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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, Trump named RFK Jr. to lead the HHS, placing an overhang on XBI and vaccine makers PFE, GSK, MRNA, MRK, and SNY. BNTX and MRK made moves in the PD- 1/VEGF space.</li><li>ABBV’s costly neuro play failed, removing the main threat to BMY’s Cobenfy. AMGN was rattled by bone loss data for its obesity drug. </li></ul>

We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&amp;A.Last week, Trump named RFK Jr. to lead the HHS, placing an overhang on XBI and vaccine makers PFE, GSK, MRNA, MRK, and SNY. BNTX and MRK made moves in the PD- 1/VEGF space.ABBV’s costly neuro play failed, removing the main threat to BMY’s Cobenfy. AMGN was rattled by bone loss data for its obesity drug. 

Biopharma Week in Review - November 18, 2024

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Equity Bottom-Up

<ul>
<li>Revolution Medicines, an American oncology-focused biotechnology company, has made considerable progress in developing therapies for patients with RAS-addicted cancers.</li>
<li>We launched coverage of the stock In November 2023 and added Revolution Medicines to our high conviction list of ideas.</li>
<li>RevMed shares has massively outperformed in 2024 with shares up ~92% YTD vs. a ~12% gain on the XBI. I established a $55 PT and see the valuation as full. </li>
</ul>


Revolution Medicines, an American oncology-focused biotechnology company, has made considerable progress in developing therapies for patients with RAS-addicted cancers.
We launched coverage of the stock In November 2023 and added Revolution Medicines to our high conviction list of ideas.
RevMed shares has massively outperformed in 2024 with shares up ~92% YTD vs. a ~12% gain on the XBI. I established a $55 PT and see the valuation as full. 


2023 High Conviction Update: Revolution Medicines, Time To Take Profits?

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kyowa-kirin-co-ltd" target="_blank" data-smartkarma-citation="entities:18055:1" rel="noopener">Kyowa Kirin Co Ltd (4151 JP)</a> announced top-line results of the Phase 3 trial of rocatinlimab targeting moderate to severe Atopic Dermatitis (eczema), which affects 6.6M patients in the U.S.</li>
<li>The trial met co-primary endpoints and reached statistically significant differences from placebo for all key secondary endpoints. However, efficacy data was less compelling compared to current standard of care.</li>
<li>Kyowa Kirin shares nosedived mainly on the concern over competitive strength of rocatinlimab. Amid gloomy outlook, Kyowa Kirin shares will need time to recover.</li>
</ul>



Kyowa Kirin Co Ltd (4151 JP) announced top-line results of the Phase 3 trial of rocatinlimab targeting moderate to severe Atopic Dermatitis (eczema), which affects 6.6M patients in the U.S.
The trial met co-primary endpoints and reached statistically significant differences from placebo for all key secondary endpoints. However, efficacy data was less compelling compared to current standard of care.
Kyowa Kirin shares nosedived mainly on the concern over competitive strength of rocatinlimab. Amid gloomy outlook, Kyowa Kirin shares will need time to recover.


Kyowa Kirin (4151 JP): Reports Phase 3 Trial Result in Atopic Dermatitis; Rivalry Remains Doubtful

<ul>
<li>In 3Q24, <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> reported operating loss of KRW40B, compared with operating loss of KRW20B in 2Q24 mainly due to anemic gross profit margin and higher SG&amp;A expenses.</li>
<li>The company is expected to report sequentially better performance in 4Q24 on favorable product mix. Varicella vaccine export is expected to increase, while Sanofi vaccine distribution revenue is showing uptrend.</li>
<li>Commencement of global phase 3 trial of SK Bioscience-Sanofi’s next-generation pneumococcal conjugate vaccine, PCV21 will lay the foundation for the company’s next level of growth.</li>
</ul>


In 3Q24, SK Bioscience (302440 KS) reported operating loss of KRW40B, compared with operating loss of KRW20B in 2Q24 mainly due to anemic gross profit margin and higher SG&amp;A expenses.
The company is expected to report sequentially better performance in 4Q24 on favorable product mix. Varicella vaccine export is expected to increase, while Sanofi vaccine distribution revenue is showing uptrend.
Commencement of global phase 3 trial of SK Bioscience-Sanofi’s next-generation pneumococcal conjugate vaccine, PCV21 will lay the foundation for the company’s next level of growth.


SK Bioscience (302440 KS): Operating Loss Widened in 3Q; What Lies Ahead

<ul>
<li>China's NMPA aims to redouble efforts to facilitate research and market registration of homegrown innovative drugs, while speeding up the introduction of novel foreign drugs to the domestic market.</li>
<li>Since the BoJ interest rate hike in July, the Yen appreciated ~5% to ¥142.74. Considerable amount of appreciation may be dilutive on the overall performance of export-oriented healthcare industry.</li>
<li>
<a href="https://www.smartkarma.com/entities/sigma-healthcare-ltd" target="_blank" data-smartkarma-citation="entities:15966:1" rel="noopener">Sigma Healthcare (SIG AU)</a> has offered remedial measure to alleviate preliminary anti-competition concerns raised by ACCC in relation to its proposed merger with CWG.</li>
</ul>


China's NMPA aims to redouble efforts to facilitate research and market registration of homegrown innovative drugs, while speeding up the introduction of novel foreign drugs to the domestic market.
Since the BoJ interest rate hike in July, the Yen appreciated ~5% to ¥142.74. Considerable amount of appreciation may be dilutive on the overall performance of export-oriented healthcare industry.

Sigma Healthcare (SIG AU) has offered remedial measure to alleviate preliminary anti-competition concerns raised by ACCC in relation to its proposed merger with CWG.


APAC Healthcare Weekly (Oct 6)-Strong Yen Impact, Sigma's Remedial Measures, Mesoblast's Fund Raise

United States

Sanofi is a global pharmaceutical company that researches, develops and manufactures prescription pharmaceuticals and vaccines.  The Company develops cardiovascular, thrombosis, metabolic disorder, central nervous system, internal medicine and oncology drugs, and vaccines.

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Biopharma Week in Review - November 18, 2024

ABBV’s costly neuro play failed, removing the main threat to BMY’s Cobenfy. AMGN was rattled by bone loss data for its obesity drug.

Water Tower Research

2023 High Conviction Update: Revolution Medicines, Time To Take Profits?

I remove Revolution Medicines stock from my high conviction list of ideas due to achieving a $55.00 price target and full valuation relative to peers.

Andrei Zakharov

Kyowa Kirin (4151 JP): Reports Phase 3 Trial Result in Atopic Dermatitis; Rivalry Remains Doubtful

Kyowa Kirin maintained 2024 guidance, which calls for 5% decline in operating profit and 16% decrease in net profit. The company is expected to...

Tina Banerjee

SK Bioscience (302440 KS): Operating Loss Widened in 3Q; What Lies Ahead

SK Bioscience reported reported operating loss of KRW40B versus operating loss of KRW20B in 2Q24. However, performance is expected to improve in...

Tina Banerjee

APAC Healthcare Weekly (Oct 6)-Strong Yen Impact, Sigma's Remedial Measures, Mesoblast's Fund Raise

BoJ interest rate hike leads to Yen appreciation, potentially impacting export-oriented healthcare industry. Sigma Healthcare addresses anti...

Tina Banerjee

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Biopharma Week in Review - November 18, 2024

ABBV’s costly neuro play failed, removing the main threat to BMY’s Cobenfy. AMGN was rattled by bone loss data for its obesity drug.

Water Tower Research

2023 High Conviction Update: Revolution Medicines, Time To Take Profits?

I remove Revolution Medicines stock from my high conviction list of ideas due to achieving a $55.00 price target and full valuation relative to peers.

Andrei Zakharov

Kyowa Kirin (4151 JP): Reports Phase 3 Trial Result in Atopic Dermatitis; Rivalry Remains Doubtful

Kyowa Kirin maintained 2024 guidance, which calls for 5% decline in operating profit and 16% decrease in net profit. The company is expected to...

Tina Banerjee

SK Bioscience (302440 KS): Operating Loss Widened in 3Q; What Lies Ahead

​SK Bioscience reported reported operating loss of KRW40B versus operating loss of KRW20B in 2Q24. However, performance is expected to improve in...

Tina Banerjee

APAC Healthcare Weekly (Oct 6)-Strong Yen Impact, Sigma's Remedial Measures, Mesoblast's Fund Raise

BoJ interest rate hike leads to Yen appreciation, potentially impacting export-oriented healthcare industry. Sigma Healthcare addresses anti...

Tina Banerjee

SK Bioscience reported reported operating loss of KRW40B versus operating loss of KRW20B in 2Q24. However, performance is expected to improve in...