Healthcare

• The contribution of innovative drugs cannot offset the generics revenue decline caused by VBP. Without PD-1 level big variety emerging, the pressure of VBP would continue for a long time. 
• Hengrui launched Luzsana to develop global business, seeming to send “a compromise and ambiguous signal” to various complex forces within this traditional pharmaceutical empire. ADC pipeline remains to be seen.
• Hengrui still has many problems that are difficult to solve. Even though there is a rebound, Hengrui’s stock price performance may not deliver excess returns, with lower-than-expected upside elasticity.

• Pharmaceutical companies shouldn’t always emphasize being the first to enter the market, but focus on how to best enter the market and maintain a dominant position as long as possible.
• It’s truly felt that the assets of China’s pharmaceutical companies are accelerating their global recognition. As their internationalization strategy becomes increasingly mature, investors are expected to obtain more benign returns.
• For Pharmaron, financial profit decline was the main reason for profit drop.If deducting fair value change of biological assets, operating profit growth was negative. We remain conservative about its outlook.

• Mankind Pharma (6596876Z IN)‘s IPO is lined up to be open for subscription next week.
• Mankind is one of the largest pharmaceutical formulation player in India. The company is a market leader in condoms, pregnancy test kits, emergency contraceptives category, etc.
• However, when it comes to the balance sheet, there are several aspects that warrant attention. These include acquisitions, asset quality, non-comparable return ratios owing to accounting treatment, etc.

• Dechra Pharmaceuticals (DPH LN) received an offer from the Swedish private equity firm EQT regarding a possible all-cash deal, where Dechra shareholders would receive £40.70 per ordinary share in cash.
• Right after the announcement, Dechra shares surged 33%. The shares are currently trading at £37.66, implying 10% upside potential.
• Without EQT offer, based on current financial performance, Dechra has a bleak outlook. Currently, Dechra has average target price of £39.39, implying a spread of just ~5%.

• Binding exclusivity to acquire or license Deverra Therapeutics’ platform asset 
• CAR-T + GEAR COEP platforms could plug into Deverra platform
• Other key assets – 2x FDA approved PI INDs for CD34+ NK Cells.

• Mankind Pharma (6596876Z IN), a pharmaceutical company, is seeking to raise up to Rs43.3 billion (US$527 million) at Rs1,026-1,080 per share. The public offer runs from 25-27 April.
• We previously discussed the IPO in Mankind Pharma IPO: The Bull Case, Mankind Pharma IPO: The Bear Case and Mankind Pharma IPO: Updates Warrant Caution. 
• Our valuation analysis suggests that Mankind Pharma is fully valued at the IPO price range. Therefore, we are inclined to pass on this IPO. 

• Legend Biotech Corp (LEGN US) shares broke into a new high after a leaked abstract showed Carvykti cuts risk of progression or death by 74% in earlier multiple myeloma therapy.
• Success of Carvykti in earlier lines of MM therapy will lead to rapid intake of the drug and increase the drug’s peak sales opportunity to $5B.
• During 2022, Carvykti generated ~$134M in net trade sales. With label and geography expansion of Carvykti, Legend Biotech shares still have further upside potential.  

• Mankind Pharma (MP) is looking to raise up to US$527m in its upcoming India IPO.
• MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products
• We have looked at various aspects of the deal in our earlier notes. In this note, we talk about the implied valuations.

• Mankind Pharma (6596876Z IN), a pharmaceutical company, is seeking to raise up to Rs43.3 billion (US$527 million) at Rs1,026-1,080 per share. The public offer runs from 25-27 April.
• We previously discussed the IPO in Mankind Pharma IPO: The Bull Case and Mankind Pharma IPO: The Bear Case. 
• The 9MFY23 (nine months to December) disclosure showcases a slowdown in growth, market share losses, margin pressure and declining RoCE. We are cautious about the IPO. 

• Indegene Limited (1864095D IN) is looking to raise about US$400m in its upcoming India IPO.
• Indegene is a “digital-first” commercialisation firm with an exclusive focus on the global life sciences industry.
• Its solutions aim to enable biopharmaceutical, emerging biotech and medical devices companies to develop, launch and drive sales for their products in a more efficient manner. 

• Mankind Pharma (6596876Z IN) IPO will open for public subscription on April 24 and close on April 27. The shares are expected to be listed on May 9.  
• The company has set IPO price band of INR1,026 –1,080 per share, valuing the company at INR433 billion at the top of the price band.
• The IPO price band implies P/E of 30.9x at the lower band and 32.6x at the upper band. This is pricier than other India focused pharmaceutical companies.

• MedSci’s profit quality/business structure is “healthier” than Medlive. MedSci is better able to cope with the negative impact of external changes, and its performance growth is more resilient than Medlive.
• MedSci’s physician platform solutions business is stronger than Medlive’s medical knowledge solutions business. Considering the logic and significance of this business, MedSci is expected to have bigger growth potential.
• If considering the cash balance, MedSci’s IPO valuation seems not that cheap. However, we think MedSci’s valuation would narrow the gap with Medlive or even surpass it in the future.

• Acadia Pharmaceuticals (ACAD US) markets CNS drug Nuplazid, which is cash flow positive with increasing profitability since 2019. Acadia has guided for Nuplazid revenue of $520M–550M for 2023.
• On April 17, Acadia has launched in-licensed drug Daybue in the U.S. for the treatment of Rett syndrome in adult and pediatric patients two years of age and older.
• Nuplazid is being evaluated for negative symptoms of schizophrenia with top-line results expected in early 2024. In-house drug candidate ACP-204 is in Phase 1 trial for Alzheimer’s disease psychosis.

Context Therapeutics’ April R&D webinar included takeaways from its poster presentation on CTIM-76 preclinical data at the AACR Annual Meeting in April 2023. The presentation highlighted the development of Context’s CLDN6 program and rationale for selecting CTIM-76 (a CLDN6xCD3 targeting bispecific antibody) as its new lead candidate (following the recent discontinuation of the ONA-XR program). We remind readers that while the therapeutic benefits of targeting CLDN6 (expressed on a variety of malignant tumor cells but rarely in healthy tissue) are well recognized, development hitherto has been hampered by a lack of selectivity and off target toxicities. Preclinical data presented by Context suggest that CTIM-76 selectively binds to CLDN6 with a potentially beneficial safety profile. The latest Phase I data in solid tumors from BioNTech’s CLDN6 CAR-T asset BNT211 (33% overall response rate, ORR; n=21) highlight the potential of a CLDN6-targeting therapy and are an encouraging read-across for this asset class, including CTIM-76.

Basilea has announced that there will be a minor delay in the timing of its new drug application (NDA) for Zevtera (ceftobiprole) to the FDA and it now anticipates submission in Q323 (previously H123). The decision comes because one of Basilea’s contract manufacturing organisations requires an additional three to six months to adapt its quality control systems before FDA inspection, a prerequisite for NDA review. Following the NDA submission, Basilea expects a regulatory decision on the approval of Zevtera in the United States by Q224. Management does not expect the recent news to affect its FY23 financial guidance and we believe a US launch date for Zevtera by late FY24 remains feasible.

• Mankind Pharma  (MP) is now looking to raise around US$500m in its upcoming India IPO.
• MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
• We have looked at various aspects of the deal in our earlier notes. In this note, we talk about the updates from its recently filed RHP.

• BioMarin gave a mixed performance in the quarter and failed to meet the revenue expectations of Wall Street despite delivering a double-digit top-line growth.
• Its total revenues for the quarter showed an increase despite the continued erosion of the KUVAN market in the US.
• Moreover, lower KUVAN product revenues are mostly because of generic competition due to the loss of market individuality in the US.

• Bristol-Myers Squibb reported another strong quarter which happened to be an all-around beat.
• The sales of Global Opdivo reflect robust demand for its newly launched and also a core indication of double-digit growth.
• Moreover, Bristol-Myers launched all nine new medicines, which include three first-in-class products.

• LianBio (LIAN US) is expected to report pivotal data from late-stage trials of its drug candidates as well as file for marketing approval for mavacamten in China in 2023.
• Lead candidate mavacamten has potential blockbuster opportunity in China. LianBio has entered into commercialization agreement with Pfizer for sisunatovir in Mainland China, Hong Kong, Macau, and Singapore.
• With current cash position sufficient to fund operations through the end of 2024, LianBio is well positioned to become a commercial-stage company.

• Max Healthcare Institute (MAXHEALT IN) reported improved occupancies, revenues, EBITDA and other operating and financial parameters in Q3FY23 versus year-ago period.   
• The company recorded highest-ever EBITDA – both in terms of absolute value and margins, EBITDA per bed, ARPOB, and ROCE for the third consecutive quarter in FY23.
• During the last three-year, Max had revenue and EBITDA CAGR of 12% and 59%, respectively. Consensus expects the company to report double-digit revenue and EPS growth through FY25.

• ADICON Holdings Limited (ADI HK) is pre-marketing an HKEx IPO to raise up to US$400 million, according to press reports.
• Adicon is the third largest independent clinical laboratories (ICL) service provider in China, with an 8.6% market share of the non-COVID-19 testing market in 2021, according to Frost & Sullivan.
• The key elements of the bull case rest on the growing non-COVID-19 testing addressable market, improving market sentiment, strong non-COVID-19 testing growth, stable EBITDA margin and cash generation. 

Ergomed reported FY22 results broadly in line with our expectations. Group revenues grew 22.5% y-o-y to £145.3m, underpinned by sustained demand for both the CRO and PV segments and supported by the ADAMAS acquisition and foreign exchange benefit. Adjusted EBITDA rose 11.5% y-o-y, although margins were comparatively lower (19.5% versus 21.4% in FY21) due to previously flagged incremental investments in technology and senior management hires. The order book remained robust at £295m (up 23.1% over FY21), boding well for medium-term sales potential. Year-end net cash of £19.1m was an improvement over the £12m reported in H122 (after the £24.2m net cash purchase of ADAMAS in February 2022) and, with £80m in undrawn credit facilities, Ergomed remains well-capitalised to fund future growth. We make minor adjustments to our estimates and roll forward our model. We upgrade our valuation slightly to 1,577p/share from 1,573p/share previously.

• Incyte Corporation generated strong financial performance in the last quarter and managed an all-around beat.
• Revenues from the commercialized items in the company’s current portfolio increased by 18% year over year.
• We give Incyte Corporation a ‘Hold’ rating with a revised target price.

• Either vaccines or therapeutic biologics, Luzhu’s clinical progress has no advantages. There have been quite a few competing products on the market or candidates with faster development progress than Luzhu.
• Luzhu applies the low price strategy to open the market. We’re not sure if it works or not, since it still depends on R&D efficiency, product quality and commercialization capabilities.
• We tend to be conservative about the Company’s prospects because its eventual revenue scale and profit margins are likely to be very limited based on our analysis.

• Anhui Province publicly solicits pre-bid data for the provincial centralized procurement of Class B large medical equipment, surgical robots included, which is worth investors’ attention.
• No more than five biotech would truly stand out in the future. We suggest investors focus on those biotech in the first echelon, rather than betting on riskier smaller ones.
• For Jafron, we analyzed some key points of the company. Due to the concerns, the temporary rebound in performance in 2023 is not enough to completely reverse the investment logic.

• Hisamitsu Pharmaceutical Co (4530 JP) reported better-than-expected FY23 results, as OTC business revenue from the overseas market, specially Salonpas increased more than expected. OTC business contributed 54% of total revenue.
• The company guided for FY24 revenue of ¥132B (+3% YoY), operating profit of ¥11.8B (+2% YoY), and net profit of ¥10.6B (-10% YoY). Dividend for FY24 is expected at ¥85/share.
• With the resumption of outdoor events globally, Hisamitsu’s OTC business will be the main growth engine, going ahead. The company is on track to achieve 7th mid-term management plan target.  

• This is our first report on West Pharmaceutical Services, a major manufacturer of injectable medication delivery and packaging systems.
• West Pharmaceutical reported an all-around beat in its last result and generated about 8% growth in organic sales overall.
• With COVID-19 excluded, West anticipates that its base organic sales growth was in the low double digits, with proprietary product growth in the mid-teens.