Healthcare

• Due to large patient population and strong clinical demand for new therapies, the future commercialization prospects of effective drugs in the field of schizophrenia would be relatively certain and promising.
• Our forecast on the peak sales of KarXT is about US$10 billion. In other words, at this peak sales level, BMS is able to recover the US$14 billion in cost.
• Karuna’s P/B is much higher than peers. If investors already have Karuna in portfolio, they may consider taking profits in time.But another rally is possible when KarXT is officially approved.

• Bristol Myers Squibb Co (BMY US) is acquiring Karuna Therapeutics Inc (KRTX US) for $330/share in cash for equity value of ~$14B. The transaction is expected to close in 1H24. 
• Karuna’s lead asset, KarXT has FDA action date of September 26, 2024 for the treatment of schizophrenia in adults. KarXT has peak annual sales potential of $6–7B.
• Considering strong clinical efficacy and favorable risk profile of KarXT, the deal seems to be fairly valued. Current market price of Karuna shares of $318.41 represents absolute spread of ~3.6%.

• Agilent Technologies Q1 2024 earnings were decent.
• Mike McMullen, the outgoing President and CEO of Agilent, announced his retirement and new CEO-elect, Padraig McDonnell took charge of the company.
• Agilent reported Q1 revenue of $1.66 billion, which represents a decrease of 6.4% against the same period the previous year.

• Henry Schein’s financial results for the fourth quarter and full year of 2023 demonstrated a robust recovery from a significant cybersecurity incident, showcasing the resilience of their business model and the steadfast loyalty of their customers.
• Notably, Henry Schein reported strong growth in its technology and value-added services businesses, a key strategic focus for the company.
• Global sales of implants and biomaterials also showed significant growth, largely driven by strategic acquisitions that expanded the company’s offering and market presence.

• This is our first report on biopharma major, Intra-Cellular Therapies.
• The company reported solid progress in its Q4 and FY2023 results, marking a year characterized by steady growth across the company.
• Central to the year’s success was the establishment of CAPLYTA as a vital treatment option for bipolar depression and schizophrenia.

• MariMed reported 4Q revenue of $38.9 million, which was exactly in line with our estimate.
• This represents a 0.26% increase Q/Q and an 8.66% improvement Y/Y. Gross margins were 44.47%, a gain of 1.80% sequentially and 0.34% Y/Y.
• Revenue was helped by a full contribution from the Thrive Dispensary in Casey, Illinois and beginning operations at the Mt. Vernon, Illinois manufacturing facility. 

• This is our first report on Penumbra, a global healthcare major.
• The company reported its fourth quarter and annual earnings on its conference call.
• The company made a revenue of USD 284.7 million in Q4, marking a year-over-year increase of 28.7%, while their annual revenues for 2023 reached USD 1,058.5 million, a 25% increase compared to 2022.

• With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
• We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
• The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

• UMP Healthcare (722 HK) delivered a slow start to FY24, with revenues up 2.3% YoY and profits down 63% YoY, due to sluggish demand in Hong Kong. 
• The company cut dividend for H1 FY24 by 25% to 1.3 HKD cents/share. Net cash on the balance sheet remained healthy at 265 mn HKD representing 64% of market capitalization.
• The company is implementing stringent cost control and we believe that a slow turnaround and a 9-10% dividend yield is very probable at these levels. 

• Pharmaessentia Corp (6446 TT) starts 2024 on a strong note, with revenue for first two months rising 103% YoY to NT$1.1B. The company is expected to become profitable this year.
• China approval of Besremi, which is expected this year, can be a major near-term catalyst. Indication expansion of Besremi in the U.S. is anticipated in next year.
• Pharmaessentia’s revenue is forecast to grow at an average rate of 55% per annum over the next two years. The company’s pipeline is progressing, thereby enhancing visibility beyond Besremi.

• In a recent discussion with a client, one of the questions that was raised was regarding the impact the local investors are having on the corporate governance reforms in Korea.
• The number of local investors in the Korean stock market has jumped in the past few years from 5.3 million in 2017 to 14.4 million in 2022.
• All in all, I think Korea is about 3-5 years behind Japan in various corporate governance reforms. So it has a lot of catching up to do.

• Xunfei Healthcare Technology (XHT HK) is looking to raise around US$200m in its upcoming Hong Kong IPO. The bookrunners on the deal are Huatai International, GF Capital, and CCB International.
• Xunfei Healthcare Technology (Xunfei), a iFlytek (Shenzhen-listed) spin-off, primarily provides solutions covering the full healthcare service cycle, with products and services mainly catered towards major stakeholders in the healthcare industry.
• Backed by its healthcare AI solutions matrix, the firm ranked first in the healthcare AI industry in terms of revenue in China in 2022, according to Frost & Sullivan (F&S).

• Innovent’s 2023 product revenue was RMB5.7 billion. In 2024, product revenue growth would remain strong (e.g. 35% YoY).The main flashpoint for performance is after the approval of mazdutide in 2025.
• Innovent has started paving the way for mazdutide more than a year in advance and building various channels.Normally speaking, mazdutide could get the approval in 25Q2. Its CDMO is Asymchem
• Share price of Innovent was once dragged down by the CXO plunge due to the US Draft Bill, but unlike CXOs, innovative drugs do not involve supply chain security issues.

AFT continues to focus on expanding its product portfolio and broadening its geographical footprint (including increased investments in its affiliates), which we expect to translate into stronger market traction and an increased top-line for AFT over the medium term. The company has updated the market on its international growth efforts, announcing new manufacturing agreements for Maxigesic Rapid and Crystaderm (ahead of their expected launches in the US and Chinese markets, respectively) and partnership expansion with Hikma (its US licensee of Maxigesic IV) to commercialise Combogesic IV in Saudi Arabia, Iraq and Jordan. Concurrently, AFT has made inroads into the UK market through the recent launch of Combogesic tablets and IV.

ORY FY23 results announcement covered an eventful period for the company’s pipeline, capped by the release of top-line data from the Phase IIb PORTICO trial for lead CNS asset vafidemstat. With the focus squarely on the planned end of Phase II (EoP2) meeting with the FDA and anticipated clinical updates on the remaining programmes, we see FY24 as a crucial period for the company, with multiple inflection points. Other key upcoming milestones include results from the FRIDA trial (iadademstat in FLT3+ r/r acute myeloid leukaemia; expected in Q224) and a clinical timeline update from the EVOLUTION trial (vafidemstat in schizophrenia; expected in 2024). Based on the current status of the company’s programmes and improved visibility, we have adjusted our market strategy, launch timelines and valuation across the company’s pipeline, leading to a valuation reset to €11.8/share (€15.1/share previously).

• Although people acknowledged BeiGene’s performance, it still makes us uneasy about a long-standing question: When will BeiGene be profitable?With current cost structure, there’s at least two years left until breakeven. 
• BeiGene’s internationalization only proves decent increase in revenue, but it doesn’t yet verify its profitability.SG&A expense ratio completely deviates from the normal state of Biotech with over US$2 billion sales.
• If BeiGene indeed has a plan to turn loss into profits, besides maintaining a high growth rate in sales, reasonable optimization in cost and expenses is the most basic “sincerity”.

• IHH Healthcare (IHH MK) reports 11% YoY increase in 4Q23 revenue, due to higher patient volumes and revenue intensity across all markets, with all business segments and markets registering growth.
• 4Q23 EBITDA remained flat at RM1.1B and PATMI (excluding extraordinary income) fell 22% YoY.
• The company remains on track to add close to 4,000 beds across all its major markets, including Malaysia, India, Europe, and Hong Kong to its existing 12,000 beds by 2028.

• In the current challenging environment, investors should prioritize pharmaceutical companies with abundant cash flow and Biotech with diversified funding sources, as their safety margin is much higher.
• After the “clamor of consumer upgrading” fades away, we will eventually realize that the so-called pricing power has never belonged to anyone or any enterprise, but always to consumers.
• Hengrui is overvalued. There’re still around RMB5 billion generic drugs yet to enter VBP scope. So, the assumption that all negative effects of VBP have cleared up is not correct.

• In the past few years, a big problem of Taiji is weak performance/low valuation. The main purpose of mixed-ownership reform with CNPGC is to improve operational efficiency and enhance profitability.
• CNPGC made a clear commitment to solve the horizontal competition issue. So, after the privatization of China TCM is completed, it’s worth noting whether it will be merged into Taiji.
• 2024 is expected to see Taiji launch new M&A deals, which would bring a qualitative leap for Taiji. Market value of Taiji is expected to at least double. 

• In the Q4 earnings, Merck & Co.
• reported a strong financial performance, underpinned by a robust demand for their innovative portfolio, including Keytruda, Welireg, and Gardasil, among others.
• The company has embarked on various collaborations further bolstering its product pipeline with a promising line of innovations.

• BioMarin Pharmaceutical recorded a 20% revenue growth in the fourth quarter of 2023 compared to Q4 of 2022.
• The company gained total revenue growth of 15% for the whole of 2023 versus the prior year.
• Non-GAAP earnings per share rose by 48% in Q4 2023, representing a 36% year-over year increase.

• Insulet Corporation reported strong Q4 2023 results, marking its eighth straight year of 20-plus percent revenue growth.
• The company’s automated insulin delivery system, Omnipod 5, played a significant role in its financial success as it generated $1 billion in revenue in 2023.
• The achievement of approximately 425,000 global customers using the Omnipod platform represented a growth of around 25% from the previous year, including almost 250,000 using the Omnipod 5.

• Teleflex Incorporated’s fourth quarter 2023 earnings were decent.
• Firstly, the revenues grew at 2.1% year-over-year, showing the company’s overall financial robustness.
• Additionally, Teleflex saw a stable-to-improving environment for material inflation and supply chains, with continued improvements expected through 2024.

• Celltrion Inc (068270 KS) has reported 12% YoY growth in its core business of biosimilars in 2023. Growth was mainly driven by new portfolios including Remsima SC and Yuflyma.
• Operating profit and operating margin improved slightly YoY, led by an increase in high-margin biosimilar sales. Biosimilar products contributed 67% of total revenue in 2023, up from 57% in 2022.   
• The company is targeting more than 60% global sales growth to KRW3.5 trillion in 2024. Celltrion is eyeing KRW1.6 trillion EBITDA and more than 40% EBITDA margin in 2024.

• This is our first report on Moderna, Inc., a renowned biotechnology company utilizing mRNA technology in the development of therapeutics and vaccines.
• The company entered 2024 optimistic despite challenging 2023 results.
• The company’s revenue for 2023 stood at $6.1 billion, with a net loss of $4.7 billion.

Key points

• EAPI is trading at a significant decrease of €5.10 per share, down from previous levels of €12.00-€13.00 before a downward revision of guidance
• The company is undergoing a strategic review after firing the CEO and facing multiple guidance changes, causing investors to lose faith in the management team
• EAPI was previously highlighted as a minimally levered spinout with potential for growth in CDMO work, but customer concentration with Sanofi as a major revenue contributor has been a factor in its discounted value compared to peers like SFZN

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 biotech major, United Therapeutics Corporation (UTC).
• The company posted solid financial results for the fourth quarter of 2023, marking the third consecutive quarter of record revenue, and the second consecutive year of record income.
• The company achieved over 20% growth in both quarterly and annual revenue for the fourth quarter and the full year.

• Exact Sciences Corporation showcased substantial growth and improved profitability throughout 2023.
• With a 24% increase in core revenue amounting to $2.5 billion and an uplifted adjusted EBITDA amounting to $362 million, the firm grew robustly.
• This success is largely credited to the advancement of its mission to eradicate cancer via the facilitation of innovative screening and precision oncology under major brands like Cologuard, Oncotype DX, and PreventionGenetics.

Having shown cognitive activity in prior trials, Actinogen began its XanaMIA Phase IIb study of lead candidate Xanamem in patients with cognitive impairment (CI) associated with mild-to-moderate Alzheimer’s disease (AD). The study will assess c 220 biomarker-positive AD patients, with interim results expected in H1 CY25. Actinogen recently reported results from a human positron emission tomography (PET) imaging study, which affirm the drug’s mechanism of action (MoA) in healthy subjects and patients with AD, by showing that Xanamem exhibited high target enzyme occupancy designed to impede cortisol production, as well as favourable safety and tolerability. Our risk-adjusted net present value (rNPV) remains essentially unchanged at A$528m.

• Medtronic delivered a solid quarter with its mid-single-digit revenue growth exceeding expectations.
• The fiscal ’24 third quarter earnings were underpinned by strength across multiple businesses like Core Spine, Cardiac Surgery, Structural Heart and Cardiac Pacing, along with robust growth witnessed across various international markets.
• Innovation-driven core technologies such as robotics, AI and closed-loop systems acted as significant growth propellers, with five AI products already FDA approved.

• Among core/key products, TY-302 and TY-2136b have to face fierce competition, with R&D progress lagging behind competing products.TY-9591 for brain metastases from NSCLC could be a breakthrough point for TYK.
• There would be a long time for the first product to generate revenue, but TYK is cash shortage.So, the survival risk is high. Such companies are less attractive to investors.
• Valuation of TYK after six rounds of financing was RMB3.08 billion. However, considering the weak sentiment and concerns on pipeline, valuation of TYK after IPO could fall below this level.

• BayMedica’s VP, Sales & Marketing, Jerry. P. Griffin joined us on The Water Tower Hour.
• Those interested can listen to the podcast on Apple Podcasts, Google Podcasts, Spotify, or our website.
• BayMedica is the commercial business arm of rare cannabinoids-based drug developer InMed Pharmaceuticals.

• Classys (214150 KS) achieved its highest performance ever in 2023. Revenue grew 27% YoY to KRW180 billion, 6% higher than the forecast of KRW170 billion announced early last year.
• As demand for equipment increased rapidly in major countries, overseas sales last year exceeded KRW100 billion for the first time, and specially in Brazil, annual sales exceeded KRW40 billion.
• With a positive outlook, Classys is expected to maintain growth trajectory. The company expects 2024 annual revenue of KRW225 billion, up 25% YoY. 

• Jiuyuan is not a typical innovative pharmaceutical enterprise with cutting-edge technology. The current seemingly good revenue/profit performance is actually based on some old products from over a decade ago.
• The risk of VBP could lead to a significant decrease in profit margins at any time. The cyclical changes in heparin industry would put more pressure on Jiuyuan’s performance.
• As Jiuyuan has not yet demonstrated superior clinical data in Jikeqin for overweight/obesity indication, together with fierce competition, we are cautious about the performance in GLP-1s pipeline at this stage.

• Medley (4480 JP) reported better-than-expected 2023 result. Revenue increased 45% YoY to ¥20.5B, EBITDA jumped 77% YoY to ¥3.4B, and net profit increased 152% YoY to ¥2.6B.
• The company expects 2024 revenue of ¥27.1B (up 32% YoY) and EBITDA of ¥3.9B (up 15% YoY). However, net profit is expected to remain flat at ¥2.6B in 2024.
• Medley has established new mid-term targets. The company aims to achieve an EBITDA of ¥20B on revenue of ¥100B in 2029, representing 5-year revenue CAGR of 30%.

OSE Immunotherapeutics has announced a global licence and collaboration agreement with AbbVie to develop OSE-230, a novel monoclonal antibody, for the treatment of chronic and severe inflammation. The announcement marks a positive milestone and much needed endorsement within a sector hindered by funding challenges. This follows sizable transactions in December 2023 and early 2024, including AbbVie’s foray into CNS (Cerevel for $8.7bn) and entry into immunotherapy (ImmunoGen for $10.1bn), covered in our outlook note. The arrangement provides further external recognition of OSE’s innovative R&D capabilities and early-stage pipeline. Deal terms include an upfront payment of $48m, with OSE eligible to receive up to $665m in additional milestone payments. The market response to the news was highly positive, with OSE’s share price increasing by over 60% on the morning of the announcement.

Key points

• RLMD is a biotech company with a high-stakes binary outcome in 2024 for their antidepressant, REL-1017
• Despite previous phase 3 trial failures, the drug has a validated mechanism of action and promising phase 2 data, leading to a $1.1B valuation
• The stock is undervalued and presents a compelling investment opportunity with significant upside potential, especially through underpriced options for exposure to the outcome in mid-2024

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.

IMMX has shared a 12-month recap, capturing key clinical and regulatory events from 2023, setting the stage for an active 2024. Its lead CAR-T asset (NXC-201) is a B-cell maturation antigen (BCMA) targeting therapy for amyloid light chain amyloidosis (ALA) and multiple myeloma (MM). The latest clinical data (Phase Ib/IIa NEXICART-1 trial) showed an overall response rate (ORR) of 100% in ALA patients (n=10) and 90% in MM patients (n=50). On the regulatory front, NXC-201 received Orphan Drug designation (ODD) in February 2024 from the EMA for ALA, and in Q323 from the FDA for ALA and MM. The FDA also cleared Immix’s Investigational New Drug (IND) application in Q423, permitting NXC-201 dosing at US trial sites (NEXICART-2 trial for ALA patients). We believe this is an important development step for NXC-201, and we look forward to rolling data readouts after the start of NEXICART-2, most likely in H124.

• Bristol-Myers Squibb (BMS) reported a strong fourth quarter for 2023 with sales momentum in both their established and new product portfolios, showing a growth of 9% and earning nearly $10 billion in revenue.
• Multiple key brands, including Eliquis, Opdivo, Reblozyl, Opdualag, Breyanzi, Camzyos, and Sotyktu, contributed to this growth.
• In addition, BMS generated significant cash flows from operations amounting to $4.3 billion.

• Eli Lilly and Company’s Q4 2023 earnings showed a year of growth and advancement for the company.
• Revenue increased by 20 percent for the full year and 28 percent for the most recent quarter, as seen in the company’s newly launched portfolio gaining momentum.
• Notably, the company received regulatory approvals for Zepbound, Jaypirca, Omvoh, Ebglyss in the EU, and an expanded label for Verzenio and two new indications for Jardiance within 2023.

• Olympus Corp (7733 JP) announced disappointing Q3FY24 result. Although revenue increased 7% YoY to ¥239B, beating estimate of ¥236B, operating profit declined 30% YoY to ¥34B, below estimate of ¥43B.
• The company cut FY24 operating profit guidance for second time and reduced revenue guidance after raising it in November. Noto Peninsula earthquake is the main reason for reducing revenue guidance.
• Although both revenue and profits are expected to improve in FY25, it will be difficult to achieve an operating margin of 20% and sales growth of 5%.

At the 2024 ESMO Targeted Anticancer Therapies Congress, OSE Immunotherapeutics (OSE) presented encouraging interim results from the Phase I/II dose escalation and expansion study for OSE-279, its anti-PD1 monoclonal antibody. The data show promising preliminary efficacy in patients with advanced solid tumours with no therapeutics options available. The mono therapy has also continued to demonstrate a desirable pharmacokinetic/pharmacodynamic (PK/PD) profile and manageable safety. OSE is investigating various combination approaches, such as with its lead cancer vaccine Tedopi, which we believe could maximise the potential of its proprietary therapies. OSE has six ongoing clinical studies (across several indications) and three pre-clinical assets and, in our view, the most significant upcoming milestone for the company will be initiation of the confirmatory Phase III trial for Tedopi in second-line non-small cell lung cancer (Q224 in the US and extension to European sites in H224).

• During Vertex Pharmaceuticals’ Fourth Quarter 2023 Earnings Call, the company highlighted the achievements of the past year, including the strong financial results they achieved and the progress of their various drug development programs.
• Vertex continued its impressive growth streak, achieving full year CF product revenues of $9.87 billion, which represents an 11% growth from 2022.
• The company attributes this growth primarily to the increased number of CF patients being reached and the groundbreaking approvals of CASGEVY, the first-ever CRISPR/Cas9-based therapy.

• West Pharmaceutical Services recently held its fourth quarter 2023 earnings conference call, closely examining their financial results, providing an update on their business operations, and presenting an overview of their financial outlook for the full year of 2024.
• The company reported a significant base growth in 2023, which offset a decrease of COVID-19-related sales by about $320 million.
• This growth was mainly driven by expanding customer demand for the company’s high value product offerings and their contract manufacturing services.

• Boston Scientific Corporation experienced an exceptional performance in 2023, delivering one of the strongest years in the company’s history by surpassing set financial goals.
• Throughout the year, total company operational sales grew by 15% and organic sales by 14%, exceeding the high-end guidance range of 8% to 10%.
• Operational sales growth for the full year was registered at 13%, and organic sales grew by 12%.

• In healthcare AI industry, the commercialization process is complex and burdened with challenges. Related products mainly plays an auxiliary role in medical scenarios, rather than a core support or rigid-demand. 
• The idea of creating corresponding solutions for C-end and B-end customers by FUNFEI is not inappropriate. However, both B-end and C-end businesses of FUNFEI have encountered varying degrees of problems.
• We’re not optimistic about XUNFEI’s profitability. The sluggish stock price performance after Airdoc’s listing indicates that the market/investors have not fully recognized healthcare AI enterprises, leading to low valuation.