Healthcare

• Concord Biotech Ltd (658823Z IN) is looking to raise around US$188m in its India IPO.
• Concord Biotech (Concord) is an India-based biopharma firm, which develops and manufactures fermentation-based active pharmaceutical ingredients (APIs).
• As per F&S, Concord was one of the leading global developers and manufacturers of select fermentation-based APIs across immunosuppressants and oncology in terms of market share, based on FY21 volume.

• Concord Biotech Ltd (658823Z IN) is amongst the few fermentation-based API manufacturing companies globally. The company commanded market share of 20%+ by volume in 2022 across identified fermentation‐based API products.
• Concord Biotech IPO opens for subscription on August 4. The IPO consists of offer for sale of 21M shares by Helix Investment Holdings at a price band of INR705–741/share.
• Large and growing addressable market, sizable market share, niche and limited competition offering, consistent growth and profitability, and reasonable valuation make the IPO worth of subscribing.

• The market’s reaction to WuXi AppTec’s 23H1 report was positive due to some improvements in performance, but we don’t think WuXi AppTec has reversed its predicament completely if look closely.
• We deep dive the challenges/risks in macro environment faced by US/Europe. The orders WuXi AppTec received from MNCs can’t guarantee future growth momentum if the US cannot achieve “soft landing”.
• We advise investors not to be blinded by the high growth of CXO in the past since the prosperity of CXO industry may face continuous downward pressure in the future.

• GSK plc delivered a strong result and managed an all-around beat in the last quarter.
• Vaccines and Specialty Medicines account for 62% of sales, providing a solid foundation for profitable growth in the coming years.
• With the current momentum, it aims to achieve profitable sales growth and maintain a strong market position well into the next decade.

• Hong Kong-based Immuno Cure BioTech has closed the US$12 million tranche of its US$27 million Series A fundraising round, led by Gobi Partners-managed AEF Greater Bay Area Fund.
• The biotech company will use the capital to accelerate the development of DNA vaccines and antibodies besides preparing for an IPO in Hong Kong.
• Immuno Cure focuses on R&D of immunotherapies for cancers, inflammatory and infectious diseases based on its patented “PD-1-enhanced DNA Vaccine Platform” and “Anti-Δ42PD1 Antibody Platform” with two DNA vaccine candidates, ICVAX and ICCOV, currently in clinical trials.

• Quest Diagnostics delivered a solid result and managed an all-around beat in the quarter.
• Quest Diagnostics remained focused on driving growth through specialized advanced diagnostics, acquisitions, and operational improvements.
• We give Quest Diagnostics Incorporated a ‘Hold’ rating with a revised target price.

• Ono Pharmaceutical (4528 JP) recorded 13% YoY revenue growth to ¥120B in Q1FY24, driven by 12% YoY growth in product revenue. Royalty revenue grew 14% YoY.
• Revenue from Opdivo grew 11% YoY to ¥37.8B, due to expanded use in treatments for gastric cancer, esophageal cancer, urothelial carcinoma, etc. Revenue from Forxiga grew 34% YoY to ¥17.5B.
• For FY24, Ono continues to expect revenue growth of 6% to ¥475B. Operating and net profits are expected to increase 8% and 2% to ¥153B and ¥115B, respectively, for FY24.

• The rebound of China TCM’s performance in 23H1 could be mainly driven by its core concentrated TCM granules business as well as the recovery of other businesses after China reopens. 
• We analyzed the potential performance changes that may occur in 23H2. The full year performance of 2023 will be worth looking forward to. We expect the share price to rebound.
• TCM VBP is always an issue. Due to the high base in 2023, the YoY performance growth in 2024 could decline, which may put pressure on valuation at that time. 

• Edwards Lifesciences Corporation managed to exceed analyst expectations in terms of revenue as well as earnings.
• It achieved double-digit sales growth in the quarter driven by increased adoption of its innovative therapies.
• The second quarter TAVR sales were helped by improved hospital staffing levels as well as the continued successful launch of the SAPIEN 3 Ultra RESILIA.

Paradigm has shared its June 2023 quarterly update. In Q423, net cash outflow from operating activities was A$17.1m (up from A$10.3m in Q323) or A$45.2m for FY23. R&D costs were A$16.1m (versus A$9.0m in Q3) or A$47.0m for FY23, and were attributed to recruitment initiatives and new site identification for the PARA_OA_002 trial, analytical activities for the PARA_OA_008 trial as well as the canine model studies of naturally occurring osteoarthritis (OA), and clinical activities assessing iPPS for mucopolysaccharidosis (MPS) types I and VI. The full year figures were partially offset by a A$7.4m R&D tax incentive rebate (reported in Q223). Paradigm reported a cash balance of A$56.4m at end-June 2023 (versus A$73.2m at end-March 2023). Assuming the cash burn rate remains at the FY23 level of A$45m, the company should have sufficient funds to bring it through near-term key inflection points, as described below.

• M3 Inc (2413 JP) reported 1QFY03/2024 results on Friday. Revenue increased 0.7% YoY to ¥57.4bn (vs consensus ¥58.1bn) while OP decreased 3.7% YoY to ¥18.0bn (vs consensus ¥18.1bn).
• Overseas revenue growth further slowed down to 5.3% despite the company expecting overseas business growth to help offset slowdown in pharma marketing business going forward.
• This proves that m3’s long list of M&A’s have not been really successful as we have not observed any meaningful growth from these new acquisitions.

• Using the current index methodology throws up 5 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be BIG.
• Using the proposed index methodology throws up 11 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be HUGE.
• The market consultation being put on hold could indicate pushback from index users or the possibility of F&O contracts being introduced on some of the non-F&O index constituents.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads – 111 Inc (YI US), Chindata Group (CD US), Estia Health (EHE AU), ENM Holdings (128 HK), JSR Corp (4185 JP), Costa Group Holdings (CGC AU).
• Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Penguin International (PBS SP), Kenedix Retail REIT (3453 JP), ARTERIA Networks Corp (4423 JP).

• Few companies disclose human capital quantitatively, and most do so in text without numbers. Rarely do companies like Sysmex show how much added value their human capital investments have generated.
• To ensure that information necessary to understand how much value investment in human capital creates is disclosed, investors should scrutinize annual securities reports to identify areas for improvement in disclosure.
• Human capital and diversity disclosures are not available in a database. Allowing comparisons over time in the same company and comparative analysis with other companies will advance companies’ efforts.

• Biogen delivered a strong result and managed an all-around beat last quarter.
• The last quarter saw decreased total revenue, but the company delivered a solid performance overall.
• The decline in Multiple Sclerosis (MS) product revenues was due to generic entrants for TECFIDERA and intense competition in the MS market.

• Thermo Fisher Scientific delivered a disappointing set of results as the company was unable to meet the revenue and earnings expectations of Wall Street.
• The company has been enhancing its commercial intensity in the quarter to assist its customers through the environment and seize more opportunities.
• During the quarter, Thermo Fisher delivered good core business growth driven by its transplant diagnostic, immunodiagnostics, and microbiology businesses.

• Cipla Ltd (CIPLA IN) reported better-than-expected Q1FY24 result, with revenue growing 18% YoY, driven by India and the U.S., both of which reported record high revenue.  
• Stellar performance across all markets drove EBITDA to multi-quarter highs. EBITDA margin expanded 230 bps YoY and 310 bps QoQ to 23.6%. Net profit increased 45% YoY to INR10 billion.
• Cipla expects the average revenue run rate of $210–215M from its U.S. business in the coming quarters. For FY24, management has raised EBITDA margin guidance to 23% from 22%.

• I tally 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals this week: Talon Energy (TPD AU)‘s non-binding Offer from Strike Energy (STX AU); and Pacific Current (PAC AU)‘s cash/scrip NBIO from Regal Partners (RPL AU).
• Key updates took place for Toshiba Corp (6502 JP), Eoflow (294090 KS), and 111 Inc (YI US).

• AD (Alzheimer Disease) and RNAi are one of the most valuable breakthroughs in global pharmaceutical industry in recent years. We think they may bring the next round of biopharmaceutical prosperity.
• MNCs have begun to adjust their strategic business model in China. Licensing cooperation and equity investments in China biotech companies are expected to become a new trend.
• We can’t expect too much from Genscript Biotech (1548 HK) just because Legend Bio’s CAR-T product has good sales performance. Genscript could underperform based on our analysis.

• Dr. Reddy’s Laboratories (DRRD IN) started FY24 on a strong note, with Q1FY24 revenue and net profit growing 29% and 18%, YoY, respectively, driven by North America generics business.
• Revenue from North America generics increased 79% y/y and 26% q/q to INR32 billion, driven by new product launches, continued momentum in existing products, and favorable forex rates movement.
• During Q1FY24, the company has launched six new products in the U.S. With a rich ANDA pipeline of 85 ANDAs, launch momentum is expected to accelerate in the current fiscal.

SIGA Technologies announced that the US Department of Health and Human Services has exercised its procurement options for oral and intravenous (IV) TPOXX, worth around $113m and $25m respectively, for the US national stockpile under the BARDA contract. This a key catalyst for SIGA for FY23 as continued US stockpile renewals are core drivers of the company’s business. SIGA aims for the delivery of oral TPOXX in FY23 and the new IV TPOXX order in FY24 (after meeting order obligations for its previous IV TPOXX order exercised in August 2022, worth $26m). We expect the company’s FY23 and FY24 revenues to continue to be driven by replenishing US government stockpiles and supplemented by incremental international orders. The next growth catalyst for SIGA, in our opinion, could be either additional international orders or an update on the next US government contract, including the possibility of a stockpile expansion.

• Medtronic Plc (MDT US) aims to acquire Eoflow (294090 KS) through share purchase agreements (SPA), a share subscription agreement (SSA) and a public tender offer at KRW30,000.
• Since the deal announcement on 26 May, the spread has widened, reflecting deal risk around patent litigation risk, regulatory approvals and the minimum acceptance condition.
• Our assessment of these risks suggests a low probability of a deal break. At the last close, the gross spread is an attractive 8.5%. 

• 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.
• I currently expect 13 ADDs/DELs for CSI 300 and 50 ADDs/DELs for CSI 500. 

• Samsung Biologics (207940 KS) reported record-high revenue and operating profit of KRW866 billion and KRW253 billion, up 33% and 49%, YoY, respectively in 2Q23, aided by contract signing spree.
• With continued orders from the leading global pharmas, the company’s total cumulative CMO contracts reached to $11.3B in July, up 19% from $9.5B at the end of 2022.
• Outlook for H2 is more positive with revenue from Plant 4 will be reflected from Q3. Two new biosimilars launch in the U.S. and EU will also add to revenue.

• Takeda Pharmaceutical (4502 JP) reported 1QFY03/2024 results today. Revenue increased 8.9% YoY to ¥1,058.6bn (vs consensus ¥989.8bn) while OP increased 12.0% YoY to ¥168.6bn (vs consensus ¥123.5bn).
• The topline growth was driven by growth & launch products which accounted for 40% of total revenues, and increased 16.2% YoY during the quarter at constant exchange rates.
• Takeda is expecting 7-8 key regulatory decisions during the current fiscal year and we expect dengue vaccine and other new launches to help offset revenue loss from upcoming patent expiry.

• In three more weeks, the index changes and the indicative capping changes for the September 2023 rebalance will be officially announced. 
• We first looked at the potential HSCEI index changes and the resultant capping flows for September 2023 in Quiddity HSCEI Sep 23 Flow Expectations: Two Changes Likely, US$276mn One-Way 
• In this insight, we take a look at Quiddity’s updated flow expectations which account for the changes in prices in the last ~1.5 months.

Oryzon’s H123 results highlight the continued progress of its lead clinical-stage assets, including positive aggregate safety data from the Phase IIb PORTICO trial assessing vafidemstat in borderline personality disorder. The company also indicated that enrolment is proceeding for the Phase IIb EVOLUTION trial (assessing vafidemstat in schizophrenia) and for the Phase Ib FRIDA trial (evaluating iadademstat in acute myeloid leukaemia, (AML)). Total H123 operating expenses were up by only 0.5% y-o-y (to €10.95m), despite a 6.3% increase in R&D costs (to $8.63m). With gross cash of $14.6m at the end of H123, we estimate a cash runway into Q224. We anticipate that top-line data readouts from the PORTICO trial (expected in Q124) may be the company’s next significant catalyst.

• Insulet Corp (PODD US), with expanding user-base and product innovation, is well-positioned to face competition in the US patch pump market. Large and underpenetrated target market offers immense growth potential.  
• Insulet raised Omnipod 2023 revenue growth guidance to 21–25% from 17–22% previously. The U.S. Omnipod revenue growth guidance has been raised to 27–31% from 21–26% earlier.
• For 2023, Insulet expects gross profit margin of 65–66%, compared with 61.7% in 2022. Insulet has reaffirmed high-single-digit operating profit margin for 2023 compared with 2.9% in 2022.

• Elevance Health managed to exceed analyst expectations in terms of revenue as well as earnings.
• This strong result was driven by solid execution and progress in its mission to become a trusted health partner for life.
• They achieved double-digit growth in GAAP and adjusted earnings per share, raising their adjusted earnings outlook for the year.

• Intuitive Surgical managed to exceed analyst expectations in terms of revenue as well as earnings.
• Cholecystectomy and hernia repair procedures grew more frequently in general surgery.
• SP procedure growth was accretive in the quarter, with a 40% global increase driven by accelerated growth in the United States.

• The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
• There is one change currently for each of the Secondary Battery, Bio and Game indices. Then there are a couple of changes for the Internet and BBIG indices.
• There are four stocks that will have over 2 days of ADV to trade from passive trackers and these stocks could move around announcement of the changes.

• In this insight, we provide an update of Medtronic’s tender offer of Eoflow. 
• The foreign ownership of Eoflow has surged in the past two months from 6.5% on 25 May to 33.2% as of 24 July. 
• We continue to believe that there is 95%+ probability of this M&A getting completed at the tender offer price of 30,000 won and Eoflow eventually becoming delisted in 2H 2023. 

• Terumo Corp (4543 JP) recorded highest ever revenue and operating profit in FY23, driven by continued strong growth in C&V business globally, particularly the largest U.S. market.
• C&V business should continue to be the primary driver of Terumo’s growth in FY24 also. The company has guided for C&V revenue of ¥504B in FY24, up 5% YoY.
• Terumo aims to grow profit by double-digit percentage in FY24 and improve profitability through expansion of high-margin products, more assertive pricing policies, and cost reduction measures centered on manufacturing cost.

• Based on the current situation, sales of MCV4 in 2023 could still be unsatisfactory. We think MCV4 is hard to become the second growth curve of CanSino in post-COVID era.
• Whether CanSino’s zoster vaccine is able to become Best-In-Class would largely determine whether this product would truly become the next blockbuster vaccine to turn the situation around for CanSino. 
• CanSino’s commercialized products cannot contribute large-scale revenue in time to prevent continuous deterioration of performance. Results in 2023 could be lower than expected, and investors are losing confidence in CanSino.

• In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in June and July 2023.
• We provide a list of 38 stocks in the Korean stock market that have announced share buyback programs in June and July 2023.
• The top four market cap stocks that have announced share repurchases include Celltrion Inc, Celltrion Healthcare, Hyundai Elevator, and SFA.

• Understanding the essential differences in business characteristics of CRO and CDMO could help investors better understand the differences between Asymchem and Pharmaron in terms of investment logic, financial performance, and prospects.
• Since Pharmaron didn’t obtain COVID-19 big orders, it would maintain normal revenue growth in 2023. However, increasing labor costs and uncontrollable investment business would lead to unsatisfactory net profit performance.
• Asymchem’s performance would be disappointing in 2023. However, its growth momentum is expected to restore after it digest the impact of COVID-19 orders. Then, Asymchem’s valuation could surpass Pharmaron afterwards. 

• Santen Pharmaceutical (4536 JP) expects generic competition for mainstay product in Japan in FY24, while overseas business should continue stable growth. The company guided for FY24 revenue of ¥273B (-2%).
• Due to the absence of impairment loss, Santen is expected to report operating profit of ¥32B in FY24 from an operating loss of ¥3B in FY23.
• Santen has unveiled new medium-term management plan, which calls for revenue of ¥280B, core operating profit of ¥56B, core ROE ratio of 13%, and core EPS growth rate of 10%+.