Healthcare

• Entero Healthcare Solutions Limited (2294842D IN) is looking to raise US$200m in its upcoming India IPO. The IPO will consist of both a primary and secondary component.
• Entero Healthcare Solutions (Entero) is a healthcare products distributor in India.
• In this note, we look at the company’s past performance.

• Aspira Women’s Health announced today that it has completed the design of the EndoCheck test based on the analysis of samples received from The University of Oxford in October.
• This data shows EndoCheck to be a high-performing blood test for localized endometriosis, including ovarian endometriosis masses known as endometrioma.
• Endometrioma is a localized form of endometriosis that has formed an ovarian mass. It is one of the most common types of endometriosis.

• This insight provides a detailed analysis of Eoflow’s appellant brief (released on 4 December) on Insulet Corp (PODD US)’s lawsuit. 
• We provide the following three major reasons why we believe Eoflow will win versus Insulet in this lawsuit.
• One of the most important arguments on Eoflow’s appellant brief is the DTSA three years statute of limitations.

• People think that third-party medical imaging service providers targeting the grassroots market would have considerable development potential.However, even overseas leading players haven’t formed large profit scale after decades of establishment.
• Different types of competitors would enter this market, and the consortium formed by public hospitals in grassroots market will be the biggest game changer. Potential legal risks also worth attention.
• The profit model is still unclear. It’s uncertain whether the anticipated sizeable scale will eventually materialise. There’s still a long way to explore the third-party imaging industry in China.

• Torrent Pharmaceuticals (TRP IN) reported 16% YoY revenue growth to INR26.6B in Q2FY24. Strong performance in India, Brazil, and Germany is partially offset by the revenue decline in the U.S.
• EBITDA increased 22% YoY to INR8.3, leading to 138bps YoY expansion in margin to 31%, due to cost optimization and discontinuation of the low margin business in the U.S.
• Initial bull thesis on the company regarding its domestic market strength is still intact. Further upside will be driven by superior performance in India and Brazil businesses and margin improvements.

• Eoflow (294090 KS) filed a 117-page appeal against the amended preliminary injunction (PI), sparking a 16% share price rally. Insulet Corp (PODD US) is required to respond by 14 December.
• Eoflow argues that the Massachusetts District Court committed legal errors. However, Eoflow’s arguments are rehashed from those that the district court has already dismissed with balanced counterarguments. 
• The appeal is Eoflow’s last roll of the dice. Eoflow’s appeal brief worryingly notes that the PI profoundly imperils both the Medtronic transaction and its status as a going concern.

• Japanese medical products maker Medikit Co Ltd (7749 JP) Tuesday announced a buyback of ~12% of its shares from the founder’s company.
• The stock is extraordinarily illiquid. 12mo ADV is <US$40k/day. But Medikit runs 40% gross margins, 20% EBIT margins, and trades at an EV/revenue ratio of ~0.8x. It’s cash-rich, and cheap.
• But it’s an interesting situation. The buyback (and its reason) combined with the shareholder structure allow me to idly speculate this is an MBO candidate.

• In November, Orthofix International Nv (OFIX US) named Massimo Calafiore as incoming President and CEO. Mr. Calafiore has extensive knowledge in orthopedics and spine, and M&A integration expertise.
• Orthofix has performed well and operated smoothly following management transition. In 3Q23, revenue increased 61% YoY on a reported basis and 1% YoY on a pro forma basis to $184M.
• The company expects to deliver much higher adjusted profits next year and to exit 2024 cash-flow positive from an estimated $100 million outflow for 2023.

• Against the backdrop of China’s reopen after the pandemic is under control, the performance comparison of the four major ophthalmic hospitals in the A-share market has attracted investors’ attention.
• Aier Eye Hospital is already going downhill. Bright Eye Hospital leads Huaxia Eye Hospital in national layout/growth rate. He Eye Hospital has a big gap compared to the rest three.
• The “weaknesses” of Huaxia and He Eye Hospital in business layout isn’t obvious currently.But in good times, the impact of businesses with strong consumption attributes on performance would be amplified.

• MariMed has begun manufacturing and processing cannabis products in its new kitchen in Mount Vernon, Illinois.
• As often happens in cannabis, there were construction and regulatory delays, but the company expects to have its award-winning edibles in Illinois stores in time for the holidays.
• Illinois is the sixth-most populated state with 12.7 million residents.

• Unveiling INM-089 targeting AMD. InMed is expanding its rare cannabinoid cannabinol (CBN)-based ocular disease treatment pipeline with INM-089, targeting age- related macular degeneration (AMD).
• INM-089, a CBN analog, is InMed’s second ocular pharmaceutical program, with the company currently engaged in pre-clinical studies of INM-088, investigating its effects in the treatment of glaucoma.
• InMed’s ocular programs target leading causes of severe eyesight loss and blindness.

Oryzon has announced the receipt of a $0.5m grant from the Amyotrophic Lateral Sclerosis (ALS) Association to support the regulatory clinical development of the company’s histone deacetylase 6 (HDAC6) inhibitor, ORY-4001, as a potential treatment for ALS. We view this as a favourable advancement that enables the company to expand its preclinical pipeline. This news of this funding grant follows on the heels of Oryzon’s recently announced €45m convertible financing arrangement. Oryzon plans to progress ORY-4001 through various investigational new drug (IND)-enabling studies and we anticipate updates from the company as the data become available. The most significant upcoming catalyst for Oryzon is top-line readouts for the Phase IIb PORTICO trial for lead clinical asset vafidemstat for the treatment of borderline personality disorder, expected in Q124.

• Wuxi Biologics (2269 HK) has guided for weaker-than-expected revenue and lower profit in 2023, as the operating industry is facing near-term challenges due to biotech funding slowdown.
• $300 million lesser revenue in development business due to reduced number of projects and manufacturing revenue deficit of $100 million due to CMO deferral contributed to the miss.
• Following the announcement, Wuxi Biologics shares nosedived 24% on HK stock exchanges, marking its biggest one-day slide since listing in 2017.

• In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in October and November 2023.
• We provide a list of 24 stocks in the Korean stock market that have announced share buyback programs in October and November 2023.
• The top five market cap stocks that have announced share repurchases include Celltrion Inc, Celltrion Healthcare, Shinhan Financial, Amore Pacific Corp, and Mirae Asset Securities. 

• QuantumPharm (QUP HK) is looking to raise US$200m in its upcoming Hong Kong IPO. The bookrunner on the deal is Citic Securities.
• QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions. 
• Its solutions and services cater to the pharmaceutical and material science (including agritech, energy and new chemicals, and cosmetics) industries and beyond.

• It seems that investors have completely lost patience with WuXi Bio after the Company made new business updates. WuXi Bio’s transparency, communication strategy and expectation management need to be improved.
• Although the decline in performance is an important reason for the sharp drop in stock price, we think there’re still some deep-seated reasons that investors should pay extra attention to.
• Fed’s interest rate cut doesn’t necessarily mean immediate improvement in financing environment. In the CXO industry downcycle, whether WuXi Bio can achieve positive turnaround in 24H2 remains to be seen.  

• Japan Catalyst’s press release supports the idea of a Taisho Pharmaceutical Holdin (4581 JP) MBO but not the proposed offer price as it implies a P/B less than 1.0x.
• The press release is a discovery exercise encouraging other like-minded shareholders to show their hand. The shares are trading marginally above the JPY8,620 offer.
• While justifiable, a bump is unlikely due to the lack of a substantial activist shareholder, irrevocables, no competing bid and the offer’s 55.5% premium to the undisturbed price.

• IHH Healthcare (IHH MK) reported stellar performance in 3Q23 exceeding expectations, with double-digit revenue and EBITDA growth, while PAT more than doubles on higher patient volumes and improved case mix.
• To deliver profitable growth, IHH will continue its organic expansion, including adding close to 4,000 beds in the next five years to its existing 12,000 operational beds.
• Notwithstanding the strong underlying demand for quality healthcare services driving operational and financial growth, IHH expects cost pressures from elevated inflation, and rising interest rates.

• The fact that many IPO companies either don’t need to raise capital or don’t share the same goal of going public is the crux of the problem.
• It would be conducive to improving quality of TSE as a whole if companies that cannot share the objectives of a listed company with shareholders are delisted through an MBO.
• An MBO by the founding family would open the door to investment for companies that have been unable to invest for fear of falling into the “value trap.”

• Japan Catalyst Fund is a relatively young effort in the Japan “engagement activism” space, having been founded by Monex Group in September 2019. Total assets remain apparently small.
• Championed by Monex Group founder Oki Matsumoto, despite small AUM, the fund has decent access. As of end-October, Taisho Pharmaceutical Holdings (4581 JP) was #5 and 5.26%. Now it’s #2.
• Friday, they released a statement about the MBO. It isn’t a barn-burner, but the stock has traded through terms since announcement at a too-low price. And nobody else has commented.

• The national centralized procurement of high-value medical consumables for intraocular lens (IOL) and medical consumables related to sports medicine released results, with lower than expected price reductions. 
• Despite anti-corruption campaign, the business/profit model validation process of Chinese Biotech has not slowed down. There’s a chance to see Chinese Biotech turn losses into profits in 2024-2025.
• Zhejiang Orient Gene Biotech (688298 CH) once brought considerable returns to investors, but now the beautiful story is over.After deletion from CSI Medical Service Index, share price could remain weak.

• 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) 2023 application, 2024 approval and 2025 launch of DW-1002 in Japan, 2023 application/approval/launch in China, as well as expedited development of combination formula MembraneBlue-DualR (DW-1002 + trypan blue) in the US [NEW]
• 3) clinical trials in 2024 in Japan and application for approval in 2025 of regenerative cell medicine DWR-2206 

• Concord Biotech Ltd (658823Z IN) reported robust performance in Q2FY24. Revenue grew 65% YoY to INR2.6 billion, while EBITDA and PAT jumped more than 3x compared to year-ago quarter.
• The company has increased capacity utilization at all the three manufacturing facilities. Operational efficiencies have helped the bottom line to achieve faster growth than the top line.
• With a high runway for growth and improving market scenario, especially for Indian pharma companies, the company remains highly optimistic to surpass its historical 18% revenue CAGR this year.

Immix hosted a key opinion leader (KOL) event highlighting the long-term potential for NXC-201, the company’s B-cell maturation antigen (BCMA) targeting CAR-T therapy to address the fragile amyloid light chain amyloidosis (ALA) patient population. This is the only CAR-T therapy in development for the treatment of relapsed/refractory ALA to our knowledge and represents a significant unmet medical need as there are only limited treatment options and no standard of care. Relapse remains a common issue and, although still in the very early stages, the KOLs had optimism in the positive response rates shown thus far in the NEXICART-1 study. We anticipate rolling readouts for the NXC-201 ALA studies (particularly NEXICART-2) as the data become available.

• For the month of November 2023, 16 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$13bn.
• The average premium for the new deals announced (or first discussed) in November was 41%. The average YTD is 38% (97 deals).
• This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

• Sunho Biologics, a China-based clinical-stage biotechnology company, plans to raise up to US$100m via a Hong Kong listing.
• In this note, we examine the company’s three core products, namely IAP0971, IAE0972, and IAH0968, which target malignancies.
• A large part of the company’s pipeline is testing the unproven targets. We also think the management and pre-IPO investors are of mediocre quality.

• Avantor had a decent quarter reported a revenue of $1.72 billion surpassing analyst expectations.
• Despite a 7.9% decline in core organic revenue, the as-reported revenue remained flat sequentially, aligning with earlier guidance.
• Avantor faced challenges in an environment marked by ongoing destocking and reduced demand in biopharma, advanced technologies, and applied materials.

• BioMarin Pharmaceutical Inc. delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.
• The company celebrates a robust 15% total revenue growth in the third quarter, propelled by the success of Voxzogo, slated to become the company’s inaugural blockbuster product.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Bio-Techne Corporation delivered a disappointing set of results as the company was unable to meet Wall Street’s revenue and earnings expectations.
• Although the US biopharma funding challenges and evolving macroeconomic conditions in China exceeded initial expectations, Bio-Techne’s growth pillars, such as the GMP proteins business, ExoDx prostate, and ProteinSimple franchise, demonstrated robust performance.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Exact Sciences Corporation delivered a positive result and managed an all-around beat in the quarter.
• During the quarter, over 10,000 new healthcare professionals ordered Cologuard, contributing to a total of more than 331,000 orders since its launch.
• Looking ahead, Exact Sciences raised its total revenue guidance for the year to a range of $2.476 billion to $2.486 billion.

• GSK plc’s results were a major disappointment as the company failed to meet Wall Street’s revenue and earnings expectations.
• Approvals for key medicines, including Arexvy and Apretude, strengthened the product portfolio, positioning GSK for substantial profitable growth.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Humana managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
• Adjusted earnings per share stood at $7.78, with notable performance in Medicaid and primary care.
• Looking ahead to 2024, Humana outlined its strategic approach to Medicare Advantage, emphasizing consumer preferences and maintaining or enhancing key benefits.

• IDEXX Laboratories delivered a mixed result in the recent quarter, with revenues below market expectations, but it managed to surpass the analyst consensus in terms of earnings.
• IDEXX experienced an impressive 8% organic growth in revenues, driven by a 9% surge in CAG Diagnostic recurring revenues.
• Despite the headwinds from a decline in US clinical visits, IDEXX CAG Diagnostic recurring revenue growth remained resilient, surpassing sector growth levels.

• This is a special one-time report on Immunogen, a biopharma player that has demonstrated notable progress and achievements in its recent earnings report.
• ELAHERE generated over $105 million in net sales during the last quarter, resulting in cumulative revenue of over $210 million year-to-date.
• Immunogen is not solely reliant on its current success; it is actively pursuing geographic expansion, with applications for European and Chinese approvals in progress.

• KOSDAQ 150’s passive outflow occurs on December 14th for Celltrion Healthcare, whereas it would be January 11th for Celltrion with KOSPI 200.
• The estimated passive flow size (x ADTV) on their respective rebalancing trading days is anticipated to be approximately -2.79x (Celltrion Healthcare) and +1.76x (Celltrion).
• We should monitor the potential expansion of the swap spread on December 14th. Additionally, contemplating an outright approach for Celltrion, akin to the Hanwha Ocean scenario, could be worth considering.

• YSB would be added to KraneShares CSI China Internet ETF.Cornerstone investors could opt to cash out directly,taking advantage of improved liquidity, which means even they’re not optimistic about YSB’s prospects.
• YSB’s profit margin is disappointing. It would be hard for YSB to deliver decent profits in the end. This business does not make money. YSB is also short of money.
• Since going public, YSB’s share price has been on a rollercoaster, which has deviated from the fundamentals, but it should be pointed out eventually stock prices will return to fundamentals.

• Santen Pharmaceutical (4536 JP) reported double-digit growth in revenue and core operating profit, and triple-digit growth in net profit in H1FY24. Overseas business grew 30% and remained the main driver.
• Santen raised FY24 guidance for the second time due to the stronger-than-expected sales from overseas markets, reviewed impact of generics in Japan, and continued progress in company-wide cost optimizations.
• Recently, the company has received European Commission approval for a new ophthalmic drug for lowering of intraocular pressure (IOP) in open-angle glaucoma and ocular hypertension.

• The “minimum majority of outside directors” is an eye catcher, but it does’t affect most companies because the 1/3 outside director ratio applies if a nominating committee is in place.
• Since companies with majority of independent directors are 12.1% in prime market, the objective becomes to achieve the minimum requirement (1/3 INEDs), and few companies engage in further improving practices.
• Companies with over 50% independent director have extremely superior market values in capitalization, ROE, ROA, and Tobin’s Q. Therefore, the acceleration of increasing independent director ratios should be seriously implemented.

• The sales scale of drugs for autoimmune diseases in China is much lower than that in overseas markets. So, internationalization is inevitable for companies in this industry.
• Qyuns’s candidates have to face fierce competition, with no advantage in R&D progress.Since Qyuns mainly do clinical trials in China, its future valuation is hard to have big expansion potential.
• Many investors may still “live in the illusion” for China biotech. We think Qyuns would not finally transform into a biopharma. Its valuation should be lower than Keymed.

• Kaken Pharmaceutical (4521 JP) reported 2% YoY decline in revenue H1FY24, while operating profit decreased 33% YoY. Top selling products are impacted by NHI drug price revision and increasing competition.
• The company has reiterated FY24 guidance of flat revenue, 5% YoY decline in operating profit, and 23% YoY growth in net profit. Profitability is expected to deteriorate in H2.
• Kaken is not expected to see any immediate respite as the small contribution from the new products will not compensate for the revenue loss from its top selling products.

• Some investors are disappointed with 23Q3 performance, but we think Dong-E-E-Jiao is getting back on track. The de-stocking has achieved great results and pressure on distribution channels has been alleviated.
• Since Dong-E-E-Jiao’s contract liabilities hit a record high, we are optimistic about the performance in 23Q4 and 24Q1. China Resources could further improve Dong-E-E-Jiao’s dividend rate, making it more attractive.
• Since Dong-E-E-Jiao’s performance is continuously improving, valuation still has room to grow. A significant increase in valuation in the short term depends on whether there would be M&A deal emerges.

• Aspira Women’s Health made two reimbursement announcements this week.
• On November 27, Aspira announced that the Centers for Medicare and Medicaid Services (CMS) approved the crosswalk of the fee to be paid to the company for OvaWatch to the fee paid historically for Ova1.
• Aspira will be reimbursed at a rate of $897 for all OvaWatch and Ova1 tests processed for Medicare patients meeting applicable coverage requirements beginning on January 1, 2024.