Healthcare

• A little over a year ago, shareholders approved Sciclone Pharmaceuticals (6600 HK)‘s buyback, which lifted GL Capital’s holding to 31.63% from 28.09%, enabling creep provisions.
• After the share price gained 14% yesterday, SciClone was suspended pursuant to the Code on Takeovers and Mergers before trading commenced this morning. Mmm.
• GL Capital, together with CDH Investments, Ascendent Capital Partner, Ocean Falcon Limited, and Boying Investments Limited, took SciClone private in 2017. Time for another privatisation?

• After rising 14% on Monday, Sciclone Pharmaceuticals (6600 HK) entered a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers.”
• SciClone US was listed on NASDAQ in March 1992 and was privatised in October 2017 by a GL Capital-led consortium. It was relisted on the HKEx on 3 March 2021.
• A GL Capital-led consortium will likely once again lead the privatisation. An offer price at or slightly above the IPO price (HK$18.80) would be sufficient to get the vote up.

• WuXi AppTec’s 2023 results were disappointing. The decline in performance in 23H2 was quite severe. 2024 performance guidance could be meaningless because the biggest concern now is the geopolitical conflicts.
• If the bill is passed, valuation logic would completely change – not based on DCF/PE, but on PB, market value falling below RMB100 billion. We cannot rule out another privatisation.
• We hope that WuXi AppTec can prepare contingency plans for the worst-case scenario that may occur, rather than simply denying or mitigating the impact of BIOSECURE Act on the Company

• Aspira Women’s Health expands senior management team with the addition of Sandra Milligan, MD, JD as President effective April 1, 2024.
• Dr. Milligan will report to CEO Nicole Sandford. She has more than 25 years of experience in the healthcare sector, with corporate experience that includes executive roles at biopharmaceutical companies Amgen, Genentech, Merck, and Organon.
• Dr. Milligan supported pipeline and product development in both oncology and non-oncology disease areas, with recent emphasis in women’s health. 

OSE Immunotherapeutics has announced the completion of patient enrolment in its Phase II CoTikiS trial, marking another step in the clinical development of its novel anti-IL-7R antibody, OSE-127/Lusvertikimab, in moderate to severe ulcerative colitis (UC). Lusvertikimab is OSE’s most advanced immune-inflammation asset, and we view the upcoming top-line efficacy results (from induction to week 10 and after six months of maintenance; expected by mid-2024) as representing a significant inflection point for the company, following the commencement of Phase III trials for its lead asset, Tedopi, in the US. With this news, we see the upward momentum continuing for OSE, which saw an uplift in sentiment following the recent collaboration agreement with AbbVie (up to $713m with $48m upfront payment) to develop its pre-clinical asset OSE-230 in chronic/severe inflammation.

• Establishment Labs is a Costa Rican company known for manufacturing and selling breast implants, with their Motiva implant gaining market share from competitors.
• The stock price of ESTA has recently dropped significantly due to a weak Q3 and lowered guidance, presenting an opportunity for investors to get into the dominant player in the breast augmentation market at a discounted price.
• With Motiva having a low rupture rate and no cases of associated cancers, analysts value ESTA at approximately $100 a share on a DCF basis, making it a compelling investment opportunity for potential growth.

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.

• This is our first report on Certara, a renowned biosimulation player.
• The company recently released its Fourth Quarter 2023 Earnings.
• In terms of performance, the company reported revenue growth of 6% for the year, in line with their guidance from August 2023.

• Cencora announced during its First Quarter 2024 Earnings, a year-over-year increase in revenue of 15% to over $72 billion, with adjusted earnings per share also increasing year-over-year by 21%.
• Recognizing the strong first quarter performance, the company has raised its full-year guidance for fiscal 2024.
• The company’s performance was fueled by the execution of commercial partnerships and strategic positioning, with teams prioritizing customer-centricity and enhancing service provision.

• Major milestones with high expectations coming in the next 2-3 years: 1) Phase IIb US trials for H-1337 as “first choice as a second-line Glaucoma drug” for patients who do not respond to PGs
•  2) 2024 application/approval and 2025 launch of DW- 1002 in Japan, 2023 application and 2024 approval/launch in China, as well as orphan drug designation for combination formula MembraneBlue-DualⓇ (DW-1002 + trypan blue) in the US
• 3) in Japan, start P2 clinical trials in 2024, P3 trials in late 2025 though 2026, and normal schedule application for approval for regenerative cell-therapy DWR-2206 in 2027

• Monash Ivf (MVF AU) delivered a strong result in H1FY24, with revenue growth of 22% YoY to A$126M and underlying NPAT growth of 19% YoY to A$15M.
• The company has guided for FY24 underlying NPAT of A$29–30M compared to A$25.5M in the prior comparative period (excluding contribution from the Fertility North acquisition).
• Secular industry tailwinds, consistent market share gain, and strong new patient registrations provide a sustainable growth trajectory for Monash IVF.  

SIGA Technologies has delivered its best top-line performance in the last five years, supported by a late surge in TPOXX deliveries across both domestic and international markets. FY23 product revenues grew 50.8% to $130.7m, driven by Q423 BARDA deliveries and international orders, resulting in overall revenues increasing to $139.9m (+26.3% y-o-y). Barring packaging-related bottlenecks, which delayed some deliveries to Q124, there could have been incremental upside to meet our $172.6m revenue estimate. The strong cash flow generation and healthy balance sheet (year-end net cash balance of $150.1m) was reflected in the company’s declaration of a special cash dividend of $0.6/share ($42.7m total; >60% payout ratio). Given sales visibility on further BARDA stockpile replenishments and increasing international market traction, we expect FY24 to be another strong year. We revise our FY24 estimates and now expect PEP and pediatric launches in 2026 (2025 previously), resulting in our valuation adjusting to $16.51/share (versus $17.24/share previously).

• A document titled “Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain” would completely change the outlook/investment logic of China’s innovative drugs.
• We predict that due to the early opening of TCM formula granules VBP in some provinces and intensifying competition, the market pattern of TCM formula granules would face reshaping.
• After the atropine eye drops is approved by the NMPA, Xingqi’s performance growth will accelerate. Supported by favorable policies, its market value is expected to reach above RMB30 billion.

• Since mid-February, spreads have not followed a clear pattern across our European liquid universe of ordinary and preferred shares (9 have tightened, 9 widened, 1 remained at same level).
• Recommended trades long preferred / short ordinary shares: Danieli, Grifols, Media-for-Europe, Sixt.
• Recommended trades long ordinary / short preferred shares: Fuchs, Henkel, SSAB Svenska Stal, Roche.

• AstraZeneca’s Fourth quarter and full-year ’23 earnings reflects strong performance.
• Notably, the company achieved their decade-long target of $45 billion sales, demonstrating its consistent focus on long-term growth.
• The company’s diverse commodity areas, ranging from oncology to rare diseases, all demonstrated strong growth in 2023, with the company’s profitability expected to increase because of this.

• On March 14, Intuitive Surgical (ISRG US) received FDA approval for its fifth-generation multiport robotic system, da Vinci 5. The device will deliver meaningful improvements in surgery.
• The company reported strong 4Q23 result, with revenue and EPS beating consensus. 2023 procedure growth of 22% matched the higher end of the company’s guidance range of 21–22%. 
• Management has guided for a worldwide da Vinci procedure volume growth of 13–16% YoY in 2024. In the medium-term, ISRG aims to improve gross margin to above 70% level.

• Abbott Laboratories displayed robust performance during the Q4 2023 earnings call, reporting a growth of 11% in 2023 with organic sales increase of 14%.
• Abbott’s Chairman and CEO, Robert Ford, underscored the company’s resilience and its strong footing despite the challenging conditions induced by the global pandemic.
• Abbott’s operating margin is already on their pre pandemic level and the biggest opportunity for margin expansion is on the gross margin line.

• AbbVie Inc.
• showcased a robust performance in the fourth quarter (Q4) of 2023, delivering results surpassing initial expectations.
• The company’s growth platform, independent of their iconic Humira, reported full-year sales growth exceeding 8%.

• Align Technology Inc’s Q4 2023 earnings report demonstrated better-than-expected revenues and earnings, with the company achieving several key milestones, including treating 17 million Invisalign patients, delivering 4.7 million treatments for teenagers and selling over 100,000 iTero scanners.
• Total revenues for the fiscal year exceeded the company’s previous outlook, with the non GAAP operating margin exceeding 21% for 2023.
• The company’s Q4 revenues were up 6.1% YoY, attributable to increased Systems and Services revenues and higher Clear Aligner volume for teenage and international doctors.

Newron Pharmaceuticals has announced new arrangements that offer the company improved operational flexibility. We estimate a pro forma gross cash balance of €17.5m (estimated year-end gross cash of €12m plus €5.5m initial equity issue) to extend the company’s cash runway into FY25, well past the top-line readout from the potentially pivotal 008A study (expected this month) and initiation of the Phase III 003 study (anticipated in Q224), both assessing evanamide in schizophrenia subsets. Provided results are positive, we expect the company to sign a licensing deal by H224. We will present updated estimates following the release of full-year results on 19 March. Management has announced a private placement of up to €15m (c CHF14.4m) from an institutional investor (initial issue of 750k shares worth €5.5m with an option to subscribe to up to an additional 1.3m shares for €9.5m). The company also reported an amendment to its loan repayment terms with the European Investment Bank (EIB), pushing out the first repayment to November 2025 (previously €10m in June 2024).

• AS ONE Corporation (7476 JP) is a specialist trading company that uses a business model focused on catalog sales.
• In FY03/23, sales were JPY91.4bn (+5.1% YoY), operating profit was JPY11.4bn (+22.0% YoY), recurring profit was JPY11.6bn (+21.6% YoY), and net income was JPY8.1bn (+12.6%YoY).
• AS ONE Corporation announced the acquisition of treasury shares via after-hours trading (ToSTNeT-3) and retirement of the treasury shares.

• Daiichi Sankyo (4568 JP) has reported better-than-expected 3QFY24 results, with double-digit growth in revenue and profit, mainly driven by global mainstay products such as Enhertu and Lixiana, and favorable forex.
• Driven by favorable Fx, sales increase from couple of products, and litigation payment, the company raised FY24 revenue, core operating profit, and net profit forecast 2%, 16%, and 30%, respectively.
• FDA set an action date for Daiichi Sankyo’s second ADC drug candidate HER3-DXd of June 26 and for Dato-DXd of December 20. Both are for various types of lung cancers.

• On the 14 December, Volpara Health (VHT AU), which makes software enabling the early detection of breast cancer, announced an Offer by way of a Scheme with Lunit (328130 KS)
• NZ’s OIO approval was satisfied on the 31 January. The  Scheme Booklet is now out, with a Scheme Meeting to be held on the 12th April.
• Lunit is offering Volpara shareholders A$1.15/share, in cash, a 47.4% premium to last close. Cornerstone investors with 25.92% of shares out are supportive. The IE says terms are fair.

• 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.

• The Volpara Health Technologies (VHT AU) IE considers Lunit (328130 KS)‘s A$1.15 offer fair and reasonable as it is above its A$0.67-0.82 per share valuation range. 
• NZ OIO approval has been received. The scheme is conditional on shareholders’ approval by more than 75% of votes cast and more than 50% of shareholders.
• The scheme vote will get up as the offer is attractive vs. historical trading ranges. At the last close and for the 21 May payment, the gross/annualised spread was 2.2%/13.0%.

• The biggest concern here is the uncertain commercialization outlook of Qyuns’s pipeline, mainly due to both industry factors in the field of autoimmune and allergic diseases and Qyuns’s own problems.
• Qyuns is overvalued. There’re rumors that Qyuns was “not popular” in primary market when fundraising, perhaps due to Dr. Yu Guoliang’s past unsuccessful experience which made investors suffered losses before.
• By reducing the size of IPO to maintain high share price, this IPO may “look successful”.Investors can seize this opportunity to take profits in time, but long-term hold isn’t recommended.

• In 2023, Hanmi Pharm (128940 KS) reported 12% and 40% growth in revenue and operating profit, respectively, driven by double-digit revenue increase from Rosuzet and improving performance of China subsidiary.
• In January, the company has enrolled first patient in phase 3 trial of type 2 diabetes/obesity drug candidate Efpeglenatide. The study is expected to complete in 2026.
• Hanmi Science-OCI merger has hit a roadblock. Although merger with OCI will bring synergistic effect, Hanmi Pharm will continue to grow even if the merger does not happen.

• Two activist investors are now on the shareholder registry of Eiken Chemical. 
• Eiken has proactively announced a share buyback to return excess cash holdings. 
• Eiken has a quality underlying business which generates solid FCF yield. Expect higher shareholder returns in the future. 

• PB-119 (T2DM) has the fastest R&D progress, but this is a highly competitive market.China’s diabetes drug market is dominated by traditional drugs. It’s not easy for PegBio to break through. 
• Since the future competitive landscape of GLP-1s (obesity) would present a very different situation.If PB-119 fails to have better weight loss effect, it would be eliminated due to fierce competition.
• PegBio’s IPO on SSE STAR Market was rejected. We’re not optimistic about its future commercialization performance. Together with cash-flow issues, we doubt whether PegBio would bring expected returns to investors.

Continued strong sales of Cresemba, Basilea Pharmaceutica’s lead antifungal asset, in the Asia-Pacific region and China, has triggered the receipt of a US$1.25m milestone payment from Pfizer (license partner). This comes on the heels of Basilea’s first sales-related milestone from distribution partner Knight Therapeutics in January for sales in Latin America. We believe these reflect sustained market traction for Cresemba, leading to in-market sales of US$445m in the 12 months ending September 2023 (+22% y-o-y) and c CHF30m in milestone payments in FY23. In December 2023, Cresemba was granted a paediatric label expansion in the US, extending its market exclusivity to September 2027 (EU decision expected Q124). Basilea is also developing a successor to Cresemba: fosmanogepix, a broad-spectrum antifungal therapy (Phase III trials to commence in mid-2024). We anticipate the Prescription Drug User Fee Act (PDUFA) date (3 April 2024) for the company’s second asset, Zevtera, will be the next near-term catalyst, as the US represents a key market.

• HUTCHMED’s 2023 results were in line with expectation. It is gradually becoming a self-sufficient innovative drug enterprise with sufficient cashflow due to upfront/milestone payments of Takeda and increasing product revenue.
• 2024 revenue guidance seems very optimistic, which has to rely on fruquintinib’s global sales performance (or Takeda’s contribution), and also on the timing of approval of fruquintinib’s 2L gastric cancer.
• Starting from 2024, HUTCHMED will enter a period of accelerated growth in product revenue based on major catalysts.Market value of US$1,200 – US$1,800 million is a good place to long. 

• PegBio, a VC-backed biotech company, plans to tap capital markets in Hong Kong. CICC is leading the offering, and an IPO date has yet to be announced.
• The company’s pipeline features promising drug candidates designed for the treatment of type 2 diabetes mellitus (T2DM), obesity, NASH, OIC and congenital hyperinsulinemia. 
• PegBio employs a proprietary technology platform, called HECTOR, and has six drug candidates in the pipeline portfolio. PB-119 is their core product with the purpose to treat T2DM and obesity.

• Since the domestic revenue scale of PD-1 has been much lower-than-expected, the market seems no longer willing to offer GLP-1 weight loss drug high expectations. However, that’s not right. 
• For China healthcare, the emergence of negative domestic policies is a time for reassessment and seeking opportunities, rather than a time of blind pessimism.
• Issuing convertible bonds is clearly a bad decision for Microport, which chose to sacrifice the interests of minority shareholders. Together with weak fundamentals/cashflow pressure, the management needs to take responsibility.

• A Senate committee moved the bill (S.3558) forward that would prohibit pharmaceutical companies from using foreign service providers like WuXi AppTec and its subsidiaries. However, rational voices are still expected.
• Seemingly conflicting proposals are mostly “noise” and disturbances to stock prices. This means in the future, we‘ll see stock prices move sharply again due to latest developments on these bills.
• WuXi AppTec should have “bottom-line thinking” and prepare some “backup solutions”.Investors don’t need to be overly pessimistic, because when global capital flows reverse, no one will mind these bills anymore.

• Pro Medicus Ltd (PME AU) reported record high revenue and net profit in H1FY24. The result was largely driven by a 37% YoY increase in revenue from North America.
• In H1FY24, PME won four key contracts. These contracts have a total contract value of A$200M (at committed minimum exam volumes) with contract terms ranging from 7 to 10 years.
• PME believes H2FY24 will be stronger than H1FY24. Assuming key contracts up for renewal are renewed at same rate, PME sees forward revenue of >A$608M over the next five years.   

• Classys is one of the top beauty medical device companies in Korea. Classys’ main products include Shurink Universe and Volnewmer.
• We have a positive view of Classys (214150 KS). Classys is trading at relatively reasonable valuations, considering the company’s strong growth in sales and profits.
• On 28 February, Classys announced a shareholder return amount of 38 billion won (including share cancellation of about 25 billion won and dividend payout of 13 billion won).

• Jazz Pharmaceuticals reported a strong financial year in 2023, with overall revenues surpassing $3.8 billion.
• This performance was primarily driven by the growth of key products in the company’s portfolio – Xywav, Epidiolex and Rylaze, which collectively accounted for a 27% year-over-year increase in revenue.
• The company’s sleep therapeutic area contributed more than $1.9 billion in annual revenue, indicating a strong demand for its offerings given the high prevalence of sleep related disorders.

• In December 2023, American multinational pharmaceutical company Bristol Myers Squibb has agreed to acquire Karuna Therapeutics for $330 per share in cash, implying a total equity value of $14B.
• The special meeting of Karuna’s shareholders to be held on March 12, 2023, to consider and vote on various proposals necessary to approve upcoming M&A deal.
• I expect the bidding battle among big pharma to acquire Karuna Therapeutics and its valuable pipeline of transformative medicines to treat schizophrenia and psychosis in Alzheimer’s disease.

• As per the Q1 2024 Cooper Companies earnings, the company reported an outstanding start to the fiscal year with record quarterly revenues of $932 million.
• CooperVision rolled in solid growth worldwide, while CooperSurgical recorded its 13th consecutive quarter of double-digit organic growth.
• The firm’s earnings were equally strong, with capacity expansion progressing well and demand remaining healthy globally.

• Viatris Inc.
• reported its Q4 and Full Year 2023 Earnings with strong operational results, showing revenue growth for the third consecutive quarter.
• As Viatris begins 2024, it continues to generate strong free cash flows that provide the flexibility to balance capital return to shareholders and strategic investments for future growth.

• Veeva Systems posted robust results for its Q4 and Fiscal 2024 year during its earnings call.
• Revenues for the quarter totalled $631 million and for the year they were $2.4 billion, both exceeding guidance.
• Non GAAP operating income surpassed expectations too, with $239 million for Q4 and $843 million for the full year.

• Eisai Co Ltd (4523 JP) has come out with ambitious revenue target for Alzheimer’s disease drug Leqembi with new estimates for global eligible patient population and potential indication expansions.
• By FY27, Eisai expects Leqembi can generate revenue of ¥290B (~$2B) worldwide. Leqembi revenue can potentially ballooned to a whopping ¥1.6T (~$10.8B) by FY33, according to the company.
• Through January, Eisai could reach just 2,000 patients in the U.S. versus target of 10K patients by March. The sluggish progress of Leqembi makes Eisai’s target difficult to achieve.