Healthcare

• On 10 June, it was announced that France’s Archimed Group is conducting a tender offer of 55.72 million shares of Jeisys Medical (287410 KS) (72% of outstanding shares). 
• The tender offer period will run from 10 June to 22 July. The tender offer price is 13,000 won.
• Archimed also signed a contract to purchase the entire stake (23.2%) held by Kang Don-Hwan (Chairman of Jeisys Medical) and (3.2%) held by a Director Myung-Hoon Lee.

• Concord Biotech Ltd (CONCORDB IN) reported 19% revenue growth in FY24. EBITDA and PAT grew at a faster pace of 26% and 28%, YoY, respectively.  
• With focus on deeper market penetration, acquiring new customers, and introducing new products in niche categories, Concord is well-positioned for 25% revenue CAGR in 3–5 years.
• Despite a huge run-up from the IPO price, Concord shares are trading at forward P/E of 38.9x, which is lower than peers.

• Regenerative medicine remains an extremely exciting area of healthcare with vast investment potential.
• In spite of the usual setbacks in valuation and strategy, the sub-sector has pivoted and the market remains innovative and attracts investment capital.
• Rather than replace entire tissues, which is a complex activity, we believe the immediate future for stem cells is more likely to be in the successful stimulation of the bodies on repair mechanisms.

• BioLineRx is a commercial stage biopharmaceutical company with a development portfolio advancing motixafortide, a platform molecule targeting indications in stem cell mobilization (SCM) & in the treatment of advanced pancreatic cancer.
• The candidate is approved in the US for SCM and is undergoing studies for use in gene therapy and in pancreatic cancer.
• Partner Gloria Biosciences is developing motixafortide in Asia & is expected to be conducting bridging studies in the near term for SCM and longer-term studies for other indications.

• Archimed aims to acquire 72% of Jeisys Medical’s shares, totaling 55,724,838 shares. The tender offer runs from the 10th of this month to the 22nd of the following month.
• If tendered shares fall short of the 18,013,879 minimum, Archimed refrains from purchases. If exceeded, Archimed buys all, eliminating allocation risk.
• With over 70% substantial volume and a large portion held by local retail investors, surpassing the 26% threshold seems feasible.

• One interesting interpretation of the new Akeso-summit cooperation is that it aims to pave the way for potential acquisition of Summit by MNC. The climax of the story hasn’t arrived.
• Jacobio is a good target for potential M&A and licensing deals. So, this company has considerable potential returns and also strong safety margin, which is worth taking a gamble on.
• There’re concerns that Genscript could face US scrutiny due to alleged ties with Chinese government. Share price rebound may not last considering geopolitical conflicts and CXO industry downturn in 24H1.

• Tempus AI, a healthcare IT company and provider of next-gen diagnostics, is expected to IPO next week. The company plans to raise $411M at the high end of the range.
• The most recent S-1/A puts the expected price range per share at $35 to $37, implying a market cap of ~$6B at the midpoint.
• Tempus AI provides personalized cancer care and brings AI to healthcare at scale. They train LLMs to develop AI applications and have the largest public genomic data sets in oncology

• Centene Corporation reported its first quarter 2024 results, highlighting several positive developments and strategic maneuvers aimed at sustaining and enhancing its business operations.
• The company achieved a higher-than-expected adjusted EPS of $2.26, prompting an upward revision in its full-year 2024 EPS guidance to over $6.80.
• This performance signals a robust start to the year, attributed partly to significant operational improvements and strategic realignments.

• QuantumPharm (QUP HK) is looking to raise US$144m 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.
• In our previous notes, we looked at the firm’s past performance and PHIP updates. In this note, we share our thoughts on valuations. 

• Agilent Technologies was found to have declining earnings in Quarter 2 of 2024.
• Despite a drop in revenue, orders grew compared to the previous seven quarters, and earnings per share did surpass expectations.
• The company faced a difficult market environment but showed signs of future recovery at a slower pace than initially predicted.

OSE Immunotherapeutic’s FY24 has started off with a series of major wins, significantly bolstering the company’s clinical pipeline and liquidity. We believe the partnership with AbbVie (announced in February) for OSE-230, targeting chronic inflammation, the €8.4m public funding for Tedopi secured in April and the recent expansion of its R&D agreement with Boehringer Ingelheim (BI) are all positive endorsements of OSE’s discovery platform. Moreover, we expect the c €91m in non-dilutive inflows from these announced deals to extend OSE’s cash runway into 2027 (previously 2026), an important consideration given the still tight biotech funding environment. While some optimism from these announcements is already reflected in the share price (up 88% ytd), our revised valuation for OSE (€19/share) indicates potential for further upside with the upcoming milestones, including the Phase III initiation for lead asset Tedopi and Phase II readouts for Lusvertikimab, both anticipated imminently.

• Veeva Systems had a solid start to the year with first-quarter results that exceeded the company’s guidance.
• The total revenue during the quarter reached $650 million, and the non-GAAP operating income was $261 million.
• Despite facing macroeconomic headwinds, the company managed to execute well and deliver customer success.

• A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.
• With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.
• The founder/CEO recently purchased 8m shares. He last bought shares in 2020-2021. The share price almost tripled afterwards.

• Alkem Laboratories Ltd (ALKEM IN) reports 1% revenue growth in Q4FY24. However, gross margin improved significantly backed by lower raw material cost and lower intensity of price erosion in U.S.
• For FY25, the company has guided for 10% YoY revenue growth, which is at par with the last five year’s average growth.
• Alkem expects to maintain FY25 gross margin and EBITDA margin at the current level. As API prices have become mostly stable, there is limited room for further margin expansion.

• 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.

• Quipt is the 5th largest home medical equipment provider in the US, specializing in respiratory equipment and consumables for patients in a home setting.
• The company operates out of 125 locations in 26 states, with dual listings in Canada and the US.
• Despite a 26% increase in share count and $70 million rise in debt, Quipt’s stock price has fallen by 4% due to concerns about potential competition from GLP-1s and a Civil Investigative Demand regarding possible false claims to government healthcare programs.

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.

• The approval/filing process of China TCM’s privatization is complicated and would take some time, but there’re almost no cases of disapproval. It also depends on the adequacy of materials submitted.
• Due to the extension of time for the despatch of Scheme Document, this process would be delayed for more months.But we should receive clear information by October at the latest.
• For arbitrageurs, China TCM is an investment opportunity of high success rate, which becomes more attractive if HK stock market is depressed.It’s better suited to idle funds considering potential risks/returns.

• On May 28, 2024, MediciNova, Inc. (MNOV) announced that two abstracts regarding MN-001 (tipelukast) and MN-002 were presented as posters at the 92nd European Atherosclerosis Society (EAS) 2024 Congress.
• The poster on MN-001 discussed the objectives and design of the ongoing Phase 2 clinical trial enrolling patients with Type 2 diabetes, dyslipidemia, and NAFLD, which has now enrolled a total of 33 patients.
• The other presentation regarded the mechanism of action of MN-001/MN-002 in lipid metabolism.

• Organovo is a biotech company that has 3D technology enabling the company to produce various human tissues, allowing the company to target diseases and accelerate the drug development process.
• The company released its annual report that showed good cash balances, and also recently released positive Phase 2 results for one of its primary treatments-FXR314.
• These results are very encouraging and bolster our belief in the future prospects for ONVO.

Oryzon Genomics has announced the publication of the final ALICE trial results in the recognised peer-reviewed journal The Lancet Haematology. The Phase IIa trial investigated iadademstat (Oryzon’s lead oncology LSD1 inhibitor) in combination with azacitidine for the treatment of acute myeloid leukaemia (AML) in newly diagnosed elderly/unfit patients. The trial demonstrated strong efficacy signals, with an objective response rate (ORR) of 81.5%, with three patients still on treatment through compassionate use and in complete remission after four years from the start of treatment. A Phase Ib, investigator-sponsored, dose-finding study evaluating iadademstat (in combination with azacitidine and venetoclax) in the first-line setting is expected to start recruitment by mid-2024. We note that the company’s near-term focus is the Phase Ib FRIDA study (in patients with advanced AML with an FLT3 mutation), from which interim data is expected imminently.

• We have already discussed our flow expectations for the mainstream indices in the CSI family such as CSI300/500, SSE50/100, and the STAR50/100 for the June 2024 index rebal event.
• In this insight, we take a look at our flow expectations for the ADDs/DELs involved in the rebalance of some of the lesser known indices in the CSI family.
• The indices covered in this insight are All Share Brokerage, China Internet, Medical Devices, National Defense, and Livestock Breeding indices.

• We have always been concerned about QuantumPharm’s business model. It is relatively difficult for a service provider like QuantumPharm to scale up revenue by just relying on charging service fees.
• For AI pharmaceutical companies, how to make money is a pain point for entire industry. Just focusing on preclinical stages would limit profitability.We haven’t seen any certainty of achieving breakeven.
• Increasing competition would bring more challenges for QuantumPharm. Post-investment valuation in 2021 was too expensive.If its future performance falls short of expectations, then sooner or later the valuation will collapse. 

• CSI announced the changes for the June rebalance after market close on 31 May and the changes will be effective after the close of trading on 14 June.
• There are 5 adds/deletes – we correctly forecasted 3 adds and all 5 deletes. Passives need to trade 0.5-3x ADV on the adds and 0.5-2.1x ADV on the deletes.
• With the index not very widely forecasted, the adds could outperform the deletes over the next week in a repeat of the performance at the December rebalance.

• The June 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 31st May 2024.
• There will be 12 changes in CSI 300 and 50 changes in CSI 500 which could collectively cause one-way index flows of ~US$3.7bn during the June 2024 index rebal event.
• Compared to Quiddity’s final expectations, 114 out of the 124 index changes (both ways) were correct translating to a hit rate of 92%. 

• 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: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Chilled & Frozen Logistics Holdings (9099 JP), Ansarada Group Ltd (AND AU), Malaysia Airports Holdings (MAHB MK). 
• Lowest spreads: Great Eastern Holdings (GE SP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Mimasu Semiconductor Industry (8155 JP), Kfc Holdings Japan (9873 JP), Alumina Ltd (AWC AU). 

• It is said that Fosun Pharma plans to privatize Henlius. There’re doubts about how to solve the debt problem/cash flow pressure of Fosun Pharma. A third party could be involved.
• Shareholders may not be willing to accept an Offer Price that is significantly below IPO price. It’s also possible that shareholders vote against the privatization. So, there are many uncertainties.
• Deal talks are still ongoing. It’s difficult to see clearly what’s happening under the table. Valuation logic of Fosun Pharma should be more like PE/VC firms not traditional pharmaceutical company.

• Innovent’s 24Q1 product sales was up just 6% QoQ. The overall data shows that PD-1 growth has entered a bottleneck. This makes 24H2 YoY growth rate uncertain.
• The deal between Hengrui and Hercules is different from traditional license-out cooperation, but belong to asset spin-off in essence, which is a “smart deal” and also a meaningful attempt.
• There’re some positive signals in Zai Lab’s 24Q1 performance, but the pain points of business model severely limit its profitability/revenue scale. Zai Lab still has a long way to go.

• Divi’s Laboratories (DIVI IN) reported steady performance in Q4FY24, marked by YoY and sequential growth in revenue and improvement in profitability. Double-digit growth is expected to continue.
• Custom Synthesis business grew 47% YoY and 38% QoQ to INR12B in Q4FY24, driven by increasing value realization from existing commercial projects and addition of new projects to the portfolio.
• In Custom Synthesis, Divi’s Lab is in the process of entering into a long-term supply agreement with an MNC customer and is planning for capacity addition at its manufacturing facility.

• Ivonescimab’s (AK112) head-to-head clinical win against Keytruda (Pembrolizumab) reaffirmed Akeso’s standing as the flag-bearer of Chinese innovative drugs. It also affirmed its business model of specialized R&D+flexible distribution. 
• This success might be followed by a similar win globally in 2025-27,as well as AK112 and 104’s head-to-head win against Tislelizumab.
• We reiterate our BUY rating on Akeso and adjust TP to HK$58 to reflect revenue share from AK112 to come in from 2025 but in bulk after 2027

• In its fiscal year 2024 Q4 earnings, Medtronic reported significant revenue growth and strong earnings, demonstrating the effectiveness of its strategies to drive growth and profitability.
• The company’s four segments delivered mid-single-digit or higher revenue growth, with total revenue growth exceeding 5% for the full fiscal year.
• This record growth was largely driven by new product innovations across Medtronic’s cardiovascular, robotics, diabetes care, and other therapeutic segments.

• Alibaba Health Information Tec (241 HK) operates an online platform for healthcare services and products.  Post COVID the company has maintained and grown it the online healthcare market.
  
• The company which is 53%-owned by Alibaba Group Holding (9988 HK) , recently reported results for 2023 which beat analyst estimates, recording a 65% increase in net profit.
• The company recently bought AJK Technology from Taobao which gives Ali Health  operational rights for advertising of online healthcare merchants on Tmall (Alimama).

• Jiangxi Rimag Group, a China-based medical imaging center operator and provider of Rimag cloud services, set terms for an IPO and plans to raise ~HK$280M (~$36M) in Hong Kong.
• The IPO is expected to be between HK$14.60 and HK$16.80. At the midpoint of the range, Jiangxi Rimag will have a market value of ~HK$5.6B based on 356.3M outstanding shares.
• CITIC Securities is leading the offering. CMB International and Huatai International act as joint global coordinators, joint bookrunners and joint lead managers.

• Glenmark Pharmaceuticals (GNP IN) FY24 results have seen PBT reducing from INR 2.4 bn to INR 365 mn i.e. by nearly 85%. 
• This was on account for exceptional line items, which included gains from sale stake in Glenmark Lifesciences, but was offset by losses pertaining to legalities and heavy impairment in assets.
• The habit of having exceptional items, especially impairments is not something new or one-offs. There have been regular impairments carried in the past as well. 

• On May 15, 2024, CervoMed Inc. (CRVO) announced financial results for the first quarter of 2024 and provided a business update.
• Enrollment is ongoing in the RewinD-LB Phase 2b clinical trial of neflamapimod in patients with dementia with Lewy bodies (DLB).
• We anticipate enrollment completing in the second quarter of 2024 with topline data from the trial expected in the fourth quarter of 2024.

• Humana Inc., a leading health insurance provider, posted its first quarter results for 2024 and provided some important insights into the company’s financial performance and future outlook.
• CEO Bruce Broussard and CFO Susan Diamond shared their insights in a Q&A session following the earnings call.
• Broussard highlighted Humana’s solid start to 2024, stating the company reaffirmed its full-year adjusted earnings per share (EPS) guidance at approximately $16 with an increased individual MA membership growth outlook.