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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, Medicare posted the first negotiated prices for Part D drugs, an additional 11% discount by our estimate.</li><li>Mpox declared a global emergency, as the SIGA antipox treatment drug failed study, but mpox vaccine makers BVNRY and GOVX got a boost. </li></ul>

We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&amp;A.Last week, Medicare posted the first negotiated prices for Part D drugs, an additional 11% discount by our estimate.Mpox declared a global emergency, as the SIGA antipox treatment drug failed study, but mpox vaccine makers BVNRY and GOVX got a boost. 

Biopharma Week in Review - August 19, 2024

Global Healthcare Analyst

Tina Banerjee

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sk-bioscience-co-ltd" target="_blank" data-smartkarma-citation="entities:31484:1" rel="noopener">SK Bioscience (302440 KS)</a> secures 60% stake in IDT Biologika, a global CDMO company with state-of-the-art manufacturing facilities in Germany, for KRW339B ($244M). The valuation seems reasonable.</li>
<li>The transaction paves the way for SK bioscience to strengthen its global presence, notably in Europe and the U.S., and to diversify its business by expanding into bulk drug substances.</li>
<li>Based on the existing CDMO contracts, IDT Biologika’s outlook remains positive. SK bioscience aims to more than double its revenue and stabilize operating profit margins at 20%+.</li>
</ul>



SK Bioscience (302440 KS) secures 60% stake in IDT Biologika, a global CDMO company with state-of-the-art manufacturing facilities in Germany, for KRW339B ($244M). The valuation seems reasonable.
The transaction paves the way for SK bioscience to strengthen its global presence, notably in Europe and the U.S., and to diversify its business by expanding into bulk drug substances.
Based on the existing CDMO contracts, IDT Biologika’s outlook remains positive. SK bioscience aims to more than double its revenue and stabilize operating profit margins at 20%+.


SK Bioscience (302440 KS): Acquiring Majority Stake in IDT Biologika- A Step Toward ‘Globalization’

<ul>
<li>A new COVID variant JN.1 is spreading fast. WHO has classified JN.1 as “variant of interest” due to its “rapidly increasing spread.” Thus far, JN.1 has not caused severe infection.</li>
<li>Symptoms of JN.1 may not be as mild as Omicron variants. If JN.1 becomes deadlier and more infectious, diagnostics and vaccine players are going to be benefitted primarily.</li>
<li>In this insight we have discussed two Asian vaccine companies and one diagnostic company, which should be kept in the watchlist.</li>
</ul>


A new COVID variant JN.1 is spreading fast. WHO has classified JN.1 as “variant of interest” due to its “rapidly increasing spread.” Thus far, JN.1 has not caused severe infection.
Symptoms of JN.1 may not be as mild as Omicron variants. If JN.1 becomes deadlier and more infectious, diagnostics and vaccine players are going to be benefitted primarily.
In this insight we have discussed two Asian vaccine companies and one diagnostic company, which should be kept in the watchlist.


New COVID Variant Is Emerging; Testing and Vaccine Euphoria May Be Back; Keep Your Watchlist Ready

Equity Bottom-Up

<ul>
<li>In 3Q23, revenue jumped 2.5x YoY and 12.1x QoQ to KRW231.8 billion, mainly due to the inflow related to Novavax vaccine contract settlement and resumption of flu vaccine production.</li>
<li>Despite significantly improved Q3 result, SK Bioscience is expected to end 2023 on a weak note, due to the absence of contract manufacturing revenue from Novavax.</li>
<li>SK Bioscience has applied for EUA for the updated Novavax COVID-19 vaccine in Korea. Once approved, the company targets to distribute the vaccine during 2023–2024 winter seasons in Korea.</li>
</ul>


In 3Q23, revenue jumped 2.5x YoY and 12.1x QoQ to KRW231.8 billion, mainly due to the inflow related to Novavax vaccine contract settlement and resumption of flu vaccine production.
Despite significantly improved Q3 result, SK Bioscience is expected to end 2023 on a weak note, due to the absence of contract manufacturing revenue from Novavax.
SK Bioscience has applied for EUA for the updated Novavax COVID-19 vaccine in Korea. Once approved, the company targets to distribute the vaccine during 2023–2024 winter seasons in Korea.


SK Bioscience (302440 KS): Significantly Improved 3Q Result Benefitted From One-Time Payment

Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

<ul>
<li>This model finds companies facing recent sharp cuts in estimates. These shorts can have very disparate characteristics.</li>
<li>The key judgement involves whether the negative revisions are temporary or if they are indications of ongoing weakness in the business. </li>
<li>Breaking Estimates stocks often continue to decline after the cuts.  This week we flag: Novavax, Micron, Generac, FormFactor</li>
</ul>


This model finds companies facing recent sharp cuts in estimates. These shorts can have very disparate characteristics.
The key judgement involves whether the negative revisions are temporary or if they are indications of ongoing weakness in the business. 
Breaking Estimates stocks often continue to decline after the cuts.  This week we flag: Novavax, Micron, Generac, FormFactor


Breaking Estimate Short Candidates: Novavax, Micron, Generac, FormFactor

United States

Novavax, Inc. is a clinical stage biotechnology company. The Company creates novel vaccines to address a broad range of infectious diseases worldwide using proprietary virus-like particle (VLP) technology.

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Novavax (NVAX US)

Biopharma Week in Review - August 19, 2024

PFE/BNTX COVID-flu vaccine missed on one endpoint, extending MRNA’s lead and allowing SNY/NVAX to catch up. SYRS ended up futile on AML.

Water Tower Research

SK Bioscience (302440 KS): Acquiring Majority Stake in IDT Biologika- A Step Toward ‘Globalization’

SK Bioscience secures 60% stake in IDT Biologika, a global CDMO company with state-of-the-art manufacturing facilities in Germany, for KRW339B...

Tina Banerjee

New COVID Variant Is Emerging; Testing and Vaccine Euphoria May Be Back; Keep Your Watchlist Ready

A new COVID variant, JN.1, is spreading rapidly and has been classified as a "variant of interest" by WHO. If it becomes deadlier, vaccine and...

Tina Banerjee

SK Bioscience (302440 KS): Significantly Improved 3Q Result Benefitted From One-Time Payment

In 3Q23, revenue jumped 2.5x YoY and 12.1x QoQ to KRW232B, mainly due to the inflow related to Novavax vaccine contract settlement, resumption of...

Tina Banerjee

Breaking Estimate Short Candidates: Novavax, Micron, Generac, FormFactor

This model uncovers companies facing recent declines in estimates. This week we flag: Novavax, Micron, Generac, & FormFactor

Eric Fernandez, CFA

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Market Cap (USDm)

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Dividend (Yield)

Biopharma Week in Review - August 19, 2024

PFE/BNTX COVID-flu vaccine missed on one endpoint, extending MRNA’s lead and allowing SNY/NVAX to catch up. SYRS ended up futile on AML.

Water Tower Research

SK Bioscience (302440 KS): Acquiring Majority Stake in IDT Biologika- A Step Toward ‘Globalization’

SK Bioscience secures 60% stake in IDT Biologika, a global CDMO company with state-of-the-art manufacturing facilities in Germany, for KRW339B...

Tina Banerjee

New COVID Variant Is Emerging; Testing and Vaccine Euphoria May Be Back; Keep Your Watchlist Ready

​A new COVID variant, JN.1, is spreading rapidly and has been classified as a "variant of interest" by WHO. If it becomes deadlier, vaccine and...

Tina Banerjee

SK Bioscience (302440 KS): Significantly Improved 3Q Result Benefitted From One-Time Payment

In 3Q23, revenue jumped 2.5x YoY and 12.1x QoQ to KRW232B, mainly due to the inflow related to Novavax vaccine contract settlement, resumption of...

Tina Banerjee

Breaking Estimate Short Candidates: Novavax, Micron, Generac, FormFactor

This model uncovers companies facing recent declines in estimates. This week we flag: Novavax, Micron, Generac, & FormFactor

Eric Fernandez, CFA

A new COVID variant, JN.1, is spreading rapidly and has been classified as a "variant of interest" by WHO. If it becomes deadlier, vaccine and...