix improved 13% QoQ to A$130.6M. Telix is progressing new marketing authorizations for Illuccix in several jurisdictions, including the U.K., EU, and Brazil.
• Telix announced preliminary results of its phase I ProstACT SELECT study. Although the study achieved primary endpoints, the findings noted grade 3 and 4 hematologic events.

Basilea presented a combination of eight presentations and abstracts on its antibiotic ceftobiprole (at the Infectious Diseases Week 2023 conference in Boston), which support its ongoing regulatory application with the FDA. The new data provide additional evidence on the drug’s utility and highlight ceftobiprole’s antimicrobial activity against clinically relevant pathogens, including MRSA, and support the dosing regimens utilised in the three Phase III studies for the three indications currently undergoing priority review by the FDA. As a reminder, the FDA has set a PDUFA date of 3 April 2024, which suggests that Basilea could potentially receive a regulatory decision for its lead antibiotic asset in the US in early-Q224. The FDA’s decision would be a significant catalyst for Basilea, considering the high prevalence of MRSA in US. The new data provide incremental support to the FDA application and instil confidence in a favourable outcome, in our view.

AFT Pharmaceuticals announced FDA approval for Maxigesic IV, an intravenous form of its flagship pain relief prescription medicine. The FDA approval of the post-operative pain alternative to opioids marks a material win for AFT, given the US is the largest analgesic market (estimated at nearly $7bn) and the current US regulatory hurdles in addressing pain in light of the opioid abuse epidemic. The launch at end FY24 or early FY25 is anticipated to trigger a US$6m milestone payment from Hikma Pharmaceuticals, the US licensee for Maxigesic IV. AFT’s 65% share of this milestone has the potential to provide upside to its NZ$22–24m FY24 operating profit guidance if Maxigesic IV is launched in FY24. We note that Maxigesic IV is already registered in 43 countries and is available in 21 countries (including key markets of Germany, France and Italy). The US approval is a key addition to the AFT portfolio, providing further confidence in the company’s ability to reach its previously stated near-term rolling 12-month stretch revenue target of NZ$200m, which we anticipate to be achieved on an annual basis by FY25.

• Medikaloka Hermina (HEAL IJ) remains a differentiated hospital player in Indonesia given its focus on the treatment of women and children plus its doctor partnership model in its hospitals.
• The company booked a strong rebound in both inpatient and outpatient volumes in 1H2023, and we expect this to continue into 2H, with two new hospitals opened in 3Q2023.
• Despite exhibiting the strongest growth amongst its peers, the company still trades at a significant discount to Mitra Keluarga Karyasehat Tbk (MIKA IJ) on 10.2x FY2024E EV/EBITDA. 

• VISEN’s candidates are potential Best-In-Class or represent novel technologies, but they need to obtain doctors/authorities’ recognition.The competition pattern in growth hormone market would continue to deteriorate with increasing new entrants. 
• Once the growth hormone market is taken seriously by the regulatory authorities, the industry’s growth momentum would be challenged. The actual market space could be greatly reduced as a result.
• In front of competitors with strong sales system, commercialization is a big challenge for VISEN. The Company has yet to prove this.VBP news on rhGH would weigh on market sentiment.

• Paradigm Biopharmaceuticals (PAR AU) announced phase 2 trial result, demonstrating that lead drug candidate, iPPS treats the symptoms of osteoarthritis as well as preserves and/or regenerates joint tissues.
• This is significant from a commercial perspective because the disease modifying effects of iPPS observed in the phase 2 clinical trial are expected to support a greater reimbursement.
• Paradigm’s cash position was bolstered by A$66M capital raise in Aug’22. As of June 30, 2023, the company has a cash balance of A$56.3M, which should provide runway through Q1FY25.

• In TOB case from a parent company, managers of acquired company finally realized that there’s litigation risk from shareholders if there’s flaw in their fiduciary duty to maximize shareholder interests.
• In the past, acquisitions with negative goodwill were conducted, but a TOB at a price below book value would require plausible rationales. TSE’s request to raise P/B may have affected.
• In addition to the increasing dissolution of parent-subsidiary listings, TOBs (or sales) of equity-method affiliates are expected to increase, as in the case of Daiken Kogyo.

• Agilus Diagnostics Limited (SRLL IN) is the largest diagnostics service provider in terms of number of laboratories and the second largest in terms of revenue from operations in India.
• Agilus has built an extensive network spread across 25 states and five union territories in India. An asset light model enables growth of the service network in a cost-effective manner.
• Indian diagnostics industry is expected to have a CAGR of 8–10% during FY23–28 to reach INR1,150B–1,250B in FY28, providing immense growth opportunities for large players like Agilus.

Paradigm has announced positive day-365 data from its Phase II trial (PARA_OA_008) assessing injectable pentosan polysulfate (iPPS) as a potentially disease-modifying treatment for knee osteoarthritis (kOA). The latest data show durable responses based on measures of pain and function, while confirming the company will be pursuing an iPPS (2mg/kg) twice-weekly regimen for six weeks across all of its clinical programmes for kOA. Based on this update, Paradigm now plans to proceed with a Provisional Approval application to the Therapeutic Goods Administration (TGA, the Australian regulatory authority). The day-365 data are encouraging for iPPS as a potential treatment for kOA, in our view, adding to the company’s data package to support discussions with regulatory authorities and potential partners. We note that Paradigm is awaiting full analysis of MRI data from this trial, and plans to share it in the near term.

• Since IPO, stock price of Kelun-Biotech has performed quite well. Then, the Company’s valuation fluctuated. Investors seem not excited about Sichuan Kelun-Biotech Biopharm (6990 HK)’s 23H1 performance.
• We won’t expect too much on A166 in such a difficult competitive landscape.Commercialization of SKB264 is also challenging.It’s difficult to make up the story after A166/SKB264 begin to generate revenue.
• After out-licensing all valuable/core assets to Merck, together with the departure of core R&D personnel, Kelun-Biotech has been “hollowed out”.So, Kelun-Biotech’s value lies in short-term trade rather than long-term hold.

At the AACR-NCI-EORTC conference in Boston, OSE presented the initial positive data supporting the potential efficacy of its anti-PD1 monoclonal antibody, OSE-279, in patients with advanced solid tumours, with no therapeutic option available. The interim data from the Phase I/II dose escalation study indicated that OSE-279 monotherapy exhibited manageable safety and showed preliminary signs of efficacy. Both the pharmacokinetic and pharmacodynamic profiles aligned with the company’s expectations. As a reminder, OSE-279 serves as the key anti-PD1 component in the company’s bifunctional checkpoint inhibitor (BiCKI) platform, designed to address primary (lack of response to treatment) and secondary resistance (resistance after an initial response) mechanisms. The data shared are promising with potential for OSE-279 as a monotherapy, but given the small cohort (13), we await further data from the Phase II component of the current study. Incremental positive results could provide validation for OSE-279 and the BiCKI platform approach.

• Agilus Diagnostics Limited (SRLL IN) is looking to raise around US$200m in its upcoming India IPO. The deal will be run by Citi, Axis Capital, and ICICI Securities.
• Agilus Diagnostics Limited (Agilus) is a diagnostic testing service provider.
• As per the CRISIL report, the firm was the largest diagnostics service provider in terms of number of laboratories and the second largest in terms of FY23 sales.

• Bluemtec is getting ready to complete its IPO in KOSDAQ in the next several weeks. Bluemtec operates the number one pharmaceutical e-commerce platform in Korea. 
• The company is offering 1.4 million shares in this IPO. The IPO price range is from 15,000 won to 19,000 won.
• The company sales and gross profit growth increased impressively in the past several years. The company’s sales increased at a CAGR of 60.5% from 2020 to 2022.

• Amvis Holdings Inc (7071 JP) reported 40% YoY increase in revenue to ¥23B in 9MFY23, driven by 27% YoY increase in bed capacity and 86.6% utilization rate at existing facilities.
• Operating profit grew 40% YoY to ¥6.2 billion. However, operating margin declined 10 basis points to 26.9%, due to the impact of inflation and increase in wages for long-service employees.
• Amvis announced plans to open 25 new facilities and expand 1 facility (1,308 beds) in FY24. The company plans to raise patient payments by about ¥4,000 per month in Oct’23.

• CDMO business usually have higher certainty/profit margin, and would be affected by the deterioration of overseas financing environment much later than CRO business. So, we prefer Asymchem to WuXi AppTec.
• Total market size of GLP-1s could exceed the sum of semaglutide + the vast majority of chronic disease drugs.No matter how GLP-1s expand indications, Asymchem has the opportunity to benefit.
• Asymchem needs to secure a large order related to GLP-1 drugs. Such big catalyst would certainly boost stock price, just like when COVID-19 order was received in November 2021.