Healthcare

• Marksans Pharma (MRKS IN) has done well in recent years, growing at 15.2% on a 5Y CAGR.  
• The company has a good balance sheet, strong cash generation and also witnessed a recent uptick on the margins side. UK business especially has been the cash cow.
• However, there are few impairment indicators; few subsidiaries are not audited while bad debts have appeared in the books lately. Company also has few disclosure issues.

• Medikaloka Hermina (HEAL IJ) booked a strong recovery in revenues and profits in FY2023 driven by rapidly rising inpatient and outpatient volume growth with JKN patient share rising. 
• The company also saw significant improvements in working capital in 2023 and will step up its capex and hospital expansion in FY2024E helping to drive growth. 
• Medikaloka Hermina is differentiated by its women & children specialisation, higher JKN exposure, and its doctor partnership model. It trades at a discount to peers with higher growth expectations. 

• In 1Q24, Intuitive Surgical (ISRG US) reported 11% YoY revenue growth to $1.89B, driven by growth in da Vinci procedure volume and an increase in the installed base of systems.
• Worldwide da Vinci procedures grew 16%, matching the higher end of prior guidance range. The company placed 313 da Vinci surgical systems, including eight newly approved da Vinci 5.
• Even after considering blip in bariatric surgery, delayed tender in China, and no benefit of patient backlog, the company has raised 2024 worldwide da Vinci procedure growth guidance to 14–17%.

OSE has announced that its licence agreement with AbbVie has cleared antitrust review and has become effective. As previously noted, this is expected to support OSE’s runway extension into 2026, past key milestones and readouts for in-house assets Tedopi (non-small cell lung cancer, US Phase III trials expected to commence in Q224) and Lusvertikimab (ulcerative colitis, Phase II readouts expected in mid-2024). Following the Federal Communications Commission (FCC) mandatory waiting period, OSE is expected to receive the negotiated US$48m upfront payment from AbbVie imminently, as part of its global licence and collaboration agreement for its pre-clinical asset OSE-230, a novel monoclonal antibody being developed for the treatment of chronic and severe inflammation. OSE is also entitled to receive up to US$665m in incremental (milestone) payments as part of the deal.

• Telix Pharmaceuticals (TLX AU) reported 18% QoQ revenue growth in 1Q24. The U.S. revenue growth accelerated to 18% QoQ in 1Q24, compared to 11% in 4Q23 and 13% in 3Q23.
• Telix reaffirmed guidance and expects 2024 revenue of $445–465M, representing 35–40% YoY increase. The current quarterly U.S. revenue run-rate of Illuccix matches the lower end of the guidance.
• Telix is on track to launch three products in U.S. this year. Two of them have an estimated initial market opportunity of $600–640M, with upside potential from indication expansions.

• Nearing the end of the review period, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
• There are overlapping names for the two indices and some of the stocks will also have flows from the CSI Smallcap 500 Index – Shang (SH000905 INDEX) trackers.
• The potential adds have outperformed the potential deletes between 9-10% for both indices over the last month with the deletes dropping a lot more than the adds.

• Since mid-March, spreads have generally widened across our European liquid universe of ordinary and preferred shares (5 have tightened, 12 widened, 2 remained at same level).
• Views are unchanged. Recommended trades long preferred / short ordinary shares: Danieli, Grifols, Media-for-Europe, Sixt, Volkswagen.
• Recommended trades long ordinary / short preferred shares: Fuchs, Henkel, SSAB Svenska Stal, Roche.

• Regeneron Pharmaceuticals Inc.’s latest earnings highlighted several critical developments and financial performance data that shape its investment appeal.
• Among the company’s accomplishments in 2023 were the FDA approval and successful launch of its EYLEA HD, a promising treatment for patients with wet age-related macular degeneration and diabetic eye diseases, which had strong start despite initial delays.
• Additionally, the company won a notable legal battle to preserve its intellectual property related to EYLEA, which deterred infringements from a biosimilar manufacturer, potentially deterring future biosimilar launches.

• Laboratory Corporation of America Holdings’ Q4 2023 highlighted a robust performance, driven by strong base business revenue growth.
• Discussing Q4 results, revenues reached $3 billion, adjusted earnings per share was $3.30, and free cash flow from operations, excluding spin-related items, was $422 million.
• Enterprise revenue grew by 4% compared to Q4 2022, led by an 8% growth in the Diagnostics business and 7% growth in the Biopharma business.

• Teladoc health has shown growth in the previous year’s earnings with an increased focus on operating efficiencies and bottom line performance.
• The company delivered 33% growth in adjusted EBITDA and free cash flow of $194 million in 2023.
• Their selling season yielded double-digit bookings growth over the prior year, with around 75% being upsells or expansions with existing clients.

• Illumina reports a successful 2023 but is bracing for a challenging 2024 amid continued macroeconomic hurdles.
• The company delivered a higher-than-expected consolidated revenue of approximately $1.12 billion in the fourth quarter, marking an increase of 4% year over year.
• CEO Jacob Thaysen highlighted the latest product, NovaSeq X, as the most successful high-throughput product launch in the company’s history.

• JTEC Corp is a specialist technology innovator, and a global market leader in customized X-ray mirrors used in synchrotron radiation and X-ray free-electron laser facilities worldwide.
• With its competitive advantage in technology through high R&D spending and strong partnerships with academic and research institutions, the company is switching back to a robust growth trajectory driven by 1) normalized business conditions post- COVID-19,
• 2) new construction and upgrade demand for synchrotron radiation facilities, particularly from China, and 3) business expansion in the life sciences and semiconductor sectors.

• C1Q24 was marked by liquidity crises in innovative drug and medical device, and depressed margin in digital health. We believe this is a buying opportunity;
• PD-1 has recovered nicely in C2H23 and exceeded our expectation made for 2023.We forecast 20% YoY growth in 2024.Further,pipeline maturity has led to new drugs in autoimmune and metabolic drugs;
• Biosimilar has proven to be part of the solution to deal with low paying ability of Chinese healthcare and denial of access to the high paying US healthcare market. 

• Edwards Lifesciences, a medical technology company specializing in artificial heart valves and hemodynamic monitoring, recently reported the Fourth Quarter 2023 Earnings, where insights about the company’s past performance and future prospects were shared.
• The company’s CEO, Bernard Zovighian, highlighted a strong financial performance in 2023, with a sales increment of 12% reaching up to $6 billion, building a strong presence across all four product groups.
• Investments in research and development went beyond $1 billion, and it hit strategic milestones like the introduction of innovative technologies for sustainable growth.

• The business model for general hospitals is not good (e.g. heavy assets, challenging operations, low profits, difficult to replicate and expand nationwide), which has never been a profitable business.
• BenQ’s profitability is not attractive if compared with for-profit specialized hospitals. The “benefit chain” of hospitals is actually very complicated, which makes it challenging to attract/retain good medical talents.
• BenQ’s overall revenue growth could slow down in the future. Its profit margin is also not attractive. It would be difficult for BenQ to achieve a high valuation after IPO. 

Actinogen Medical announced that the first randomised patient in its Phase IIb XanaMIA trial of lead candidate Xanamem received their first treatment on Friday 12 April. This study is designed to enrol c 220 patients with cognitive impairment (CI) associated with biomarker-positive mild-to-moderate Alzheimer’s disease (AD), as confirmed through an elevated level of phosphorylated Tau-181 (pTau-181) protein in their blood at baseline. The study has commenced at 13 Australian sites and will concentrate on domestic sites for the first c 100 patients, and initial efficacy and safety results will be analysed when these patients reach 24 weeks of treatment. These results are now expected in mid-CY25 (vs prior guidance of H1 CY25) and Actinogen expects to expand the trial to US study sites following this interim readout. In the near term, the next material milestone for the company will be results, now expected in early Q3 CY24 (vs Q2 CY24 previously), from its Phase IIa XanaCIDD study in patients with CI and major depressive disorder (MDD).

• Teva Pharmaceuticals and Viatris Inc are leading global generic pharmaceutical manufacturers with diverse drug portfolios.
• Both companies are currently undervalued and are anticipated to see substantial shareholder returns in 2024.
• Despite challenges in the US generic drug industry, Teva and Viatris are poised for significant upside potential in the near future.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• The local market anxiously awaits the family’s ability to pay by early May. Failure could prompt the Tax Service to sell their pledged stocks, including Hanmi Science shares.
• Preventing Tax Service from selling Hanmi Science shares requires additional collateral, unlikely due to existing pledges. Rumor suggests mother and daughter may sell shares before May, followed by Tax Service.
• Given negotiation uncertainty with KKR, it’s crucial to prepare for potential failure rather than solely relying on success, necessitating a pragmatic approach.

• Eubiologics (206650 KS) received UNICEF oral cholera vaccine order of KRW124B in 2024. This is nearly 1.9x higher than last year’s sales, making the case for record-high sales in 2024.
• Eubiologics is not expecting any near-term competition. The company is boosting its production capability to 90M doses annually by 2025 from 33M doses currently.
• Eubiologics is planning to enter the premium vaccine market, which should further accelerate the revenue growth and improve its margins. Recently, Bionote (377740 KS) has increased stake in Eubiologics.

• 23H2 net loss significantly widened as cost control was not as tight as in 23H1. Expenses would remain high in 2024, since Innovent would continue expanding team in CVM field.
• Innovent may think that not many players will join the competition of weight loss drug in short-term, but the actual commercialization of mazdutide after launch could be full of uncertainties.
• It’s already good for Innovent to be breakeven in 2025. If Innovent breaks even in 2024, it will exceed expectations.Considering major policy shift, Innovent could experience a leap in valuation.

• In 2023, CanSino Biologics (688185 CH) generated revenue of RMB561.7 million from the sales of meningococcal conjugate vaccines, up 266% YoY.
• This year, consensus is expecting CanSino to report revenue of RMB858 million, up whopping 140% YoY, mainly driven by meningococcal vaccines.
• CanSino is expected to add pneumococcal conjugate vaccine (PCV13) vaccine in its revenue stream in 2025. The company’s PCV13i is a potential best-in-class improved PCV13.

• China plans to issue ultra long-term special treasury bond (about RMB1 trillion) to promote large-scale medical equipment renewal, which is expected to boost domestic demand in medical device sector. 
• Various regions (e.g. Beijing, Hainan, Guangzhou, Zhuhai) have issued separate supporting policies for innovative drug industry. It may be too early to completely lose hope of Chinese innovative drugs.
• There is “horizontal competition” issue between Taiji and Shanghai Shyndec Pharmaceutical (600420 CH), which is the underlying logic for potential spin-offs and integrations within Taiji and China TCM before 2025.

• Several days ago I published a piece showing the data for TOPIX flows for April month-end.
• This is an update reflecting new data companies have reported to regulators, one large correction to a data provider’s data, and one Very Large Flow.
• I believe that the revised data is more accurate. And there is more flow. With a spreadsheet attached. 

• Sinopharm Group Co Ltd H (1099 HK) reported YoY and sequential growth in revenue and net profit in 4Q23. However, outlook for the sector remains bleak in near-term.
• Last year, Sinopharm’s distribution business was impacted by anti-corruption campaign. The momentum of the campaign continues in this year also. This lowers conviction toward improving performance in 1H24 at least.
• Despite of mid-single digit revenue growth, Sinopharm’s margin remains stagnant or is declining. Sinopharm still earns more than 70% revenue from low margin earning pharmaceutical distribution business.

Despite the challenging macroeconomic environment, OSE announced an encouraging funding win with the receipt of €8.4m in non-dilutive public funding from Bpifrance (a French public sector financing institution). Proceeds will be directed to support the upcoming registrational Phase III study of lead asset Tedopi, in second-line treatment in HLA-A2 positive non-small cell lung cancer (NSCLC) patients with secondary (acquired) resistance to anti-PD-(L)1 immunotherapy. This announcement follows the company’s $713m deal with AbbVie, reported in February, for preclinical asset OSE-230 (in chronic inflammation). Bpifrance in Q223 had granted €1.5m in non-dilutive funding to support the development of a companion diagnostic screening test to help identify HLA-A2 positive NSCLC patients, who have a higher likelihood of responding to Tedopi.

• Novartis published its offer document for MorphoSys AG (MOR GR) (US: MorphoSys AG (MOR US)) following approval by BaFin. The acceptance period has commenced on 11 April, and will expire on 13 May.
• I remain confident NVS’ acquisition of MOR closes on track. I maintain my TP at €68/share, $18.25/ADR offer price, as deal will highly likely close in H1, in my view.
• As of 11 April, gross spread is 0.82% and the estimated annual return is 7.78%. Long and tender.

• Amvis Holdings Inc (7071 JP) opened 57 facilities during FY20–23, which raised total borrowings 37% YoY to ¥17B in FY23 and further to ¥19B at the end of Q1FY24.
• The impact of the monetary policy is expected to be immaterial based on the current interest incidence of just 0.44%. Interest expenses account for less than 1% of revenue.
• Amvis started FY24 on a solid note, with all key parameters reporting more than 30% YoY growth in Q1FY24. The company has reiterated full-year FY24 guidance.

• The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
• The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
• In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.

• Shineway’s performance in 23H2 was disappointing, mainly due to the VBP of formula granules and anti-corruption campaign. Accordingly, TCM injection and TCM formula granule businesses had negative growth in 23Q4.
• As the NHSA has further lifted the reimbursement restrictions on Chinese medicine injections, Shineway’s injection business is expected to help “hedge against” the headwinds in TCM formula granule business.
• 24H1 growth is under pressure due to 23H1 high base. Growth in 24H2 would pick up.As long as TCM favorable policies remain, profit is expected to increase by 20%-30% annually.

In the lead up to its capital markets day, Basilea Pharmaceutica announced it has received initial funding of up to US$0.9m through a grant from Combating Antibiotic-Resistant Bacteria Biopharmaceutical Accelerator (CARB-X), a global non-profit partnership backed by governments and foundations, for its preclinical antibiotics program. CARB-X is focused on supporting early-stage antibacterial research and development, and this grant is expected to support development work up until clinical candidate nomination in H224, with potential additional funding subject to achieving certain milestones. 2024 is shaping up to be an active year for Basilea, following the recent FDA approval and anticipated subsequent commercial launch of Zevtera in the US, as well as the initiation of Phase III studies for newly acquired antifungal asset Fosmanogepix (mid-2024).

• TRX is focused on the development and commercialisation of two proprietary processing technologies for the repair of soft tissue (dCELL®) and bone (BioRinse®).
• It has a broad portfolio of products used in biosurgery, orthopaedics and dental markets.
• Investment in tissue processing, manufacturing capacity and strong commercial partners, together with its “4S” strategy, has generated six consecutive reporting periods of strong growth, with TRX turning EBITDA-positive in 2023.