Healthcare

• Diagnostic imaging provider Capitol Health (CAJ AU) has announced it has entered into a process deed with Integral Diagnostics (IDX AU)
• This non-binding indicative Offer, by way of a Scheme, involves 0.12849 new IDX shares for each share of Capitol.  The next step is four weeks of two-way confirmatory due diligence.
• The implied Offer Price under the scrip terms is A$0.3284/share. Should the transaction complete, Integral would hold 63% in the combined group. This is the second Integral/Capitol merger attempt.

• Production problems of Vyvanse generics seem to be largely resolved with nine of the ten suppliers back in stock.
• Safety concerns with Takeda’s approved psoriasis competitor does raise further concerns as they are both TYK-2 inhibitors.
• The company’s $900 m big restructure and cited areas for margin improvement are not “convincing” and lack detail.   

• Top Glove Corp (TOPG MK) achieved 16% QoQ revenue growth in 3QFY24, on 13% sequential volume increase and higher ASP. 3QFY24 operational loss reduced to RM34M from RM59M in 2QFY24.
• Considering the current demand and supply condition, Top Glove expects the ASP to further increase. The company aims to recover its EBITDA margin to pre-pandemic levels of 15% by FY26.
• With rising import alert and expected tariff increase on Chinese manufacturers, the US demand may shift from China to Malaysia. Top Glove is poised to benefit from potential trade diversion.

• On 17 June, Capitol Health (CAJ AU) disclosed a non-binding merger proposal from Integral Diagnostics (IDX AU) at 0.12849 Integral shares per Capitol share.
• Integral has been granted a four-week exclusivity period that ends on 15 July. The transaction will require approval from the ACCC and Capitol shareholders. 
• The offer is attractive compared to historical exchange ratios, trading ranges and peer multiples. At the last close, the gross spread was 11.7%.  

• On 19 June, Eoflow announced that the U.S. Federal Appeals Court issued a decision to overturn the provisional injunction.
• In other words, the U.S. federal court ordered the first trial’s preliminary injunction banning overseas sales of Eoflow to be overturned. 
• A jury trial is set at end of November 2024. Depending on the ruling, either side may appeal and a second trial may follow or there may be a settlement.

• Telix Pharmaceuticals (TLX AU) has withdrawn its proposed IPO in the U.S. due to unfavorable market condition. The proposed Nasdaq listing was not predicated on the need to raise capital.
• As a profitable, cash generative company, Telix is confident that its existing and upcoming cash resources will be sufficient to meet R&D and commercialization needs.
• Following the successful commercial launch of Illuccix, Telix has demonstrated its ability to develop and commercialize innovative product portfolio, which should accelerate its growth trajectory.

• The top two biggest markets of Soft International (China and Russia) are encountering the challenge of slowing growth or even growth stagnation due to decreasing birth rate and increasing competition.
• Single-Digit net profit margin is not satisfactory for a company with strong consumption attributes. This makes us wonder if the personal hygienic disposables is not a money-making business. 
• Overreliance on Russian Top-tier Retailer would bring risks to the business.Both revenue growth and profitability could decrease sharply if adverse situations occur. Soft International’s valuation could be lower than peers.

• In FY24, Morepen Laboratories (MORE IN) achieved revenue, EBITDA, and PAT growth of 20%, 101% and 150%, YoY, respectively, driven by medical devices and API businesses.
• Business has stabilized in FY24 and Morepen is seeing fresh buying of medical devices. With expanding capacity, glucometer and BP monitor are expected to maintain ~30% growth momentum.
• Morepen aims to expand API product portfolio and geographic reach, while maintaining global leadership positioning in six key widely used API products.

• Longeveron is focusing on using its primary treatment, Lomecel-B, to fight a rare pediatric heart birth defect that devastates families.
• Under new leadership, the company has focused on specific objectives, cut costs, and looked to maximize revenue opportunities.
• We believe the company is on a better and more sustainable track and are excited about ongoing developments and the just released 1Q2024 earnings report reinforces that view.

• Monogram Technologies (NASDAQ: MGRM) is a medical device company developing a product solution architecture to enable patient-optimized orthopedic implants at scale by linking 3D printing and robotics with advanced pre-operative imaging.
• The company delivered its first surgical robot in November 2023, will market its solutions to international markets in 2024, and anticipates 510(k) submission in the second half of 2024.The company has $10.1 million in cash, and we believe the company will be funded throughout 2024.
• We believe MGRM stock to be undervalued at this time with several significant potential catalysts within the next 12 months.

• Prodia (PRDA IJ) suffered from a seasonal downturn in 1Q2024 as Lebaran slowed its testing volumes from corporates, with opex related to Prodia Digital impacting margins in the quarter.
• The company’s testing mix is shifting in a meaningful way towards esoteric testing, which commands significantly higher margins plus it is building out its genomic testing, which yields higher returns.
• Investment in Prodia Digital should slow in the coming quarters, helping to improve margins. with new outlets driving revenues. Valuations are unjustifiably low with 2Q2024 numbers likely to be positive.

• 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 (top-line data is expected in the 2H of 2024)
• 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

• IN8Bio is a clinical-stage, oncology-focused biotechnology company using ?d T cells against solid and hematological tumors.
• Its pipeline is built on the DeltEx platform & drug resistant immunotherapy (DRI) technology which have produced clinical candidates targeting leukemia & GBM.
• INB-100 is evaluating leukemia in a Ph1 study, while INB-200 & INB-400 are Ph1 and Ph2 assets evaluating GBM.

• Due to increasing competition/price reduction/overcapacity issue, outlook of domestic vaccine companies isn’t optimistic, which has been reflected in 24Q1 results. However, there’s also a “special one” that deserves investors’ attention.
• The status of medical insurance funds is improving rather than deteriorating, but we’re currently in the first half of the decade with the highest pressure on medical insurance.
• As the H.R.8333 proposal faced obstacles in the process of being included in NDAA, WuXi AppTec/WuXi Bio’s shares once rebounded.We remain conservative as situation is not as simple as imagined.

• Ascentage was originally in an extremely difficult situation, but the cooperation with Takeda turned things around. Ascentage has obtained urgently needed cash flow to solve the survival problem.
• At this stage, it’s possible for Ascentage to hit about 50% market value of HCM.  Investors are interested to know if APG-2575 would also be out-licensed, which however is not easy.
• Ascentage’s current strength isn’t sufficient to self-build sales system. While this deal is a good start, if Ascentage still chooses to do commercialization on its own, it’s time to sell. 

• Fangzhou cannot get around the decreasing unit-price of drugs and the increasing role of medical insurance in chronic-disease treatment.It’s challenging to find patients willing to pay out of own pockets.
• The internal dispute between the Founder and shareholders hasn’t ended, and related litigation is still pending. This makes us concerned about the stability of future business development and corporate governance. 
• Fangzhou has significant cash flow pressure. In the case of increasingly fierce competition in the industry, without successful business diversification/transformation, growth prospects is gloomy, Valuation should be lower than peers. 

• I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Three new deals discussed this week: Fancl (4921 JP)‘s Tender offer, A8 New Media (800 HK)‘s Scheme, and Jeisys Medical (287410 KS)‘s delisting offer. Bain also approached Bapcor (BAP AU).
• Key updates took place on: Sigma Healthcare (SIG AU), Alumina (AWC AU), Greatview Aseptic Packaging (468 HK), Helios Techno (6927 JP), and Tatsuta Electric Wire & Cable (5809 JP).

• Medipal Holdings (7459 JP) reported FY24 result, with revenue and net profit beating and operating profit missing guidance. FY24 revenue increased 6% YoY, driven by growth across all business segments.
• The company is anticipating an upturn in revenue and operating profit in FY25. However, FY25 net profit is expected to fall due to the absence of extraordinary income.
• The company has announced a share buy-back plan to purchase up to 2.5M shares for ¥5B from May 15, 2024 to August 30, 2024.  

Oryzon Genomics has reported positive interim data from the Phase Ib FRIDA study, evaluating iadademstat in combination with gilteritinib in advanced acute myeloid leukaemia (AML) patients. Results from the first two cohorts (13 patients) showed a favourable safety profile and efficacy signals, with 69% of patients reporting bone marrow (BM) blast cell clearance in the first cycle. Moreover, 38% of patients achieved complete remission with full or partial hematologic or blood count recovery. While we caution against direct read across between clinical trials, this compares favourably to the 26.3% rate (excluding remissions after bone marrow transplantation during the trial) delivered by gilteritinib in the Phase III ADMIRAL study, potentially supporting the synergy of the combination. Oryzon noted that the first two cohorts achieved full target engagement and indicated the scope for dose reduction (to aid faster platelet recovery) under the FDA’s OPTIMUS guidance. A third cohort is being recruited following this guidance.

• UnitedHealth Group has reported its first quarter financial results for 2024, which reflect the resilience and adaptive capacity of the organization amidst significant challenges, most notably the Change Healthcare cyberattack.
• In addressing the cyberattack, UnitedHealth Group has showcased robust crisis management capabilities, responding swiftly to ensure continuity in care provision and financial support for affected healthcare providers.
• The financial impact of the cyberattack has been substantial, with approximately $870 million in total impact to the quarter and an anticipated full-year impact in the range of $1.15 to $1.35 per share.

• The Cigna Group has presented its first-quarter results for 2024, demonstrating financial strength and strategic advancements across its diverse business segments.
• The financial outcomes reveal a sound start to the year, with increased revenue and adjusted earnings per share, alongside an uplift in the full year 2024 earnings guidance.
• However, these positive aspects are accompanied by areas of setbacks and challenges suggesting that while Cigna is on a promising trajectory, there are complexities that might affect its future performance.

• Elevance Health recently reported its first-quarter results for the 2024 fiscal year, showcasing a blend of strategic accomplishments and agile responses to ongoing industry shifts.
• The company announced earnings per share (EPS) on a GAAP basis of $9.59 and an adjusted diluted EPS of $10.64, indicating a robust growth of 12.5%.
• This performance was underpinned by disciplined execution across Elevance Health’s strategic initiatives in a dynamically evolving healthcare landscape.

• Revenue increased by 2.6% YoY to JPY2.2bn, while operating profit decreased by 57.3% YoY to JPY281mn.
• SG&A expenses rose by 29.4% YoY to JPY1.1bn, leading to an operating profit margin decline to 12.6%.
• Medical device sales grew by 35.6% YoY to JPY486mn, and cosmetics sales surged by 157.9% YoY to JPY286mn.

• Molina Healthcare has reported their first quarter earnings, achieving an adjusted EPS of $5.73 and generating $9.5 billion in premium revenue.
• The company’s performance was described as being in line with expectations and is backed by efficient operating metrics across all business segments.
• The consolidated MCR (medical cost ratio) stood at 88.5%, demonstrating strong medical cost management with results across segments fulfilling the company’s forecasts.

• On June 6, 2024, Soligenix, Inc. (SNGX) enacted a reverse stock split at a ratio of 1 post-split share for every 16 pre-split shares.
• Our valuation has been adjusted accordingly.
• The company recently completed a public offering for gross proceeds of approximately $4.75 million.

• Humana has presented a mixed set of results for the first quarter of 2024, coupled with adjusted expectations for the upcoming year.
• The company has reaffirmed its full-year adjusted EPS guidance at approximately $16 and increased its membership growth outlook from 100,000 to 150,000 net additions, which speaks to Humana’s operational resilience and strategic expansions.
• This performance is supported by inline or positive medical cost trends, and visible growth in their primary care business with a significant upswing in new and mature centers.

• Centene Corporation has provided an encouraging financial performance in its first quarter of the year, as echoed in their latest review of modified earnings and strategic developments across various business units.
• Notably, the company exceeded their expected adjusted earnings per share (EPS) at $2.26, prompting an upward revision in their full-year 2024 forecast to over $6.80 per share.
• While these results show solid progress and operational efficiency, they frame a nuanced picture—detailing areas of strength alongside ongoing challenges.

• Back on the 11th December 2023, pharmacy distributor Sigma Healthcare (SIG AU) announced a “transformational merger” – in effect a reverse takeover – with mega chain Chemist Warehouse (CWG).
• In Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover I flagged pushback from ACCC; but on balance thought the merger should still get up.
• Travis Lundy struck a more tentative tone in Sigma Healthcare: ASX200 Inclusion Now, MUCH More Squeezy Fun Later. Maybe… Rightfully so it seems. The ACCC has now raised competition concerns. 

• Given the high number of pipeline dropouts, and the potentially disappointing $6 bn psoriasis drug acquisition, we question Takeda’s recent investment track record.
• A big restructuring, high expectations from new/recently launched drug portfolio, and punchy company guidance reduces the probability of upside surprises.
• Unless you are limited from investing outside Japan and you want exposure to an innovative pharma company, we believe that there are better and cheaper options elsewhere.

• We preview UMP Healthcare (722 HK)  earnings for FY24 (June-end), which will be declared in September, and our outlook for FY25. 
• The company has more than 300 mn HKD of net cash (almost 75% of its market cap), and even assuming a 20% dividend cut, it has an ~8% dividend yield.
• On core earnings for FY24, we estimate that the stock trades at 12x PE( ex-cash 2.8x PE), with low-hanging fruit from streamlining the business in FY25. 

• Operating revenue grew 91.5% YoY to JPY3.0bn, driven by significant sales increases in the US and Japan.
• The company revised its full-year FY04/24 earnings forecast, increasing operating revenue to JPY4.1bn and net loss to JPY1.0bn.
• R&D expenses rose 20.6% YoY to JPY364mn, and SG&A expenses increased 11.3% YoY to JPY3.2bn.

• Operating revenue grew 91.5% YoY to JPY3.0bn, driven by significant sales increases in the US and Japan.
• Revised full-year FY04/24 forecast: Operating revenue JPY4.1bn, operating loss JPY1.9bn, recurring loss JPY743mn, net loss JPY1.0bn.
• Cost of sales increased 44.2% YoY to JPY1.0bn, with R&D expenses up 20.6% YoY to JPY364mn.

• Operating revenue grew 91.5% YoY to JPY3.0bn, driven by significant sales increases in the US and Japan.
• Operating loss narrowed by JPY720mn YoY to JPY1.6bn, with recurring loss at JPY336mn and net loss at JPY700mn.
• Revised FY04/24 forecast: Operating revenue JPY4.1bn, operating loss JPY1.9bn, recurring loss JPY743mn, net loss JPY1.0bn.

• In full-year FY04/23, the company reported consolidated operating revenue of JPY2.3bn (+53.6% YoY), an operating loss of JPY3.2bn (versus loss of JPY2.7bn in FY04/22), a recurring loss of JPY2.4bn (versus loss of JPY1.8bn in FY04/22), and a net loss attributable to owners of the parent of JPY2.4bn (versus net loss of JPY1.9bn in FY04/22).
• Operating revenue grew on sales expansion of mainstay products in Japan and overseas.
• However, the operating loss expanded, because overseas sales were not enough to offset upfront investment in establishing a direct sales structure.  The company’s full-year FY04/24 forecast (revised in June 2024 for the second time) calls for operating revenue of JPY4.6bn (previous forecast: JPY4.1bn), an operating loss of JPY2.1bn (previous forecast: a JPY1.9bn loss), a recurring profit of JPY140mn (previous forecast: a JPY743mn loss), and a net loss attributable to owners of the parent of JPY255mn (previous forecast: a JPY1.0bn loss). While revenue, mainly in the US, exceeded the previous estimates, costs on a foreign currency basis increased and profitability declined in Europe and Australia, due to the yen’s depreciation.

• Operating revenue grew 91.5% YoY to JPY3.0bn, driven by significant sales increases in the US and Japan.
• The company revised its full-year FY04/24 forecast: operating revenue to JPY4.1bn, operating loss to JPY1.9bn.
• Foreign exchange gains of JPY1.3bn and an extraordinary loss of JPY199mn due to remittance fraud were recorded.

• Operating revenue grew 91.5% YoY to JPY3.0bn, driven by significant sales increases in the US and Japan.
• The company revised its full-year FY04/24 forecast, increasing operating revenue to JPY4.1bn and recurring loss to JPY743mn.
• Foreign exchange gains and extraordinary loss due to remittance fraud impacted financial results, narrowing recurring and net losses.

• Operating revenue grew 91.5% YoY to JPY3.0bn, with significant sales increases in the US and Japan.
• Operating loss narrowed YoY to JPY1.6bn, driven by increased sales and foreign exchange gains of JPY1.3bn.
• Full-year FY04/24 forecast revised: operating revenue JPY4.1bn, operating loss JPY1.9bn, recurring loss JPY743mn, net loss JPY1.0bn.

• QuantumPharm (QUP HK) raised US$126m from its Hong Kong IPO.
• 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.
• We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

• Medtide (1268709D CH) is looking to raise at least US$100m in its upcoming HK IPO. The deal will be run by Morgan Stanley and Citic Securities.
• Medtide is the third largest peptide-focused contract research, development and manufacturing organization (CRDMO) worldwide in terms of sales revenue in 2023, according to F&S. 
• Its full-cycle services range from early-stage discovery, pre-clinical research and clinical development to commercial-stage production.

• Telix Pharmaceuticals (TLX AU) is looking to raise around US$190m in its US ADS listing. The bookrunners on the deal are Jefferies, Morgan Stanley, Truist Securities, and William Blair.
• TLX is a commercial-stage biopharmaceutical company focused on the development and commercialization of therapeutic and diagnostic radiopharmaceuticals.
• In this note, we talk about the updates since our last note and current deal dynamics.

• Around RMB5 billion generic drugs would be included in VBP in 2024/2025 (e.g. sevoflurane/Ioversol/butorphanol tartrate). So, the assumption that all the negative effects of VBP have cleared up isn’t correct.
• Hengrui’s innovative drugs would lose growth momentum after they reach peak sales. It’s difficult for Hengrui to maintain its scale expansion or achieve the over 20% YoY revenue growth.
• Hengrui’s PE would fall below 30 (or even below 20) in the future, which means its valuation would start to enter a downward trend. Current high valuation cannot be justified.

• Longeveron is focusing on using its primary treatment, Lomecel-B, to fight a rare pediatric heart birth defect that devastates families.
• The company announced the completion of an encouraging meeting with investigators involved in the ongoing trial of Lomecel-B for the treatment of HLHS.
• Additionally, the LGVN announced it has signed its first contract for the use of its state-of-the-art manufacturing facility.

• Grifols facing controversy over high debt, aggressive accounting practices, and financial sustainability doubts
• Despite challenges, Grifols is a major player in blood plasma-derived therapies market and has improved margins
• Company generated over EUR700m in free cash flow in 2020, expected to return to positive cash flow in 2025 with decreased costs and slowed growth investments; recent asset sale to reduce debt and new CEO joining to work towards stable financial future

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.

• SHC is a provider of medical device and pharmaceutical sterilization services with potential for significant upside
• Operates in a duopoly market with high barriers to entry and strong customer retention
• Stock is currently undervalued, providing investors with a timely opportunity to capitalize on the company’s potential

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.

• Adaptimmune Therapeutics plc (NASDAQ: ADAP) is a biopharmaceutical company focused on designing, developing, and delivering innovative cell therapies.
• The company’s unique T-cell receptor (TCR) platform engineers T-cells to target and destroy cancers across multiple solid tumor types.
• The company was founded in 2008 and is headquartered in Abingdon, United Kingdom, and Philadelphia, PA.

• Aesthetic laser maker Jeisys Medical (287410 KS) has announced French PE outfit Archimed SAS is seeking to delist the company.
• Archimed intends to acquire 72% of Jeisys at ₩13,000, a 20.82% premium to undisturbed. Archimed has also inked agreements with founders/directors for 26.44%, taking its possible % acquisition to 98.44%. 
• A Korean medical device maker – not another Eoflow (294090 KS)?! Jeisys did face a patent infringement case from Syneron Medical (ELOS US) in 2018; but since resolved. 

• Today after the close, SBI Holdings (8473 JP) – which currently owns 32.4% of Medical Data Vision (3902 JP) – announced it would buy another 1.91mm shares over 7mos.
• This market purchase would lift them to ~37.4% by year-end. Interestingly, they plan to go through the one-third level without a Tender Offer. But their buying history hasn’t been great. 
• SBI bought 20% in 2020. It fell by half. They bought another 5%. Then it dropped 50%, so they bought another 5%. Now -25% so they are buying another 5%.

• Some shareholders have confirmed to be acting in concert at the Court Meeting, but long-term investors may vote against the privatization because they are not satisfied with the Cancellation Price.
• The success rate of SciClone’s privatization is lower than that of China TCM and L’Occitane. If fails, there’s a high probability that the share price will fall back to HK$14/share.
• The current share price cannot provide decent returns. Together with exchange rate risk, potential failure risks, etc., there’s no need for investors to take risks at this share price level.

• Hugel Inc (145020 KS) got favorable preliminary ruling in US for its litigation with Medytox. The ruling revealed that the competitor’s claim of strain theft by Hugel is baseless.  
• In March, Hugel received FDA approval for BTX product, Letybo in US. The company plans to launch Letybo in 2H24, while final ruling for the litigation is scheduled in October.
• As BTX and HA filler grew steadily in domestic and overseas markets, 1Q24 sales grew 15% YoY to KRW74.3B, achieving the highest ever performance in the first quarter.

• BrainStorm Cell Therapeutics Inc. (Nasdaq: BCLI, Biotech) is focused on developing autologous mesenchymal stem cell (MSC) therapies for the treatment of neurodegenerative diseases (NDDs) – BCLI’s primary target is the fatal amyotrophic lateral sclerosis (ALS/MND/Lou Gehrig’s).
• Post hoc analysis of BCLI’s PIII trial data shows BCLI’s NurOwn® (debamestrocel, MSC-NTF), has statistically significant clinical effects on early-stage ALS sufferers and that placebo trialists deteriorate faster.
• Peer reviewed research (Mar 2024) indicated that BCLI’s NurOwn® has a positive impact on NfL biomarkers for ALS.

• SCLX is filling a much-needed area of the health care sector, that of developing non-opioid pain relief products.
• The company already has commercialized products that are proven to improve patients’ lives.
• The company recently added to its important line on non-opioid drugs by announcing the FDA approved the commercial manufacturing of Gloperba and that the product is being stocked in many national pharmacy chains and independent pharmacies.