'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<p style="text-align: center;"><strong>- MARKET COMPOSITE -</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/436/original/2019-03-10_11-07-01.png?1552183736" class="editor-image img-responsive" data-smartkarma-image-id="81436"></figure><div style="text-align: center;" class="content-caption">Source: Japan Analytics</div><div>
<strong>SOUTHBOUND </strong>- The upside we anticipated two weeks ago turned out to be only ¥6t before the harsh realities of some weak macro data intervened and sent the market 3% lower over the last two trading days suggesting the bear market rally is now over. After peaking at 48%, the market-value-based percentage above the weighted sum of moving averages has now retreated to 33%. </div><hr><p style="text-align: center;"><strong>- SECTORS - </strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/437/original/2019-03-10_11-38-43.png?1552185548" class="editor-image img-responsive" data-smartkarma-image-id="81437"></figure><div style="text-align: left;" class="content-caption">
<strong>LEGEND</strong>: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.</div><p><strong>SECTOR BREAKDOWN</strong> - The top six sectors remain domestic and defensive and are unchanged from two weeks ago with <strong>REITs</strong>, the clear leader. Equally predictable is the bottom half-dozen - <strong>Banks</strong>, <strong>Non-Bank Finance</strong>,<strong> Retail</strong>,<strong> Autos</strong>, and <strong>Metals</strong> remain from two weeks ago, with <strong>Machinery</strong> replacing <strong>Construction</strong>. <strong>Banks</strong> stay at the bottom, and the sector had its largest volume 'day' as measured by our Volume Score since September 21st, 2018 on Friday although many other sectors were 'active.' </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/440/original/2019-03-10_11-54-26.png?1552186476" class="editor-image img-responsive" data-smartkarma-image-id="81440"></figure><div class="content-caption">Source: Japan Analytics</div><hr><p style="text-align: center;"><strong>- COMPANIES -</strong></p><p><strong>COMPANY MOVING AVERAGE OUTLIERS </strong>- As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. <strong>We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. </strong></p><div class="content-highlight">
<p>In the <strong>DETAIL</strong> section below, we highlight the current top and bottom twenty-five large capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note.</p>
<p>Our most extreme positive outlier two weeks ago, <strong><a href="https://www.smartkarma.com/entities/26181" target="_blank" data-smartkarma-citation="entities:26181:1">Pksha Technology (3993 JP)</a></strong> declined by 8% and 'tops' our most negative two-week change list, while the most negative outlier<strong> <a href="https://www.smartkarma.com/entities/24540" target="_blank" data-smartkarma-citation="entities:24540:1">SanBio (4592 JP)</a> </strong>rose by 3%. <strong><a href="https://www.smartkarma.com/entities/8244" target="_blank" data-smartkarma-citation="entities:8244:1">Leopalace21 (8848 JP)</a> </strong>which was also featured recovered by 9%.</p>
<p><strong><a href="https://www.smartkarma.com/entities/2709" target="_blank" data-smartkarma-citation="entities:2709:1">AnGes (4563 JP)</a> is currently the most extreme large cap positive outlier having peaked at '492' on 26th February up from a 'trough' of -132 in December. Biotechnology peer <a href="https://www.smartkarma.com/entities/24540" target="_blank" data-smartkarma-citation="entities:24540:1">SanBio (4592 JP)</a> is, for the third time this year, the most extreme negative outlier, having topped the 13th January and 24th February positive outlier lists and is another 'round-tripper'. </strong></p>
</div><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/441/original/2019-03-10_12-13-00.png?1552187591" class="editor-image img-responsive" data-smartkarma-image-id="81441"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/442/original/2019-03-10_12-17-48.png?1552187878" class="editor-image img-responsive" data-smartkarma-image-id="81442"></figure><p>Source: Japan Analytics</p>
</div>

- MARKET COMPOSITE -Source: Japan Analytics
SOUTHBOUND - The upside we anticipated two weeks ago turned out to be only ¥6t before the harsh realities of some weak macro data intervened and sent the market 3% lower over the last two trading days suggesting the bear market rally is now over. After peaking at 48%, the market-value-based percentage above the weighted sum of moving averages has now retreated to 33%. - SECTORS - 
LEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.SECTOR BREAKDOWN - The top six sectors remain domestic and defensive and are unchanged from two weeks ago with REITs, the clear leader. Equally predictable is the bottom half-dozen - Banks, Non-Bank Finance, Retail, Autos, and Metals remain from two weeks ago, with Machinery replacing Construction. Banks stay at the bottom, and the sector had its largest volume 'day' as measured by our Volume Score since September 21st, 2018 on Friday although many other sectors were 'active.' Source: Japan Analytics- COMPANIES -COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. 
In the DETAIL section below, we highlight the current top and bottom twenty-five large capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note.
Our most extreme positive outlier two weeks ago, Pksha Technology (3993 JP) declined by 8% and 'tops' our most negative two-week change list, while the most negative outlier SanBio (4592 JP) rose by 3%. Leopalace21 (8848 JP) which was also featured recovered by 9%.
AnGes (4563 JP) is currently the most extreme large cap positive outlier having peaked at '492' on 26th February up from a 'trough' of -132 in December. Biotechnology peer SanBio (4592 JP) is, for the third time this year, the most extreme negative outlier, having topped the 13th January and 24th February positive outlier lists and is another 'round-tripper'. 

Source: Japan Analytics


🇯🇵 Japan: Moving Average Outliers - AnGes, SanBio, Adastria, AIN, Sumco & Benefit One

Asia Healthcare Analyst, Pathology Associates Limited

Dion Stéfan Büchner M.D., FCAP

Asia Healthcare Analyst

Pathology Associates Limited

Equity Bottom-Up

<ul>
<li>AnGes secures ~24+ months cash burn runway even under a conservative assumption of the company being able to raise only ~$70m or 75% of the anticipated proceeds (due to stock price volatility).</li>
<li>As a result, AnGes would remain adequately funded to: <ul>
<li>Undertake post-marketing surveillance of HGF gene therapy (“real-world” data critical to apply for un-conditional approval in Japan)</li>
<li>progress ongoing/upcoming clinical trials</li>
</ul>
</li>
<li># Share issuance capped at 16m implies maximum potential dilution of ~17.6% over the next two years</li>
<li>We retain our OW rating and maintain our “base case” DCF derived fair value of ¥ 400 / share.</li>
<li>However, we reiterate that AnGes’ fair value is highly sensitive to its HGF gene therapy’s probability of success in the US (Ph III, PoS 40%) and as such any guidance on execution of its development strategy for the US (aimed at timely launch) could result in an increased probability of success.</li>
<li><div class="content-highlight">Consequently, we arrive at a DCF based fair value range between ¥ 400 / share (base case, PoS 40%) to ¥ 1,100 / share (PoS 55%).</div></li>
</ul>


AnGes secures ~24+ months cash burn runway even under a conservative assumption of the company being able to raise only ~$70m or 75% of the anticipated proceeds (due to stock price volatility).
As a result, AnGes would remain adequately funded to: 
Undertake post-marketing surveillance of HGF gene therapy (“real-world” data critical to apply for un-conditional approval in Japan)
progress ongoing/upcoming clinical trials


# Share issuance capped at 16m implies maximum potential dilution of ~17.6% over the next two years
We retain our OW rating and maintain our “base case” DCF derived fair value of ¥ 400 / share.
However, we reiterate that AnGes’ fair value is highly sensitive to its HGF gene therapy’s probability of success in the US (Ph III, PoS 40%) and as such any guidance on execution of its development strategy for the US (aimed at timely launch) could result in an increased probability of success.
Consequently, we arrive at a DCF based fair value range between ¥ 400 / share (base case, PoS 40%) to ¥ 1,100 / share (PoS 55%).


Announces Stock Issuance; Maintain OW - Potential Dilution Only Slightly Higher Than Anticipated

<ul>
<li>
<strong>HGF Plasmid</strong> (Beperminogene Perplasmid), <a href="https://www.smartkarma.com/entities/2709" target="_blank" data-smartkarma-citation="entities:2709:1">Anges Mg Inc (4563 JP)</a>’ mainstay pipeline product for critical limb ischemia (CLI), has faced numerous clinical setbacks, both in Japan and in the US.</li>
<li>However, after a decade-long pursuit, it is now finally close to approval in Japan and AnGes has set its sights on a new development strategy in the US with modified primary endpoints.</li>
<li>Japanese HGF gene therapy approval will undoubtedly bring immediate cheer to investors; however, re-commencement of the US Ph III trials for HFG gene therapy will be a major and long-term sentiment booster, leading to re-rating of the stock.</li>
<li>
<strong>NFκB Decoy Oligonucleotide</strong> for lumbar disk degeneration and <strong>DNA vaccine </strong>for hypertension are attractive drivers of long term value.</li>
</ul>



HGF Plasmid (Beperminogene Perplasmid), Anges Mg Inc (4563 JP)’ mainstay pipeline product for critical limb ischemia (CLI), has faced numerous clinical setbacks, both in Japan and in the US.
However, after a decade-long pursuit, it is now finally close to approval in Japan and AnGes has set its sights on a new development strategy in the US with modified primary endpoints.
Japanese HGF gene therapy approval will undoubtedly bring immediate cheer to investors; however, re-commencement of the US Ph III trials for HFG gene therapy will be a major and long-term sentiment booster, leading to re-rating of the stock.

NFκB Decoy Oligonucleotide for lumbar disk degeneration and DNA vaccine for hypertension are attractive drivers of long term value.


Japan Approval of HGF Gene Therapy to Initiate Re-Rating of The Stock

Japan

AnGes MG, Inc. develops gene-therapy drugs that use Hepatocyte Growth Factor (HGF) for myocardial infarction and arteriosclerosis patients.  The Company also develops nucleic acid drug (decoy oligo) for patients with asthma, allergy, and rheumatism.  AnGes MG develops vectors (a carrier used to introduce a foreign gene into a host cell) which help study and analyze genetic functions.

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Anges Mg Inc (4563 JP)

🇯🇵 Japan: Moving Average Outliers - AnGes, SanBio, Adastria, AIN, Sumco & Benefit One

- MARKET COMPOSITE - SOUTHBOUND - The upside we anticipated two weeks ago turned out to be only ¥6t before the harsh realities of some weak macro...

Campbell Gunn

Announces Stock Issuance; Maintain OW - Potential Dilution Only Slightly Higher Than Anticipated

AnGes secures ~24+ months cash burn runway even under a conservative assumption of the company being able to raise only ~$70m or 75% of the...

Dion Stéfan Büchner M.D., FCAP

Japan Approval of HGF Gene Therapy to Initiate Re-Rating of The Stock

HGF Plasmid (Beperminogene Perplasmid), Anges Mg Inc (4563 JP)’ mainstay pipeline product for critical limb ischemia (CLI), has faced numerous...

Dion Stéfan Büchner M.D., FCAP

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