Healthcare

• Lutronic Corp and Jeisys Medical have considerably lower DTV in comparison to their float shares. It is highly probable that they have artificially increased their float shares.
• Coincidentally, these two stocks are the ones that have experienced the most dramatic increase in borrow balance after the result announcement.
• These two stocks are being targeted for short-selling from a post-event perspective because the market believes they will exhibit abnormal passive (price) impact due to their inflated float shares.

• Due to the surging cholera cases globally, demand for cholera vaccines for public market continues to grow. According to GAVI, shortage of cholera vaccine is likely to continue through 2025.
• To respond to surging vaccine demand, Eubiologics (206650 KS) plans to increase its production capacity from the current 33M doses per year to a maximum of 90M doses in 2027.
• Eubiologics, in partnership with TechInvention is launching Euvichol-Plus in India. India is among the top cholera-endemic countries, with an estimated incidence rate of 1.64 per 1,000 people.

In a strategic push of its US commercialisation strategy, Respiri has announced the proposed acquisition of Access Managed Services, its US remote patient monitoring (RPM) and chronic care management partner, for a cash consideration of up to US$3m (A$4.5m). We expect the acquisition to afford Respiri greater oversight of operations and sales and marketing efforts, potentially reducing sales cycles and expediting patient onboarding. The acquisition will also result in the RPM recurring revenue increasing to US$70–100 from US$10–20 per patient, although we note Respiri will cease to recognise revenue from device sales and operating expenses will likely trend higher. Management now guides for break-even to be achieved at 9,000 patients (by end CY24) vs 30,000–40,000 patients previously. The acquisition will be funded by a A$6.5m capital raise, including A$4.5m in convertible notes and a A$2m equity offer. We will update our model and estimates following the fund-raise and deal closure.

Following recent updates regarding Immix’s CAR-T therapy (NXC-201) and Q123 results, we have adjusted our financial estimates. Quarterly R&D expenses of $1.3m were lower than expected, largely due to lower clinical development costs. Roughly 48% of these expenses were related to quarterly payments made to the licensors of Nexcella’s (Immix’s majority-owned, 94%, subsidiary) CAR-T therapy, NXC-201. Based on the quarterly R&D spend run rate, we have revised our FY23 R&D expenses to $6.1m, down from $11.7m previously. The resulting operating loss of $10.9m is down from $15.8m previously. Immix ended the quarter with a net-cash position of $11.5m and raised a further $2.5m post quarter end through the company’s ATM facility, which we anticipate will provide an operating cash runway into Q224, a slight extension from Q423 previously. Our valuation of Immix has been adjusted due to the higher pro-forma cash position of $14m, rolling our model forward and our revised R&D estimates. We value Immix at $83.3m or $5.5 per share (previously $77.1m or $5.5/share).

• Jupiter Life Line Hospitals (0372574D IN) is looking to raise about US$135m in its upcoming India IPO. The deal will be run by ICICI Securities, Edelweiss Financial Services and JM Financial.
• Jupiter Life Line Hospitals (JLLH) is among the key multi-specialty tertiary and quaternary healthcare providers in the Mumbai Metropolitan Area (MMR) and western region of India, according to CRISIL. 
• Its hospitals function on an ‘all-hub-no-spoke’ model with each hospital being a full-service hospital, operating independently and offering services such as diagnostics to surgery and rehabilitation.

• It was a mixed first quarter for Amgen, with unit volume growth across global markets driving a 2% year-over-year increase in product sales.
• Despite some challenges, such as net price decline and inventory declines, the company achieved sustainable sales on 10 of its brands.
• The company’s priority products, including Repatha, EVENITY, KYPROLIS, and TEZSPIRE, experienced robust volume growth.

• Angelalign’s business model is easily challenged by lower priced similar competing products. Once Angelalign’s products lose price advantage, it would lead to a rapid decline in overall sales performance. 
• Performance growth could still be under pressure this year due to unsatisfactory demand.The potential price war, further price reduction and increasing selling/marketing expenses would put more pressure on profit margin.
• Angelalign hasn’t accumulated enough data size due to few overseas customers, which could lead to product quality issues and slow internationalization progress. There is downside risk due to overvaluation.

• Johnson & Johnson is a diversified healthcare products company.
• The Company is engaged in the re- search and development, manufacture and sale of a range of products in the healthcare field.
• It operates through three segments: Consumer Health, Pharmaceutical and MedTech. Its primary focus is products related to human health and well-being.

• Ansell Ltd (ANN AU) reported weak H1FY23 result. Strong growth in industrial more than offset by lower healthcare sales leading to 11.5% overall revenue decline on an organic constant currency-basis.
• Healthcare business sales declined 21.9% YoY on an organic constant currency-basis, mainly dragged by a 38% YoY decline in examination/single-use glove revenue with reductions in both price and volume.
• Ansell has revised FY23 EPS guidance downward to $1.10–1.20 (down 21% YoY at mid-point) from $1.15–1.35 earlier, reflecting market condition in healthcare GBU.

• Despite unfriendly external environment in 2022, Consun Pharmaceutical (1681 HK) still achieved stable performance growth. The Company has maintained a consistently high level of dividend payout, which is commendable.
• The rapid sales expansion of commercialized products has laid the foundation for the high-quality growth of Consun, and the continuously improving profitability further confirms its growth certainty.
• Based on the current market value, we think Consun is undervalued considering its RMB3 billion cash balance by 2022. It is expected to usher in valuation repair in the future.

• Olympus Corp (7733 JP) announced mixed FY23 result. While revenue was slightly ahead of forecast, both operating and net profits missed guidance. Excluding Fx, revenue increased just 4.5% in FY23.
• Operating profit increased 28% YoY to ¥187 billion, below forecast of ¥198 billion, mainly due to high-than-expected SG&A expenses, which accounted for 47.7% of revenue versus forecast of 47.2%.
• Due to continuing macroeconomic uncertainties and waning Fx benefit, Olympus expects FY24 revenue to be ¥914B (+4% YoY) and operating profit to be ¥163B (-13% YoY).

• TAVR was once envisioned with infinite optimism as a “hundred billion yuan market”, attracting massive amounts of capital/companies to enter. However, the commercialization status of TAVR companies is much bleak.
• High cost of TAVR surgery without medical insurance reimbursement and limited number of qualified hospitals to carry out such complicated surgery are the major reasons for the unsatisfactory sales growth. 
• Venus Medtech’s market share would continue to be challenged. MicroPort CardioFlow’s low gross margin and slow product iteration are the problems. Peijia could be “dark horse” if positive momentum continues. 

• The Beijing Medical Insurance Bureau issued a notice soliciting opinions on the linkage program of DRG payment and VBP policy in the city, involving sports medicine, neuro-intervention, and electrophysiology.
• The basic logic of CXO is that there should be no significant fluctuations with the success or failure of a specific drug, unless this drug significantly increases total medical expenditure.
• Zylox-Tonbridge Medical Technology (2190 HK) achieved high performance growth in 2022, and is a beneficiary of centralized procurement policy at the current stage.However, it still has to face some challenges.

• Zydus Lifesciences Ltd (ZYDUSLIF IN) recorded 32% growth in revenue to INR50B in Q4FY23, driven by 58% YoY growth in US formulation business. India business revenue grew 11% YoY.
• US business growth was driven by volume expansion in existing products and new launches. The company has launched eight new products in the US during the quarter.
• Going ahead, growth is expected to moderate, due to high base effect. The company expects single-digit growth in the US business in FY24, slower than 28% growth recorded in FY23.

• Amid general disappointment over China’s post-COVID recovery, high beta names like Akeso have sold off in recent days; 
• Management called for an update which specified on (1) why Ivonescimab (AK112) was absent in ASCO 2023, (2) sales update of Cadonilimab (AK104), (3) NDA and data readout timelines. 
• We came away positive;  We view management’s confirmation on progress a positive development that enhances certainty. We raise TP by HK$1 to HK$60.

• Medipal Holdings (7459 JP) announced strong FY23 result, with year-over-year improvement in sales and profit. While sales were just 1% ahead of forecast, net profit exceeded the guidance by 16%.
• Outperformance was mainly driven by PALTAC business. Revenue from PALTAC increased 6% YoY to ¥1,104B, 2% ahead of forecast of ¥1,080B, fueled by 14% growth in OTC pharmaceutical products.
• Medipal has guided for accelerated revenue growth of 3% YoY for its pharmaceutical wholesale business in FY24. In FY23, the business recorded revenue growth of 0.6% YoY.

Incannex has announced that it has entered into a lease for its first ‘psychedelic clinic’ in Melbourne, following the announcement of plans for commercializing its psychedelic-assisted psychotherapy business in March 2023. In collaboration with Australian psychedelic clinical experts, Incannex will set up these clinics through its subsidiary, Clarion Clinics Group, using psilocybin for treatment-resistant depression (TRD) and MDMA for post-traumatic stress disorder (PTSD). The first ‘model’ clinic is expected to open and take patients from September 2023. If sound operations are observed, Incannex intends rapidly to expand to larger clinics across Australia. While we recognize that this has the potential to provide a future stream of revenue for the company, we await further details before updating our valuation.

• Incyte had a terribly disappointing first quarter and failed to meet the revenue expectations as well as earnings expectations of Wall Street.
• The company’s product revenue increased 14% year over year as Jakafi was in high demand among patients across all indications.
• In hematology and oncology, the ongoing launches of Pemazyre and Minjuvi ex-U.S. were the primary factors in the 17% rise year over year.

• The review period for the June rebalance of the S&P/ASX family of indices ends tomorrow and we expect two changes for the S&P/ASX 200 (AS51 INDEX). 
• Impact of passive trading on the stocks varies between 4.3-11 days of ADV. Short interest on the potential adds is small while there are significant shorts on the potential deletes.
• We expect there is pre-positioning on at least three of the four stocks. In some cases that is small, while it could be a lot larger in other stocks.

• SK Pharmteco is currently 100% owned by SK Inc. It is one of the largest CMO players in Korea. SK Pharmteco is trying to raise nearly 600 billion won. 
• SK Pharmteco is seeking valuation of about 5 trillion won which is much higher than its book value of 1.65 trillion won.
• Our NAV valuation of SK Inc suggests an implied NAV of 21.2 trillion won or 286,636 won per share, representing 75% upside from current levels.

• HUTCHMED has been a company that is easily overlooked by investors. However, its BD capabilities have been verified after the deal with Takeda, and its commercialization performance is also commendable.
• Based on our forecast, total oncology/immunology consolidated revenue in 2023 could reach about US$220 million. If product sales growth remains benign, together with good cost control on R&D/SG&A, eventual breakeven is reachable.
• However, based on the current development trend, HUTCHMED could have to remain at the stage of a biotech, and is difficult to become a biopharma. Investors should be aware of this.

• In 1Q23, Peptidream Inc (4587 JP) recorded revenue of ¥4,963 million, compared to ¥419 million revenue in year-ago period, driven by radiopharmaceutical business segment, which contributed 80% of total revenue.
• As of March 31, 2023, the company’s pipeline consisted of 127 discovery and development programs (representing a net increase of 1 program from the end of the prior financial year).
• Peptidream reiterated guidance for full-year 2024. Revenue is expected to increase 12% to ¥30B in 2024, while operating and net profits are expected to decline 30% and 64%, respectively.    

• IDEXX Laboratories had a strong Q1 2023 performance and delivered an all-around beat.
• The company’s strategic focus on execution, organic growth, and product portfolio expansion resulted in significant new business gains and sustained growth in recurring veterinary software revenues.
• The company’s performance was reflected in its key metrics, such as high first-quarter premium instrument placements, steady new business gains, and continual growth in recurring veterinary software revenues.

• I got two new ideas and will close one. 
• The first one is Genomma Lab (LABB) , a Mexican branded OTC pharma and personal care products company.
• The stock trades at a cheap multiple of about 10x earnings. But if you adjust for currency losses, the stock is cheaper.

• We continue believe that upside is limited with the S&P 500 testing the top-end of our anticipated 2023 trading range (4165-4200).
• Our gameplan remains unchanged; reduce risk near resistance (where we are now) and add risk near support (the December 2022 lows at 3765 and/or the 2022 lows at 3490).
• A break above 4200 on the SPX would likely mean a test of 4300-4325, which we would view as a selling opportunity. A break below 4050 would kickstart a pullback.

• ImmuneOnco, 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 core product, namelyIMM01, a CD47 target fusion protein. We also look at the company’s management and pre-IPO investors.
• We think its clinical data is not yet convincing and we are not so keen on the company.

• IN Q4FY23, Cipla Ltd (CIPLA IN) reported highest ever US business revenue of $204M, up 27% YoY and 5% QoQ, driven by expansion in market share of key launches.
• Lead peptide asset Lanreotide injection, launched in Q4FY22, is consistently gaining market share. The product currently has market share of 17%, up from 14.1% in Q3FY23 and 9.6% in Q2FY23.
• Ex-COVID, India business revenue increased 16% YoY, driven by chronic branded prescription portfolio. FY23 marks the second consecutive year of market beating growth of Cipla’s chronic portfolio.

e-therapeutics is a biotech leveraging its validated computational biology platform to identify novel, liver-associated targets and expand its internal pipeline of short interfering RNA (siRNA or RNAi) therapeutics. In addition to the advantages of focusing on a single cell type (hepatocytes), the company’s recent strategic commitment to large language model (LLM) technologies has the potential to provide accelerated access to effective new drugs. RNAi medicines are a rapidly evolving drug class, with five drugs currently that use this technology. We view RNAi as a key growth market for e therapeutics. At end-January 2023, the company had a net cash position of £31.7m, supported by a capital raise of £13.4m (net proceeds) in September 2022.

• Different from other TCM companies, Pientzehuang is based on the investment logic of consumer goods, which breaks away from the price constraints of drug market. Meanwhile,  Pientzehuang has formed a “monopoly”.
• As a well-known trademark/time-honored brand in China, and representing the quintessence of Chinese culture, Pientzehuang would be supported by national policies,and is consistent with China’s efforts to expand domestic demand/consumption.
• Although Pientzehuang’s performance was disappointing last year, its strategic height and significance are obviously different from other TCM. We think that this is crucial to the investment value of Pientzehuang.

• Born of a merger between two not-very-well-known businesses 20 years ago, Alfresa Holdings (2784 JP) is still not very well known. It is in a boring, low-margin business. 
• The highest EBIT margin in the past two decades was…. 1.8%. ROE was in the 8-10% range for 2016-2020 but has since fallen below, as PBR has fallen below 1.0x.
• Today, we got an amended Mid-Term Management Plan, a new dividend policy, and buyback of 10% of shares out based on last price. It’s worth looking in the details.

• We discuss about the likely exclusion of SD Biosensor from KOSPI 200 in 2024, a big earnings miss in 1Q 2023, and higher probability of further share price decline. 
• SD Biosensor reported terrible earnings in 1Q 2023. It had sales of 182.4 billion won (down 86.9% YoY and 48% lower than consensus) in 1Q 2023. 
• Our core bearish case of SD Biosensor is that in most countries around the world, there is no longer any need to test millions of people for COVID-19.

• Celltrion Inc (068270 KS) recorded double-digit revenue and operating profit growth in Q1. Biosimilars reported first-ever KRW400B+ quarterly revenue. Operating margin reached to 30.5% in 1Q23 from 24.3% in 1Q22.
• Remsima SC sales (27% of revenue) resumed at full scale and rebounded to KRW100B quarterly revenue after a gap of ~2.5 years, driven by increasing market share in EU.
• This year, Celltrion is expected to launch three products in the U.S.: Vegzelma (biosimilar bevacizumab), Yuflyma (biosimilar adalimumab), and a novel subcutaneous formulation of infliximab.

• With the launch of new products and their accelerated admission to hospitals, Acotec’s revenue streams become more diversified, which would enhance its own risk resistance ability and core competitiveness.
• Considering market size/increasing competition, Acotec’s growth ceiling is obvious if relies solely on domestic market. It becomes crucial whether Boston Scientific’s acquisition would bring expected value or have other intentions.
• How much room for improvement in future valuation depends on Acotec’s performance in overseas markets. After all, if there is no internationalization breakthrough, Acotec’s valuation logic would not be reshaped.

• Oneness Biotech (4743 TT) recorded 10% revenue growth in Q1. However, operating loss widened. With global expansion of the marketed drug, the company is expected to turn profitable in 2024.
• In January 2023, Oneness received marketing approval for Fespixon in Singapore, with launch expected in 2H23. Fespixon is also expected to receive approval in Philippines this year. 
• Oneness is conducting phase 3 trial for Fespixon in the U.S., with targeting NDA submission in 2026. Fespixon has an estimated addressable market opportunity of $14.8B for diabetic foot ulcer.

• 2023 is a crucial year for Zai Lab.It’s the first time for Zai Lab to demonstrate the profitability of license-in model.If it fails, investors would lose confidence in the company.
• There is little correlation between the four commercialized products, which makes commercialization difficult and leads to low efficiency/high costs for sales team. So, breakeven could be more distant than expected.
• Zai Lab’s current pipelines are hard to make money. There are concerns whether its business model is sustainable in the long term. As its valuation lacks an “anchor”, risk is high.