Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Equity Capital Markets

<ul>
<li>Upstream Bio, a biotech company focused on developing therapeutics that address severe asthma, CRSwNP and COPD, will price its IPO in October.</li>
<li>Upstream Bio has raised ~$400M to date. Their last round was a $200M Series B led by private equity firm Enavate Sciences and Venrock Healthcare Capital Partners.</li>
<li>My DCF analysis suggests that Upstream Bio's core U.S. business (ex. COPD) may be worth ~$1.8B. The severe asthma and CRSwNP markets represent a potential $10B+ opportunity.</li>
</ul>


Upstream Bio, a biotech company focused on developing therapeutics that address severe asthma, CRSwNP and COPD, will price its IPO in October.
Upstream Bio has raised ~$400M to date. Their last round was a $200M Series B led by private equity firm Enavate Sciences and Venrock Healthcare Capital Partners.
My DCF analysis suggests that Upstream Bio's core U.S. business (ex. COPD) may be worth ~$1.8B. The severe asthma and CRSwNP markets represent a potential $10B+ opportunity.


Upstream Bio Valuation Summary, DCF Analysis Suggests U.S. Business (Ex. COPD) Is Worth ~$1.8B

<ul>
<li>Upstream Bio, a clinical-stage biotech company developing novel therapies for inflammatory and allergic diseases, filed for an IPO in the United States.</li>
<li>The biotech firm was backed by premier investors, including OrbiMed, Access Industries, Maruho Co., Samsara BioCapital, Omega Funds, and Enavate Sciences, among others.</li>
<li>I believe that company’s lead compound, verekitug (UPB-101), has a broader commercial opportunity than many investors appreciate.</li>
</ul>


Upstream Bio, a clinical-stage biotech company developing novel therapies for inflammatory and allergic diseases, filed for an IPO in the United States.
The biotech firm was backed by premier investors, including OrbiMed, Access Industries, Maruho Co., Samsara BioCapital, Omega Funds, and Enavate Sciences, among others.
I believe that company’s lead compound, verekitug (UPB-101), has a broader commercial opportunity than many investors appreciate.


Upstream Bio IPO Preview: Severe Asthma/CRSwNP Program Advancing

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&amp;A.</li><li>Last week started a busy season of medical and healthcare conferences, with obesity and cancer as major themes. SMMT led with Keytruda-beating (MRK) data in lung cancer, lifting TIL and BNTX with similar drugs.</li><li>NVO boosted amylin class of obesity drugs with positive early data, including ZLDPF, GPCR, and VKTX. </li></ul>

We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&amp;A.Last week started a busy season of medical and healthcare conferences, with obesity and cancer as major themes. SMMT led with Keytruda-beating (MRK) data in lung cancer, lifting TIL and BNTX with similar drugs.NVO boosted amylin class of obesity drugs with positive early data, including ZLDPF, GPCR, and VKTX. 

Biopharma Week in Review - September 16, 2024

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Our long-term outlook remains neutral on the S&amp;P 500 (SPX) as of our 8/6/24 Compass, after being bullish since early-November 2023.</li>
<li>Since late-July discussed expectations for a 1-to 4-month pullback/consolidation on SPX and QQQ; now it's likely to last closer to four months, and potentially 4- to 6-months from 7/17/24.</li>
<li>At that point the market will decide which way this consolidation resolves. Throughout this pullback we have said that this consolidation could end up being a significant topping pattern.</li>
</ul>


Our long-term outlook remains neutral on the S&amp;P 500 (SPX) as of our 8/6/24 Compass, after being bullish since early-November 2023.
Since late-July discussed expectations for a 1-to 4-month pullback/consolidation on SPX and QQQ; now it's likely to last closer to four months, and potentially 4- to 6-months from 7/17/24.
At that point the market will decide which way this consolidation resolves. Throughout this pullback we have said that this consolidation could end up being a significant topping pattern.


Upgrading Staples, Real Estate, and Health Care to Overweight; List of Concerns Continues to Grow

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zai-lab-ltd-94df40cf-c15e-462f-b3de-8d2d434ae935" target="_blank" data-smartkarma-citation="entities:36261:1" rel="noopener">Zai Lab (9688 HK)</a> recorded Vyvgart revenue of $10M, $13M, and $23M in 4Q23, 1Q24, and 2Q24, respectively. The company raised 2024 Vyvgart revenue guidance to $80M from $70M earlier.</li>
<li>Despite strong momentum from Vyvgart, Zai Lab still has a lot of pain points. Decelerating revenue growth from Zejula is one of them.</li>
<li>Due to its in-licensing business model, Zai Lab has lower gross profit margin of 64–65%, compared with ~80% for a typical innovator biotech company.</li>
</ul>



Zai Lab (9688 HK) recorded Vyvgart revenue of $10M, $13M, and $23M in 4Q23, 1Q24, and 2Q24, respectively. The company raised 2024 Vyvgart revenue guidance to $80M from $70M earlier.
Despite strong momentum from Vyvgart, Zai Lab still has a lot of pain points. Decelerating revenue growth from Zejula is one of them.
Due to its in-licensing business model, Zai Lab has lower gross profit margin of 64–65%, compared with ~80% for a typical innovator biotech company.


Zai Lab (9688 HK): Vyvgart Is Not the De-Risking Tool; Future Is Still Uncertain

United Kingdom

AstraZeneca PLC operates as a holding company. The Company, through its subsidiaries, researches, manufactures, and sells pharmaceutical and medical products. AstraZeneca focuses its operations on eight therapeutic areas, including gastrointestinal, oncology, cardiovascular, respiratory, central nervous system, pain control, anaesthesia, and infection.

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AstraZeneca PLC (AZN LN)

Upstream Bio Valuation Summary, DCF Analysis Suggests U.S. Business (Ex. COPD) Is Worth ~$1.8B

In my insight, I discuss DCF valuation for biotech company Upstream Bio ahead of upcoming IPO, which is expected to be priced in October

Andrei Zakharov

Upstream Bio IPO Preview: Severe Asthma/CRSwNP Program Advancing

Upstream Bio, a clinical-stage biotech company focused on severe asthma, CRSwNP, COPD, filed for US IPO. Their ex-Astellas monoclonal antibody,...

Andrei Zakharov

Biopharma Week in Review - September 16, 2024

We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.

Water Tower Research

Upgrading Staples, Real Estate, and Health Care to Overweight; List of Concerns Continues to Grow

Upgrading Staples $XLP, Real Estate $XLRE, Health Care $XLV to Overweight; List of Concerns Continues to Grow; Dow $DJI, Equal-Weight S&P 500 $RSP,...

Vermilion Research

Zai Lab (9688 HK): Vyvgart Is Not the De-Risking Tool; Future Is Still Uncertain

Zai Lab's Vyvgart revenue sees significant growth, but challenges remain with decelerating Zejula revenue and lower gross profit margins due to in...

Tina Banerjee

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Upstream Bio Valuation Summary, DCF Analysis Suggests U.S. Business (Ex. COPD) Is Worth ~$1.8B

In my insight, I discuss DCF valuation for biotech company Upstream Bio ahead of upcoming IPO, which is expected to be priced in October

Andrei Zakharov

Upstream Bio IPO Preview: Severe Asthma/CRSwNP Program Advancing

Upstream Bio, a clinical-stage biotech company focused on severe asthma, CRSwNP, COPD, filed for US IPO. Their ex-Astellas monoclonal antibody,...

Andrei Zakharov

Biopharma Week in Review - September 16, 2024

We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.

Water Tower Research

Upgrading Staples, Real Estate, and Health Care to Overweight; List of Concerns Continues to Grow

Upgrading Staples $XLP, Real Estate $XLRE, Health Care $XLV to Overweight; List of Concerns Continues to Grow; Dow $DJI, Equal-Weight S&P 500 $RSP,...

Vermilion Research

Zai Lab (9688 HK): Vyvgart Is Not the De-Risking Tool; Future Is Still Uncertain

​Zai Lab's Vyvgart revenue sees significant growth, but challenges remain with decelerating Zejula revenue and lower gross profit margins due to in...

Tina Banerjee

Zai Lab's Vyvgart revenue sees significant growth, but challenges remain with decelerating Zejula revenue and lower gross profit margins due to in...