Healthcare

• Blue Jet Healthcare Ltd (BJHC IN) is a CDMO focusing on specialty pharmaceutical and healthcare ingredients and intermediates. The company targets to raise $100M from its upcoming India IPO.
• The IPO, which will open for subscription on October 25, consists of OFS of 24.3M shares by two of the promoters. The price range has been fixed at INR329–346/share.
• Blue Jet enjoys a competitive advantage in the global contrast media market through established customer relationships with the top contrast media manufacturers. The company is on a capacity expansion spree.

Basilea has announced an expansion of its portfolio to foster long-term growth, a key strategic priority for management, leveraging expertise in the commercialisation of its two key anti-infective products, Cresemba and Zevtera. The company will in-license GR-2397, a clinical-stage antifungal compound targeting invasive mould infections, mainly caused by the Aspergillus species. The Phase II-ready asset has Qualified Infectious Disease Product, Orphan Drug and Fast Track designations from the US FDA for invasive aspergillosis, which often leads to priority review post a New Drug Application (NDA) filing and grants 10 years of US market exclusivity. Basilea will make an upfront payment of $2m, followed by ~$69m in milestones and tiered royalties. Our valuation of Basilea remains unchanged, and will be reassessed once additional information becomes available.

• Many of the companies that didn’t meet the listing criteria for the prime market still failed to gain market recognition over an 18-month period and moved to the standard market.
• It is believed that TSE expects more companies to gradually drop out of Prime Market by raising the hurdle for effort targets that aren’t explicitly stated in the listing criteria.
• As quality differences gradually emerge between the Prime and Standard markets, the rift between management awareness and shareholders of Standard market-listed companies is likely to deepen in the future.

• Telix Pharmaceuticals (TLX AU) reported net operating cash inflow for 3Q23 of A$21.4M, a A$10.6M improvement on the prior quarter and fourth consecutive quarter of positive operating cash flow.
• In 3Q23, revenue from U.S. sales of Illuccix improved 13% QoQ to A$130.6M. Telix is progressing new marketing authorizations for Illuccix in several jurisdictions, including the U.K., EU, and Brazil.
• Telix announced preliminary results of its phase I ProstACT SELECT study. Although the study achieved primary endpoints, the findings noted grade 3 and 4 hematologic events.

Basilea presented a combination of eight presentations and abstracts on its antibiotic ceftobiprole (at the Infectious Diseases Week 2023 conference in Boston), which support its ongoing regulatory application with the FDA. The new data provide additional evidence on the drug’s utility and highlight ceftobiprole’s antimicrobial activity against clinically relevant pathogens, including MRSA, and support the dosing regimens utilised in the three Phase III studies for the three indications currently undergoing priority review by the FDA. As a reminder, the FDA has set a PDUFA date of 3 April 2024, which suggests that Basilea could potentially receive a regulatory decision for its lead antibiotic asset in the US in early-Q224. The FDA’s decision would be a significant catalyst for Basilea, considering the high prevalence of MRSA in US. The new data provide incremental support to the FDA application and instil confidence in a favourable outcome, in our view.

AFT Pharmaceuticals announced FDA approval for Maxigesic IV, an intravenous form of its flagship pain relief prescription medicine. The FDA approval of the post-operative pain alternative to opioids marks a material win for AFT, given the US is the largest analgesic market (estimated at nearly $7bn) and the current US regulatory hurdles in addressing pain in light of the opioid abuse epidemic. The launch at end FY24 or early FY25 is anticipated to trigger a US$6m milestone payment from Hikma Pharmaceuticals, the US licensee for Maxigesic IV. AFT’s 65% share of this milestone has the potential to provide upside to its NZ$22–24m FY24 operating profit guidance if Maxigesic IV is launched in FY24. We note that Maxigesic IV is already registered in 43 countries and is available in 21 countries (including key markets of Germany, France and Italy). The US approval is a key addition to the AFT portfolio, providing further confidence in the company’s ability to reach its previously stated near-term rolling 12-month stretch revenue target of NZ$200m, which we anticipate to be achieved on an annual basis by FY25.

• Medikaloka Hermina (HEAL IJ) remains a differentiated hospital player in Indonesia given its focus on the treatment of women and children plus its doctor partnership model in its hospitals.
• The company booked a strong rebound in both inpatient and outpatient volumes in 1H2023, and we expect this to continue into 2H, with two new hospitals opened in 3Q2023.
• Despite exhibiting the strongest growth amongst its peers, the company still trades at a significant discount to Mitra Keluarga Karyasehat Tbk (MIKA IJ) on 10.2x FY2024E EV/EBITDA. 

• VISEN’s candidates are potential Best-In-Class or represent novel technologies, but they need to obtain doctors/authorities’ recognition.The competition pattern in growth hormone market would continue to deteriorate with increasing new entrants. 
• Once the growth hormone market is taken seriously by the regulatory authorities, the industry’s growth momentum would be challenged. The actual market space could be greatly reduced as a result.
• In front of competitors with strong sales system, commercialization is a big challenge for VISEN. The Company has yet to prove this.VBP news on rhGH would weigh on market sentiment.

• Paradigm Biopharmaceuticals (PAR AU) announced phase 2 trial result, demonstrating that lead drug candidate, iPPS treats the symptoms of osteoarthritis as well as preserves and/or regenerates joint tissues.
• This is significant from a commercial perspective because the disease modifying effects of iPPS observed in the phase 2 clinical trial are expected to support a greater reimbursement.
• Paradigm’s cash position was bolstered by A$66M capital raise in Aug’22. As of June 30, 2023, the company has a cash balance of A$56.3M, which should provide runway through Q1FY25.

• In TOB case from a parent company, managers of acquired company finally realized that there’s litigation risk from shareholders if there’s flaw in their fiduciary duty to maximize shareholder interests.
• In the past, acquisitions with negative goodwill were conducted, but a TOB at a price below book value would require plausible rationales. TSE’s request to raise P/B may have affected.
• In addition to the increasing dissolution of parent-subsidiary listings, TOBs (or sales) of equity-method affiliates are expected to increase, as in the case of Daiken Kogyo.

• Agilus Diagnostics Limited (SRLL IN) is the largest diagnostics service provider in terms of number of laboratories and the second largest in terms of revenue from operations in India.
• Agilus has built an extensive network spread across 25 states and five union territories in India. An asset light model enables growth of the service network in a cost-effective manner.
• Indian diagnostics industry is expected to have a CAGR of 8–10% during FY23–28 to reach INR1,150B–1,250B in FY28, providing immense growth opportunities for large players like Agilus.

Paradigm has announced positive day-365 data from its Phase II trial (PARA_OA_008) assessing injectable pentosan polysulfate (iPPS) as a potentially disease-modifying treatment for knee osteoarthritis (kOA). The latest data show durable responses based on measures of pain and function, while confirming the company will be pursuing an iPPS (2mg/kg) twice-weekly regimen for six weeks across all of its clinical programmes for kOA. Based on this update, Paradigm now plans to proceed with a Provisional Approval application to the Therapeutic Goods Administration (TGA, the Australian regulatory authority). The day-365 data are encouraging for iPPS as a potential treatment for kOA, in our view, adding to the company’s data package to support discussions with regulatory authorities and potential partners. We note that Paradigm is awaiting full analysis of MRI data from this trial, and plans to share it in the near term.

• Since IPO, stock price of Kelun-Biotech has performed quite well. Then, the Company’s valuation fluctuated. Investors seem not excited about Sichuan Kelun-Biotech Biopharm (6990 HK)’s 23H1 performance.
• We won’t expect too much on A166 in such a difficult competitive landscape.Commercialization of SKB264 is also challenging.It’s difficult to make up the story after A166/SKB264 begin to generate revenue.
• After out-licensing all valuable/core assets to Merck, together with the departure of core R&D personnel, Kelun-Biotech has been “hollowed out”.So, Kelun-Biotech’s value lies in short-term trade rather than long-term hold.

At the AACR-NCI-EORTC conference in Boston, OSE presented the initial positive data supporting the potential efficacy of its anti-PD1 monoclonal antibody, OSE-279, in patients with advanced solid tumours, with no therapeutic option available. The interim data from the Phase I/II dose escalation study indicated that OSE-279 monotherapy exhibited manageable safety and showed preliminary signs of efficacy. Both the pharmacokinetic and pharmacodynamic profiles aligned with the company’s expectations. As a reminder, OSE-279 serves as the key anti-PD1 component in the company’s bifunctional checkpoint inhibitor (BiCKI) platform, designed to address primary (lack of response to treatment) and secondary resistance (resistance after an initial response) mechanisms. The data shared are promising with potential for OSE-279 as a monotherapy, but given the small cohort (13), we await further data from the Phase II component of the current study. Incremental positive results could provide validation for OSE-279 and the BiCKI platform approach.

• Agilus Diagnostics Limited (SRLL IN) is looking to raise around US$200m in its upcoming India IPO. The deal will be run by Citi, Axis Capital, and ICICI Securities.
• Agilus Diagnostics Limited (Agilus) is a diagnostic testing service provider.
• As per the CRISIL report, the firm was the largest diagnostics service provider in terms of number of laboratories and the second largest in terms of FY23 sales.

• Bluemtec is getting ready to complete its IPO in KOSDAQ in the next several weeks. Bluemtec operates the number one pharmaceutical e-commerce platform in Korea. 
• The company is offering 1.4 million shares in this IPO. The IPO price range is from 15,000 won to 19,000 won.
• The company sales and gross profit growth increased impressively in the past several years. The company’s sales increased at a CAGR of 60.5% from 2020 to 2022.

• Amvis Holdings Inc (7071 JP) reported 40% YoY increase in revenue to ¥23B in 9MFY23, driven by 27% YoY increase in bed capacity and 86.6% utilization rate at existing facilities.
• Operating profit grew 40% YoY to ¥6.2 billion. However, operating margin declined 10 basis points to 26.9%, due to the impact of inflation and increase in wages for long-service employees.
• Amvis announced plans to open 25 new facilities and expand 1 facility (1,308 beds) in FY24. The company plans to raise patient payments by about ¥4,000 per month in Oct’23.

• CDMO business usually have higher certainty/profit margin, and would be affected by the deterioration of overseas financing environment much later than CRO business. So, we prefer Asymchem to WuXi AppTec.
• Total market size of GLP-1s could exceed the sum of semaglutide + the vast majority of chronic disease drugs.No matter how GLP-1s expand indications, Asymchem has the opportunity to benefit.
• Asymchem needs to secure a large order related to GLP-1 drugs. Such big catalyst would certainly boost stock price, just like when COVID-19 order was received in November 2021.

• Latest filings on Insulet Corp (PODD US)’s voluntary dismissal without prejudice only to Flex (FLEX US), Eoflow (294090 KS)’s motion to restart Korean sales, dismiss a count and a timetable.
• Examining the court filings suggests Medtronic Plc (MDT US)’s access to court unredacted documents is restricted. Medtronic’s limited access makes evaluating the transaction’s potential litigation risk challenging.
• Eoflow’s defence in the court documents is based on reverse engineering and procedural arguments. The KRX will rule on Eoflow’s share trading suspension by 1 November.

• Cash usage and return targets should be presented to investors along with cost of capital, but few companies can successfully envision future design due to poor planning for growth investments.
• Since there’s a significant positive correlation between ROE+DOE and TOPIX, the company should optimize its cash allocation by demonstrating enhanced shareholder returns until it can design a growth investment plan.
• Ajinomoto, which provided cost of capital projections and ROIC targets by business segment, should be commended for its constant communication with investors seeking better disclosure in good times and bad.

• Should the nominated directors, to be voted on by EOFlow (294090 KS)‘s shareholders at the November EGM, include Medtronic Plc (MDT US) executives, then game on.
• Fast Retailing (9983 JP) STILL has a Nikkei 225 problem, which means it probably has to underperform Nikkei 225 slightly between now and the Base Date (31 July 2024).
• JMDC (4483 JP) has been one of the more annoying partial tenders out there. Even post-facto, it is tough to know what the disposition was. This is extraordinarily vexing.

• Due to IPO policy adjustment on SSE STAR Market, investment/financing for innovative drugs should continue to deteriorate.But the positive side is the innovative drug industry is emerging from the bottom.
• For the three hot fields in pharmaceutical industry (BsAb, ADC, CGT), we analyze their position and pecking order, which should be ADC > BsAb > CGT at the current stage.
• To better understand the investment logic of Fosun Pharmaceutical, it is necessary to fully understand the ecosystem/operational model of Fosun Group. Fosun Pharma’s role is just a “chess piece”.

• Hanall Biopharma (009420 KS)‘s licensed partner Harbour BioMed announced that the China’s NMPA has officially accepted the Biologics License Application for batoclimab for the treatment of generalized myasthenia gravis.  
• Immunovant announced positive initial result from the single-ascending dose portion of the Phase 1 trial of IMVT-1402. Initial data from the multiple-ascending dose cohorts are expected in October/ November 2023.
• Hanall and Daewoong have initiated phase 1 clinical trial of HL192 for the treatment of Parkinson’s disease, and dosed the first subject. The initial results are expected in 2H24.

• They said that EOflow has made a strategic decision not to raise any objections to the court’s injunction to temporarily suspend the sale and marketing activities of EOPATCH.
• They stated their commitment to making efforts to actively prove that they are not subject to KRX’s substantive delisting examination. Hence, they aim to resume trading from November 1st.
• They subtly hinted at a degree of caution, suggesting that the final agreement with Medtronic might undergo slight modifications to align with the outcome of this preliminary injunction.

• Ansell Ltd (ANN AU) reported 11% YoY decline in revenue to $1,655M in FY23. Healthcare business experienced significant customer destocking through FY23, leading to 21% YoY decline in segment revenue.
• Ansell has outlined an investment program to improve productivity and accelerate digitalization for total cost of $70–85 million. The program calls for production as well as job cut.
• Strong headwinds in the glove sector are expected to continue as the global oversupply situation persists. Ansell expects FY24 adjusted EPS to be $0.92–1.12 (down 3–20% YoY).

• Given that embedding diversity within company is essential for the company’s growth and resilience, it’ll be up to management leadership to decide whether this should be promoted as management strategy.
• Companies with more women in the workforce tend to have higher stock prices. It can be assumed that the company is hiring talented, skilled, and necessary personnel regardless of gender.
• Analysis shows that companies with a higher percentage of female board members contribute more to value creation. Companies that promote board diversity are also keen on diversity throughout the company.

• On the 7 August, aged care provider Estia Health (EHE AU) and Bain Capital entered into a Scheme Implementation Agreement at A$3.20/share (less any dividends), a 50% premium to undisturbed
• The Scheme Booklet is now out. A shareholder meeting will be held on the 15th of November with implementation expected on the 30th of November. 
• Estia paid a fully franked dividend of A$0.12/share on the 15th of September. Currently trading  tight to the adjusted terms of A$3.08/share. This still needs FIRB approval.

• CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
• In this insight, we take a look at the potential ADDs/DELs for the CSI 300 and CSI 500 rebalance in December 2023.
• A couple of baskets I suggested in my last insight have both outperformed the CSI 300 index by more than 2% in less than a month.

• Suzuken Co Ltd (9987 JP) reported better-than-expected Q1FY24 result, due to an increase in specialty drug distribution contracts and a larger than expected contribution from products related to COVID-19.
• In Q1FY24, revenue increased 4% to ¥573.6B, driven by 4% YoY growth in pharmaceutical distribution business, due to increased sales of new drugs such as specialty drugs and COVID-19 therapeutics.
• The company guided for FY24 revenue of ¥2,231.9B, down 4% YoY. Operating profit is expected to decline 48% YoY to ¥17B. Net profit is guided at ¥13B, down 36% YoY.

• Results for the Omron Corp (6645 JP) Partial Tender Offer for JMDC (4483 JP) are out. 
• The Pro-Ration was 51.63%, at the lower end of my initial estimate of 50-58% range, and at the higher end of my revised range (42-56%).
• The pro-ration, the nature of the shapes (technical term) tendered, and what that suggests for Noritsu Koki’s position suggests the back end could be more squeezy than not.

• On the 6th of October, a US district court judge entered a preliminary injunction (PI) against EOFlow (294090 KS), pending a trial. This development should have been expected.
• Less expected was the suspension of EOFlow shares today, and the cessation of sales globally. 
• The latter measure appears extreme, noting the PI addresses only sales in the US, which EOFlow is not permitted anyway, without FDA approval. There’s clearly more than meets the eye.

• In reaction to the preliminary injunction, Eoflow (294090 KS) shares were suspended as it is reviewing whether it is subject to a substantive review for KOSDAQ listing eligibility.  
• Medtronic Plc (MDT US) is in an unprecedented situation of potentially acquiring a company whose shares are suspended, has a preliminary injunction against it and exposure to possible liabilities. 
• Medtronic could have prevented this development by reaffirming its commitment to the deal. The transaction is on increasingly shaky grounds, which is reflected in the 38.2% gross spread. 

• On 10 October, the Korea Exchange announced a temporary suspension of trading of Eoflow (294090 KS) shares starting 11 October.
• Eoflow decided at its board of directors meeting the previous day (10th) to suspend production and sales of Eoflow patches until the outcome of the lawsuit is resolved. 
• In this insight, we provide various scenario analysis including the worst case, best case, and in-between cases of the Eoflow M&A tender offer process.

• The Estia Health (EHE AU) IE considers Bain’s A$3.20 (A$3.08 excluding paid dividends) offer fair and reasonable as it is above its valuation range of $2.83 to A$3.21 per share. 
• The offer is subject to FIRB and possibly aged care industry approvals. The MAC clause risk, particularly around material regulatory events, is diminishing.
• This is a done deal. At the last close price and for the 30 November payment, the gross and annualised spread is 1.3% and 9.7%, respectively.

• Singapore-based biotechnology startup Automera has secured US$16 million in a Series A round of investment co-led by early-stage life science accelerator and investment firm Accelerator Life Science Partners (ALSP) and Temasek-backed venture builder ClavystBio.
• EDBI, Xora Innovation, and other undisclosed investors also participated.
• Automera was established by Associate Professor Michael Lazarou, Loong Wang, and Taiyang Zhang at Talo Labs in collaboration with ALSP.

• With few women in managerial positions, the reality is that for the time being female directors are forced to appoint candidates from outside the company.
• Two companies is the limit for a monthly board meeting with agenda preliminarily reviewed; investors should oppose proposals to elect candidates who hold board positions at three or more companies.
• The main idea is to promote board diversity for making strategic decisions based on diverse values, but it has become a numbers matching exercise to achieve % of female board members.

• Universal Vision Biotechnology (3218 TT) reported continued growth in 1H23, with revenue, operating profit, and net profit increasing 25%, 31%, and 31%, YoY, respectively. 
• Revenue from high-margin technical service grew 23% YoY, driven by increasing number of refractive and cataract surgeries performed in Taiwan. UVB dominates refractive market in Taiwan, with 50% market share.
• With dominant market positioning in Taiwan, re-opening in China, secular market tailwinds, and widening geographic presence, UVB is expected to report double-digit top and bottom-line growth through 2025.

Oryzon presented a positive update on vafidemstat’s ongoing Phase IIb PORTICO trial in borderline personality disorder (BPD) at the ECNP Congress. The aggregated blinded safety data, as of 23 August, demonstrated a well-tolerated safety profile for a cohort with baseline characteristics reflecting real-world demographics of a typical BPD population. This is a critical consideration for therapies to progress and be successful once commercialised. We also note a low rate of discontinuations (2%) due to treatment-emergent adverse events (TEAEs) and zero discontinuations attributed to serious TEAEs. Screen failure and dropout rates, at 37% and 21%, respectively, were also favourable compared to other agents in development for BPD, such as brexpiprazole, which had higher rates (62% and 27%). As a reminder, the primary objective of the PORTICO trial is efficacy of vafidemstat, and we anticipate top-line data in Q124. Although the shared data was blinded, the overall results suggest a favourable safety profile for vafidemstat and we await next year’s efficacy readout as (if positive) it will be a key catalyst and potentially increase the probability of success for vafidemstat in BPD.

Newron has announced encouraging interim six-month data from its Phase II trial (study 014/015) of evenamide in 161 patients with treatment-resistant schizophrenia (TRS). The six-month interval data for treatment at all dose levels showed evenamide was well-tolerated and efficacious, with statistically significant responses (p-value <0.001) across the key efficacy measures (PANSS, CGI-S and LOF). The interim data also provide inputs for the potentially pivotal Phase III trial (study 003), which we expect to start in Q124. We note that one-year data was reported on the first 100 participants of study 014/015 in May 2023, and we now await the complete one-year data from the full 161-patient cohort, expected in Q124. If favourable, this could be a significant inflection point for the company.